Bureau of Economic and Business Affairs
July 5, 2016

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Executive SummaryShare    

Kazakhstan has made significant progress toward creating a market economy since it gained independence in 1991 and has achieved considerable results in its efforts to attract foreign investment. As of December 31, 2015, total foreign investment in Kazakhstan reached $198.5 billion. Of that total, net Foreign Direct Investment (FDI) constituted $125.1 billion, with portfolio and other investments comprising the remaining $73.3 billion. The majority of foreign investment is in the oil and gas sector and the United States is one of the leading sources of investment capital with around $23.2 billion invested in Kazakhstan as of September 30, 2015.

  • The country’s vast hydrocarbon and mineral reserves continue to form the backbone of the economy, and foreign investment continues to flow into these extractive sectors. However, the government is making incremental progress toward its goal of diversifying the country’s economy by improving the investment climate. Kazakhstan’s efforts to remove bureaucratic barriers has resulted in the improvement of its ranking on the annual World Bank “Doing Business” report from 53 to 41 out of 189 in 2016.
  • The government maintains an active dialogue with international investors. President Nazarbayev chairs the Foreign Investors Council, the Prime Minister has regular meetings with foreign investors in cooperation with the American Chamber of Commerce, and the Investment Ombudsman addresses complaints from foreign investors on a case by case basis. In 2015, Nazarbayev signed into the law a new Entrepreneurial Code and a new Labor Code, both aimed at improving the business environment. The Government established a “single window” for investors - special offices around the country where investors receive a wide range of government services such as business registration and work permits. Kazakhstan joined the WTO at the end of 2015 and started to lift local content requirements that contradict the WTO Agreement on Trade Related Investment Measures (TRIMs).
  • Despite these positive institutional and legislative changes, concerns remain about corruption, bureaucracy, and arbitrary law enforcement, especially at the regional and municipal levels. The government's tendencies to challenge contractual rights, legislate preferences for domestic companies, and attempt to intervene in foreign companies' operations continue to discomfort foreign investors.

Table 1



Index or Rank

Website Address

TI Corruption Perceptions index


123 of 168


World Bank’s Doing Business Report “Ease of Doing Business”


41 of 189


Global Innovation Index


82 of 143


U.S. FDI in partner country ($M USD, stock positions)



BEA/Host government

World Bank GNI per capita





1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Attitude toward Foreign Direct Investment

Kazakhstan has attracted significant foreign investment since independence. As of December 31, 2015, foreign direct investment in Kazakhstan totaled $125.1 billion, primarily in the oil and gas sector. Kazakhstan is widely considered to have the best investment climate in the region, and numerous international firms have established regional headquarters in Kazakhstan.

Kazakhstan’s government has incrementally improved the business climate for foreign investors overall, and national legislation does not discriminate against foreign investors; however, corruption and bureaucracy remain serious obstacles curbing foreign investment.

Other Investment Policy Reviews

Kazakhstan announced in 2011 its desire to join the Organization of Economic Cooperation and Development (OECD). To meet OECD requirements, the government will need to amend its investment legislation. The OECD presented its Investment Policy Review on Kazakhstan in March 2012 (http://www.oecd.org/countries/kazakhstan/kazakhstan-investmentpolicyreview-oecd.htm). In brief, the OECD review recommended corporate governance reforms at state-owned enterprises (SOEs), increased private participation in infrastructure, easier access to agricultural land for foreign investors, and better financing support for small and medium enterprises (SMEs).The OECD started its second Investment Policy Review in September, 2015. The process is ongoing and the final report is expected to be completed by the end of 2016.

Laws/Regulations on Foreign Direct Investment

The following legislation affects foreign investment in Kazakhstan: 1) the 2015 Entrepreneurial Code; 2) the Civil Code; 3) the Tax Code; 4) the 2003 Customs Code and the Customs Code of the Customs Union (in force since July 2010); 5) the Law on Currency Regulation and Currency Control; and 6) the Law on Government Procurement. These laws provide for non-expropriation, currency convertibility, guarantees of legal stability, transparent government procurement, and incentives for priority sectors. Inconsistent implementation of these laws and regulations at all levels of the government, combined with a tendency for courts to favor the government, create significant obstacles to doing business in Kazakhstan.

The new Entrepreneurial Code outlines basic principles for doing business in Kazakhstan and establishes the relationship of entrepreneurs with the government. The Code contains incentives and preferences for government-determined priority sectors, providing customs duty exemptions and in-kind grants detailed in Part 5.2 (Performance Requirements and Investment Incentives). This law also provides for dispute settlement through negotiation, use of Kazakhstan's judicial process, and international arbitration. U.S. investors have expressed concern about the law’s narrow definition of investment disputes and its lack of clear provisions for access to international arbitration.

Tax rates are competitive. The tax code that Kazakhstan adopted in 2009 lowered corporate income and value-added taxes (VAT), replaced royalty payments with a mineral extraction tax, and introduced excess profit and rent taxes on the export of crude oil and natural gas. Accordingly, the corporate income tax rate has dropped from 30% to 20%. The government gradually reduced the VAT from 16% in 2006 to 12% in 2009, but is now considering replacing VAT with a sales tax in the near term. The timing and mechanism for the change to a sales tax has not been specified causing anxiety in foreign companies. Kazakhstan applies a flat 11% social tax to employers based on employees' earnings, and a personal income tax rate of 10%. The tax rate for non-residents varies between 5% and 20% depending on the type of income. Subsoil concerns may be subject to additional taxes, such as signing bonuses, commercial discovery bonuses, and historical cost reimbursements.

