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Government session: investment projects in Kazakhstan and their prospects (REVIEW)

by February 27, 2018 Health

Work organization issues on attracting investments within the execution of instructions of the Head of State have been considered today during the Government meeting under the chairmanship of Prime Minister of Kazakhstan Bakytzhan Sagintayev.

So, Minister for Investments and Development of Kazakhstan, Zhenis Kassymbek, told about cooperation with other countries in the sphere of investment projects.

According to the Minister, in the first 9 months of 2017, the gross inflow of foreign direct investments amounted to 15.8 billion dollars, which was 5.3% higher than in the same period in 2016.

“Within the Kazakh-Chinese cooperation, 51 projects amounting to 27.7 billion dollars are implemented, of which 4 projects worth 140 million dollars have been commissioned. Under this program, 11 projects are constructed in 2018, of which 6 projects are planned for commissioning for a total of 363 million dollars. The construction of another five projects involving the Chinese capital with the investment amount of 623 million dollars will begin this year”, Kassymbek said speaking about plans for the Kazakh-Chinese cooperation.

As for cooperation with Turkey, within the framework of the Kazakh-Turkish cooperation program “New Synergy”, which consists of 26 projects, according to Kassymbek, only one project has been implemented so far.

“Two projects are expected to be commissioned this year, and other investment projects implemented under the agreements of the Head of State during foreign visits are also included in the base list. In total, out of 145 projects, it is planned to start the construction of 15 projects worth 1.6 billion dollars and to launch o23 projects worth 3 billion dollars. The basic list also includes individual initiatives of foreign investors ready to invest in Kazakhstan”, he said.

“For example, for the creation of a biochemical cluster, offered by the Chinese company KTI, Kazakh Invest carries out a detailed study in search of a Kazakh partner. In the future, the base list will attract funds from international financial institutions, including PPPs”, Kassymbek added.

He noted the Ministry is working to attract investment in two areas: approving projects for investment areas and connecting system activities in order to improve the investment climate.

“The issues of attracting investments are one of the main priorities of the Ministry’s work and they are always under constant control”, Zhenis Kassymbek summed up.

According to First Deputy Minister of Foreign Affairs of Kazakhstan Mukhtar Tleuberdin, assistance in attracting foreign investments and innovative technologies to the priority sectors of the economy, as well as promoting domestic export products is a key element of Kazakhstan’s foreign economic policy and one of the fundamental priorities of the trade and economic diplomacy.

M. Tleuberdin reminded that the Head of the State pays special attention to the development of the economic diplomacy. Almost all official visits abroad envisage President’s separate meetings with the foreign business community, commercial agreements are concluded. So, within the framework President’s visits in 2016-2017 investment and trade agreements worth over 6 billion dollars were signed. Following the official visit of the Head of State to the United States in January 2018, 27 documents have been signed for the amount of about 7 billion dollars.

To strengthen the work on attracting investments at the external level, work is under way to deploy the network of investment advisers from the Ministry for Investments and Development in 10 priority countries for the task work with investors.

Foreign institutions of Kazakhstan jointly with foreign representatives of NC “Kazakh Invest” regularly conduct activities to strengthen investment cooperation with the foreign business community.

“In general, foreign economic guidelines, outlined by the country’s leadership, are laid down as defining throughout the whole spectrum of activities of the Foreign Ministry. The Ministry of Foreign Affairs acts as an important link between internal mechanisms and external partners, especially in promoting the economic diplomacy, attracting foreign investments. This multifaceted work will be continued”, Mukhtar Tleuberdin summed up.

Over the years of independence, about 200 billion dollars of direct foreign investments have been attracted to the oil and gas industry of the country, including more than 120 billion dollars to develop three largest projects � Tengiz, Kashagan and Karachaganak. This was told by Minister of Energy Kanat Bozumbayev.

