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State program for Innovative and Industrial Development of the Republic of Kazakhstan for 2015 – 2019

The Program is a logical extension of the State Program for accelerated industrial-innovative development of Kazakhstan for 2010 – 2014 and the experience of its implementation is taken into account.The Program is part of the industrial policy of Kazakhstan and is focused on the development of the manufacturing industry with a concentration of efforts and resources on a limited number of sectors, regional specialization using the cluster approach and effective industry regulation. Baiterek” Holding and subsidiaries are responsible for implementation of some directions of the Program. In particular, they provide financial support for major projects, search investors for the implementation of promising projects in Kazakhstan.

State program for Innovative and Industrial Development of the Republic of Kazakhstan for 2015 – 2019

State program for Innovative and Industrial Development of the Republic of Kazakhstan for 2015 – 2019 

Program Passport

Program Name State Program for Accelerated Industrial and Innovative Development of Kazakhstan for 2010 - 2014
Basis for development

1) item 1 of the Action Plan for implementation of the RK President’s orders given  at  the extraordinary XII congress of Nur Otan People's Democratic Party on 15 May 15 2009, approved by the RK President’s order No. 326 as of 2 June 2009;

2) items 3 and 4 of the Action Plan for implementation of the RK President’s orders given  at  the III session of the Republic of Kazakhstan Parliament of the fourth convocation on 1 September 2009, approved by order No. 01-30.27 of the Head of RK President's Administration as of 19 September  2009.

Developer Ministry of Economic Development and Trade of the Republic of Kazakhstan, Ministry of Industry and New Technologies of the Republic of Kazakhstan
Program purpose To provide  sustainable and balanced economic growth through diversification and increase its competitiveness
Tasks

Development of priority sectors of the economy, ensuring its diversification and increased competitiveness;

strengthening of social efficiency in development of economy priority sectors and implementation of investment projects;

creation of a favorable environment for industrialization;

formation of economic growth centers on the basis of rational territorial organization of economic potential;

ensuring of effective interaction between government and business in development of priority sectors of the economy.

Implementation period 2010-2014
Resources required and financial support

State budget and funds of enterprises and organizations, including national companies and organizations with state participation.

 The volume of financing from the republican and local budgets will be refined during the formation of the corresponding budgets for the planning period

Target indicators  

Introduction

The State Program for Accelerated Industrial and Innovative Development of Kazakhstan for 2010-2014 (hereinafter - the Program) was developed in fulfillment of the President’s order of given on 15 May 2009 at the extraordinary XII congress of Nur Otan People's Democratic Party, the President's Message to people of Kazakhstan - "New Decade - New Economic Growth - New Opportunities for Kazakhstan”  as well as in accordance with the key areas of the Strategic Plan of Development of Kazakhstan till 2020, which is the second phase of implementation of the Strategy of Development of Kazakhstan till 2030.

The program aims to ensure sustainable and balanced economic growth through diversification and enhancing its competitiveness.

The program is a logical continuation of the policy for diversification of the economy, and integrated main approaches of the Strategy for Industrial and Innovative Development for 2003-2015, the "30 Corporate Leaders of Kazakhstan" Program and other program documents in the sphere of industrialization.

For the period up to 2015, the main priority of the forced industrialization policy will be implementation of major investment projects in the traditional export-oriented sectors of the economy, with multiplication of new business opportunities for small and medium-sized businesses through the purposeful development of local content, subsequent redistribution and recycling. 

Initiators for promotion of large projects will be the following:

Samruk-Kazyna National Welfare Fund JSC (hereinafter - Samruk-Kazyna NWF JSC), strategic companies of fuel and energy and metallurgical sectors of the economy, as well as strategic foreign investors.

Simultaneously there will be formation and / or strengthening of economic sectors, not related to the resources sector and focused on domestic and subsequently to the regional markets (countries of the Customs Union, Central Asia).

The state will support the initiative of Kazakhstan's small and medium businesses aimed at the transfer of advanced technologies, attraction of foreign investors to build  modern import-substituting productions with the prospect of their export orientation.

In order to create foundations of postindustrial economy there will be continued development of a national innovation infrastructure and support of scientific and technological capacity with prospects for commercialization. 

In general, government support of economic diversification will be carried out through implementation of the system of economic policies at the macro and sectoral levels, as well as selective support measures for specific sectors and projects.

Systemic measures of economic policy will focus on creation of a favorable macro environment and investment climate, measures to improve productivity and competitiveness of the national economy.

Selective measures will be based on the combined package of financial and non-financial support to priority sectors and projects.

The government will systematically build its interaction with business through the development of effective institutions for cooperation at the national and regional levels.

