sign in sign up
<<
Home , Askar Mamin, East Kazakhstan Region, Economy of Kazakhstan, Regions of Kazakhstan

Economic Newsletter on |October 2020

CONTENTS MACRO-ECONOMICS & FINANCE ...... 2 ENERGY & NATURAL RESOURCES ...... 6 TRANSPORT & COMMUNICATIONS ...... 10 AGRICULTURE ...... 12 CONTACTS ...... 16

The Economic Section of the Embassy of the Kingdom of the 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, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan MACRO-ECONOMICS & FINANCE Council for Improving Investment Climate considers prospects for economic recovery At a meeting of the Council for Improving the Investment Climate chaired by Prime Minister Askar Mamin, issues of economic recovery in Kazakhstan in the post-pandemic period were considered. Ambassadors accredited in the country of the US William Moser, of the UK Michael Gifford, of Canada Nicholas Brousseau, of the EU Sven-Olov Carlsson, of the Netherlands Andre Carstens, Director of the OECD Eurasian Division William Thompson, Director of the EBRD Representative Office in Kazakhstan Agris Preimanis, Chair of Shell in Kazakhstan Olivier Lazare, as well as representatives of EY and Deloitte reported on the prospects of international financial institutions and the investment community in Kazakhstan. The anti-crisis measures taken by the Government helped to smooth out the economic recession due to the pandemic — positive dynamics have been preserved in the real sector of the economy, in particular, construction (10.5%), agriculture (5%) and manufacturing (3.3%).

Head of the National Bank tells how the ends 2020 By the end of 2020, a deficit is expected in Kazakhstan. The head of the National Bank, Yerbolat Dossayev: "By the end of 2020, a current account deficit of minus $4.2 billion, minus 2.5% of GDP, is expected. Exports of goods will decrease by 21.7% to $45.5 billion. This will be facilitated by a decline in oil and metals prices, as well as a decrease in oil production due to compliance with the terms of the OPEC+ deal. The decrease in exports will be partially offset by a decrease in income payable to foreign direct investors working in the commodity sector. Imports of goods will decrease by 15.5%, and amount to $33.8 billion. This is due to a decrease in the effective demand of the population and business due to the spread of COVID-19, as well as a planned slowdown in the implementation of investment projects in the oil and gas sector.” The decline in GDP in 2020 is expected at the level of 2-2.3%.

Oil and not only: what Kazakhstan offers to the world According to the statistics committee, over 7 months of 2020, the export of Kazakh products abroad fell by 13.3% compared to the same period in 2019. The country received $28.6 billion from foreign trade. A decrease is noted for most of the main export goods, from rolled steel products and wheat to oil and ferroalloys. In general, over 7 months of 2020, goods were sold abroad for $321.7 million, which is far from the worst result. Over 6 years it was higher only once in 2019. But physical sales are now at their lowest level since at least 2013.Exports to decreased by 30%, amounting to $241.1 million. Revenue from sales to fell to 37.3 million, and to to 9.1 million. But there is also good news. There were no exports to in January-July 2019, and now this country ranks second in terms of purchases at $46.1 million. Another common feature is that the physical volume of exports is at the lowest level over the past at least 8 years at 11.3 million tons. Oil and products from bituminous rocks, an important commodity for the economy of Kazakhstan, also showed a large decline, by more than 45%. In January-July 2020, Kazakhstan sold 2.56 million tons of wheat and meslin abroad. Compared to the same period in 2019, the physical volume of exports fell by 22.4%, or almost 740 thousand tons. Every year more and more ferroalloys are exported from Kazakhstan. Shipments have been growing for the fifth year in a row, exceeding 1.1 million tons in January-July. On the other hand, less and less money comes in, and the trend is also stable, as revenues are falling for the fourth year. Over 7 months, exports amounted to $974.5 million. Kazakhstani products go to 41 countries of the world, but more than 60% of all revenue is

2

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

provided by only two of them, China at $413.3 million, minus 7.4%, and Japan at $198 million, minus 34.1%. Over 7 months, 11.3 billion cubic meters of natural gas went abroad. Most of all, about 4.6 billion, went to China, which paid the most, $932 million. This is only slightly lower than the level of the previous year at 974.9 million. But in the countries of the post-Soviet space, there is a significant decrease in pumping. The third place in the list of the main export goods of the country is held by products of inorganic chemistry, including . Over 7 months, it brought in 1 billion 318.9 million dollar, which is the highest value in the last 4 years. This is the first product from the ranking, the export of which has grown over the year, by 26.8%. The growth is based on an increase in sales revenue to China at plus $266.3 million, to 528.6 million.

