Net negative foreign direct investment (FDI) is an immediate red flag for international capital. While UNCTAD’s World Investment Report 2026 highlighted broader growth across Central Asia, Kazakhstan recorded a net FDI outflow of $861m in 2025.
However, Alibek Bakayev, Kazakhstan’s Ambassador to the UK, offers a granular counternarrative.
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For the UK, the more fundamental challenge remains diversification, with crude oil still accounting for more than 85% of British goods imports from Kazakhstan.
Speaking with Investment Monitor, the ambassador explains how Astana intends to channel British capital into various sectors.
IM: Can you describe the steps you are taking to increase UK capital flows into Kazakhstan and to strengthen the trade relationship between the two countries?
Bakayev: Since taking up my post, I have set a straightforward test for our economic diplomacy: how many credible projects progress from an initial conversation to financing and implementation.
The UK–Kazakhstan Strategic Partnership and Cooperation Agreement, which entered into force on 3 June 2026, gives us a stronger framework across trade, investment, financial services, energy, transport and intellectual property.
It will also connect British investors, service companies and technologies directly with Kazakh project sponsors, the Astana International Financial Centre (AIFC) and relevant decision-makers – to remain involved when investors encounter practical obstacles. Critical minerals provide the clearest example of this approach.
The latest UK data put bilateral trade in goods and services at approximately £2.6bn ($3.47bn) in the twelve months to the end of the first quarter of 2026. However, its composition is as important as its size: services account for more than three-quarters of UK exports to Kazakhstan, while crude oil represents more than 85% of UK goods imports from Kazakhstan.
While the relationship is substantial, it is still too concentrated. Diversifying it will require continued improvements in project preparation, procurement transparency, regulatory consistency and contract enforcement.
IM: Now that the UK-Kazakhstan Strategic Partnership and Cooperation Agreement has been ratified, what does this change in practice for active investors on the ground?
Bakayev: The agreement is not a conventional free-trade agreement that removes tariffs overnight, nor does ratification automatically change every domestic licence or tax rule.
For investors committing capital to a mine, energy asset or infrastructure project for perhaps 15 or 20 years, greater certainty over the rules can be more valuable than a short-term incentive.
For British companies already operating in Kazakhstan, the agreement establishes a number of practical safeguards, subject to its terms and reservations. These include non-discriminatory treatment, protections for the transfer and repatriation of investment capital and profits, clearer licensing procedures, access to courts and administrative bodies, and greater regulatory transparency. Provisions on temporary entry should also make it easier for companies to deploy key personnel.
The real test will be implementation. Kazakhstan has chosen to bind itself to the standards set out in the agreement. Investors are entitled to judge us by how consistently we deliver them.
IM: The World Investment Report 2026 noted that while Central Asian FDI grew, Kazakhstan experienced a net FDI outflow of $861m in 2025. What steps are being taken to reverse this trend and support long-term inflows?
Bakayev: The $861m net outflow deserves attention, but it should not be read as $861m of cancelled projects or an economy-wide withdrawal by investors. FDI statistics include equity, reinvested earnings and intra-company debt. Kazakhstan’s negative balance in 2025 was overwhelmingly concentrated in mature oil and gas projects: that segment recorded approximately $6.3bn in net outflows as major investments, including the Tengiz expansion, moved from an intensive construction phase into production and capital repayment.
The National Bank’s gross-inflow measure rose by 14.4% to $20.5bn; manufacturing recorded a net inflow of around $1.7bn, while trade, finance and communications together attracted approximately $3.4bn. These measures are not interchangeable, but the underlying picture is clearly more nuanced than the headline.
We want to move beyond traditional resource extraction towards critical-minerals processing and recycling, power and grid infrastructure, Middle Corridor logistics, digital infrastructure, advanced manufacturing and agrifood.
In London, we are engaging strategic investors, banks, asset managers, the London Stock Exchange Group and UK Export Finance (UKEF). UKEF is currently open for short- and long-term cover in Kazakhstan and indicates market-risk appetite of at least £5bn and local-currency financing available for medium- and long-term business. The task now is to convert that capacity into bankable transactions.
IM: Are any fiscal incentives, tax exemptions, or Special Economic Zone (SEZ) privileges being offered to British companies willing to invest in downstream processing?
Bakayev: Yes, but these are project-based incentives, not a UK-specific concession. Within an appropriate SEZ, income from qualifying activities can receive a 100% reduction in corporate income tax, alongside zero land and property taxes, zero-rated VAT on specified goods consumed in the zone and duty-free imports under the free-customs-zone procedure. For newer SEZ agreements, the principal tax-holiday periods are seven, 15 or 25 years, depending on project value.
Outside an SEZ, support is more project-specific. Under Kazakhstan’s 2026 investment and industrial-policy framework, qualifying projects may receive tax preferences for up to ten years, customs-duty or import-VAT relief on eligible equipment and inputs, in-kind grants such as land, and facilitation for specialist foreign labour.
