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Executive Summary

Kazakhstan has made significant progress towards creating a market economy since gaining its independence from the Soviet Union in 1991. It has attracted significant foreign investment to develop its abundant mineral, petroleum, and natural gas resources. As of October 2021, the stock of foreign direct investment (FDI) totaled $170 billion, including $40.4 billion from the U.S., according to official central bank statistics. Publicly available information indicates that U.S. investments in the hydrocarbons sector alone far exceed this official statistic.

While Kazakhstan’s vast hydrocarbon and mineral reserves remain the backbone of the economy, the government continues to make incremental progress toward diversification into other sectors.  The COVID-19 pandemic gave impetus to efforts by the Government of Kazakhstan (GOK) to remove bureaucratic barriers to trade and investment.  The GOK maintains an active dialogue with foreign investors through the President’s Foreign Investors Council and the Prime Minister’s Council for Improvement of the Investment Climate.  Kazakhstan is a member of the World Trade Organization (WTO) and the Eurasian Economic Union (EAEU).

Widespread civil unrest in January raised concerns about the country’s political and economic stability. President Tokayev has since assured foreign investors that the GOK will ensure a stable investment climate and meet its commitments to investors. He also pledged to reduce the outsized role of monopolies and oligopolies in the economy. President Tokayev announced political and economic reforms in March that may bring positive changes to the country’s investment climate by increasing privatization and combatting corruption.

Given Kazakhstan’s long border and extensive economic ties with Russia, Russian aggression against Ukraine and ensuing sanctions against Russia affect Kazakhstan’s investment climate. Some investors will likely be deterred from investing in Kazakhstan, while others may find Kazakhstan an attractive alternative to doing business in Russia. The GOK has expressed a commitment to complying with the western sanctions against Russia and has invited western investors to relocate from Russia to Kazakhstan.

Despite President Tokayev’s assurances, concerns remain that some of the underlying economic causes of the January unrest remain unaddressed and sanctions on Russia may exacerbate existing structural weaknesses to cause high inflation, currency devaluation, and logistical impediments to imports and exports. Despite institutional and legal reforms, corruption, excessive bureaucracy, arbitrary law enforcement, and limited access to a skilled workforce in certain regions continue to present challenges.  The government’s tendency to increase its regulatory role in relations with investors, to favor an import-substitution policy, to limit the use of foreign labor, and to intervene in companies’ operations continues to concern foreign investors.  Foreign firms cite the need for better rule of law, deeper investment in human capital, improved transport and logistics infrastructure, a more open and flexible trade policy, a more favorable work-permit regime, and a more customer-friendly and consistent tax administration.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 102 of 180
Global Innovation Index 2021 79 of 132
U.S. FDI in partner country ($M, historical stock positions) N/A N/A
World Bank GNI per capita 2020 $8,710


1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

According to the National Statistical Bureau, as of January 1, there are 25,201 state-owned enterprises (SOEs) and 617 enterprises where the state has some stake, including all types of enterprises, from small veterinary inspection offices, kindergartens, and regional hospitals, to airlines, mining companies, and the national oil and gas company.  A full list of SOEs is available at: .

SOEs play a leading role in the country’s economy.  According to the 2017 OECD Investment Policy Review, SOE assets amount to $48-64 billion, approximately 30-40 percent of GDP; net income was approximately $2 billion.  In January, President Tokayev enabled the Agency for Development and Protection of Competition to endorse the creation of new state-owned enterprises and to review enlargement of existing ones. Parastatal companies benefit from greater access to subsidies and other government support.

The National Welfare Fund Samruk-Kazyna (SK) is the largest national holding company, managing key SOEs in the oil and gas, energy, mining, transportation, and communication sectors.  The IMF reports that, as of 2019, SK held assets equivalent to 38 percent of GDP and generated revenues of 15 percent of GDP, which was equivalent to three-quarters of total government revenue.  In 2020, SK reported $54 billion in assets and $1.4 billion in consolidated net profit.