Kazakhstan and EU step up mutual cooperation The EU is Kazakhstan’s principal trading partner, representing 40% of external trade. The EU is the main foreign investor in Kazakhstan, accounting for 48% of the total (gross) foreign direct investment. The entry into force of the Enhanced Partnership and Cooperation Agreement (EPCA) in March 2020 has marked the beginning of a new stage of EU-Kazakhstan relations. It is the first such agreement the EU has concluded with any of its partners in . The Agreement provides an expansive framework for cooperation, not only including the fields of trade and economy, but equally encompassing the socio-cultural and political realms of Kazakhstan-EU relations. The EPCA also foresees to further deepen and strengthen EU-Kazakhstan cooperation in the fields of innovation and green technologies, transport, logistics, education, energy, and environmental protection. The Agreement aims to create a stronger regulatory environment for businesses in areas such as trade in services, establishment and operation of companies, capital movements, raw materials and energy, government procurement, and intellectual property rights. The EPCA seeks to offer a platform and provide opportunities both for European and Kazakh business partners to meet and exchange views and best practices.

Kazakhstan up on ’s Worldwide Governance Indicators scale The country has improved its performance in the World Bank’s Worldwide Governance Indicators project that measures good governance in more than 200 countries since 1996. The report covers six dimensions of governance – voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption. These indicators aggregate different data sources and combine the views of businesses, citizens, and expert survey respondents. In this report, Kazakhstan performed best in the regulatory quality indicator that reflects the perceptions of the respondents on the government’s ability to develop and implement sound policies and regulations in private sector development where it received 61.06 percent from the total 100 percent scale. The nation has made steps in creating a favorable investment climate and continues its efforts in doing so. The World Bank’s latest Doing Business report also noted the country’s latest measures to support investors. In government effectiveness, Kazakhstan received 57.69 percent. The indicator measures the “quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies.” Kazakhstan gained 45.51 percent on the political stability indicator that demonstrates perceptions of the likelihood that the government will be “destabilized or overthrown by unconstitutional or violent means, including politically‐motivated violence and terrorism.” In this report, Kazakhstan made strides forward in all indicators, except for voice and accountability, a category which “captures perceptions of the extent to which a country’s citizens are able to participate in selecting their government, as well as freedom of

3

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

expression, freedom of association, and a free media” where it received 14.78 percent on the total 100 percent scale.

USA, China, the Netherlands trim investments in Kazakhstan External investments in Kazakhstan decreased by $4 billion. In the first half of 2020, gross direct investments amounted to $8.1 billion, while for the same period in 2019 they exceeded $12 billion. The decrease is by 33%. Investments from the USA decreased the most, by 64.3%, to $1 billion, followed by China by 59%, to $378 million, by 35%, to $349 million, and by 31%, to $689 million. Negative dynamics in investments was also observed from the Netherlands, Japan and Turkey. Investments from these countries in Kazakhstan decreased by 26.4%, 24.1% and 22.5%, respectively. In turn, investments from the UK alone grew by 37%. If in the first half of last year they amounted to $336.5 million, then in the first half of this year they increased to $461 million.

Number of companies with foreign participation increases by 12% over the year By the beginning of autumn, there were 21.7 thousand operating companies with foreign participation in Kazakhstan, which is 11.8% more than in the same period last year at 19.4 thousand companies. Of these, this year 97.3%, or 21.1 thousand, are small companies; 1.5% or 325 companies are medium-sized; 1.2% or 260 companies are large. Most often, foreign companies operate in wholesale and retail trade (8.600). In the construction sector, their number amounted to 2.200, in the field of professional, scientific and technical activities to 1.600. The largest number of foreign companies in Kazakhstan are Russian. At the end of August this year, 740.000 companies from Russia were operating in the country, most of which work in the field of trade (361.000 companies. There are also a lot of enterprises from Turkey (2.440). Most often they operate in the field of trade, construction and manufacturing. China also entered the TOP-3 in terms of the largest number of foreign companies in Kazakhstan at 1.240 enterprises. Of these, 1.200 are small companies, 16 are medium- sized, and 20 are large.

Most of the money from Kazakhstan goes to the UK and the Netherlands According to the National Bank's data for the second quarter of 2020, the UK received $331 million from Kazakhstan, the inflow of money for the same period of 2019 amounted to $2.8 billion. On the second place is the Netherlands, in which the outflow of investments from the country exceeded $97 million, against $1.06 billion in 2019, or minus 91%. The third was the Cayman Islands at almost $79 million, plus 12%, and the fourth was Switzerland, at $60.6 million against $68 million inflow in 2019. The UAE received $25.5 million during the second quarter, accounted for $25.2 million, Russia and Azerbaijan for $15.8 million each.

Kazakhstan allows more than 16 thousand foreigners to work in the country Over 9 months of 2020, Kazakhstan has allocated more than 16,105 permits to attract foreign workers. According to the Ministry of Labor and Social Protection, foreign labor migrants of the first category of managers and their deputies were issued 641 permits, the second group of heads of structural divisions got 3,449. The bulk of permits for attracting foreign labor were issued in the third (specialists) and fourth (skilled workers) categories at 7,461 people and 1,125 people, respectively. Seasonal work attracted 1,694 people.

