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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 29,749 24,205 22,400 60
GNI per capita
 US $ 1,780 1,510 1,350 119
Ranking is given out of 208 nations - (data from the World Bank)

Books on Kazakstan


Area ( 


ethnic groups 
Kazaks 44.3%
Russians 35.8%
Ukrainians 5.1%
Germans 3.6%
and many others

(formerly Akmola)


Nursultan Nazarbayev


Update No: 290 - (25/02/05)

Dictatorial ways prevail
The regime in Kazakstan is dictatorial; there is no doubt about that. It rigs elections, as last October to parliament; and, unlike its Georgian and Ukrainian counterparts, it gets away with it. 
Latterday evidence for this is not lacking. Police in Kazakhstan arrested seven opposition activists at a protest on January 29th against the recent banning of the former Soviet republic's main opposition party, party officials said.
The seven were among around 2,000 people who converged on the former capital Almaty to demand political change in this oil-rich country led by President Nursultan Nazarbayev and the restoration of the Democratic Choice movement's party status, a Democratic Choice spokeswoman said. "They came from all over Kazakhstan to hold a rally ... but the police prevented it," the spokeswoman told AFP.
At an overnight court hearing five of the seven were handed jail terms of between two and seven days and the other two were fined and released, Democratic Choice said in a press release.

Economy booms
The reason that the regime gets away with it is that the economy is booming like none other in the FSU. This does not mean that everyone is benefiting - far from it. But it does mean that anyone with initiative and a gung-ho spirit has a good chance of doing well. Similarly, whilst ultimately this is a Police State, the brutal excesses of neighbouring Uzbekistan do not appear to be replicated here. They are not therefore at this time going to contemplate revolution as the solution, unlike in Georgia and Ukraine.
In 2004 in Kazakhstan a tentative estimation showed economic growth at 9%, a modest reduction from the 10% average growth rates of yore. Industrial output increased by 10.2%. The international reserves of the country increased in general by 66.3% and amounted to US$14.3Bn. 
The problem is that this is all due to just one factor - high global prices for the country's main export - oil.
Nazarbayev is well aware that the main problem is to diversify the economy. He has ordered the government to finalize the shadow economy legalization programme in the first quarter of 2005. 
"The programme for legalizing the shadow sector has not been worked out yet. Despite the difficulty of the problem, there are no grounds for delay," Akayev said at an extended cabinet meeting in Astana, the new capital.

The magnet in Eurasia for FDI
There is no doubt of the possibilities for adventurous businessmen opening up in Kazakstan. Foreign Direct Investment (FDI) is simply inundating the place, vast as it is.
Kazakstan's government on January 7th said that its economy received foreign direct investments of US$3.9bn during the first 9 months of 2004, up by 17.6% compared to the same period in 2003. This is of all Commonwealth of Independent States countries - the second highest capital inflow in volume after Russia and the highest inflow by capita. The information was released in the latest report of the National Bank of Kazakstan.
The United States is still the largest foreign investor in Kazakstan, with foreign direct investments of nearly €1.2bn during the first three quarter of 2004, up 45% over same-period 2003 (€1.09bn). Second is the Netherlands, with investments of €571m over the same period, up by 34.7% over 2003. Britain came third with €529m, up 23.7% over 2003.
The natural-resources sector remains the most attractive sector for foreign investment, but during the first 9 months of 2004, foreign investments in the consumer goods industry grew by 50.7% to €164.4m.
However, even if the oil and gas industry will remain the most attractive sector in which to invest for years to come, other sectors are emerging. During the first 9 months of 2004, foreign investments in the consumer goods industry grew by 50.7%, reaching US$164.4m, whereas investments in transport and communications related industries rose by 6.6% over the same period to US$65.9m.
Growth in non-oil sector is at least partially due to the government's economic development programme "Strategy of Industrial and Innovation Development for 2003-2015," which aims to diversify the country's economy in order to reduce its dependence on oil. 
"Kazakstan will take further measures to improve the investment climate," announced Kazak President Nursultan Nazarbayev at the annual meeting of Foreign Investors Council last December in Astana. "The republic devotes much attention to the enhancement of the legislation to protect investors' rights," he said. There can be no question that he is correctly addressing the major concerns of foreign investors who have grave doubts about this very issue in neighbouring Russia

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Kazakstan grain production drops

The net weight of Kazakstan's grain production amounted to 12.374m tonnes in 2004, down 16.4% from 14.8m tonnes in 2003, a representative of the Kazak Agriculture Ministry told Kazinform on January 6th. 
Last year the former Soviet republic's wheat production reached 9.942m tonnes. The representative pointed to the high quality of the grain gathered last year noting that the released figures were not final. Kazakstan is a major grain producer in Central Asia. Last year its wheat production reached 11.5m tonnes.

