Kazakhstan, an oil-producing Caspian nation hit hard by the global recession, urged foreign companies to invest more of their profits locally to help diversify the economy.
The former Soviet nation has attracted more than $50 billion in foreign direct investment since it gained independence in 1991, mainly in its oil and metals sectors.
Addressing a meeting of foreign investors and EBRD President Thomas Mirow, President Nursultan Nazarbayev said it was time for foreign companies to look at opportunities in other sectors.
“One of the important ways of securing the financing of our economy is to create a way for foreign investors to reinvest their profits,” Nazarbayev told the meeting in the Kazakh town of Kostanai on the Russian border.
“I had several meetings with foreign investors ... who expressed their interest in investing concurrently in other sectors of the economy,” he said.
Nazarbayev, who has ruled his resource-rich nation since 1989, urged the government to create the most “most attractive, comfortable conditions,” for that purpose.
Foreign investors have been worried about the state of Kazakhstan's banking sector, which is plagued by deteriorating asset quality and painful debt restructuring talks, as well as a string of high-profile arrests in the key uranium sector.
Memories are also still fresh of a bitter dispute between the government and a group of Western oil companies in 2007-2008 over the future of the Kashagan oilfield, one of the world's biggest oil discoveries in past decades.
Nazarbayev appeared to want to allay any fears that Kazakhstan could try to gain greater control over foreign investors and their businesses in a country where the strategic oil sector is dominated by Western companies.
“I would like to emphasize to you - Kazakhstan was and remains committed to the principle of a market economy, the protection of the rights of private ownership and the independence of signed contracts,” he told the meeting.
“All our laws and our constitution guarantee this and they always will,” he said. “As we talk about investments and diversification of the economy however, we cannot leave unsaid that the priority for us remains the development of Kazakhstan.”
Addressing the same meeting, Economy Minister Bakhyt Sultanov vowed to do more to improve transparency and corporate standards at Kazakh companies to make it easier for foreigners to enter local markets.
US oil companies such as Chevron Corp are some of the biggest foreign investors in Kazakhstan, which now seeks to diversify sources of financing by inviting more companies from Europe and Russia, its biggest trading partner, analysts say.
Central Asia's biggest economy, Kazakhstan grew rapidly on the back of booming oil and metals prices between 2000 and 2007 but the financial crisis has ended years of double-digit growth.
Concerns about emerging market risks have made foreign investors more cautious about investing in countries such Kazakhstan - a headache for the Kazakh government seeking new ways to reinvigorate the stalling economy.
With industrial production falling and economists expecting the economy to slip into recession this year, Kazakhstan is also worried about a possible rise in anti-government sentiment in a country where the state tolerates little dissent.
Industrial production contracted by 4.6% year-on-year in January-May compared with growth of 3.8% in the same period. (Reuters)