Kazakhstan’s localization policy: challenges and solutions

As part of its drive for accelerated industrialization and economic diversification, the Government of Kazakhstan is actively promoting a policy of production localization and foreign direct investment attraction. The main goals are to double the country’s GDP by 2029, build competitive industrial value chains, and reduce the size of the shadow economy.

However, the success of this policy largely depends on how well the country’s infrastructure and business environment are prepared to host new production projects. Below are the three key risks that could slow down localization processes and limit the inflow of investments.

1.⁠ ⁠Shortage of High-Quality Warehouse Space

According to NF Group, the total volume of modern warehouse facilities in Kazakhstan amounts to 1.3 million square meters. Of that, 73% are located in Almaty, 21% in Astana, and 6% in Shymkent. The market is facing a severe shortage of available space, which pushes rental prices up – to as much as 4,000-4,500 tenge per square meter per month for Class A facilities.

Although Kazakhstan leads the Central Asian region in warehouse availability (for comparison: Uzbekistan has 221,000 sq. m, Kyrgyzstan – 46,000, and Tajikistan – 10,000), the imbalance between export-oriented regions (Atyrau region accounts for 34% of exports) and import-dependent centers (Almaty makes up 40% of imports) creates localized logistics bottlenecks, especially in the country’s southern and eastern areas.

Developing regional logistics hubs and encouraging the construction of modern warehouses are essential for sustaining industrial localization and ensuring stable production growth.

2.⁠ ⁠Weak Development of Transport Services and Multimodal Connectivity

Kazakhstan’s transport system operates in a fragmented way, with limited integration between different types of transportation. While national legislation provides for the development of multimodal logistics, in practice such systems are rarely used. The main issues include:

• ⁠ ⁠Road transport. Only about 370 companies participate in international freight transport, operating a total fleet of 7,600 trucks that handle just 43% of cross-border cargo volumes.
• ⁠ ⁠Railways. Out of 16,000 kilometers of rail lines, 69% are single-track, and the wear-and-tear level reaches 57%, reducing both safety and speed of transportation.
• ⁠ ⁠Air transport. Airport infrastructure is 68% worn out, and Kazakh airports account for just 2% of the total transit between Asia and Europe. More than 70% of airport ground equipment needs replacement.

Without modernization and stronger intermodal connectivity, Kazakhstan risks losing part of its transit potential and undermining the efficiency of localized manufacturing projects.

3.⁠ ⁠Underdeveloped Infrastructure in Special Economic Zones (SEZs)

Kazakhstan currently has 14 Special Economic Zones, but only four of them – “Astana – New City,” “Park of Innovative Technologies (PIT),” “Ontustik,” and “Aktau Sea Port” – show consistent performance.

Most other SEZs suffer from poor engineering infrastructure, limited priority activities, and low occupancy levels (around 40%).

The average infrastructure readiness is about 70%, while power grid equipment is 65% depreciated. On top of that, Kazakhstan may face an electricity shortage of up to 6 GW by 2030, which poses a serious systemic risk for new – especially energy-intensive – industries.