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‘Kazakhstan one of the leaders in the CIS, E. Europe in foreign investments’Interview with Ambassador B. Dyussenbayev of Kazakhstan

Ambassador B. Dyussenbayev of Kazakhstan in Seoul said, “Today Kazakhstan is known as one of the leaders in the CIS and Eastern Europe in attracting foreign investments.” Speaking at a recent interview with The Korea Post, Ambassador Dyussenbayev stated, “Over the past 10 years, more than $100 billion of foreign investment has been attracted and over the years of independence, the average monthly wage increased 9.3 times.” Excerpts from the interview follow.—Ed.

Question: Please introduce your Head of State in detail, including major achievements. Also, please introduce the government minister in charge of economic cooperation with countries like Korea.

Answer: The Republic of Kazakhstan is a unitary state with the presidential system of government. The President of the Republic of Kazakhstan, Nursultan Nazarbayev is the head of the state, the highest political official, who determines the main directions of the domestic and foreign policy of the country. Kazakhstan is enough young country in the international community but in spite of that, we can be proud of the achievements.

President of Kazakhstan (Nursultan Nazarbayev, image from the embassy of Kazakhstan)

Since 1991 when Kazakhstan became independent, our country has achieved significant successes and achievements. Many reforms were carried out in various spheres. Today Kazakhstan is a country with a market economy integrated into the world economic system. The country has headed for economic and political modernization, implementation innovations and high technologies. Considerable attention was paid to the development of the social sphere and public health, agro-industrial complex, construction and machine building. In recent years, Kazakhstan attaches great importance to building up its transit potential through the development of transport infrastructure.

Today Kazakhstan is known as one of the leaders in the CIS and Eastern Europe in attracting foreign investments. Over the past 10 years, more than $100 billion of foreign investment has been attracted. Over the years of independence, the average monthly wage increased 9.3 times. The average size of pension payments increased 10 times. Over the past 15 years, incomes of Kazakhstanis have increased 16 times. The gross domestic product (GDP) of Kazakhstan has grown more than 16 times and now amounts to $ 14 000 per capita.

Sustainable development lies at the heart of many of our initiatives. That is why Kazakhstan hosted the EXPO 2017 International Specialized Exhibition in Astana last summer, the theme of which is “Future Energy." With the participation of 115 countries and 22 international organizations, Kazakhstan hopes to draw international attention to renewable energy and smart technologies, particularly with the growing appeal of smart cities in the realms of urban development.

Astana's EXPO infrastructure continuing to be used productively even after the event is concluded. The “International Centre for Green Technology and Investments is one of the projects created and housed in the EXPO facilities. It is intended to facilitate Kazakhstan's transition toward a green economy, and to ensure that at least 50 percent of energy produced in Kazakhstan comes from alternative sources. The site also host the Astana International Financial Centre, which is to became the financial hub for Central Asia, the Caucasus, EEU, the Middle East, western China, Mongolia, and Europe. It operates on the basis of the principles of English common law, enjoy a preferential tax regime, and have an independent financial court at its disposal.

Kazakhstan is also working on the implementation of the Green Bridge Initiative, aimed at encouraging the easier transfer of “green" technologies between countries.

With regard to cooperation with Korea, our countries has a good mechanism like Kazakhstan-Korea intergovernmental commission (IGC) on trade and economic, scientific and technical cooperation. We attach importance to the Republic of Korea, so co-chairman of commission from Kazakhstan side is Minister for investment and development. This Government body is of one of the major ministries in our country, who is responsible for important areas as mining, metallurgy, industry, contraction, transportation, investment and many other spheres.

Prime Minister Bakytzhan Sagintayev of Kazakhstan

Q: Nowadays, economic cooperation is very important between the countries. Who are the major Korean companies actively engaged in bilateral economic cooperation? Please introduce them in detail in the order of size and scale of business activities in your country. We are introducing them with the purpose of encouraging other business companies in Korea to follow suit and invest in your esteemed country.

A: Diplomatic relations between Kazakhstan and South Korea established 25 years ago. During this time two countries achieved a high economical growth, and there is no doubt about the prospects of further favorable development.

