Kostanai Region seeks major industrial investments while focusing on recreational and hunting tourism, Akim says

ASTANA – As the series of exclusive interviews with the regional governors in Kazakhstan continues, Akim (Governor) of Kostanai region Arkhimed Mukhambetov describes the efforts of his administration aimed at attracting major investments thanks to the specially created industrial zone, while its abundant recreational resources provide ample opportunities for developing tourism of various sorts.

Arkhimed Mukhambetov. Photo credit: investinkostanay.kz.

What socio-economic development issues are on the agenda? What work is planned to improve indicators in the coming years?

As the head of state noted, income and quality of life are the main criteria for the effectiveness of our work.

At the end of last year, there were many positive results:

– average monthly salary increased by 7.2 percent to 139,370 tenge (US$364.46) and the real wage index by 1.7 percent;

– cash income of the population (nominal per capita) increased by 8 percent; real cash income, by 2 percent;

– the life expectancy of the population increased from 71.5 to 72.2 years;

– unemployment rate (Q3 2018) stood at 4.8 percent, which was a consequence of successful implementation of the Comprehensive Employment Promotion Plan, under which 30,600 people were involved in employment activities, while the plan had called for only 22,400 people.

According to the implementation of the second initiative of the head of state to reduce the tax burden in order to increase the wages of low-paid workers, starting from Jan. 1, 2019, the tax burden for 57,200 people with a salary of 63,125 tenge (US$165.08) and less (totalling more than 1.6 billion tenge (US$4.2 million)) was reduced in the region.

The minimum wage was increased 1.5 times for about 37,000 people at enterprises and organisations of all forms of ownership.

The initiative to increase wages was supported by more than 2,000 companies in the region, which have increased the wages of more than 58,000 employees since Jan. 1.

A great deal of work has been done to reduce the maximum tariffs for public utilities and today, the tariffs for heat have already been reduced to 14 percent; for water, sewerage and municipal solid waste removal to 10 percent and for electricity transportation and services of consumer co-operatives to 8 percent.

In addition, since the beginning of this year the cost of maintenance of elevators and coal suppliers to the region has been reduced to 5 percent.

The work on reduction of prices and tariffs will be continued in the current year.

The real growth of the economy contributes to the improvement of the quality of life of the population.

Thus, the growth in industry amounted to 8.3 percent; construction works, 22.3 percent.

A total of 299,300 square metres  of housing were commissioned, or 113.1 percent, compared to 2017.

The region’s economy received 245.3 billion tenge (US$641.5 million) in investments with growth of 13.3 percent, while external investments were 38.6 percent higher than in 2017.

Gross output of agricultural products increased by 10.2 billion tenge (US$26.7 million) to 378.3 billion tenge (US$989.3 million).

According to the results of the year, we forecast the growth of gross regional product of more than 5.0 percent; that is, the President’s order to ensure the growth of the economy is fulfilled.

We associate further development of the region with the implementation of investment projects in the basic industries.

Currently, we are actively working on 40 projects worth 2.2 trillion tenge (US$5.8 billion), including 20 projects with foreign participation (1.7 trillion tenge (US$4.4 billion)), with the creation of 6,000 jobs.

In industry, we are focusing on the introduction of elements of Industry 4.0. In 2017, Sokolov-Sarbai Mining Production Association (SSMPA) introduced the smart quarry system at one of the fields and this year, there are plans to introduce a similar system at other fields as well.

In addition, SSMPA has created a fifth-generation smart factory in the Kachary quarry. Thanks to the automated system with elements of artificial intelligence, the productivity of the equipment will be increased four times and the volume of finished products (concentrate and pellets) will be increased up to 23 million tonnes in five years.

In agriculture, we are organising an agricultural processing cluster in Arkalyk, which is directly connected to Astana.

We are focusing on the meat processing complex with the capacity of 1,000 tonnes, which was commissioned as part of the traditional teleconference bridge.

We are also implementing a project to build a livestock breeding complex in Arkalyk.