It is common for Kazakhstan’s tax authorities to invoke national Tax Code provisions over International Financial Reporting Standards (IFRS). At times this can lead to double taxation, especially when employing IFRS standards for deducting expenses between a company’s home office and its branch office in Kazakhstan (see Section 4 on Dispute Settlement).

In 2001, Kazakhstan adopted transfer pricing legislation which gives tax and customs officials the authority to monitor export-import transactions, and which since 2009 have codified the "arm's length principle" embraced by the OECD. Amendments to the law made in 2010 further clarified the rights and liabilities of government agencies by providing private parties contracting with the government the right to justify applied prices to state agencies and to appeal tax inspection results. According to the law, the Ministry of Finance has the right to monitor companies’ transactions by surveying the prices of transactions and analyzing companies’ reports. Foreign investors have noted the new law is more closely aligned with international standards, but remain concerned that the law will be applied not only to transactions with related parties, but all international transactions.

All laws, decrees of the President and the Government are available in Kazakh and Russian at the website of the Ministry of Justice of the Republic of Kazakhstan: http://adilet.zan.kz/rus

Business Registration

The 2016 World Bank’s Doing Business Report ranked Kazakhstan 21 out of 189 in the category “Starting a Business.” In the last year, Kazakhstan has eliminated registration fees for small and medium-sized firms, shortened registration times, and eliminated the legal requirement to use a company seal. Foreign investors also have access to “single window” service, which simplifies many business procedures, including business registration. Investors may apply for business registration online through the website arranged by the Investment Committee at: http://isc.baseinvest.kz According to the Committee, business registration usually takes three or four days.

The Investment Committee within the Ministry of Investment and Development is in charge of facilitating investment-related issues and developing an attractive investment climate in the country. The Minister of Investment and Development also serves as the Investment Ombudsman.

An enterprise with less than 50 employees is considered "small"; "medium"-sized enterprises employ from 50 to 250 people; and "large" entities are those that have more than 50 people.

Industrial Strategy

The government’s primary industrial development strategies, such as the Concept for Industrial and Innovative Development 2015-2019 and the national program to attract investments, prioritize diversifying Kazakhstan's economy away from its overdependence on extractive industries. The government has announced a set of industries that feature tax waivers and simplified procedures for acquiring visas and work permits. The list of priority sectors includes agriculture, food processing, textiles, oil processing, petrochemical, metallurgy, transport, machinery building, and residential construction. In order to facilitate the work of foreign investors, especially in the industries, the government has approved visa-free travel for citizens of 19 countries, including USA, Germany, Japan, UAE, and France. All information about priority sectors and preferences is available at http://invest.gov.kz or at http://isc.baseinvest.kz. The government maintains a dialogue with foreign investors through the Foreign Investors’ Council under the president, the Council for Improving the Investment Climate chaired by the prime minister, and the recently created Investment Ombudsman. In 2016, the Government will introduce "investment advisors" in Kazakhstan’s embassies abroad and will establish special investment councils in every region of Kazakhstan for more efficient coordination with the Ministry of Investment and Development.

Limits on Foreign Control and Right to Private Ownership and Establishment

Although no sectors of the economy are legally closed to investors, restrictions on foreign ownership exist, such as a 20% ceiling on foreign ownership of media outlets, a 49% limit in domestic and international air transportation services, and a 49% limit in telecommunications that does not apply to mobile operators. The government has indicated that it will remove restrictions in the telecommunications sector upon Kazakhstan’s accession to the World Trade Organization (WTO). There are no limits on the participation of foreign capital in the banking and insurance sectors, but foreign bank and insurance company branches are forbidden to operate in Kazakhstan. The government requires foreign banking and insurance companies to form subsidiaries incorporated in Kazakhstan and also restricts foreign ownership of agricultural land.

Privatization Program

By law, and in practice, foreign investors can participate in privatization projects. The government and parastatal National Welfare Fund “Samruk-Kazyna” (SK) approved a comprehensive plan of privatization for 2016-2020. The priority list for privatization includes 65 subsidiaries of large national companies operating in the energy, mining, transportation, and service sectors. The Government has not yet provided details on how the bidding process will be organized, but has stated that all necessary information will be available at the websites of Kazakhstan’s embassies abroad. SK plans to conduct the "People’s Initial Public Offerings (People's IPO)", which will allow citizens and institutional investors to buy up to 10% of the stock of national companies. Additionally, the Government continues to sell small municipal enterprises through electronic auctions; see: https://e-auction.gosreestr.kz

Screening of FDI

Foreign investors have complained about the irregular application of laws and regulations, and interpret such behavior as efforts to extract bribes. Some investors report harassment by the Financial Police via unannounced audits, inspections, and other methods. At times, the authorities have used criminal charges in civil disputes as a pressure tactic. The protracted period of low oil prices has made the government more responsive to complaints from foreign investors. In one notable instance, when Chinese investors in a high-profile project complained about excessive inspections by the Financial Police and bribe-seeking from government officials, President Nazarbayev “promoted” his son-in-law, whom the investors blamed for the bribe-seeking, from CEO of national gas monopoly KazTransGas to the largely ceremonial and less influential role of Chairman of the Board of Directors. In other instances, oil and gas companies have petitioned for, and received, tax relief for continuing to operate marginal and declining fields.

Many foreign companies say they must vigilantly defend investments from a steady stream of decrees and legislative changes, most of which do not exempt or "grandfather in" existing investments. Foreign investors also complain about arbitrary tax inspections, as well as problems in finalizing contracts, delays and irregular practices in licensing, and land fees. Foreign companies report that the authorities at the local and national level arbitrarily impose environmental fines which are then placed in the general budget, as opposed to directly offsetting any alleged environmental damage. As a result, they argue that environmental fines are assessed to generate additional revenue rather than to punish companies for breaching environmental regulations. In numerous meetings with Washington officials, the government acknowledged its awareness of the skewed system of environmental fines and promised that 80 percent of recommendations made by foreign investors would be introduced into environmental legislation that would meet OECD standards. In March 2016, Kazakhstan’s parliament passed legislation allowing for some relief from these excessive fines, but it will likely be several years before the necessary enabling legislation makes the new law useful to companies.