Ambassador Bakyt Dyussenbayev of Kazakhstan

For the last period the relations between our countries have come a long way. In the beginning of 90-s we knew a little about each other, in the middle of 90-s we have already actively replenished the legal base of good quality and perspective bilateral documents, in the first decade of this century we have already entered on the level of strategic partnership and now we are actively deepen and broaden it.

At the beginning our economic cooperation was mainly built on the exchange of goods of light industry. Further, Kazakhstan began to import from Korea, mainly, electronic goods, automobiles. Later on Korea reached the level of the development of being able to make investments in the service, finance, construction, factories, infrastructure and mining.

Today mutually beneficial and fruitful economic cooperation between Kazakhstan and South Korea is transferred to the category of habitual phenomena. Every citizen of Kazakhstan in his daily live use Korean origin goods, ranging from cosmetics and household chemicals and finishing with cell phones and automobiles.

Nowadays almost all big Korean companies are represented in Kazakhstan, such as Hyundai, Lotte, LG, SK, Doosan, KNOC, KOLON, GS, POSCO and many others. These companies became a kind of "umbrella" for the entry of small and medium businesses in Kazakhstan.

Kazakhstan and Korea are developing a range of projects. All these are vivid examples of our close cooperation. Today there are more than 400 Kazakhstan-Korean joint ventures, and I believe this number will increase further, taking into consideration new opportunities for business opened up with the Eurasian Economic Union, as well as with Kazakhstan’s itself.

Economic integration always had positive impact on development of entrepreneurship, and Korean companies clearly understand that, now making business in Kazakhstan which has very beneficial tax system and comfortable conditions for running business, will open them far bigger market of the world’s 6th GDP and almost 180 million consumers.

We have many positive experiences of Korean companies, which are doing business in Kazakhstan. For example, Highvill company (Dongil Construction) has been doing business in Kazakhstan for almost 15 years. Today it is one of the well know and successful companies in construction business.

This year we have launched the Big Almaty ring rood project. A consortium consisting of Korea Highway Corporation, SK E&C and two Turkish construction companies -- Alarko and Makyo will build this road for four years and operate the road for 16 years. Korea Highway Corporation will be responsible for the maintenance and management of the road. This project will create various business opportunities by harnessing our strengths in the construction of roads, tunnels and underground space and development-type projects. These are only some illustrations of our mutually beneficial partnership. There are many other successful cases of business relations between Kazakhstan and Korea. We have a multiple relations among medium and small companies. Moreover, we know that almost all of them are enough prosperous with great business plans for the forthcoming. We wish them to succeed and we will support them.

Ambassador Bakyt Dyussenbayev of Kazakhstan (right) and Publisher-Chairman Lee Kyung-sik of The Korea Post.

Q: What is the present volume of bilateral trade and its outlook in the next 12 months?

A: Last year the trade turnover between our countries grew 2.5 times and amounted to 1.7 billion dollars. The import of Korean goods increased 25.3% year-on-year to $ 567.5 million. Exports from Kazakhstan to Korea grew at once more than 5 times – to $ 1.1 billion. The main items of export from Kazakhstan to Korea are mineral resources, metals and products from metal, while we import machinery and equipment from Korea.

Moreover, since the establishment of diplomatic relations in 1992 and to date trade turnover has increased 150 times.

I think, against the background of growth rates with the countries of the world, this is a very significant indicator.

In addition, taking into consideration our strategic cooperation, which is at the stage of its active deepening, I strongly believe that we have many reasons for reaching and even exceeding $ 2 billion turnover in the nearest future. Moreover, the structure of the turnover in terms of items might be changed.

Q: What are the areas in your country where you might want Korean companies to invest in and what are the areas where you wish your businessmen to invest in Korea?

A:Of course, we have priority areas/spheres for investment like chemicals, petrochemicals, mining, metallurgy, agriculture, machinery building, renewable energy, but in my personal idea, every sphere might be attractive for investments. It depends on the capabilities and willingness of the investors.

