The U.S. Department of State Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world.  They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

These statements highlight persistent barriers to further U.S. investment. Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy.

Executive Summary

Kazakhstan has made significant progress towards creating a market economy since gaining its independence from the Soviet Union in 1991. It has attracted significant foreign investment to develop its abundant mineral, petroleum, and natural gas resources. As of October 2021, the stock of foreign direct investment (FDI) totaled $170 billion, including $40.4 billion from the U.S., according to official central bank statistics. Publicly available information indicates that U.S. investments in the hydrocarbons sector alone far exceed this official statistic.

While Kazakhstan’s vast hydrocarbon and mineral reserves remain the backbone of the economy, the government continues to make incremental progress toward diversification into other sectors.  The COVID-19 pandemic gave impetus to efforts by the Government of Kazakhstan (GOK) to remove bureaucratic barriers to trade and investment.  The GOK maintains an active dialogue with foreign investors through the President’s Foreign Investors Council and the Prime Minister’s Council for Improvement of the Investment Climate.  Kazakhstan is a member of the World Trade Organization (WTO) and the Eurasian Economic Union (EAEU).

Widespread civil unrest in January raised concerns about the country’s political and economic stability. President Tokayev has since assured foreign investors that the GOK will ensure a stable investment climate and meet its commitments to investors. He also pledged to reduce the outsized role of monopolies and oligopolies in the economy. President Tokayev announced political and economic reforms in March that may bring positive changes to the country’s investment climate by increasing privatization and combatting corruption.

Given Kazakhstan’s long border and extensive economic ties with Russia, Russian aggression against Ukraine and ensuing sanctions against Russia affect Kazakhstan’s investment climate. Some investors will likely be deterred from investing in Kazakhstan, while others may find Kazakhstan an attractive alternative to doing business in Russia. The GOK has expressed a commitment to complying with the western sanctions against Russia and has invited western investors to relocate from Russia to Kazakhstan.

Despite President Tokayev’s assurances, concerns remain that some of the underlying economic causes of the January unrest remain unaddressed and sanctions on Russia may exacerbate existing structural weaknesses to cause high inflation, currency devaluation, and logistical impediments to imports and exports. Despite institutional and legal reforms, corruption, excessive bureaucracy, arbitrary law enforcement, and limited access to a skilled workforce in certain regions continue to present challenges.  The government’s tendency to increase its regulatory role in relations with investors, to favor an import-substitution policy, to limit the use of foreign labor, and to intervene in companies’ operations continues to concern foreign investors.  Foreign firms cite the need for better rule of law, deeper investment in human capital, improved transport and logistics infrastructure, a more open and flexible trade policy, a more favorable work-permit regime, and a more customer-friendly and consistent tax administration.

To access the ICS, visit the U.S. Department of State Investment Climate Statement website.