Manufacturing Sector Remains Priority

ASTANA – Kazakhstan has entered the top 20 countries in receipt of foreign direct investment. The inflow of foreign direct investment (FDI) fell sharply in 2008 due to the global financial crisis. Although the volume of financial investments is still showing a negative trend worldwide, in Kazakhstan, the rate of FDI remains stable.

“In 2012, the gross inflows of FDI in Kazakhstan reached a record figure of US$28.8 billion, which is 8.9 percent or US$2.4 billion more than in the previous year. According to the UN Conference on Trade and Development (UNCTAD), Kazakhstan took 19th place among the top 20 leading countries in terms of attracting foreign direct investments,” Deputy Chairman of the National Agency for Export and Investment KAZNEX INVEST Kairat Karmanov said at a press conference.

However, he said, the dynamic of change in the total of investments is not a key indicator; since the main purpose of the nation’s industrial strategy is to diversify the economy through the development of manufacturing. Positive results can be seen here too. For the first half of 2013, the gross inflow of FDI in the manufacturing sector totalled US$1.6 billion, which is 5.2 percent higher than in the same period last year.

The trajectory of growth for this indicator during the implementation of the industrial programme has changed significantly. According to the Kazakhstan National Bank, during the SPAIID years, the gross inflows of FDI in the manufacturing sector amounted to US$12.9 billion, or 68 percent of all foreign direct investments in the manufacturing industry since 2005.

A large share of investments (77.8 percent) directed to the manufacturing sector, is in metallurgy, a sector in which FDI increased by 16 percent and amounted to US$1.3 billion. In food manufacturing, investment inflows increased by 78 percent and reached US$234 million; in the manufacturing of rubber and plastic products FDI increased by 79 percent to US$31.5 million; in the production of chemical products FDI went up 43 percent to reach a total of US$22.3 million.

KAZNEX INVEST works to showcase investment opportunities in Kazakhstan. For example, this year, three road-shows were held in Japan, the U.S. and Brazil to establish contacts with foreign investors. More than 330 foreign companies participated in the events. The fact that they took place in these countries was not by chance. Japan and the U.S. are the world’s leaders in technology. Leading industrial entities with significant investment potential are concentrated in these two countries. Also, foreign investors from Turkey, Italy, the UK, Germany and Switzerland in the automotive, chemical, energy, transport and logistics industries took part in the events.

The agency also promotes a positive investment image of Kazakhstan in the international arena. Famous director, Timur Bekmambetov’s company made a video clip about investment opportunities in Kazakhstan this year. It was played more than 1,500 times on leading international TV channels CNN, Euronews and Bloomberg.

The international publications FDI Magazine and Machinery Market Magazine published articles about investment opportunities in the country and infographics were published in online editions of the Wall Street Journal and Bloomberg Business Week’s iPad edition.

This marketing campaign increased visits to the nation’s marketing website by more than 50 percent (from 10,000 to 15,500 visits per month). In total, since the Internet page was put up, more than 270 thousand visits have been registered. The number of requests received via online resource from potential investors grew by more than threefold.

As the deputy head of the agency noted, according to 2012 research carried out by  a major business channel, Kazakhstan’s PR campaign has made the country one of the most recognized nations amongst foreign business audiences in the United States (15th place) and Europe, the Middle East and Africa (5th place).

“Both this and last year, over 20 promotional events were held for investors, this includes business forums and exhibitions, which resulted in 180 documents being signed worth US$15 billion,” Deputy Chairman of the Investment Committee of the Ministry of Industry and New Technologies, Ruslan Tasbergenov said.

“In order to attract investments to the more provincial areas of the country, we built a system in which investors are put in contact with central state bodies, that then organise meetings between them and local authorities,” he continued.

To automate this process, the Committee for Investment created an online database. It contains three types of projects: implemented, ongoing and promising.

“Particular emphasis is on attracting large investors. This year’s major headline in investment news was Toyota and Peugeot’s entry into Kazakhstan. These campaigns are “beacons” for other investors, as they show that Kazakhstan can successfully do business,” Tasbergenov said.

The same day, the first award ceremony for the best foreign investors hosted by the Deputy Prime Minister, Minister of Industry and New Technologies, Asset Issekeshev, ambassadors and representatives of international organisations was held. The event was held on the Day of the First President of Kazakhstan.

Eight companies that are expanding production in provincial Kazakhstan and reinvesting in projects were given awards by the MINT investment committee and KAZNEX INVEST.

The most active foreign investors are the French company Alstom (assembly of engines in Astana and production of electric switches in Almaty), Vicat Group (construction of a cement plant in the Zhambyl region) and Danone (construction of a dairy plant in the Almaty region), the German company Heidelberg Cement (modernisation of a cement plant in East Kazakhstan, construction of a cement plant in the Mangistau region and construction of four concrete plants in Astana, Almaty and Aktau) and Knauf (production of construction materials in Almaty and Atyrau regions), Polish Polpharma (construction of a new and modernisation of an existing factory belonging to Chimpharm in Shymkent), Toyota Motor Corporation (assembly of the Fortuner model in the Kostanay region) and General Electric of the United States (assembly of engines in Astana).

The deputy prime minister, in his welcoming speech, stressed the commitment of Kazakhstan to the creation of an open economy and formation of a favourable investment climate in the region. He reminded that the head of state annually holds meetings of the Foreign Investors Council and the government’s Commission on the Investment Climate and that he set up the institute of an Investment Ombudsman.

“Thanks to the efforts and support of foreign investors, the qualifications of domestic personnel have improved and investors are actively involved in social projects. In the second five-year period of the industrial development programme, special attention will also be paid to attracting investments to projects oriented towards new technologies,” Issekeshev said.

He expressed hope that investors will continue to participate in projects in priority sectors of the economy.