EY’s attractiveness survey: Kazakhstan 2012 – Bridging the perception gap

The substantial difference in the responses of investors who have established activities in Kazakhstan versus those who have not suggests that many international investors still have insufficient awareness of Kazakhstan’s business and economic environment.

In 2011, Kazakhstan’s investment climate improved in the opinion of 35% of respondents (compared with 27% of respondents surveyed in 2010).

Macroeconomic stability and growth potential contribute to investors’ confidence. And despite the global financial crisis resulting in a noticeable slowdown, the economy bounced back relatively quickly, growing by 7.5% in 2011.

That said, to compete successfully for FDI in a global market and move up the value chain, the country needs to improve quality indexes such as transport and logistics infrastructure, transparency and predictability of the business environment, R&D availability and further develop human capital in line with economic needs and innovation.

Skills needed

Thus, while 44% of respondents indicate that the labor costs in Kazakhstan are attractive for doing business, there is the perception that industry-specific skills are not sufficiently competitive.

A number of respondents see opportunities arising from the introduction of the Customs Union and Common Economic Space, which currently comprises Belarus, Kazakhstan and Russia. Investors see this regional organization as a stimulus to aid market expansion, enhance competitiveness and strengthen human capital skills.

Reforms needed

Despite substantial progress, the Kazakhstani regulatory environment needs further reform.

Fifty percent of respondents felt that the level of legal and regulatory transparency and predictability is insufficient, with the main areas of concern being inconsistency of interpretation of law and its selective application; over-regulation and onerous local content requirements; perceived corruption and an insufficiently independent court system.

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