Economic Newsletter on Kazakhstan |November 2017

CONTENTS

MACRO-ECONOMICS & FINANCE ...... 2 ENERGY & NATURAL RESOURCES ...... 8 TRANSPORT & COMMUNICATIONS ...... 12 AGRICULTURE ...... 14 WATER & ENVIRONMENT ...... 18 EXHIBITIONS IN KAZAKHSTAN (January-March 2018) ...... 20 CONTACTS ...... 21

The Economic Section of the Embassy of the Kingdom of the Netherlands in Kazakhstan intends to distribute this newsletter as widely as possible among Dutch institutions, companies and persons from the Netherlands. The newsletter summarises economic news from various Kazakhstani and foreign publications and aims to provide accurate information. However, the Embassy cannot be held responsible for any mistakes or omissions in the bulletin. ECONOMIC NEWSLETTER, November 2017 Embassy of the Kingdom of the Netherlands

MACRO-ECONOMICS & FINANCE National Bank raised GDP growth forecast in Kazakhstan in 2017 to 3.5% The growth of Kazakhstan’s GDP in 2017 is expected at 3.5%, in 2018 - 2.8%, Kazpravda.kz reports with reference to the National Bank of Kazakhstan press service. The National Bank conducts forecast rounds four times a year, during which the forecast of the main macroeconomic indicators, primarily inflation, is carried out for the medium- term for the next seven quarters. Basing on the obtained forecasts and estimates, the Bank takes decisions on monetary policy, including the level of the base rate. On November 23 this year the regular October-November 2017 forecast round was completed. The forecast period is from the fourth quarter of 2017 to the second quarter of 2019. According to the latest assessment of the National Bank, Kazakhstan’s economic growth rate will accelerate to 3.5% (in the previous forecast round - to 3.1%) in 2017 and will weaken to 2.8% in 2018 (to 3%). The Bank explained revision of the growth rate by the acceleration in the III quarter of this year of recovery processes in the real sector of the economy. And the economy growth largely owes to increased volume of mineral resources extraction. Positive dynamics is maintained in other sectors of the economy. The short-term economic indicator, based on changes in the indices of output in the basic industries, in January-October 2017 increased by 5.4% on-year. The growth of investments in fixed assets continues to support the growth rate of the economy. It is expected that the current moderate growth rate of investment will remain on the background of the production activity expansion. At the same time the Bank points out that the recovery of households’ consumption is slow. On the one hand, it is supported by the growth of retail lending, but it is limited by the reduction in real monetary incomes of the population. In view of this fact, assessment was revised of the output gap in the forecast period from slightly positive to slightly negative, which indicates that the disinflationary pressure in the economy remains throughout the forecast period. It is estimated that the closure of the gap is to be in the second quarter of 2019. Thus, due to the current structure of economic growth in the forecast period, changes related to the diversification of the economy are not expected, which tells on the significant exposure to external shocks. In turn, the prerequisites for economic growth in the forecast period have not changed. The National Bank expects recovery of domestic consumption, growth of investment in fixed assets. At the same time, the growth of imports of consumer and investment goods as a result of expanding domestic demand will act as a deterrent to the GDP growth. Basing on the latest forecast round, oil price at $ 50 per barrel is considered as the main scenario for Kazakhstan economy throughout the period under review. According to the forecasts, annual inflation in Kazakhstan during the fourth quarter of 2017 will be closer to the upper range of the target corridor of 6-8%, and in 2018 it will start a smooth entry into the target corridor of 5-7%. In particular, stable prices for oil and grain, lower inflation expectations and weak disinflationary pressure from domestic demand will lead to inflation in the target corridor of 5-7% in 2018 and 4-6% in early 2019. At the scenario of $40 per barrel, annual inflation will be higher than the upper boundary of the target corridor in 2017-2018, which will require tightening of monetary conditions.

Kazakhstan presents plan on development until 2025 The Kazakh Government submitted a strategic plan for development of Kazakhstan until 2025. The plan describes how the life of citizens of the country is expected to change in the next 7 years. The project was presented by Minister of National Economy Timur Suleimenov and published by the Ministry of Economy of Kazakhstan.

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Under the strategic plan, the GDP per capita should grow to $46,000, life expectancy should increase from 72 to 75 years, and the GRP (Gross Regional Product) gap between the regions will decrease from 3.2 times to 2.7 times. By 2025, the exports of non-primary goods and services should increase from 44.6% to 50%, and the share of small and medium businesses in GDP should grow from 26.8% to 35%. It is planned to ensure the growth of the national currency loan portfolio from 18% to 50% of GDP. It is also expected that government agencies will be more client-oriented, the banking sector more stable, and the judicial sector less corrupted. The state’s share in the economy will decrease, the barriers for small and medium businesses will decline and the use of new technologies will increase, Trend reports.

Law on guaranteed transfer from the National Fund submitted for signature to President At a Senate plenary session, the deputies adopted the law of the Republic of Kazakhstan “On guaranteed transfer from the National Fund of the Republic of Kazakhstan for 2018- 2020,” Kazpravda.kz reports. “In accordance with the Decree of the President of the Republic of Kazakhstan dated December 8, 2016 “On the Concept of formation and use of the funds of the National Fund of the Republic of Kazakhstan”, starting from 2020, the amount of the guaranteed transfer to the republican budget will be fixed and amount to 2 trillion tenge,” says the Senate finance and budget Committee. Thus, the amount of the guaranteed transfer from the National Fund to the republican budget will gradually decrease and amount to 2 trillion 600 billion tenge in 2018, 2 trillion 300 billion tenge in 2019, and 2 trillion tenge in 2020 and in subsequent years. At the same time, in 2020, the guaranteed transfer from the National Fund will ensure compliance with the minimum balance of funds in the National Fund in the amount of 30% of the forecasted GDP at the end of the corresponding fiscal year. “In general, adoption of the bill will ensure the balance of the budget and fully finance the republican budget expenditures, including those aimed at increasing economic activity and employment in the economy,” the profile committee notes.

Funds in the National Fund since the beginning of the year has decreased by 10.6% The overall amount of funds of the National Fund of the Republic of Kazakhstan during 10 months of this year decreased by 10.6% and as of November 1 it is estimated at 21.3 trillion tenge. The rate of reduction of the National Fund this year is higher than in the past: during the same period in 2016, the amount of funds in these reserves of the country showed a decrease of 5.5%. The decrease in the total cash volume of the National Fund is taking place against the background of a sharp increase in the use of reserve funds set against a slower growth in revenues. During the current year the National Fund’s spent 4.1 trillion tenge against 2.6 trillion tenge for the same period a year earlier. At the same time, income so far this year was only 1.6 trillion tenge. It can be observed that this year the replenishment of the National Fund is up from the previous 2 years, but it is still far off from 2011-2014. Thus, in January-October 2016, the amount of replenishment stood at 1.2 trillion tenge, and during the same period of 2015 at 1.5 trillion tenge. By comparison, during the first 10 months of 2014 the National Fund was replenished by 5.2 trillion tenge, which is 3.3 times more than this year. The increase in revenues is due to the growth of direct taxes from the oil sector (except for taxes paid to local budgets) due to a stabilisation of hydrocarbon prices in world commodity markets. This year, the National Fund received 1.4 trillion tenge in direct taxes of the oil industry, or 77% more than a year ago.