Reporting on the issue of attracting investments, Minister of Energy Kanat Bozumbayev noted that at the present moment, the expansion and extension projects for the oil rate-plateau are implemented at these three large fields with a total investment of 42.3 billion dollars.

In 2017, amendments were made to the Subsoil and Subsoil Use Code, which provides measures to stimulate investments in geological exploration and reduce investment risks of subsoil users. The Code will come into force in July 2018. At the moment the Ministry of Energy has developed 52 subordinate regulatory acts that are in agreement.

In the sphere of the petrochemical industry, a project for the production of polypropylene with a capacity of 500 thousand tons per year is in active phase. An EPC contractor (Chinese company – China National Chemical Engineering Company) was chosen. Borrowed financing for 2 billion dollars was raised, and the issue of providing raw materials was resolved. The construction completion date is 2021.

Kanat Bozumbayev also spoke about the implementation of projects in the field of renewable energy sources.

“By the end of 2020, it is planned to put into operation about 52 objects with the gross power of two gigawatts with a total investment amount of almost 1 trillion tenge”, he said.

According to Bozumbayev, the Eurasian Bank for Reconstruction and Development will help to invest high-tech projects.

“The EBRD plans to invest in RES projects up to 200 million euros with the possibility of attracting private investments to Kazakhstan, investments of international private institutions for a total amount of up to 480 million euros. The possibility of implementing renewable energy projects within the framework of agreements with such companies as “ANI International BV”, “General Electric International Inc. “, EBRD, “Samruk Kazyna-United Green”, “Development Bank of Kazakhstan”, “CAPEC Green Energy”, a subsidiary of DBK – “BRK-Leasing”, “KAZ GREEN TEK SOLAR” is worked out”, the Minister said.

He also recalled the main expected effects from the introduction of renewable energy sources.

“The energy market will become the main stimulating market for renewable energy. There are 55 operating renewable energy facilities with a total capacity of 336 megawatts”, he added.

Also, the Minister of Energy told about the progress of the Astana household natural gas connection project.

“In the gas sector, the Ministry is working on attracting EBRD funds to finance the construction of the Saryarka gas pipeline which is thought to ensure natural gas supply of the city of Astana, as well as the central and northern regions of Kazakhstan. The cost of all four stages of the project is 370 billion tenge, including VAT, including the first stage to the city of Astana – 267.3 billion tenge, including VAT”, he said.

The Minister also talked about preparations for the large-scale production of polypropylene.

“The project for the production of polypropylene with a capacity of 500 thousand tons is in its active phase. The cost of it is 9.6 billion dollars. In 2018, according to the project, it is planned to start foundation works and laying underground engineering networks, the completion date of the construction is 2021”, Bozumbayev said.

As for the project of polyethylene production in Kazakhstan, the Minister stressed that one of the world’s largest producers of polyethylene and polypropylene, Austria’s Borealis AG is interested in its joint implementation.

“This company is one of the top 4 largest companies producing polyethylene in the world, being one of the most technologically advanced, it has its own licensed technology. In 2018, it is planned to create a joint project company and complete the feasibility study. The implementation of the above projects will help to attract 9 billion dollars in investments, of which 8 billion dollars will be private investments”, Bozumbayev said.

According to the Minister, these projects will help to create up to 10,000 workplaces at the construction stage and 1,200 workplaces at the operational stage. The contribution to the country’s economy will be 1.5 percent.

First Vice-Minister of Agriculture Arman Yevniyev reported on the work to attract investments in the agro-industrial complex of Kazakhstan.

Arman Yevniyev noted that in 2017 the volume of investments in the fixed capital of agriculture was about 352 billion tenge, which was 39% more than in 2016.

At the same time, the First Vice-Minister noted the annual growth of investments in food production. So, in 2017, the investment growth was 51% compared to 2016.

Also, according to Arman Yevniyev, additional measures taken by the Ministry of Agriculture contribute to the increase in the inflow of private investments into the agribusiness sector.

