Presentation by H.E. Kassymzhomart Tokaev, Minister of Foreign Affairs of the Republic of Kazakhstan at the Economic Forum
(Jeddah, January 18, 2004)

Distinguished participants!

First of all I would like to mention that I’m participating at this prestigious Forum with great interest, appreciation and gratitude to the organizers for giving me this opportunity to make a presentation of Kazakhstan, a newly independent country. Twelve years ago we embarked on the path of creating market economy having no experience and tradition of doing that.

It was a serious challenge for us since very few people outside the country and even our compatriots believed that someday Kazakhstan would succeed. There were also serious doubts whether Kazakhstan would become a really independent state because we had to face threatening challenges like total collapse of economy, hyperinflation, high rate of unemployment, drastic reduction of population, absence of international treaties and legally confirmed borders. But despite all these threats and challenges our reforms initiated by President Nursultan Nazarbayev achieved the desired results: the economy of Kazakhstan has been rapidly developing for the last four years, since 1999 Kazakhstan has gained macroeconomic stability and sustainable development.

The economic growth during the last four years was about 50 percent. Our economy is growing by 9-10 annually. Industrial production, agricultural and construction industry are booming. Meanwhile, nearly 80 percent of our economy have been privatized, a special attention is being made on developing SME's. Now more than 1 mln. people out of 15 mln. of our population are engaged in SME's.

Kazakhstan is one of the first states in CIS which has been recognised by UN, EU and USA as a country with market economy. We are the most successful country in Central Asia by all economic indicators, including GDP which is larger than economies of all our neighbours taken in combine. Our country takes up the third place on attracting per capita foreign investments among postsocialist countries. From 1993 till 2003 more than 23 billions dollars of direct investments have been attracted into the economy of Kazakhstan.

The financial reserves of the Government, including the deposits of the National Fund, reached almost 9 billion USD. In other words these reserves “cover” nearly 80 percent of annual import of commodities into our country and exceed the volume of state debts which by the way take up only 15 percent of GDP. Kazakhstan in principle does not need to take loans and has become a netto-creditor.

The financial system of Kazakhstan has been recognized as one of the most developed in the world, it is totally transparent and safeguarded from the state interference. The banking system of our country also meets basic international standards. Since 2003 Kazakhstan banks have introduced the international standards of accountancy.

Kazakhstan has already completed the pension system reform which is highly estimated by all the financial institutions. We also have a very developed agriculture which produces annually 17 mln. tons of grain, Kazakhstan is selfsufficient in terms of meat products. Our agricultural export potential is very strong and promising.

I hope you will agree all those indicators and facts are quite impressive, taking into account a relatively small population of my country (15 mln. people) and the fact that Kazakhstan launched its reforms only 10 years ago. Kazakhstan is actively negotiating on the accession to the World Trade Organization.

Talking about foreign investment into our economy, its necessary to mention that the energy sector still attracts major interest of the leading companies. It’s quite natural because Kazakhstan possesses the largest reserves of oil and gas in the region.

The government of my country adopted the Program on offshore exploration of the Caspian Sea in the upcoming 10 years. We expect 150-200 billions USD to be invested in several projects in oil and gas sector. Today Kazakhstan produces 50 million tons of crude oil (1 mln. barrels daily). Up to 2015 we are going to bring this volume to 180 million tons.

While proposing the exploration of its oil reserves, Kazakhstan is addressing the issue of creation of a multiple network of export pipelines. Two years ago the joint project of Kazakhstan, Russia, Oman and major western companies – called the " Caspian Pipeline Consortium" was brought into operation. This pipeline gives us an opportunity to export more than 20 mln. tons of crude oil to the external markets. Our assessment of export pipelines is clear and simple: the more pipelines we have the better it will be for Kazakhstan. Now we are launching another promising and ambitious project - a pipeline from our territory to China. We also favoring another project, a strategic one, a pipeline to Turkey.

At the same time you should remember that oil and gas are not a single source of enhancing of our economical potential. This sector provides only 30 percent of revenues of the state budget and takes up nearly 20 percent of GDP.

Despite the great perspectives of oil and gas sector the Government carrying out a special programme to diversify the economy. The Strategy of Innovation for the period of 2003-2015 has been elaborated and adopted. The objective of this programme is to introduce and develop high-techs and manufacturing sector, to make our economy more safeguarded from the fluctuations of the external markets. So we established special funds responsible for this policy, including the Innovation Fund.

Education is also our priority. The more educated people, particularly young people we will have, the more sustainable will be our economic growth. This is our basic policy which is steady and consistent.

I want to tell the foreign investors who are willing to contribute to the creation of high-tech production as well as other sectors of industry that they will have tax preferences. For example enterprises working in petrochemical sector will be paying no taxes for 5 years after a new production is being launched.

Finally I would like to mention such Saudi companies like Dabbagh Group, Central Asia Investment Company, Saudi bin Laden which are actively operating in Kazakhstan. Nevertheless, I urge the representatives of Saudi business community to be more active in making investment in our country since we have created a very comfortable legal and political environment for that kind of activity.

Ladies and gentlemen!

Kazakhstan established a new capital which is located just in the center of our vast territory, in the heart of Eurasia. We are in the process of building hotels, residential houses, trade centers and other facilities in the city of Astana, where the free economic zone was established.

Taking this opportunity I would like to invite all entrepreneurs to visit Kazakhstan to see existing opportunities in my country.

Thank you for your attention.