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Kazakhstan and China are exploring the creation of a joint direct investment fund with an initial size of up to $200 million. The fund would support the development of the Trans-Caspian International Transport Route. Its size could be increased later, the government’s press service said (kursiv.media).
What happened
Kazakhstan’s Deputy Prime Minister and Minister of National Economy Serik Zhumangarin and China’s Finance Minister Lan Fo’an discussed the fund. They met on the sidelines of the Second Tien Shan Forum for Economic Cooperation in Central Asia.
To speed up the launch, Zhumangarin proposed naming the financial institutions responsible in each country. They would agree on how the fund should operate. Kazakhstan’s national holding company Baiterek is expected to participate, alongside China’s Silk Road Fund.
This is one of three financing tools the countries are currently developing. They are also setting up the Kazakh Invest Fund with Silk Road Finance Corporation and preparing arrangements for project lending and insurance.
What this means for projects
Zhumangarin proposed linking existing and future mechanisms through a single Kazakhstan-China window for financing and insurance. His proposal does not involve creating a separate organisation.
“We are currently establishing several complementary mechanisms, each of which should address specific tasks,” Zhumangarin said.
Under the proposed approach, a comprehensive support package would be put together for each priority project. It could include long-term loans, insurance, guarantees, yuan financing and, where needed, equity investment — funding in exchange for an ownership stake.
Baiterek, the Development Bank of Kazakhstan and Chinese financial institutions are expected to participate in lending and insurance. These include China Development Bank, China EximBank, Bank of China, ICBC and Sinosure.
The fund builds on investment cooperation between Kazakhstan and China. At the meeting, the two sides also discussed expanding cooperation with the Export-Import Bank of China on Kazakhstan’s transport and utility infrastructure.
How they plan to launch financing
Several pilot projects are to be selected to test the single window. The plan is to support them from the investment decision through to the completion of financing arrangements. This should help identify and remove barriers that delay major projects.
The proposed next step for the fund itself is to name the financial institutions responsible. They would then develop a shared approach to its operations.
