Kazakhstan Prime Min Sees GDP Growth; Seeking Foreign Investment

Nov 23. Dow Jones

By Riva Froymovich

Kazakhstan Prime Min Sees GDP Growth; Seeking Foreign InvestmentGrowth has turned positive after 11 months of sluggishness, said Kazakhstan Prime Minister Karim Massimov.

He said gross domestic product is seen advancing between 0.3% and 0.5% in 2009, on the back of “improved macroeconomic figures.”

A big portion of this growth can be attributed to stimulus measures by the government, which injected $20 million.

This capital injection also supported the banking sector, as well as small and medium-sized enterprises. But, these are short-term measures, said Massimov, and stimulus measures will stop in 2010 before the government creates a bubble.

Yet Massimov said the government will create a new program to protect small and medium businesses to make it “commercially viable” to invest in Kazakhstan.

Massimov went on to discuss the importance of China to Kazakhstan, and said he hoped to develop similar foreign direct investment relationships with U.S. investors.

Kazakhstan is building railroads and pipelines that will connect China with western countries, which will be financed by Kazakhstan’s government and banks in China. Massimov also expects investors from Hong Kong to participate.

Massimov was speaking to attendees at the Kazakhstan-U.S. Investment Forum in New York via satellite from Hong Kong.

Kazakhstan will present its industrial project plans in 2010 and hopes for investment from around the world, he said.

Kazakhstan recently decreased its corporate tax to 20% from 30%, said Massimov, but increased its taxes in the oil sector.

The Prime Minister said he does not expect any changes in the tax regime in the “reasonable future.”

He said he expected increased interest in oil-sector investment in Kazakhstan in the years ahead.

Meanwhile, Massimov said Kazakhstan is working with South Korea’s government to build up coal electricity power in Kazakhstan, a project scheduled to begin in middle of 2010.