Kazakhstan attracts foreign direct investment of $ 8.4 bn in 2004

Apr 13, 2005 02:00 AM

Kazakhstan's economy received foreign direct investments (FDI) of $ 8.4 bn in 2004, up by 83 % compared to the previous year. With $ 3.1 bn the US is still by far the biggest investor. While the oil and gas sector still attracts the highest amount of FDI, the government has put in place measures to diversify the country's economy and to boost small and medium businesses.
According to the latest report of the National Bank of Kazakhstan, foreign direct investment in Kazakhstan reached $ 8.423 bn in 2004, a spectacular rise (82.8 %!) compared to the previous year.

The most important foreign investor in the reference period was the United States. In 2004, US investments reached $ 3.1 bn (up by 186 % as compared to 2003). The rise of American investments was most spectacular in the last quarter of 2004 with $ 1.9 bn.
The second biggest investor is The Netherlands, with investments reaching $ 1.8 bn over the same period (up by 195 %). The UK came third with $ 924 mm, a growth of 56 %.

The most attractive sector remains mining and extraction. An overall $ 5.4 bn, 64 % of the reference period's total investments went into this sector. Some $ 5.3 bn of this sum went directly into extraction of crude oil and natural gas (up by 152 % compared to 2003).
However, even if the oil and gas industry remains the most attractive sector in which to invest, other sectors are emerging. In 2004, foreign investments in the consumer goods industry grew by 63 %, reaching $ 268 mm, whereas investments in transport and communications related industries rose by 8 % over the same period to $ 81.9 mm compared to 2003.

There was also a notable increase in education, health and social work. While in 2003 $ 4.2 mm of foreign direct investments went into this sector, it reached $ 90.7 mm in 2004.
Growth in the non-oil sector is mostly due to the government's economic development program "Strategy of Industrial and Innovation Development for 2003-2015", which aims to diversify the country's economy in order to reduce its dependence on oil.

In his annual speech to the nation on February 18th, 2005, Kazakhstan's President Nursultan Nazarbayev emphasised that this program would help "to create and develop at least five or seven clusters in such sectors as tourism, oil and gas machinery building, foodstuffs and textiles manufacturing, transports and logistics, metallurgy and construction materials manufacturing."
He also reminded that the government has allocated approximately $ 192 mm in order to boost the development of small and medium businesses in Kazakhstan.

In 2005 Kazakhstan intends to attract even more investments.
"Kazakhstan will take further measures to improve the investment climate";, President Nazarbayev announced at the annual meeting of Foreign Investors Council last December in Astana. "The Republic devotes much attention to the enhancement of the legislation to protect investors' rights," he further emphasised.

Source: AsiaPulse
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