IDB recommends Malaysian banks to tap into Kazakhstan's economy

Malaysian banks should consider venturing into Kazakhstan's potentially booming oil and gas industry as well as its construction and property market sector. Islamic Development Bank (IDB) regional director (Kazakhstan and five other Central Asian republics), Nik Zainal Abidin Nik Yusuf, said Malaysian banks could cooperate with the Kazakh National Bank to introduce new banking programmes such as lending facilities to assist its yet-to-be developed financial system.
"With our capacity building to develop its expertise, Kazakhstan is one of the best places for Malaysian banks and investors to venture because of its potentially rich oil and gas deposits," he told.

This former Soviet Union republic is reported to have 202 oil and gas fields with an expected recoverable oil reserves estimated at 7.8 bn tons and gas reserves at 7.1 tcm. At present oil is produced at 55 fields. Nik Zainal Abidin, who has been heading the Central Asian region for the past four years, said IDB had spent a total of $ 450 mm for its credit operation, including $ 100 mm for Kazakhstan since it was established here in 1995. So far 40 % of its development programme in Kazakhstan had been earmarked for the construction of roads and infrastructure, including two ongoing road projects linking Almaty to Astana, the capital city in the north, he said.
As part of efforts to assist member countries in the development of their economic and social activities, he said IDB had also assisted in the social sectors such as the upgrading of hospitals with modern health facilities and equipment as well as postal services.

Other facilities included providing clean water supply in rural Kazakhstan. He was confident that, with Malaysian expertise, Bank Negara could come up with proposals for local banks to venture here to promote a modern banking system with an Islamic window. Given the potentially favourable future oil prices, he said Malaysian investors could also consider exploiting the growing construction and property market sector in the country.
"Business is booming everywhere and being the place in Central Asia with easily available halal food makes it easier to invest here," Nik Zainal Abidin said. However, he said it would be pointless if potential Malaysian investors did not have the right contacts to initiate bilateral negotiations. "Come and see how things are done here, talk with other businessmen and investors in the region," he advised. He said Almaty was now Central Asia's most cosmopolitan city due to its increasing exposure to the outside world.

Meanwhile Malaysian ambassador to Kazakhstan, Tan Seng Sung said Malaysian entrepreneurs had shied away from investing in the country because of problems in finding suitable partners for joint ventures. He said Malaysians must ensure that they are dealing with bona fide companies before signing any deals.
Tan said Malaysian investment in Kazakhstan was negligible despite the establishment of bilateral agreements in trade, promotion and protection of investment, economic,scientific and technical cooperation and air services.

Kazakhstan, which recorded a gross domestic product (GDP) of $ 424.3 bn with a GDP growth of 9.5 % last year, registered a total trade of RM 53 mm with Malaysia during the same period. The country's foreign direct investment was worth $ 1.9 bn, including 80 % on the mining sector with Russia.
China, Germany and the United States are also its major trading partners. Its exports to Malaysia, worth RM 42.6 mm, last year were mainly silver and platinum while importing chiefly margarine, shortening, edible oils and furniture from Malaysia totalling RM 10.4 mm.