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Proceeds on claims to subsoil users, fines, penalties for the year increased 6.1 times and amounted to 31.3 billion tenge. At the same time, the amount of investment income from fund management decreased almost 3-fold, to 125.5 billion tenge. The sharp increase in spending of the National Fund was primarily due to an increase in the volume of targeted transfers by 2.4 times from a year ago, from 601 billion tenge to 1.4 trillion tenge. These funds were used to support the country’s financial sector, in particular for the capitalisation of the Problem Credits Fund for the repayment of troubled loans to second-tier banks. On the other hand, the volumes of guaranteed transfers have increased significantly, by 36.7%, up to 2.7 trillion tenge. At the same time, on the fund management and external audit this year was spent 2.4 times less than last year, or 6.1 billion tenge, Finprom reported.

Kazakh official names priority sectors for raising investments Priority areas for attracting foreign investments in Kazakhstan are ferrous metallurgy, non-ferrous metallurgy, agricultural chemistry, oil refining, oil and gas chemistry, and production of automobiles, food and electrical equipment, Larisa Jumagaliyeva, deputy chairman of the Investments Committee of the Ministry of Investments and Development of Kazakhstan, told Trend. The most attractive sectors for investments are metallurgy, chemistry, oil refining, engineering and food production, she noted. There is a package of incentives and government support measures in order to support investors implementing projects in priority sectors of the economy, said Jumagaliyeva. She added that this package includes exemption from payment of corporate tax and land tax for 10 years, property tax – for eight years, compensations of investors’ capital expenditures by the state, and others. Kazakh economy’s priority sectors for investments are also defined by the State Program of Industrial and Innovative Development of the Republic of Kazakhstan for 2015-2019, according to Trend.

Kazakhstan’s regions lead in number of public private projects Kazakhstan is implementing public private projects (PPP) worth 139.5 billion tenge. Most of the projects are being implemented in the country’s regions, Trend reports. “Since my last report on the issue, the number of PPP contracts has grown more than 2 times from 46 to 116. We have launched 53 objects worth 70 billion tenge. Other 63 facilities worth 69.5 billion tenge are currently at the construction stage,” said Timur Suleimenov the Minister of Economy of Kazakhstan at the meeting of the government, Kazakh media reported. He added that the list of the PPP projects of the country includes 45 educational facilities, 27 health facilities, 17 cultural and sports facilities, 7 service and procurement centers in the Almaty region, 5 ophthalmologic institutions, 4 housing and social facilities, 3 republican projects in energy and passenger transportation sector, three polyclinics in Karaganda, Kyzylorda and Shymkent regions, etc. The most part of the PPP projects (113 out of 116) account for the regions, according to the minister. “The leaders in terms of the conducted projects are Karaganda (21), Kostanay (17) and South-Kazakhstan regions (13), and the same time the leaders in terms of investment attraction are the Aktyubinsk region (16.6 billion tenge) and Astana (15.1 billion tenge).”

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Kazakhstan expands import ban on products from Kyrgyzstan, Kyrgyzstan to

compensate losses for victimised traders EURASIAN Kazakhstan has updated the list of Kyrgyz enterprises banned from import. ECONOMIC The updated list includes such Kyrgyz companies as Shin Line LLC, Talas-Sut CJSC, Elimai LLC, Ak-Sut OJSC and Tuunganbayev FE, according to the Kazakh Agriculture Ministry. UNION These companies used to export milk and dairy products to Kazakhstan. Kazakhstan returned more than 400 tons of fruit imported from Kyrgyzstan on October 24. Out of 59 cases of import of quarantine products, 41 were recorded from Kyrgyzstan. In 11 of them, production was imported without a mandatory phytosanitary certificate (93.3 tons of apples and pears, 21 tons of grapes and 4 tons of beet). A few days later, dairy products from Kyrgyzstan were destroyed in Almaty. On October 30, Kazakhstan seized 3.5 tons of Kyrgyz trout and 15 kilograms of trout caviar. At present, only 20 Kyrgyz enterprises have the right to supply their products to Kazakhstan. These enterprises include ten milk processing plants, eight fish processing plants and two producers of finished meat products. The problem of veterinary control on the border with Kazakhstan dates from the moment of Kyrgyzstan’s entry into the EAEU. To fully participate in its activities, the country was set to create bio-laboratories designed to issue certificates of compliance of agricultural products with all-Union standards. In January-May 2017 the supply of Kyrgyz dairy products to Kazakhstan increased by 37.1% and of vegetables by 28.2%. Kazakhstan and Russia are the main markets for the export of Kyrgyz products, as stated by the deputy director of the State Agency for Promotion of Investments and Export under the Ministry of Economy, Shumkarbek Adilbek Uulu at the roundtable, Kabar reported. The share of Kazakhstan in the export of the Kyrgyz Republic amounts to 22.2% and Russia’s share to 21.3%, following the results of 2016, according to the deputy director. “This shows that Russia and Kazakhstan are the main partners. At the same time, being a witness of the risks that arose recently, Kyrgyzstan, is set to seek new markets,” he said. Adilbek noted that the markets of China and Uzbekistan are being studied. Experts are studying the purchasing power of these countries and the opportunities of Kyrgyzstan for export. “The situation itself must be resolved solely through dialogue. There are problems that need to be discussed,” he added. Kazakhstan introduced additional control measures on the Kyrgyz-Kazakh and Russian- Kazakh state borders on October 10, 2017. The measures are taken as part of an overall plan, according to Kazakh side. Meanwhile, the average daily number of persons and vehicles from Kyrgyzstan decreased by 2.4 times at the major and busiest checkpoints Ak-Zhol and Ak-Tilek after the introduction of additional control measures by the Kazakh side. Since October 10, as many as 3,000 persons and 300 transport units cross the border daily. Previously, more than 8,000 persons and over 600 transport units crossed the border each day. On October 18, during a meeting of Kyrgyz Prime Ministers Sapar Isakov and his Kazakh counterpart Bakytzhan Sagintayev in Astana, the parties agreed to give priority in crossing the state border to individuals with personal luggage, vehicles carrying out regular passenger transportation, motor transport, and empty cargo vehicles. To date, the issues with loaded vans remain unresolved. During a meeting of the EAEU states held on October 25, the sides couldn’t find the solution to the problem at the state border. In January-August 2017, trade turnover between Kazakhstan and the Eurasian Economic Union (EAEU) member-states grew 31.6% to $10.8 million. In the total Kazakhstan-EAEU states trade turnover, Kyrgyzstan accounts for 4.3%.

