Kazakhstan Expands Construction Materials Market 3.3 Times Over Thanks to New Economic Program

NUR-SULTAN – The production volume of building materials for construction works has increased 3.3 times over, said Minister of Industry and Infrastructural Development Beibut Atamkulov during a July 21 government meeting. The Kazakh government will also implement new measures to increase domestic products in the construction industry as part of the Economy of Simple Things program.

The production of construction materials comprises a 6 percent share in the entire manufacturing industry in Kazakhstan. There are 1,965 enterprises engaged in construction material production.

The main contributing factors to this dynamic development are the large-scale state programs such as the Nurly Zher (Shining land) housing program, the Nurly Zhol (Shining Road) national road repairment program, the new Employment Roadmap, the State Programme for Industrial and Innovative Development, as well as major social and cultural projects.

In addition to this, the Kazakh government introduced new measures to “increase the utilization of enterprises’ capacities, to boost the sale of products and the growth of production volumes.”

One of the key priorities of the ministry is to increase the share of domestic housing construction products. The Kazakh construction product market has a high import share, in particular the share is quite high for the main materials in housing construction. The imported products constitute 41 percent, which is 348 billion tenge (US$848.51 million), of materials in housing constructions.

To address the issue, the Kazakh government will launch eight new import substitution projects with a projected production volume of 103 billion tenge (US$251.14 million) by the end of the year. The projects aim to increase the share of Made in Kazakhstan products in housing construction up to 90 percent, and reduce import share by 15 percent, he said.

Although Kazakh manufacturers produce a wide variety of top in-demand building materials, they fail “to meet the volumes to fully cover domestic market demand,” Atamkulov said.

In 2020, the eight projects will focus on five types of building materials. These are glass, polyethylene pipes, dry building mixtures, fittings and ceramic tiles, he said.

In addition to these, the ministry plans to initiate projects for the production of thermal insulation materials, ceramic refractory bricks, sanitary ware with a production volume of 61 billion tenge (US$148.73 million). These projects should decrease the import share by another 8 percent.

To stimulate the development of the construction industry, the ministry is working with the Samruk Kazyna Sovereign Wealth Fund and large construction companies to introduce “new procurement mechanisms, including offtake contracts and direct contracts,” he said.

The government also plans projects that will guarantee product sales and increase awareness of trading platforms. The ministry is considering creating an online marketplace for domestic building materials.

“This (the marketplace) will reduce the product cost by 15 percent and ensure the transparency of the building materials market. With the support of the state, the online platform will provide an opportunity to sell construction materials at a fixed cost,” the minister said.

The plans also include the development of investment passports for the main imported building materials. Such passports grant a possibility “to determine the prospects and economic feasibility of deploying the production of certain building materials,” he said.

The government has also created regulatory incentives to increase the production of domestic products. As of today, the new legal framework requires the use of Kazakh building materials for budget financed projects.

Moreover, all projects are now obliged to provide an accessible resource sheet online. This means that domestic producers will be able to see the number of planned construction projects, as well as the demand volume for building materials, products, structures, and equipment in the future.

Get The Astana Times stories sent directly to you! Sign up via the website or subscribe to our Twitter and Telegram!