Kazakhstan sees sharp drop in Russian business presence as foreign investment interest remains strong
The number of Russian-owned companies in Kazakhstan has dropped to its lowest level in six years, according to fresh data from Kazakhstan’s Bureau of National Statistics.
As of April 1, 2025, a total of 18,400 Russian legal entities were registered in Kazakhstan. This marks a decline of 495 companies since the start of the year. It also reflects the steepest year-on-year drop since the agency began tracking this data in 2018.
“This marks the fourth straight quarter of decline,” the Bureau noted, adding that this is part of a wider downward trend.
Rapid Rise Followed by Steady Decline
The fall comes after a period of rapid growth that began after the start of the Russia-Ukraine war in early 2022. Between April 2022 and March 2023, Kazakhstan saw a surge in Russian companies. On average, around 2,300 Russian firms were registering each quarter during that time.
The boom was driven by Russian businesses seeking safer and more stable markets, especially those looking to avoid the effects of Western sanctions and growing economic uncertainty in Russia.
Now, that trend appears to be reversing.
Which Sectors Are Most Affected?
Sectors that once saw high levels of Russian business activity are now seeing the biggest declines.
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In the trade sector, the number of active Russian companies dropped by 238, now totaling about 7,500.
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In the information and communications field, 70 companies exited the market. That sector now includes 2,500 active Russian firms.
Experts believe that regulatory pressures, currency volatility, and changing geopolitical dynamics are playing a key role in these decisions.
Why Are Russian Firms Leaving?
The decline is linked to several factors:
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Economic instability in Russia has made it harder for small and mid-sized firms to continue operations abroad.
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Western sanctions have complicated cross-border transactions and increased risks for Russian investors.
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Kazakhstan’s shift in foreign policy, including its neutral stance on the Ukraine war, may also be a signal to Russian businesses that the political climate is changing.
At the same time, some Russian firms are downsizing or moving further west, while others are closing entirely due to lack of financing.
Kazakhstan Remains an Investment Hotspot
Despite the fall in Russian business presence, Kazakhstan continues to attract strong foreign investment.
In 2022, the country recorded a ten-year high of $28 billion in foreign direct investment (FDI). Russia ranked fifth among foreign investors, contributing $1.52 billion, mainly into mining, trade, and industrial projects.
Pro-Business Reforms Fuel Global Interest
Kazakhstan’s appeal is growing thanks to ongoing economic reforms. Since 2019, the government has taken steps to:
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Make company registration faster and easier
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Streamline licensing and permits
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Improve investor protections and regulatory oversight
According to the latest Ease of Doing Business Index by World Economics, Kazakhstan ranked 24th globally, ahead of Russia (28th), China (31st), and even advanced economies like Italy and Brazil.
This shows the country’s strong commitment to building a more transparent and business-friendly environment.
A Shift in Kazakhstan-Russia Relations
While Kazakhstan and Russia have long shared close ties, recent years have seen some cooling in the relationship.
President Kassym-Jomart Tokayev has openly said that Kazakhstan will not recognize the independence of the Donetsk and Luhansk People’s Republics, diverging from Moscow’s foreign policy stance.
This has led to some diplomatic tension and may also be influencing Russian companies that rely on strong political ties to operate effectively in foreign markets.
Russian Firms Still Relocating—But Not All to Kazakhstan
Interestingly, Kazakhstan has still managed to attract companies leaving Russia, even amid the recent decline in total numbers.
As of March 2024, 41 companies had officially relocated to Kazakhstan, representing over $1.5 billion in investments. These firms span sectors such as:
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Digital technology
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IT services
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Manufacturing
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Mining and engineering
Many of these businesses are large multinational firms that needed a stable base in Central Asia to continue operations unaffected by sanctions.
What’s Next?
Although the downward trend in Russian-owned companies is likely to continue, Kazakhstan is expected to remain a top destination for international investors.
Government officials say they plan to expand pro-business reforms and boost infrastructure projects to attract even more global firms.
For now, Kazakhstan seems well positioned to diversify its foreign investment portfolio, even as it loses some of its long-standing Russian players.
