“Country Risk Analysis Report” Asia Edition (Part 3)

　Kazakhstan
Country risk reference rating: Level 5(5/9)
Country Risk Outlook: Stable
　◆Political Risk
The political situation in Kazakhstan is generally stable, but there is uncertainty about the transfer of power. President Nazarbayev has brought political stability and rapid economic growth to the country. He has high public support and his authority will be difficult to challenge in the short term. It is worth noting that President Nazarbayev’s health problems have a greater impact on the political situation. Once serious health problems occur, chaotic power struggles and widespread social unrest may occur in the country.
The risk of nationalization and expropriation of assets of foreign-invested enterprises by the Kazakhstan government is relatively low. Currently, the country is focusing on expanding exports of energy and mineral resources and promoting economic diversification. It continues to work hard to improve the country’s business environment and hopes to better integrate the national economy into the world economy. In addition, Kazakhstan’s banking industry has now completely emerged from the crisis, and currency depreciation may increase the risk of inflation.
From 2014 to 2018, China will become one of Kazakhstan’s most important partners. International relations in Central Asia are still characterized by tensions, and although relations with Uzbekistan have improved, cooperation between Kazakhstan and other countries in the region remains limited.
◆Business environment
Since its independence, Kazakhstan has adhered to the strategy of attracting foreign investment. Coupled with its rich natural resources, stable domestic political situation, rapid economic growth, the overall investment environment has continued to improve, and the economy’s export-oriented degree has gradually increased. It has now become the most attractive country for foreign investment in Central Asia. powerful country.
There are 13 main fields in which foreign capital flows into Kazakhstan, among which the largest inflows are mining, geological exploration, manufacturing, banking, trade, etc. In order to further improve the investment environment and increase the enthusiasm for investment in non-raw materials fields, Kazakhstan has formulated a national plan to attract foreign investment and improved investment laws based on research and analysis of domestic conditions for attracting foreign investment and the international investment market, and drawing on foreign experience in attracting foreign direct investment. , create conditions for attracting investment and establish investment service agencies.
The country’s labor market has improved slowly, and it is expected that as the economy grows steadily, more sectors will continue to absorb young workers, resulting in a slight decline in the unemployment rate.
◆Economic Risk
Kazakhstan’s economic growth is mainly due to the increase in consumption and retail sales, and the economy relies on bulk commodities such as oil and natural gas. The current account surplus as a proportion of GDP has declined, and the trade surplus has decreased significantly. But overall, its steady growth at the national level will continue in the next two years.
In recent years, Kazakhstan has made remarkable achievements in economic development. From 2000 to 2010, the average annual economic growth rate of Kazakhstan was 8%; in 2013, it was 5.9%; from January to May 2014, the real GDP growth rate was 4.1%. The World Bank, Asian Development Bank and European Bank for Reconstruction and Development predict that Kazakhstan’s GDP growth will range from 5% to 6% in 2014, but Kazakhstan’s Ministry of Economy predicts that its GDP growth in 2014 will exceed 4.5%.
There are only a small number of registered unemployed residents in Kazakhstan. Since unemployment benefits are relatively low and the eligibility criteria for receiving unemployment benefits are quite strict, unemployment registration is unattractive. It is expected that the urban registered unemployment rate may rise, reaching 4% to 5% in the short to medium term.
The country’s food price inflation trend has weakened, and inflationary pressure caused by demand has strengthened. Inflation will generally be relatively stable in 2014, with the forecast inflation rate remaining at 6% to 8%.
Higher industrial efficiency will benefit Kazakhstan’s economy. Oil and gas extraction still play an important role, but increasing the productivity and competitiveness of the non-oil sector economy still requires structural reforms.
◆Policy recommendations
Judging from the four indicators of taxation system, investment convenience, infrastructure and administrative efficiency, Kazakhstan’s business environment has improved in 2014, but the level of corruption is still high. The government strives to improve the business environment, actively attract foreign investment, and promote domestic economic development. .
Judging from the overall current situation, Kazakhstan’s political situation is stable, its economic development prospects are promising, and its investment environment and legal environment have improved. Companies pay attention to unstable factors affecting the political situation and the resulting changes in economic and investment policies. Unbalanced regional development is an important social problem facing the country and one of the potential factors causing social unrest.
Kyrgyzstan
Country risk reference rating: 8(8/9)
Country Risk Outlook: Stable
　◆Political Risk
Kyrgyzstan’s ruling coalition has resolved its internal crisis through reorganization, and the political situation will remain stable for the time being. As the 2015 parliamentary elections approach, various factions will form new divisions and combinations. Affected by the spillover effects of ethnic conflicts and unrest in Afghanistan, there are unstable factors in social security.
Kyrgyzstan has relatively high risks of nationalization and expropriation of corporate assets with foreign investment. Given the government’s desire to further attract foreign investment, outright nationalization of private property is unlikely, particularly in the gold mining industry where state-owned enterprises lack the relevant technology.
The currency of Kyrgyzstan is available in the current account and capital account.�The economy will have a greater negative impact. Due to the lack of resources, a large amount of industrial raw materials still need to be imported from abroad, and capital and technology-intensive industries have not yet been formed.
◆Policy recommendations
Sri Lanka has limited natural resources, but Sri Lanka adheres to a free and open policy, and various policies and measures focus on promoting economic development. Its advantages in human capital and demographic dividends help to give full play to its economic latecomer advantages, and there is still great potential for economic growth.
The country has many investment opportunities, but its domestic economic foundation is weak and its industrial service system is not yet complete. Although the political situation in Sri Lanka is basically stable after the war, many issues left over from the war still need to be resolved.
Sri Lanka’s economic growth has not effectively improved its foreign exchange strength, and its foreign currency debt repayment capacity is still insufficient. The country’s trade deficit has always been relatively large and the current account deficit will not change in the short term.
The “National Risk Reference Rating” is divided into levels 1 to 9 (9 levels in total), with risk levels increasing in sequence.