Kazakhstan attracted $756 million in foreign direct investment during the first half of 1997 alone, according to figures recently released at an Almaty press conference by Baurjan Kaimakov, Director of the State Investments Committee. (Russian agencies, October 22) If this pace continues, Kazakhstan would roughly equal the $1.638 billion in FDI attracted in 1996, a figure that represented 7.9 percent of last year’s GDP (Kazakhstan Economic Trends, July 1997)
South Korean companies are by far the largest foreign investors in Kazakhstan. They accounted for nearly $400 million of the $756 million invested during the first half of the year, and have cumulative investments worth more than $1 billion. (Russian agencies, October 15) The importance of the Korean connection was further underscored by the October 19 conclusion in Seoul of three new investment protocols between First Deputy Prime Minister Akhmetjan Esimov and representatives of the Daewoo corporation. (Russian agencies, October 21) These agreements anticipate investment of some $370 million in Kazakhstan’s telecommunications sector, as well as Daewoo’s construction of a $250 million press center in Almaty. Other Korean chaebols with active or prospective investment programs in Kazakhstan include Samsung, LG Electronics, and Hyundai.
These developments underscore Kazakhstan’s success (compared to other CIS countries) in attracting foreign direct investment. According to Kaimakov, the mid-1997 investment figures give Kazakhstan the fifth largest cumulative FDI value among post-Communist countries. In per-capita terms, Kazakhstan ranks second only to Hungary. These investments have also helped to ease Kazakhstan’s strained balance-of-payments position. On the other hand, because most of these investments are narrowly concentrated in the energy sector, they have yet to generate large payoffs for the rest of the economy, or had a significant effect upon living standards. Moreover, the increasing financial difficulties experienced by a number of the Korean chaebols at home suggest that their investments in Kazakhstan’s economy could prove to be a mixed blessing.
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