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Kyrgyz MP Azamat Arapbayev speaking at the Parliament committee for economic and fiscal policy said that Kazakhstan introduced a silent embargo. “It’s been 21 days since Kazakhstan introduced enhanced control on border. They’ve created huge trouble for our entrepreneurs. Kyrgyzstan is represented at the Eurasian Economic Commission by 2 people, but we haven’t heard anything from them so far. Prime Minister, Economy Minister are trying, we see it, but nothing is done by the representatives in the EEC,” he said. In this regard, Arapbayev suggested to consider their competences and responsibilities. “They must reported to the parliament committee,” he added. He also reminded that Kyrgyzstan started facing problems in the fuel and lubricant market. “95% of fuel is imported from Russia. Prices for fuel grew worldwide, fuel shortage is emerging, perhaps it all could lead to price hikes. If oil price is rising, duties will be imposed, and then we’ll have price hikes. We must achieve a balance, count and try to import without duties,” he said. The government of Kyrgyzstan has adopted a resolution aimed at assisting businesses and entrepreneurs who have suffered financial losses due to delays at the Kyrgyz-Kazakh border. Prime Minister Sapar Isakov said on October 30 that he signed a resolution under which traders, vendors, and others affected by the border bottleneck would receive tax relief and other benefits to compensate the losses. Kyrgyzstan has blamed Kazakhstan for long lines and the slow movement of travelers, cars, and trucks across the border, delays that began when Kazakh authorities stepped up checks at the frontier on October 10. The delays began after outgoing Kyrgyz President Almazbek Atambayev accused Kazakhstan of meddling in the campaign for Kyrgyzstan’s October 15 presidential election and criticised the Kazakh President Nursultan Nazarbayev over his long rule. Kazakh officials have denied any political motive for stepped-up procedures at the border. Both countries are members of the Eurasian Economic Union (EEU), which also includes Russia, Belarus, and Armenia. The Kyrgyz Foreign Ministry said on October 27 that Kazakhstan’s actions contradicted the goals of the EEU, which include easing trade among its members. On October 24, Kyrgyzstan said it was denouncing an agreement under which it would have received some $100 million in aid from Kazakhstan earmarked to help bring its infrastructure up to EEU standards.

Eurasian Economic Union works out programme to create common oil and oil products markets by 2025 The Eurasian Economic Union countries (Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan) have prepared a programme of creation of common oil and oil products markets by 2025, Finmarket reports. The programme implies application of unified rules to trading in petroleum exchanges and price-making principles for conveying oil and oil products through trunk pipelines. The program has been worked out by RPI Company and was upheld by the intergovernmental council of the Eurasian Economic Commission last week. Access of the Eurasian Economic Union member countries to common oil markets will be facilitated, all the obstacles removed and all restrictions lifted. They will no longer pay customs duties and taxes and commissions for the common market. The Eurasian Economic Union countries will exchange statistical data on production, refinement, supply and consumption of oil an oil products. A common petroleum space as well as transparent petrol exchange and out-of- petroleum-exchange indicators will be formed. A mechanism of formalizing deals in the common space will be set as well. The program contains a detailed description of general principles of the exchanges.

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Kazakhstan central bank keeps policy rate unchanged at 10.25%

Kazakhstan’s central bank kept its main interest rate unchanged at 10.25%, in line with market expectations, the regulator said in a statement. BANKING Six out of nine analysts polled by Reuters last week expected the central bank to keep the rate on hold after gradually cutting it by 1.75% earlier this year. The bank said it wanted to keep monetary conditions neutral and also took into account persistent external risks to inflation. The bank will next review the rate on January 15. Annual inflation in Kazakhstan rose to 7.7% in October, near the upper bound of the central bank’s target range of 6.0-8.0%. On a month-on-month basis, inflation picked up to 1.2% last month from 0.3% in September, according to Reuters.

Central bank discloses Kazakhstan’s foreign debt The National Bank of Kazakhstan revealed the information about the country’s current external debt, Kazinform correspondent reports. Deputy Chairman of the National Bank Alpysbai Akhmetov clarified that as of 1st July 2017, the external debt of the Republic of Kazakhstan amounted to $167.9 billion. This includes 7.9% or $13.2 billion of the public sector, 3.7% or $6.2 billion of the banking sector, 25.2% or $42.4 billion - of other sectors not related to direct investment, and the remaining 63.2% or $106.1 billion is the intercompany debt. “The external debt of the public sector has grown by $0.4 billion mainly because of the rise in the value of sovereign Eurobonds issued on the international capital markets and the upswing of demand for the National Bank’s short-term notes from non-residents. The external debt of the banks [second-tier banks and Development Bank of Kazakhstan JSC] has decreased by $1.0 billion (due to the planned repayment of Eurobonds and the current external loans as well). The intercompany debt has increased by $1.8 billion, mainly due to further financing of oil and gas projects and the growth of the debt owed to direct investors for unpaid dividends and loan fees,” Mr. Akhmetov said. According to the deputy head of the National Bank, the GDP growth and increased exports of goods and services contribute to improving the relative parameters of external debt: the ratio of external debt to gross domestic product as of 1st July 2017 was 112.4% in contrast to 119.3% at the start of the year, and the ratio of external debt to exports of goods and services was 336.6% over 375.8%. “In the first half of 2017, Kazakhstan’s net foreign debt has increased by $3.1 billion up to $41.2 billion, or 27.6% of GDP,” Akhmetov said. He also noted that the public sector still retains the position of a net creditor for the rest of the world, while other sectors and banking sector are net debtors, according to Kazinform.

Delta Bank to be liquidated The Board of the National Bank of the Republic of Kazakhstan made a decision on decertification of Delta Bank as of November 2, 2017. Kapital reports with reference to the National Bank. By order of the chairman of the National Bank, a temporary administration has been appointed. The temporary administration will function until the court appoints the liquidation commission. All operations related to bank accounts of clients and the bank itself have been terminated from November 3, except for transfer of money to the bank related to expenses provided for by regulatory legal acts of the authorised body. The National Bank, in accordance with the procedure established by law, will apply to the court with a request for compulsory liquidation of the bank. From the date of the court’s commencement of the bankruptcy liquidation case, the claims of creditors to the bank may be presented only in liquidation proceedings, with the exception of requirements related to the current expenses for the maintenance of the bank.

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The bank is a participant in the mandatory deposit insurance system for individuals. Deposits are in tenge and foreign currency. Money on payment cards and bank accounts is protected by a guarantee from the Kazakhstan Deposit Insurance Fund.

ENERGY & NATURAL RESOURCES Kazakhstan sees rise in oil output The volume of oil production in Kazakhstan in January-October 2017 amounted to 60.172 million tons, which is 12% more than for the same period in 2016, the Committee on Statistics of the Kazakh National Economy Ministry reported. During the reporting period, gas condensate was produced in the amount of 10.984 million tons (showing an increase of 8.1% compared to the same period of 2016), natural gas - 43.478 billion cubic meters (14.6%), coal - 90.312 million tons (11.1%), copper ore - 81.15 million tons (24.7%), gold ore - 16.222 million tons (4.4%), chrome concentrate - 3.771 million tons (9%). Gasoline output in January-October 2017 amounted to 2,550 million tons, which is 7.1% more compared to the same period of 2016. In December 2016, Kazakhstan, supporting the OPEC initiative to reduce oil production, agreed to reduce the volume of oil production in the first half of 2017. Later in May 2017, Kazakhstan joined the agreement on the extension for another nine months of the period of the contract on the reduction of oil production. In 2017, the forecast for the export of oil from Kazakhstan is 67 million tons. For 2018, the figure is set at 69 million tons, according to Trend.