In addition, the region is a pilot region for the introduction of digitisation in the agricultural sector.

We are implementing a smart dairy farm (Olzha Sadchikovskoye LLP), smart meat farm (Terra LLP) and smart poultry farm (Zhas-Kanat 2006 LLP) and introducing precision farming technologies.

The main issue of the next stage of the agro-industrial complex digitisation for 2019 is the scaling up of these projects to other regions and the strengthening of awareness among agricultural enterprises and the establishment of competence centres for training farmers (training centres) on the basis of pilot farms.

In the area of business support and development, joint work with the Asian Development Bank will be continued to develop an action plan for entrepreneurship development in the Kostanai region for 2019-2022.

Systematic work will also continue to increase the share of small and medium-sized enterprises (SMEs) in the economy from 25.5 percent to 28.2 percent.

The work on gasification of settlements will be continued. In order to continue gasification of the region, 2.3 billion tenge (US$6 million) will be allocated for implementation of four projects.

During the implementation of the memorandum with KazTransGas, the gasified population of Kostanai region increased from 471,900 people to 482,900 people. The implementation of four projects will allow increasing access of the population of the region to natural gas up to 500,000people.

Within the framework of the social initiative to expand microcrediting, 3.3 billion tenge (US$8.6 million) is envisaged for 2019, of which 3.1 billion tenge (US$8.1 million) will be allocated for crediting in rural areas and 237.1 million tenge (US$620,032) in cities.

The Year of Youth, announced by the head of state, sets ambitious goals for us. To achieve them, we have developed a road map with 79 events.

For example, our region is one of the first in Kazakhstan to open the Youth Palace and hold an international forum of Kazakhstan-Russia youth cooperation, which will give new impetus to the development of the youth policy in the region.

In addition, we will carry out:

– The Koktem korki qyzgaldaq rural youth forum;

– Qosta Youth information meeting and

– Deni sau urpaq – Ult Bolashagy health and sports festival.

This year, we are completing the construction of the Youth Palace. A concert hall with 1,000 seats and an orchestra pit, modern sound and lighting equipment will be provided for youth creative groups.

 

How many foreign investments were attracted to Kostanai region in 2017-2018? Please tell us about the most significant projects in the construction, manufacturing and agro-industrial sectors.

Work on attracting investments, including foreign investments, is one of the most important strategic tasks of the Kostanai region Akimat (government). At the same time, there is steady growth in attracting foreign investment in the capital of the region.  In 2017 and 2018, 22.8 and 31.6 billion tenge (US$59.6 million and US$82.6 million) were attracted, respectively. According to static data, the volume of foreign investments in 2018 was three times higher than in 2015 (10 billion tenge (US$26.2 million)).

The undoubted success of the last two years is the attraction of several large foreign investors.

The abundance of natural resources and availability of raw material base in our region encourages investors to create new production facilities both in the agro-industrial complex and manufacturing.

Investors are very interested in processing grain crops, which is conditioned by the existing raw material potential of the region.

For example, in 2017 the Kostanai region exported about one million tonnes of wheat grain, which could be processed producing high value added products.

In December 2018 in Kostanai, Best Kostanai LLP launched a mill complex with a capacity of 700 tonnes of flour per day. A similar mill with an even higher capacity (1,000 tonnes of flour per day) will be launched in 2019 on the basis of Salamat Company LLP.

Both projects are implemented with the participation of Turkish investments.

The machine-building industry is developing at a good pace and in 2017-2018, fruitful work in this industry was carried out. In 2017, jointly with the multinational company CMC (China National Machinery Import & Export Corporation), a part of the Genertec conglomerate (China General Technology Group) and on the basis of Saryarka AutoProm LLP (a part of the domestic machine builder Allur Group), a project was implemented to produce JAC S3 automobiles by the small-knot assembly method (CKD (complete knocked down)). The cost of the project amounted to 5.6 billion tenge (US$14.6 million). The project works stably; about 700 cars have already been produced since the beginning of implementation.

