Almaty has long been the business center of Kazakhstan. But it is now also establishing itself as Central Asia’s business, tourism and transportation hub.
Such a role for Kazakhstan’s former capital may come as a surprise to the outside world. But not to those familiar with the policies the Kazakh government has implemented since independence 20 years ago.
In the two decades since, Kazakhstan’s unilateral nuclear disarmament, free market policies and successful development of domestic energy resources have attracted more than $122 billion in foreign direct investment.
“Kazakhstan has today a thriving economy, governed by consumers not plans. With material improvements has come well-deserved pride and self-confidence,” said Thomas Mirow, the President of the European Bank for Reconstruction and Development at the EBRD Annual meeting in Kazakhstan in May.
As the largest city in the country and the nation’s first capital, it was inevitable that the success of those policies would transform Almaty into a major transportation hub and regional center for visiting foreign businessmen and investors.
President Nursultan Nazarbayev’s decision to move the national capital to the previously small communications center of Astana in the center of the country was, at first, not popular in Almaty. It resulted in hundreds of thousands of people — government officials and their families followed by government service industries – relocating to the new city rising in the Asian steppe.
But today, it’s clear that this decision proved to be a boon for Almaty’s development. The old capital has continued to boom and earlier this year established itself on the global sporting map by hosting the Asian Winter Games – the first time that such a major sporting event has been held in Central Asia.
Almaty’s population and economy have continued to grow at remarkable speed and the city government consequently has had to deal with the social and environmental problems associated with rapid economic success. But these issues — especially winter air pollution from nearby coal-burning power stations and from the city’s high concentration of cars and trucks — would have been far worse if the nation’s capital with all its functions and worker requirements had not moved to Astana.
Most of all, by moving prime national political functions and administrative affairs to Astana more than 1,000 kilometers to the north, Nazarbayev’s decision cleared the way for Almaty to clarify its vision and focus on its true expertise and destiny.
“Kazakhstan wants to become an active player in the global economy. Therefore, the task has been set before the nation and government to turn the country into a world trade, logistics and business hub,” Nazarbayev told a meeting of the Council of Foreign Investors recently.
“We are developing our transit capabilities, encouraging flows of workforce and cargoes, and creating a well-developed logistics and transportation infrastructure,” he said. “We have been developing Almaty, a large business and financial center, promoting tourism and services.”
Just as Astana has successfully emerged as Kazakhstan’s Washington, DC, faster and more successfully than anyone expected, Almaty has emerged more as the nation’s New York City — the business, tourism, communications and entertainment center of the country.
This might have happened eventually. But the speed with which Almaty has developed its new identity has given it a head-start on any other major city in Central Asia.
Most important to Almaty’s emerging new role is the Kazakh Stock Exchange (KASE). This year, KASE is in the throes of one of its most extensive expansion periods. The government is pushing ahead with a program to launch initial public offerings (IPOs) in many major state-owned companies with shares to be purchased by Kazakh citizens by the end of the year.
This program will increase the participation of ordinary Kazakhs in the activities and profits of major corporations. It will also greatly expand the volume of capitalization of the Kazakh Stock Exchange confirming its dominant position in Central Asia.
And since the hydrocarbon oil and natural gas reserves of the Caspian Basin now promise to be comparable in scale to those of the Arabian/Persian Gulf region a century ago, the value of Almaty establishing itself as the business and investment center for the region cannot be over-estimated.
The expansion of Kazakhstan’s road and rail infrastructure is also solidifying Almaty’s position as the main transportation hub of the Asian heartland.
On June 15, 2009, Kazakh and Chinese officials confirmed that Kazakhstan’s new network of super highways, and the super highway systems of northwestern China would meet just inside China at the town of Horgos, which is the Chinese terminal for the Turkmenistan to China natural gas pipeline.
Since Almaty is located close to the Kazakh-China border and is also the largest city relatively close to Horgos, that agreement confirmed Almaty’s identity as the future “Chicago” of Central Asia – a great business, transportation and trading city in the heart of a resource-rich continent.
The expansion of regular airline services to and from Almaty also confirms this growing role.
The government of Kazakhstan’s national development strategy to 2030 has also had an impact in solidifying Almaty’s position.
The strategy, boosted by Kazakhstan’s membership in a new customs union with Russia and Belarus, is to encourage the development of light industry and more advanced industries across the country. While many of the more advanced industrial developments such as oil refineries and petrochemical plants will be located in and around the Caspian Basin, or at the mining centers for other precious minerals, much light industrial development, especially in the food processing sector, is likely to be attracted to the large population and rapidly growing market of Almaty.
The city’s emerging role as a transportation center will also make it an obvious choice for export-reliant industrial enterprises.
“I find Almaty’s location and developing transportation access to the Chinese market to be key attractors in our consideration to invest here,” the CEO of a large multinational said during a recent scouting trip to the city.
Almaty’s geographical location at the foot of the Tien-Shan mountain range and its famous cable-car tramway ride into the mountains where world-class skiing can be found also confirm the city’s potential as a growing tourism center. The mountain vistas, alpine-style lakes, winter sports facilities and incomparable wild life offer an array of outdoor activities.
The ancient Scythian warriors, courageous Kazakh traders and explorers, and Russian colonizers who founded the modern city in the mid-19th century could never have dreamed of how far and how fast Almaty would grow. But the city is now poised for a new era of prominence in the 21st