Shell eyes oil and gas projects in Kazakhstan President of Kazakhstan Nursultan Nazarbayev held a meeting with the Chief Executive Officer of Royal Dutch Shell, Ben van Beurden on 20 November, Kazinform reports with reference to Akorda press service. At the meeting, the sides discussed the current issues and prospects for the cooperation in Kazakhstan’s oil and gas sector including further development of the Karachaganak and Kashagan projects. The Head of State highlighted the active assistance of Royal Dutch Shell in organizing the Astana Expo 2017 International Specialized Exhibition and thanked the company’s senior management for the participation. For his part, Ben van Beurden thanked Nursultan Nazarbayev for the opportunity to meet and congratulated Kazakhstan on the success in hosting the international exhibition. He also expressed his admiration for Nur Alem sphere as the most attractive pavilion at the EXPO. The CEO reminded that 18 November will mark the 20th Anniversary of signing the production sharing agreements for the aforesaid fields, and underlined President Nazarbayev’s role in implementing them. “These projects turned out to be very good and effective. All the expenses were repaid in due time, and the projects are now operating to make profits,” the Head of State responded to the words of Ben van Beurden. Shell is a global group of energy and petrochemical companies. Shell, a British-Dutch multinational oil and gas company, is one of the parties to the North Caspian Production Sharing Agreement signed on 18 November 1997. Kazakhstan, holding 3% of the world’s oil reserves, is among the top 15 countries in the world in terms of proven oil reserves. Oil and gas bearing areas occupy 62% of the country’s territory, and have 172 oil fields, of which more than 80 are under development. More than 90% of the oil reserves are concentrated in the 15 largest fields.

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The fields are located on the territory of six of the fourteen regions of Kazakhstan. These are the Aktyubinsk, Atyrau, West Kazakhstan, Karaganda, Kyzylorda and Mangistau regions. About 70% of hydrocarbon reserves are concentrated in the west of Kazakhstan, according to Trend.

Kazakhstan’s Kashagan oilfield will produce 370,000 barrels per day by 2018 Kazakhstan’s giant Kashagan oilfield will reach production capacity of 370,000 barrels per day in 2018 rather than this year, the North Caspian Operating Company (NCOC) said. “With the start-up and optimisation of the raw gas reinjection process, it is planned to ramp up oil production to a capacity of 370,000 barrels per day … into 2018”, a NCOC representative said in an email. Earlier plans called for a production level of 370,000 barrels per day by the end of 2017. A unit of Kazakhstan’s third-biggest oil producer, KazMunaiGas, said in September that the oilfield will produce 270,000 barrels per day in the last quarter of this year. That forecast was lower than that given by Energy Minister Kanat Bozumbayev, who said the field would increase production to 300,000-370,000 barrels per day by the end of this year from the 200,000 barrels per day currently. Production was expected to be boosted by raw gas re-injection, which started in August, but it failed to bring about immediate results, while flooding at the oilfield disrupted work, industry sources said. NCOC said that it was testing the systems and are gradually increasing and optimizing the amount of gas being re-injected so that more oil can be produced from Kashagan. In September CPC Blend loadings of Kashagan oil were cut by 400,000 tons due to production problems, and traders expect November’s loading plan to be reduced. The revised loading plan for November is expected this week, according to Reuters.

Kazakhstan hopes for Karachaganak gas field deal by year-end Kazakhstan hopes to settle a dispute with global energy companies developing the Karachaganak gas condensate field in the coming weeks, Energy Minister Kanat Bozumbayev told reporters. “I hope that before the end of this year we and the (Karachaganak) shareholders… will invite you to a table where we will sign something,” Bozumbayev said, adding that progress had been made in the talks “in Kazakhstan’s favor”. Kazakhstan filed a $1.6 billion claim against foreign firms developing the Karachaganak gas condensate field in 2015, one of the companies has said. The Energy Ministry has said the row was over how each party’s share in the field’s output was calculated. Karachaganak field, located in the West Kazakhstan Region, is one of the largest oil and gas condensate fields in the world. Its reserve is estimated at over 1.2 billion tons of liquid hydrocarbons and 1.3 trillion cubic meters of gas. Karachaganak oil field is being developed within the Production Sharing Agreement reached between Kazakhstan and consortium of Western companies. The field gives almost 45% of the total gas and 16% of the total liquid hydrocarbons produced in Kazakhstan. Karachaganak is being developed within the production sharing agreement (PSA) reached between Kazakhstan and a consortium that includes Royal Dutch Shell (29.25%), Eni (29.25%), Сhevron (18%), Lukoil (13.5%) and KazMunaiGas (10%). In 2016 KPO produced 139.7 million barrels of oil equivalent of stable and unstable liquids, raw gas and fuel gas compared to 141.7 million barrels of oil equivalent in 2015, according to KazWorld.

Kazakhstan to hold green energy auction in 2018 Kazakhstan plans to hold the first green energy auction in 2018 to purchase energy generated from Renewable Energy Sources (RES), said Kazakh Energy Minister Kanat

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Bozumbayev during a government meeting on environmental issues, Kazakh media reported October 31. “In 2018, we plan to hold the first auction on RES. I think ensuring attractive conditions for the winner of the auction would help us reduce the RES tariffs and attract major international investors,” said Bozumbayev. He stressed that the auction is expected to result positively for the country, and the tariffs for the Kazakh “green” electricity would be more acceptable for the consumers. “Previously such a practice was applied by Saudi Arabia when the Masdar company won an auction setting a price of 1.8 cents per 800 megawatt.” The minister mentioned that Kazakhstan has agreements with international financial institutions on allocating funds for development of renewable energy sector in the country. In particular the European Bank for Reconstruction and Development will allocate 200 million euros to renewable energy projects in Kazakhstan, Trend reported.

Solar power plant to be built in Mangistau region In the Mangistau region near the village Batyr, a solar power station is planned to be built, 24.kz reports. The capacity of the future facility is 2 MW or 2 million kWh. This is enough to provide electricity to 3 villages totaling 50 thousand people. The engineering structure will occupy an area of 10 hectares. 8 580 panels will be installed there. The project is estimated at 1 billion 210 million tenge. Kazakhstan content of the socially significant facility is 90%. 10 people will be employed there. "The power plant is planned to be put into operation in February 2018. In addition, another 5-megawatt power plant will be built next to the village Batyr. The project will cost over two billion tenge; 21000 panels will be installed there”, said akim of Munaily district Nurlan Tazhibaev.

Kazakhstan: new energy efficiency plans for Astana and Almaty Kazakhstan is set to develop urban Energy Efficiency Plans for its two largest cities – Astana and Almaty. A new study, conducted jointly by city municipalities and the World Bank, outlines key improvements to be made in the energy sector of the two cities within the next 15 years, allowing savings of up to 25% on total energy consumption, the World Bank said in a press release on November 28. Both Astana and Almaty face steady population and economic growth, which requires an expansion of reliable energy and delivery of municipal services. Although several initiatives, such as developing more energy efficient public transport and retrofitting of aging buildings, have been implemented in both cities, there is still a need to improve infrastructure and meet the growing demand for energy services. “The energy efficiency agenda endorsed by the Government of Kazakhstan in recent years is a great momentum for municipalities to commit to energy and climate related targets at the local level and take up the ownership of energy efficiency projects,” said Ato Brown, World Bank Country Manager for Kazakhstan. “We always highlight that energy efficiency interventions not only help improve the living conditions of people, but also lead to a better use of municipal finances, and the creation of new generation jobs.” The assessment of the energy performance of Astana and Almaty found that targeted interventions in energy-efficiency in municipal service sectors — including public buildings, district heating, transport, street lighting, waste and water supply — can lead to significant energy savings annually, including 43% savings (3.7 billion kWh) in Astana and 34% savings (3.1 billion kWh) in Almaty. The study focuses on key areas for interventions and offers concrete energy saving measures with over 50 investment projects until 2030. It also includes activities in the areas of institutional development, awareness raising and scaling up energy efficiency financing.