Political influence continues to dominate SK.  SK has special rights to conclude large transactions among members of its holdings without public notification, a pre-emptive right to buy strategic facilities and assets and is exempt from government procurement procedures. More information is available at  

Two other major SOEs are the national managing holding company Baiterek and national information holding company Zerde. More information about both companies is available on their web-sites:  and  

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

8. Responsible Business Conduct

Entrepreneurs, the government, and non-governmental organizations are aware of the expectations of responsible business conduct (RBC). Kazakhstan continues to make steady progress toward meeting the OECD Guidelines for Multinational Enterprises, and the government promotes the concept of RBC. The OECD National Contact Point is the Ministry of National Economy.

The Entrepreneurial Code has a section on social responsibility, which is defined as a voluntary contribution for the development of social, environmental, and other spheres. This creates conditions for RBC but cannot force entrepreneurs to take socially responsible actions. The code considers charitable contributions as a form of social responsibility and envisions tax preferences for entrepreneurs engaged in charitable activities. The government encourages companies to donate to the Khalkyna (To the People of Kazakhstan Fund).

The government signed on to the Extractive Industries Transparency Initiative (EITI) in 2007.  Kazakhstan produces EITI reports that disclose revenues from the extraction of its natural resources.  Companies disclose what they have paid in taxes and other payments, and the government discloses what it has received; these two sets of figures are then compared and reconciled.  In 2019, the EITI Board reported that Kazakhstan had made considerable improvements since 2017 by providing additional information on local content, social investment, and transportation of oil, gas, and minerals.

9. Corruption

Kazakhstan’s rating in Transparency International’s 2021 Corruption Perceptions Index is 37/100, where 100 is very clean and 0 is highly corrupt. According to Transparency International, the January civil unrest underscored the dangers of ignoring corruption. The Anti-Corruption Agency has focused on sectors like agriculture and healthcare, leaving out the largest industries. President Tokayev announced in January that the government would do more to combat corruption. Within months, several investigations began against wealthy and powerful individuals, including relatives of First President Nazarbayev.

According to the State Department’s Human Rights Report, the government selectively prosecuted officials who committed abuses, especially in high-profile corruption cases. Nonetheless, corruption remained widespread, and impunity existed for many in positions of authority as well as for those connected to law enforcement entities. The law provides criminal penalties for corruption by officials, but the government did not implement the law effectively. Corruption was widespread in the executive branch, law enforcement agencies, local government administrations, the education system, and the judiciary, according to human rights NGOs. Journalists and advocates for fiscal transparency report frequent harassment and administrative pressure.

The Criminal Code imposes criminal liability and punishment for corruption, forbids suspended sentences for corruption-related crimes, and provides for lifelong bans on employment in the civil service with mandatory forfeiture of title, rank, grade, and state awards for those convicted of corruption-related crimes. The Law on Public Service mandates public servants adhere to rule of law principles including anti-corruption and professionalism of civil service. However, the Law on the First President of the Republic of Kazakhstan—Leader of the Nation establishes blanket immunity for First President Nursultan Nazarbayev and members of his household from arrest, detention, search, or interrogation.

Kazakhstan’s Anti-Corruption Agency prepares an annual report on countering corruption. Kazakhstan ratified the UN Convention against Corruption. It participates in the Istanbul Anti-Corruption Action Plan of the OECD Anti-Corruption Network, the International Association of Anti-Corruption Agencies, and the International Counter-Corruption Council of CIS member-states. Kazakhstan is a member of the Group of States against Corruption (GRECO).

Corruption continues to be observed in nearly all sectors, including extractive industries, infrastructure projects, state procurements, and banking. The International Finance Corporation’s Enterprise Survey for Kazakhstan, conducted in 2019 with over 1,400 small, medium, and large enterprises, found that 12 percent of respondents had experienced at least one bribe payment request across six different transactions including paying taxes, obtaining permits or licenses, and obtaining utility connections.

