Almaty region, bordering China, eyes expanding industry, trade and tourism

ASTANA – In an exclusive interview with this newspaper, Akim (Governor) of Almaty oblast Amandyk Batalov shares his views on the region’s transformation from a formerly agrarian to a combined agrarian and industrial one, its efforts to attract tourists to its diverse destinations as well as its growing role as a key entry point into Kazakhstan from China as it implements its famed Belt and Road Initiative (BRI).  

Amandyk Batalov

What socio-economic development issues are on the agenda? Are there plans to improve performance in the coming years? How much foreign investment did Almaty oblast attract in 2018 and could you tell us about the most significant projects?

This year, we are planning to maintain the momentum of the socio-economic development of the oblast.

As the state-of-the-nation address of the head of state says, “Export-oriented industrialisation should be a central element of economic policy.” We are now working hard in this direction. Whereas in the past our oblast was considered exclusively agrarian, it is now safe to say that Zhetysu (Seven Rivers, the region’s informal name) is an agrarian and industrial region.

It is also worth emphasising that our oblast is implementing nine projects involving large multinational companies; two of them have already been launched. They include a pump production plant of the German company Wilo, which has already produced 44 units of equipment, and there are plans to produce more than 300 units in 2019. A Mareven food plant for the production of products under the brands BIGBON and Rolton with its own logistic and warehouse infrastructure launched on Industrialisation Day last December. Annual production will amount to 24 billion tenge (US$62.8 million); up to 80 percent of the products will be exported to Central Asian countries under the brand Made in Kazakhstan.

This year, three more large export-oriented facilities are being introduced.

Lukoil, one of the world’s largest producers of oil-refining and petrochemical products, has begun the pre-commissioning of a lubricant plant; 21,000 tonnes of products will be exported to Central Asia, China, Iran and Siberian regions of Russia under the internationally-recognised Lukoil brand marked Made in Kazakhstan.

The Khorgos-Eastern Gate SEZ (special economic zone), a major transport and logistics hub at the crossroads of commodity flows between China, Central Asia and the Eurasian Union, provides a powerful impetus to the economic development of the oblast. Phoenix, a company from the United Arab Emirates, will open a feed mill with a capacity of 60,000 tonnes per year at the SEZ dry port; it will be the only enterprise that produces extruded feed for all types of farm animals, birds and fish and 50 percent of the products will be exported to China.

An Alacem cement plant with a capacity of 1.2 million tonnes per year is being launched in May; it will export its products to China, Kyrgyzstan and Uzbekistan.

As a result of the measures taken, in 2018 non-primary exports grew by 15 percent ($298.3 million).

Agribusiness shows qualitative progress. Thus, 440,000 tonnes of sugar beets have been harvested out of 11,200 hectares of the crop. Two plants in the Aksu and Koksu districts have produced 42,000 tonnes of their own white sugar.

There are plans to modernise the Alakol and Karabulak sugar factories and relevant talks were held with investors. Moreover, building of a new factory in Kapshagai is being negotiated together with Atameken National Chamber of Entrepreneurs.

Thanks to the introduction of advanced technology in corn production, a record crop of 532,000 tonnes has been harvested for the last 27 years. Thus, farmers of Panfilov district, who use drip irrigation, receive up to 120 centners from one hectare, which is two times more than the average yield in the oblast.

The oblast started to develop a new direction – industrial potato growing. Kegen and Raiymbek districts sowed 100 hectares with elite potato varieties, received 300 centners from one hectare (with an average across the oblast standing at 187 centners per hectares), created two service and storage facilities and purchased 21 units of equipment.

Overall, we plan to increase the gross harvest of potatoes from 722,000 to 800,000 tonnes, which will ensure stock for a soon-to-be-launched Farm Frites potato plant with a production capacity of 70,000 tonnes per year.

In livestock breeding, beef production grew by 9 percent; we exported one million tonnes of meat. We have 97 feedlots for the development of export potential; the construction of five meatpacking plants with a total capacity of 91,000 tonnes is underway.

Thanks to the automated production of large milk plants and the creation of 70 family dairy farms, milk production in farms increased by 21 percent and the workload of milk plants reached 89 percent. By 2021, due to the creation of family-based dairy farms, there are plans to ensure a full load of milk plants with high-quality milk.

As a result of the measures taken, last year agribusiness raised 82 billion tenge (US$214.5 million) of investments with a growth of 22 percent, labour productivity increased by 10 percent and exports of processed agricultural products by 28 percent.

We pay great attention to the development of entrepreneurship. Today, small and medium-sized enterprises employ one in four residents of the oblast. They produce almost a third of the gross regional product and tax revenues increased by 1.5 times, from 75 billion tenge (US$196.2 million) to 108 billion tenge (US$282.6 million).

 

Could you tell us about public-private partnership activity and projects?

From 2016-2018, Almaty oblast signed 22 public-private partnership (PPP) agreements worth 33 billion tenge ($86.3 million) and generated 12 billion tenge (US$31.4 million) of private investment, as well as created more than 400 new jobs.

