Guidance

Overseas business risk: Kazakhstan

Updated 10 January 2024

1. Political, economic and trade overview

Kazakhstan is the 9th largest country in the world located on the Eurasian Steppe bordering Russia, China, Turkmenistan, Uzbekistan and Kyrgyzstan and bound to the Caspian Sea. It is a presidential republic and upper middle-income country with an economy 20% bigger than all of its Central Asian neighbours combined^{[footnote 1]}. The UK is among the largest foreign direct investors in Kazakhstan. In December 2021, Kazakhstan celebrated its 30 years of independence. Its population is 19.6 million, 30% are under 15^{[footnote 2]}.

1.1 Political overview

Kazakhstan is a presidential republic. The President makes executive orders, and the Prime Minister delivers them. The President is the head of state and commander in chief of the armed forces, and the Prime Minister is the head of government (Ministerial Cabinet). The current President is Kassym-Jomart Tokayev (re-elected in November 2022), who also serves as Chairman of the influential Security Council – a body which implements national security policy and defence capability. The president can only serve one 7-year single term and elected through a nationwide election.

The Prime Minister is nominated by the Majlis’ (lower chamber of Parliament) majority party and approved by the President. The President directly appoints the Ministers of Defence, Foreign Affairs, and Internal Affairs. The Prime Minister selects the other Cabinet Ministers in consultation with the Majilis with final approval coming from the President. The current Prime Minister is Alikhan Smailov (re-appointed in March 2023, and in office since January 2022). The Prime Minister and Cabinet are political appointments and not members of the Majilis.

Regarding seniority, after the President, the Senate Chairman, is first line in to take on the responsibilities of the President, should the President be impeached or discharged early. Second is the Majlis Chairman and third is the Prime Minister. Since 1999, the ruling party ‘Amanat’ (previously called ‘Nur Otan’) has held a strong majority in both the executive and legislative branches of power. In March 2023, Kazakhstan held Majlis elections using a new 69 nationwide party list and 29 single mandate territorial lists (98 seats in total). The results were:

• Amanat Party: 62 seats (40 from party list, 22 single mandate)
• Auyl Party: 8 seats (from party list)
• Respublica: 6 seats (from party list)
• Aq-Jol: 6 seats (from party list)
• People’s Party: 5 seats (from party list)
• Nationwide Social Democratic Party: 4 seats (from party list)
• Independents: 7 seats (from single mandate territories)

OSCE/ODIHR’s preliminary report stated that the election administration handled preparations efficiently and voting was organised smoothly. However, significant procedural irregularities were observed and important safeguards were often disregarded during counting and tabulation – undermining transparency of the process.

Ongoing political reforms

Following the unprecedented events of January 2022, which has been widely publicly reported on, President Tokayev proposed to build a ‘New Kazakhstan’ by limiting the powers of the Presidential office. In June 2022, a national referendum on constitutional amendments were voted in, and his presidential election program in November 2022 promised to initiate further political reforms. During 2022, some of the changes included:

• the President can only serve a single seven-year term
• the President cannot be a member of a political party
• the closest relatives of the President can no longer hold positions of senior political servants (for example, in the President’s Office and Prime Minister’s Cabinet)
• introduction of a new (mixed) election system for Parliamentary elections aimed at enhancing political pluralism
• simplified registration of political parties
• establishment of a Constitutional Court, and strengthening of the Human Rights Commissioner powers to enhance human rights protection in the country

Despite these changes, international observers conclude that political power in Kazakhstan remains heavily centralised, with limited political plurality, a constrained freedom of assembly, and a highly controlled media environment. ODIHR/OSCE have found that all presidential and parliamentary elections in Kazakhstan have fallen short of OSCE standards, lacking genuine competition.

1.2 Economic and trade overview

Facts and figures

• GDP: US $ 225.8 billion (2022)^{[footnote 3]}

• GDP per capita: US $11,440 (2022)^{[footnote 4]}

• Population: 19.832 million (as of 1 April 2023) ^{[footnote 5]}

• Real annual GDP growth: 3.2% (2022) ^{[footnote 6]}

• Annual Inflation Rate: 20.3% (2022) ^{[footnote 7]}

• Unemployment Rate: 4.9% (2022) ^{[footnote 8]}

• National currency: Tenge (KZT)

Key exports (January – December 2022)

According to the data of the Bureau of National Statistics of the Republic of Kazakhstan as of 15 February 2023 goods exports amounted to $84.3 billion, of which:

Mineral products including fuel and energy goods	78,5%, of which fuel and energy goods 73.1%
Metals and metal  goods	12.7%
Products of animal and vegetable origin, ready-made food products	3.5%
Products of chemical and related industries (including rubbers and plastics)	3.3%
Machinery, equipment, transport means	0.8%
Others	1%

Major trading partners’ market shares are:

• EU: 40.1% (of which Italy - 16.4% and Netherlands – 6.5%),
• Russia: 10.4%,
• China:15.6%,
• Turkey: 5.6%
• Uzbekistan: 4.4%.

