Orbeli Analitical Research

Turkey’s Economic Presence in Kazakhstan

11 m. | 2020-04-07

Kazakhstan is of great importance for Turkey first of all in the context of solidarity with the Turkiс world. Kazakhstan is a key partner in Turkey’s post-Soviet foreign policy as opposed to Moscow. Turkey pays significant attention to Kazakhstan՛ս role in East-West transport communication corridor bypassing Russia.

Between 2010-2019, Turkey’s exports to Turkic countries were $50.9 bil. Azerbaijan is leading with $19.6 bil., followed by Turkmenistan $13.5 bil. and Kazakhstan $8.4 bil. Only in 2019, Turkey’s exports to the Turkic world amounted to $4.7 bil.

Source: https://www.aa.com.tr/ru/экономика/экспорт-турции-в-страны

Let’s note, that Turkey is not included in the list of Kazakhstani major trading partners and leading foreign investors. Thus, in 2018 Turkey was not included in the list of 10 leading trading partners of Kazakhstan. Russia is the major trading partner of Kazakhstan, which is followed by Italy and China.

Source: https://stat.gov.kz/edition/publication/collection

Based on calculation of the first 9 months of 2018, the largest foreign investor of Kazakhstan is the Netherlands with 27.4% of FDI. The second largest is the USA (22.8%). The shares of the Netherlands and the United States make up more than half (50.2%) of the FDI total value implemented in Kazakhstan

Source: https://invest.gov.kz/upload/iblock/54a/54acc80

According to the Investment Committee of the Ministry of Foreign Affairs of Kazakhstan, in the first half of 2019, the largest foreign investor in Kazakhstan was again the Netherlands ($3.4 bil.). The following high investment indicators were among the USA ($2.9 bil.), Switzerland ($1 bil.), China ($922 bil.) and Russia ($632 mil.). Turkey ranks 9^th on the list with $275 bil. The list of the leading investors ends with Japan with $214 mil.

Since the independence of Kazakhstan, Turkey’s FDI in Kazakhstani economy has made about $4 bil. Between 2005-2017, the dynamics of Turkish direct investment in Kazakhstan stood out with some fluctuations. The highest results were recorded in 2007 and in 2013, respectively $347mil. and $271 mil. During that period, as a rule, Turkey’s share does not exceed 2% of the total FDI in Kazakhstan [1]. In 2017, investment with a total value of $20.7 bil. was made in Kazakhstan, of which Turkey’s share was 1.24%.

Source: https://regnum.ru/news/polit/2440405.html

In the first half of 2019, Turkey made an investment of $275 bil. in Kazakhstan and $148 bil. in the first half of 2018.

Between 2005-2012, the index of FDI in Kazakhstan increased steadily and between 2012-2015, it decreased steadily: a certain increase in volumes was noticed in 2015. Between 2005-2019, the republic’s highest FDI result ($28.8 bil.) was recorded in 2012.

Source: https://regnum.ru/news/polit/2440405.html,
https://eadaily.com/ru/news/2019/06/21/v-2018,
https://strategy2050.kz/ru/news/v-kazakhstane

Between 2014-2019, the highest trade turnover result between Kazakhstan and Turkey was in 2014 ($3.2 bil.). Between 2014-2016, the bilateral trade turnover decreased steadily, and growth was observed in 2016. In 2019, the bilateral trade turnover was $3.1 bil.

Source: https://stat.gov.kz/edition/publication/collection

Between 2014-2018, exports from Kazakhstan to Turkey, as a rule, exceeded imports from Turkey: the quantitative difference was especially obvious in 2014. In 2018, Kazakhstan exported goods worth of $1.2 bil. to Turkey and imported almost half as little, $655 mil.

Source: https://stat.gov.kz/edition/publication/collection

In 2018, the highest results among exports from Kazakhstan to Turkey were recorded in crude oil and oil products ($463 bil.), refined copper and unprocessed copper alloys ($274.4 bil.), unprocessed aluminum ($189.4 bil.), wheat ($58.8 bil.) and unprocessed zinc ($56.6 bil.). Kazakhstan imported from Turkey textile goods ($149.2 bil.), metal ($51.9 bil.), ground vehicles and equipment ($37.2 bil.) and plastic ($29.6 bil).