I will give some examples from each area.

In the agricultural sector, we opened seven service and storage facilities (in Aksu, Eskeldi, Karatal (2), Koksu, Panfilov and Sarkan districts) by leasing 114 units of agricultural equipment to private partners, which helped to increase the acreage of sugar beet up to 1,500 hectares; rice, 1,000 and corn, 500.

In education, we commissioned kindergartens for 320 children in Taldykorgan, for 150 children in Kaskelen and for 100 children in the village of Kyrgauyldy of Karasai district, which increased the coverage of children with preschool education in the oblast. Overall, we managed to bring the availability of kindergartens up to 98 percent by the end of the year.

As for healthcare, we opened a modern medical laboratory in Karasai district that conducts laboratory research of biomaterials in the shortest possible time and runs tests using modern high-tech equipment. A complex of medical information systems was introduced in 12 medical institutions of Almaty oblast, which helps to quickly and accurately diagnose and treat patients. Furthermore, the computed tomography department of Alakol Central Regional Hospital is equipped with a computer tomograph and an effective diagnostic process has been organised.

With regards to social protection, a daycare centre was built in Talgar district for 25 children with disabilities providing specialised social assistance in a semi-hospital setting for children under 18 with disabilities.

As for sports, two sports centres were leased in Tekeli, which will facilitate the promotion of popular sports in the city by increasing the number of people involved.

This year, we are working on 26 PPP projects totalling 78.1 billion tenge (US$204.3 million), including four in education, five in health, seven in energy and utilities, four in sports, agriculture, industry, tourism and culture and one in transport and security.

Other projects include a school for 1,200 students in the village of Aitei of Karasai dsitrict, operation of a positron emission tomography centre in the village of Otegen Batyr of Ili district, an outpatient clinic for 250 people in the village of Uzynagash of Zhambyl district, a cultural centre in Kapshagai, an indoor track facility and a swimming pool in Taldykorgan, fitness and health centres in Kapshagai, Shamalan village and in Raiymbek rural area of Karasai district and a 110/10 kV substation in Karasai district.

PPP projects help to unburden the budget and build socially important facilities, modernise infrastructure and create jobs thanks to private investment. Generally speaking, this mechanism gives a tangible positive effect.

 

What is being done to attract tourists? How many tourists visited the oblast in 2018?

The tourist potential of Almaty oblast is rich and diverse. The oblast has unique opportunities for the development of all types of tourism, starting from an educational one related to visits to cultural and historical sites and ecotourism including the observation of rare species of flora and fauna to adventure tourism, wellness tourism and others. In order to develop all these areas, we adopted the Tourism Roadmap for Almaty oblast for 2018-2020 taking into account the priority development of domestic and inbound tourism.

To attract tourists, every year Almaty oblast presents its opportunities at tourist exhibitions in Almaty and Astana, this year presenting itself at the largest tourist sites in Berlin, Hong Kong, London, Moscow and Tokyo. In 2018, apart from Aktau, Almaty, Astana and Shymkent, workshops were held in Chengdu and Shaanxi (China) and Novossibirsk (Russia). Memorandums of cooperation were signed with the tourism departments of Chengdu and Xi’an (China) and the Ministry of Economic Development of Novossibirsk Region of the Russian Federation.

Information tours are conducted for foreign and domestic tour operators along the most attractive routes and new facilities to increase the tourist flow through direct sales. In 2018, five information tours were held, including for international exhibitors of the Kazakhstan International Tourism Fair (KITF) exhibition and as part of the opening of the tourist season at Lake Alakol. We are working with the international Internet platforms Profi.Travel and TripAdvisor. The output of this work will be a micro website presenting the accommodation sites and tourist facilities of Almaty oblast.

The well-known television and radio broadcasting company BBC filmed two beautiful videos about the nature and tourist destinations of Almaty oblast and they were seen by a huge number of viewers around the world.

Tourism monitoring data show a steady increase. Thus, in 2018 compared with 2017, the tourist flow grew by 22.2 percent and amounted to 1.9 million people. Services rendered increased by 54.9 percent and amounted to 12.9 billion tenge (US$33.7 million). The oblast has 729 accommodation sites, an increase from last year’s level by 7.2 percent with 9,607 rooms, and the one-time capacity is 25,929 beds.

Lake Alakol is the gem of Zhetysu. In order to implement the instructions of the head of state given during his working visit to Almaty oblast on May 9, we are developing tourism and all the necessary adjacent infrastructure.

In 2018, an investment of 2.5 billion tenge (US$6.5 million) allowed us to commission 33 facilities on the lake shore and create 216 new jobs. The construction of a multifunctional five-star, 400-bed Koktem Grand Resort has been completed. Its investor is Falcon Petroleum LLC; the hotel resort is officially open.