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Funded by the Energy Sector Management Assistance Program (ESMAP), a multi-donor global trust fund managed by the World Bank, the study was conducted in close cooperation with the Akimats (municipalities) of the two cities, municipal service providers, and other key stakeholders, according to Times of Central Asia.

For more news on Kazakhstan’s energy sector, please see our Special Energy Issue, which is available on a monthly basis at the Embassy’s website: https://www.netherlandsandyou.nl/your-country-and-the-netherlands/kazakhstan.

Kazakhstan projects uranium production at 22,000 tons in 2017 Uranium production is projected at 22,000 tons in 2017 in Kazakhstan, Minister of Energy Kanat Bozumbayev said. MINERAL A leading uranium producer is expected to cut production in 2017 by 2,000 tons. In 2016, RESOURCES Kazakhstan produced 24,000 tons. “Forecast for uranium production is 22,150 tons,” Bozumbayev told reporters. China will remain the main buyer of Kazakh uranium; China’s share is more than 50% of the total uranium exports of Kazakhstan. Kazakhstan decided to down uranium production in 2017 due to drop in prices for uranium by almost 47%. In 2016, the total uranium output was 24,600 tons, according to AKIpress.

Kazakhaltyn produced three tons of gold since the beginning of year During the first ten months of 2017 the Mining and Metallurgical Concern KazakhAltyn produced about three tons of gold worth the sum about 120 million dollars, CEO Balamir Makhanov told a press conference during the forum “We Create the Kazakhstan”, BNews reports. “In line with a decree by the head of state gold export abroad from the republic is forbidden. All our output is being delivered to the Balkhash refinery of the Kazakhmys corporation and to the Tau-Ken Samruk refinery in Astana,” Balamir Makhanov told. During the forum top managers of five companies: Kazakhmys Holding LLP, Eurasia Group LLP, Kaztsink LLP the KAZ Minerals Group and Kazakhaltyn MMC signed a memorandum of mutual cooperation in development of local content. “All of us will contribute to joint efforts in the development of Kazakh content from now on. This will make its development more effective. Today cooperation between our companies is already taking shape. Since 2016, teams to put mutual data together have been created,” commercial director of Kazakhmys Corporation LLP Rustam Adilkhan noted. The mines Aqsu, Bestobe and Zholymbet are a part of Kazakhaltyn MMC. In 2016 the Kazakhaltyn’s enterprises produced 2.3 tons of gold.

Miners in Kazakhstan hope for abolishment of “surplus” income tax The excess profits tax for mining companies may be abolished in Kazakhstan, First Vice- Minister of the National Economy Ruslan Dalenov said while presenting the draft Tax Code to the parliamentarians in the Senate. “Taking into account the world practice, it is proposed to abolish the excess profit tax for the mining industry with transferring the load to the rental tax on the export of coal,” he said. He mentioned that there is no such tax in the world practice for the mining sector. “In fact, the tax is paid by the coal mining companies. Today, only the coal mining companies pay a tax on excess profits, so we suggest removing it, transferring it to a rent- tax,” Dalenov said.

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“If an investor sees that there is a tax on excess profits in the country, he can limit investment activity,” he said adding that the excess profit tax for liquid hydrocarbons will be preserved. In the draft new Tax Code, which is designed to stimulate the growth of SMEs and strengthen the financial sector of the country, it is also proposed to abolish the commercial discovery bonus in order to stimulate successful exploration. Also, within the framework of the new tax code, it is proposed to stimulate agrarians and abolish VAT for them. Under the new code, all inaccuracies will be interpreted in favor of taxpayers. In general, it is expected that with the adoption of Tax Code, tax disputes will decrease, the number of inspections will be reduced, and the tax policy will become clearer and more predictable, Trend reports.

TRANSPORT & COMMUNICATIONS Kazakhstan plans to enter IMO white list Kazakhstan intends to enter the white list of the International Maritime Organization (IMO) and subsequently conclude agreements with the Caspian states on recognition of professional proficiency certificates, the Ministry of investments and development of Kazakhstan said in a statement. Presently the country’s ship registries include about 300 vessels. The working personnel of the mentioned ships include more than 1,500 people. At the same time, the share of Kazakh citizens in the crews is slightly more than half (52%). Kazakh citizens in the command staff accounts only for 25% from the whole staff on all the mentioned ships. The maritime administrations of the Caspian countries will conduct an audit to study the compliance of Kazakh sailors’ training system with international standards to conclude agreements on the recognition of professional proficiency certificates of Kazakhstan. In this regard, the Russian Maritime Register of Shipping is currently inspecting the educational institutions and training centers of the country. To date, Kazakh sailors and students of the Kazakhstan Maritime Academy are being trained in the training centers of Russia and Azerbaijan, Trend reported.

Two Dutch tugs arrived to Kazakhstan fleet A solemn ceremony for the reception of the two Dutch powerful modern tugs Emba and Talas, which were built at the request of the National Maritime Shipping Company Kazmortransflot, was held in the Aktau port, Kazpravda.kz reports with reference to the press service of the company. During the ceremony, the state flag of the Republic of Kazakhstan was raised on the vessels. The tugs will operate in shallow waters of the Northern Caspian and perform such functions as towing of objects and vessels, assisting ships, navigational assistance, as well as other duties of an auxiliary vessel, the press service informed. The project is implemented in accordance with the contract for borrowing funds between Kazmortransflot, shipbuilding company Damen and Islamic bank Al Hilal, which includes the construction of three tugs for Kazmortransflot. Completion of construction of the third tug is expected in 2018, Kazakhstanskaya Pravda informed.

KazAvtoProm reveals data on Kazakh cars output, sales Over 15,000 vehicles were produced in Kazakhstan in January-October 2017, the Kazakhstan’s Union of automotive industry enterprises KazAvtoProm reported. “According to the results of 10 months of this year, as many as 15,014 vehicles (including passenger cars, trucks, buses, special vehicles and trailers) totaling 115.1 billion tenge were produced in Kazakhstan,” KazAvtoProm noted.