Competition Law

The Entrepreneurial Code regulates competition-related issues such as cartel agreements and unfair competition. The Committee for regulating natural monopoly and protection of competition under the Ministry of National Economy of the Republic of Kazakhstan is responsible for reviewing transactions for competition related concerns.

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

Kazakhstan introduced a free floating exchange rate and inflation targeting regime on August 20, 2015. Since that time, the tenge has fallen by almost 100% from 188.38/USD on August 20, 2015 to 345.73/USD on March 20, 2016. The National Bank defined the REPO rate as the key basic rate of the monetary policy which is set at 17% for March-April, 2016.

Despite spending hundreds of millions of dollars propping up the national currency from 2014-2016, Kazakhstan has managed to maintain its international reserves at a sufficient level. Kazakhstan's total international reserves, including the NBK's foreign currency and gold reserves, are $91.3 billion (at current prices). The NBK monitors the currency operations of select subsidiaries or joint ventures of foreign corporations, primarily in the oil and gas, construction, and mining industries on the grounds that such practices improve statistical data on balance of payments and external debt.

Kazakhstan is bound by Article 8 of the International Monetary Fund’s Articles of Agreement, adopted in 1996, which forbids the government to restrict currency conversions or the repatriation of investment profits. No distinction is made between residents and non-residents in opening bank accounts, but all account holders must have a Kazakhstani tax identification number. Money transfers associated with foreign investments, whether inside or outside of the country, are unrestricted. However, in 2015 the NBK introduced a requirement for residents and non-residents to present a currency contract for transfers exceeding $10,000. Article 16 of Kazakhstan’s Law on Currency Regulation and Currency Control (hereafter the “currency law”), has, since June 2005, permitted employers to pay non-residents their wages in foreign currency, and foreign investors may convert and repatriate earnings. The currency law likewise prohibits restrictions on money transfers, and allows individuals to take up to $10,000 in cash out of the country without documenting its origin. The Eurasian Economic Union has further liberalized money transfer rules by removing the requirement for a member state central bank to certify the origin of amounts exceeding $10,000. On January 1, 2007, Kazakhstan eliminated licensing requirements and procedures for foreign currency operations except the licensing of exchange operations. Banks conducting transactions in a foreign currency are still required to notify the NBK of their operations once certain thresholds, $100,000 for capital outflow operations and $500,000 for capital inflow operations, are reached. For foreign exchange transactions, individuals are required to present their ID if the amount they buy exceeds1 million tenge ($2,941 at the current exchange rate).

The NBK’s registration regime also governs export-import credits and financial loans exceeding $50,000 with terms longer than 180 days. Banks must register these transactions and notify the NBK before completing them. Legislation stipulates that non-fulfillment of payment obligations related to export-import contracts can trigger administrative or criminal charges. Administrative penalties are applied for non-payment of up to $50,000, above which criminal charges are applied. Following December 2011 legislative amendments to the currency law, the NBK no longer requires so-called transaction passports for export-import operations, but requires commercial banks to issue contract registration numbers for currency imports and exports. A registration number is required for all transactions exceeding $50,000, and the procedure to receive a registration number can take several days.

The currency law allows the government to create a "special currency regime" in the event the country's economic and financial stability are in jeopardy. Measures may include requirements for companies to retain a certain percentage of their foreign currency profits in the NBK or other authorized banks, the mandatory sale of foreign currency earnings, and limits on the use of foreign bank accounts.

Remittance Policies

The U.S. Embassy is not aware of any concerns with regard to remittance policies or the availability of foreign exchange conversion for remittance of profits.

A 2011 Financial Action Task Force (FATF)-style peer review conducted by members of the Eurasian Group on Combatting Money Laundering and Terrorist Finance found Kazakhstan compliant or largely compliant with 13 recommended preventive measures, partially complaint with 18 recommended preventive measures, and not complaint with 16 preventive measures, including recommendations that regulators pay close attention to suspicious or unusual transactions or transactions concerning certain foreign countries deemed to be high-risk for money laundering or terror financing. The report, available at http://www.fatf-gafi.org/countries/j-m/kazakhstan/, recommends that the government further strengthen legislation in order to comply with these recommendations.

3. Expropriation and CompensationShare    

The bilateral investment treaty between the United States and Kazakhstan requires the government to provide compensation in the event of expropriation. The 2003 Law on Investments allows the state to nationalize or requisition property in emergency cases, but fails to provide clear criteria for expropriation or require prompt and adequate compensation at fair market value.

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

Kazakhstan's Civil Code establishes general commercial law principles. The 2015 Entrepreneurial Code defines an investment dispute as "a dispute ensuing from the contractual obligations between investors and state bodies in connection with investment activities of the investor," and states such disputes can be settled by negotiation, litigation, or international arbitration. Aggrieved investors can seek dispute settlement in Kazakhstan's courts or international arbitration. Although some analysts believe the government prefers litigation to arbitration, courts will enforce arbitration clauses in contracts. Any court of original jurisdiction can consider investment disputes and bankruptcy cases.


A 2014 bankruptcy law improves the insolvency processes by permitting accelerated business reorganization proceedings, extending the period for rehabilitation or reorganization, and expanding the powers of insolvency administrators. The law also eases bureaucratic requirements for bankruptcy filings, gives creditors a greater say in continuing operations, introduces a time limit for adopting rehabilitation or reorganization plans, and adds court supervision requirements. In part due to these changes, the World Bank ranked Kazakhstan 47th (up from 63rd place) for ease of resolving insolvency in its latest “Doing Business” report.

