Sagia Governor and Kazakhstan Prime Minister Massimov committed to growing the economic relationship
May 23. AME Info
Amr Al-Dabbagh, the Sagia Governor led the largest delegation of Saudi business leaders ever to visit Kazakhstan on Monday with a view toward creating the conditions for enhanced bilateral economic exchange between the two nations.
According to Al-Dabbagh, the Chairman of the Saudi-Kazakhstan Joint Economic Commission, ‘Kazakhstan has been identified as a good strategic partner for Saudi Arabia with respect to a number of industries, including and especially food and livestock given its competitive advantages. It is also the largest country and market among the Central Asian nations, is richly endowed with oil, gas and mineral resources, and is an up-and-coming emerging market which, among other things, just happens to have a rich history and deep roots in Islam.’
The Saudi Governor joined the Kazakhstani Prime Minister Karim Massimov in opening the Saudi-Kazakhstan joint economic Commission meeting on Monday with a speech to the over 300 participants in which he outlined a number of areas that the Kazakhstan government should focus on in order to increase the amount of investment coming from Saudi Arabia. The Governor emphasized the role a competitive investment environment plays in relation to incoming FDI, pointing out that as Saudi’s international rankings improved, a corresponding rise in FDI was seen.
‘Investment is the oxygen of the economy,’ said Al-Dabbagh. ‘And investment goes to where it is most welcome.’
Following his speech the Governor and Prime Minister Massimov detailed the way forward, which included a reiteration of the significant impact a business friendly environment has on attracting FDI. The Prime minister welcomed the Governor’s input and expressed his commitment to ensuring that his government would respond proactively to meet the needs of Saudi and other foreign investors. Al-Dabbagh returned the commitment to working with Kazakhstan to enhance its competitiveness, given the success Sagia has had leading the Kingdom’s national competitiveness agenda. KSA is now ranked 16th globally by the doing business report of the World Bank, whereas Kazakhstan is ranked 70th, which is a jump of ten points from 2008 but does not reflect the country’s great potential. Some of Saudi’s top business leaders who were with the Sagia Governor confirmed their commitments to either increasing their investments, or for new investors, making their first investment, in both cases given that certain global best business practices were put in place.
It is also expected that Saudi investors will start considering Kazakhstan more seriously after the signing of the Avoidance of Dual Taxation Treaty and after negotiations for the Bilateral Investment Treaty have reached the final stages.
As the largest of the Central Asian nations, Kazakhstan is 5 times larger than France, and is the 9th largest country in the world, 5 countries ahead of KSA in terms of area.
The economy is larger than those of all the other Central Asian states combined, due largely to its vast natural resources and a recent history of political stability.
The government is currently focusing on expanding the development of the country’s vast energy resources and exporting them to world markets, diversifying the economy outside the oil, gas, and mining sectors, achieving sustainable economic growth, strengthening relations with neighboring states and other foreign powers, and – well aligned with Sagia’s forte – enhancing its national competitiveness.
In 2008 the Kazakhstan GDP was estimated at $177bn, with a real GDP growth rate of 3% reflecting a drop from 2006’s 10.5% and 2008’s 8.5%, signs it is being affected by the global crisis. GDP Per Capita in 2008 was approximately $11,500.
Kazakhstan’s major trading partners are Russia, China, Germany, Italy, and France, and according to Al-Dabbagh:
‘Given our respective value propositions with regard to our respective core competencies, the bilateral investment flow between our nations is inexcusably insignificant. From the Kazakhstan side we would like to see increased investment entering our stable and prosperous market where financing is easily available and opportunities numerous, and from our side we would like to see Kazakhstani companies get a fair share of the Saudi capital outflow. We believe the right incentives need to be put in place, which we have done in Saudi by focusing on enhancing the competitiveness of our business environment according to international ranking criteria, before the economic flow between our nations matches the level justified by our synergies.’