First of all it is necessary to underline that today in Kazakhstan there are all possible favorable conditions for business and investments. These are simplification of tax legislation, optimization of licensing procedures, also specialized programs for separate sectors and many others had been implemented.

There are 10 Special Economic Zones in Kazakhstan at Burabay, Saryarka, Ontustik, Astana New City, Seaport Aktau, Khorgos Eastern Gate, Chemical Park Taraz, National Industrial Petrochemical Technology Park, Park of Innovative Technologies and Pavlodar. Currently 99 international projects worth some $8 billion are being implemented across the Special Economic Zones.

Astana (Capital of Kazakhstan)

Our Government is working under the goal to turn Kazakhstan into a regional investment hub for the surrounding emerging markets. We aim to turn our country into a gateway to the Eurasian Economic Union market, comprising Kazakhstan, Russia, Belarus, Kyrgyzstan and Armenia. To enable this, we have made efforts to diversify our economy and make it more stable and free from dependency on oil.

In light of the world economy’s sputtering growth, the government under President Nazarbayev kick-started a national program called “Kazakhstan 2050 Strategy,” aimed at ensuring long-term social and economic development and entering the ranks of top 30 economies in the world.

Under the purview of the program, a new economic policy of “Nurly Zhol,” meaning the “Bright Path,” has been implemented to overhaul transport, energy and industrial infrastructure; modernize built-up spaces; nurture small and medium-sized enterprises; and revamp finance, manufacturing, housing and schooling.

I am convinced that Kazakhstan is also becoming an investment-attractive for the development of infrastructure, logistics, transport and related services.

We have conducted large-scale infrastructure construction and created a short and economically advantageous transport and logistics. All transport and logistics infrastructure of Kazakhstan and our state program “Nurly Zhol” (Bright Path) are associated with the Chinese mega-projects creating the “Economic belt of the Silk Road” and “One belt and one way”. Therefore, we believe that transport and logistics might be good areas for investing.

Korean companies are invited to take part in various programs under the “Bright Path” through public-private partnership

Our policy on developing high-tech production, renewing the basic sectors of the economy and the agro-industrial complex gives the great opportunities for investors. Such spheres as metallurgy, refining, chemistry, mechanical engineering and agriculture should be attractive for investors.

In addition, Kazakhstan has large prospects in the mining of copper, gold, rare metals, including lithium and vanadium, phosphate raw materials and much more.

Charyn canyon of Kazakhstan

For the further development of the manufacturing industry, we are interested in inviting the investors for geological exploration, new technologies for the enrichment and processing of raw materials.

In general, the Kazakhstan Government opens many proposals and new ideas of investors in almost all areas and pays special attention to the creation of a favorable business climate for investors and improvement of business environment. According to the report of World Bank and the International Finance Corporation Doing Business 2018, Kazakhstan is on the 36th place in overall Ease of Doing Business Ranking.

Government of Kazakhstan have taken important steps toward making it easier to do business – implementing more than 36 reforms acknowledged by Doing Business since 2006. Kazakhstan was recognized by the annual Doing Business report as one of the top 10 reformers four times during that period – a unique achievement.

Surely, we are not going to be satisfied with our achievements and we are looking forward.

Kazakhstan has the ambitious goal of joining the top 30 developed countries of the world; therefore, we have taken comprehensive measures to develop the economy of our country. Such measures include fundamental reforms in the area of investment policies, which affect almost all aspects of investors’ activities: visa and migration policy, investment preferences, taxation, international trade, judicial system as well as investment security guarantees. As a result, Kazakhstan became an associate member of OECD Investment Committee and 48th country to join the OECD Declaration and Decisions on International Investment and Multinational Enterprises. The Program of Industrial Development, launched in 2010, generated great interest among the investors. During the implementation period, over 1,000 projects worth KZT 5.2 trillion were initiated in Kazakhstan. It resulted in the creation of one hundred thousand jobs. New enterprises have already produced goods for a value of KZT 8 trillion; herewith, Kazakhstan started producing 500 types of goods for the first time. We continue to improve the production and transport infrastructure to increase the investment attractiveness. Kazakhstan has an advantageous geographical location having borders with both Europe and Asia. The main advantage of transit through our country is to shorten time and distance between a producer and a consumer from Asia to Europe. Unlike overseas transportation, the delivery time overland through Kazakhstan is reduced by 2–3 times, i.e. from 35–40 to only 12–15 days. I am convinced that a participation in projects for the development of regional logistics hub will allow our partners to obtain considerable benefits from transiting goods