4

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

At the moment there are 1,785 employers in Kazakhstan using labor from abroad. More than 455.8 thousand Kazakhstanis work for them, which is 96% of the total number of employees. The main countries of origin of labor migrants are Ukraine at 3,511 people, Thailand at 1,723, Turkey at 1,669, Uzbekistan at 1,186 and Serbia at 1,065. For 2020 the quota for attracting foreign workers is set at 0.32% of the economically active population of Kazakhstan at about 29.3 thousand people.

Kazakhstan changes rules for entry and stay of foreigners By the Decree of the dated October 22, 2020, amendments and additions were made to the Rules for entry and stay of immigrants in Kazakhstan, as well as their departure from Kazakhstan and the Rules for the implementation of migration control, as well as registration of foreigners and stateless persons illegally crossing the state border of Kazakhstan, illegally staying on the territory of the republic, as well as persons who are prohibited from entering the territory of Kazakhstan. In particular, the changes affected the following norms. Immigrants arriving for the purpose of working are divided into the following categories: 1) Foreign workers: Those who arrived for self-employment in professions in demand in priority sectors of the economy; Attracted by employers to carry out labor activities in the territory of Kazakhstan, including those who arrived as part of an intra-corporate transfer; 2) Business immigrants, who arrived for the purpose of carrying out entrepreneurial activities in accordance with the legislation of Kazakhstan; 3) seasonal foreign workers, that is immigrants recruited by employers for a period of not more than 1 year to perform seasonal work, which, due to climatic or other natural conditions, are performed during a certain period, according to the list of professions approved by the authorized body for migration population in agreement with the authorized state bodies in charge of the relevant area of public administration; 4) Labor immigrants, who arrived in Kazakhstan as domestic workers for the purpose of performing work with employers, individuals in the household on the basis of a labor immigrant permit. The attraction of foreign labor, as well as the implementation of labor activities by immigrants temporarily staying in the country, are carried out on the basis of the permission of the local executive body or internal affairs bodies within the quota established by the authorized body for population migration, unless otherwise provided by the legislation of the republic in the field of population migration and/or international treaties ratified by Kazakhstan. Seasonal foreign workers, immigrants arriving for humanitarian reasons, are issued a temporary residence permits on a general basis, unless otherwise provided by the legislation of Kazakhstan in the field of population migration and/or international treaties. Migrant workers from the member states of the and their family members enter Kazakhstan without visas, and also stay and leave the country without visas during the permitted period of stay. The Rules for the implementation of migration control and registration of foreigners and stateless persons illegally crossing the state border are supplemented by the rule that the costs of expulsion or readmission are borne by expelled or readmitted illegal immigrants, individuals or legal entities who invited an illegal immigrant to Kazakhstan or who used his labor at the time of establishing the fact of illegal stay of an immigrant in Kazakhstan. In the absence or inadequacy of funds from the named persons to cover the costs of expulsion or readmission, the financing of the relevant activities is carried out at the expense of budget funds, while the funds spent on expulsion or readmission are subject to reimbursement in court at the claims of interested state bodies against the above- mentioned persons.

5

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

The resolution comes into force upon the expiration of 10 calendar days after the day of its first official publication, on October 26.

Kazakhstan 53rd out of 93 in world ranking of healthcare quality In the world ranking by the level of health care published this year by the world's largest database Numbeo, Kazakhstan took 53rd place among 93 countries. It has the highest quality index of the healthcare system among the Central Asian countries. The rating assesses the quality of the health care system, the availability of equipment, the level of professionalism of medical workers and health professionals, the cost of services in clinics and other indicators. The TOP-5 of the best countries in the world includes Taiwan, , France, Japan and .

Kaspi.kz valued on the London Stock Exchange at $6.5 billion In September this year, Kaspi.kz published information about the expected Initial Public Offering (IPO) on the London Stock Exchange (LSE). Kaspi.kz is valued at $6.5 billion for an BANKING IPO. The founders are new billionaires: cofounder Vyacheslav Kim is worth just over $2.5 billion, while CEO and cofounder Mikhail Lomtadze owns a slice worth just over $2 billion. Kaspi claims to be Kazakhstan’s largest payments and Fintech Company, with over 7 million monthly users from a population of an estimated 18 million. Its catch all “Super App” for payments, loans and banking has, it claims, played an increasingly “integral part of people’s daily lives in Kazakhstan” as the Covid-19 pandemic accelerated “consumer adoption of cashless payments, e-Commerce and digital financial services,” according to a company statement before the IPO. Kaspi earned $515 million in net income on $1.3 billion in revenue in 2019, according to its prospectus. And the company appears to have flourished during the pandemic, netting $286 million in profits on just over $740 million in revenue in the first half of 2020, per the prospectus. The IPO was “the largest London listing by a company from Kazakhstan since 2007 and is the largest international technology-focused IPO in London this year to date,” says Ayuna Nechaeva, head of at the LSE.

