With a national budget of 128 billion USD, Kazakhstan is seen as an open, untouched investment area. Despite the risks, significant gains can be achieved for Turkish investors, especially textile and apparel manufacturers, in this market.
With 17.8 million inhabitants, rich natural resources and vast geography, Kazakhstan, one of the most important countries of Central Asia, has the potential to offer prime opportunities for investors. The report prepared by the Istanbul Apparel Exporters’ Association (İHKİB) sheds light on Kazakhstan’s potential for the textile and apparel industries. With a surface area of 2 million 725 thousand km2 about 3.5 times the size of Turkey, Kazakhstan’s national income is 128.1 billion USD. Kazakhstan is the largest economy in Central Asia with this national income. The per capita national income of the country, which has a rapidly changing market appearance, is at 7.138 USD. This country’s national cuurency is Tenge and according to the official data, in 2017 the GDP of the country increased by 4% and industrial production increased by 7%.
Kazakhstan ‘s the biggest partners are Russia and China
Kazakhstan is the world’s 52nd largest exporter with 37 billion USD and the world’s 65th largest importer with 25 billion USD. While Russia is the biggest importer of the country, the biggest export market is Italy and China. This country’s main export products are crude oil, refined copper and copper alloys, radioactive chemical elements, petroleum gases and ferrous alloys, and so on. In contrast, Kazakhstan mostly exports; petroleum oils, medicines, telephones, thin or thick pipes and boilers from iron or steel. Turkey ranks 12th with 0.9 billion USD for Kazakhstan’s exports and 7th for imports with 0.6 billion USD.
It is noticeable that the trade between Turkey and Kazakhstan remained at almost the same level in recent years and did not show a significant improvement. In fact, Turkey’s trade with that country declined over time, from 2013 to 2017, showing a 50% decrease. Exports, which were about 1.1 billion USD in 2012, declined to 624 million USD in 2016. Turkey’s export products to Kazakhstan include prefabricated buildings, jewellery, seeds, grains, T-shirts, jumpers, sweaters and other products.
Turkey is in the top 5 for apparel, garment and textile imports
It is noted that Kazakhstan depends on imports in terms of garments and apparels. The country has a share of 0.1% worth 492 million USD in global garment and apparel imports which is totalling up to 442.6 billion USD. Russia is the biggest supplier with a share of 24.8% and a value of 121.9 million USD in this import. Russia is followed by China with 23.29%. Turkey is Kazakhstan’s 3rd largest garment and apparel supplier with 19.5%. Looking at Kazakhstan’s imports of textile products; Russia is again the leader being the largest supplier with a value of 56.4 million USD and a share of 30.9%. The second largest textile products supplier China has a share of 29.22%. Uzbekistan ranks 3rd with 10.31% share, while Turkey is 4th with a share of 4.88%.
Turkish garment and apparel industry exported to this market worth 99 million USD in 2016, this number decreased by 13.7% to 85 million USD in 2017. Exports of textiles and raw materials exports were worth of 24 million USD in 2016, which has increased by 151.4% in 2017, to 60 million USD.
Joint Customs Tariff with Eurasia Customs Union
In 2010, customs tariffs between the Eurasia Customs Union established between the Russian Federation, Kazakhstan and Belarus; and the union members were reset, while the common custom tariff application for third countries started. Armenia and Kyrgyzstan later joined this union. Accordingly, for example, 10% tax is imposed on knitted furs and coats, and 10% on cotton and artificial synthetic dresses.
According to the data of Turkish Ministry of Economy, there are 600 companies that have Turkish capital in Kazakhstan. These companies employ more than 15 thousand people. As of March 2016, 475 projects worth 21 billion USD were undertaken by Turkish contractors in Kazakhstan. Foreign direct investment from the country to Turkey amounts to 681 million USD.
In April 2018, the Ministry of National Economy of Kazakhstan announced that; it was expected to grow more than 3.8% in GDP. The country has completed 60 of 100 steps of the development project; that it has launched to become one of the 30 most advanced countries. Having started the third modernization process last year, the country pays great attention to industrialization and digitalization.