Kazakhstan has emerged as a top investment destination in North and Central Asia, attracting $15.7 billion in new projects, according to the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) latest report released on Dec. 25. The figure represents a 88% year-on-year increase, accounting for 63% of all investments in the region.
Kazakhstan as a leader in the subregion
Investment inflows into North and Central Asia grew by 27% to $24.8 billion in 2023.
“The growth in Kazakhstan now sees it attracting 63% of the region’s total FDI in thus far 2024, led by investments totaling $11 billion from Qatar’s UCC Holding to establish two gas processing plants, a new compressor station, and two additional trunk gas pipelines throughout the country,” reads the report.
QazaqGas, the national gas company, and Qatar’s UCC holding signed key agreements during President Kassym-Jomart Tokayev’s visit to Qatar. Among these projects are two gas processing plants with capacities of one billion and 2.5 billion cubic meters annually to enhance raw gas utilization, a new compressor station, the Aktobe-Kostanai gas pipeline, and the second line of the Beineu-Bozoi-Shymkent pipeline.
“In this context, proactive investment promotion by line ministries and investment promotion agencies (IPAs) becomes increasingly crucial, particularly in sectors contributing to sustainable development. For emerging investment destinations, success depends not only on creating the right policy environment but also on offering investors a comprehensive suite of support services and aftercare,” reads the report.
Trends in North and Central Asia
Other countries with robust investment trends include Uzbekistan ($4 billion), the Kyrgyz Republic ($2.1 billion), Azerbaijan ($1.2 billion), Turkmenistan ($339 million), Georgia ($126 million) and Armenia ($67 million).
Outward investment from the subregion declined in 2024, following a recovery in 2023. The report indicates that total outflows fell by 58% to $2.3 billion. Russia accounts for 90% of this amount, or $2.1 billion. Of that, Russian investors directed $847 million into India and Belarus’s coal, oil, and gas sectors.
Investment patterns in Asia-Pacific
FDI in the Asia-Pacific region hit $292 billion from January to September this year, a $14 billion decline compared to $339 billion in the same period in 2023. Leading recipients were India ($76 billion), Australia ($38 billion), China ($28 billion), and Japan ($25 billion) announced to be invested.
“The landscape of foreign direct investment (FDI) in Asia-Pacific continues to evolve rapidly amid global economic uncertainties, geopolitical shifts, and technological transformations. While 2024 has witnessed some moderation in investment flows following the record-breaking announcements of 2023, the region has demonstrated remarkable resilience and maintained its position as a premier destination for international capital,” states the report.
Investors are adjusting to a “new normal” driven by enduring shifts in global markets and politics. Key drivers include accelerated digital economy investments post-COVID-19, a stronger emphasis on energy security, supply chain restructuring amid geopolitical tensions, and the mainstreaming of industrial policies.
Experts highlight two key investment trends – a more cautious evaluation of new opportunities compared to the initial surge of reactive investments and a natural slowdown in investment pace as 2023 projects transition to implementation, with corporate stakeholders closely monitoring outcomes and impact.
Sectoral trends
According to the report, most inward FDI in the Asia-Pacific region went to the services sector, which accounted for 40-50% of the total. The share of the extraction and manufacturing sectors has fluctuated.
As of September, the manufacturing sector accounted for 41% of total FDI in Asia-Pacific, while the services sector made up 55%. The share of the primary sector dropped to 4% in the first three quarters of 2024, down from 9% in the same period in 2023.
“Within the manufacturing sector, the top sectors targeted in the first three quarters of 2024 were the semiconductor, electronic components, and metals sectors, attracting $28.2 billion, $19 billion, and $12.5 billion,” reads the report.
Although metals remained the leading manufacturing sector in 2023, investments in the first three quarters of 2024 declined by 61% compared to the same period in 2023. The report indicates that this decline stems from sluggish global steel demand, falling steel prices, heightened Chinese steel exports at lower costs, and reduced domestic consumption.