EIB lends Kazakhstan $30 million in support of SMEs The European Investment Bank (EIB) provided KazMicroFinance (KMF), the largest microfinance organization in Kazakhstan, with $30 million to provide affordable lending to Kazakh small and medium sized enterprises (SMEs). The KMF will allocate the funds to Kazakh self-employed entrepreneurs and micro-enterprises in urban and rural areas. Out of $30 million, $13.1 million will fund the lending to business development, the remaining $16.9 million will fund green lending. In accordance with EU directives, the latter will finance measures and the purchase of equipment that can ensure reduction of the environmental impact of entrepreneurial activities and increasing the energy efficiency of Kazakh businesses. The EIB’s financial support to Kazakh SMEs has reached 547 million euros ($643.18million) in total.

ENERGY & NATURAL RESOURCES Kazakhstan exports 52.2 million tons of oil in first 9 months For 9 months of this year (January-September), Kazakhstan produced 64.7 million tons of oil and condensate. During this period, Tengiz produced 20.2 million tons of oil. The volume of oil production at Kashagan reached 11.5 million tons. 52.2 million tons of oil were exported in nine months. Besides, the country produced 41.6 billion cubic meters of gas. Domestic consumption of natural gas reached 11.1 billion cubic meters. The volume of gas exports amounted to 10.3 billion cubic meters.

6

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

Kazakhstan plans to increase capacity of the Kashagan plant The associated gas processing plant at the , planned for construction by the end of 2021, may increase its capacity to 5 billion cubic meters of gas at subsequent stages. Gas supplies from Kashagan to the gas processing plant will be carried out until 2041. As reported, the construction of an associated gas processing plant (GPP) at the Kashagan field worth $860 million will be completed by the end of 2021. The construction of the gas processing plant will make it possible to process 1 billion cubic meters of raw gas from the field annually. This will make it possible to increase the production of marketable gas and increase oil production at the Kashagan. The project is being implemented as part of the national sour gas processing program instead of flaring and re-injection. At present, oil and gas from the field is transported through a pipeline to the Bolashak complex oil and gas treatment plant for processing to be cleaned from impurities. With the expected growth in oil and condensate production at Kashagan, the construction of new refining facilities will be required in the future.

Kazakhstan allocates 150 billion tenge to search for oil and minerals About 150 billion tenge will be allocated from the state budget for the study of mineral resources in 2021-2025. It is planned to assess the raw material potential of five little- studied sedimentary basins, including North-Turgai, Priirtysh, Aral, Syrdarya, and Shu- Sarysu. In 2019, investments in geological exploration amounted to 171.77 billion tenge. Of these, 137 billion tenge is for the search for hydrocarbons, 34.6 billion tenge for solid minerals, and 170 million tenge for groundwater.

Kazakhstan offers 10 oil and gas sites to investors Kazakhstan has named the conditions for the sale of 10 oil and gas sites, which will go through online auctions. Vice Minister of Energy Zhanat Zhakhmetova explained that persons interested in obtaining a subsoil use right can apply from September 1 to November 29, 2020. Currently, more than 30 applications for participation in the auction have been received. The total area of sites proposed by the state for the development and production of hydrocarbons is about 29 thousand sq. km. The estimated cost of the plots is $164 million. Electronic trading is scheduled for December 23, 2020 at the state register site. The participation fee is 277.8 thousand tenge, the fee is paid for each area sold. The period for consideration of the application by the competent authority is no more than 20 working days.

Kazakhstan goes ahead with gasification project of CHP-2 At a meeting chaired by the Prime Minister of the Republic of Kazakhstan Askar Mamin, a decision was made on the project to modernize the Almaty CHP-2 (Coal Combustion Plant). The project on transfer of CHP-2 from coal to gas through the reconstruction of the existing power boiler units was approved. The selected option of gasification of the CHP allows using the existing supply and discharge infrastructure. At the same time, the impact on the environment is minimized - there are no emissions of sulfur and ash oxides, a low level of emissions of nitrogen oxides and carbon dioxide. The project will be implemented gradually by the end of 2025.

Kazakhstan among top-10 countries with the cheapest gasoline Kazakhstan again entered the top-10 countries with the cheapest gasoline. According to Global Petrol Prices, the average cost of fuel and lubricants in Kazakhstan was $0.40 per liter or 172.73 tenge at the rate of the National Bank of 431.82 tenge per $1. The country

7

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

is on the 9th place in the ranking. The same indicator is in Malaysia, closing the TOP-10. Above Kazakhstan Nigeria with $0.39 per liter. Turkmenistan, which was previously ranked higher than Kazakhstan, was in 11th place with $0.43 per liter. The TOP-3 cheapest countries are Venezuela at $0.02 per liter, Iran at $0.06 per liter, and Sudan at $0.14 per liter. The most expensive fuel was found in at $2.26 per liter, Central African Republic at $1.96 per liter and the Netherlands at $1.83 per liter. The world average price has dropped to $0.99 per liter. Meanwhile, ranked 16th with $0.47 per barrel. Russia is on the 26th line at $0.59 per liter, on the 38th position at $0.68 per liter.

