ASTANA, Kazakhstan, January 29. Kazakhstan remains at the forefront in the Central Asian region, even with a staggering 98.4 percent decline in net foreign direct investment (FDI) inflows, attributed to a reduction in reinvested earnings, Trend reports via KAZAKH INVEST.
Kazakhstan's national investment company, KAZAKH INVEST clarified some details regarding rumors in the media about a sharp decline in foreign investments in Kazakhstan. The company’s press service emphasized that it is important to understand that these reports of a decline require detailed analysis.
The company explained that the data on FDI inflows in Kazakhstan are based on the methodology of the National Bank of the Republic of Kazakhstan (NB RK), which complies with the International Monetary Fund (IMF) standards. The calculations are based on official information about the activities of foreign direct investors, corporate statistics, and departmental reports, which are published by industry and region.
According to this methodology, FDI includes: acquisition of shares in Kazakhstani companies by non-residents (at least 10 percent). Reinvested earnings: the share of foreign direct investors in the undistributed profit or loss of Kazakhstani companies. Borrowed funds from foreign direct investors in the form of loans, goods, services, or intangible assets.
The company also noted that the significant reduction in net FDI inflows to Kazakhstan from January through September 2024 (-98.4 percent compared to the same period in 2023) was primarily due to a 93.4 percent decrease in reinvested earnings (by $6.4 billion). This indicates either a reduction in the net profit of companies with foreign participation or an increase in dividend payments to foreign shareholders.
“It is important to emphasize that reinvested earnings are formed based on the decisions of foreign shareholders regarding profit distribution as well as the dynamics of global commodity prices, considering the still high share of the mining sector in Kazakhstan’s FDI structure. These processes are beyond the control of government authorities. Therefore, the decline in net FDI inflows is due to a range of objective economic factors, such as global commodity market volatility and investors' decisions on dividend payments, rather than shortcomings in Kazakhstan's investment policy,” said Kazakh Invest.
Moreover, the drop in net FDI inflows seen in 2024 ought to be considered a passing phase, brought about by tangible economic and cyclical influences. Kazakhstan continues to shine as a beacon for foreign investors, clearly demonstrating its leadership in North and Central Asia when it comes to investing in new projects.
