The Best Investor in Kazakhstan 2003 Competition
At the end of this year, the winners of The Best Investor in Kazakhstan 2003 Competition, which is being held for the first time, will be selected. The main objective of the Competition is to encourage potential investors to contribute to the country’s economic development and honour the companies with the best business performance. The Competition is run by the Foreign Investors’ Council Chaired by the President of the Republic of Kazakhstan, Kazakh Investment Promotion Centre Kazinvest of the Ministry of Industry and Trade, and the Khabar media agency.
The Competition is open to companies with any percentage of foreign interest which have successfully completed an investment project in any sector of the economy except for trade, weapons and military equipment, tobacco or alcohol.
The applications for The Best Investor 2003 are evaluated using criteria specially developed by a working group comprising Kazinvest, Khabar and Mitsubishi Corporation. The key criteria are the company’s transparency, outlook for future development, use of Kazakh products and services, and direct investment in export-orientated and import-substitution production. The latter criterion reflects the ultimate goal of the Government’s industrial and innovation policy, i.e. abandoning the role of a raw materials supplier and moving towards a service and technology-intensive economy. Close attention will be given to the applicant’s social commitment, provision of employment opportunities for the local population and training of Kazakh specialists abroad.
The title of Best Investor 2003 will be conferred by the Expert Council on nominees in the following sectors: processing, production infrastructure, power, petrochemicals, airlines, food, agribusiness, services and finance.
Notably, no members of the Foreign Investors’ Council Chaired by the President of the Republic of Kazakhstan will be eligible for the Competition jury, which indicates an unprejudiced attitude towards all the participant companies.
The nominees include a number of large companies such as Tengizchevroil, Munai Tas Northwestern Pipeline Company, AES Ekibastuz, Air Astana, GSM Kazakhstan, Kazakhtelecom, Turkuaz Edible Oil Industries, Coca-Cola Almaty Bottlers, USKO International, Toyota Tsusho Butya and ABN AMRO Bank Kazakhstan, among others.
The winners in the various sectors will be presented with special diplomas. The award ceremony will take place on 6 December this year as part of the 10th Plenary Session of the Foreign Investors’ Council.
Tengizchevroil (TCO) was one of the first joint ventures in the Kazakh oil and gas industry with ten years experience. The foreign members of this joint venture are Chevron Texaco Overseas Company (USA), ExxonMobil Kazakhstan Ventures Inc. (USA) and LukArco (Russia). The company is implementing an investment project for developing the Tengiz deposit. A total of US$3,861 million was invested in the project between 1993 and 2003. TCO is the largest oil producer in Kazakhstan. In 2002 alone, oil production by the company amounted to 13.1 million tonnes, a 5% increase compared with 2001.
The TCO project included the launch of auxiliary facilities which have made it possible to process all the company’s propane and butane export output to European standards. A gas pipeline section to Kulsary was rehabilitated and two new sulphur plants were built which will enable the company to export up to three fourths of the sulphur produced.
In 2005 TCO will begin using an advanced gas injection technology, and in 2006 a second generation plant will be completed which will increase the annual oil production by 7 million tonnes.
The operations of TCO in Kazakhstan have had an important impact on the national economy and the social sector.
Munai Tas Northwestern Pipeline Company was founded in December 2001 in accordance with an agreement between the National Company Transport Nefti I Gaza and the CNPC International (Kazakhstan) Ltd. The company is implementing an investment project for building and operating the Keniyak-Atyrau oil pipeline, which is expected to enhance the capacity of Kazakhstan’s transport infrastructure and pave the way for building another facility from West Kazakhstan to China. The pipeline will enable oil companies from Aktobe Region to reach international markets via the Atyrau-Samara and CPC pipeline systems. The project will achieve a throughput capacity of 6 million tonnes of oil in 2003 and 12 million tonnes by 2006.
The company was the first in the CIS to install a cathodic protection system on the main pipeline (manufactured by SSS Korrosionsschutztechnik GmbH & Co.KG of Germany), and uses solar energy and SCADA-based fully automated process control systems with dispatch control.
The company’s policy is to build high-tech, resource-saving facilities.
AES Ekibastuz is the main power provider in Kazakhstan. In 1996, AES Suntree Power Limited of Ireland bought GRES-1, thus becoming the first overseas investor in the Kazakh power industry. Since that time AES Ekibastuz has invested over US$100 million in the plant in order to boost its capacity from 600 to 1800 MW. Today the company owns nearly 100% of the reserve power facilities in the country.
In 1996-2002 the company’s annual power production grew from 1.6 to 5.1 billion KW/h and its share in the power market from 2.7% to 8.7%. It is expected that the company will achieve a production rate in excess of 6 billion KW/h in 2003, and increase it further by more than 70% in 2006.
The company has an excellent outlook for the future. Its main concern at present is to increase power production by rehabilitating inoperable units and promoting sales both domestically and abroad. Six units will be rehabilitated in several phases by 2007.
Air Astana was co-founded by the Kazakh Government and BAE Systems Kazakhstan Limited (UK) in 2001. It provides services to Western standards and is contributing to the expansion of the domestic and international air transport infrastructure.
The company is showing a sustained movement towards safer and better services on its main and secondary routes, both local and international.
Air Astana was the first airline in the CIS to employ the new generation Boeing 737-700 and 737-800 aircraft embodying the latest achievements of the international aircraft industry. In addition, the company leases two Boeing 757-200s which have a larger passenger and cargo capacity than the other aeroplanes in its fleet.
Since 2003 Air Astana has been offering many new flights to destinations in Kazakhstan and elsewhere, including Uralsk, Atyrau, Seoul, Bangkok, Istanbul, Frankfurt, Hanover, London and Amsterdam. In the same year a sustained trend emerged towards exceeding planned performance (345,000 passengers, 900 tonnes of cargo and 360 tonnes of mail).
