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Implementation of Industrial and Innovative Development Program: There are 3,500 new enterprises in processing industries

by August 27, 2018 Fun

The second five-year industrialization period began in 2015, therefore the Ministry for Investments and Development takes 2015 for comparison to sum up the State Program’s implementation results. According to the ministry’s information, it is already possible today to say that the implemented program fully corresponds to the goals set, favorably influencing the stability and positive growth dynamics of the manufacturing sector.

For example, the share of manufacturing in GDP has grown by 11.8%. Growth is observed in the industrial sector, from 39.5% to 40.9%, in exports from 24.4% to 28.7%, in the inflow of foreign direct investment � from 15.5% to 17.6%.

One of the important aspects is that industrialization contributes to an increase in the number of enterprises in the manufacturing industries oriented towards the output of finished products (chemical industry, engineering, furniture, building materials, etc.).

So, if we compare the first half of 2018 with 2010, 3,500 additional operating enterprises appeared in the processing industries.

As noted in the ministry, growth was achieved mainly due to the increase in the number of enterprises in machine building (805), food industry (545), construction materials (514), the share of which in the total growth of processing enterprises is more than 50%. At the same time, the greatest growth is observed in the chemical industry (1.7 times), mechanical engineering (1.5 times) and production of other finished products (3.3 times).

Also in the first half year, as compared with the same period in 2017, the manufacturing sector grew by 5.2%. The main drivers of growth, contributing to positive dynamics, are mechanical engineering (+ 17.2%), chemical industry (+ 11%), food production (+ 5.2%), oil processing (+ 4.4%), metallurgy (+3.4%), production of construction materials (+ 2.2%).

For 2018 reporting period, all the target indicators show positive dynamics.

Export: 123 Countries and 800 Items

As is known, the vision of the industrialization policy is to achieve the average level of competitiveness of the most developed OECD countries in the manufacturing industry by 2035 through increasing the share of Kazakhstan in world manufacturing exports. So, target indicators of the State Program are to achieve an increase in the value of exports of manufactured products by 19% to the level of 2015.

The average exports of manufacturing products in the republic for 2018 increased by 20.5% to the corresponding period of 2015 and amounted to $2.5 billion.

In the context of the priority sectors of the manufacturing industry, a significant increase is noted in railway (3.7 times), in electrical engineering and agrochemistry (3.1 times), in building materials (3 times) and in mining machinery (2 times).

The current geography of exports is 123 countries, to which about 800 commodity items are exported.

For some commodity positions, new markets have been opened. For example, in 2018, the supply of engineering products and building materials to Uzbekistan and chemical products to Ukraine began. The food industry’s production continues to be in demand abroad: export contracts worth $13.2 million have been concluded. In particular, meat supplies to Iran, Bahrain, exports of meat products, animal and vegetable oils to Russia, vegetable oil to China, sugar to Uzbekistan.

Undoubtedly, to achieve these indicators, the Government carried out a large complex work jointly with exporters. The latter were provided with service support, trade missions, and advertisement and presentation for the promotion of domestic products.

Labor Productivity: Goal � Increase of 22%

Another target indicator of the State Program is the growth of labor productivity in the manufacturing industry by 22% in real terms to the level of 2015.

According to the Ministry for Investments and Development, labor productivity in the manufacturing industry in the country in 2018 increased by 8.5% compared to 2015 and amounted to $8,000 per person.

In the manufacturing sectors, the highest growth in productivity is observed in oil and gas, and electrical engineering, oil refining, oil and gas chemistry, construction materials production, and ferrous metallurgy � by 10.4%. By the end of the year, it is planned to increase the labor productivity in the manufacturing industry by 11.9%.

Investments Almost Doubled

Among the program’s effectiveness indicators � the volume of investment in fixed assets of manufacturing industry. By the end of the implementation, this indicator should be 4.5 trillion tenge.

Meanwhile, for six months of 2018, the volume of investments in the main capital of the country’s manufacturing industry amounted to 532.8 billion tenge, an increase of 47.6% compared with the same period in 2015.

In terms of manufacturing sectors, taking into account the implementation of major projects to modernize the refinery, investment in refining (11 times) has sharply increased. In addition, significant growth is noted in electrical engineering (3.2 times) and food production (1.9 times).

Industrialization Map: Eighteen New Projects for Six Months

As a result of the provision of systematic measures to support enterprises, the State Program continues the launch of new production facilities, the modernization and expansion of existing enterprises.

