Government to Help Develop Single-Industry Towns

ASTANA – Almost 30 so-called single-industry, or company, towns in Kazakhstan will receive significant government support and will be the beneficiaries of new government measures designed to lead them out of economic depression.

Company towns, also known as mono-towns, are towns in Kazakhstan that were supported by single industries during the Soviet era, but that have not been able to diversify in the post-Soviet era. As a result, many remain economically depressed.

A special target-oriented government programme, developed to improve the situations of these towns in line with the President’s instruction, was launched on Jan. 1, 2013, and will last until 2020.

First Vice Minister of Regional Development Kairbek Uskenbayev reported in detail on the progress of its implementation at a government meeting on Sept. 10. According to Uskenbayev, more than 1.5 million people or 16.8 percent of the urban population of the country live in 27 company towns.

Of those, only six towns have a high potential for development, one-fifth of the total number, while 19 towns are considered to have average potential. Uskenbayev noted that around 6 billion tenge ($39.1 million) has already been spent on the work to save the small towns, which began last year. However, this year, he said, can be called decisive. First of all, funding increased twofold, and the state budget has allocated 10 billion tenge ($65.1 million) to revive company towns.

According to the Ministry of Regional Development, the problem of most company towns is a lack of work and, as a consequence, high levels of unemployment and self-employment. Thus, today the highest unemployment rates are in Arkalyk (9.4 percent), Kentau (8.7 percent) and Aksu (7.9 percent).

“The problems of company towns are to be solved in a systematic and long-term manner,” the deputy minister said.

This year the funds will be invested primarily in the improvement of cities, as well as in the development of small and medium-sized businesses and the creation of new industries.

“Almost all company towns have crashed or abandoned faciltiies, which have a negative impact on the mood of the population, and negatively affect the social environment. It is planned to demolish all existing abandoned and dilapidated homes and buildings in mono-towns until 2015. This year, the government provided 750 million tenge ($4.9 million) for this purpose,” Uskenbayev said.

Communities with the largest number of abandoned and dilapidated houses are Arkalyk, where 84.7 percent of the total area of the city is occupied by dilapidated and abandoned houses, as well as Abai (36.7 percent), Zhanaozen (10.9 percent), Karatau (8.4 percent) and Zhanatas (7.1 percent).

“There are already results. Thus, in Zhanatas, 62 houses have been already demolished, in Karatau – 18 houses, in Abai – 16 and in Arkalyk – 17,” Uskenbayev noted.

However, the main issue continues to be the need to increase employment and create new industries.

“It is planned to implement 47 investment projects with the creation of more than 25,000 new jobs,” he added, stressing the personal responsibility of governors to implement the projects.

Approximately 4.7 billion tenge ($30.6 million), of which only 1 billion tenge ($6.5 million) has been distributed, will be provided in 2013 for the development of small and medium-sized businesses in mono-towns.

“Unprecedented measures are planned to support entrepreneurship in the company towns. A loan taken by an entrepreneur at 14 percent interest is subsidized by the budget up to 10 percent, which means that he pays only the difference of 4 percent,” Uskenbaev noted.

He also said that the local executives of large enterprises are involved in these measures. For example, last year in Temirtau memoranda of understanding and cooperation were concluded among the Atyrau, Mangistau, Karaganda and East Kazakhstan regions, KazMunayGas, OzenMunayGaz, Kazzinc and Kazakhmys Corporation LLP, as well as TCO. A similar document was signed between Zhambyl oblast and Kazphosphat LLP.

Municipal akimats (city governments) along with the Damu Entrepreneurship Development Fund also established business support centres in all 27 company towns within the programme. Approximately 136.2 million tenge ($887,181) was allotted for this purpose. The support centres will involve the local population and provide information on ongoing state measures.

At the same time, the government sees relocating the populations of these small and company towns to more prosperous centers of economic growth as one solution to the problem.

“Taking into account the redundancy of labour resources and the unidirectional character of mono-towns, the emphasis is put on the formation of an optimal structure of urban employment and the movement of the labour force to perspective points of growth,” the deputy minister commented.

According to him, the emphasis will be on organization of training, retraining and skills’ development, which should be linked to the implementation of major projects. For this purpose, 28 million tenge ($182,387) has been allocated in the current year’s national budget.

“In addition, construction of housing is planned to encourage voluntary relocation of the population from mono-towns. For instance, more than a billion tenge ($6.5 million) is allotted this year for the construction of rental housing in the town of Ridder ,” Uskenbaev said.

Following the experience of the United States, the government intends to encourage businesses in big cities to move to mono or small towns through the reimbursement of relocation costs.

According to the Deputy Minister of Regional Development, in general, such a full-scale implementation of systematic measures will help solve the problems of single-industry towns.

Summing up the meeting, Prime Minister Serik Akhmetov criticized the implementation of the programme on company towns’ development.

“Analysis of 2012 and the current year shows that the governors focused attention on the development of engineering and social infrastructure in company towns. At that, they have not taken proper measures in the key areas of the programme – the diversification of economy of these towns and development of entrepreneurship, creation of jobs, and expansion of small and medium-sized businesses,” Akhmetov said.

According to him, only under these conditions will the necessary jobs be created to contribute to the development of these towns.

“Akims (mayors) of company towns and regions need to take specific measures to diversify the economies of these towns, to study prospective anchor investment projects,” Akhmetov said.

In this regard, Akhmetov instructed the Ministry of Regional Development and oblast governors to make proposals for appropriate changes in the discussed state programme.