Aktobe region bets on manufacturing, agriculture, SMEs and PPPs, governor says

ASTANA – In this exclusive interview, Berdybek Saparbayev, Akim (Governor) of the Aktobe oblast in the western Kazakhstan, speaks about the major efforts by his administration to develop industry, agriculture and road infrastructure and attract tourists as they prepares to celebrate the 150th anniversary of the founding of the regional capital.

Berdybek Saparbayev.

What social and economic development issues are on the agenda for your region?

Given the potential and tasks set by the head of state, the main priorities of the social and economic development of the Aktobe oblast are further diversification of the economy with the development of the manufacturing industry, use of the potential of the mining industry, service sector, agricultural industry, increase in labour productivity by digitising and introducing new technologies, as well as improving urban development with the aim of becoming a big agglomeration and centre of the country’s western macroregion.

I would like to note that thanks to the support of the President, government and the implementation of all state programmes, we managed to ensure the growth of the regional economy at the level of 5 percent for the second year in a row. Industrial enterprises manufactured products for a record amount of 1.9 trillion tenge (US$5.05 billion), farmers – 228 billion tenge (US$606 million). A total of 908,000 square metres of housing were built, 534.6 billion tenge (US$1.4 billion) were collected in the consolidated budget.

Our task for this year is to use all the reserves for the further development of the region and improvement of the well-being and quality of life of the population.

 

What is planned to be done to improve performance in the coming years?

First, the systematic development of the manufacturing sector will be maintained. Over the past five  years, the share of manufacturing in the gross regional product (GRP) has increased from 7.3 percent to 11.6 percent.

In addition, work is underway to establish a special economic zone by transforming the existing Aktobe industrial zone, which will create attractive conditions for investors. At the first stage, it is planned to attract about 2.2 trillion tenge (US$58.5 billion) of investment in the oblast, create about 5,000 new jobs, establish a chain of enterprises with high added value and thereby diversify the economy of the region.

At the same time, based on the analysis of the balance between manufacturing and consumption of products in the region and neighbouring areas, strategic niche projects and promising directions, types of necessary products that the oblast and other regions of Kazakhstan need, are identified. Thus, in 2019, another 10 investment projects are planned to be commissioned with a total investment of 34.8 billion tenge (US$92.5 million) creating 700 new jobs that will fill niches in the construction industry, mechanical engineering and consumer goods.

Sure enough, we will also use the mining industry potential. At present, there are still 160 reserve fields in the region, the potential of which has not been unlocked. Free fields will allow developing metallurgical and petrochemical clusters.

The development of the service sector is also one of the key areas of economic development. In 2019, using all sources available, about 34 billion tenge (US$90.4 million) will be allocated for the SME development, including 5.1 billion tenge (US$13.5 million) for microcrediting within the implementation of Five Social Initiatives of the President, further creating more than 2,000 jobs. Allocated funds will increase the share of small and medium-sized businesses in the structure of the economy.

In order to improve business confidence in state agencies in the region, the Business without Barriers project is being implemented. It provides for the reduction of administrative barriers, optimisation of authorisation procedures, and reduction of the documents list when obtaining authorisation documents and making changes to the regulatory acts, as well as carrying out activities aimed at improving the region’s rating on ease of doing business. The region is the leader in non-financial support from the EBRD, the amount of grants was more than 120 million tenge (US$319,140). In cooperation with the MASHAV, human capital is being constantly developed, increasing the competence of entrepreneurs. Within the Zhas Project designed for the unemployed youth, the World Bank allocated a grant in the amount of 163 million tenge (US$433,499).

Agriculture remains one of the main sectors of the economy of the Aktobe oblast. The key areas of the agricultural industry in the short term should be the development of animal husbandry, irrigated land and non-traditional agricultural sectors. With the EBRD financing, this year it is planned to increase the irrigated land area by 10,600 hectares. The agricultural project office was created, within which 208 promising projects were outlined for 2019, including 149 projects in animal husbandry, 37 projects in irrigated crop farming and greenhousing, 10 projects in dairy farming, five projects in processing of agricultural products, four projects in poultry farming and one project in fish farming.