Investments in environmental protection of Kazakhstan over 10 years reach almost 370 billion tenge

In January-August this year, capital investments aimed at environmental protection ENVIRONMENT increased by 24% on-year and reached 92.5 billion tenge. In the same period last year, the amount of investments amounted to 74.6 billion tenge, with an increase by more than 2 times. Over the past 3 years, investments in the sector have been growing by an average of 94.7% on-year. In total, over the past 10 years, 368.8 billion tenge has been allocated for environmental protection. In the regional context, most investments in environmental protection were allocated in the Akmola at 27.5 billion tenge, 2 times more than in the corresponding period last year at 13.4 billion tenge. In the , the amount of investments increased by more than 5.5 times on-year and reached 10.1 billion tenge against 1.8 billion tenge a year earlier. The closes the TOP-3 leading in terms of investment in the sector at 7.8 billion tenge against 1.8 billion tenge a year earlier. Among all , only Almaty did not have investments in environmental protection, though the city generates a high level of air pollution. , Ust-Kamenogorsk, are also cities with a very high level of pollution. In addition to Almaty, cities with a high level of pollution include Nur-Sultan, , , , and .

Kazakhstan to conduct research on plastic pollution In Kazakhstan, a large-scale study will be conducted on the plastic pollution of the country's regions. Board chairman of Jasyl Arystan private fund, Gulnar Erezhepova: "Our capital has once been dubbed the city of flying plastic bags. We all see what the ecology of Kazakhstan is coming to. At present alone more than 5 million tons of solid household waste is formed in the country, of which plastic takes 10-15%. It turns out that every resident of our country, including even babies, uses and throws away about 42 kilograms of plastic waste. And this figure is only from official sources. We understand that in reality the situation is much worse. Something has to be done about it." In order to obtain reliable and fresh data on the current problem, the foundation plans to conduct a large-scale study on plastic pollution in all regions of Kazakhstan this year. The main goal is to raise awareness of the population on plastic pollution. In the period from 1950 to 2018 alone, about 8.5 billion tons of plastic products were produced (data from Plastics Europe). Globally, only 5-10% of all plastic waste is recycled. Another 12% is incinerated and 79% ends up in landfills and gets into the environment. Given the durability of such products (the period of natural decomposition of plastic is up to 500 years), we can state that the situation is becoming catastrophic.

Ministry of Ecology gives another 39 billion tenge for anti-crisis measures Almost 40 billion tenge was allocated in Kazakhstan for anti-crisis measures in the field of ecology in 2020. The largest share accounted for solving water problems. According to the

8

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

information of the Ministry of Ecology, Geology and Natural Resources, due to the additionally allocated 39.2 billion tenge, financing will grow to 125.7 billion tenge. Improvement of irrigation and drainage systems is financed most of all from anti-crisis funds at 24.8 billion tenge. Of these, 17.4 billion tenge due to co-financing of external loans from the national budget and 7.4 billion tenge due to external loans. Also, 7.2 billion tenge will be directed to the reconstruction of water facilities according to the Employment Roadmap for 2020-2021. There are 5 projects in total. These are construction at 1.9 billion tenge, reconstruction at 2.3 billion tenge, and relocation of the site at 1.7 billion tenge, of the Eskulinsky water pipeline, taking into account the water supply in Zhezkazgan; reconstruction and modernization of the Zhidelinsky reservoir with the introduction of automation for 450 million tenge; reconstruction of the Aitikensky hydroelectric complex for 700 million tenge. In addition, water resources will be modernized for 7 billion tenge. A total of 7 projects are planned. A total of 204.2 million tenge was allocated for management, ensuring the conservation and development of forest resources and wildlife. In Almaty, billions of tenge were allocated for the development of a green economy.

Kazakhstan vows to provide population with clean drinking water At a meeting of the Government chaired by Prime Minister Askar Mamin, issues of water supply and sanitation of settlements were considered. In Kazakhstan, access to centralized water supply is 97.2% in cities and 86.4% in . 100% provision with centralized water supply in cities was achieved in the North Kazakhstan, Mangystau and Atyrau regions, in villages in the Almaty (98.8%), Atyrau (98.4%) and (97.2%) regions. Low rates of access to centralized water supply are noted in (61.1%), Zhambyl (72.6%) and (73.3%) regions. Work is underway on the construction, reconstruction and modernization of sewage treatment facilities in 53 cities, funding sources have been identified (loans from ADB and EBRD), and project documentation is being prepared. “Providing the population with clean drinking water is a strategic task of the Government, the solution of which directly affects the improvement of the quality of life of people. Each should have specific plans to bring the necessary infrastructure to settlements,” Mamin said.

