Astana plans to attract more investment

ASTANA – Kazakhstan’s capital is counting on local and foreign investment for financial self-sufficiency. More than 10 potential large investors are considering investment prospects in Astana, authorities and analysts say.

Of the nearly US $20 billion (3 trillion KZT) in foreign investment that Kazakhstan drew last year, Astana absorbed US $4 billion (594.6 billion KZT) – 30 times more than 10 years before.

The Astana mayor’s office estimates that the capital’s annual budget has grown 50-fold in the last 10 years to reach US $2 billion (297.3 billion KZT), including 70% in federal transfer payments. The time has come to end the subsidy, President Nursultan Nazarbayev has said more than once.

Meanwhile, Astana’s share of the GDP has grown from 1.5% to 10% in the same period.

All those are “good signals for future investors,” Astana Deputy Mayor Kanat Sultanbekov said, adding that the bulk of investments today are in construction and manufacturing industries.

“Astana now intends to attract investments in non-resource-based and high-tech industries,” he said. To lure investors, the municipal government by 2014 plans to establish special economic zones (SEZs) and offer other favourable terms to them.

“Back in 2001, we established an (SEZ) called ‘Astana – A New City,’” Sultanbekov said. “Its area has now increased to 7,600 ha, with projects worth nearly US $1 billion (148.6 billion KZT) currently under implementation in the industrial park within this SEZ, including a logistics complex, vegetable warehouses, and several building-material plants. Twenty-one companies investing a total of US $500m (74.3 billion KZT) were attracted there in 2011.”

City called attractive

Astana today is drawing attention from regional and internationally renowned investors in IT, metal-working, light industry and food companies, economist Bolot Akhmedbekov said.

“The city has a favourable location, and although it lost business during the world financial crisis, it was practically unnoticeable and new industries kept developing,” he said. “All that confirmed Astana as a reliable market in the eyes of investors. Besides, in contrast to many other places in the Commonwealth of Independent States, the situation there is quiet and risk-free.”

The idea of establishing new SEZs in Astana will be an additional spur to city development, Akhmedbekov said.

“In the existing SEZs over the years, 257 facilities worth a total of US $10 billion (1.5 trillion KZT) were built,” he added. “If we offer new incentives, that’s bound to bring new investment.”

To attract investments, the authorities will initiate new projects, such as a hotel, a sports complex and facilities for the National Space Centre, worth more than US $180m (26.8 billion KZT). Some of the would-be Centre’s facilities have already been built – a design and technology bureau, a factory for goods assembly and testing and a building for the above-ground portion of the Space System for Remote Probing of the Earth.

Another US $175m (26 billion KZT) is needed to build a freight hub at Astana International Airport, Sultanbekov said.

This project will be implemented under a public-private partnership that already has attracted the attention of several Chinese and Korean companies, according to Astana Innovations. The would-be investor will be offered all tax preferences as an SEZ participant.

Parking lots, too

Astana also needs about 100 underground parking lots to accommodate the unsightly vehicles that occupy sidewalks and apartment courtyards, Sultanbekov said.

“The mayor’s office has proposed three investment projects, each worth US $16m (2.4 billion KZT),” project co-ordinator Serik Bektemirov said. “The parking lots are designed for 1,700 cars in the busiest areas of downtown Astana, the so-called Left Bank. They are to be built (by their eventual operator) over a 30-year period.”

The parking lot project is promising and useful, because “Astana’s image is spoilt by the dominance of vehicles,” said Dmitry Verkhoturov, an analyst with the Central Asian Development Institute. He suggested building parking lots not only on the Left Bank, but also in the old city centre, under the square near the mayor’s office, a space that can hold up to 1,000 cars.

“With time, Astana will be able to become as mighty as Almaty,” Akhmedbekov said.