SPIID: With a Focus on Manufacturing Industry Development

The State Program of Industrial and Innovative Development (SPIID) of Kazakhstan for 2015-2019 was approved by the Presidential Decree of 01.08.2014 and is a logical continuation of the State Program on Forced Industrial-Innovative Development for 2010-2014 and takes into account the experience of its implementation.

The program is a part of the industrial policy of Kazakhstan and focuses on the development of manufacturing industry with concentration of efforts and resources on a limited number of sectors, regional specialization with cluster approach and efficient sectoral regulation.

The main goal of the State program is an emphasized stimulation of the competitiveness of the manufacturing industry, aimed at increasing labor productivity and the volume of exports of processed goods.

To achieve this goal, the following tasks are defined:

  • Completing the creation of an effective core industry by modernizing enterprises in traditional sectors.
  • Creation of new points of industrial growth through the implementation of large branch-specific projects.
  • Provision of conditions for the emergence of highly efficient industrial entrepreneurship, focused on exports and a constant increase in the productivity of their labor.
  • Creation of prerequisites for emergence of a critical mass of innovation-active business.

The implementation of the Program will help achieve the 19% growth of exports of manufactured products to the level of 2015 by 2019. The growth of labor productivity in the manufacturing industry will be 22% in real terms to the level of 2015. The volume of investments into fixed assets of manufacturing industry will reach 4.5 trillion tenge in 2015-2019. It is planned to reduce the energy intensity in the manufacturing industry by no less than 7% to the level of 2014.

Addresses of New Productions

One of the largest realized projects was the organization of Giessenhaus LLP alloyed aluminum in Pavlodar region (Germany, 4.6 billion tenge). In 2017 in the territory of Pavlodar SEZ, the Giessenhaus project for the production of alloyed aluminum was realized, the raw material for which is liquid aluminum from Kazakhstan Electrolysis Plant JSC.

At the same time, in the free areas of the Giessenhaus in 2017, the production of light alloy aluminum car disks was organized by the KiK Pavlodar LLP. This plant is the first in Kazakhstan to produce aluminum car disks. The production capacity is 1 million tons per year.

Another example of successful production, launched in the framework of SPIID, is the refinery Tau Ken Altyn. At the end of 2013, the state refinery was launched, which, despite a short period of activity, effectively affects the growth of refined gold production. Thus, the volume of production and sales of final products in 2017 amounted to 18.1 tons, an increase by 2016 by 1.5 times (12 tons).

The maintenance of an annual output of at least 10 tons for three years, in accordance with the requirements of the London Metal Exchange, allows Tau-Ken Altyn LLP to receive the London Good Delivery certificate, which will result in international recognition as a refinery.

At the end of 2017, the application of Tau-Ken Altyn on the possibility of including the plant in the list of suppliers that are accredited at the London Bullion Market Association (LBMA) and entitled to produce ingots according to the Good Delivery standard, is supported by LBMA management.

The plant is supported by two LBMA experts who will accompany all work on the expertise of Tau-Ken Altyn LLP for compliance with LBMA requirements. The candidacy of the facilitator in the person of SG2 Consult Sarl was also recommended. Together with the facilitator, work is under way to select an independent third-party audit for certification (or compliance) to ISAE 3000 or ISO 19011.

Moreover, in accordance with the adopted Law and the Resolution of the Board of the National Bank, the gold enterprises of Kazakhstan were able to sell refined gold directly to jewelry manufacturers.

Tau-Ken Altyn LLP, in addition to standard ingots weighing 12 kg, sold to the National Bank of Kazakhstan, produces for jewelers granules of various diameters and billets from 1 to 100 g for sale to the population as investment gold.

Results of 2017: 120 Projects and 10 Thousand Permanent Jobs

What are the results of the implementation of the State Program in 2017?

The volume of industrial production of manufacturing industry for 12 months of 2017 amounted to 9.2 trillion tenge, having increased by 5.1% in comparison with the same period of 2016.

The main target indicators of the State program also develop positive dynamics.

Exports of manufacturing industry in the 11 months of 2017 increased by 22.1% compared to the same period in 2016 and amounted to $14 billion.

The volume of investments in manufacturing for the 12 months of 2017 increased by 4.7% compared to the same period of 2016 and amounted to 981.6 billion tenge.

The productivity of labor in a full range of enterprises in the third quarter of 2017 (by the same period in 2016) increased by 9.9% to $22.3 thousand per person.

The implementation of the Program influenced the change in the structure of the economy and industry. Thus, the contribution of the manufacturing sector to the development of the economy (GDP) increased from 10.1% in 2015 to 11.5% in the first 9 months of 2017, in industry — from 31.8% in 2010 to 40.4% in the end 12 months of 2017, in exports — from 27.9% in 2010 to 32.5% in the 11 months of 2017.

In 2017, 120 projects were put in the amount of about 1.5 trillion tenge with the creation of about 10 thousand permanent jobs.

