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1. Political and Economic
Kazakhstan is an upper- middle-income country. Its economy is almost half the size again of all of its Central Asian neighbours (Uzbekistan, Tajikistan, Turkmenistan and Kyrgyzstan) combined (based on 2017 GDP converted to USD). The UK is among the six largest foreign direct investors in Kazakhstan. Political power remains heavily centralised, with President Nazarbayev the dominant figure.
Kazakhstan is a constitutional republic with power concentrated in the position of the President. President Nazarbayev has been in power since 1989. He has won four elections since independence, most recently in April 2015 when he achieved 97.7% of the vote according to official statistics. Whilst international observers have found that all Presidential elections have fallen short of Organisation for Security and Co-operation (OSCE) standards, President Nazarbayev remains genuinely popular.
Nazarbayev is exempt from the constitutional bar on Presidents running for office more than twice in a row and from holding membership of a political party. He is the head of the biggest political party in Kazakhstan, Nur Otan (which translates as ‘fatherland’s ray of light’ in Kazakh), whose members are prevalent at all levels of government.
On March 20 2016 Kazakhstan held Parliamentary elections. There are 3 political parties represented in the Parliament Nur Otan, Ak Zhol, and Communist People Party of Kazakhstan). Nur Otan continues to be the largest party.
In June 2010 legislation was passed making President Nazarbayev the lifelong ‘Leader of the Nation’. The legislation gives him the right to veto legislation and address Parliament at will, even when he is no longer President. The legislation also foresees penalties for anyone found to insult the ‘honour and dignity’ of the President.
Under the Constitutional reform of 2017, which aimed at redistribution of powers between President and Government, some powers of President were abolished and transferred to the Government (for example, President no longer can issue decrees that will have a legislative force). President retains overseeing control over strategic development of the country, national security, defense and foreign policy.
In December 2012, President Nazarbayev launched a new ‘Kazakhstan 2050’ strategy, an effort to take Kazakhstan into the top 30 most developed countries in the world. As with previous development plans this focuses on the economic and social development of Kazakhstan with an emphasis on stable growth, the development of a middle class, and increasing emphasis on the role of innovation and new technologies.
As part of his election platform in 2015, President Nazarbayev launched a new programme of ‘five institutional reforms’, professionalising the civil service; promoting industrialisation and economic growth; promoting a unified nation; encouraging transparency and accountability of the state; and ensuring the rule of law. The last of these received a significant boost in 2017 with the establishment of a Court of Arbitration operating under English Common Law, associated with the newly created “Astana International Financial Centre” (AIFC) and based on the model of Dubai’s IFC. Formally operational from July 2018, the AIFC offers tax preferences for companies based there, with zero corporate, property, income and land tax rates under certain conditions until 2066. This is part of the President’s “100 Steps” plan, designed to promote transparency and accountability in the public sector.
In December 2016, President Nazarbayev announced a process to transfer some of the Presidential responsibilities to the Parliament and Government of Kazakhstan. The President’s role will be focused on defence capabilities, external policy, governance, protection of the Constitution and ensuring the effective work between the branches of state power.
This was followed in January 2017 with the initiation of a programme of Constitutional reform. The main objective of this reform was to redistribute powers between the President and the Government, thus providing Government with more responsibility. Under this reform, Parliament gets new responsibilities to control Government and executive bodies. In June 2017 the President signed legislation on introduction of amendments and additions to some Constitutional laws of Kazakhstan. With this, eight constitutional laws were brought in compliance with the amended Constitution of Kazakhstan.
2.1 Facts and figures
- GDP: US $160.8bn (2017)
- GDP per head: US $8,840.9 (2017)
- annual GDP Growth: 4% (2016)
- inflation: 7.4% (2017)
- unemployment: 5% (2017)
- national currency: Tenge (KZT)
- exchange rate as of 01.05.15: 327.25 KZT per 1 USD, 396.89 KZT per 1 EUR, 451.11 KZT per 1GBP
Major trading partners based on 2017 export figures: Italy – 17.8%; China - 12%; Netherlands – 9.9%; Russia - 9.5%; and France – 6.1%; Switzerland – 6.0%.
