Kazakhstan business landscape faces a new frontier

BUSINESS INSIGHT

More than two decades natural resources in Kazakhstan were a major driver for foreign investments and business opportunities. Everything was around natural resources. For the last five years prices on metals fall down and make mining less attractive for investments. Last year oil prices also fall down due technologic revolution in shale oil and gas extraction. Subsoil Use Act 2010 also made investments in natural resources less attractive due to heavy and excessive regulations and unfriendly administration of contacts both in mining and in oil & gas. Without doubt, natural resources play and will play a key role in Kazakhstan revenues, but now the business landscape extends to new frontier.

We observe that many market players focus on production in Kazakhstan. Many companies are considering opportunities to build plants and factories. This new trend is twofold. One focuses on big industry market like steel tube production for oil & gas. Another focuses on retail and consumer market like cars, trucks, construction materials and pharmaceutics. Almost each month Kazakhstan has a new factory or a plant, or a replacement of old equipment with a brand new. Last week Tikkurila put into operation its brand new paint factory in Almaty to get competitive advantage due to local content requirements. This trend shows that many players focus on their long-term plans for Kazakhstan and Central Asia, while their business outlook is still modest.