Investment Disputes

A number of investment disputes involving foreign companies have arisen in the past several years linked to alleged violations of environmental regulations, tax laws, transfer pricing laws, and investment clauses. Some disputes relate to alleged illegal extensions of exploration schedules by subsurface users, as production sharing agreements with the government usually make costs incurred during this period fully reimbursable. Some disputes involve hundreds of millions of dollars. Problems arise in the enforcement of judgments, and ample opportunity exists for influencing judicial outcomes given the relative lack of judicial independence.

In an effort to encourage foreign investment, the government has developed dispute resolution mechanisms aimed at enabling aggrieved investors to seek redress without requiring them to litigate their claims. The government established an Investment Ombudsman in 2013 to resolve foreign investors’ grievances by refereeing inter-governmental disagreements. According to the Ministry of Investment and Development, from 2015-2016 the Investment Ombudsman successfully addressed 60 investors’ requests.

Kazakhstani law provides for government compensation for violations of contracts that were properly entered into and guaranteed by the government. However, where the government has merely approved or confirmed a foreign contract, the government’s responsibility is limited to the performance of administrative acts (for example, concerning the issuance of a license, granting of a land plot, or mining allotment, etc.) necessary to facilitate the investment activity in question. In such a case, litigation or commercial arbitration may be needed to remedy the alleged violation.

International Arbitration

Despite effective dispute resolution mechanisms for most commercial activity, foreign investors have expressed serious concern about the lack of explicit provisions in the Subsoil Law for international arbitration. International law firms worry that because the Subsoil Law does not expressly provide for international arbitration, the government might choose not to include such a provision in future subsoil contracts, although the Ministry of Justice does have a special legal department to defend the country's interests in international courts.

ICSID Convention and New York Convention

Kazakhstan has been a member of the International Center for the Settlement of Investment Disputes (ICSID) since December 2001 and ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 1995. By agreement, any international arbitral award rendered by the ICSID, a tribunal applying the UN Commission on International Trade Law Arbitration rules, Stockholm Chamber of Commerce, London Court of International Arbitration, or Arbitration Commission at the Kazakhstan Chamber of Commerce and Industry is enforceable in Kazakhstan.

Duration of Dispute Resolution – Local Courts

Even when investment disputes are eventually resolved in accordance with contractual conditions, the process of reaching a resolution can be very slow and require a considerable investment of time and resources. Many investors therefore elect to handle investment disputes privately, rather than make their cases public.

Additionally, the U.S. Ambassador participates in every meeting of the Prime Minister's Council to Improve the Investment Climate. The Council was created with the goal of paying special attention to questions related to foreign investors, including protection of their rights and interests. The Council has proved to be an efficient forum for foreign companies to raise concerns about doing business in Kazakhstan to the country's ministers and decision makers. In 2012-2016, the Council discussed various issues, including tax administration problems, decriminalization of administrative violations, the rule of law, judicial independence, and the arbitrary application of environmental fines.

5. Performance Requirements and Investment IncentivesShare    


Kazakhstan became a member of the WTO on November 30, 2015. Post is not aware of any notification from the national government about measures which are inconsistent with the requirements of the WTO’s Trade Related Investment Measures (TRIMs) obligations.

Investment Incentives

The 2015 Entrepreneurial Code and 2009 Tax Code provide for tax preferences, customs duties exemptions, investment subsidies and in-kind grants as incentives for foreign and domestic investment in priority sectors. The Investment Committee under the Ministry of Investment and Development (MID) makes decisions on every type of incentives on a case-by-case basis. The law also allows the government to rescind incentives, collect back-payments, and revoke an investor's operating license if an investor fails to fulfill contractual obligations. Special Economic Zones give investors a wide range of preferences, which are described by a separate law.

The government is using preferences to help diversify its economy away from the extractive sector. Priority sectors include agriculture, agricultural chemistry, agricultural machinery manufacturing, construction materials, metallurgy, chemistry, food production, oil refining, oil and gas machinery manufacturing, transport, electric equipment, and mining. The Investment Committee considers expanding the list of priority sectors, given investors’ interests in other sectors like logistics. The government’s preference system applies to new and existing enterprises, and the duration of tax preferences increases with the size of investment. More information on preferences and incentives is available at www.invest.gov.kz.

Performance Requirements

Local content requirement is one of the government’s major performance requirements, and especially affects the work of foreign investors in the energy and mining industries, as well as suppliers of goods and services to national holding companies like Samruk-Kazyna (SK). The Ministry of Energy, Ministry of Investment and Development, and SK monitor local content compliance. A limitation on using foreign labor is one of the local requirements that is still in effect (please see details in Section 15. Labor).

Data Storage

The Government of Kazakhstan does not require foreign IT providers to turn over source code or encryption keys. We are not aware of any rules that require foreign companies to maintain certain amounts of data storage in Kazakhstan.

6. Protection of Property RightsShare    

Real Property

Private entities, both foreign and domestic, have the right to establish and own business enterprises, buy and sell business interests, and to engage in all forms of commercial activity.

Secured interests in property (fixed and non-fixed) are recognized under the Civil Code and the 2003 Land Code. All property and lease rights for real estate must be registered with the Ministry of Justice through its service centers distributed throughout the country. In 2014, Kazakhstan introduced new procedures aimed at expediting property transfer and registration. According to the “Doing Business Report,” Kazakhstan ranks 19 out of 189 countries in terms of the ease of registering property.