Key imports (January to December 2022)

According to the data of the Bureau of National Statistics of the Republic of Kazakhstan as of 15 February 2023 goods imports amounted to $50 billion and comprise:

Machinery, equipment, transport	54.6%
Products of chemical and related industries (including rubbers and plastics)	17.6%
Textiles and textile products	6.8%
Products of animal and vegetable origin, ready-made food products	6.6%
Metals and metal goods	5.9%
Mineral products including fuel and energy goods	1,6%, of which fuel and energy goods 0.8%

Major trading partners’ shares of imports are: 

• Russia: 34.7%
• China: 21.9 %
• EU: 16% (of which Germany is 4.5% and Italy 2.1%)
• US: 3.8%
• Turkey: 3.3%

Recent economic trends

Kazakhstan is the most developed of the Central Asian states, following significant oil driven growth since the turn of the century. Natural resources still dominate the economy and it retains exceptional mineral wealth. Despite attempts at diversification, hydrocarbon output comprised 15 percent of GDP and over 50 percent of exports (largely oil).

In 2022 Kazakhstan’s economy has been hit by Russia’s invasion of Ukraine, one of its main trading partners (over 34.7% of its imports). Real GDP grew 3.3% in 2022 slower than other Central Asian countries. Inflation in 2022 hit 20.3%that is significantly above target corridor of the National Bank of Kazakhstan (NBK) 4 to 6%.  In May 2023 Fitch affirmed Kazakhstan’s BBB stable rating outlook bolstered by high commodity prices and projected increases in oil output. Kazakhstan exports the majority of its oil through Russia with the CPC pipeline transporting around 80% of its oil. Kazakh oil is not subject to the oil price cap.

 To assist Kazakh companies working with countries who have imposed sanctions against Russia and Belarus, the Kazakh government created a database setting out the totality of such trading restrictionswww.traderadar.kz

The economy remains dominated by State Owned Enterprises (SoE). According to the 2017 OECD Investment Policy Review, SoE share in the economy is approximately 35-40% of GDP.   Responding to criticism by President Tokayev in January 2022, the Sovereign Welfare Fund Samruk-Kazyna announced a plan for further privatization of its assets in January 2022.  However, to-date this only resulted in a local listing IPO of 3% of KazMunayGas’s shares. These started trading on the Astana International Exchange (AIX) and the Kazakhstan Stock Exchange (KASE) on 8 December 2022.

Astana International Exchange is part of the Astana International Financial Centre (AIFC). The AIFC was set up in 2018 to provide a one stop shop for international investment entering the Kazakh market. The AIFC also offers a beneficial tax regime for companies based there. AIFC jurisdiction is based on the principles of the English Common Law with an arbitration centre and court, which has successfully processed and enforced over 2,000  judgements ^{[footnote 9]}.

Kazakhstan published its strategy for reaching carbon neutrality by 2060 in February 2023 with headline commitments only. Carbon neutrality is forecast to need $610 billion investment. Kazakhstan is also committed to 15% reduction greenhouse gas emissions by 2030 under Paris Agreement.

Membership of international organisations

Kazakhstan is a member of a number of international organisations including: the Commonwealth of Independent States (CIS), the Collective Security Treaty Organisation (CSTO), the Eurasian Economic Union (EAEU), the Shanghai Cooperation Organisation (CSO), the Organisation for Security and Cooperation in Europe (OSCE), the Euro-Atlantic Partnership Council, the Turkic Council, the Organisation of Islamic Cooperation Council (OIC), the World Trade Organisation (WTO), and the United Nations (UN).

