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Kazakhstan and Germany: 30 Years of Diversified Cooperation

18 May 2022 11:35

NUR-SULTAN. KAZINFORM - The sweeping geopolitical changes in the region and the volatility of the global economy create not only challenges but also opportunities to strengthen bilateral ties between Kazakhstan and Germany that marked 30 years of diplomatic relations in February 2022. That was a key takeaway of the Kazakh – German business forum hosted in Nur-Sultan on May 12. More about the current state and prospects in the bilateral ties between Kazakhstan and Germany is in the latest analytical article of Kazinform.

The two countries established diplomatic relations on February 11, 1992, less than two months after Germany recognized the independence of Kazakhstan. The bilateral relations cemented after the opening of the German Embassy in Almaty in December 1992 and the Kazakh Embassy in Bonn in 1993, which moved to Berlin in 1999.

German investments in Kazakhstan's economy reach almost $5.5 billion

Germany is one of the largest investors in the Kazakh economy. But what makes it stand out is the nature of its investments – more than 90 percent of investments are in the non-resource sectors which Kazakhstan has been trying to develop over the past decade.

Over the past 17 years, the volume of foreign direct investments from Germany reached almost US$5.5 billion. Despite the adverse impact of the pandemic on the economies, last year alone, German companies invested US$323 million, while the trade turnover reached US$2.2 billion, 6.4 percent more than in the same period of the previous year, according to the data provided by Kazakh Invest national company.

Several intergovernmental agreements and regular meetings, including the two visits of President Kassym-Jomart Tokayev to Germany in December 2019 and in February 2020, foster the deepening of trade and economic cooperation, and the promotion and mutual protection of investments.

The Kazakh-German business forum on May 12 was yet another step towards strengthening the bilateral ties. The event brought some 60 German delegates, the biggest business delegation since the outbreak of the coronavirus infection, as well as representatives of Kazakh business and government. It focused on prospects for cooperation in high technology, green economy, and logistics.

As part of the forum, the sides signed 11 bilateral documents worth over $200 million in areas such as mechanical engineering, industrial automation, petrochemistry, logistics, healthcare and IT.

Among the planned projects are a digital competencies laboratory with Siemens, a machine tool assembly plant with EMAG, a processing plant gypsum stone with Knauf, and the construction of three haemodialysis clinics in Turkestan, Kyzylorda and Atyrau regions.

«T here are many more fields for cooperation and work between Kazakhstan and Germany. On one side we have the C entral A sian country with its abundant and vast resource base at the crossroads of key logistical corridors and an ambitious plan to reform and develop its economy, reduce dependency on the energy sector, diversify production and export, deepen the domestic value chains and develop industry, IT and h igh- t ech sectors - these all with the set goal of carbon neutrality until 2060 ,» said Hovsep Voskanyan, the head of the Delegation of German Economy for Central Asia.

Addressing the business forum, Kazakhstan’s First Deputy Prime Minister Roman Sklyar commended the development of bilateral relations and specified the green energy sector as a promising area for cooperation. He said that diversified energy sources, logistics, and significant natural resources, offer significant potential for the production and subsequent export of green energy.

Among the biggest projects in this area is a giant green hydrogen development project by Germany’s Svevind company, whose chair visited Kazakhstan in September 2021 and met with President Kassym-Jomart Tokayev. The plan is a project to operate wind and solar power plants of nearly 30 GW with the subsequent utilization to produce approximately 2 million tons of green hydrogen annually in the Mangystau region.

Sklyar also said that Kazakhstan is interested in attracting German investments in digital technologies to modernize existing enterprises and create new high-tech industries.

«Kazakhstan is opening a new path in its history,» said Sklyar referring to the sweeping political and economic reforms undertaken by the country’s leadership following the January unrest and that would benefit the investors working in Kazakhstan.

New opportunities for cooperation

With the ongoing situation in Ukraine, challenges are emerging for the region, but there are also many opportunities for Kazakhstan that the country can capitalize on. Managing Director of the German Committee on Eastern European Economic Relations Michael Harms said German companies are interested in relocating their businesses from Russia to Kazakhstan and those, who had partners in Russia, are looking to build partnerships in Kazakhstan. Either way, the companies seek to come here with what he described as «long-term real industrial investments.»

«Western sanctions against Russia and repeated lockdowns in China did catapult the world economy into the greatest supply shock since the 1970s. The global economy which was facing impressive growth and started to recover after the pandemic now must respond again to unexpected challenges,» said Manfred Grundke, a board member at the Eastern Committee of the German Economy.

These challenges open great opportunities for Kazakhstan and Germany, according to Grundke. «Opportunities for a fresh start to build sustainable economic resilience. That’s the path we want to go on together,» he told the forum participants.

He commended Kazakhstan’s efforts toward economic diversification and modernization.

«It understands opportunities arising from the challenges, potential opportunities arising from the needs for sustainable supply chains, and also the potential arising from the need for climate protection,» he added.

Bilateral cooperation in agriculture to ensure global food security

Food security became a big concern after the situation in Ukraine caused a sharp spike in food prices globally, and this is where Kazakhstan, the world’s key wheat exporter, and agricultural producer, can play a key role.

Kazakhstan and Germany have maintained extensive cooperation in agriculture. Kazakhstan can benefit from German expertise and know-how, said Per Brodersen, director of the German Agribusiness Alliance, whose members include such giants as Syngenta, BASF, Bayer, and CLAAS. He has also visited Nur-Sultan as part of the business delegation.

«The world might face substantial shortages in food security and for that reason, it would be advisable for Kazakhstan to strengthen its productivity, especially in grain production,» he said in an interview for this story.

He commended the country’s impressive move to decrease the recycling fee on cars, including agro machinery. «There is substantial progress on abolishing this fee. But it is very important to abolish further. It enables Kazakh producers in agriculture to invest in modern agrotechnology,» he said.

«Germany is interested in securing global food security and enabling Kazakhstan as a place for sustainable agriculture,» he said. «On one hand, Kazakhstan as a potential user of modern agrotechnology interested in raising its productivity and therefore German companies can offer modern agrotechnology, like agro machinery, high-quality seeds, animal genetics for the production of milk and beef.»

He noted the big potential in enhancing the quantities and quality of agricultural production in Kazakhstan and said the alliance is in constant dialogue with the government on how the country can achieve more sustainability and productivity. In doing so, he stressed the importance of investing in knowledge and training.

Written by Assel Satubaldina

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