Page 72 - Bloomberg Businessweek - November 19, 2018

ADVERTISEMENT ADVERTISEMENT
Foreign Affairs, that number is expected
to double to 400,000 in 2018, and
reach 1.5 million containers by 2020.
Although shipping by rail is more costly
than shipping via sea, these new rail RUSSIA
links enable freight to travel from China
through Kazakhstan to Europe in just POLAND BELARUS
15 days, and on to London in 18 GERMANY ASTANA
days— considerably faster than the KAZAKHSTAN
30–45 days it takes by sea. BULGARIA
GEORGIA KHORGOS
Meanwhile, Air Astana, Kazakhstan’s
TURKEY AZERBAIJAN CHINA
CHINA
fl agship airline and the fastest-growing C CHINAHINA
carrier in Central Asia, continues
to expand domestic, regional and
international service from Astana and
Almaty, Kazakhstan’s largest city, and
recently received delivery of its fi rst
Airbus A320neo and A321neo aircraft; K
Kazakhstan is the Buckle of azakhstan is the Buckle of
the airline expects to purchase 15 new the Belt and Road Initiative
Airbus as well as fi ve new Embraer
Astana: a futuristic capital city built
for the 21st Century E190-E2 jets over the next few years.
The airline serves many major cities, Best of the Frontier Markets part of any savvy investor’s portfolio.”
including London, Frankfurt, Moscow,
Abu Dhabi, Bangkok, Hong Kong During his annual state-of-the-nation It’s worth remembering how countries
Beijing and Seoul. address on Oct. 5, Kazakh President like China, India and Russia were
once considered exotic investment
Nursultan Nazarbayev said: “Over
WHY INVEST IN KAZAKHSTAN? Increased transport connectivity has the past 20 years, the country has destinations, and not so long ago.
been a boost for domestic and foreign-
owned export enterprises alike. Europe raised $300 billion of foreign direct Kazakhstan is well positioned to lead
the new wave of frontier markets and
investment. We see the development
based Siemens Alstom, which has
New Silk Road connectivity, tax incentives and comprehensive structural and regulatory reform make operated in Kazakhstan since 2010, of small and medium-sized enterprises increasingly be a focus of attention in
the years to come.
Kazakhstan an attractive Central Asian powerhouse, report Arif Durrani and Gabe Kirchheimer. has been a notable direct benefi ciary serving as the foundation for our
economic prosperity.”
as the main shareholder in Astana’s
Electric Locomotives Assembly Factory Kazakhstan now ranks 28th among Kazakhstan 2017 Exports
Over the last few years, Kazakhstan has Since Kazakhstan joined the World State-of-the-Art Connectivity 190 countries in the World Bank Doing
made signifi cant strides to attract more Trade Organization (WTO) in 2015, (EKZ), under contract to provide 295 Italy ($8.67B)
Kazakhstan has invested $30 billion electric engines for the new rail lines. Business Index.
international business and investment, sweeping trade, tariff and FDI over the last 10 years in its transport China ($5.78B)
overhauling virtually every facet of doing regulatory reforms have signifi cantly and logistics infrastructure, according to The government is focusing on Netherlands ($4.75B)
business in the country in an attempt to increased GDP and improved the government fi gures, and plans to spend supporting exporters as a central tenet Russia ($4.52B)
facilitate and increase FDI. The nation’s nation’s score on the OECD’s FDI AIFC Brings New Law of its economic development. President
an additional $8.4 billion to revive the Nazarbayev has pledged $1.3 billion to Switzerland ($3.1B)
strategic location as the main land Restrictiveness Index. and Order
ancient Silk Road route. support the manufacturing industry and France (2.86B)
corridor linking China with Russia and “Over the past few years, Kazakhstan The Astana International Financial
Europe, via newly expanded rail and has made signifi cant progress in The 2,700 km Kazakh portion of Centre (AIFC) opened in July 2018 non-commodity exports over the next Spain ($1.44B)
highway networks, makes Kazakhstan improving its investment regime and the new 7,000 km Western Europe– with the ambition to become the three years. Uzbekistan ($1.25B)
the so-called “Buckle” in China’s new business environment,” notes OECD. Western China Highway has been leading fi nancial center in Central Kazakhstan’s dynamic corporate bond Turkey ($1.15B)
Belt and Road Initiative (BRI). It’s a view shared by the U.S. State built, and expanding northern and Asia. It forms a major market continues to boost domestic Ukraine ($1.14B)
southern rail routes have already
Kazakhstan’s regional and global trade Department’s 2018 Investment Climate dramatically increased shipping volume part of Kazakhstan’s plans to fi rms, and a strong push toward South Korea ($1.13B)
potential have been vastly improved. Statement, which called Kazakhstan the and capacity. The southern rail route attract fi nancial resources diversifi cation of the economy has + Other markets
A country built on oil revenues is now “best investment climate in the region,” to domestic enterprises and opened up opportunities for investment * Kazakhstan exported $48.34 billion
goes across Kazakhstan to Aktau, on in many rapidly growing enterprises,
diversifying into agriculture, technology, and highlighted its “signifi cant progress” the Caspian Sea, then across the water infrastructure projects. worth of goods in 2017
fi nancial services and beyond. toward creating a market economy. including digital sectors like blockchain. Source: U.N. COMTRADE database
and into Georgia, Turkey and the EU One major AIFC initiative is the Marko Dimitrijevic, an expert on
Improving Investment Climate Today, 9,000 foreign companies are through Bulgaria. The northern route establishment of the AIFC Court, an emerging markets, and author of
reported to be operating in Kazakhstan. goes from southwest China through independent commercial dispute
Kazakhstan leads Central Asia in resolution court for companies Frontier Investor: How to Prosper in Brought to you by
economic growth and FDI, and Corporation tax stands at 20 percent, Kazakhstan en route to Russia, Belarus, registered with the AIFC. The court the New Emerging Markets, says the Astana
generates roughly 60 percent of the the value-added tax (VAT) has been Poland and Germany, ending in potential for high returns exist because AIF International
region’s GDP. After modest growth reduced to 12 percent and a fl at 11 Duisberg, the largest dry port in Europe. is based on the rules of English the growth potential is so huge. Noting Financial
Centre
common law, and is staffed by
of 1.2 percent between 2013–15 percent social tax is applied to employers This game-changing rail network saw experienced judges from the U.K., that the so-called frontier markets,
(following contractions in neighboring based on employees’ earnings. Personal 200,000 containers shipped from to create a familiar environment of like Kazakhstan, account for 71 of the
Russia and China) Kazakhstan’s income tax rate stands at 10 percent for China to Europe, via Kazakhstan, last trust and transparency. world’s 75 fastest growing economies, For more information,
economy rebounded to achieve a nationals and between 5 percent and year. According to Roman Vassilenko, he adds: “I truly believe that these visit: https://aifc.kz
3.9 percent lift in 2017. 20 percent for non-nationals. Kazakhstan’s Deputy Minister of overlooked frontier markets should be