Adequate to the objective state of the economy, the path of industrialization policy up to 2015 will have internal consistency with resource, infrastructural, institutional and technological constraints. The systemic nature of built-in program mechanisms that encourage diversification and technological modernization of the economy will provide:

creation of favorable macroeconomic conditions;

improving of the business climate and stimulation of  investment inflows;

large-scale technological modernization and development of a national innovation system;

improving of the human capital quality.

The concentration of state and business resources in the development of priority economy sectors will be followed by an interactive process of government and business solutions harmonization, using modern information systems of monitoring and specific instruments of implementation.

Information on the Current Status of the Industrial and Innovative Development of the Republic of Kazakhstan for 2015-2019 State Program Implementation

Goal

 

Accentuated competitiveness stimulation in manufacturing industry aimed at the increase in labor productivity and growth of processed goods exports.

Objectives

 

1) completion of the effective basic industry establishment through the modernization of enterprises in traditional sectors;

2) creation of new points for industrial growth through the implementation of large-scale industry-forming projects;

3) ensuring conditions for the emergence of highly efficient industrial entrepreneurship focused on exports and (or) continuous increase in the productivity of its labor;

4) creation of prerequisites for the emergence of a critical mass of innovatively active businesses

Implementation period

2015-2019

Target indicators

Achievement of the following economic indicators by 2019:

1) increase in the value of exports in manufacturing industry by 19% compared to 2015;

2) increase in labor productivity in manufacturing industry by 22% in real terms compared to the level of 2015;

3) investments amount of 4.5 trillion tenge in the fixed assets of manufacturing industry;

4) energy intensity reduction in manufacturing industry by at least 7% compared to the level of 2014.

 

Information on the Progress of the IIDSP 2015-2019 Action Plan Implementation

over the 1st half of 2019

 

Action 1: Further support of business entities in manufacturing industry through financing for modernization and equipment upgrade within the Business Roadmap – 2020 Integrated Program.

 

Status: In 2016-2018, 37.5 billion tenge was allocated from the national budget. For mixing purposes, in accordance with the BRM 2020 terms, commercial funds in the amount of 9.4 billion tenge were attracted. 30.5 billion tenge were disbursed, including 24.4 billion tenge which were budget funds. Funds provided in 2016 in the amount of 10 billion tenge, taking into account mixing of commercial funds in the amount of 2.5 billion tenge in accordance with the BRM 2020 terms, were allocated between 8 projects. Out of these funds, 11.9 billion tenge was disbursed, including 34 476 thousand tenge disbursed in the 1st half of 2019 (projects of FerroTransTrade LLP - 15 005 thousand tenge, Maslo Del LLP (2nd transaction) - 19 471 thousand tenge). Funds provided in 2017 in the amount of 17.5 billion tenge, taking into account mixing of commercial funds in the amount of 4.4 billion tenge in accordance with the BRM 2020 terms, were allocated between 9 projects. Out of these funds, 14.9 billion tenge was disbursed, including 9 709 093 thousand tenge disbursed in the 1st half of 2019 (projects of KSM Technovid LLP - 1,473,162 thousand tenge, ENEVERSE KUNKUAT LLP - 6 421 783 thousand tenge, GorKomTrans, Qaragandy LLP - 192 595 thousand tenge, Kazpoligraf LLP - 72 575 thousand tenge, Maslo Del LLP (2nd transaction) - 52 193 thousand tenge, Asia Trafo LLP (2nd stage) - 1 178 796 thousand tenge, Zerde-Keramika Aktobe LLP - 317 989 thousand tenge were financed). Thus, disbursement in the 1st half of 2019 amounted to 9 743 569 thousand tenge, including 7 794 855.2 thousand tenge of budget funds. At the expense of the funds allocated in 2018 in the amount of 10 billion tenge, taking into account the mixing of commercial funds in the amount of 2.5 billion tenge in accordance with BRM 2020 terms, 4 projects were approved in the amount of 10.2 billion tenge. According to the Law “On the National Budget for 2019-2021” allocation of 14 billion tenge was envisaged in 2019. As of the end of the 1st half of 2019, no funds were allocated. The main conditions for budget lending of “Baiterek” NMH” JSC were approved by the Resolution of the Government No. 212 dated April 19, 2019.                                                            

 

As of July 1, 2019, according to BRM 2020, 12 projects are under financing: KSM Tekhnovid LLP, Zerde-Keramika Aktobe LLP, TsATEK Green Energy LLP, Prommashkomplekt LLP, Kazpoligraph LLP, Maslo Del LLP (2nd transaction), GorKomTrans of Qaragandy LLP, Asia Trafo LLP, Asia Trafo LLP (2nd stage), NUR-STROI LTD LLP, ENEVERSE KUNKUAT LLP, FerroTransTrade LLP;

