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Saturday, December 7th, 2019

Competitiveness of manufacturing industry: Government approves concept of Third Industrialization Program

by December 4, 2018 Market

The Minister for Investments and Development Zhenis Kassymbek reported that the Concept envisaged such areas as the development of the economy of simple things, the saturation of the domestic market with domestic goods, support for exporters in the manufacturing industry and the implementation of large, breakthrough projects through private investment, including foreign ones.

At the same time, Kassymbek noted that the continuity with the Strategic Plan-2025 has been ensured, and key initiatives and principles have been taken into account.

According to the Ministry for Investments and Development, the main provisions and approaches to the Concept were developed in close cooperation with Atameken National Chamber of Entrepreneurs and industry associations. So, in October 2018, the draft Concept was reviewed and generally approved at a meeting of the Expert Council on Economy. The main approaches to the Concept were also presented to the deputies of the Majilis of the Parliament.

In general, industrial policy will maintain continuity and will focus on the development of the manufacturing industry. We will make maximum use of the existing infrastructure and institutional framework, the minister assured.

In addition, he noted that since the beginning of an active industrial policy, basic conditions for the development of the manufacturing industry have been provided.

First, an institutional framework has been formed: the Enterprise Code has been adopted, which combined all the tools for supporting entrepreneurs, and determined the functions of development institutions. The creation of the Baiterek Holding and the development of specialized support institutions made it possible to cover all aspects of the manufacturing industry.

Second, the system support for the processing industry continues through the development of the necessary industrial infrastructure � 12 special economic zones have been created, three of which already have full infrastructure readiness (Innovative Technology Park, Ontustyk and Khorgos-Eastern Gate). There are 22 industrial zones with fully or partially completed infrastructure, seven industrial zones are at the construction stage, 9 are at the design stage.

In addition, systematic work is underway to develop human capital. Within the framework of the second five-year plan, 11 basic higher education institutions for personnel training were defined.

Third, the modernization of existing enterprises and the implementation of new investment projects in the basic sectors � metallurgy, oil refining and chemical industry.

Fourth, the manufacturing industry is expanding the range of manufactured products in metallurgy, mechanical engineering, chemistry, pharmaceuticals, and the construction industry.

The approaches to the Concept of the Third Industrialization Program are based on key challenges for further qualitative growth and sustainable competitiveness of the manufacturing industry: insufficient investment in fixed capital, an unformed critical mass of enterprises, low complexity of products.

The goal of industrial innovation policy is to stimulate the competitiveness of the manufacturing industry in the domestic and foreign markets. This goal will be achieved by solving three problems:

1. Deepening industrialization. The task is aimed at improving the efficiency of enterprises, providing the domestic market with domestic goods, rational placement of enterprises at growth points and the creation of a pool of competitive manufacturing enterprises.

2. Expansion of production volumes, range and complexity of processed goods that are in demand in foreign markets. This is a task for exporters.

3. The increase in industrial capacity. This task will be solved through the stimulation of the development of new industries, the creation of capital-intensive industries, including with the participation of transnational companies and foreign investors, and the provision of the necessary raw materials to manufacturing enterprises.

For the successful achievement of the goals and objectives, the ministry offers to work in five areas of industrial and innovative development.

1. Conducting a proactive trade policy aimed at removing barriers to foreign trade within the framework of the EAEU, access to the market in China, Central and South Asia, as well as rational protection of the domestic market.

2. The anticipated creation of specialized production factors at growth points. Efforts will be directed to the development of high-quality industrial, digital and certification infrastructure, human capital, centers of competence.

3. Creation of new capital-intensive and knowledge-intensive industries, using the state’s capabilities in the distribution of raw materials and the provision of attractive conditions for investors.

4. Direct support for efficient enterprises in the domestic and foreign markets. Efficiency will be measured by the capacity for sustainable competition in the domestic and foreign markets.

5. Improving the efficiency of the support system for industrial innovation through more precise adjustment of the coordination, financing and monitoring of industrialization policies.

Kassymbek stressed that the Third Industrialization Program will differ from the two previous five-year plans. First, a transition will be made from industry priorities in favor of supporting efficient producers in all sectors of the manufacturing industry. Second, efforts will be focused on the development of new, expansion and “complication” of the existing range of products, including consumer goods. Third, direct support will be provided in exchange for the counter obligations of the business to achieve specific indicators (modernization, export growth, etc.). Fourth, as part of preparing the industry for the digital age, the necessary infrastructure and standards will be created.

We will continue to support enterprises based on a balanced development model. Enterprises will receive comprehensive support at all stages of their development � from a beginner to a successful enterprise, said Kassymbek, noting that further attention will be paid to three groups of enterprises.

The first group Strong rear is manufacturing enterprises, due to which the volumes and assortment of domestic products, including consumer goods, will be increased, and a pool of future exporters will be created.

The second group is “Competitive Manufacturers.” These are the existing exporters, their tasks: expanding the nomenclature and increasing the complexity of the export basket.

The third group, Gravity Centers, includes large, capital-intensive projects, including in the basic industries, as well as with the participation of TNCs and foreign investors. At the expense of them, the production of new types of industrial semi-finished products will be assured and the necessary raw materials will be provided.

According to the results of the Third Industrialization Program, it is planned to achieve the following main indicators in the manufacturing industry by 2016:

real growth of investment in fixed assets by 2 times;

real growth in labor productivity by 1.7 times;

export growth of processed goods by 2.3 times;

increase of the Index of economic complexity to 55;

an increase in the number of operating enterprises per 1000 people of the economically active population by 2.3 times.

According to Kassymbek, the voiced approaches to the Concept of the Third Industrialization Program will strengthen the work on further increasing value added in the economy, complicating the produced basket of goods and expanding its presence in foreign markets.

Source: The Prime Minister of Kazakhstan