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Fitch upgrades Bank Caspian's rating to B

Fitch Ratings, the international rating agency, on January 13th upgraded the Kazakstan-based Bank Caspian's long-term rating to B from B- (B minus), and individual rating to D from D/E, Interfax News Agency reported.
At the same time, the agency has affirmed the bank's other ratings at short-term B. The outlook on the long-term rating remains positive. The upgrade and the positive outlook reflect the stronger performance of Caspian, its sound capitalisation, the improved diversification and maturity profile of funding, as well as the bank's successful business development.
However, the ratings remain constrained by the bank's relatively small, albeit growing, size and market share, high but declining concentration in the loan portfolio, and risks inherent in the bank's very rapid asset growth.
Caspian's performance was good in 2003 and outstanding in first 9 months of 2004 (return on equity of 47.56%) on the back of a growing volume of high yielding retail express loans and tight overhead controls. By end-September 2004 retail lending accounted for around 19% of the loan book and this proportion is set to rise further in 2005. Asset quality has so far been reasonable at about 2% of impaired loans in the loan book at third quarter of 2004. But this needs to be carefully controlled given the bank's very rapid loan growth, the untested nature of the express loan market in Kazakstan and the degree of concentration in lending.
High internal capital generation, capital injections from shareholders and subordinated debt issuance resulted in a sound Basel total capital adequacy ratio of 20% in the third quarter of 2004 (15% including retained profits). In fourth quarter, a further US$17m equity contribution (equal to 30% of end-third quarter equity) was made by the bank's shareholders.
Notwithstanding the bank's strong growth plans, capital ratios should remain sound in 2005 due to current capital levels, forecast profit retention and planned capital-raising activities. The tenor of funding has been lengthening primarily due to issues of long-term domestic bonds and, unlike many other CIS banks, Caspian does not have a high degree of concentration in its customer accounts.
The policy to keep cumulative liquidity gaps positive is prudent, and is supported by Caspian's sizeable portfolio of relatively liquid Kazak government securities. At third quarter of 2004, Caspian had total assets of 65.4bn tenges, making it the 9th largest commercial bank in Kazakstan, with around 3% share of the banking system's assets. It is primarily a corporate bank, with its main clients from the trade, engineering, construction and agricultural sectors. However, in 2003 it also began actively penetrating the retail market, pioneering point-of-sale express lending in Kazakstan.

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AES Kazakstan to invest US$30m

The Kazak branch of US-based AES Corporation plans to invest over US$30m in boosting the capacity of its Ust-Kamenogorsk thermal power plant, Kazinform quoted the corporation's press department as saying recently.
It revealed plans to invest over US$100m in Kazakstan within eight years. The AES Corporation is an international energy company with sales of US$8.4bn for 2003. It supplies energy to 27 countries worldwide, and owns 114 energy-producing units and 17 energy-distribution grids. The corporation entered the Kazak market in 1996.

Kazakstan to purchase half of BG Group stake in oil field

The government of Kazakstan has reached a deal to purchase half of BG Group PLC's 16.67% stake in the mammoth Kashagan oil project in the northern Caspian Sea, a decision that could allow a consortium of oil majors developing the project to slit the other half, the Wall Street Journal Europe reported on January 31st.
Negotiations between the government and the consortium developing the Kashagan field, led by Eni SpA of Italy, had become something of a test case for what type of role the state would play in oil projects in the energy-rich Central Asian country. The Kashagan field, with extractable reserves estimated at 13 billion barrels, is the largest oil find of the past 30 years.
Ever since BG Group, the British natural-gas giant, indicated that it wanted to sell its stake in the project, the issue of who would acquire it became a politically sensitive topic. Other members of the seven-company consortium moved to pre-empt BG Group's attempt to sell its share to two Chinese oil companies, China Petroleum & Chemical Corp and China National Offshore Oil Corp, in March 2003 by offering to buy it themselves.
But that sale was in turn scotched when the Kazak government announced that it wanted a piece of the project as well. The government's move raised concerns among oil majors operating in Kazakstan that the state planned to play a much more aggressive role in developing the country's oil resources.
"Kashagan is the crown jewel and for the country to not be a part of that bothered the government," said Maria Valdez, a lawyer based in Almaty with the firm Denton Wilde Sapte. "I don't believe investors think that this is going to happen in every other project, although the fact that it can happen has people concerned," she said.
The consortium, which also includes Exxon Mobil Corp, Royal Dutch/Shell Group, Total SA and ConocoPhillips, conducted negotiations with the government for months before reaching a deal. Japan's Inpex Corp is also a member of the consortium, but it didn't participate in negotiations to buy some of BG Group's stake.
Recently, Kazakstan's energy minister, Vladimir Shkolnik, told the Parliament that the government had reached agreement with the consortium developing the Kashagan oil field to buy half of BG Group's 16.67% stake in the project. The total value of BG's stake is US$1.23bn (€943.2m), but Mr Shkolnik didn't indicate whether the government would pay exactly half that amount. 
Other companies in the consortium, including Eni, the project's operator, are interested in acquiring the other half of the BG stake. That could alter the balance of ownership of the Kashagan project. Eni, Total, Shell, Exxon Mobil and BG all hold 16.67% shares; ConocoPhillips and Inpex hold 8.33% shares. However, further negotiations are necessary before the parties decide how to apportion the other half of the BG Group stake, said an official at a company in the consortium.