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The volume of output in kind exceeded the last year indicator by 2.7 times, approaching the result achieved in the twelve months of 2015 (15 210 units). In particular, the production of passenger cars increased by 3.3 times, reaching 12,986 units. Of these, 72.4% accounted for the share of AZIA AVTO JSC and 27.6% - for SaryarkaAvtoProm LLP. The number of buses produced amounted to 545 units and exceeded the last year indicator by 3.3 times. The production of specialized vehicles amounted to 182 units, showing an increase of 1.7 times compared to the same period last year. The output of trucks was 1,117 units and almost reached the figures of the previous year (1,133 units), reducing the gap to 1.4%. In the context of regions, East Kazakhstan region holds the largest share in the structure of auto equipment production (9,620 units, or 64.1%). It is followed by Kostanay (3,988 units, 26.6%), Akmola (617 units, 4.1%), Almaty (419 units, 2.8 %) and Karaganda region (4 units, 0, 03%). Lada (7,413 units), Hyundai (1,605 units), KIA (1,544 units), Chevrolet (1,168 units) and JAC (562 units) entered the top five most popular brands of passenger cars of Kazakhstan assembly in January-October 2017, according to KazAvtoProm. The list of brands offered by domestic enterprises includes Ravon (500 units), SsangYong (251 units), Skoda (236 units), Peugeot (151 units) and Geely (27 units). Sales rating of cars of local manufacture was headed by models of Lada brand - Lada 4x4 (3,332 units), Lada Granta (1,394 units) and Lada Largus (1,263 units). The list of popular models for Kazakhstanis was also supplemented by Hyundai Elantra (718 units), Lada Vesta (706 units), Hyundai Tucson (685 units), Ravon Nexia (447 units), Chevrolet Cruze (417 units), JAC S3 (409 units) and Lada XRAY (398 units). In the first ten months of this year, Kazakh cars - 1,187 cars (7.9% of the industry sales) - were mainly sent to China, Russia, Belarus and Tajikistan for export. The bulk of overseas sales (83.2% or 988 units) fell on Lada cars supplied by AZIA AVTO plant to the market of China. Also, 129 units of Hyundai commercial vehicles, 66 JAC cars and 4 SsangYong cars were shipped abroad. “The contribution of the industry’s enterprises to the GDP structure of the republic for ten months amounted to 111.1 billion tenge, which far exceeds the similar figures of the pharmaceutical and light industry. Investments of enterprises of the automobile industry in fixed assets reached 3.6 billion,” KazAvtoProm said. Car manufacturing is growing at an unprecedented rate in Kazakhstan and significant expansion is planned in coming years. As of November 2015, the number of registered vehicles reached 5 million automobiles, a 63% growth from 2013 (a 10% compound annual growth rate). On average, there is a car in every second household in the country. However, official car dealers reported a decrease in the amount of sales of new cars by 28.2% in first quarter of 2017 compared to the same period of 2016. As much as 29% of all cars sold in the first quarter of 2017 were assembled in Kazakhstan.

Chinese cargo traffic through Kazakhstan increases The volume of transit container traffic in the direction of the China-Europe-China through Kazakhstan increased to 104.000 containers (by 100 times), said the Minister of Investments and Development of Kazakhstan Zhenis Kasymbek, during the “TransEurasia- 2017” conference, the press service of the ministry said in a message. “It is planned to expand the volume of container transit in this direction to 800,000 containers, and generally the traffic is intended to be increased to 2 million containers by 2020,” Kasymbek said. He added that, the number of railway lines between Asia and Europe grew from 72 block- trains in 2013 to 1200 by the end of 2016.

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Kazakhstan has launched transport and logistics services for the China-Europe-China regular container lines on 15 international routes, starting from the main points of consolidation of China’s cargo flows. The minister stressed that Kazakhstan will receive $5 billion form the transit by 2020, adding that the transport logistics and transit become an independent part of the Kazakh economy, Trend reported.

Introduction of toll highways in Kazakhstan postponed to 2018 The highways Astana-Temirtau, Almaty-Kapshagai and Almaty-Khorgos will become fee- based not at the end of this year, but in the middle of 2018. This was announced at the briefing in the Ministry of Investment and Development of Kazakhstan by the managing director for business development of NC KazAvtoZhol Rustam Isaev, Kazpravda.kz reports. “Testing of the toll highways Astana-Temirtau and Almaty-Kapshagai will start in January, when terminals, video cameras, charging systems will be installed, and the whole system will be tuned within three months. After the winter period is over, the roads will become fee-based,” the representative of the national company said. Thus, according to him, the opening of toll roads is delayed due to introduction of a smart transport system in the sections Astana - Temirtau and Almaty - Kapshagai with a total length of 174 km. “By the end of next year, we plan to launch the smart system,” concluded Rustam Isaev. On July 25 this year, the Minister for Investment and Development, Zhenis Kasymbek, at the meeting of the Government said that the three above-mentioned highways in Kazakhstan will become fee-based in December this year.

AGRICULTURE Cooperative farms on the rise in Kazakhstan The work on uniting small producers of agricultural products into cooperatives continues in the Karaganda province. Up to 56 agricultural co-operatives were created in the region in the first nine months of 2017. It was possible to create 25 dairy and 31 meat producing co-operatives under a plan to create 38 cooperatives this year. The villagers are attracted by the opportunity to get preferential loans for the acquisition of milking and slaughter equipment. In addition, 780 stables for fattening were created under a plan of 891. They will be able to grow 7 799 heads of cattle annually, Kazakh-Zerno reports. Overall 530 tons of milk and 67 tons of meat were produced by the cooperatives from the beginning of the year to October 1. This will make it possible to increase their share in the intake of dairy plants from 62% to 65% this year, and in that of meat processing plants from 55% to 60%. It should be noted that the authorities of the region rely on cooperatives in the development of agricultural processing. Due to the increase in raw material supplies, as well as the modernization of 4 dairies and 7 meat processing plants, the annual total meat processing in the Karaganda region should amount to 29 thousand tons, milk - 73 thousand tons by the year 2021.

Kazakhstan to increase export of agricultural products to Iran Kazakhstan and Iran can complement each other in the field of agricultural industry. This was announced by Iran’s Agriculture Minister Mahmoud Hojjati at a meeting with Kazakh Deputy Prime Minister Askar Myrzakhmetov who headed the Kazakh delegation to Tehran. Issues of lifting the restrictions on import of Kazakh wheat, attracting investments, speeding up the approval of certificates for several types of livestock products and providing the Iranian party with requirements for cattle importation and frozen and chilled beef from Kazakhstan were discussed during the meeting.

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“We are an importer of barley, oilseeds, red meat and light and heavy livestock and Kazakhstan can supply our demand in these areas. In return, Iran is among the biggest producers of dairy, milk powder, eggs and poultry. There is demand in Kazakhstan for these products and Iran can supply them,” Hojjati said, Mehr News Agency reported. The official added that there is high capacity in Kazakhstan for expanding aquaculture due to abundant water resources. “Iran is the biggest producer of cold water fish and trout in the world. We are ready to export these products and cooperate in producing these types of fish in Kazakhstan,” he said. The Iranian side also expressed its readiness to provide seeds of rice varieties. To this end, an appropriate plan for the implementation of the investment project will be developed. Myrzakhmetov, who is also Kazakhstan’s minister of agriculture, said his country is ready to meet part of Iran’s demand for rice by cultivating the seeds of Iranian rice in Kazakh farmlands. Following the visit, the agreements on the possibility of launching joint investment projects in the production and processing of rice and priority oilseeds with their further export through the ports of the Caspian Sea to Iran were reached. As part of his visit, Myrzakhmetov also held a meeting with Iranian Minister of Industries, Mine, and Trade Mohammad Shariatmadari, during which the sides discussed issues of lifting the restriction on import of Kazakh wheat and the abolition of the “flag tax” by the Government of Iran with the aim of creating equal conditions between Kazakhstan and Iranian shipping companies in the Caspian Sea. The Iranian side expressed its readiness to waive visas for commercial purposes. The purpose of the trip was to reach agreements on attracting foreign investments to the agro-industrial complex, achieving mutually beneficial bilateral agreements and increasing the export potential of the agricultural sector, according to the statement of Kazakh Agriculture Ministry, Kazakh media outlets reported. Kazakhstan will ship 200 tons of meat to Iran until the end of the year, the ministry said. “An agreement on the supply of 200 tons of mutton until the end of the year has been signed between companies in West Kazakhstan region and Iranian representatives. Since the beginning of the year, the region shipped 80 tons of mutton to Iran,” the Kazakh ministry said in a message. Moreover, the message noted that particular attention is paid to the work on obtaining access of Kazakh livestock products to the Iranian market. In July 2017, veterinary requirements for the supply of live sheep and chilled lamb from Kazakhstan were agreed upon with the Iranian side. As a result, this year, exports of live sheep and chilled lamb have started while exports of flax and rape increased and sunflower exports resumed. Currently, the economic cooperation between the two states remains close to the result of the previous year with $273 891 million, during the first half of 2017. A large share in general trade turnover between the countries account for the export from Kazakhstan to Iran. Kazakhstan’s export to Iran amounted to $892.503 million in 2014, $565.791 million in 2015 and $550.518 million in 2016. In the first half of 2017 the level of export amounted to $239.756 and it is expected to reach the level of the previous year, AzerNews reported.