Kazakhstan's constitution provides that land and other natural resources may be owned or leased by Kazakhstani citizens. The 2003 Land Code allows citizens and Kazakhstani companies to own agricultural and urban land, including commercial and non-commercial buildings, complexes, and dwellings. Amendments to the Labor Code in 2011 permit foreigners to own land to build industrial and non-industrial facilities, including dwellings, with the exception of land located in the frontier zone. Later amendments to the Labor Code allow foreigners to rent, but not own, agricultural land and extend the rent period from 10 to 25 years. The Land Code does not allow private ownership of the following types of land:

  • land used for national defense and national security purposes;
  • specially protected nature reserves;
  • forests, reservoirs (lakes, rivers, canals, etc.), glaciers, swamps, etc.;
  • designated public areas within urban or rural settlements, except of land plots, occupied by private building and premises;
  • main railways and public roads;
  • land reserved for future development and construction of national parks, railways and public roads, subsoil use and power facilities, and social infrastructure.

Intellectual Property Rights

Kazakhstan has not been listed in the Special 301 Report since 2006. To facilitate its WTO accession and attract foreign investment, Kazakhstan continues to improve its legal regime for protecting intellectual property rights (IPR). The Civil Code and various laws, in principle, protect intellectual property. Kazakhstan has ratified 18 of 24 treaties endorsed by the World Intellectual Property Organization (WIPO). http://www.wipo.int/wipolex/en/profile.jsp?code=KZ).

In 2015, Kazakhstan passed two legislative acts on IPR. The law from April 2015 enhanced the role and transparency of organizations for collective management of copyrights. The law from October 2015 extended the protection period for an original medicine for up to six years. During this period, no new drug can be registered with a reference to the test data and confidential information received by the applicant of the original patent.

In July 2015, the Ministry of Health amended its regulation on state registration of pharmaceuticals in order to avoid distribution of illegal generics. In 2014, new Administrative and Criminal procedures came into force making formerly administrative violations now criminal violations and lengthening jail terms from five years to seven years. Articles 198 and 199 of the new Criminal Code define punishments for violations of copyright and allied rights and for violations of rights for inventions, useful models, industrial patterns, selective achievements, and integrated circuits topographies. The law also permits the government to target internet piracy and shut down websites unlawfully sharing copyrighted material, provided rights holders register copyrighted material with Kazakhstan's IPR Committee. U.S. companies and associated business groups have alleged that 76% of software used in Kazakhstan is pirated, and criticized the government’s enforcement efforts.

Resources for Rights Holders

Contact at the U.S. Embassy in Astana: InvestmentClimateKZ@state.gov
Country/Economy resources: The American Chamber of Commerce (AmCham) in Kazakhstan: http://www.amcham.kz

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.
Local lawyers list: http://kazakhstan.usembassy.gov/uploads/b8/LE/b8LEmttSzlth6cJkiKwuWQ/List-of-attorneys-in-Kazakhstan_June-2009.pdf

7. Transparency of the Regulatory SystemShare    

Kazakhstan has steadily improved its business environment since independence. It has streamlined bureaucratic practices, provided accelerated business start-up procedures, reduced minimum capital requirements for businesses, and simplified the procedures for registering property and getting construction permits. As a result, the World Bank in 2016 moved Kazakhstan up 9 places to 41 out of 189 countries in its “Doing Business” report.

Still, non-transparent application of laws remains a major problem in Kazakhstan and an obstacle to expanded trade and investment. Foreign investors complain of inconsistent standards and corruption. In spite of the government’s efforts to encourage foreign participation in the economy, some foreign investors point out that the government is not always evenhanded and sometimes reneges on its commitments. Although the central government has enacted many positive and progressive laws, local authorities may interpret rules in arbitrary ways for the sake of their own interests.

8. Efficient Capital Markets and Portfolio InvestmentShare    

Kazakhstan has created a sound financial system and a stable macroeconomic framework. Official policy supports credit allocation on market terms and the further development of legal, regulatory, and accounting systems that are consistent with international norms.

A general attitude of authorities toward foreign portfolio investors is positive, though foreign clients may only trade via local brokerage companies or after being registered as members of the Kazakhstan’s Stock Exchange (KASE). KASE, which has operated since 1993, is an insignificant source of investment. The number of listed companies dropped from 354 in 2010 to 132 in 2016. The government’s 2013 decision to consolidate all pension savings into a single state-owned pension fund practically froze the stock market, as private pension funds, which until that time were Kazakhstan’s main institutional investors, ceased to operate. Current trading is dominated by block trades, and the spreads are extremely wide. Traditionally, foreign exchange is the main segment of trades within KASE. In 2016, 55.8% of KASE trades were in foreign exchange, repo transactions comprised a further 42.8%, and government securities trading accounted for roughly 1.2% of KASE volume. In March 2016, the stock market capitalization was $35.9 billion, and bond market capitalization was $25.4 billion. The Single Pension Fund is the sole source of tenge liquidity in the country and has accumulated nearly $17.6 billion by the end of March, 2016. Its largest investment positions are in Kazakhstani government securities (46.2%) and corporate bonds of Kazakhstan-based companies (37.66%). The Single Pension Fund is not listed, and does not trade, on KASE. As KASE is not fully developed, decreased capitalization and diminished transaction volumes have not impacted financial markets or the overall economic situation.

Most domestic borrowers obtain credit from Kazakhstani banks, although foreign investors often find margins and collateral requirements onerous, and it is usually cheaper and easier for foreign investors to use retained earnings or borrow from their home country.

