Kazakh machine building sector sees consistent growth

NUR-SULTAN – Kazakh car manufacturing increased by 13.4 percent to 553 billion tenge (US$1.4 billion) in the first half of 2019. During that period, 128 projects worth 367 billion tenge (US$948 million) were launched and an additional 10 projects worth 54 billion tenge (US$140 million) are slated to start by the end of the year.

Photo credit: 24.kz.

Machinery production, which was approximately one trillion tenge (US$2.5 billion) in 2018, has also increased three-fold during the years of industrialisation.

Machine building is a priority for the country’s industrial and innovative progress, said Vice Minister of Industry and Infrastructure Development Amaniyaz Yerzhanov at an Aug. 1 government meeting.

“Machinery import is worth approximately $13 billion. Domestic production is worth more than $3 billion. We need to work more in this direction,” he said.

Electrical, oil and gas engineering and car manufacturing equipment are the top three imported products.

“The ministry will continue its work on the development and promotion of machinery products and the creation of favourable conditions for investors,” he added. Local companies are continuing to create high-tech products using modern technology and equipment. Electrical engineering has shown stable production growth and in-depth localisation.

The agricultural engineering sector has increased production since 2018 facilitated by government support measures, including a value-added tax exemption on product sales.

The increase in mining engineering production is related to manufacturing spare parts for drilling and sinking machines, which occupy 73 percent of mining engineering.

The ministry and Kazakhstan Machine-Building Union developed the machinery industry development roadmap for 2019-2024 to increase productivity, domestic consumption and export-oriented products and reduce import dependence.

“The development of the machine-building industry is an indicator of the economy. The machinery industry makes up 40 percent of sector turnover in Germany and 27 percent in Russia. Unfortunately, our country has not reached this level. However, the machinery industry has been developing in recent years. The imports are declining and the number of enterprises is growing. We observe a demand for products both domestically and abroad. We should pay more attention to this sector,” said Union Chairperson Meiram Pshembayev.

Production and labour productivity are expected to increase two-fold and exports, 1.2 times.

“The road map envisages the adoption of a law on industrial policy. It is also intended to create the Industrial Development Fund of Kazakhstan at the ministry. There is a proposal to introduce tax preferences for enterprises to modernise existing capacities and further increase the export potential of domestic enterprises,” he added.

More than 2,600 machine-building enterprises with 64,000 employees operate in the country. Average labour productivity per employee is $12,400. According to the ministry, one job in engineering stimulates the creation of approximately seven-eight jobs in related industries.