Kazakhstan

Franchise Organization
KAZAKHSTAN Franchise Association
Mr. Andrey Zakharov
 480008 Box 33. Almaty, Kazakhstan
Tel. (32-72) 474-771. Fax (32-72) 479-160
 www.franchising.kz

Background:
Native Kazakhs, a mix of Turkic and Mongol nomadic tribes who migrated into the region in the 13th century, were rarely united as a single nation. The area was conquered by Russia in the 18th century, and Kazakhstan became a Soviet Republic in 1936. During the 1950s and 1960s agricultural "Virgin Lands" program, Soviet citizens were encouraged to help cultivate Kazakhstan's northern pastures. This influx of immigrants (mostly Russians, but also some other deported nationalities) skewed the ethnic mixture and enabled non-Kazakhs to outnumber natives. Independence in 1991 caused many of these newcomers to emigrate. Kazakhstan's economy is larger than those of all the other Central Asian states combined, largely due to the country's vast natural resources and a recent history of political stability. Current issues include: developing a cohesive national identity; expanding the development of the country's vast energy resources and exporting them to world markets; achieving a sustainable economic growth; diversifying the economy outside the oil, gas, and mining sectors; enhancing Kazakhstan's competitiveness; and strengthening relations with neighboring states and other foreign powers.

Geography:
Area: 2.7 million sq. km. (1.05 million sq. mi.); ninth-largest nation in the world; the size of Western Europe.
Major cities: Astana (capital, June 1998), Almaty (former capital), Karaganda, and Shymkent.
Border lengths: Russia 6,846 km., Uzbekistan 2,203 km., China 1,533 km., Kyrgyzstan 1,051 km., and Turkmenistan 379 km.

People:
Nationality: Kazakhstani.
Population (January 2008 est.): 15.6 million--down from 16.2 million in 1989; second most-populated country in Central Asia. Large-scale emigration of ethnic Russians, Germans, and Ukrainians accounts for most of the population decrease since 1989.
Population growth rate (2007 est.): 1.08%.
Population distribution: 52.8 % of population lives in urban areas. The largest cities include Astana (capital) with a population of 602,480, Almaty (former capital) 1.3 million, Karaganda 453,400, Shymkent 545,400, Taraz 340,000, Ust-Kamenogorsk 310,000, Pavlodar 300,000.
Population density: 14.5 people per sq. mi. (U.S. density, 2000: 79.6 people per sq. mi.).
Ethnic groups (2002): Kazakh 55.8%, Russian 28.3%, Ukrainian 3.3%, Uzbek 2.6%, German 1.8%, Uyghur 1.5%, other 5.0%.
Religion: Sunni Muslim 47%, Russian Orthodox 44%, Protestant 2%, other 7%.
Language: Kazakhstan is a bilingual country. Kazakh language has the status of the "state" language, while Russian is declared the "official" language. Russian is used routinely in business; 64.4% of population speaks the Kazakh language.
Health (2007 est.): Infant mortality rate--27.4/1,000. Life expectancy--67.22 years (male 61.9 yrs.; female 72.84 yrs.). Health care (2005 est.)--30.3 doctors and 68.2 hospital beds per 10,000 persons.
Education: Mandatory universal secondary education. School system consists of kindergarten, primary school (grades 1-4), secondary school (grades 5-9), and high school (grades 10-11). Literacy rate--98.4%.
Work force (2007 est., 8.16 million): Industry and construction--18.1%; agriculture and fishing--32.9%; services--49%.

Economy:
GDP (2007): $102.5 billion.
Exchange rate (period average): 122.55 KZT/U.S. $1 in 2007.
GDP growth rate: 9.5% (2002); 9.2% (2003); 9.6% (2004 est.); 9.7% (2005 est.); 10.7% (2006); 8.5% (2007).
GDP per capita (2007, purchasing power parity): $11,100.
Inflation rate: 6.6% (2002); 6.8% (2003); 6.7% (2004 est.); 7.5% (2005); 8.4% (2006); 18.8% (2007 year-over-year); 10.8% (2007 average).
Trade: Exports (2007 est.)--$44.88 billion. Imports (2007 est.)--$29.91 billion.
Gross external debt: $18.2 billion (2002); $22.9 billion (2003); $32.71 billion (2004); $43.40 billion (2005); $73.46 billion (2006); $96.37 billion (2007).
Central Bank's foreign exchange reserves: $4.96 billion (2003); $7.07 billion (2005 est.); $19.04 billion (Feb. 2008).
National (oil) fund reserves: $3.6 billion (2003); $5.1 billion (2004); $10.1 billion (2006); $22.6 billion (Feb. 2008).
Officially recognized unemployment rate: 8.7% (2003); 8.4% (2004 est.); 8.1% (2005 est.); 7.4% (2006 est.); 7.1% (2007 est.).
Population below poverty line: 13.8% (2007).
Kazakhstan, the largest of the former Soviet republics in territory, excluding Russia, possesses enormous fossil fuel reserves and plentiful supplies of other minerals and metals. It also has a large agricultural sector featuring livestock and grain. Kazakhstan's industrial sector rests on the extraction and processing of these natural resources. Kazakhstan enjoyed double-digit growth in 2000-01 and 8% or more per year in 2002-07 - thanks largely to its booming energy sector, but also to economic reform, good harvests, and increased foreign investment; growth slowed to 5% in 2008, however, as a result of declining oil prices and a softening world economy. Inflation reached 10% in 2007 and 18% in 2008. In the energy sector, the opening of the Caspian Pipeline Consortium in 2001, from western Kazakhstan's Tengiz oilfield to the Black Sea, substantially raised export capacity. In 2006 Kazakhstan completed the Atasu-Alashankou portion of an oil pipeline to China that is planned in future construction to extend from the country's Caspian coast eastward to the Chinese border. The country has embarked upon an industrial policy designed to diversify the economy away from overdependence on the oil sector by developing its manufacturing potential. The policy changed the corporate tax code to favor domestic industry as a means to reduce the influence of foreign investment and foreign personnel. The government has engaged in several disputes with foreign oil companies over the terms of production agreement, most recently, in regards to the Kashagan project in 2007-08. Since 2007, Astana has provided financial support to the banking sector which has been struggling with poor asset quality and large foreign loans.