At the same time, we are universally introducing innovations in the agricultural industry, introducing satellite monitoring of fields, automating technology crop maps, monitoring the traffic record, grain storage and processing. In the future, it is planned to implement smart farms in the oblast and introduce targeted farming.

In addition, the oblast will work to increase labour productivity by developing digitisation and introducing new technologies. According to the state-of-the-nation address of the head of state, “Third Modernisation of Kazakhstan: Global Competitiveness,” in 2017 the activities were launched to modernise and digitise enterprises. Over the past two years, about 75 enterprises have been modernised in the amount of 105 billion tenge (US$279.2 million).

The investment package of documents of every production facility was revised, with the involvement of foreign experts for a detailed analysis of the modernisation and digitisation effectiveness. Together with local enterprises, we worked with large foreign companies to purchase equipment, further reduce costs, increase competitiveness, increase productivity and improve the environmental situation. In 2019, at least 50 enterprises are planned to be modernised and digitised in the industry. As a result, their productivity should increase by 7 percent.

In order to increase the competitiveness of the region, activities are underway to improve the urban environment, since this facilitates investment attractiveness. In Aktobe, we are implementing the Smart City project with a special focus on public space, development of pedestrian streets that shape the city’s brand and attract tourists and SMEs. We are doing this taking into account the best international standards.

Housing construction is also a priority. We will build on the principle: increasing the number and affordability. “Increasing the number” means an ambitious task of the current year to commission more than one million square metres of housing, and “increasing affordability” means cutting costs in housing construction through the introduction of modern technologies and the use of construction materials from local manufacturers.

 

What is the amount of foreign investment attracted to the Aktobe oblast in 2017 and 2018?

At the end of 2018, 516.1 billion tenge (US$1.37 billion) was attracted to the region. Comparing to 2017, the amount of investment increased by 78.1 billion tenge (US$207.4 million). Thirty percent of investment are foreign (155.6 billion tenge, (US$413.8 million) or 41.9 percent more than last year.

At the same time, jointly with the Kazakh Invest national company, active work is carried out to attract foreign investment in various sectors of the regional economy. Thanks to transnational corporations (TNCs) and other large foreign companies entering the region, we have noted a positive trend in foreign investment. Today, seven TNCs operate in the oblast including Sinopec Group, CNPC, ERG, Yildirim Group, Russian Copper Company, which in 2018 included the global giants Eni and General Electric, building a wind power plant in the Kargaly region worth 33 billion tenge (US$87.7 million).

 

Please, tell us about the most important projects in construction, manufacturing and agribusiness.

In 2018, six large investment projects of the manufacturing industry were commissioned with total investment of 47.2 billion tenge (US$125.5 million), 575 jobs were created. Thus, with the participation of Chinese investors, production of modular equipment packages was opened at Kazakhstan Oil Equipment Plant LLP at a cost of 1.8 billion tenge (US$4.7 million), ice-cream production was launched at Ice Plus LLP at a cost of 1.2 billion tenge (US$3.1 million), as well as production of ovens for the oil industry at EcoExpress Aktobe LLP worth 1 billion tenge (US$2.6 million).

The gas processing facility of Gas Processing Company LLP has become a significant project for the region. The project was launched in 2016. Then, within the Fourth International Investment Forum “Aktobe Invest 2016,” a memorandum was signed between the oblast akimat and the management of the company. On Dec. 11, 2018, within the Industrialisation Day, the President of the country launched a new facility during a teleconference. This production facility not only makes a significant contribution to the economic development of the region, but also improves the environmental situation by processing the associated gas, which was previously simply flared. The investment amount in the project was 42 billion tenge (US$111.6 million). It is predicted that in just seven years tax revenues to the local and national budget from this plant alone will amount to more than 10 billion tenge (US$26.5 million).