 

4 projects are under monitoring: Maslo Del LLP, GROUP INDEPENDENT LLP, Bayan Sulu JSC, Shin-Line LLP;

 

11 projects have been approved by the MO (1st and 2nd stages): SaeromKZ LLP, Solnechniy Dairy Plant LLP, Kentau Transformer Plant JSC, Alina Group LLP, Shin Line LLP, Maslo Del LLP (transaction 3), Best Textile LLP, Aktobe Oil Equipment Plant JSC, Nova Jet LLP, Kazpoligraph LLP, Istkomtrans LLP.

 

Action 5: Financing of investment projects within the Program implementation through lending by the Development Bank of Kazakhstan Joint-Stock Company.

 

Status: In 2019, the receipt of 11 billion tenge has been scheduled for the 3rd-4th quarter. As a part of the IIDSP 2015 - 2019 implementation, as of 01.07.2019, the Development Bank of Kazakhstan JSC (hereinafter referred to as the DBK, Bank) allocated funds from the national budget (hereinafter referred to as the NB) in the amount of:

  • 75 billion tenge (based on the Resolution No. 603 of the Government of the Republic of Kazakhstan dated 21.10.2016);
  • 80 billion tenge (based on Resolution No. 161 of the Government of the Republic of Kazakhstan dated 03.04.2017, according to which the disbursement period is 3 years from the date of the loan transfer to the borrower’s account).
  • 12 billion tenge (based on Resolution No. 414 of the Government of the Republic of Kazakhstan dated 09.07.2018, according to which the disbursement period is 2 years from the date the loan transfer to the borrower’s account).

 

In accordance with the conditions for the provision of budget loans, the DBK is additionally attracting 167 billion tenge on market conditions (from extrabudgetary sources). Thus, the total pool of financial assets allocated for IIDSP projects financing along with the use of the NB funds is 334 billion tenge.

 

As of July 1, 2019, under the IIDSP implementation with the NB funds attraction, the total amount of target funds approved by the DBK for IIDSP investment projects has amounted to 162.95 billion tenge, including 119.11 billion tenge actually disbursed, out of which 105.9 billion tenge from the NB, and 13.2 billion tenge from the FS.

 

As of 01.07.2019, 8 projects were approved for financing: 1) reconstruction and modernization of Shymkent Oil Refinery; 2) construction of Zhairem Mining and Processing Complex and modernization of the existing production capacities; 3) construction of a plant for the production of power transformers; 4) construction of Qaragandy Complex Alloys Plant; 5) construction of a plant for the production of ferrosilicon in the city of Qaragandy; 6) construction of a broiler poultry farm with a productivity of 60 thousand tons in live weight per year in Akmola Oblast; 7) production of motor fuels of K5 Class (2nd stage); 8) construction of a plant for the production of methyl tert-butyl ether in Shymkent.

 

In the 1st half of 2019, the disbursement amount for the approved projects has amounted to 5,688.8 million tenge, including 2 642.9 million tenge from the NB and 3 045.9 million tenge from the FS.

 

Action 31: Subsidizing interest rates in regard to the STB loans through Damu EDF JSC.

 

Status: Over the 1st half of 2019, 1 123 projects with subsidizing in the amount of loans of 68 billion tenge were signed. The amount of subsidies paid during the 1st half of 2019 has amounted to 14,380.6 million tenge. The total number of signed projects since the beginning of the BRM 2020 implementation is 13 781 projects with a total loan portfolio of 2,489.7 billion tenge. As of 2019, under BRM 2020, 28 168.2 million tenge was allocated in regard to the instrument of subsidies from general nature transfers (hereinafter referred to as the GNTs). Additional 4.2 billion tenge are needed to sign new subsidy agreements within the BRM 2020.

 

Action 32: Issue of guarantees for STBs loans in priority sectors through Damu EDF JSC.

 

Status: As of 2019, 3,024,483 thousand tenge have been allocated from the GNTs under the BRM 2020. As of July 1, 2019, 641 projects (a plan of 1,400 units) in the amount of 10 billion tenge have been guaranteed within the framework of the BRM 2020, while the amount of loans issued with a guarantee from Damu EDF JSC has amounted to 26.3 billion tenge (as of July 1, 2019, 1 359.630 million tenge out of 3 024.483 million tenge has been disbursed, which is 45%). The shortage of targeted transfers from the local budget by regions is approximately 1.9 billion tenge.