In recent years, Kazakhstan has sought to attract foreign direct investment (FDI) in the education sector as a means of boosting economic productivity and efficiency. Predominantly, this has taken place through setting up foreign university branches across the country with a view to increase the skills of the workforce and thus increase the productive potential of the economy. To attract investment into Kazakh education, Kazakhstan has set up a Council for Strategic Partnership with foreign universities, which streamlines the process through the introduction of common rules for co-operation. Furthermore, through state initiatives such as the Bolashak scholarship, the Kazakh government aims to train Kazakhstani specialists abroad without losing them to jobs within their country of study.
By encouraging foreign universities to set up branches in the region, as well as skilling the workforce internationally, Kazakhstan is incentivising more foreign firms to set up operations, and thus invest, in Kazakhstan. Therefore, education as well as investment incentives can be seen as part of the reason Kazakhstan is able to attract more foreign businesses and corporations than other Central Asian nations.
Foreign University Campuses
As of October 2024, there are 23 foreign universities operating in Kazakhstan. Some of these include branches of Coventry University, De Montfort University and most recently Cardiff University, whose presence marks the first Russell Group campus in the region. This investment into Kazakh education is beneficial for investors and the nation itself, as training specialists in areas desired by foreign firms, such as IT and STEM subjects, can directly influence the volume of firms setting up branches in Kazakhstan.
Furthermore, investment in Kazakhstan’s education system is directly influencing strategic partnerships between Kazakhstan and nations such as Germany. In his September 2024 state visit, Chancellor Olaf Scholz emphasised the importance of establishing further Kazakh-German educational collaboration through the establishment of the Kazakh-German Institute of Science and Technology at Serikbayev East Kazakhstan State Technical University, with further goals to “open a Kazakh-German school, and [to secure] collaboration between the German association Bitkom e.V. and Kazakh IT companies on joint digital technology projects.” With a deepened partnership in the education sphere, both Germany and Kazakhstan are more likely to achieve mutually beneficial objectives: namely, more German companies will be encouraged to set up businesses in Kazakhstan.
Incentivising Investment
To incentivise FDI into various sectors of the economy, Kazakhstan has begun to advertise its services and development potential through the “Kazakhstan Born Bold” project. The campaign was set up with the intention of “showcas[ing] why Kazakhstan is an investment opportunity for businesses and governments around the world“. The focus areas of the project include: youth and education, logistics and transportation, energy and environmental as well as tourism and culture. The slogan, “Born Bold,” can be linked to the address made by President Tokayev at the World Nomad Games 2024 where he used the phrase “тумысынан қайсар” (“born courageous”). Now, this phrase has been used in relation to economic and foreign policy spheres when promoting Kazakhstan worldwide. With a literacy rate of 99.8% and a Human Development Index score of 0.802, there are ample reasons for foreign firms to invest in a highly skilled Kazakh workforce. In this regard, joint ventures with multinational corporations have already begun taking place.
This includes Microsoft’s plans to open a multi-regional hub in Kazakhstan, Amazon’s support in boosting Kazakhstan’s IT capabilities, as well as Mastercard partnering with the Eurasian Bank to launch the Digital Tenge Card.
Furthermore, international investment has been incentivised through Kazakhstan’s adoption of English common law in the AIFC (Astana International Financial Centre), a move that enables a “a flexible and transparent approach to resolving disputes.” Through the implementation of a widely recognised legal system, investors’ fears concerning investment in an unfamiliar environment can be alleviated. This adoption can be further linked to Kazakhstan’s goal to “shape Astana into Central Asia’s leading finance hub” using tax, monetary, and trade reforms. Therefore, in terms of education, the prevalence of British university branches in Kazakhstan is particularly beneficial, due to its contribution towards the education and training of lawyers under the English legal system.
In addition, the incentive for universities and firms to invest in Kazakhstan can also be viewed through the lens of tax credits and incentives in Special Economic Zones such as ‘Astana, the New City’, Aktau Sea Port, and the ‘Park of Innovative Technologies’ in Almaty. According to PwC, “incentives are granted under an investment contract between the government and companies with focus on priority sectors of the economy, as determined by the government.” Priority investment projects are granted investment subsidies, tax incentives and customs duty/import VAT exemptions, with certain taxpayers being able to shift payment deadlines or reduce payments by 100% if they meet a certain set of criteria set by the government.
Internationalisation and the Bolashak scholarship
As well as encouraging foreign universities to branch into Kazakhstan, the government has also taken initiative to internationalise the education of their workforce. The most poignant example of this initiative is the Bolashak scholarship programme, which was conceived in 1993 and designed to fund the education abroad of students of various disciplines. The programme has benefitted over 10,000 students thus far by covering all study-related costs.
The OECD explains that in order to avoid a ‘brain drain,’ where Bolashak recipients do not return to Kazakhstan having acquired education abroad, the scholarship can “only be given to an applicant who provides collateral property equivalent to the value of the scholarship, or provides up to four guarantors who will assume financial liability for the government’s investment should the recipient not return to Kazakhstan. Upon completion of their study abroad, recipients must work in Kazakhstan in the discipline of their degree for five years. Their collateral guarantee is then released.” Therefore, the internationalisation of Kazakh education can be understood as possibly limiting on an individual level – i.e. for those who do not have guarantors or sufficient collateral – while extremely effective in securing talent that may have otherwise been lost to the foreign market. Opportunities like the Bolashak scholarship allow Kazakhstan to further incentivise FDI, edging the nation forward in its aims to become a dynamic commercial, technological, and financial centre with specialists trained in key sectors for the government’s goals.
Conclusion
The increased presence of multinational corporations in Kazakhstan will further encourage companies to invest in the region. Following in the others’ footsteps, corporations may begin to recognise Kazakhstan as a secure, fruitful country within which to invest. This domino effect is due to investors being keen to keep up with their competitors, by securing a foothold in the Central Asian market. As firms with a more established presence in the region are likely to secure both brand loyalty and an increased market share, other corporations are likely to follow suit. From the combination of a highly skilled workforce, educated through both foreign and state investment into higher education, subsidies, and the introduction of the AIFC, Kazakhstan hopes to see further increases in the productive potential of the economy in years to come.