Major trading partners based on 2017 import figures: Russia - 39.1%; China - 16.1%; Germany - 5.1%; USA - 4.4%; Italy - 3.2%.
2.2 Recent economic trends
Kazakhstan is the most developed of the post-Soviet Central Asian states with impressive 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 the oil and gas sector contributes around 70% of exports and 30% of GDP. Low oil prices have therefore had a significant impact on government revenues and Kazakhstan remains vulnerable to external shocks. Combined with recession in Russia and slower demand from China GDP officially grew at just 1.1% in 2016 and 4% in 2017, far below the 8% averaged since 2000. The European Bank for Reconstruction and Development revised its GDP growth forecast to 3.9% for 2018 driven by higher oil prices and increased volumes.
However in real terms GDP has actually shrunk due to currency devaluation. In August 2015 the national currency, the Tenge, was moved from a pegged to a free floating exchange rate.The Tenge immediately devalued, losing 60% of its value by the end of 2015. During 2016 the exchange rate stabilised at around 330-340 Tenge to the USD.
The economy remains dominated by State Owned Enterprises with growth of the private sector constrained by a weak financial sector and corruption. There are ongoing government efforts to diversify the economy with agribusiness, financial services and transportation receiving a particular focus. In 2015 the Government launched a stimulus package – Nurly Zhol. The intention is for USD14bn worth of investments to be used to fund infrastructure projects with about half of this investment coming from international financial institutions.
2.3 Membership in international organizations
Eurasian Economic Union (EaEU)
The EaEU provides for freedom of movement of goods, services, labour and capital, a common external trade policy, and coordinated macroeconomic policy. It came into effect in January 2015 and its current members are Russia, Belarus, Armenia, Kyrgyzstan and Kazakhstan.
2.4 World Trade Organization (WTO)
In December 2015 Kazakhstan became a member of the WTO. Kazakhstan committed to harmonize its legislation with the WTO Accession Protocol provisions, and accepts obligations on 10 service sectors (including 116 subsectors out of 155 sub-sectors prescribed by the WTOclassification). Kazakhstan will adopt the General System of tariff preferences for developing and the least developed countries of the WTO. Some of the above changes are adopted. Adoption of the rest requires additional time and harmonization at the EaEU level.
Organisation for Economic Co-operation and Development (OECD)
In 2015 OECD and Government of Kazakhstan signed Memorandum of Understanding on a two-year Country Programme which was extended in 2017. This will focus on introducing best OECD practices and standards in such areas as public sector integrity and governance, environment, health, taxation, competition and business climate and statistics)
2.5 Foreign policy
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-stretch land border in the world. However, Kazakhstan carefully balances its relations between East (in particular China), the West and rest of the world. It considers itself to be a Eurasian state rather than a Central Asian one, and portrays itself as a country that can reconcile differing groups and points of view.
On 28 June 2016 Kazakhstan was elected a non-permanent member of the UN Security Council (UNSC) for the period of 2017-2018. Kazakhstan is the first Central Asian country to become a non-permanent member of the UNSC.
3. Business and Human Rights
In September 2013 the UK launched its action plan on business and human rights, becoming the first country to set out guidance to companies on integrating human rights into their operations. Read it here.
We remain concerned about aspects of Kazakhstan’s human rights record. Following his visit to Kazakhstan in January 2015, the UN Special Rapporteur for Freedom of Assembly Maina Kiai presented a report to the Human Rights Council during its 29th session in June 2015. According to this report despite freedom of association being nominally guaranteed by Kazakhstan’s constitution, in practice a ‘web of laws and practices limit the real-world freedom of political parties, public associations, trade unions and religious associations to operate.’