Eurasian Economic Union (EaEU)

In theory the EaEU is an ambitious project for economic integration with formal objectives a market much like the European Union. However, in reality cooperation is more cumbersome with member states often acting unilaterally. Around 40% of customs duties in the EaEU aren’t harmonised new market access for certain types of goods such as livestock and agricultural products require approval from all member states. It came into effect in January 2015 and its current members are Russia, Belarus, Armenia, Kyrgyzstan and Kazakhstan. 

World Trade Organisation

Kazakhstan joined the WTO in 2015.  It committed to harmonise its legislation with WTO Accession Protocol provisions.  On services, Kazakhstan has made specific commitments in 10 services sectors, including 116 sub-sectors.  In December 2019 Kazakhstan started negotiating accession to the Government Procurement Agreement (GPA) in accordance with its WTO membership terms. From December 2020, foreign banks and insurance companies are permitted, subject to compliance with certain requirements, to set up branches in Kazakhstan.  

OECD

Kazakhstan has been one of the most active OECD partners in the Eurasian region since 2008. The country participates in the work of many OECD committees and their subsidiary bodies as an associate member.

2. International relations

Kazakhstan maintains a ‘multi-vector’ foreign policy, aimed at balancing its relationships with a variety of countries and international organisations, as outlined in President Tokayev’s 2020 to 2030 foreign policy concept. Due to its history, culture, geography and ambitions, Kazakhstan considers itself a Eurasian state as much as a Central Asian one and portrays itself as a country that can reconcile differing groups and points of view.

In 2022, during 30 years of independence celebrations, Deputy Prime Minister and Foreign Minister Mukhtar Tileuberdi reiterated Kazakhstan’s multi-vector foreign policy and listed Kazakhstan’s foreign policy priorities as Russia, China, Central Asia, the Turkic States, USA, EU, UK, Multilaterals, Far East, and Middle East.

As a former Soviet state, and the last country to declare independence from the USSR, Kazakhstan maintains strong links with Russia, with which it shares the longest single continuous land border in the world. It shares much of its trade with Russia, and is home to a sizeable ethnic Russian minority, accounting for approximately 15.2% of the population. Kazakhstan officially maintains a neutral position on the war in Ukraine and has made public statements not recognising ‘quasi-state associations’ of Luhansk and Donetsk and that Kazakhstan “will not violate” sanctions.

Kazakhstan also carefully balances its relations with its other neighbours, China and the Central Asian countries. This is for several reasons, including: Kazakhstan’s increasing focus on regional interconnectivity through China’s Belt and Road Initiative (BRI) infrastructure projects, the sizeable Kazakh minority living in Xinjiang, balancing Russia’s assertion in Central Asia, the liberalisation of Uzbekistan’s economy, and a growing view that deepening regional Central Asia trade is mutually beneficial and preferable to costly import substitution strategies from far away international markets – particularly because trade routes through Iran and Afghanistan come with many risks.

In autumn 2022, Astana (the capital of Kazakhstan) hosted a number of international and regional summits, such as: Conference on Interaction and Confidence-Building Measures in Asia (CICA) which included attendance from the Presidents/Heads of States/PMs of Azerbaijan, Armenia, Belarus, China, Iran, Egypt, Kazakhstan, Kyrgyzstan, Kuwait, Palestine, Pakistan, Qatar, Turkey, Tajikistan, Taiwan, Russia, Uzbekistan, and UAE; 14th Summit of the Commonwealth of Independent States (CIS); and the First Central Asia 5 + Russia Summit.

On the wider international stage, Kazakhstan plays an ambitious role on security issues. It was the first Central Asian country to become a non-permanent member of the UN Security Council (UNSC) in 2017 to 2018, and remains the only country in the region to deploy UN Peacekeepers. It currently contributes military personnel to the UN mission in Lebanon (UNIFIL) and aspires to do more. Kazakhstan has been holding Syrian Peace talks since 2017. Currently, Kazakhstan holds a seat at the UN Human Rights Council for 2022 to 2024.

3. Human rights

As a participating member of the OSCE and signatory of the UN universal declaration of Human Rights, Kazakhstan has committed to upholding international human rights standards. However, in many areas Kazakhstan continues to perform below such standards.

Reports by the UN universal periodic review, the OSCE’s Office for Democratic Institutions and Human Rights and reputable international human rights organisations continue to highlight areas of concern on issues such as freedom of association and assembly (including political pluralism), freedom of information (including media freedom), freedom of religion and belief, independence of the judiciary, rule of law and labour rights.