Money and Banking System, Hostile Takeovers

Kazakhstan has 35 commercial banks. As of February 1, 2016, the five largest banks (KazKommertsBank, HalykBank, Tsesna Bank, Sberbank-Kazakhstan and Bank CenterCredit ) held assets worth approximately $42.5 billion, or about 58.9% of the banking sector’s total assets. Although Kazakhstan's banking system remains stable, it has experienced hard times for the past several years. Banks' share of non-performing loans declined from 31.2% in January 2014 to 8.3% in February 2016. However, the situation caused by several devaluations may result in NPL growth in 2016. Kazakhstan's high level of dollarization remains a serious challenge and creates an additional burden on banks. The share of retail dollar-denominated deposits reached its record level in February 2016 - 80.3%. The Government is undertaking measures on maintaining the banking sector by injecting money from the National Oil fund and the Single Pension Fund for implementation of various government programs.

As there are relatively few publicly traded firms, few hostile takeovers have occurred in Kazakhstan. Defensive measures against takeovers are not targeted toward foreign investors in particular. The Civil Code requires a company that has purchased a 20% share in another company to publish information about the purchase.

9. Competition from State-Owned EnterprisesShare    

Officially, private enterprises compete with public enterprises under the same terms and conditions. In reality, however, SOEs generally enjoy better access to natural resources, markets, credit, and licenses than private entities.

The law on state property defines national companies, national holding companies, and national managing holding companies. A national company is a government-created joint stock company which operates in “fundamental industries” or facilitates regional economic development, and in which the state holds a controlling interest. A national holding company is a government-created entity which holds shares in national companies. A national managing holding company is a government-created entity which manages the government’s interest in national holding companies, national development institutes, and other legal entities. As of February 2016, Kazakhstan had 130 joint stock companies with state participation, including four national holding companies and five national companies. The law requires all SOEs to publish annual reports and submit their books for independent audit.

National Welfare Fund Samruk-Kazyna (SK) is Kazakhstan's largest national holding company, and manages the state-owned companies that dominate the oil and gas, energy, mining, transportation, information and communication sectors. SK has 600 subsidiaries and employs 360 thousand people. By some estimates, SK controls more than half of Kazakhstan's economy, and is the nation's largest buyer of goods and services. Created in 2008, SK's official purpose is to facilitate economic diversification and to increase effective corporate governance. The Prime Minister chairs SK's board of directors, and several other ministers and the Head of the Presidential Administration also serve on the board alongside three independent directors. President Nazarbayev endowed SK with special rights such as the ability to conclude large transactions between members of its holdings without public notification. SK enjoys a pre-emptive right to buy strategic facilities and bankrupt assets and is exempt from government procurement procedures. The government can transfer state-owned property to SK, easing the transfer of state property to private owners. Kazakhstan intends to join the WTO Agreement on Government Procurement (GPA) in 2018. Prior to this, the government has indicated that it plans to bring government procurement rules and procurement of quasi-sovereign companies into compliance with the GPA. To follow this policy, SK approved new procurement rules without direct local content requirements in January 2016.

The government in 2013 created a national managing holding company called Baiterek to provide financial and investment support to non-extractive industries, drive economic diversification, and to improve corporate governance in its subsidiaries. Baiterek is comprised of the Development Bank of Kazakhstan, the Investment Fund of Kazakhstan, the Housing and Construction Savings Bank, National Mortgage Company, National Agency for Technological Development, Distressed Asset Fund and other financial and development institutions. Like SK, the Prime Minister is Chairman of the Board, assisted by several cabinet ministers and independent directors.

Other notable SOEs include KazAgro, which manages state agricultural holdings such as the government’s wheat purchasing agent the National Food Contract Corporation, farm equipment subsidy provider KazAgroFinance, the Agrarian Credit Corporation, and an agricultural insurance company. National company Parasat is charged with stimulating domestic scientific research and development in the high-tech sector, and manages several scientific institutions and funds, while holding company Zerde is charged with creating modern information and communication technologies and to stimulate investments in the communication sector.

OECD Guidelines on Corporate Governance of SOEs

To live up to its OECD commitments, Kazakhstan plans to decrease the SOEs' share in the economy to 15% by 2020. For this purpose, the government enacted legislation in 2015 applying Yellow Pages Rules that would limit state participation in the economy. For the same purpose, the government is conducting a large-scale privatization campaign and SK is now in its transformation process. However, the current preferential status of parastatal companies remains unchanged. Although such companies are subject to the same tax burden as the private sector, they enjoy more access to the budget and National Oil Fund money.

Sovereign Wealth Funds

Kazakhstan's sovereign wealth fund is called the National Oil Fund, and was established by presidential decree in 2000. The fund exists to reduce the country's budgetary dependence on fluctuating world oil prices and to accumulate savings to benefit future generations. The Fund receives all direct taxes and a percentage of revenues from the oil sector, revenues from the privatization of state property in the mining and manufacturing industries, proceeds from sales of farmlands, as well as the Fund's investment income. The Ministry of Finance owns the National Fund, while the NBK acts as trustee and selects external administrators from internationally recognized investment companies or banks to oversee the fund. Information on external administrators and the assets they manage is confidential.

In addition to preserving wealth for future generations, the Fund is also used to support the government’s political and economic objectives. The Fund extended a $4 billion loan in 2012 to Kazakhstan's state-owned oil company KazMunayGas (KMG) to support its participation in the Kashagan oil field. The Fund also invests in the domestic economy through annual official transfers to the state budget, which currently vary from $6.8 billion to $9.2 billion annually. In 2014-2016, President Nazarbayev decided to direct more than $20 billion as official and special purpose transfers from the Fund for stimulating economic diversification, infrastructure, and small business development. President Nazarbayev has decreed that the Fund should retain a minimum balance of no less than 20% of GDP. As of March 2016, the National Fund's assets totaled $63.5 billion.

