REMARKS by H.E. Erlan Idrissov Minister of Foreign Affairs of Kazakhstan at the U.S.-Kazakhstan Business Association Round Table
Dec 12. MFA
Ladies and gentlemen,
Thank you for your kind introduction. It is good to be back in Washington – a place for me of many happy memories and where I have a great many friends.
As Ambassador, I saw first-hand how strong the ties are between our two countries. It is a relationship as Foreign Minister I am determined to do all I can to help strengthen.
Our meeting today provides a great opportunity for me to highlight what the Government has been doing to improve our business and investment climate to make it easier for US companies to play their part in our economy.
It is a partnership which started with Chevron in 1993 with the Tengiz oil field. This wasthe first significant international energy investment in the former Soviet Union.
Oil & gas investments have encouraged other overseas investors to come to Kazakhstan and engage in new sectors. Today our country enjoys partnerships with many transnational corporations, including GE, Microsoft, Honeywell and a wide range of major American companies.
In all, more than 15,000 companies with foreign capital are registered in Kazakhstan. Among them are 270 companies listed in the Fortune 500. Many operate as joint ventures. Others through their subsidiaries or representative offices.
Kazakhstan has worked to put in place all the necessary conditionsto encourage joint partnerships. We have a liberal market economy, favorable tax and customs regimes, one of the best investment incentives in the region and improving legislation aimed at providing protection of investors’ rights.
As a result, the volume of American foreign direct investment in Kazakhstan in the first half of 2014 was $2.3 billion, almost twice the level of the same period in 2013. Most American FDI goes to the mining industry, real estate and business services, financial sector and processing industry.
Investment partnerships, of course, stimulate mutual trade turnover. During the second quarter of 2014 we saw 21% increase in trade between our countries.
At a policy level, we continue to create and strengthen theframeworks for discussions in the form ofjoint commissions and working groups. As of today, we have fully operating the Kazakh-American Commission on Strategic Partnership, the Energy Partnership, as well as Joint Commission on Science & Technology we launched last year.
We are also in the process of establishing the Working Group on Investments and Trade which, with Kazakhstan’s accession to WTO, will improve dialogue on a wide range of economic and investment policy issues.
To ensure we are listening to the concerns of the foreign investor community, we have created an Institute of Investment Ombudsman. The meetings of the Ombudsman are held every quarter, and a special task force led by Minister for Investments and Development Asset Issekeshev was formed to take up its recommendations. Any foreign investor can raise questions or concerns with the Ombudsman.
Another new institution with a special focus on supporting the private sector is the National Chamber of Entrepreneurs. It is a nongovernmental organization representing the interests of the country’s private sector whose powers and functions include such important areas as foreign economic partnerships, education and business initiatives.
To further strengthen our private sector and expand our country’s growing middle class, we are going to privatize over 650 more state owned enterprises in the next three years. The privatization programme is our largest since the 1990s and is expected to bolster domestic and foreign investments. We welcome all American investors interested in becoming new shareholders of Kazakh companies.
Kazakhstan, as part of the global economy and also because of our location in Central Asia, is not immune, of course, to geopolitical and economic challenges. In response to the impact of these forces and tensions on our economy, our President has recently announced a new economic program called “Nurly Zhol” to provide a stimulus through large infrastructure projects. The country’s National Fund and major international financial institutions will devote 24 billion US dollars for the construction of transport and logistics infrastructure, the modernization of housing and utilities, and the improvement of energy capacities.
We believe all these initiatives provide tremendous opportunities for American companies to start or expand their business across Kazakhstan. The country also possesses another exciting asset for investors – our human capital. We have a young, dynamic and educated population. We have made huge investments in two flagship projects – Nazarbayev University and the Bolashak scholarship program where hundreds of our brightest students are sent to study at the top universities overseas, including of course, here in America. We are also investing heavily in our high schools, community colleges and universities, converting our oil&gas assets into “brain power”.
We have gone further this year in making Kazakhstan attractive to foreign investors and partners. In addition to the existing investment incentives we have introduced a series of 8-10 year exemptions from corporate tax, land tax, and property tax and a reimbursement of investment expenses. We have guaranteed a stable regime of taxation and environmental law, made it easier to bring in expert foreign staff and put in place long term tariff ceilings for the services of natural monopolies. Starting next year, new legislation will make it easier and more attractive to start a business in our special economic zones with favorable tax and customs conditions.
The stimulus package will be also applied to those companies who can come to Kazakhstan with alternative energy and energy efficient technologies. Under our “Kazakhstan 2050” strategy, renewable energy is a top priority for our country’s development.
This helps explain why EXPO 2017, which is taking place in Astana, has the theme of “Future Energy”. We hope it will serve as a catalyst for greater dialogue and collaborative solutions to energy challenges. We look forward to seeing a U.S. national pavilion there and I want to encourage American companies to take part.
We believe all these developments will further enhance Kazakhstan’s regional economic role as a gateway to the Customs Union and Central Asia and through its key position on the Silk Road Initiative which connects Europe to Asia.
We are confident that that the Eurasian Economic Union (EEU) will serve not just the economic interests of Kazakhstan but also of our partners as it provides access to a common market of over 170 million people.
Now ratified by all three countries, the Treaty will come into force on Jan. 1. The EEU will be formed by merging the existing Customs Union and the Common Economic Space, enabling us to simplify the governance process. We hope every company participating today will consider Kazakhstan as a platform for investment projects which would target the markets of the Customs Union and Central Asia.
As for the new Silk Road, it has become a reality. Kazakhstan is already serving as a link between China and the European Union through the international mega project the “Western Europe-Western China” highway. We expect the volume of cargo passing through Kazakhstan to double by 2020 and reach 50 million tons per year.
We remain a keen supporter of regional economic integration and see a network of economic and transit connections running from China throughout Central-South Asia to Europe with Kazakhstan at its heart. Kazakhstan has a potential to provide uninterrupted transport not just east and west but also north and south.
Finally, of course, nothing better demonstrates our determination to continue strengthening and diversifying our economy than the fact that our talks about WTO membership have now reached the final stage. We hope to become a WTO member in the near future.
Ladies and gentlemen,
I would like to say that while our position in Central Asia brings challenges, these are dwarfed by the opportunities. There is huge untapped potential in our region. Our countries and companies have now enjoyed successful partnerships for over two decades. We want to invite you to work with us on national and regional projects and can promise a warm welcome.
I am looking forward to hearing your plans of how you might begin or expand your business in the region. I hope our discussion today will help increase understanding of how the Government and the country’s private sector could partner with you for the benefit of both sides. We in turn, would welcome any new ideas you may have.
Thank you very much for your attention.
(Washington, DC, December 11, 2014)