Today Kazakhstan is particularly interested in attracting efficiency seeking investors, willing to consider our country as a platform for the production of goods and services with high added value for further export. Therefore, with the technical support of the World Bank, we developed the National Investment Strategy for 2018–2022, which involves a number of comprehensive measures to support both new and existing investors. An agency for investment promotion – National Company Kazakh Invest, was specially created for this purpose. This company represents the Government of Kazakhstan, acts as a “single negotiator” with TNCs and big investors, and has branches in the key business-oriented cities all over the world. Republic of Korea is not exception in fact your country included into the list of top-10 priority countries for cooperation on investments, trade and technology. The priority of the Strategy is to incite foreign investors to participate in the largest privatization program in the history of Kazakhstan since its independence. Within the framework of this program, over 700 assets will undergo privatization in such areas as the oil & gas, transport and logistics, industrial goods production, telecommunications and power generation.

Attracting investments is a priority task of the Government. Following this priority we have accepted and implementing the National investment strategy, the main purposes of which are DFI, PPP and privatization.

In order to give an additional impetus to the economic growth of Kazakhstan through the introduction of digital technologies in traditional industries, the Government of Kazakhstan is actively pursuing the implementation of the Digital Kazakhstan Program initiated by the Head of the State.

Therefore, we are planning to make a technological re-equipment of basic industries including elements of the fourth industrial revolution till 2025.

Thanks to the launching elements of Industry 4.0, the competitiveness of companies will increase. We expect a significant reduction (10-20%) of operating expenses due to optimization of processes by analyzing data in real time, reducing emergencies and interruption, improving the interaction of employees and equipment.

Talking about investments, I would like to note that we expect a large-scale inflow in the next few years.

We are ready to support and assist every foreign company. Today the Government provides a significant package of measures for investors, which will ensure their long-term profitability and stability for doing business in Kazakhstan. For large investments (over $ 3-4 billion), we are ready to provide support at the highest level, up to the signing of intergovernmental agreements.

Q: What are your competitive products and/or services attractive to Korea and what are the Korean products and services that your country might wish to import?

A:Moreover, we analyzed the potential export opportunities of Kazakhstan for the South Korean market, where 25 main items were identified as a promising for supplying to Korean market. For example, from the production of mechanical engineering - stop valves, switchboards, bearings, capacitors; from the production of metallurgy are metal pipes, bars of iron, rolled metal, corrosion-resistant steel; from food products - confectionery, malt, pasta, rice, vegetable oils (sunflower, rape, linseed, cotton), flour; from chemical products - silicon, activated carbon, chromium trioxide, yellow phosphorus, sodium dichromate.

Handycrafts of Kazakhstan

Also, we identified 78 items that might be in demand in the Kazakhstan market, such as Metallurgy – flat rolling, bars, aluminum wire, iron wire, Mechanical engineering – lathes, material processing machines, electric machines, cruise ships, floating lighthouses, Construction materials – paint and varnish products, putties, Woodworking products – paper and cardboard, timber, Food products – frozen fish, alcoholic drinks, dairy products, vegetables, nuts, Tobacco industry – tobacco, tobacco products, oil industry – coke, coal char, petroleum coke, Chemistry – organic chemicals, inorganic chemicals, alcohols, acyclic, textiles and textile products – textile, wool textile materials suits and jackets, coats.

Especially, I would like to mention about agriculture and food industry. The sector has the advantage of naturally complying with the requirements of global environmental and food safety as Kazakhstan occupies first place in the world in terms of using the lowest levels of chemicals in crop production (total of 0.1 ton per hectare of cultivated lands). The country has equally gained the status of a grain-producing state, annually supplying 5–8 million tons of grain to the markets of more than 70 countries and regarding flour exports, Kazakhstan has occupied a leading position in the world in recent years, exporting up to 2.5 mln. tons annually.