For metals processing, a qualifying locally incorporated manufacturer may also seek priority access to domestic copper, aluminium or zinc. The current mechanism provides discounts against London Metal Exchange benchmarks of 5% for finished-goods production and 1% for intermediate products.
IM: Over 85% of UK goods imports from Kazakhstan are still crude oil. What specific strategies are you using to pitch non-resource sectors like ICT, green energy, or agriculture to British institutional investors?
Bakayev: The 85% figure is a fair warning that our merchandise trade remains too concentrated, and we should not try to explain it away.
Our approach in London is increasingly sector-specific and transaction-led: matching projects to investors with the appropriate mandate and ticket size, bringing sponsors, regulators and potential offtakers into the discussion, and following meetings with financial models, risk allocation and access to project data.
In renewable energy, we are presenting portfolios of wind, solar and storage assets supported by auctions and long-term power-purchase arrangements, with grid connection and currency exposure addressed from the outset.
In ICT, where Kazakhstan’s IT-service exports exceeded $1.1bn in 2025, we distinguish scalable software companies from data centres and digital infrastructure, which can fit long-duration infrastructure capital.
In agriculture, we are explicit that foreign investors cannot own or lease farmland. The opportunity instead lies in regenerative and climate-smart agriculture, water security, irrigation and water-efficiency technologies, food processing, carbon management and export logistics.
IM: Following the signing of the bilateral Critical Minerals Roadmap through 2027, how is it progressing?
Bakayev: The 2026–2027 roadmap covering geological exploration, processing and advanced technologies was signed in London in February 2026 and is still in its early implementation phase.
The near-term test is whether projects are passing the intermediate stages: access to better geological data, technical evaluation, bankable feasibility studies, processing solutions, long-term offtake and financing.
Our priority is not simply to extract more material, but to process it in Kazakhstan and connect it to resilient UK supply chains.
A tangible development came in July, when Kazakhstan’s Zhezkazganredmet and the UK’s Maritime House concluded a five-year rhenium offtake contract. Existing UK-Kazakh rhenium cooperation has already demonstrated a route into the Rolls-Royce supply chain.
IM: Are there any concrete exploration or extraction projects involving British businesses, such as Rio Tinto and Maritime House’s ongoing work, that are expected to break ground in the near term?
Bakayev: Rio Tinto’s Kazakhstan subsidiary has prepared an exploration programme for 2026–2031 covering the Kylshbay-1, Kylshbay-3 and Kylshbay-5 areas in the Moyynkum district of Zhambyl Region. Anglo American is also undertaking geological exploration activities in Kazakhstan. More broadly, we see an opportunity to bring additional UK companies into Kazakhstan’s copper sector.
IM: UK Department for Business and Trade data shows bilateral trade fell 2.8% year-on-year to the end of Q1 2026. What are the specific challenges to steady trade growth?
Bakayev: The 2.8% decline is measured in current prices. UK imports of Kazakh goods actually increased by 2.5%, while UK services exports to Kazakhstan remained broadly stable.
More than four-fifths of the £76m overall decline came from lower UK imports of services from Kazakhstan. Kazakhstan’s total goods trade also grew by 10.5% in the first quarter of 2026, so this is not principally a story of declining demand in our market.
The more fundamental challenge is that bilateral trade still lacks sufficient breadth and diversification. Kazakhstan’s landlocked geography also adds to the cost of trade, although I would stress that the Trans-Caspian International Transport Route is developing rapidly, strengthening Kazakhstan’s connectivity between Asian and European markets and creating new opportunities for trade and logistics.
There is also a practical market-access gap. Many British companies still have limited knowledge of Kazakhstan beyond energy and mining, while prospective Kazakh exporters must meet demanding UK requirements relating to certification, scale, and distribution.
IM: The EU is already supporting the Trans-Caspian International Transport Route via its Global Gateway fund. Where does the UK stand?
Bakayev: At present, the UK’s support is project-led, rather than through a dedicated corridor-wide package comparable to the EU’s Global Gateway. However, the UK recognises the strategic importance of the Trans-Caspian route, with UKEF engaging on potential rail, port and logistics projects. The UK is also a major EBRD shareholder, supporting connectivity projects such as the modernisation of Aktau Port.
For Kazakhstan, the Middle Corridor reflects 15 years of sustained investment and over $35bn in transport and logistics infrastructure, alongside digital cargo tracking and smart customs. Cargo volumes increased more than fivefold, from 0.8 million tonnes in 2020 to 4.1 million tonnes in 2025. British capital is already involved: Standard Chartered is providing up to $100m within a $300m financing package for the Almaty Railway Bypass.
The next phase is about moving beyond goods to energy, data, capital and technology. Together with Azerbaijan and Uzbekistan, we are developing the Caspian Green Energy Corridor, including a high-voltage submarine cable linking Central Asian energy systems with Azerbaijan and potentially Europe. With Azerbaijan, we are also developing a Trans-Caspian fibre-optic cable between Aktau and Sumgayit, with planned capacity of up to 400 Tbps.