Air Astana is oriented to the development of the aircompany as a national airline capable of operating to high international standards.
GSM Kazakhstan Kazakhtelecom was founded in 1998 by Fintur Holdings B.V. of the Netherlands from the foreign party. It provides mobile communications services to the GSM-900 standard.
GSM Kazakhstan has over 750,000 subscribers and ranks first in Central Asia in this respect. The company is continuously expanding its geographical coverage, with 23 more cities in Kazakhstan having joined its network in 2002. Its automatic international roaming services are facilitated by 188 operator companies in 86 countries. Between 1998 and May 2003 the company invested about US$210 million in a project to set up a GSM digital mobile network in Kazakhstan. The current technical potential of the GSM Kazakhstan network is adequate to service 1.6 million subscribers.
GSM Kazakhstan is the national leader in affordability, investment and service quality and range.
The company’s investment strategy is revised from time to time in connection with international trends towards a wider use of the service potential of GSM networks.
Turkuaz Edible Oil Industries was founded in November 2001 by the Turkuaz Group which entered the Kazakh food market in 1992. The company’s core business is deep processing of oilseeds and the manufacture of vegetable oils to international quality standards.
The company is building a vegetable oil refining facility and an oil-extraction plant in Aktobe at a total cost of more than US$9 million. The oil-extraction plant introduced the latest technology and equipment of the Swedish company Alfa Laval for the first time in Kazakhstan, allowing a monthly production rate of 2,000-2,250 tonnes of unrefined oil to be maintained. The current capacity of the oil-extraction facility is 1,500-1,700 tonnes of unrefined oil.
The company is implementing a programme under which farm enterprises from Aktobe and Uralsk Region`s are receiving financial aid for buying elite seeds and growing oil crops, and a system of raw material supply from Turkey and elsewhere is being built up with a view to distributing the seeds free of charge under futures contracts beneficial to farmers. To date over 55 tonnes of seeds have been distributed to farmers on credit.
Coca-Cola Almaty Bottlers, founded in 1994, produces and distributes beverages under The Coca-Cola Company trademark. Its founders are Tonus (Kazakhstan), Efes Invest (Turkey) and Coca-Cola (USA). The company has secured a leading position in the local beverages market.
The annual output of Coca-Cola Almaty Bottlers is about 60 million litres, the current company’s production capacity is 110 million litres of beverages per year. The company’s production plan for 2003 is 71 million litres of beverages,6 million litres of beer and 15 million litres of juices.
The company has embarked on four investment projects. To date, over US$8 million has been invested in the purchase and installation of a second Sidel and Krones production line for producing carbonated beverages, increasing the current production capacity. The other projects envisage the production of drinking water and expanding storage capacity.
In summer 2005 the company will complete and launch a new beverage bottling complex which will increase its annual production capacity to 250 million litres.
The company has set itself the goal of saturating the market with products meeting high international quality standards.
USKO International was founded in 1992 by Mr Bang, a US citizen, as a pioneer multi-sector foreign company in Kazakhstan. Its main activities are construction, furniture, warehouse services, logistics, telecommunications (the exclusive right to distribute Samsung and LG Electronics products) and supplies.
The company is making sustained progress in furniture production and provision of services year by year. In 2003 furniture production was boosted by 77% and construction services by 60% compared with 2001.
The company has put forward six investment projects and has already completed four of them, investing a total of over US$12.5 million in 1999-2002.
Under one of USKO’s long-term projects, the production facilities at Almatymebel were rehabilitated in 1996-2002, including the reconstruction of office and production premises and the purchase of German equipment for the manufacture of luxury office furniture.
USKO is determined to boost the domestic production of furniture even further in 2003-2008. The company’s facilities are currently being modernised and its production premises expanded.
Toyota Tsusho Butya was co-founded by Toyota Tsusho Corporation and Butya Car Centre in 1998. The company sells cars (it is the official importer of Toyota in Kazakhstan) and spare parts and operates a car repair service.
The company has implemented an investment project for establishing Zhetysu Toyota Centre which constitutes the first private Japanese investment in Kazakhstan not to be guaranteed by the Government. The total project cost is US$2,861,000. A specially trained team of Kazakh mechanics carries out computer-aided diagnosis of cars and complex repairs to modular units. This service centre is in no way inferior to similar establishments in Paris, London or Moscow.
Zhetysu Toyota Centre fully meets strict Japanese requirements, a fact which is clearly confirmed by the Centre’s official status as a Toyota facility. The Centre uses Japanese technology and company management methods.
ABN AMRO Bank Kazakhstan was founded in 1994 by Kazkommertsbank, ABN AMRO (Netherlands) and the International Financial Corporation. The bank’s scope of activity includes banking services, project financing, paper issue, syndicated loans, consultations on fixed interest instruments and commercial transactions, stock market transactions, etc.
The bank has developed and implemented two investment projects: the pension asset management company (PAMC) ABN AMRO Asset Management (1998, 129.6 million tenge); and the non-government savings pension fund ABN AMRO CaspyMunaiGaz (1999, 126.45 million tenge).
The authorised capital of ABN AMRO CaspyMunaiGaz is 180 million tenge. As of 1 June 2003, the fund had over 130,000 depositors, and as of 16 June 2003 its pension assets exceeded 22 billion tenge.
The assets are managed by the PAMC. As of 1 April 2003, ABN AMRO Asset Management managed the assets of four of the 15 non-government pension funds, totalling over 31 billion tenge, and emerged as the third largest PAMC of the seven operating in Kazakhstan.
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