A Comprehensive Approach is the Strategy for Success
Oleg Khimchuk, First Deputy Akim of the Aktobe Region
Following Kazakhstan’s independence, its economy passed through several stages of development. Denationalization and the liberalization of the economy was the major task during the start-up period. The predominance of the private sector in the economic structure, along with a stable currency and an acceptable level of inflation, followed as a consequence.
The next stage was characterized by gradual economic growth at the expense of the extractive industries, first and foremost the oil-and-gas sector. Its share in total industrial output had increased from 16.3% in 1998 to 39% by 2002. The past three years have shown a stable growth in GDP and macroeconomic stabilization.
The approval by the Head of State of the Strategy for Industrial and Innovation Development in Kazakhstan for 2003-2015, dated 17th May 2003, laid the foundations for a new stage in the country’s economic development. The major objective of the Strategy is to move away from the raw materials bias of industry by means of diversification of the economy and intensive development of manufacturing that can both face competition and encourage innovations.
Aktobe Region is among the most dynamic in Kazakhstan. Taking account of present-day development trends, the following plans have been developed for the Region:the Framework for Developing and Locating Productive Industries in the Region to 2015, Action Plan for the Region for 2003-2005 on Implementing the Strategy for Industrial and Innovation Development in Kazakhstan for 2003-2015, and the Blueprint for Region Development to 2007. These documents, prepared according to the basic provisions of the Strategy, take the fullest possible account of the Region’s potential in the oil and gas, mining and metallurgical, machinery, construction and agribusiness sectors. In order to obtain the most advantageous outcome for the tasks in hand, the Regional Government has developed a uniform 3-step system for selecting and implementing projects.
The first step is the Council for Industrial and Innovative Development which was formed under the leadership of the head of the Region for the purpose of outlining the regional development strategy and controlling the process of preparing and implementing investment projects.
The second step is the system analysis and monitoring centre. The goal of this centre is to process information and prepare recommendations and methods for implementing investment projects taking account of the provisions of the Strategy for Industrial and Innovation Development in Kazakhstan for 2003-2015.
The third step is represented by the Centre for Innovation and Promotion. Its basic purpose is to implement investment projects in practical terms such as new product lines and jobs.
The Council for Industrial and Innovation Development of the Region includes representatives of the Regional Government, the heads of large enterprises in the Region, academics and economists. The Council thus represents a blend of theory and practice. Its main objectives are: developing strategic solutions as regards the major trends and differentiation of local productive forces, considering the expediency of projects promoting the development of the local economy, and considering innovative offers with a view to implementing them.
The analytical centre employs experts and researchers from the Region’s higher educational institutions, state bodies and commercial structures. The major objectives of the Centre are setting up a databank of the most effective development and investment projects, collecting and analyzing information, monitoring the local social and economic conditions, carrying out specialized and integrated research, provision of well-researched recommendations and general examination of projects.
The Centre for Innovation and Promotion is currently being formed in the Region in order to develop innovative activity. The tasks of the Centre cover implementing investment projects and original ideas, or finished products with new or improved characteristics. The Centre will allow close integration of education, research and industry.
This scheme represents a comprehensive system, which allows a closed cycle of development and application to be formed for the investment projects that are the most viable and strategically important for the Region.
This comprehensive approach engenders:
• choice of the highest priority directions for the Region’s economy;
• use of the projects` strengths for socioeconomic development and the elimination of their shortcomings during the analysis and selection of projects;
• tangible results from the implementation of prospective projects.
As a whole, this comprehensive approach will promote dynamic and sustainable development of the local economy.
Today, the Region has either put into action or is planning to implement more than 40 projects in 2003–2015. The following major facilities have already been brought into operation:
• the first phase of a gas cleaning and liquefaction plant with a capacity of 50,000 cubic metres of treated gas and 2.5 tonnes of liquefied gas per hour (KazTransGaz);
• a new gas treatment plant in Zhanazhol (CNPC-Aktobemunaigaz) with a capacity of two million tonnes of oil and 1.4 billion cubic metres of gas per year (the capacity of the former plant was three million tonnes of oil and 800 million cubic metres of gas);
• Aktobe oil equipment factory (150,000 drill rods and 10,000 tonnes of tubing and compressor tubes per year);
• an oil refinery with a capacity of 120,000 tonnes per year, producing gasoline, diesel oil and black oil;
• a vegetable oil plant with a capacity of 36,000 tonnes per year;
• a small refinery with a capacity of 50,000 tonnes per year, producing gasoline and black oil.
