Since the presidency of Nursultan Nazarbayev, official propaganda has maintained that Kazakhstan is Central Asia’s leader in terms of economic development, social sphere, and attraction of foreign investment. But it looks like it is no longer the case, Amirzhan Kosanov, a member of the Public Chamber of the Mazhilis (the lower house of Kazakhstan’s parliament), wrote in an article published by Novaya Gazeta Kazakhstan.
According to a report from the United Nations Conference on Trade and Development (UNCTAD), foreign direct investment (FDI) in Central Asian countries has decreased, mainly due to Kazakhstan, where the net FDI inflow for the first 9 months of 2024 was practically zero. At the same time, neighboring Uzbekistan showed positive dynamics: in the first nine months of 2024, the volume of FDI in this country increased by 7 percent and amounted to $1.9 billion.
Kosanov notes that despite its rich natural resources, Kazakhstan lags behind its neighbor in attracting investment, and adds: What kind of leadership in the Central Asian region can we talk about now?
According to Kosanov, much of what prevented investment from coming to Old Kazakhstan has successfully migrated to New Kazakhstan.
The first is corruption.
The second is the inter-clan struggle for resources and assets, which has intensified during the post-Nazarbayev period. Today, Nazarbayev’s greedy entourage which has privatized the entire country is being replaced by President Tokayev’s favorites.
The third is the uncertainty of the country’s economic policy. It seems that the government is stuck in between the need for urgent shock measures and socio-economic populism. Seeing this indecision, investors might rightfully think: “Is it worth investing money in such an unpredictable country?”
Kosanov also believes that one of the reasons for the decline in Kazakhstan’s investment attractiveness is its political and economic affiliation with Russia. Proximity (not only geographical) to a country that unleashed a war against a neighboring nation and faced international sanctions has done a disservice for Kazakhstan by scaring off potential investors.
The Kazakh government, through the national company Kazakh Invest, explained the decrease in net FDI inflow by “a number of objective economic factors, such as global volatility in commodity markets and investors’ decisions to pay dividends,” not by shortcomings in Kazakhstan’s investment policy. “The decrease in the net FDI inflow recorded in 2024 should be considered a temporary phenomenon caused by objective economic and cyclical factors,” stated Kazakh Invest, adding that the decline in gross FDI inflow was also due to the completion of the $46 billion Tengiz oil and gas field expansion project in the Atyrau region. Despite numerous statements by the authorities about economic diversification, the oil industry remains decisive in Kazakhstan, says Kosanov.
He also commented on the issue of Central Asian regional integration and the ongoing construction of a railway from China to Kyrgyzstan and Uzbekistan, bypassing Kazakhstan. This railway will connect China with Europe and the Persian Gulf countries. In geopolitical terms, the future railway will reduce its participant countries’ dependence on Russia and Kazakhstan.
On March 31, the presidents of Kyrgyzstan, Tajikistan, and Uzbekistan will hold their first-ever trilateral summit in Khujand (Tajikistan). Officials say the meeting will center on the final demarcation of the border between Kyrgyzstan and Tajikistan. Kosanov asks what does Uzbekistan have to do with it? If it is going to be there, why wasn’t Kazakhstan invited?
It is time for Astana to think about the reasons why its regional neighbors have begun to avoid Kazakhstan, Kosanov concludes.