K azakhstan is of great importance to Turkey’s energy demand, as well as reducing energy dependence from Russia and Iran. Ankara highlights Kazakhstan’s role in the issue of energy exports to European and other markets through Turkey [2]. Based on 2018 data, Kazakhstan’s oil reserves are about 30 bil. barrels, making about 1.8% of the world’s reserves. The country’s natural gas reserves are estimated at about 1.9 tril. cubic meters or 1% of the world’s reserves.

Between 2014-2018, the highest level of crude oil and oil products (1.2 tril. tons) exported from Kazakhstan to Turkey was recorded in 2014. Moreover, there was noticed a steady decline in exports of that product groups between 2014-2017. In 2018, it increased again becoming 817,000 tons. Kazakhstan’s results in the total volume of crude oil imported to Turkey was 3% in 2016.

Source: https://stat.gov.kz/edition/publication/collection

In 2017, Turkey imported 25.7 mil. tons of crude oil. The largest share in this volume was imported from Iran (44.6%)․ The shares of Iraq (27.3%) and Russia (7.7%) were also high. Kazakhstan’s share was 1.8% [3].

Turkey highlights the issue of supplying Kazakh oil to other markets through the territory of Turkey via Baku-Tbilisi-Ceyhan (BTC) Oil Pipeline. Still in 2002, Kazakhstan’s KazMunaiGas Oil Company and Azerbaijani SOCAR began negotiations in Kazakhstan’s possible participation in the BTC project. In 2006, Kazakhstan and Azerbaijan signed an agreement on the organization of oil transportation from Kazakhstan to international markets through the Caspian Sea and through the BTC oil pipeline in the territory of Azerbaijan. In 2008, Kazakhstan launched first BTC oil supply to foreign markets. According to the same data, Kazakhstan’s share in the volume of oil supplies through the BTC oil pipeline is about 10% [4]. Ankara expects to consider the issue of gas supply from the Tengiz oil and gas field in the Atyrau region of Kazakhstan in case of implementation of the Trans-Caspian gas pipeline.

In 2017, Kazakhstan and Turkey signed the New Synergy Joint Economic Program for 2017-2020. It is aimed at promoting bilateral trade and reviving joint investment capital.

T he document includes 26 investment projects with about $1 bil. volume [5]. The projects are aimed at various fields: production of construction materials, machine building, chemical and mining industry, agricultural industry, energy and infrastructure development.

Let’s recall, that New Synergy Joint Economic Program was signed also in 2012 [6]. 23 joint projects were implemented within the framework of the program with an investment volume at about $800 mil and 3000 workplace were created.

In mid-2016, the major Turkish Ipek Kagit launched a hygienic paper factory in Astana. The project costs $14 mil. The total area of the factory is 50 thous. square meters, with 17 thous. tons of production capacity. The factory was established Astana-New City economic zone (SEZ). The production is intended both for domestic consumption and export. In 2006, Turkish company Ipek Kagit founded the first paper production enterprise in Almaty [7].

In September 2018, a number of agreements were signed during Kazakhstan-Turkey investment forum. An agreement was reached between Kazakh Invest and Eksen Group to implement Downtown Almaty project to build financial, social and business center. The investment value of the project was $300 mil.

T he leadership of Turkistan signed an agreement with DAL Holding Investment Company on building a greenhouse complex in the region of Aktobe. The project costs $200 mil. and will create 700 workplace. With an agreement signed between Kazakh Invest Nation Company and DAL Holding Investment Company, the sides expressed willingness to cooperate in the development of investment projects in Kazakhstan, such as machine building, mining, IT, finances, agriculture and other fields [8]. Turkish companies Çalık Enerji and Zorlu Enerji expressed willingness to make investments in the construction project of solar power plants with 50 MW power in the Turkistan region, which costs $120 mil.

Among the joint infrastructure initiatives is the construction project of 66-km-long Almaty city highway (Big Almaty Ring Road) with an investment value of $543 mil. The project is one of the key components of the “Western Europe-Western China” transport corridor. It is implemented by a consortium consisting of Alsim Alarko, Makyol Insaat, SK Engineering & Construction Co. and Korea Expressway Corporation. The project was launched in 2015 [9]. The highway’s construction is planned to be completed in 2021.