For six months of 2018, 18 projects for about 187 billion tenge were introduced within the Industrialization Map, over 1,800 permanent jobs were created. Among them there are such significant projects as Bakyrchik Mining Enterprise LLP � the construction of a mining and processing complex with a capacity of 2 million tons of ore per year in the East Kazakhstan region, as well as Maker LLP �modernization of machine-building production in the Karaganda region.

In the second half of 2018 it is planned to implement about 100 projects worth about 1.1 trillion tenge with the creation of more than 12,200 jobs.

Currently, on the instruction of the Head of State, the Ministry for Investments and Development, taking into account new global technology trends, has developed a conceptual vision of industrial-innovative development for 2020-2024. The main goal of the new program will be further enhancing the competitiveness of the manufacturing industry with an emphasis on the development and promotion of exports. Particular attention will be paid to the transfer of technology and the promotion of digitalization of the manufacturing industry.

Impact on GDP

Minister of National Economy Timur Suleimenov spoke about the component of the manufacturing industry in the country’s GDP at a meeting of the Government. According to him, in general, the share of the manufacturing sector in GDP after the decline in 2015 to 10.1% began to recover and by the results of the first quarter of 2018 reached 12.9%.

It is noted that of the manufacturing industries the largest contribution to the country’s GDP was made by: metallurgy (5.1% of GDP), food industry (1.7% of GDP), refining (1.3% of GDP) and construction materials (0,8% of GDP). The aggregate GVA of the manufacturing industry is dominated by: metallurgy (39.9%), food industry (13.4%), oil refining (10.4%), construction materials production (6.3%). Suleimenov also stressed that the sector is stable: it supports the economy during the crisis periods.

SPIID in Energy Sector: Modernization of Refineries, Eco Gasoline and Other Projects

Minister of Energy Kanat Bozumbayev, in his turn, reported that within the framework of the State Program of Industrial and Innovative Development for 2015-2019, the Ministry of Energy is implementing the following projects: K5 Motor Fuel Production” � at Condensate JSC, modernization of Pavlodar refinery, reconstruction and modernization of Atyrau refinery, reconstruction and modernization of Shymkent refinery, construction of polypropylene plant.

The Motor Fuel Production project of the joint-stock company Condensate for the production of high-octane gasoline was completed in 2016, in June 2018 the production of diesel fuel of the ecological class K4, K5 was introduced.

At present, the company supplies high-octane gasoline to the markets of the West Kazakhstan and Aktobe regions. In 2017, the plant was modernized with an increase in the capacity of the enterprise to 850,000 tons per year.

At the end of 2018, modernization of the Pavlodar refinery was completed. The project’s goal was achieved: production of motor fuels of ecological class K4, K5, production of 100% high-octane gasoline was established. The plant’s capacity allows processing 5.5 million tons of West Siberian oil annually, as well as up to 4.7 million Kazakhstani oil.

At the same time, in June 2018, the production of jet fuel was established: a declaration of compliance of jet fuel with the Technical Regulations of the Customs Union and a pin code for aviation fuel of the jet fuel brand was assigned.

As for the project for reconstruction and modernization of the Atyrau oil refinery (Deep Oil Refining Complex), then, according to the Ministry of Energy, the mechanical work is completed and commissioning is underway at the moment. As part of the start-up operations under the deep oil refining project, 10 out of 12 process plants with the production of target products were commissioned. For the remaining two installations � TAME and Benfree � the launching operations are continuing, the completion is planned for August 2018. The plant switched to the production of motor fuels of classes K4 and K5.

After modernization of the plant, the volume of production of high-octane gasoline will be up to 4,400 tons a day, diesel fuel � up to 5,200 tons a day.

In June 2017, the first stage of the reconstruction and modernization of the Shymkent Oil Refinery was completed. In particular, an isomerization unit, a naphtha splitter and a hydrogen purification unit have been launched. The production of automobile fuels of ecological class K4 and K5 was established, the share of high-octane gasoline is 100%. The construction works for the second stage have been completed. At the beginning of July 2018, petroleum products were sent for flushing the system and running in the equipment. Start-up and adjustment works are being carried out.

As part of the first phase of the integrated gas chemical complex, the construction of a polypropylene production plant started in June 2018. A joint project company was established between the United Chemical Company LLP and the Austrian company Borealis (Sileno LLP) for a polyethylene production project. The works on the development of the feasibility study of the project are planned for September 2018.

These are the implementation results of the State Program of Industrial and Innovative Development for the first half of the year, but there is still much to be done. In the second half of the year, the work of the relevant ministries is aimed at achieving the planned indicators.

Source: The Prime Minister of Kazakhstan