Government • 26 March, 2019

Construction of a Hyundai passenger car plant will be launched

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At the Government meeting chaired by the Prime Minister Askar Mamin, the implementation of the State Program of Industrial and Innovative Development of Kazakhstan for 2015-2019 was reviewed.

Minister of Industry and Infrastructure Development Roman Sklyar reported on the implementation of the second five-year plan of industrialization. According to the program, over four years of the program (2015–2018), 480 projects worth 4.9 trillion tenge were commissioned, and more than 44 thousand permanent jobs were created.

For all target indicators of the program for the reporting period, positive results were achieved.

“The share of the manufacturing industry in GDP increased over the reporting period from 10.1% to 11.6%, the share of people employed in the industry — from 6.6% to 6.9%. At the end of 2018, the industry grew by 4.1%. This became possible due to the 4% growth in the manufacturing industry,” said the Minister Roman Sklyar.

The main drivers of growth were steel engineering (+ 14.1%), chemical industry (+ 8.1%), oil refining (+ 8.8%), light industry (+ 4.4%) and metallurgy (+ 2.2% ).

As part of the Industrialization Map, 102 projects were commissioned for about 1.3 trillion tenge in 2018, about 13.3 thousand permanent jobs were created.

Sklyar also reported on the measures taken to increase production and preserve jobs at enterprises of supervised industries.

“This year we must ensure the growth of the processing industry not lower than 104%. It is planned to introduce about 120 projects worth 1.1 trillion tenge with the creation of 20,000 permanent jobs,” said Sklyar.

By the end of the year, the metallurgy industry will launch a plant for the production of ferrosilicon in the Karaganda region, a plant for the production of steel spiral pipes in Almaty.

In engineering, it is planned to increase the production of motor vehicles from 32 to 60 thousand units.

As part of industrial cooperation, construction of a Hyundai passenger car plant will be launched, a joint venture with PJSC KAMAZ will be established, and cooperation with the Kirovets plant will be established to transfer technology for the production of agricultural machinery components.

Particular attention is paid to the program of preferential crediting of branches of the “economy of simple things” to 600 billion tenge, of which 400 billion tenge will be directed to the development of the production of industrial goods and certain types of services. This will allow to start the production of about 250 manufactured goods for daily use. As a result, by 2025, about 16 thousand permanent jobs will be created, tax revenues to the budget will increase by 1.1 trillion tenge, the share of imports of “simple things” products will be reduced from 59% to 37%.

Major projects in the light industry will be modernized and expanded in 2019. The project office for the implementation of the Economy of Simple ThingsPprogram, created under the Atameken National Chamber of Entrepreneurs, will help inform and assist local businesses in obtaining support measures for the program.

The implementation of 500 billion tenge, allocated for the promotion of exports (for 2019 provided - 187 billion tenge), has begun in 2019. The funds are directed to concessional financing, increasing insurance and guaranteeing volumes, reimbursement of transportation costs of exporters and providing extensive service support in the form of exhibitions, marketing, comprehensive analysis of sales markets and reimbursement of certification costs.

Until the end of 2019, the State Program of Industrialization will be developed on the basis of the Concept of the Third Five-Year Plan of Industrialization. There will be a shift from industry priorities to the support of efficient producers in all sectors of the manufacturing industry. Direct support will be provided in exchange for the counter obligations of the business to achieve specific indicators (modernization, export growth, etc.). In addition, existing and new tools aimed at technological modernization of enterprises will be improved. In general, industrial policy will maintain continuity and will focus on stimulating the competitiveness of the manufacturing industry in the domestic and foreign markets.

Sklyar noted that one of the drivers of mechanical engineering could be the production of equipment and machinery for the oil and gas industry, since the implementation of such large projects as Karachaganak, Kashagan and Tengiz creates domestic demand for oil and gas equipment. At present, the sector's share in engineering is 5%.

Minister of Energy Kanat Bozumbayev, in turn, reported on the development of engineering for the oil and gas sector. So, in 2018 in the oil and gas sector, the purchase of local goods, works and services provided amounted to 43.3% for 2.6 trillion tenge, the total amount of six trillion tenge. The share of purchases of local goods — 27%. At the same time, in order to increase the share of domestic goods production, it is proposed to analyze the purchase of goods with operators, analyze the existing production facilities of Kazakhstan, create a working group for the development of local content of large oil and gas projects, as well as create a list of import-substituting goods.

Minister of Agriculture Saparkhan Omarov reported on the development of agricultural engineering. According to him, there is a high potential for the development of domestic agricultural machinery. Volumes are growing from year to year. In order to support domestic machine builders today, investment subsidies are provided to buyers of domestic machinery for 25% of the amount of goods. Local akimats also have the opportunity to provide 10% of investment subsidies from local budgets. In this case, the volume of investment subsidies will be 35%. In addition, the leasing rate of domestic equipment acquired in leasing will be subsidized.

Considering the measures taken to develop the industrial sector in the regions, akims of Kostanay and Pavlodar regions reported.

Deputy Prime Minister Zhenis Kassymbek stressed that by the end of the year all indicators of the industrialization program will be achieved. Such initiatives as the “economy of simple things” and the exporter support program will contribute to this. By the end of the year, the manufacturing industry should give at least 4% growth. One of the main tasks for 2019 is to prepare the third five-year plan of industrialization, the main direction of which is to increase the competitiveness of the manufacturing industry by supporting productivity growth, exporters, and bring Kazakhstani goods to foreign markets.

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