Our Partnership Has Great Potential
Michael Müller, Trade Commissioner of the Austrian Embassy to Kazakhstan and Commercial Attaché for Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan answers the questions of the Kazakhstan magazine.
We know that the foreign trade office of Austria in Kazakhstan opened in Almaty in the last year. What have you managed to do and what tasks are set?
In fact I came to Almaty in July, but the formal ceremony of opening of the foreign trade office in Almaty took place in November 2010. The Austrian Embassy to Kazakhstan has been operating in Astana since 2007, while prior to this, the issues of cooperation in the economic area had been the competence of our office in Moscow. Our major goal is to support and develop economic, trade and investment relations between Austria and the four Central Asian countries, first of all, Kazakhstan. However, we are also in charge of interaction with Kyrgyzstan, Turkmenistan, and Tajikistan. "Supporting relations" is, of course, a general concept, but I can divide it into four key components.
The first and most important one is contact with the Austrian businessmen, to which Kazakhstan and the entire region in general are of interest, and which wish to enter the market of this region. They need information as to what are the conditions of running a business in the country, what sectors of the national economy are promising, and what opportunities they provide for the Austrian companies. As a rule, these are quite specific questions, starting from the specific nature of law regulations in the country and finishing with the search for local partners. This is indeed a great deal of daily routine work, which involves the arrangement of visits of groups and individual support of the Austrian companies operating in Kazakhstan, as well as the organization of seminars in Austria itself.
The second component is the feedback with Kazakhstani companies. I have been working in Kazakhstan for a half a year now and I am glad that we already have interesting contacts with local businessmen, which come to us with questions and ideas and proposals of cooperation.
The third component is our participation in preparation of all formal delegations aimed at solving economic and business matters. For example, a large business delegation, comprising representatives of 30 companies, headed by the Vice President of the Federal Economic Chamber of Austria, came for the opening of our foreign trade office in Almaty. At that time, jointly with the Atameken Alliance we conducted a business forum in Astana, and simultaneously a meeting of the mixed governmental commission with participation of Austria’s Ministry of Economy was held. Quite an important event was the first visit to Kazakhstan of the Austria’s Federal President Fischer, who not only visited the OSCE Summit 2010, but held bilateral negotiations with the President Nazarbayev and Prime Minister Massimov. The focus of attention at the negotiations was the issues of economic interaction of our countries. The foreign trade office also engages in development of intergovernmental agreements as to the intent of cooperation in the priority sectors of the economy.
At last, the fourth component and maybe the most pleasant part of my work is the possibility of studying on my own the markets of Central Asian states and seeking absolutely new niches of cooperation. This is of real interest to me: to travel a lot, then I can learn more about the country.
How are the trade and economic relations between Austria and Kazakhstan are characterized, by what indicators?
The total trade turnover between our countries today is about 1.2 billion Euros. Kazakhstan is a very important partner of Austria in supplies of energy raw materials; thus, the greater part of the commodity turnover is the Kazakhstani oil exports, coming to some 1 billion Euros, and these exports have an upward trend.
Concerning the supplies of Austrian goods to Kazakhstan, unfortunately, there was a certain decline in the last few years. The peak of Austrian exports to Kazakhstan which was before the economic recession had been 250 million Euros, while in 2009 it dropped to 200 million, and based on the 2010 year’s results, it is expected to be at the same level as in 2009 or even a little bit less. We expect stabilization in 2011 and an increase in 2012. In the structure of Austria’s turnover, Kazakhstan is third among the CIS countries after Russia and Ukraine.
In what sectors of the Kazakhstan economy is the Austrian business represented?
When the matter concerns the remote markets, Austria always makes an accent on the B2B segment, not B2C. Although, one can find in Kazakhstan the Austrian brands such as Swarovski or FREY WILLE, Wolford, or Red Bull. Still, the consumer goods have a relatively small share. Mostly, the items of trading are the equipment for various sectors of the economy – oil and gas sector, food industry, railway transport, metallurgy, and etc. This is what Austria is traditionally strong in. Supplies of pharmaceutical products, making 20% of all Austrian exports to the country, play an important role.
Regarding the question of investments, the direct foreign investments to Kazakhstan, based on the 2009 year’s results, reached 2 billion Euros according to the National Bank of Austria. You must agree: this is quite a good results for such small country as ours. Here, I would like to look at the two largest projects. The first one refers to the Bank Austria, comprising the UniCredit Group’s structure, which invested considerable funds in the Kazakhstani ATF Bank. The second one refers to the petroleum company OMV, which has been operating in Kazakhstan for a long time through its subsidiary Petrom.