The Sectoral plan for investment attraction is approved, within the framework of which specific measures are envisaged to create conditions for attracting investments.

“In accordance with the National Plan “100 concrete steps” involving strategic investors, four investment projects for the production and processing of milk and meat for a total investment of 175 million dollars are implemented”, First Vice-Minister Arman Yevniyev said.

The work is under way with four transnational companies to implement large investment projects in Kazakhstan.

In addition to the investment projects included in the National Plan “100 concrete steps”, currently 20 projects involving foreign investors with a total value of about 952 million dollars are implemented”, Arman Yevniyev noted.

The work is carried out to return subsidizing interest rates on loans for fixed assets, as well as leasing of agricultural machinery and animals.

In addition, it is planned to introduce such instruments as agrarian receipts, funding of credit partnerships, second-tier banks, microfinance organizations, leasing companies by “KazAgro” holding.

According to the First Vice-Minister of Agriculture, an investment subsidy program is realized to implement investment projects in the agro-industrial complex.

“Over the four years of the implementation of this program, direct investments amounting to 482 billion tenge were attracted”, the First Vice-Minister said.

In conclusion, Arman Yevniyev noted that in 2018 the Ministry has the tasks of increasing the volumes and activating the work within the framework of the National Plan “100 concrete steps”, as well as fulfilling the instructions of the Head of State to increase the labor productivity in the agro-industrial complex and export of processed products in 2, 5 times.

In the course of the work consideration on their directions, Chairman of the board of NC “Kazakh Invest” S. Tuyakbaev, Chairman of the board of “National managing holding “Baiterek” JSC A. Arifkhanov, Governor of West Kazakhstan region A. Kulginov, Zhambyl region – A. Myrzakhmetov, Akmola region – M. Murzalin reported.

As a result of the discussion, Prime Minister of Kazakhstan Bakytzhan Sagintayev gave a number of instructions on activating and improving work in the field of attracting investments.

In particular, Bakytzhan Sagintayev noted that in 2017 the growth was achieved in all key indicators of attracting investments. New enterprises are opened, jobs are created. Investors of all levels receive the state support.

However, despite the measures taken to create the favorable investment climate, the number of foreign investors’ appeals on the solution of certain problem issues at the local level is not decreasing. These problems are voiced by investors within the Council for improving the investment climate and other dialogue platforms.

Kazakhstan has identified a list of 145 priority investment projects, which are on the permanent monitoring. All existing issues must be resolved promptly, within the framework of the “single window”.

Bakytzhan Sagintayev noted, within the framework of the National Plan “100 concrete steps” there is a task to attract TNCs and “anchor investors”. It is also very important for the country to implement 51 Kazakhstan-Chinese joint projects.

The Prime Minister of Kazakhstan paid attention of Minister for Investments and Development Zh. Kassymbek to conduct the explanatory work among the population together with NC “Kazakh Invest” on each of these projects. It is necessary to explain people that these projects are not old but new projects.

Bakytzhan Sagintayev also raised the issues of attracting investments in monotowns. The attraction of “anchor projects” was to promote the opening of new production facilities and new jobs in monotowns. In this connection, Minister for Investments and Development, Zh. Kassymbek was entrusted to take the matter to the control.

To strengthen the work on attracting investments in the regions, all the necessary conditions have been created. Each region has special deputy governors for investments, “Kazakh Invest” regional representative offices and investor service centers have been opened, regional headquarters have been set up to address investors’ problems. Despite this, in a number of regions, including in Zhambyl, South Kazakhstan, West Kazakhstan, Akmola regions, the issues of attracting investments are at a very low level in comparison with other regions.

Bakytzhan Sagintayev instructed the Governors of the regions to strictly control the issues of attracting investments and reminded them of the effectiveness of the work of new and already launched projects.

The control over the execution of instructions is assigned to First Deputy Prime Minister Askar Mamin.

Source: Kazakhstan 2050