The UK, alongside the USA, Canada and EU member states engage regularly with the government of Kazakhstan and civil society on cases of most serious concern.

4. Bribery and corruption

Under the UK Law bribery is illegal. It is an offence for a British national or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. In addition, a commercial organisation operating in the UK can be liable for the conduct of employees or agents who are not UK nationals or residents, or for a body incorporated or formed in the UK. In this case, it does not matter whether the acts or omissions which form part of an offence take place in the UK or elsewhere. For more information go to our Bribery and corruption page.

According to Transparency International’s Corruption Perception Index (CPI), in 2022 Kazakhstan scored 36, out of a possible 100 (0 = most corrupt; 100 = least corrupt). This represents a deterioration from 2020; Kazakhstan is now ranked the 101st out of 180 countries and territories, compared to 102nd in 2021, 94th in 2020 and 113th in 2019. According to Transparency International, the January 2022 events “underscore the dangers of ignoring corruption in priority areas, but Kazakhstan has an opportunity to turn the tide”.

The Anti-Corruption Agency of the Republic of Kazakhstan reports to the President of the Republic of Kazakhstan. The agency designs and implements anti-corruption policies, and investigates corruption offenses. On 2 February 2022, Kazakhstan adopted its anti-corruption policy for 2022 to 2026.There are specific objectives for the eradication of corruption among state authorities and civil society. It is currently implementing the Group of States against Corruption (the Council of Europe’s anti-corruption body) recommendations.

5. Terrorism threat and protective security

For advice on terrorism on protective security go to our travel advice.

6. Intellectual property

Intellectual property (IP) rights are territorial; that is they only give protection in the countries where they are granted or registered. If you are thinking about trading internationally, then you should consider registering your IP rights in your export markets.

The National Institute of Intellectual Property (Qazpatent) is the body responsible for operating the patent, industrial design, trade mark and copyright system in Kazakhstan. Foreign nationals may not apply independently for registration of intellectual property, but only through patent attorneys.

On the Global Innovation Index, Kazakhstan was ranked 27th among 36 upper middle-income economies.

For further information go to the World Intellectual Property Organisation (WIPO) website and our intellectual property page.

7. Serious and organised crime

The United Kingdom/City of London remains a location of interest for the laundering of illicit funds generated by corruption, including high profile ‘PEP’ cases and organised crime. The UK has strengthened its laws to tackle illicit finance in recent years and is actively supporting work globally to support other countries in doing so, including Kazakhstan. The UK/Kazakhstan Treaty on Mutual Legal Assistance in Criminal Matters as well the Memorandum of Understanding between UK NCA and the Prosecutor General’s Office provide legal ground for Kazakh law enforcement and judicial authorities to work closely with UK agencies to prosecute cases and recover assets.

Kazakhstan is a transit route for Afghan grown and produced opium and heroin. The Covid-19 lockdown disrupted trade routes. There is increasing evidence of increasing domestic production of new psychotropic substances (NPS) and other synthetic drugs. Within the first 6 months of 2021, the Ministry of Interior uncovered and destroyed 10 clandestine laboratories. Cybercrime and cyber enabled crime continue to rise in scale and complexity. Cyber criminals are increasingly stealing identity data online, e.g. through ‘phishing’ emails, and then selling personal data. As per the Kazakh Computer Emergency Response Teams (CERT) statistics, 15799 cyber attacks were registered within first half of 2021. Online sharing of images of child abuse and exploitation is an increasing concern. In response to the growing cyber threat, the Government of Kazakhstan has developed a comprehensive legal and regulatory framework, and created dedicated cyber programmes at law enforcement training institutions.

It has received a tier 2 ranking related to human trafficking from the US State Department. This means that Kazakhstan’s government does not fully meet the UN TIP Protocol and the United States’ Trafficking Victims Protection Act of 2000’s minimum standards but are making significant efforts to bring themselves into compliance with those standards.)

8. Contacts

The Department for Business and Trade contact point in Kazakhstan is [email protected]

1. www.imf.org ↩

2. www.unfpa.org ↩

3. https://www.worldbank.org/en/country/kazakhstan/overview ↩

4. https://www.worldbank.org/en/country/kazakhstan/overview ↩

5. https://stat.gov.kz/en/ ↩

6. https://stat.gov.kz/en/ ↩

7. https://old.stat.gov.kz/ ↩

8. https://old.stat.gov.kz/ ↩

9. https://court.aifc.kz/en ↩