The attractive products of the agribusiness, which should be considered by Korean importers are milk and dairy products, fruits and vegetables, oilseeds, wheat, meat, honey and organic products.

We are strengthening our advantages, but we are also carrying out structural reform of the agrarian sector, diversifying the acreage in accordance with market demand. Scientific and technical, technological re-equipment of the entire industry has been started, including the introduction of the latest developments in the field of fertilizers. All this provides great opportunities for competing in the world market.

As you can see, there are huge prospects for cooperation that provide an opportunity for the opening of joint ventures between companies of our countries.

Today we are working with companies from China, the United States, Turkey, Japan, Russia, the Netherlands, Germany and others in Kazakhstan. Particularly, I would like to say about our cooperation with China. We are working at the government level having a joint industrial - investment program, within which business implements joint projects.

I am sure we may develop and sign a similar program with Republic of Korea that will allow us to successfully implement joint investment projects.

In addition, our growing financial sector might be attractive for Korean people. We established Astana International Finance Centre (AIFC) in the capital of Kazakhstan, which will be based on the unique infrastructure of EXPO-2017. It is expected that the Centre will become a financial hub for companies and investors from Central Asia, Transcaucasian republics, EAEU, Middle East, Western China, Mongolia and Europe.

Moreover, Korea has become a well recognized global IT powerhouse and ranked the top advanced countries with high level of competitiveness in IT sphere.

I think, Korean business can use this strong advantage and make every effort to share its success in informatization/automation with the international community, particularly with Kazakhstan.

As I mentioned before, we launched a very important state program “The Digital Kazakhstan” that aims to improve the standard of living of every Kazakh citizen through the use of digital technologies. The plan is to implement the program within five years from in five key areas: digitization of the economy, transition to digital government, implementation of the Digital Silk Road, human capital development and creating an innovation ecosystem.

We expect to create 120 projects with the specific goals. And we forecast that digitalization process will cause the Kazakhstan economy’ increase by 30%. I’m sure that Korean business should take advantage of this program.

Q: Please add whatever other details that Your Excellency might consider to be important.

A:Kazakhstan abandoned nuclear weapon in 1990’s. Now, Kazakhstan is a prosperous nation with a sound economy and stable policy.

From early 1990s, when my country became independent Kazakhstan set national security, political stability, democratic and free market reforms as major goals. In this domain being a young country we had to maximize the benefits of structural reforms and international cooperation. Reforms under the leadership of President Nursultan Nazarbayev led to the creation of a dynamic economy with new opportunities for both local and foreign companies.

By implementing consistent economic measures and efforts, Kazakhstan has been steadily improving its international competitiveness, and has been able to take high positions in investor protection field and other criteria by World Bank.

Each year we are convening several international conferences, of which Kazakhstan and Korea are active participants. These are Astana Economic Forum and Congress of World and Traditional Religious Leaders (Congress), Conference on Interaction and Confidence Building Measures (CICA), Central Asia - Republic of Korea cooperation Forum and many others.

On Aug. 29 1991, Kazakhstan voluntarily relinquished its military nuclear capacity by closing down the Semipalatinsk test site, a primary experiment ground for the Soviet Union’s atomic arsenals. By terminating 1,400 nuclear warheads at the time, the country has since established a nuclear weapons free zone in Central Asia with its neighbors.

As for the North Korea issue I think Kazakhstan’s model of denuclearization is positive in resolving nuclear program of Pyongyang. Astana welcomes continuing interactions between two Koreas, including as third summit between the Republic of Korea and the Democratic People’s Republic of Korea on September 18-19. And also as a non-permanent member of the UN Security Council highly appreciating efforts of the parties aimed to make Korean peninsula free of nuclear weapons.

Ambassador Bakyt Dyussenbayev of Kazakhstan (2nd from right) poses with Publisher-Chairman Lee Kyung-sik of The Korea Post (2nd from left). Far right is Attache Aigerim Aidarova of Kazakhstan and far left is reporter Kim Sua of The Korea Post.

Kim Sua  edt@koeapost.com

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