To the present day, in December 2018, while continuing cooperation with CMC, an agreement was signed on the investor’s entry into the capital of Allur Group. The signed agreement implies the acquisition by CMC of 51 percent of shares from a domestic automotive company and the attraction of about $1.1 billion. This will help expand the range of manufactured cars, increase the localisation level up to 50 percent and enter foreign markets.

In September 2018, the company launched a project worth over two billion tenge (US$5.2 million) to produce tractors of the Belarus brand. The investor was Composite Group holding (, based in Russia’s Sverdlovsk region, which also has a branch in Kyrgyzstan. It should be noted that the holding is working on the certification of OAO MTZ.

Implementation of the project became possible due to close cooperation between the state and business. On the territory of the industrial zone in Kostanai, the investor was provided with a brownfield site, i.e. a land plot with a ready-made production facility and an existing engineering infrastructure built at the expense of budget funds and leased to the enterprise for long-term rent. Thanks to this, the production of tractors was established in the shortest possible time.

In addition, negotiations with Petersburg Tractor Plant on the assembly of Kirovets tractors series K-744 on the territory of Agromashholding is being conducted now.

The industrial zone being created is a strong argument for direct negotiations with investors. The total area of the industrial zone is 400 hectares, of which about 40 percent of the territory is already being developed.

At the moment, 11 projects are being developed at this site (two of them were launched in 2018) for the amount of more than 300 billion tenge (US$783.8 million). In 2019, two projects involving foreign investment are planned to be implemented in the industrial zone.

In the first half of 2019, construction of a modern crop processing complex worth $300 million will begin on an area of 140 hectares. The investor is Bio Grain LLP together with China CAMC Engineering. Under the project, there are plans to process 600,000 tonnes of grains and 200,000 tonnes of oilseeds, as well as to produce one million tonnes of mixed fodder. This year, we plan to start construction of the complex.

Summing up the above, I would like to note that work in this area is ongoing. Currently, 23 potential investment projects with the participation of foreign investments are under consideration. This list of projects is constantly being updated and work is being done to support investors at all stages of production launch.

 

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

As of today, 67 projects are being implemented in the region within the framework of PPP in various spheres of the economy – education, healthcare, housing and communal services, internal affairs, housing construction, culture and sports for the total amount of 26.6 billion tenge (US$69.5 million).

Forty-four PPP contracts were concluded for 16.6 billion tenge (US$43.4 million), which is third place in the ranking among the regions of the country:

– in the field of education, 21 contracts for the construction and reconstruction of five kindergartens, the installation of block-module boiler houses in secondary schools and the rental of premises for preschool institutions;

– in the area of health care, 12 contracts have been concluded for the construction of a medical and obstetric station, the lease of a family medical outpatient clinic and premises for medical institutions;

– in the sphere of physical culture and sports, six agreements on construction of a football arena, a sports and entertainment complex, a 50-metre swimming pool, an ice palace in the city of Kostanai and a sports hall in the cities of Kostanai and Rudny;

– in the sphere of housing and communal services, four agreements on leasing of specialised equipment for municipal solid waste (MSW) removal and

– in the sphere of housing construction, one contract for reconstruction of a building for a rental house in Lisakovsk.

 

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

In the region, inbound and domestic tourism is dynamically developing due to the attraction of investments in the construction of facilities and development of tourism infrastructure. Every year the range of tourist services, the number of objects and the most important tourists increases.

From January-September 2018, the region was visited by more than 155,600 tourists, including 14,600 foreign visitors.

The region has adopted and is implementing a master plan for the development of the tourism industry in the Kostanai region for 2018-2022 which defines six major tourist cluster sites in the region. Also, the action plan for implementation of the master plan and promotion of Kostanai region as a tourist destination has been developed.

In accordance with the action plan, roads are being repaired, information boards and signs are being installed, new tourism facilities are being constructed and existing ones are being reconstructed and the necessary infrastructure is being provided.

