In furtherance of the discussion whether Kazakhstan needs the Astana International Financial Centre (AIFC) and whether this costly project can have at least the slightest success in the foreseeable future, we would like to draw our reader’s attention to the question that, so far, no one in the country has asked.
The thing is that the AIFC’s main goal and task lies in attracting foreign investments to the country. Those who would like to confirm this for themselves may visit the official website of this quasi-governmental structure and familiarize themselves with the content of page «Goal» in the «About Us» section. For the rest, we offer two citations from the text entitled «We Create New Opportunities» (text in bold by kz.expert).
«Our goal is to maintain our course towards the modernization and development of the Republic of Kazakhstan, to make our country’s business environment even more attractive, to attract the capital needed for the development and to provide companies with the most contemporary, reliable and effective investment tools».
«Our country’s prosperity cannot be achieved in isolation from the economic development of the other countries of the region and without regard to the global economy. Therefore, our mission lies in ensuring the sustainable development of the Republic of Kazakhstan and the entire Central Asian region via offering new opportunities for attracting investment capital, launching important and effective projects in the industrial and service field, developing market outlets to corporations and entrepreneurs».
So, the question we would like to pose to the local market participants — the potential investors and authorities; the question that, in our opinion, must be — widely and actively — discussed inside the country is this. Does Kazakhstan truly need foreign investments?
Personally, we think it does not.
Why? Because, today, the country has enough of its own investment potential. It consists of:
а) the resources kept in the National Fund of the Republic of Kazakhstan (at the end of September 2019, they constituted US59.4 $ bln according to the official data).
b) the idle funds of the second-tier banks a significant part of which is taken by the National Bank of the Republic of Kazakhstan (about US9 $-10 bln),
c) the idle funds of the citizens deposited at the banks (8.7 trillion tenge as of September 1, 2019),
d) the idle funds of legal bodies deposited at the same banks (7.9 trillion tenge),
e) the idle funds of both legal and physical bodies deposited at the foreign financial institutes as well as on the offshore companies’ accounts (it is hard to estimate their size, but we are talking about tens of billions of US dollars).
It is difficult to assess the total volume of the monetary funds that belong to the Kazakhs that may eventually be invested in the economy, but we are certain we are talking about no less than a hundred billion dollars.
With that, all the talks that the resources of the National Fund of the Republic of Kazakhstan cannot be used for the purpose of investing them in the national economy are foolish. For that to become possible, it is enough to change certain normative documents. Of course, before that, one would have to convince the main money executor of the National Fund of the Republic of Kazakhstan — Nursultan Nazarbayev.
But if this is so, then the strategic task of attracting investors to the national economy must be formulated in a much more extensive way than the authorities do today — what needs to be done in order for the Kazakh and foreign physical and legal bodies to start investing?
First, one must start to get interested in what does not satisfy the local and potential investors. And agree with them about a mutually profitable cooperation. And only after this has been achieved, to start solving the topical problems, overcome the difficulties, eliminate the barriers. Basically, work towards the result.
However, it is this kind of real work on the forming of the normal investment climate in Kazakhstan is what is lacking today and perhaps is not going to materialize in the future. As for the reasons, there is such an abundance of then that their naming and analysis alone requires several lengthy publications. We will point out to only one of these reasons, not the most crucial one but the one that is most noticeable even from the outside — the massive despotism of the state, its structures and individual officials.
In these circumstances, Akorda’s (and now «the Library’s») desire to attract foreign investors on a large scale is akin to an attempt of a man who has lost his wallet to find it under a street lamp (in other words, where it is more convenient to do but not where the wallet was actually lost).
Clearly, these actions will result in nothing as far as the Kazakh state is concerned. Except perhaps it may switch of the citizens’ attention to the large-scale show of the nation-wide importance called the Astana International Financial Centre. Still, one cannot be satiated by shows alone…