KazMunaiGaz unit to up oil production 4% in 2005

Razvedka Dobycha KazMunaiGaz, the extraction subsidiary of Kazakstan's national oil and gas company KazMunaiGaz, has decided to increase oil and gas condensate production by 4.2% to 9.3m tonnes in 2005, New Europe reported recently. 
Razvedka Dobycha KazMunaiGaz was set up March 31st, 2004, during a merger of KazMunaiGaz subsidiaries Embamunaigaz and Uzenmunaigaz, and is the legal heir to their property, rights and obligations. A company statement said Razvedka Dobycha KazMunaiGaz extracted 8.918m tonnes of oil and condensate in 2003 and 7.914m tonnes in 2002. The latest numbers show 59.166m tonnes of oil and gas condensate being produced in Kazakstan last year, which was 15.4% more than the year before. That included 5.423m tonnes of gas condensate, 91.2% of the amount produced in 2003. Kazakstan increased natural gas production 53% against 2003 to 11.591bn cubic metres in 2004, the country's state statistics agency said on January 14th.

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Astana and Tbilisi to examine transit agreement

Georgian president, Mikhail Saakashvili, is expected to visit Kazakstan within the first half of 2005, said charge d'affaires of Kazakstan to Georgia, Nauryz Aidarov, during a meeting held in Manhistau oblast for transportation of export and transit cargos in the direction of Caucasus, Kazinform reported recently.
The representatives of the largest shippers and railway administration of Azerbaijan, Georgia, Kazakstan, Aktau, Baku, Poti ports, biggest transport and shipping companies and also the ministry for transport and communications of Kazakstan attended the work meeting held in Aktau seaport.
Georgian Deputy Foreign Minister of Georgia, Mikhail Ukhleba, said that soon memorandums would be signed on cooperation between Batumi, Poti and Aktau. Increase in cargo turnover between the European and Asian countries led to thinking on creation of the alternative routes so competitive as to force the freight forwarders to reduce the tariffs.
More than 9.5m tonnes of different cargo passed via Aktau port in 2004.

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DEG, KfW to offer €37m to Kazkommertsbank

German investment and development organisation Deutsche Investitions-und Entwicklungsgesellschaft (DEG) and German bank Kreditanstalt fur Wiederaufbau, (KfW) will offer a loan of €37m to Kazakstan's Kazkommertsbank, Interfax News Agency reported recently. 
"To a large degree, Kazkommertsbank plans to put this money into a mortgage crediting programme, and to a lesser degree into financing small and midsized businesses," the Kazak bank's Managing Director Andrei Timchenko told Interfax in Almaty on January 17th, after the deal signing ceremony. The credit will be for 9 years with a 3-year grace period for the repayment of principle debt at a 6-month Libor plus 3.5% per year. Timchenko added that the loan terms are fairly advantageous.

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Iran calls for close partnership with Kazakstan

Sabit Tairov, Kazakstan's ambassador to Iran, met with the speaker of the Iranian Medijlis, Golam Ali Khodad-Adel, Kazinform reported recently.
During the meeting the Iranian Speaker underlined Kazakstan's dynamic development among other Commonwealth of Independent States (CIS) and pointed out the republic's recognised leadership in execution of social-economic reformations. Taking into account the favourable geographic situation of Kazakstan and Iran, the Speaker underlined the importance of full cooperation of both states' transit potential. The parties also talked about outlooks for development of bilateral trade-economic cooperation. They particularly touched upon expansion of partnership within SWAP-operations and supplies of Kazakstan's grain to Iran, Afghanistan and Persian Gulf countries, and participation of Iran in the sessions within the Conference on Interaction and Confidence Building Measures in Asia and Congress of World and Traditional Religions.

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Gold, forex reserve grows 67.5% in 2004

Kazakstan's gold and forex reserves, including the National Bank's gross reserves and resources accumulated in the National Fund, increased by 67.5% in 2004, reaching €14.345bn, the National Bank said in a recent statement, Interfax News Agency reported. 
The National Fund's resources, according to preliminary estimates, amounted to €5.065bn at the end of 2004. The country's gold and forex reserves had reached €8.565bn by January 1st, including €3.6bn in National Fund resources. The National Bank's net gold and forex reserve in December 2004 increased by 11.4%, reaching €9,277bn by the end of the year.

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