Kazakhstan is not a member of the IMF-hosted International Working Group of Sovereign Wealth Funds.

10. Responsible Business ConductShare    

The Entrepreneurial Code has a special section on social responsibility, which is defined as a voluntary contribution for development of social, environmental and other spheres. The Code underlines that the state creates conditions for social responsibility but also specifies that nobody can force entrepreneurs to take socially responsible actions. The Code considers charity one of key forms of social responsibility and envisions a tax deduction for charitable activity.

President Nazarbayev has repeatedly asked foreign investors and local businesses to implement responsible business conduct projects, to provide occupational safety, pay salaries on time, and invest in human capital. The President presents annual awards for achievements in responsible business conduct. Foreign Investors report that local government officials regularly pressure them to provide social investments in order to achieve local political objectives. These local officials also attempt to exert as much control as possible over the selection of projects and the subsequent allocation of funding. A survey conducted in 2013 found that large companies are better practitioners of responsible business conduct principles than their small and medium-size counterparts, although there is a likely correlation between resources and charitable outlays.

11. Political ViolenceShare    

There have been no incidents of politically motivated violence against foreign investment projects, and politically motivated civil disturbances remain exceptionally rare. In 2012, Kazakhstan experienced several isolated incidents in which individuals or groups associated with Islamic extremists launched small-scale violent attacks against government offices, with most concentrating on police and national security organs. Foreign investment or foreigners working in Kazakhstan have not been targeted. Kazakhstan enjoys generally good relations with its neighbors, although the government is concerned that the borders with Kyrgyzstan and Uzbekistan are vulnerable to penetration by extremist groups.

Kazakhstan held presidential elections in April 2015, with President Nazarbayev, in office since 1991, winning 97.75 percent of the vote. While the Organization for Security and Cooperation in Europe (OSCE) asserted that the election did not meet Kazakhstan's OSCE commitments or international standards for democratic elections, and opposition groups denounced the election as fraudulent, no significant demonstrations against the results occurred.

12. CorruptionShare    

On December 26, 2014, President Nazarbayev signed into law the new anti-corruption strategy for 2015-2025. The document focuses on measures to prevent the conditions that foster corruption. A new Criminal Code came into force on January 1, 2015, toughening criminal liability and punishment for crimes related to corruption. Under the new code, probation is no longer allowed for corruption crimes. A new penalty of a life ban on employment in the civil service was introduced, as well as mandatory forfeiture of title, rank, grade, and state awards.

The statute of limitations does not apply to persons charged with corruption. On November 20, 2015, Nazarbayev signed the new law On Countering Corruption as part of his Five Institutional Reforms program. The law introduces broader definitions of corruption, corruption policy and risks, anticorruption monitoring and analysis. The law toughens financial accountability through declaration of income and assets. The Bureau for Countering Corruption of the Ministry for Civil Service will annually present a national report on countering corruption.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Kazakhstan acceded to the UN Anticorruption Convention in June 2008, but it is not a party to the OECD convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

The Ministry of Interior, Bureau for Countering Corruption of the Ministry for Civil Service, Disciplinary State Service Commission, and Committee for National Security (KNB) are responsible for combating corruption.

Contact information:

-NAME: Kairat Kozhamzharov
-TITLE: Chairman
-ORGANIZATION: National Bureau for Countering Corruption
-ADDRESS: 37 Seyfullin Street, Astana
-TELEPHONE NUMBER: +7 (7172) 90-92-60
-EMAIL ADDRESS: anticorruption@nab.gov.kz

Transparency International (TI) maintains a national chapter in Kazakhstan.

-NAME: Natalya Kovalyeva (Petyaksheva)
-TITLE: Executive Director
-ORGANIZATION: Civic Foundation “Transparency Kazakhstan”
-ADDRESS: 43 A Mynbayev Str.
-TELEPHONE NUMBER: +7 (7273) 79 84 50
-EMAIL ADDRESS: nnm_04@mail.ru

13. Bilateral Investment AgreementsShare    

Bilateral Taxation Treaties

The United States-Kazakhstan Bilateral Investment Treaty came into force in 1994, and the United States and Kazakhstan signed an Investment Incentive Agreement in 1992. In 1996, a Treaty on the Avoidance of Double Taxation between the United States and Kazakhstan came into force. Since independence, Kazakhstan has signed treaties on the avoidance of double taxation with 46 countries, and bilateral investment protection agreements with 48 countries (and ratified 32), including Great Britain, Germany, Italy, France, Russia, South Korea, Iran, China, Turkey, Japan and Vietnam. In 2012, Kazakhstan signed investment agreements with Macedonia and Afghanistan, and joined the investment protection agreement of the Eurasian Economic Community (EVRAZES) in 2006. Some foreign investors have charged that Kazakhstani tax authorities are reluctant to refer double taxation questions to the appropriate bi-national resolution bodies.

14. OPIC and Other Investment Insurance ProgramsShare    

The Overseas Private Investment Corporation (OPIC) and the government of Kazakhstan signed an Investment Incentive Agreement in 1992, and OPIC has been active in Kazakhstan since 1994. OPIC seeks commercially viable projects in Kazakhstan's private sector and offers a full range of investment insurance and debt/equity stakes. Kazakhstan is also a member of the Multilateral Investment Guarantee Agency (MIGA), which is part of the World Bank Group and provides political risk insurance for foreign investments in developing countries.