In agribusiness, a large-scale project for the construction of the fifth-generation greenhouse facility at Green Capital Kazakhstan LLP has been implemented. A project worth 7.4 billion tenge (US$19.6 million) will grow more than 1,500 tonnes of vegetables per year.

In addition, such projects are at the stage of completion as Koktas Aktobe JSC construction materials plant worth 7 billion tenge (US$18.6 million), Zerde Keramika Aktobe LLP ceramic tile and granite plant worth 9.2 billion tenge (US$24.4 million).

At the same time, it is worth noting construction projects in the social area, where 23.8 billion tenge (US$63.2 million) was allocated for the design, development and arrangement of engineering and utility infrastructure, and 30.9 billion tenge (US$82.1 million) – for the construction of 26 schools in 2017-2018.

 

Please tell us about activities and projects in the area of public-private partnership (PPP).

In his address “Third Modernisation of Kazakhstan: Global Competitiveness,” the President stressed that “all possible kinds and forms of PPPs are critical to be used to attract private funds: trust management of state property, service contracts and others. PPP is set to become a primary mechanism for infrastructure development, including the social one.”

In turn, the Aktobe oblast is actively introducing PPP mechanisms and attracting private investment in solving various social issues on an ongoing basis. To date, 79 contracts have been signed for a total amount of 22.7 billion tenge (US$60.3 million).

As part of the PPP, a number of large and socially important facilities have already been opened in Aktobe, which meet all international standards. Among them is the Daru Zharygy ophthalmology centre, equipped with high-tech equipment from Germany, France, the United States, Japan and other leading countries. The centre already performs surgeries unique for western Kazakhstan. The investment amount in the project is 3.1 billion tenge (US$8.2 million).

The Daru Zharygy ophthalmology centre.

Based on the example of the Istanbul ambulance, the city emergency station is operating with the capacity of 150,000 attendances a year. The station has an information system that will be integrated with the Ministry of Healthcare and all hospitals in Aktobe. Calls will be addressed to the call centre, and 25 dispatchers will be able to track the routes of all teams online. Advanced equipment, including mobile ICUs, made it possible to reduce the time of arrival to the patient to eight-10 minutes. At the same time, the project provides for three substations with a repair base for 50 ambulances, planned to be commissioned in 2019. The investment amount is 2.1 billion tenge (US$5.5 million), the investor is a Turkish company.

At the end of 2018, the Ice Palace was commissioned, where technological equipment was computerised to the maximum. The project implementation made it possible to create conditions for health promotion and public involvement in winter sports – hockey, figure skating, short track, etc. The investment amount is 2.5 billion tenge (US$6.6 million), the investor is the Slovak company H + H Technika.

The Zhekpe Zhek sports palace

In addition, a tennis centre has been recently opened, consisting of four outdoor and four indoor courts. In general, this facility has quite spacious rooms for year-round tennis, as well as various national and international tournaments. The investment amount is 1.5 billion tenge (US$3.9 million), the investor is a local company Bonus Corporation LLP.

In total, last year PPP and corporate social responsibility projects were implemented for a total amount of 32 billion tenge (US$85.1 million).

In addition, today within the PPP it is planned to build large projects such as:

  • Positron Emission Tomography Centre (PET centre) worth 6.5 billion tenge (US$17.2 million). The project, being implemented jointly with the American partner General Electric, will improve the quality of diagnosis and treatment of cancer patients identifying cancer-related diseases at the earliest stages.
  • Check-up Centre worth 5 billion tenge (US$13.2 million). The project is being implemented jointly with the Seoul National University. The centre will apply new technologies for the early and timely diagnosis of various diseases.
  • Children Oncology Centre worth 4.4 billion tenge (US$11.7 million).