New plants for processing agricultural products to appear in Kazakhstan According to Trend, some 79 new plants for the processing of agricultural products are planned to be built in Kazakhstan, while 80 more will be modernised. This was announced by Vice-Minister of Agriculture Rustem Kurmanov at a working meeting to discuss the Map on Development of the agro-industrial complex in the akimat of Pavlodar region.

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ECONOMIC NEWSLETTER, November 2017 Embassy of the Kingdom of the Netherlands

Kurmanov said that the ministry, considering the high volume of agricultural imports to Kazakhstan, the intake volume of domestic enterprises and the raw material potential of the country, defined nine priority areas for the processing. These priority areas cover the processing of milk, meat, hides, wool, oilseeds and grains, fruits and vegetables, sugar beets and potatoes. 435 enterprises and peasant farms throughout the republic are already engaged in these activities. “A clear map for the location of agro-processing enterprises has been developed,” Kurmanov stressed. “According to the map, it is necessary to build 79 new plants and modernize 80 plants. Construction of new plants is planned in the South Kazakhstan, Almaty, Pavlodar, West-Kazakhstan and Aktobe regions. These regions have a significant raw material potential.” This will increase the processing of milk and the production of mulled products by 49%. Some 33% will be ensured thanks to loading of domestic enterprises, while five percent will be contributed by modernization and eleven percent the construction of plants. “If we implement these measures by 2021, our share of imports will drop for cheeses and butter,” Kurmanov said.

Ontustyk Investment center will provide loan to mushroom farm Credit facilities in the amount of 30 million tenge will be allocated to the company AgroGreen LLP to reach full capacity. This became known during the visit of the enterprise by the governor of the South Kazakhstan region Zhanseit Tuimebayev, the press service of the head of the region reports. The enterprise, which is located in the Sairam district, is engaged in growing mushrooms in greenhouses and is capable of producing up to 200 tons of produce per year. Equipment for greenhouses was purchased in Poland and Holland. At the same time, 11 people are provided with permanent jobs in the company. Having become acquainted with the work of the mushroom farm, which is one of the first and largest projects for growing mushrooms in the region, the head of the region expressed gratitude for the work of the entrepreneur. “Annually about 280 tons of mushrooms are imported to Kazakhstan from abroad, mainly from Poland. If full capacity will be achieved, this partnership can compensate for all the import mushrooms and even export its products abroad. To date, a total of 30 million tenge has been allocated to the project to work at full capacity through the Ontustyk RIC,” the governor said. In addition, Zhanseit Tuimebayev noted that this project is implemented using unique technologies, and the products can become competitive. It should be noted that the grown products are delivered to Karaganda, Almaty and Shymkent. According to the head of the company Feruza Karimova, the total cost of the project is 572.5 million tenge. On the farm covering an area of 280 square metre there are 12 greenhouses. Seeds of mushrooms are imported from the Netherlands. Harvests take place four times a year, according to Kapital.

Chinese companies to invest in Kazakh agro sector The Kazakh national holding Kazagro and Chinese State Development and Investment Corporation signed a memorandum on the construction of an agroindustrial complex worth $100 million in Kazakhstan, reads a report of the Kazakh Ministry of Agriculture. The deal was signed within framework of Deputy Prime Minister, Agriculture Minister Askar Myrzakhmetov to Beijing upon the invitation of the Chinese side. Within the framework of the visit, Myrzakhmetov held bilateral meetings with Chinese Minister of Agriculture Han Changfu, Chairman of the Main Directorate for Quality Supervision, Inspection and Quarantine of the People’s Republic of China Zhi Shupin, as well as major Chinese companies.

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In Beijing, topical issues of development of Kazakh-Chinese bilateral cooperation in the field of agriculture, including joint investment projects, development of organic and veterinary issues were discussed. During the visit, the Kazakh and Chinese sides signed a Protocol on quarantine and health protection requirements for equine animals exported for slaughter from Kazakhstan to the People’s Republic of China. In addition, a number of agreements have been signed between Kazakh and Chinese companies on cooperation in trade and attracting investments in the agro-industrial complex: - Kazagro and Grand China Business Management Co. LTD signed a memorandum on the construction of a premium wheat farm valued at $100 million; - Food Corporation and the Dalian Commodity Exchange inked a memorandum on the construction of a network of wholesale distribution centers and the organization of a commodity exchange; - Food Corporation and Grand China Business Management Co. LTD agreed on the export of 20,000 tons of first class wheat (for $4.5 million); - Food Corporation and Grand China Business Management Co. LTD signed an agreement on the export of 2,000 tons of vegetable oil ($1.5 million). A Memorandum on the implementation of the investment program for 2018-2024 on the construction of infrastructure for breeding and export of cows and beef ($600 million) was signed between the Union of Kazakhstan Meat Union and CITIC Construction. The export of Kazakh goods amounted to $35.1 billion in January-September, showing an increase of 31.1%, or $8.3 billion compared to the same period last year, World Grain reported.

Kazakhstan sets up to export 240,000 cattle to China The Association of individual entrepreneurs and legal entities “Meat Union of Kazakhstan” and Chinese CITIC Construction have signed a Memorandum on implementing the investment program for 2018-2024 to construct the infrastructure for producing and exporting cows and beef, Kazinform reports. The document was signed during a working visit of Kazakh Minister of Agriculture Askar Myrzakhmetov to China. It entails $600 million as Chinese investment into the economy of Kazakhstan. “First of all, the investment will be targeted at increasing the breeding stock in Kazakhstan so that to export it to China. The investment will also be used to enlarge the existing feeding grounds and construct new ones, improve feed production, and create irrigated lands. We plan to export nearly 240 thousand heads of cattle and small ruminants and horses to China. It is the expected result of the Government’s sustained effort as we have built the infrastructure that meets all up-to-date requirements and does not differ from Australian or American technologies,” Head of the Kazakhstan Meat Union Maksut Baktibayev said. According to him, the imports of foreign breeds of cattle to Kazakhstan in 2010-2015 improved the quality of meat produced in Kazakhstan. “I hope that in the next 5-7 years the imports will boost the development of small and medium-sized farming in Kazakhstan because the guaranteed sale and a good price will attract more people in our country to livestock breeding,” Baktibayev added.

Kazyna Capital Management invests in construction of poultry farm Kazyna Capital Management additionally invested $5.85 million to complete the construction of a poultry farm in the Akmola region. Commissioning of the first stage of a poultry farm in the city of Makinsk is planned for the third quarter of 2018. This was told by representatives of Kazyna Capital Management during an inspection of the construction of the poultry farm, Kapital reports.

