|
EBRD announces significant new commitments to Kazakhstan; encourages authorities and foreign investors to work together
The European Bank for Reconstruction and Development (EBRD) today announced two new investments in Kazakhstan worth over US$ 150 million, to which the Bank will itself contribute over US$ 35 million. A Vice President of the Bank, Steven Kaempfer, in Almaty to attend the Foreign Investors Council (FIC) as well as meet with the country’s President, Nursultan Nazarbayev, said the investments reaffirmed the Bank’s commitment to promote Kazakhstan’s long-term economic transition.
The investments include US$ 40 million to upgrade and expand Almaty’s capacity to provide its 1.6 million citizens with clean drinking water as well as treat the city’s sewage. The financing package, to which the EBRD is providing a loan of US$ 6.3 million, will be extended to Almaty Sui, the city’s water and sewage company, majority owned by France’s Generale des Eaux, a subsidiary of Vivendi. A further US$ 25 million will be provided by the French Republic, under a bi-lateral cooperation agreement with Kazakhstan, US$ 3.7 million in equity from Generale des Eaux and the remainder generated internally by Almaty Sui.
A US$ 119 million investment, to which the EBRD is contributing US$ 28.5 million, with a further US$ 65 million from the Asian Development Bank and US$ 24 million from the Government of Kazakhstan, will rehabilitate the regionally important 245-kilometre stretch of road linking Almaty to Bishkek, in Kyrgyzstan.
Mr Kaempfer praised the Kazakhstani authorities for a number of recent notable legal reforms, such as the ratification of the International Convention on the Settlement of Investment Disputes, as well as efforts to stamp out corruption. Kazakhstan is currently enjoying a very favourable macro-economic climate, said Mr Kaempfer, with growth expected to continue next year.
But Mr Kaempfer warned that a series of external factors, such as high oil prices and a resurgent Russian economy, are largely responsible for the country’s growth and that there is a very real risk these circumstances will not last. Moreover, stressed Mr Kaempfer, whilst Kazakhstan has real potential to become a key player on the world’s energy market over the coming decades – highlighted by the recent oil find in Kashegan – peak production levels are a long way off, and price volatility will remain an important risk in the meantime.
"Expecting external conditions to remain the same is dangerous over the long-term, and whilst the country has clearly enormous potential in the energy sector, it could take years to realise this," said Mr Kaempfer. "In this context foreign direct investment can play a vital role in diversifying the economy and making it more resilient to shocks. To this end, it is essential that FDI is encouraged in the non-oil sectors, such as infrastructure, the banking sector, small business development and industry."
Mr Kaempfer said that the implementation of reforms discussed at the last FIC, which were designed to improve the country’s investment climate and thereby promote FDI, remained important. These included the creation of a transparent and consistent tax code as well as a predictable regulatory environment. Mr Kaempfer emphasised, however, that foreign investors also had a role to play.
"Foreign investors bring in scarce investment resources, skills, technology and technical assistance. But they can also, through their own activities and behaviour, make a difference in the confidence-building process by showing how a good reputation, good governance and high standards of business practices create market value and commercial success," said Mr Kaempfer.
The EBRD, said Mr Kaempfer, is committed to Kazakhstan. Since 1992, when Kazakhstan joined the EBRD, the Bank has committed US$ 850 million, which in total has mobilised around US$ 2 billion in investment. Among the Bank’s projects, Mr Kaempfer highlighted the success of the Kazakhstan Small Business Fund, which has supported over 6,000 small businesses.
The EBRD recently published its new country strategy for Kazakhstan, available on the Bank’s Web site, which says the oil and gas sector will become an important focus for the Bank. It stresses the need, however, to diversify investment throughout the economy. It highlights five crucial areas:
- Promoting investment in industry, including opening up the country’s mining sector.
- The continued promotion of small and medium-sized business.
- Continued strengthening of the banking sector.
- Upgrading the country’s infrastructure – specifically in the transport and energy sectors, as well as working to improve municipal infrastructure across the country, especially in water and waste-water treatment.
- Further development of a strong investment climate.
|