In addition, as part of the PPP, street lamps will be replaced with energy-saving ones everywhere reducing the annual cost of street lighting by more than 60 percent. The project cost is 1.2 billion tenge (US$3.1 million), while the return of funds will be ensured by saving electricity.

I cannot but note that social responsibility of business is actively developing in our region. If we talk only about really large-scale projects, the Academy of Creativity worth 1.5 billion tenge (US$3.9 million) was built in 2017-2018. I would also like to mention the Arts Centre with a concert hall for 1,200 seats worth 1.5 billion tenge (US$3.9 million), rehabilitation centre for children with cerebral palsy, and the Wedding Palace worth 1.2 billion tenge (US$3.1 million).

The Academy of Creativity.

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

Here we work based on the principle “developed infrastructure – developed tourism.” Therefore, in 2018,  eight entertainment and cultural facilities and 18 roadside service facilities were opened in the oblast totalling 6.8 billion tenge (US$18 million). In particular, the first visitors were received by the summer water park, which will soon become year-round; we also opened Yurta Park with a capacity of about 1,000 people, a new local history museum, and Zaru health centre.

In addition, it is planned to launch the first five-star hotel DoubleTree by Hilton in Aktobe.

In order to inform visitors and residents of the region about the tourist potential, website www.visitaktobe.kz is functioning with all the necessary information about sights, hotels, tours, guides, etc.

As part of the state programme for the development of the tourism industry until 2025, the Kargaly reservoir is included in the top 50 facilities at the Tourism Development Map. In this regard, it is planned to create a year-round resort area at the reservoir, by attracting investors and providing state support by allocation of land, ensuring utilities.

As for the tourist attendance of the oblast, according to the data for the first nine months of 2018, over 90,000 guests were registered in hotels. This is 17 percent more than in the same period of 2017. We were visited by guests from Russia, Uzbekistan, China, Germany, Ukraine, Kyrgyzstan, Turkey, Belarus, Korea, USA, Azerbaijan, Italy, the Netherlands, Canada and other countries.

 

Please tell us what is being done to improve the transport system in the Aktobe oblast.

The head of state tasked to bring the share of roads in good and satisfactory condition up to 90 percent by 2022. In order to fulfil this task, road repairs in the Aktobe oblast are increasing annually. While 99 km were repaired for 9.6 billion tenge (US$25.5 million) in 2016, 302 km were repaired for 16.9 billion tenge (US$44.9 million) in 2017. A total of 404 km were repaired for a total amount of 35.7 billion tenge (US$94.9 million) in 2018. This year we are planning to repair more than 500 km of roads.

Currently, large projects are being implemented such as the reconstruction of sections of Aktobe – Atyrau – Russian border (Astrakhan) national road with a length of 319 km. The total project cost is 122 billion tenge (US$322.4 million). In 2018, 19.4 billion tenge (US$51.5 million) were allocated and distributed, and 16.7 billion tenge (US$44.4 million) were allocated for further work in 2019.

The Aktobe – Russian border (Orsk) national road is covered by mid-level repairs – a 50-kilometre section was repaired to the amount of 2.1 billion tenge (US$5.5 million) in 2018, in 2019 it is planned to complete 45 km of the national road worth 1.5 billion tenge (US$3.9 million). The reconstruction of the South Bypass of Aktobe and Aktobe-Orsk roads continues.

In addition, reconstruction of the section from eight to 16 km of the Aktobe-Orsk road has been completed.

The key event of 2019 for our oblast is the celebration of the 150th anniversary of the founding of Aktobe. Today, we are doing a lot of work in preparation for this anniversary. It is planned to open at least 150 new social and industrial facilities, to organise a multitude of international, national and regional events in the field of sports, culture, science, economics and other activities.

All events dedicated to the City Day contribute to increasing the investment and tourist attractiveness, shaping the brand of Aktobe as a modern, industrial, educational, scientific, innovation and cultural centre. I am sure that no Aktobe resident will stand aside and will make his/her own contribution to the development and prosperity of their home land.