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According to them, in the third quarter of 2018 the plan is to launch four sites for growing broilers, an incubator, and a poultry processing plant. Productivity of the first stage of the poultry farm will be 25 thousand tons of broilers per year in live weight. At the first stage, the main product of the enterprise is chilled broiler meat which will be supplied to the domestic markets of Astana, Karaganda, Kokshetau, Kostanay and Petropavlovsk. The enterprise plans to conquer a 50-60% market share in these cities. The project with a total value of more than $100 million is implemented with the participation of the Вaiterek Venture Fund (a subsidiary of Kazyna Capital Management), the European Bank for Reconstruction and Development (EBRD) and the Development Bank of Kazakhstan (DBK). “The plant will be launched on August 1, 2018, as planned. Production will start on November 1, 2018. The plant has applied the best world technologies for growing, processing and fodder production. This is an innovative project for Kazakhstan. Technical equipment has been bought from Germany, other EU countries and Japan. 400 people are working at present at the construction site, including subcontractors. After the full launch of the plant, new jobs will engage 900 people. At this stage, we will purchase feedstock raw materials, and then we plan to create a purchase bank in this region to provide feed for the enterprise. Raw materials for feed, wheat and sunflower are planned to be purchased from local producers,” said the director of the Makinsk poultry farm Alexey Shevchenko. “The Baiterek Venture Fund has issued the last tranche of $5.85 million, bringing the total investment sum up to $9 million. We have come to the site to inspect the progress of the construction. Everything goes according to schedule, and we expect that by August 1, 2018, the first stage of the poultry farm will be launched. This project is strategic for Kazyna Capital Management and the Baiterek Venture Fund, as it is implemented in the agro-industrial complex within the framework of the state programme “Leaders of Competitiveness - National Champions”. We hope that this enterprise will become competitive, export-oriented in the non-primary sector of the economy. To date Kazakhstan imports about 150 000 tons of poultry meat, and the 25 000 tons that will be produced with the implementation of this project will significantly reduce the level of importation of poultry meat from other countries,” said Arslan Basibekov, deputy chairman of the board of JSC Baiterek Venture Fund. The launch of the second stage is scheduled for 2020 and provides for the construction of an additional 48 poultry houses at four broiler breeding sites. By this time the capacity of the enterprise will reach 60 thousand tonnes of produce per year in live weight. It is planned that the revenues to the regional budget in the form of taxes at the first stage will be about 1 billion tenge, and at the second stage more than 2 billion tenge. After full launch, the poultry farm will become the largest in the region of Central Asia in terms of production volumes.

WATER & ENVIRONMENT ADB: Kazakhstan needs 1.3 trillion tenge of investments for water supply projects Kazakhstan needs 1.3 trillion tenge for projects to provide rural communities with drinking water. This was announced today by the director of the permanent representative office of the Asian Development Bank in Kazakhstan Giovanni Capannelli at the parliamentary hearings, Kazinform reported. “Recently, we discussed the possibility of launching a new project to provide drinking water to rural communities with the government. It is expected that due to this project the current volume of water supply in rural areas will increase more than fourfold. We were informed that the total need for investments is about 1.3 trillion tenge. ADB is ready

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to consider supporting this project, taking into account Kazakhstan’s need to find a source of funding outside the budget,” he said. ADB can provide preferential financing within the framework of sovereign borrowing on very attractive terms, according to Capannelli. “Taking into account the scale of investments and the impact of tariff increases, we suggest that the country’s leadership consider a financing option with rather low costs and long-term benefits,” he added. The bank’s representative recalled that ADB is actively involved in the work on improving integrated water resources management in Kazakhstan. In 2006, ADB assisted in the implementation of the state program “Drinking Water” by providing a loan in the amount equivalent to 5.3 billion tenge to address water supply and sanitation in rural settlements of South Kazakhstan, North Kazakhstan and Akmola regions. “Currently, we are working on the following directions: rehabilitation of irrigation canals in five regions of Kazakhstan, development of a master plan for integrated water resources management for Astana, creation of a knowledge center on water resources jointly with Agrotekhab on the basis of the Kazakh National Agrarian University of Almaty,” he said. Since joining ADB in 1994, Kazakhstan has received around $4.9 billion in sovereign and non-sovereign loans, and guarantees for agriculture and irrigation, education, finance, transport, water supply and sanitation sectors. Last September, the financial institution presented a new country partnership strategy, according to which ADB plans to invest about 1 trillion tenge in agriculture, water, energy, rural and urban development, transport, health, education and financing of small and medium enterprises by 2021, according to AzerNews.

Kazakhstan to increase recycling by up to 40 % by 2030 Kazakhstan intends to increase its capacity of waste recycling up to 40% and to reduce the role of storage in landfills up to 95% by 2030. The country recycled 29,9% industrial and 8,1% solid domestic wastes in the first nine months this year, Kazinform reports. According to the Ministry of Energy the country gathered more than 28 billion tons of wastes, 103 million tons of them being domestic household wastes. Annually there are about 1 million tons of industrial wastes and 5-6 million tons of domestic household wastes being produced in the country. Last year the share of domestic household wastes recycling totaled 26.8%. 29.1% of the industrial and 8.1% of household wastes were recycled in the first three quarters. In addition only 15% of the landfills have the necessary licences to work. Most of them are filled all up and require rehabilitation. “The aim is to supply 100% of the population with garbage disposal services. In 2016 garbage disposal services covered 66.4% of the demand,” the Minister of Energy Kanat Bozumbayev said during a meeting with NGOs on environmental protection. According to him, there are 15 dups for heavily polluting wastes dating from old times in the country. Today the work on storage dumps for mercury wastes in Karaganda, and for oil sludge in the Mangistau province is being carried out. A territory of four hectares has been cleared of pesticides in the village of Togyzak, Kostanay province, Vlast reported.

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ECONOMIC NEWSLETTER, November 2017 Embassy of the Kingdom of the Netherlands EXHIBITIONS IN KAZAKHSTAN (January-March 2018)

ShymkentBuild South Kazakhstan International Exhibition on Construction and Interiors, Ceramics and Stone, Fenestration, Heating and Ventilation, Road Construction 13 – 15 March 2018, Shymkent Organizer: Iteca www.shymkentbuild.kz

AgriTek Astana Kazakhstan International Exhibition for Agriculture 14 – 16 March 2018, Astana Organizer: TNT Productions www.tntexpo.kz

FarmTek Astana Kazakhstan International Exhibition for Animal Husbandry and Livestock Breeding 14 – 16 March 2018, Astana Organizer: TNT Productions www.tntexpo.kz

KAZNEFTEGAZSERVICE-2018 Annual Conference on Oilfield Construction and Engineering 16 March 2018, Atyrau Organizer: KazService www.kazneftegazservice.com

HomeDeco Kazakhstan International Exhibition for Home Textile and Interior Design 26 – 29 March 2018, Almaty Organizer: Turkel Fair Organization www.homedecofair.com

Exhibitions dates are subject to change. For a complete overview and more information on exhibitions in Kazakhstan, please visit: www.iteca.kz www.astana-expo.kz www.expocentralasia.com www.tntexpo.kz www.atakentexpo.kz http://10times.com/

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ECONOMIC NEWSLETTER, November 2017 Embassy of the Kingdom of the Netherlands CONTACTS Embassy of the Kingdom of the Embassy Office in Almaty Netherlands

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