Kazakhstan's climate is warming almost 2 times faster than global According to most climatologists, the source of the observed global climate change is human industrial and agricultural activities. China, the USA and India are the leaders in emissions of carbon dioxide and other greenhouse gases. Kazakhstan ranks 23rd with less than 1% of global emissions. According to the national hydro meteorological service Kazhydromet, over the past 30 years, the climate in Kazakhstan has warmed almost twice as much as the world average. As a result, despite the relatively small contribution of Kazakhstan to the total volume of greenhouse gas emissions, climate change is affecting the country. According to forecasts of climatologists, a decrease in the yield of pastures and a number of agricultural crops is expected, there is a threat of a decrease in the share of forests and the loss of a part of biodiversity. The changing global climate leads to an increase in the frequency of extreme weather and adverse climatic events in Kazakhstan, causing emergency situations.

Another solar power plant for 24 billion tenge launched in Turkestan region A solar power plant for 24 billion tenge was launched in the Turkestan region. The project was launched in the Suzak region. A land plot of 120 hectares in the industrial zone of the region was allocated for the construction of the station. The cost of the project amounted to 24 billion tenge, the production capacity is 50 MW.

9

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

Earlier it was reported that the region also wants to launch a solar station for 15.2 billion tenge with the participation of an Italian company. The facility's capacity will be 50 MW. The project is planned to be implemented in 2021. In 2019, 3 green projects were implemented in the region for 22.4 billion tenge. Thus, a solar power plant with a capacity of 2.5 MW was built in the region. The investment amounted to 1.5 billion tenge. Also, together with a German company, they launched a solar station for 13.3 billion tenge. The capacity of the green facility is 20 MW. Together with a French investor, they opened a SPP for 7.6 billion tenge. The capacity is 14 MW. A total of 86 jobs were created at these facilities. In the another green project is expected to be implemented with investors from the Czech Republic. The project is estimated at over 70 million euro. Its capacity will be 100 MW.

TRANSPORT & COMMUNICATIONS Kazakhstan increases car production by 60% in 9 months According to the press- service of the Association of the Kazakhstan Auto Business (AKAB), Kazakhstan in January-September 2020 produced 53,755 vehicles of all types. This is 60.3% more than in the same period last year. The Committee on Statistics of the Ministry of National Economy of Kazakhstan calculated that the total cost of the manufactured products of the automotive industry is estimated at 406.9 billion tenge – 77.7% more than the results of the nine months of 2019 (228.9 billion tenge). ($1 = 428, 05 tenge) Over 4,700 cars were exported from Kazakhstan in January-August to foreign markets. The main importer of cars produced in Kazakhstan in 2020 is Uzbekistan.

Kazakhstan is manufacturing electric cars The country produces electric crossovers of Chinese brands: the JAC (IEVS4, IEV7S), and NIO (ES6, ES8) for both domestic supply and export. The 2021 goal is the production of 1,200 units of electric transports, including buses. In 2022, the national pavilion plans to increase production to 2,000 units. As of today, Nur-Sultan has more than 50 charging stations for electric vehicles. Half of them are in special zones on the territory of the national pavilion. Kazakhstan continues to improve infrastructure for electric vehicles, as well as introducing measures to make the use of green cars more appealing. The Almaty Green Economy Department, for example, has launched an online service that registers electric cars to allow passage through to the Medeu open-air ice skating rink to the Shymbulak ski resort.

SCAT builds a new passenger terminal at Shymkent airport The local airline reports that, despite substantial losses amounting to about 6 billion tenge only for the period March-April 2020, SCAT did not suspend the project to build a new passenger terminal at Shymkent International Airport. It will include an aviation engineering base, an aviation training center, a handling facility, a hotel and its own in- flight catering workshop. The flights from the new airport are planned to more than 12 domestic and 16 international destinations. The contractor is currently performing construction and installation work. To date, about 4.8 billion tenge has been spent in the form of investments. Four years ago the company successfully implemented a project to build a new terminal at airport, which has been successfully developing throughout the past time. Over the years, SCAT has been developing an international aviation hub based on airport; since 2017, the company has launched a program for the development of a second international hub based on airport.

10

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

5G to be available in Nur-Sultan, Almaty and Shymkent in 2022 According to Minister of Digital Development, Innovation and Aerospace Industry Bagdat Musin, in Kazakhstan, all cities and more than 4500 villages are provided with the Internet using various technologies. By the end of the year, a total of over 5,200 settlements will be connected to the Internet. The 5G network in the cities of Nur-Sultan, Almaty, and Shymkent will be launched in 2022. It is planned to launch in regional centers by 2025. As part of the development of the transit potential, the companies Transtelecom and Azertelecom are building 400 km of FOCL at a speed of 4-6 terabits per second along the bottom of the . This project is scheduled for the end of 2021. A 380-400 km cable laid on the seabed will allow receiving up to 1 Terra Bits per second of traffic through Kazakhstan for 1 year of the project. The start of the technical implementation of the project is scheduled for the spring of 2021. In 2021-2022 it is planned to complete this project.