10. Political and Security Environment

During violent civil unrest in January, at least 237 individuals were killed and there were many instances of theft, looting, and arson. More than 1,000 government and commercial buildings were damaged in Almaty and several other cities and rioters briefly seized Almaty International Airport. President Tokayev stated that the initial economic damages were estimated at $2-3 billion. After restoring order, President Tokayev assured foreign investors that the GOK would ensure a stable investment climate.

11. Labor Policies and Practices

The OECD Skills Strategy project showed in 2021 that the country is improving rapidly in the use of skills at work, particularly digital skills.  However, the skills of youth remain substantially below the OECD average. Adults also possess comparatively weak foundational and problem-solving skills, as the culture of adult learning is under-developed.

The State Program of Education and Science Development 2020-2025 seeks to reduce the gap in educational achievement between urban and rural schools and to improve lifelong learning.

Many large investors rely on foreign workers to fill the void.  The government regulates foreign labor; foreign workers must obtain work permits.

The GOK has made it a priority to ensure that Kazakhstani citizens are well represented in foreign enterprise workforces.  The government is particularly keen to see Kazakhstanis hired into the managerial and executive ranks of foreign enterprises.

Kazakhstan joined the International Labor Organization (ILO) in 1993 and has ratified 24 out of 189 ILO conventions.

The Constitution and Labor Code guarantee basic workers’ rights, including occupational safety and health, the right to organize, and the right to strike.  On May 4, 2020, the government enacted amendments to labor-related laws, including the trade union law, to bring them closer to compliance with ILO standards. The three independent labor unions – the Federation of Trade Unions of the Republic of Kazakhstan (FTUK), Commonwealth of Trade Unions of Kazakhstan Amanat, and Kazakhstan Confederation of Labor (KCL) – had over three million members, or 40 percent of the workforce, as of March 1, 2020. According to the FTUK, as of January 2021, 1.5 million workers, or 90.2 percent of FTUK members, labored with collective bargaining agreements in 2020. The number of collective agreements countrywide increased 19.1 percent from 120,200 in 2019 to 143,571 in 2020, the latest data available.

The Labor Code describes a mechanism for resolution of individual labor disputes via direct negotiations with an employer, mediation commission, and court.  It identifies a mechanism for resolution of collective labor disputes via direct negotiations with an employer, mediation commission, labor arbitration, and the court. Workers’ right to strike are limited. Courts have the power to declare a strike illegal at the request of an employer or the Prosecutor General’s Office.  Employers may fire striking workers after a court declares a strike illegal.  Please see additional details at the Human Rights Report at:

Complaints about low wages, poor social benefits, and substandard working conditions resulted in over 363 strikes and labor disputes in 2021 and dozens in the first three months of 2020. Workers typically ended strikes after the companies’ management agreed to a partial increase of wages and bonuses.

The average salary for men was 21.7 percent higher than that for women in 2021. The official unemployment rate is 4.9 percent, or around 450,000 unemployed people out of 9.2 million working-age Kazakhstanis.  In March, KPMG estimated that the real unemployment rate was 10 percent in 2019, 12 percent in 2020, and may increase to 20 percent in 2022.

The GOK reported in 2020 that 1.22 million citizens (or about 13.5 percent) of the country’s workforce worked in the informal economy. Informal workers were concentrated in the retail trade, transport services, agriculture, real estate, beauty and hair dressing salons, and laundry and dry-cleaning businesses. Small entrepreneurs and their employees for the most part worked without health, social, or pension benefits, and did not pay into the social security system.

14. Contact for More Information

U.S. Embassy Nur-Sultan Economic Section
3, Qoshkarbayev Str., Nur-Sultan
+7 7172 70 21 00 

Country/Economy resources:
American Chamber of Commerce (AmCham) in Kazakhstan 

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