New Enterprises Are the Answer to Economic Crises, President Says

ASTANA – President Nursultan Nazarbayev, summing up the results of the first five years of the industrialisation programme on Dec. 25, confirmed that new industries, import substitution and manufacturing of products that have not been produced locally before would assist the national economy in dealing with economic crises.

01 (13)Участие в телемосте“Expended costs have already returned to the state budget in trillions of tenge. In fact, we have created a new model of production and social and labour relations, responding to the 21st century demands. We have made a decisive step to change the structure of the economy. Diversification in Kazakhstan began not only in words but also in deeds. We have ensured that the growth rate of the volume of manufacturing industry is much higher than in traditional extractive industries,” President Nazarbayev said during his annual national teleconference dedicated to the Industrialisation Day.

The teleconference examined the preliminary results of the first five-year of Kazakhstan’s State Programme of Accelerated Industrial and Innovative Development (SPAIID), presented 15 new projects of the Industrialisation Map and showed how implemented projects were already working in the regions.

“The share of the mining industry in the country’s GDP decreased to 16.5 percent. Over five years, 400 new products were mastered that had not been produced beforehand in Kazakhstan. [During these years] the manufacturing sector received almost 70 percent of all foreign investment in Kazakhstan’s economy since independence,” Nazarbayev announced.

According to him, during 2010-14, 770 projects were commissioned creating 75,000 permanent jobs. Eighty percent of the projects have reached the planned capacity. New companies have produced four trillion tenge (US$22 billion) worth of goods and exported goods worth 628 billion tenge (US$4.9 billion). Implemented Industrialisation Map projects produced 12.4 percent of the total volume of manufacturing industry’s output (594.3 billion tenge, which is US$3.26 billion). In 2014 alone 150 new projects were implemented.

The contribution of the projects to GDP growth in the first nine months of 2014 amounted to 0.79 percentage points (from the overall growth of 4.1).

During the teleconference, Nazarbayev reminded that due to state policies, “in the most difficult times of the 2007-09 crises, we did not allow negative growth rate of the economy.”

“Now, when difficult times are coming again, I hope we will overcome them together. In these difficult conditions, labour productivity in manufacturing has increased by 60 percent, with each worker producing an annual average of $20,000 worth of more products. New major economic sectors have emerged, while world’s largest industrial giants, namely Airbus, General Electric, Alstom, Eurocopter, Toyota, Ssangyong, LG, have come to Kazakhstan,” the President added.

At the same time, the head of state said that to ensure the future six percent growth of the economy and implement the full industrial potential, the state needed to create 100,000 jobs annually. While the manufacturing industry consumes 80 percent of professional services, one job in the industrial sector creates three to five jobs in the service sector, creating a multiplying effect, he said. Therefore, the Industrialisation Programme should establish annually from 30,000 to 50,000 high-quality jobs, the President said.

Reflecting the results of the first five years, he stressed that they gave the state a “priceless experience” of successful anti-crises responses to instability in the global economy, which resulted in the overhaul of manufacturing industry and the appearance of new fields, including automotive, railway engineering, medical equipment and wind energy.

“We have expanded the range of products in the chemical industry, while in five years the share of domestic construction materials almost doubled: now we produce almost 80 percent of the construction materials [that we use]; in comparison when we started, it was only 15 percent,” he said.

Among other fields, the President highlighted pharmaceuticals, which was developing at a fast pace with the number of pharmaceutical products increasing by 500 units and production volumes tripling. Nazarbayev stated that in the mining and metallurgical complex, production of long steel increased six-fold and production of pipes grew three times.

Among the advantages of Kazakhstan, he determined full provision of energy, fuel, electrical power and basic foodstuffs. “We are gradually developing agriculture, so [in our farming sector] compared to 2010 the cattle population increased by more than 50 percent,” the President stated adding that currently more than 80 percent of domestic demands were covered by food produced in Kazakhstan.

Referring to future goals, Nazarbayev stated that by 2020, the share of high-tech products was expected to increase from 1.5 percent to 5 percent of GDP, while sector of professional, scientific and technical services should grow from the current eight percent to 20 percent on the basis of the development of innovation in the private sector. A science park “Astana Business Campus” Nazarbayev University and the Alatau Park of Innovative Technologies will become platforms for these innovations.

The head of state also stressed the need to establish newmanufacturing industries,setting a task to attractat leastfive majortransnational corporationstoKazakhstanfor the constructionof five new manufacturing plants. He highlighted the need to reconsider the issue of building a new oil refineryanda couple of largeoil and gas companies, which would produce a whole range ofchemical products, including gas,medicines, clothing, and polyethylene. He also insisted on a newcopper smelterin Kazakhstanwith a full cycle of cables.

Talking with officials and workers in regions through video links, Nazarbayev examined the work of existing facilities constructed within the first five-year plan of industrialisation and gave permission for commissioning new projects, including a new plant of a unique titanium ingots and slabs, POSUK Titanium. Titanium ingots and slabs produced in Kazakhstan will be rolled into titanium sheets and pipes in POSCO enterprises for subsequent use by the largest shipbuilders in South Korea. The goal of the project is to diversify production and create new innovative production of titanium ingots and slabs by electron-beam melting. The use of POSCO’s modern rolled metal technology will enable the joint Kazakh-Korean enterprise, POSUK Titanium LLP, to become a major supplier of flat rolled titanium in the world market.

The President also announced creating a large transport and logistics hub on the border with China, with the Khorgos – Eastern Gate dry port being the first stage of this project. In the short term, the dry port’s processing capacity is expected to reach more than 200,000 thousand containers.

The Khorgos – Eastern Gate special economic zone along with with the Zhetigen-Korgas and Zhezkazgan-Beineu railways, the Western Europe – Western China road corridor and the Aktau port, create a powerful cross-border logistics distribution centre and ensure further integration of the country in the global trade and transportation links, the Kazakh leaders stressed.

At the teleconference, the President also formally gave permission for the launch of a bridge over the Syrdarya River, an A class warehouse in Astana, a gold processing plant in North Kazakhstan region, a polypropylene granulation plant in Pavlodar, an industrial wind power plant (WPP) by Vista International LLP, a carpet factory in South Kazakhstan region, among others.

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