Invest Capital Realty: Warehouses, Logistics, and Infrastructure
The economic success of Kazakhstan in recent years has made it a leader among the newly independent states. However, the majority of international experts agree that to maintain its dynamics, Kazakhstan needs to build up a state-of-the-art transport and logistics infrastructure. A promising project in this area is ICaR—an innovative custom–warehouse complex to be built near Almaty and operated by High Tech Logistic. High Tech Logistic is a Kazakhstani-Russian joint venture and a member of the Invest Capital Realty Group. Today, in the run-up to the opening ceremony, we spoke with Saken Toilybayev, the founder of Invest Capital Realty.
Mr. Toilybayev, how was the idea for this centre conceived?
In 2003, we were already experienced in implementing development projects and began to monitor new opportunities in the Almaty real estate market. We figured out that the least developed segment is the warehouse facilities market. Because of flourishing production and the growth of retail networks, in addition to cargo and trade flows, the city experiences an increasing lack of high-quality warehouses. We understood that investment in warehouse construction has strong potential, so we began to study Russia’s and Eastern Europe’s experience in this field. These countries are witnessing the rapid development of transport and logistics centres, which both rent high-quality warehouses and manage logistics processes. We liked the idea and, while visiting an industry-specific exhibition in Moscow, we became acquainted with Russian experts in warehouse logistics who have the necessary know-how in management and technology. In 2004, we invited these specialists, the Interrus Company, to Kazakhstan. After studying transport and logistics opportunities in Almaty and Kazakhstan as a whole, we decided to establish High Tech Logistic, a joint venture providing comprehensive logistics services on its own sites. The first company’s site will be the ICaR warehouse complex to open this autumn.
What criteria were used for choosing the construction site?
Currently, most of the warehouse facilities in Almaty are situated in the heart of the city. This complicates cargo delivery and aggravates the environmental situation. It is no accident that the municipal authorities require that all industrial and warehouse facilities be moved to the outskirts and that the entry of large trucks to the city be restricted.
These were the first and foremost requirements that we took into account when choosing a place for our first operating site. We ordered a study from the Transport and Communications Research Institute and chose a 35,000 sq m warehouse facility that was left incomplete during Soviet times. The site is close to the city (the first kilometre of the Ili highway) which will allow for distribution to be arranged in both Almaty and the regions. The complex has good access roads, a 150-van parking lot with a rail spur, and a container facility and a rail station that is some 500 metres off. The warehouse is partitioned into sections so that incompatibles can be stored in the same building. The complex is completely self-sufficient: it has its own boiler house, substation, water tanks, pump station, water ring-main, effluent facilities, sewage and fire fighting systems. The only thing we had to do after purchasing the facility was to fit it out with modern equipment: packaging and palletising machines, electric lift trucks, air curtains, dust-proof polymer floors, etc. We now have a high-quality warehouse rated between A and B.
What are the main competitive advantages of High Tech Logistic?
Today, Kazakhstan does not have a high-quality system of logistics services. The operation of warehouses is not perfect—their owners prefer to lease warehouses and let their customers arrange the process themselves. The ICaR infrastructure allows for a comprehensive approach to solving logistics tasks. What we offer is true custody. The automated control system by the ant Technologies optimises the work of staff and equipment, manages documentation, and maintains stock accounting. The system processes any orders and information related to the goods storage and flow in real time. Moreover, it monitors the quality of all operations with an accuracy of 99.9%. The complex provides all modes of storage, including temporary-storage, free, and customs warehouses. Our customers may rent offices equipped with up-to-date communications. High Tech Logistic acts as a customs broker and provides free-of-charge insurance for customers’ goods. Through our partners we can also manage traffic outside the warehouse, thus providing the renters with a comprehensive outsourcing system to optimise their storage and collection indices, as well as the delivery schedule.
Who will be your main customers?
Our market encompasses a number of major transnational companies which traditionally establish high requirements for the quality of storage. Another group of customers are major local distributors that follow their Western counterparts and understand that warehouse logistics and transportation should be managed by professionals. Our objective is to build up logistics systems for our customers while anticipating the development of their businesses. After building the warehouse in Almaty, we plan to construct some 250,000-300,000 sq m of high-tech warehouse facilities throughout Kazakhstan in the next five years. These will be supported by high-quality management. It also should be kept in mind that Kazakhstan is located between Russia and China, which have an enormous trade potential. We would like to create a well-tuned transport and logistics channel to serve transit flows between these two countries.
What are long-term objectives of Invest Capital Realty?
A priority of Kazakhstani economic policy is to support small and medium-sized business. The country is implementing the Strategy for Industrial and Innovation Development and the so-called cluster initiative. Small and medium-sized businesses are the main driving force for these programmes. We consider ourselves to be a part of this process, which is why the development of local business initiatives may become a promising area for Invest Capital Realty.
Our idea follows the Western example of the so-called industrial parks which are special land plots used to locate industrial enterprises. The operator provides general infrastructure, buildings, transport routes, water supply, communications, office premises, etc. Manufacturing businesses purchase or rent land within the park’s area; their concentration in one place allows for manufacturing value-added products while reducing production, transportation and other costs. We are trailblazing the creation of such an infrastructure project in our country. Currently, we are studying its economic feasibility. According to our preliminary assessment, a land plot in a park that is situated some 5-15 km from Almaty would be a beneficial purchase for small and medium-sized businesses.
In the future, we could create such economic development complexes near all regional centres of the country, for example, at the Aktau port or the Druzhba border station. Similar terminals in neighbouring CIS countries could provide an impetus for Kazakhstani businesses to work up to external markets. As you see, we are not afraid of challenges, and we establish global goals.
Infrastructure development includes the most capital-intensive and long-term projects in terms of pay-back. How do you see the government’s role in such an initiative?
I know that private businesses are able to implement such projects on their own. The state should only remove administrative obstacles and create fair conditions for all.
Infrastructure development contributes to the development of a region which means investment, taxes, and new jobs. In terms of our ICaR warehouse, about 60-70% of the staff (i.e. 180-200 people) will be from the local population. We co-operate with the Ili Employment Centre and train young specialists at the regional college. We also take part in community events. So I believe that the local authorities should be interested in such projects. They could assist in addressing many issues, including land allocation or negotiations with transport, electricity and gas monopolies. The government and private businesses must build up their relations on the basis of mutual benefit and trust, for we have a common objective—to increase the competitiveness of Kazakhstan.
Biographical information. Saken Toilybayev was born on 22 October 1975 in the South Kazakhstan oblast. His parents were school teachers. Mr. Toilybayev graduated from the Physics and Mathematics Department of the Almaty State University and later from the Kazakh State University of Law. His professional experience includes civil service and private business (construction, real estate, law, development). Mr. Toilybayev is married and has two children.
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