How is this country attracting manufacturing investment?

The country aims to build on last year’s record investment in sectors including manufacturing and next-generation metallurgy. Kazakhstan attracted around €16.5 billion in greenfield investment, accounting for nearly 90% of all such investment in North and Central Asia, according to the UN Economic and Social Commission for Asia and the Pacific (ESCAP).

Strong investment and industrial growth suggest the strategy is gaining traction.

In the first five months of the year, Kazakhstan’s non-oil economy grew by over 5%.

For a second consecutive year, manufacturing narrowly overtook mining, accounting for 46.5% of industrial output in the first five months of the year, according to the Ministry of Industry and Construction.

Industrial output reached €52 billion in the first five months of the year, up 2.5% from a year earlier.

“This trend is continuing, and we hope it will further transform the structure of the economy,” Panbayev said.

However, Panbayev said this was not the result of weaker oil production, as the country produced a record 99.5 million tonnes of oil last year, an all-time high, he highlighted.

Instead, Panbayev attributes the growth in manufacturing output to “stronger performance at existing enterprises, and also the launch of new production facilities across the country”.

This year, Kazakhstan plans to implement more than 200 industrial projects worth over €2.5 billion across metallurgy, machinery manufacturing, construction materials, chemical, and food industry.

He added that 77 investment projects worth around €526 million have already been commissioned in the first half of the year.

Investment climate

Beyond this year’s projects, Kazakhstan also has a pipeline of large-scale industrial investments. Panbayev highlighted three major projects with a combined investment value of more than €11 billion.

Two were completed last year: automotive plants in Almaty and Kostanay with a combined annual capacity of 190,000 vehicles.

“This year, work continues on the expansion of the country's largest steelmaker in the Karaganda region.” New production of gold, copper, potash, and mineral fertilisers in western Kazakhstan are also set to be launched.

Officials says stable legislation and investment incentives will continue to support investment, says Azamat Panbayev, Chairman of the Industry committee at the Ministry of Industry and Construction.

“Manufacturing is a strategic priority for the government. It will continue to promote manufacturing and other non-resource sectors of the economy,” said Azamat Panbayev.

One of the country's key investment advantages is the Astana International Financial Centre, which operates under English common law. “Companies benefit from corporate income tax incentives, as well as a range of other tax preferences,” he added.

The state also provides long-term, affordable financing and financial guarantees through national investment holding Baiterek, and supports the promotion of investors’ products both on the domestic market and internationally.

Special Economic Zones

Special Economic Zones (SEZ) are expected to support further investment in higher-value manufacturing, as Kazakhstan competes for hosting production facilities globally.

More than 43% of industrial land within Kazakhstan's Special Economic Zones is occupied by investment projects, with the total number of SEZ projects at 1,159.

The government expects continued investment in infrastructure to increase occupancy across the zones.

“We are currently raising over €1.1 billion from the Islamic Development Bank to provide the infrastructure needed for these zones to operate effectively, so that investors can implement their projects without unnecessary obstacles,” added Panbayev.

Projects benefit from infrastructure support, as well as tax and customs incentives across the country’s 18 Special Economic Zones and 67 industrial sites.

“The government has already invested around €1.1 billion into infrastructure on these sites, which has attracted over €14 billion worth of projects,” said Adilet Bektembayev, Deputy Chairman of QazIndustry, the operator in charge of developing Kazakhstan's manufacturing sector.

Now, new legislation is expected to attract more manufacturers into SEZ.

One of the main changes for investors is the possibility of applying for the sites through a one-stop-shop system.

Applications and supporting documents will be submitted electronically, and the system will automatically distribute them to the relevant government authorities through a central coordination platform.

Now, the government is mulling involving professional developers and international operators, “which would replace the current state-led management model in place currently,” raising the competitiveness of the sites, said Bektembayev.

Manufacturing sectors with strongest potential

Qazindustry identifies three manufacturing sectors expected to attract the most investment over the coming years.

The first is machinery manufacturing. Kazakhstan has already localised the assembly of major automotive brands, including Korean and Chinese manufacturers. “In railway engineering, global American, French, and Swiss companies have already established a strong presence in Kazakhstan,” said Bektembayev.

The second priority is the chemical industry. A major polypropylene production project has already been completed, while a hydrogen peroxide production facility is currently under development.

The third priority is light industry. A Chinese investor is currently implementing a textile manufacturing project in Kazakhstan.

With manufacturing now outperforming mining for a second consecutive year, Kazakhstan sees investment in higher-value production as key to reshaping its economy. Officials say continued investment in industrial projects, special economic zones and export-oriented manufacturing will determine whether that transition gathers further momentum.