PAIID Programme Results Examined

ASTANA – The massive State Programme of Accelerated Industrial-Innovative Development (PAIID) for 2010-14 has had significant progress over the more than three years of its implementation and has the potential to further change the overall economic structure of the country contributing to its diversification and jobs creation, the Government was told on April 30.

Industrial policy

“All state bodies, regional administrations, holdings, national companies, development institutes, business associations and industrial enterprises are involved in implementing the national programme of accelerated industrialisation,” Deputy Prime Minister and Minister of Industry and New Technologies Asset Issekeshev said, presenting a report on PAIID at the government session on April 30.

Initially, the whole regulatory system was revised, amendments were introduced in more than 50 laws and business support programmes and programmes for territorial development were elaborated, taking into account target indicators. In addition, over 100 tools of state support were provided.

“New national industrial policy has been developed,” the minister said, “and it is not only about the provision of tax incentives, but also the introduction of modern technologies, training and retraining.”

Overall growth in real GDP was 22.6 percent in 2012 compared to 2008, and manufacturing had the highest growth rate of 19.4 percent. A special role belongs to the Industrialisation Map: new productions commissioned under the State Programme of Accelerated Industrial-Innovative Development (PAIID) accounted for 1.3 percent of the last year’s five percent GDP growth.

The manufacturing industry’s growth in 2012 compared to 2008 reached 19.4 percent, and in comparison with 2011 was up .7 percent; in the first quarter of 2013, it was 1.6 percent. In 2012, mechanical engineering grew by 16.2 percent, production of non-metallic mineral output (construction materials) by 10.6 percent, light industry by 8.3 percent, the chemical industry by 5.9 percent and the pharmaceutical industry by 5.6 percent. Market struggles in the steel industry led to a 1.5 percent drop.

Specific indicators

PAIID is a socially oriented project. For example, in 2008-2012 the number of employees in the industrial sector increased by over 85,000 people, of whom about 40,000 or 47.9 percent were employed in new jobs created as part of the Industrialisation Map.

Another important factor of industrialisation is labour productivity. In 2012, it increased by 1.4 times compared to 2008. In the chemical industry it grew by 1.8 times, in the engineering, pharmaceutical and light industry by 1.3 times and in the manufacturing of other non-metallic mineral output by 1.2 times.

“Other PAIID target indicators are also positive. A low level of execution was observed in the following two indexes: the share of non-oil exports and labour productivity in agriculture. Thus, despite significant growth in non-oil exports, which in 2012 were more than $25 billion (and doubled in comparison to 2009), their share of total exports over three years declined from 27.8 to 27.3 percent because of high commodity prices,” Deputy Prime Minister Issekeshev explained.

Branch context

“In general, all priority sectors are developing dynamically,” said the minister at the meeting.

The gross added-value in the engineering sector in 2011 increased by 71 percent when compared to 2008; labour productivity almost doubled in the same period, exceeding $17,000; exports grew fourfold and reached 193 billion tenge. The industry considerably expanded its product range in railway, oil and gas, and automobile construction. From 2009-2012, the volume of production in the chemical industry increased by 2.1 times and amounted to 180 billion tenge, exports increased by 68 percent compared to 2009 and labour productivity in 2012 was $48,300 per person, having increased by 3.7 times since 2009.

Maximum volumes in the processing industry were observed in the Karaganda (1,035 billion tenge), Pavlodar (821 billion tenge) and East Kazakhstan regions (792 billion tenge). Tangible growth of real output (64.4 percent) in 2012 against 2008 was marked in the east of Kazakhstan and Astana city (62.2 percent). In Karaganda and Mangistau regions, it decreased by seven and 12.1 percent respectively.

“Undoubtedly, progress has been made during the years of PAIID implementation,” the minister said. “At the same time we have experienced some problems so far. According to the Global Competitiveness Index of the World Economic Forum for 2012, Kazakhstan is 115th among 144 countries in such indicators as the financial market’s sophistication.”

Among the sore spots of the industrialisation programme are the lack of qualified personnel and industrial infrastructure, including in Special Economic Zone development, and inefficient bankruptcy procedures.

Tasks for the future

Today, the Industrialisation Map includes 779 projects worth 11.2 trillion tenge; more than 220,000 jobs are expected to be created during construction and 181,000 after the projects have been built and commence work. Over three years of the map’s implementation, 537 projects worth 2.1 trillion tenge have been commissioned and over 57,000 permanent jobs created.

In 2012, the completed projects’ manufactured output was worth 913.4 billion tenge, and in the first quarter of 2013 was at 235.5 billion tenge, a 40 percent growth in comparison to the first quarter of 2012, which saw growth of 168 billion tenge. This year, 140 projects at a total amount of 560 billion tenge will be completed and the construction of another six plants will be launched.

Summing up results of PAIID so far, Prime Minister Serik Akhmetov noted progress in the regions that resolved problems of the projects’ quality and monitored their progress toward full capacity.

“The industrialisation process must be stimulated,” Prime Minister Akhmetov said. “To achieve this, local authorities must ensure the commissioning of quality projects only.”

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