The transportation corridor starts in North Europe stretching from St. Petersburg to Western China (the end point is Lianyungang). The total length of St. Petersburg-Almaty-Lianyungang highway is 8445 km, 2233 km of which passes through the territory of Russia, 2787 km through Kazakhstan and 3425 km through Kazakhstan [10].

Launch of the highway construction’s initiative
Source: https://informburo.kz/novosti/v-almatinskoy-oblasti

Among the major infrastructure projects is the construction of a modern international airport worth of $70 mil. in Turkistan. The investment will be implemented by a Turkish Company YDA Holding. The construction of the airport has begun since the beginning of 2019. Based on the program, the airport will operate in the end of 2020 [11]. Terminal’s annual capacity will be 3 mil. passengers.

The construction project of a five-star multi-functional Aktau Resort Hotel is carried out on the shore of the Caspian Sea with an investment value of $170 mil. as a result of the agreement reached with a Turkish Sembol Construction Company. The construction of this complex already launched in May 2019, which will be completed in mid-2020 [12].

Source: https://www.youtube.com/watch?v=73r

18 contacts worth of $1.5 bil. were signed during Kazakhstan-Turkey Business Forum held in the end of 2019, in the fields of light and chemical industry, transport and infrastructures, machine building, health, tourism, development of financial market, mining and agriculture.

Cooperation memorandum on the field of infrastructure development was signed between Kazakhstani Government and Çalık Dijital ve Bilişim Hizmetleri, which will implement the project of hospital complex’s construction in Aktau, Atyrau and Aktobe.

The construction project of the multifunctional tourist complex Caravanserai is being implemented as a result of the agreement signed between Turkistan and Turkish Company Sembol Construction [13]. The project envisages the construction of hotels, eastern market, restaurants, artificial lake and others. The construction of the complex began in the end of 2019.

Source: https://otyrar.kz/2019/12/v-turkestane-vozvedut

A memorandum was signed with a Turkish Company Kastro Kablo, aimed at implementing an investment project for the production of low-voltage cables in the region of Turkistan [14]. Kazakh QazIndustry and Turkish Betek Boya Kimya ve Sanayi A.Ş․ companies signed a cooperation memorandum on the project of establishing varnish production in the Karaganda region. The investment value of the project is $30 bil. [15].

In mid-2019, Turkish YDA Holding company reached an agreement on the construction and furnishing of 2 medical complexes in Petropavlovsk and Turkistan cities of Kazakhstan. The project costs $290 mil. and will be completed in 2022 [16].

In the end of 2019, Turkey and Kazakhstan reached an agreement on cooperating in the production of satellites, the launch of Turkish satellites from the Baikonur Cosmodrome in Kazakhstan, as well as collecting satellite parts and other issues.

The strategic partnership of bilateral relations is often emphasized in Ankara and Nursultan. The level of cooperation is almost adequately expressed mainly in the political vector and in contrast to Moscow. Referring to economic issues, Ankara has so far been forced to give up its position in the economy and investment market of Kazakhstan in competition with Western, Russian and Chinese economic capital.

[1] https://regnum.ru/news/polit/2440405.html

[2] http://www.sesric.org/pdf.php?file=ART17102401-2.pdf

[3] https://www.sigmaturkey.com/the-impacts-of-the-us-iran

[4] http://www.sesric.org/pdf.php?file=ART17102401-2.pdf

[5] https://inbusiness.kz/ru/news/novaya-sinergiya-dlya

[6] http://adilet.zan.kz/rus/docs/P1200000659

[7] https://kursiv.kz/news/kompanii/2016-06/v-astane

[8] http://www.dalholding.com.tr/kazakh-invest-partnership

[9] http://bakadepc.com/?page_id=17&lang=ru

[10] https://orbeli.am/hy/post/397/2020-03-18/Ղազախստան

[11] https://www.youtube.com/watch?v=dE2cCbxgZL8

[12] https://www.youtube.com/watch?v=73rMwHDPfY