The following projects are being implemented:
• a concentrating mill manufacturing titanic iron ore-rutile-zircon concentrate from ores from the Shokash field (Kazchrome); the design capacity for rutile concentrate is 4,000 tonnes per year and 7,200 tonnes per year for zircon concentrate;
• a plant for manufacturing chromite pellets with a production capacity of 700,000 tonnes per year (Kazchrome).
The cost of these investment projects is more than 28 billion tenge. Financing is provided both by the companies themselves and outside investors.
The implementation of 14 high priority investment projects is in the pipeline. Their total cost will come to US$1.4bn, and the estimated number of jobs to be created is 15,000.
The largest of the projects are:
• construction of a copper-smelting plant with a capacity of 90-100,000 tonnes of refined copper per year;
• construction of a plant for manufacturing fibre-glass tubes with a capacity of 329 km per year;
• construction of an electro-metallurgical plant for manufacturing stainless steel with a capacity of 200,000 tonnes per year;
• construction of a petrochemical factory producing polypropylene and polythene with a capacity of 600,000 tonnes per year;
• construction of a sheet glass plant with a capacity 10-12 million m2 per year.
A working group for promoting investment projects, set up under a decree by the Prime Minister of Kazakhstan, has recognized the high degree of awareness on the part of the Aktobe Region administration and enterprises regarding investment projects. The projects have been approved and sent to the Development Bank of Kazakhstan, Investment Fund of Kazakhstan, and potential foreign and domestic investors for examination.
Some of the projects are unique and unmatched in Kazakhstan. Particular examples are the plants for manufacturing sheet glass, fibreglass tubes, and stainless steel. Linking economic and social questions and then coming up with a comprehensive solution provided the basis for decisions about locating the projects in various districts around the Region.
Firstly, the investment projects will allow the development of unique deposits of mineral resources that have been explored but are as yet unused. The projects for the manufacture of sheet glass and copper form closed production cycles and are constructed on the principle of a value added chain.
Secondly, these projects provide a solution to the problems of deprived districts and towns in the Region. A particular instance is the construction of the sheet glass plant in the depressed small town of Zhem.
The development of the copper field and construction of a thermal power station (140 MW) using brown coal from the Mamyt field will increase the industrial potential and promote the development of rural areas in Aiteke bi, Kargaly and Khromtau districts.
Fourteen investment projects have now been distributed among the three working groups that have been established at the Centre for Innovation and Promotion. Their major task is to assist and control the practical implementation of the projects.
The first group is engaged in the projects forming the closed-cycle manufacture of glass (a quartz sand concentration mill and soda ash production) and fibreglass tubing, and a kaolin concentration mill, whilst a feasibility study for the glass manufacturing plant is being conducted.
The second deals with developing a feasibility study for the copper-smelting plant and the stainless steel plant (for which a feasibility study was prepared in 1992).
The third working group is studying all the remaining projects. The largest of these is the construction of the petrochemical plant (producing soda, chlorine and hydrochloric acid). Other projects involve enterprises for processing wool, manufacturing knitted products, constructing a thermal power station, and a plant for precision steel alloy moulding.
As a result of the Protocol Session of the Government Working Group on 12 September 2003, five projects have been submitted to the Kazakhstan Investment Fund and six to Kazakhstan Development Bank, whilst further five have been sent for joint consideration by the Kazakhstan Investment Fund and Kazakhstan Development Bank.
The Administration of Aktobe Region is actively seeking out and striving to attract domestic and foreign investors. In December 2002, by a resolution of the Region head, a Department for Foreign Economic Relations and Investments has been set up to work in this direction.
All the conditions necessary for successful activities by investors are in place in the Region today. An integrated system has been formed, allowing investment projects to be implemented. Aktobe Region is open to anyone who is ready to invest money, intellect and effort in developing the regional economy.
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