Moreover, some 50 more Austrian companies are represented in Kazakhstan, mainly through their small representative offices, permanent partners or franchise. Now these are mostly trade offices which sell goods, provide assembling and servicing of the equipment. In many respects, such an approach is explained by the structure of the Austrian economy, which is represented mainly by small and medium businesses. For such companies it is not likely to enter a new market and immediately start investing, say, in construction of a plant. More often, the development of Austrian business in a country is an evolutionary process, based on the dynamics and volumes of sale.
If to speak of the most successful examples of business, these are Schaller and Bertsch, which have been operating in Kazakhstan for a long time, offering equipment for meat processing. The world-known Doppelmayr Company built a new cable way at Shymbulak. Our Austrian firm BSH is the contractor for the ventilating equipment of the subway in Almaty. Austrian equipment to repair railways is in use in Kazakhstan. Concerning the area of services, I can name the Vamed Company, which runs the National Scientific Center for Motherhood and Childhood in Astana.
As far as we know in Russia, in contrast to Kazakhstan, there are a relatively big number of industrial enterprises with the participation of Austrian capital. What is the reason for that and what sectors of the Kazakhstan economy are most prospective for joint investment projects?
I think that the major and most evident reason is the difference in the number of population in Kazakhstan and Russia. Russia, with its 140 million population is another kind of the market. The structure of the Russia’s economy by sectors is similar to that of the Austria’s economy. As an example, considerable Austrian investments were made in Russia’s forestry and papermaking, since we have large players in this sector, and for them, Russia is the target market, endowed with raw material.
Of course, now with the creation of the Customs Union the covering of the potential markets has increased for Kazakhstan. Still, we believe those sectors of the economy which do not directly depend on the number of population in your country have the most prospects, from the viewpoint of Austrian investments. These are infrastructure, telecommunications, electrical power engineering, energy saving, etc.
I do not absolutely except the fact that Austrian companies will be investing in production in Kazakhstan. We are already discussing a few particular projects now. The Accelerated Program of Innovative and Industrial Development is of great interest in this respect. Kazakhstan is endeavoring to introduce new technologies and efficient processes, while Austria, having extensive industrial production, has know-how in development and application of clean technologies and improvement of technological processes. We have a certain cooperation potential, and we have to steadily develop it.
In its turn, Austria could become a good platform for Kazakhstan business in its entering the market of Europe. The companies from many countries, including Russia, have been actively operating in Austria as well, and we believe this could be of interest to Kazakhstan.
Austria is well-known for its developed tourism infrastructure. What opportunities for cooperation in this field do our countries have?
Indeed, tourism plays a considerable role in Austria’s economy. Of course, by the number of tourists we are behind France, Great Britain or USA. However, by income from tourism per capita our indicators are the highest in the world.
The second aspect is marketing. The Austrian tourism market is distinguished by tough competition, and for a project to be successful it is necessary to thoroughly examine a niche, make positioning and other things. In this respect, the Austrian companies also have know-how which is applied abroad. For example, our firms are actively participating in development of the skiing tourism in Turkey.
This can be consulting on the issues of target development and management of the tourism industry as well, i.e. how to develop new resorts and how to tie them with the existing infrastructure, etc.
A very important aspect is the provision of skilled human resources. One can launch a high-tech tourism project, but if the level of service is low, the impression can be spoilt irretrievably. Educational centers in the area of tourism successfully operate in Austria. They cooperate with many counties. I hope Kazakhstan will join their list.
In conclusion, what events in the field of economic cooperation between Austria and Kazakhstan are scheduled for 2011?
First of all, the government delegation from Kazakhstan headed by Kazakhstan’s Vice Prime Minister Aset Isekeshev will visit Austria in February of this year. This is quite an important event for our countries, since we have not had events of this level for a few years. In the course of this visit, we are planning to familiarize the Kazakhstan side with the best Austrian enterprises, industrial and mechanical engineering ones.
Besides, the Europe – Central Asia forum will take place in Vienna on June 8–9 in the framework of the World’s Economic Forum. Relevant invitations are sent, and we hope this will give a new impetus to cooperation between our countries. By the end of the year it is also planned to hold a meeting of the mixed intergovernmental commission.
Concerning the events in the Republic of Kazakhstan itself, we have plans to organize a large economic mission from Austria in September–October of this year. Along with that, we wish to engage in a more specific format of work – at the level of particular sectors of the economy. The first step in this direction will become a visit to Kazakhstan of a delegation of Austrian companies, operating in the tourism area, which is scheduled for late February – early March. I am sure this undertaking will be successful, and the scope of cooperation will be growing.