Thus, the reconstruction of the section of national highway M-36 of Yekaterinburg-Almaty (25 km), passing through the resort area of Altynsary District, was carried out. The current repair of the access road to the Sosnovyi Bor sanatorium has been completed.

In 2018, seven investment projects were implemented in the field of tourism for the construction and reconstruction of hotels for the total amount of 249.7 million tenge (US$652.4 million), with the creation of 34 jobs.

As part of the implementation of the Digital Kazakhstan state programme, the region launched a website www.visitkostanay.kz with a mobile application and 3D tours to the sights of the region.

On the territory of the railway station and the airport electronic information kiosks about sights and tourist objects of the region are installed.

In the framework of the 15th Forum of Interregional Cooperation between Russia and Kazakhstan, held in 2018 in Petropavlovsk with the participation of the heads of state of Russia and Kazakhstan, the akimat of the region signed four memoranda on cooperation in tourism with the regions of the Russian Federation (Kurgan, Omsk, Orenburg and Sverdlovsk). Work is currently underway with the Russian side to develop and agree on an action plan for the implementation of these memoranda.

In addition, two directions from Kostanai region were included in the top 50 objects of the Tourist Board of Kazakhstan – the resort area of Altynsary District and hunting-trophy tourism. In 2019, there are plans to develop master plans for the development of these areas.

There are 99 hunting farms and 212 fishery reservoirs in the region which contribute to the development of hunting, fishing and active recreation. The given direction gives the chance to be engaged in adventure tourism. The companies providing hunting tourism services are Kainturohota LLP, Kostanayintour LLP and SAFARI LLP.

The main territory of hunting tourism in the region is the southern regions – Amangeldy and Zhangeldy districts and Arkalyk city. In Arkalyk, for comfortable accommodation of tourists there are hotels with budget rooms and suites.

For the development of hunting and fishing tourism, a video clip was developed on these directions of tourism on the territory of the Arlan, Kazinturohota and Russian Zharkol hunting farms.

Altynsary District is the leader in organisation of resort and recovery tourism in Kostanai region.

Particularly attractive for tourists is the health resort of our region – the Sosnovyi Bor sanatorium located in a picturesque resort area. The sanatorium provides a wide range of services that are used by residents of our country and citizens of other countries. Annually, the sanatorium serves about 12,000visitors.

There is also the Dzhaylyau KZ recreation and entertainment complex, which has all the means for recreation and recovery.

Also, in Altynsary District there are recreation centres such as Derevenka v boru and Selena and children’s health camps such as Merei, Sosnovyi Bor and Svetofor.

 

What kind of work is being done to improve the Kostanai region transport system?

One of the most important factors of the region’s economic growth is the dynamic development and improvement of transport infrastructure. Highways are one of the most important elements of the transport and communication complex of the Kostanai region, the effective work and sustainable development of which in modern conditions is becoming an important factor in the transition to economic recovery, raising the standard of living and improving the living conditions of the population.

The length of roads of regional and district importance of Kostanai region is one of the longest in the country and is 7,879 km, including regional (2,208 km) and district (5,671 km). In 2018, 331 km of roads were repaired on regional and district level.

Thanks to all the repair work carried out on the roads of regional and district importance, according to the results of the autumn inspection the share of roads of regional and district importance that are in good and satisfactory condition amounted to 66 percent, exceeding the share of 2017 by 2 percent.

In 2019, there are plans to allocate about 30 billion tenge (US$78.4 million) for these purposes. The reconstruction of 2.2 km of regional roads will be carried out and 392.7 km of local roads and 95.7 km of streets in settlements will be covered by capital and medium repairs.

In 2018, the regional akimat (government) launched a project to reconstruct the artificial runway at Kostanai Airport. The project will take two years and is planned to be completed in 2019. Implementation of the project will improve the quality and durability of the airfield cover and increase the safety of aircraft operation.

In 2018, work began on a feasibility study for the reconstruction of the terminal building to accommodate the Kostanai Airport passenger terminal.