15. LaborShare    

Kazakhstan has an educated workforce, although the proportion of highly technically competent workers is fairly small. Demand for skilled labor generally exceeds local supply. Technical skills, management expertise, and marketing skills are all in short supply. Many large investors rely on foreign workers and engineers to fill the void. In 2009, and as noted above, the government instituted a comprehensive policy for local content, particularly for companies in the extractive industries. The government is particularly keen to see Kazakhstanis hired into the managerial and executive ranks of foreign enterprises. Local content regulations require a minimum of 1% of a project budget be earmarked for training programs and workforce development, including overseas assignments with the lead operator. Employers' reliance on foreign labor in the face of poverty in rural Kazakhstan has become a political issue in recent years. In October 2015, the Government amended legislation on migration and employment which will result in new rules for foreign labor starting from January 2017 (please see details in Section 1.7). U.S. companies are strongly advised to contact Kazakhstan-based law and accounting firms and the U.S. Foreign Commercial Service in Almaty for current information on work permits.

Kazakhstan joined the International Labor Organization (ILO) in 1993, and has ratified key ILO conventions pertaining to minimum employment age, prohibition on the use of forced labor and the worst forms of child labor, prohibition on discrimination in employment, equal pay, and collective bargaining. The Constitution and the national labor legislation guarantee basic workers' rights, including the occupational safety and health, the right to organize and the right to strike. In November 2015, the President signed a new Labor Code that came into force on January 1, 2016. In contrast to the previous law, the new Labor Code leaves many labor-related issues at the discretion of employers and gives them more rights, especially in relation to dismissal and layoffs. The Labor Code imposes tighter collective bargaining requirements and restrictions on employees involved in labor disputes.

Workers’ rights to strike are limited by several conditions. Workers can strike if all arbitration measures defined by law have been exhausted. Strike votes must be taken in a meeting where at least half of workers are present, and strikers are required to give five days’ advance notice to their employer, include a list of complaints, and tell the employer the proposed date, time and place of strike. Courts have the power to declare a strike illegal at the request of an employer or the General Prosecutor’s office. Employers may fire striking workers after a court declares a strike illegal. The criminal code enables the government to target labor organizers whose strikes are deemed illegal. Raising concerns about freedom of association, a Labor Union law enacted in July 2014 requires local (and potentially independent) labor unions to be affiliated with larger unions.

Please see details at the Human Rights Report at http://www.state.gov/j/drl/rls/hrrpt/humanrightsreport/#wrapper

The minimum wage for 2016 is approximately $66.3 per month, and the minimum pension is $75 per month. The official unemployment rate in Kazakhstan was 5.1% in February 2016; however, independent analysts claim that this rate does not reflect the real situation at the labor market, given the large number of self-employed people or those whose companies have mandated part-time shifts or leave without pay. 

The government regulates foreign labor at both the macro and micro levels. Foreign workers must obtain work permits, a practice which has historically been difficult and expensive. On November 9, 2015, Kazakhstan introduced amendments to the migration and employment law to go into effect January 1, 2017. These amendments will waive quotas and work permits for expatriates coming to Kazakhstan looking for work; require certification for foreign workers in specialized fields; and assess expatriate workers on a grading system. The amendments will also allow for submission of work permit applications through e-service centers, which are being used for an increasing number of licensing and payment transactions with the government. The move toward e-service centers is expected to speed up processing from 40 to five days, improve transparency, and reduce opportunities for corruption.

From 2003-2008, the quota for foreign labor steadily increased from 0.14% to 1.6% of the total workforce, but was reduced by half on the heels of the economic crisis in 2008. In 2013, the foreign labor quota grew to 1.2% of the active labor force, but shrank in 2014 to 0.7% and remained unchanged throughout 2015 and 2016. Although from January 1, 2012, the amendments to the Expatriate Workforce Quota and Work Permit Rules allowed only 30 percent of company executives and 10 percent of engineering and technical personnel be foreign nationals, the terms of Kazakhstan’s accession to WTO required Kazakhstan to relax these limits on foreign nationals by increasing this “quota” to 50 percent for both categories of personnel.

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

The 2011 Law on Special Economic Zones allows foreign companies to establish enterprises in special economic zones (SEZs), simplifies procedures to attract foreign labor, and establishes a special customs zone regime not governed by Customs Union rules. A system of tax preferences exists for foreign and domestic enterprises engaged in prescribed economic activities in Kazakhstan's ten SEZs. The SEZs are located in the New Administrative Center in Astana, the Seaport of Aktau, the Alatau Information Technology Park (near Almaty), the Ontustik Textile Center in south Kazakhstan, the international tourism zone "Burabay" (a resort area 300 kilometers from Astana), the Atyrau National Industrial Petrochemical Techno park, SEZ “Saryarka” in the Karaganda region, a transport and logistics zone in Khorgos at the Kazakhstan-Chinese border, and SEZ “Pavlodar”, and SEZ ”Chemical Park Taraz”.

For more details see http://isc.baseinvest.kz/account/wey_map#.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy


Host Country Statistical source

USG or international statistical source

USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other

Economic Data






Host Country Gross Domestic Product (GDP) ($M USD)







Foreign Direct Investment

Host Country Statistical source

USG or international statistical source

USG or international Source of data:
BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)





Local source is the National Bank of the Republic of Kazakhstan: http://www.nationalbank.kz/?docid=679

Host country’s FDI in the United States ($M USD, stock positions)





Local source is the National Bank of the Republic of Kazakhstan: http://www.nationalbank.kz/?docid=679

Total inbound stock of FDI as % host GDP






Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward



Total Outward









United States



United Kingdom















China, P.R. Mainland



Russian Federation



"0" reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets

Top Five Partners (Millions, US Dollars)


Equity Securities

Total Debt Securities

All Countries



All Countries



All Countries



United States



United States



United States



United Kingdom






United Kingdom






United Kingdom

























18. Contact for More InformationShare    

Patrick Horne
Economic Chief
Rakhymzhan Koshkarbayev Ave., 3
Astana, KAZAKHSTAN 010010