(Last updated: 2 May 2012)

Current business situation

The Department of Foreign Affairs and Trade (DFAT) provides advice for business travellers and tourists going to Kazakhstan. This is regularly updated, and should be checked before planning travel.

Country facts

(Source: Department of Foreign Affairs and Trade - Country brief)

Economic climate

Kazakhstan has been one of the most decisive reformers in the CIS, having made major strides in privatisation, price liberalisation and reform of the civil service, finance and banking system, tax administration, pensions and communal services. Kazakhstan has strived to develop market-oriented legislation and has attracted over US$100 billion in accumulated FDI, although this is primarily in the oil and gas sector.

The Kazakh economy enjoyed a sustained period of strong growth from 2000 to 2007, expanding at an average annual rate of 10 per cent. The economy is heavily dependent on the extractive sector, but strong growth has also been seen in construction, transport, retail and the financial sector – although much of this can be traced to spill-over from the oil economy.

In 2007-2008, Kazakhstan’s growth dynamic was hampered by the global financial crisis. High external debt among the country’s commercial banks (as a result of aggressive foreign borrowing), a sharp fall of world crude prices and closure of international financial markets led to a noticeable slowdown in economic activity in 2008-2009 (to 3.3 and 1.2 per cent growth respectively). The government’s US$20 billion stabilisation program and the improved commodity outlook have helped recover growth.

Energy is the leading economic sector in Kazakhstan. Production of crude oil and natural gas condensate from the country’s oil and gas basins amounted to 79.5 million tonnes in 2010, representing a four per cent rise from 2009 production.

According to British Petroleum, Kazakhstan holds about 6.5 billion tonnes of proven oil reserves and 1.8 tcm (63.5 tcf) of natural gas. It is expected that the development of new fields (notably, the Kashagan oil field) will enable the country to produce as much as three million barrels per day by 2015, placing Kazakhstan among the top 10 oil-producing nations in the world.

Like Australia, Kazakhstan is blessed with rich natural resources, including minerals and vast agricultural land. The country has 24 million hectares of arable land (located mainly on the steppe). Wheat is Kazakhstan’s main agricultural product and the country also has the potential to be competitive in livestock breeding for meat and dairy. Australia and Kazakhstan thus have strong complementarities and there are significant opportunities to build durable commercial and investment linkages.

For the latest key economic indicators and statistics, please see the Department of Foreign Affairs and Trade - Country economic fact sheet.

Political climate

Kazakhstan is a constitutional republic which, as observers note, has increasingly acquired the style and structures of an executive presidency. The President is the head of state. He is also the commander-in-chief of the armed forces and may veto legislation that has been passed by the Parliament.

The President was initially elected in 1991 to a five-year term which was extended by referendum in April 1995 to the year 2000. Following constitutional changes, President Nazarbayev was re-elected for a seven-year term, polling nearly 82 per cent of the votes cast. In April 2011 Kazakhstan held presidential elections where the incumbent President was re-elected again, having been granted a right to exert life-long powers and run for the presidency in excess of two constitutional terms.

Kazakhstan consists of 14 administrative regions (provinces) and two self-governing cities, Almaty (the former capital) and Astana (capital of the country). The constitution was adopted in August 1995 by popular referendum. The Prime Minister chairs the Cabinet of Ministers and serves as Kazakhstan's head of government. Kazakhstan has a bicameral Parliament composed of the lower house (Majilis) and upper house (Senate). Single mandate districts popularly elect 67 seats in the Majilis; there also are 10 members elected by party-list vote, rather than by single mandate districts. The Senate has 39 members. Two senators are selected by each of the elected assemblies. The president appoints the remaining seven senators.

Despite the country’s stable political situation and economic success, social unrest cannot be ruled out completely due to large income imbalances and low quality services in education, health and infrastructure for the general population.

Trade relations and statistics

According to the Kazakh-US Investment Forum, the development of the country’s energy sector has created opportunities for a wide range of foreign investors, partners, suppliers and expertise. Under its long-term development plan, championed by President Nazarbayev, the country is seeking to broaden and diversify its economy through greater foreign direct investment.

In keeping with this policy, the government of Kazakhstan continues to work on building a favourable investing climate, including taking steps to reduce corporate tax burdens and promoting an open economy geared to stimulating entrepreneurial participation. The government is also seeking further privatisation of many state-owned industries.

Since 1993, Kazakhstan has obtained foreign direct investment of approximately US$118 billion. Foreign companies have begun to operate actively. Significant investors include such multinational companies as BAE Systems, Chevron, Coca-Cola, Danone, Eni, General Electric, Henkel, LG Electronics, Microsoft, Shell, Siemens and Toshiba.

Kazakhstan has become a relatively open economy. According to Kazakh Statistics, in 2010 foreign trade stood at 90 per cent of GDP, with a favourable balance of trade. Kazakhstan’s foreign trade increased by 24 per cent in 2010 to reach US$88.9 billion, with exports rising 37 per cent to recoup the year-earlier contraction of 35 per cent.

One of Kazakhstan’s key challenges is to diversify its exports away from raw materials and increase the country’s non-oil competitiveness. Much of Kazakhstan's exports are raw materials (oil & gas, copper, ferrous metals and grains) and intermediate goods. Finished goods are mostly imported.

Most exports go to Russia and the Commonwealth of Independent States, the European Union and China. The largest sources of imports tend to be Germany, China, the United States and the European Union, with machinery and equipment representing a significant portion of imports.

Kazakhstan is a member of the Customs Union with Russia and Belarus. The country is also seeking WTO membership with negotiations at an advanced stage.

Kazakhstan is Australia's leading trading partner in Central Asia, however, the level of two-way trade remains modest. Australia's direct exports to Kazakhstan, worth $12.8 million, consisted principally of vehicles. Imports from Kazakhstan, worth $10.9 million, consisted mostly of pig iron. Some trade is handled through intermediate markets such as Russia, China and the Netherlands.

Several Australian companies are active in Kazakhstan, including Aker Solutions, Central Asia Resources, Jupiter Energy, Leighton Holdings, Orica, Rio Tinto, Snowy Mountains Engineering Corporation (SMEC) and WorleyParsons. In addition Macquarie Group is investing in Kazakhstan through its $530 million Macquarie Renaissance Infrastructure Fund (MRIF).

Please see the Department of Foreign Affairs and Trade - Country economic fact sheet for key trade statistics.