Kazakhstan consistently leads in ratings of cyber-attacks in the world Kazakhstan ranks 19th in the world in terms of the number of cyber-attacks. This was announced by Evgeny Pitolin, Managing Director of Kaspersky Lab in Central Asia, CIS and Baltic countries. In the second quarter, the country ranked first in the world among countries prone to attacks by mobile ransomware Trojans. Kazakhstan is consistently in the TOP-3 of this rating. In the ranking of countries that attack with financial malware, the republic is on the 8th place, in terms of attacks by Trojans-encryptors on the 11th place, in terms of attacks by miners on the 7th place. In Kazakhstan, 82% of the population in one form or another faced ransomware scammers. In this case, usually the text contains a congratulation and an invitation to follow the link or an offer to write to a short number to receive a prize. Before the promised money is transferred to the account, he is asked to pay some commission or tax. As a result, only fraudsters receive money. In addition, they have at their disposal the payment data of the deceived user. On average, the amount of damage from the actions of fraudsters in the first half of 2020 was almost 12 thousand tenge. In the second quarter of 2020, the laboratory repelled 899.7 million attacks that were carried out from the Internet resources of 191 countries of the world. The top countries from which Kazakhstanis are attacked include USA, Netherlands, , Russia, Dominica, Ireland, , France, Israel, and Great Britain.

Digitalization in Kazakhstan can receive up to 500 billion tenge Kazakhstan intends to increase investments in digital technologies up to 500 billion tenge. These indicators are planned to be achieved by 2025. More than 1,000 innovative companies will also be created and 100,000 IT specialists trained. 10 priority areas have been identified by the government for the implementation of the program. They include the digitalization of the sphere of social relations, the creation of the Industry 4.0 technology platform for energy and industry, AgriTech and Govtech technology platforms, the provision of high-quality ICT infrastructure and information security, the implementation of the Smart city technology platform, digital tools to improve the safety of citizens, FinTech and electronic trade, development of artificial intelligence and creation of an innovation ecosystem.

11,000 video cameras are used to keep order on the roads of Kazakhstan In total, about 11 thousand video cameras are operating on the roads of the country. Almost 1.2 million violations are detected annually, which is 40% of all detected traffic violations. More than 7 billion tenge is charged to the budget. Serik Tusupov from the Ministry of Internal Affairs of Kazakhstan: “The system of electronic police for fixing traffic violations discipline both drivers and pedestrians.”

11

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

Since the beginning of the year, 13 thousand people suffer as a result of road accidents in Kazakhstan, every tenth of them dies In January-September 2020, 8.9 thousand road accidents were registered in the country, 22.2% less than a year earlier. For comparison, in the same period last year, 11.5 thousand accidents were registered, plus 3.4% on-year. In the regional context, a quarter of all road accidents in the country occurred in the southern capital at 2,200, 34.9% less than a year ago. The three regions with the highest number of accidents included the Almaty region at 1.500 accidents, minus 12% on-year, and the Zhambyl region at 660 accidents, minus 27.2%. 96% of all accidents in the country occur due to drivers who exceed the speed limit, or who overtake in prohibited and dangerous places. The decrease in the number of accidents is associated, first of all, with the introduction of quarantine measures in the regions, due to which the intensity of vehicle traffic on the roads has decreased significantly. However, the lifting of restrictive measures on the movement of cars and the subsequent traffic increase led to a sharp surge in accidents. Over 9 months, 13 thousand people were injured in road accidents, 22.7% less than last year; including 11.8 thousand were injured, 23.1% less than in the same period last year. Among them, 6.6 thousand victims were men, 5.1 thousand were women, and 2 thousand were minors. Since the beginning of the year, 1.377 people have died as a result of road accidents, which is 18.5% less than last year. It concerns 948 men, 315 women and 114 minors.

Kazakhstan intends to extend suspension of visa-free regime Kazakhstan plans to extend the suspension of the visa-free regime for a number of countries until May 1, 2021. The visa-free regime was already suspended till 30 November 2020. It is also planned to suspend until 23:59 p.m. on December 31, 2020, the effect of clause 26-1, which allows citizens of China and India in transit to travel without a visa, provided they stay for less than 72 hours. As reason for the suspension of the visa-free regime is mentioned the prevention of the spread of coronavirus infection.