Thanks to industrialization, we were able to make the manufacturing industry attractive for investment.

Holiday of Industrialization

In Kazakhstan, the Days of Industrialization at the end of the year with the participation of the Head of State and members of the Government have already become common, when new facilities are launched, new production in all spheres of the country's economy is launched. The day of industrialization turns into a holiday. And this is natural, since each such new enterprise is hundreds and thousands of new jobs, these are the addresses of new modern plants and factories.

2017 was no exception. Within the framework of the Day of Industrialization with the participation of the Head of the State, 25 projects were presented with a total cost of more than 1.2 trillion tenge with the creation of about 3.4 thousand jobs. Of these, 23 projects were launched with a cost of about 300 billion tenge.

Among the most significant projects is the construction of the gold extraction plant of Kazakhaltyn Technology LLP in the village of Aksu in the Akmola region. It is the first enterprise in the country to process technogenic mineral wastes containing precious metals, followed by the production of gold and silver in the form of the Dore alloy (note: a gold-silver alloy obtained in gold deposits and sent to refineries for further purification). The project implementation will allow to process up to 7 million tons of TMW annually. Thanks to the new technology, only at the initial stage we will receive up to 4 tons of gold and up to 2 tons of silver in the form of Dore alloy. The implementation of the project required the use of modern automated technologies in the extraction of metals.

No less important project is the construction of a plant for the production of oil and gas equipment and pipes with a capacity of 50 thousand tons per year, Giessenhaus LLP, Pavlodar region. The plant is an integral part in the development of aluminum production facilities of high redistribution and will serve as a starting point for the development of an aluminum cluster in Kazakhstan. Finished products will provide domestic enterprises with alloyed aluminum, and will also be exported to Europe and the CIS countries.

In addition, the construction of two projects worth about 1 trillion tenge was started. The first of them is the construction of a plant for the production of grouting cement, Company Gezhuba Shieli Cement LLP, Kyzylorda region. The main products of the plant are grouting cement, 70% of which will be directed to the needs of the domestic market, and 30% is exported to Central Asia, the CIS countries and China. The project will be invested 64 billion tenge. 260 new jobs will be created.

Another project is the construction of an integrated gas chemical complex, Kazakhstan Petrochemical Industries Inc. LLP, Atyrau region.

 

Won’t Get Without Additions

Of course, during the implementation of the State program, certain adjustments are made to it. For example, in order to create a system for supporting non-primary exports in 2017, the Ministry of National Economy developed and adopted the National Export Strategy.

In 2017, together with the World Bank, the National Investment Strategy for 2018-2022 was developed and approved. Work with investors is built on the principle of "Single Window" through a specialized national investment company Kazakh Invest with a network of foreign representatives and regional branches.

Correction on the progress of work continues. Thus, in fulfillment of the instructions of the Head of State given in the Address to the People of Kazakhstan "New Opportunities Under the Fourth Industrial Revolution," the Concept of the Third Five-Year Plan of Industrialization, aimed at the development of the digital age industry (with emphasis on innovation, technology transfer and promotion digitization of the manufacturing industry) will be developed.

To Start Startups ...

Within the framework of the plan of measures of the State program of industrial and innovative development for 2015-2019 on the basis of ACF Park of Innovative Technologies, development technology centers are created with the involvement of transnational corporations. According to the information of ACP PIT, the following largest companies are involved in the work with startups: IBM, EMC-DELL, Google, Intellisense.io, Materia, Autodesk, Metalysis, Ecodomus, OCSiAl.

To finance start-ups, the Ministry for Investments and Development, in cooperation with PIT ACP, attracts foreign funds in the form of joint ventures. The first joint investment fund GVA AlatauFund (the USA) was also established. This is the first large-scale Kazakhstan program aimed at developing domestic and attracting foreign start-ups to the country where today the first foreign venture fund (GVA Capital, the USA) is attracted for 30% co-financing of the Startup Kazakhstan program.

To ensure effective interaction with leading innovation centers, PIT ACP representative offices are opened in Silicon Valley (the USA), Skolkovo and Novosibirsk Academpark (the RF). Ten companies of PIT SEZ already passed acceleration in the representation in the Silicon Valley (the USA) this autumn. Following the results of acceleration, one company is already entering the US market.

 

Tasks For 2018

In the current year, it is planned to introduce almost 150 Industrialization Map projects worth about 1 trillion tenge with the creation of 15 thousand permanent jobs.

The most significant projects of 2018 are:

  • Complex for the production of wheels for railway use of Prommashkomplekt LLP (Pavlodar region);
  • Construction of a factory for the production of steel welded pipes of large diameter Asia Steel Pipe Corporation LLP (Almaty);
  • Plant for the production of food products Mareven Food Tien Shan LLP (Kapshagay, Almaty region).

Stay updated about the events of the Prime Minister and the Government of Kazakhstan - subscribe to the official Telegram channel

Subscribe