In June 2016 at the 117th UN Human Rights Committee meeting in Geneva Kazakhstan defended its 2nd periodic report on implementation of international obligations on civil and political rights. Committee members acknowledged Kazakhstan’s progress in this field.
However, recent cases when 2 civil activists were given imprisonment for 5 years each, and trade unions closures leave enough space for concerns on human rights situation in Kazakhstan.
3.1 Migrant workers
The population of Kazakhstan is 18,177,700. 57.4 percent or 10,439,600, live in urban areas with 42.6 percent or 7,738,100 living in rural areas. According to the migration service’s figures, the number of migrants registered in the country in January-September 2017 increased to 11,945 (+28.7% against 2016), the number of migrants who left the country had risen to 28,150 (+6.3%) and the migration balance was equal to 16,205. Major sources of migration and emigration are other CIS countries; Kyrgyzstan, Tajikistan and Uzbekistan. In particular, the share of arrivals from the CIS was 70.6%, while the share of those who left for CIS countries was equal to 89.8%. The share of interregional migrants amounted to 35.1% of the country’s total internal migrants. The positive interregional migration balance was observed in Astana city (30,315), Almaty city (22,755), and Akmola region (1,725). The majority of migrant workers are employed in low skilled jobs. They work mainly in construction and agriculture, in markets , in the service sector and as domestic workers.
Forced labour does occur and labour migrants from Central Asia are particularly at risk. The International Federation of Human Rights (FIDH) in September 2016 mentions the ‘total lack of contracts and abusive working conditions, no status and no rights for migrants in Kazakhstan.’
3.2 Ethnic discrimination
There are 130 ethnicities living in Kazakhstan. Indigenous ethnic group – the Kazakhs, comprise the majority of the population. According to the 2016 census there are two dominant ethnic groups in Kazakhstan: ethnic Kazakhs (66.48%) and ethnic Russians (20.61%) with a wide array of other groups represented, including Ukrainians, Uzbeks, Germans, Tatars, Uyghurs, Koreans. Only 8 percent of government jobs are held by non-Kazakhs.
Though discrimination based on gender is illegal, the law in Kazakhstan does not require equal pay for equal work. According to the World Bank’s Women, Business and the Law 2016 report, women in Kazakhstan faced discrimination obtaining work in the same industries as men, and no laws protect women from sexual harassment in the workplace. Women in leadership positions are underrepresented across the country. The ratio is 9.7% across the country. The target Kazakhstan plans to achieve by 2030 is 30%.
Islam is the dominant religion in Kazakhstan, which has a large Christian minority, belonging to the Russian Orthodox Church. Ethnic Kazakhs are historically Sunni Muslims of the Hanafi school. Though mainstream ‘traditional’ Abrahamic religions co-exist peacefully in Kazakhstan, the treatment of some minority religious groups is a cause for concern. Certain groups such as evangelical Christians, Jehovah’s Witnesses, Hare Krishnas and Ahmadi Muslims have been treated with suspicion by the authorities and have suffered censorship of their literature, fines for unregistered activity, and in some cases, imprisonment.
3.5 LGBT rights
Though not a criminal offence, there is a negative social attitude to LGBT persons in many parts of Kazakhstan and there are reports of discrimination in the workplace.
3.6 Labour rights
The law protects the rights of workers to bargain collectively, but in practice the right to strike and associate freely can be constrained. On 1 January 2016 a new Labour Code came into force. The new code gives more powers to the employer. For example, an employer can unilaterally change the stipulations of a working contract with an employee.
According to the Human Rights Watch (November 2016), the government of Kazakhstan fails to guarantee workers’ rights to freedom of association and to fully protect their interest in the workplace. Legislative changes in recent years have made it more difficult for workers to freely form unions and bargain collectively and have introduced criminal sanctions for leading or participating in illegal strikes.
More information on political risk, including political demonstrations, is available in the FCO Travel Advice.
4. Bribery and corruption
Bribery is illegal. It is an offence for British nationals 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 carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere. For more information go to our Bribery and corruption page.
