Kazakhstan is stepping up support for small and medium-sized businesses. With more financing, reforms, and trade incentives, the goal is to grow its SME base and attract more European investment.
00:00Kazakhstan's government is actively supporting the growth of small and medium-sized enterprises
00:14to improve access to financing. It is increasing state guarantees for private investors. The total
00:20amount covered by these guarantees is set to rise from 14 billion euros to nearly 18 billion by
00:252027. What does this mean for local entrepreneurs and is it encouraging more European businesses to
00:31enter the market? Welcome to East-West Connect. We're highlighting business and economic developments
00:38in Kazakhstan and the wider Central Asia region, connecting with Europe and beyond. This year alone,
00:44at least 30,000 SMEs are expected to receive almost 3 billion euros in support. According to the new plan,
00:51loans will be available to 50,000 projects annually. Almost 11,000 joint ventures unite foreign and
00:57local partners, all with access to bank loans, state-backed guarantees and international investment
01:03vehicles. The OECD's 2023 progress report notes that more work remains, including consistent
01:10implementation of the new entrepreneur's code, better access to trade data and stronger dispute
01:15resolution mechanisms. Joining us to discuss these dynamics is Nurlan Kulbatyrav, first deputy
01:21CEO of Kastrade, the Center for Trade Policy Development. Mr. Kulbatyrav, great to have you with us.
01:27Hello, thank you for the invitation.
01:29Which incentives have proven most effective in attracting foreign entrepreneurs to Kazakhstan?
01:33I would like to admit, it would be just the access to finance. There are from small grants to
01:38subsidiaried percent of different grants from the state. If the foreign business is always considered
01:45Kazakhstan as a point of entry to Central Asia, and if they want to export, we have, for example,
01:50Kastrade-acceleration program, when we help us get on the external market.
01:55So, how would you assess foreign-led SEMI's ability to navigate Kazakhstan's legal framework?
02:01So, what now? Is the government planning to introduce any reforms to drive the growth of SMEs?
02:19So, what now? Is the government planning to introduce any reforms to drive the growth of SMEs?
02:29This is one of the last reforms that we have planned. It is not on the number of companies, but on the quality.
02:35So, we want it to be not only over a million individual foreign entrepreneurs, but the average entrepreneurs who pay taxes, create working places.
02:44For such competitive companies, companies will have more support.
02:48Thank you so much for being with us.
02:50Thank you very much.
02:52And now, four new commercial opportunities that could attract European and other foreign investors to Kazakhstan.
03:01Top two areas ripe for entry are processing of agricultural products and food production, franchising, logistics and business support services, and IT services.
03:11Today, foreign-owned joint SMEs in Kazakhstan are predominantly active in wholesale and retail trade, motor vehicle and motorcycle repair, other services, and construction.
03:21Here's where foreign SMEs come from.
03:24Regional neighbors lead the way with Russia, Uzbekistan, and China, closely followed by Turkey, Kyrgyzstan, and Azerbaijan,
03:30reflecting strong cultural and economic ties.
03:34Ukraine and Belarus also make the list, whilst Germany and South Korea round out the top ten,
03:39underscoring Kazakhstan's appeal to globally competitive, innovation-driven economies.
03:44Here's an inspiring success story.
03:49Askar started out with just eight employees in a 400-square-meter space, making compact transformer substations.
03:55As demand grew, so did the need for space.
03:57He bought a warehouse with support from the Damu State Entrepreneurship Fund, which subsidized over half the interest on his loan.
04:03That support helped his business grow sevenfold, now producing almost 14 million euros worth of products and services each year.
04:10For entrepreneurs, for entrepreneurs, there are all technical opportunities.
04:16There are land, there are electricity, there are heat, there are electricity, there are heat,
04:20to build factories and to launch new products.
04:24And plus, the support of the state is very good.
04:27Interest rate subsidies are in high demand among foreign entrepreneurs looking to start small and medium businesses in Kazakhstan.
04:35So far, the Damu Fund has helped finance more than 1,600 internationally-owned projects,
04:40covering over 1 billion euros in loans.
04:43The fund also offers other tools, including low-interest loans and partial guarantees.
04:47Foreign investment for Kazakhstan is a key priority in terms of attracting foreign capital, transferring technology and educating our employment.
04:59So, for European investors, it's also one of the good strategies in order to enhance their business.
05:07SME support systems like the Damu Fund help create an environment where businesses can grow sustainably and scale their operations.
05:14Just like in Askar's case, his compact transformer substation business made full use of the fund's support
05:21and is now planning to expand five-fold, aiming to produce over 70 million euros worth of electrical engineering products and services.
05:31To bolster EU businesses on the ground in Kazakhstan,
05:35European countries have established local trade offices,
05:39like the Italian Kazakh Trade Association, which helps firms deepen their local partnerships.
05:44Let's bring in its president, Marco Beretta, who's joining us down the line.
05:48Mr. Beretta, good to have you with us.
05:50Thank you very much. I'm very happy to be here today.
05:53How easy is it for European SMEs to set up operations in Kazakhstan?
05:57Are there any challenges or opportunities in this regard?
05:59Obviously, for European small-medium enterprise, opening and running business in Kazakhstan
06:07see some challenges like the legislation difference between Europe and Kazakhstan,
06:12the cultural difference, and the fact that the small and medium enterprise in the country
06:17has much more added value than foreign one in terms of economics.
06:22But Kazakhstan, in order to be attractive for small-medium enterprise in Europe,
06:27put in place a lot of leverages like a special economic zone where taxation is easier
06:34and sometimes even zero for some years.
06:38The IFC for the international law that allowed small-medium enterprise to feel more comfortable in case of problem.
06:48Interesting. How do you see Kazakhstan evolve as a business hub for European companies in the next decade?
06:54Kazakhstan is changing its DNA into the industrialization and transformation of these natural resources
07:01into added value of finer products.
07:04This is for sure a booster for small-medium enterprise to come in the country and to work on this DNA change.
07:12Our association and other associations, together with the government of Kazakhstan,
07:16organizing a supply chain forum.
07:20And this is one of the examples of how Kazakhstan can become a hub for the international SME.
07:27They need some support.
07:28They need to be driven into the process.
07:31They need to understand the ground where they want to make business.
07:35Mr. Beretta, thank you so much for joining us.
07:38Thank you very much.
07:38With a strategic position along the Europe-China middle corridor,
07:45a steady push for pro-business reforms and targeted incentives,
07:48Kazakhstan hopes to generate a new wave of SME success stories.
07:52Bye for now and join us in the next episode of East-West Connect.