The seasonal railway service Zhetygen-Dostyk-Zhetygen (Almaty 1-RZD 13 (Akshi)-Dostyk) has been subsidised since 2015. We allocated 36.8 million tenge (US$96,276) from the local budget in 2015, 65.6 million tenge (US$171,623) in 2016, 85 million tenge (US$222,378) in 2017 and 85 million tenge (US$222,378) in 2018. In 2018, we subsidised air flights amounting to 579 million tenge (US$1.5 million) in the following directions: Astana-Usharal-Astana, Almaty-Usharal-Almaty, Taldykorgan-Usharal-Taldykorgan and Taldykorgan-Astana-Taldykorgan. In 2018, we completed the construction of the railway station in Akshi village.

The work carried out in 2018 showed that the tourist flow to Lake Alakol grew by 35.4 percent compared with 2017 and amounted to over one million people. We rendered tourist and recreational services amounting to 5.9 billion tenge (US$15.4 million), 1.7 times more compared with 2017 (3.5 billion tenge or US$9.2 million).

We are actively developing mountain tourism. To this end, we signed a memorandum with Kazakh Tourism and Almaty-Tau Association of the Tourism Cluster of Almaty oblast on joint development of the mountain cluster. The first stage provides for the development of five mountain gorges. To date, the capacity of the ski resorts is 7,500 people per day, 45 km of tracks and 670 beds. By 2025, the projected flow of tourists will reach 65,000 people per day and 320 km of tracks and 4,000 beds will be created. In general, the tourist flow to Almaty oblast will reach 4.165 million people.

The opening of Oi-Qaragai Lesnaya Skazka mountain skiing park in early January was a striking start to the development of the mountain cluster. The investment amounted to 15.5 billion tenge (US40.6 million). We continue to develop Lesnaya Skazka-Aport-Aktas ski resort in Talgar district and plan to invest 16.5 billion tenge (US$4.3 million); the number of visitors is 724,000 people.

Thus, thanks to the work done in 2018, the tourist flow to Almaty oblast grew by 22.2 percent and amounted to almost two million tourists.

 

Could you tell us about the measures being taken to improve the transport system in Almaty oblast?

State infrastructure development programmes are of great help in improving the oblast’s transport system. As part of the Nurly Zhol programme, we built roads in the oblast meeting world standards. They include the section of the Western Europe-Western China (304 km) and the Almaty-Taldykorgan road (260 km). The total length of the roads in Almaty oblast is 6,138.6 km. Up to 30 billion tenge (US$78.5 million) is allocated annually for the construction and repair of local roads. As of Jan. 1, 78.1 percent of oblast autoroads are in good or satisfactory condition and by the end of this year, this figure will reach 78.5 percent.

As I have already said, a developed transport infrastructure is one of the mandatory criteria for the successful development of tourism. Thus, the Taldykorgan-Usharal-Taldykorgan air route is subsidised; for this purpose, we allocated 46.2 million tenge (US$120,869) in 2018 and will allocate 107.8 million tenge (US$282,028) in 2019 from the budget of the oblast. Flights operate three times a week; last year, they operated from July-October. The aircraft is Yak-40; the airline is Airline Zhetysu. This year, we plan to increase the frequency from three-six months. Currently, the Usharal Airport cannot receive large aircraft, which limits the flow of tourists. In this regard, for the repair work and to increase the capacity of the runway of the airport so it could receive aircraft such as Airbus, IL-76 and Boeing, we allocated funds from the oblast budget to develop, design and estimate documentation. Construction and installation work is scheduled for the beginning of the second quarter of this year.

Following an official instruction of the Minister for Investment and Development of the Republic of Kazakhstan on the development of regional aviation of Dec. 13, 2017, Zhetysu Airline was named the main operator for the purchase of aircraft for regional airlines. To this end, as part of the Nurly Zhol state infrastructural development programme, the akimat of the oblast together with BRK-Leasing purchased two Czech-made L-410 aircraft. One of the aircraft has sanitary equipment that will allow rendering qualified medical assistance to the population outside the oblast centre.

Indeed, the fact that the Nurly Zher and Nurly Zhol state programmes are extended until 2025 will help us to increase the percentage of roads in good condition from 77 percent to 90 percent.

 

Any additional information about the region that would be interesting to our readers?

Our gross regional product for 2018 is estimated at 2.7 trillion tenge (US$7.1 billion), with an increase of 3.5 percent. Industrial output was 884 billion tenge (US$2.3 billion); the quantum index is 101.1 percent. Gross agricultural output reached 703.3 billion tenge (US$1.8 billion) with a growth of 103.6 percent. Construction amounted to 276.6 billion tenge (US$723.6 million) or 101.6 percent by 2017. A total of 713,200 square metres of housing (110.4 percent) were commissioned. The oblast’s economy attracted 574.3 billion tenge (US$1.5 billion) of investment; the quantum index is 103 percent. Retail turnover exceeded 500 billion tenge (US$1.3 billion) with an increase of 7.2 percent. We created 31,295 jobs in all sectors of the economy; the unemployment rate decreased to 4.6 percent.