Kazakhstan has improved its global rankings for the ease of doing business in recent years but corruption remains a key constraint. In 2017 Kazakhstan was ranked 36 in the World Bank’s Ease of Doing Business index but 122nd in Transparency International’s Corruption Perception Index 2017.
In Kazakhstan the National Anti-Corruption Bureau under the Agency of the Republic of Kazakhstan for Civil Service Affairs and Anti-Corruption is responsible for prevention, detection and investigation of corruption. Fighting corruption is a key part of the 100 steps reform programme, launched May 2015, and includes a focus on civil reform to combat corruption.
4.1 Relevant Kazakhstani anti-corruption legislation
- law on Fight against Corruption, 18 November 2015: defines fundamental principles for anti-corruption measures
- law on Civil Service; 23 November 2015: defines anti-corruption behaviour of civil servants
- ethics Code of the Civil Servant: provides rules of civil service ethics for civil servants
- the Criminal Code; 3 June 2014; defines corruption crimes and punishments
4.2 Membership in international organizations
At an international level, Kazakhstan ratified the United Nations Convention against corruption in 2008. Anti-corruption policy in Kazakhstan is monitored under the Istanbul Anti-Corruption Action Plan by OECD. Kazakhstan plans to join the Council of Europe’s Group of Countries Against Corruption (GRECO). Kazakhstan is a member of many international anti-corruption associations and initiatives.
5. Terrorism threat
For advice on terrorism go to our travel advice
6. Protective security advice
For advice on protective security go to our travel advice
7. 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.
Manufacturers and traders are strongly advised to patent their inventions and register their trademarks in Kazakhstan, and to do so through a patent or trademark agent.
Kazakhstan operates under a “first to file” and not a “first to use” jurisdiction, meaning it is important to register as soon as possible to protect industrial property rights (such as trademarks, inventions, utility models and design) in Kazakhstan. Patents are granted for the period of 5-20 years from the date of filing the application with the right to extend the patent for 3-5 years depending on the item subject to patent. Patents are granted by National Institute on Intellectual Property Rights under the Ministry of Justice of the Republic of Kazakhstan. After being granted a patent, patentee is liable to pay annual patent fees.
For further information go to the World Intellectual Property Organisation (WIPO) website and our Intellectual Property page.
8. Serious and organised crime
The United Kingdom/City of London remains an attractive location for the laundering of illicit funds generated by corruption, including high profile ‘PEP’ cases and organised crime. The Kazakh authorities are working closely with UK agencies to prosecute cases and recover assets. Relevant training is also being provided to the Prosecutor General’s Office, Anti Corruption Committee and Financial Intelligence Unit.
Kazakhstan is a transit route for Afghan grown and produced opium and heroin. Most of this is aimed at the growing domestic drugs market in Russia, but Central Asia is a transit route for some Afghan heroin trafficked to Europe. There is also increasing evidence of international crime gangs working in Kazakhstan, often with contacts in Western Europe and the Baltic States. Kazakhstan recognise the drugs threat but has only a limited capacity to tackle it. Porous borders and ineffective border management hinder the counter-narcotics effort. The NCA (in partnership with the UNODC) is actively engaged in border projects.
Kazakhstan is in the UK ‘Top Ten’ Cyber Crime threat countries; Russian speaking criminals exploit he Kazakh infrastructure to conduct criminal activities which affect the UK and other countries worldwide. The NCA (National Cyber Crime Unit), the OSCE and other international agencies are working to raise awareness with the responsible Kazakh agencies.
9. UK trade and Investment contact
The Department for International Trade contact point in Kazakhstan is email@example.com.
A guide for British businesses who are interested in developing their overseas trade and doing business in and with Kazakhstan can be found here.
The guide contains information on:
- challenges of doing business in Kazakhstan
- growth potential
- trade between the UK and Kazakhstan
- opportunities in Kazakhstan
- start-up considerations
- legal considerations
- tax and customs considerations
- entry requirements
- who to contact for more help