Kazakhstan ranks 70th out of 73 in the rating of the most popular countries among tourists In the breakdown of the best countries in the world for travel and adventure, according to the annual publication US News & World Report, in 2020 Kazakhstan ranked 70th out of 73 countries. Alas, Kazakhstan surpassed only Qatar, Oman and in this ranking. Last year Kazakhstan ranked 72nd among 80 countries. The country's popularity rating among tourists and travel enthusiasts is based on 5 categories, including fun and entertainment, friendliness, pleasant climate, picturesque and sexuality. The best results in Kazakhstan are in friendliness at 10.7 points out of 100, and picturesque at 10.4 points out of 100, and the lowest result in climate friendliness at 1.4 points out of 100.

AGRICULTURE Kazakhstan increases subsidies to attract investment in the agricultural sector The government plans to continue working on the development of economic incentives for the introduction of modern technologies and innovations in agriculture. Agriculture Minister Saparkhan Omarov: “This year 85.8 billion tenge is provided for these purposes, and next year 100 billion tenge.”

12

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

In 2019, it was reported that 50% of all investments in agriculture in Kazakhstan were in three regions. In total, about 264 billion tenge was invested. The largest investment in agriculture was in the at 62.6 billion tenge, 38.4% more, in the at 35 billion tenge, 77% more, in the at 32.7 billion tenge, 33.6% more. The listed regions account for 49.4% of all investments in the industry or 130.2 billion tenge.

Details of the construction of the largest greenhouse in the world In the Turkestan region, an investor from Russia will invest 534 billion tenge in the construction of a greenhouse. The project will be implemented in the Keles district. The greenhouse is planned to be launched in 2021-2024. The complex will be the largest in the world, where vegetables will be grown under one roof on 500 hectares. In particular, it is planned to grow tomatoes, cucumbers, peppers, eggplants, zucchini and other vegetables. A total of about 250-300 thousand tons. At the first stage, the greenhouse will be built on an area of 50 hectares. A greenhouse for 12 million euro with Polish investments was launched in the region this year. The project was implemented in the Sairam region. Thus, a greenhouse of 11 hectares was opened. 173 people are employed. 1.200 tons of cucumbers and 1.100 tons of tomatoes have already been delivered to Russia since the beginning of the year

Production of chicken eggs in Kazakhstan falls by 5% on-year In January-August 2020, the country's poultry farmers received 3.6 billion chicken eggs, which is 4.8% less than last year. 2.7 billion Eggs were received by agricultural enterprises, 899.4 million eggs by households, 18.5 million eggs by individual entrepreneurs and farms. In 2019, 5.5 billion chicken eggs were received, 1.1% less than a year earlier. In the regional context, the largest production volume happened in the Almaty region at 696 million eggs, 3.8% less than a year earlier. The three leaders also included the Akmola region at 566.2 million eggs, minus 4.5%, and the North Kazakhstan region at 458.7 million eggs, minus 17.5%. Such companies as Alsad Kazakhstan, Almaty Poultry Farm Sunkar in the Almaty region, Kazger-kus in the Akmola region, Maikuduk Poultry Farm, K. Marks Poultry Farm in the operate in the leading regions. In Kazakhstan, 35 poultry complexes are engaged in the production of eggs. They fully meet the demand of the domestic market.

Kazakhstan opens milk processing facility aimed at markets in Russia, Kyrgyzstan and Uzbekistan In the Almaty region in 2023, it is expected to open a dairy plant for 530 million tenge. The project is at the stage of development and selection of the necessary equipment. The plant is expected to start in 2023. The production capacity will be up to 21 tons of milk and up to 6 tons of kumis per day. 30% of finished products are planned to be exported to , Kyrgyzstan, Uzbekistan and Russia.

Kazakhstan subsidizes farmers for the introduction of scientific developments The state is ready to allocate up to 100 billion tenge for the introduction of modern technologies and innovations in agriculture. Agriculture Minister Saparkhan Omarov: “You know that we have transformed the structure of subsidiaries of the National Agrarian Research and Education Centre, which now meets the requirements of international standards and is focused on business needs. On the basis of research institutes, 22 centers for the dissemination of knowledge have been created, and permanent consulting centers have also been organized. This year, the Higher Scientific and Technical Commission under the Government approved the total volume of program-targeted financing for the next 3 years in the amount of 50.4 billion tenge. This is 2.3 times more than in the previous three-year period. It is planned to use

13

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

these funds to develop 36 scientific and technical programs in 10 priority areas of research.”

Kazakhstan keen to ramp up fish exports to neighboring markets Minister of Ecology, Geology and Natural Resources Magzum Mirzagaliyev: “There are huge potential markets for export right next to us,” adding that Kazakhstan can export up to 3 million tons of fish products per year to neighboring Russia and China. Given the existing water resources, according to the minister, Kazakhstan can increase volumes of fish production by 600,000 tons, which is ten times more than now.

Kazakhstan prepares measures on veterinary and phytosanitary safety At a government session chaired by Prime Minister Askar Mamin, issues of veterinary and phytosanitary safety were considered. According to him, the competitiveness of the agro- industrial complex depends on the state of veterinary and phytosanitary safety. The state takes measures to control the veterinary and phytosanitary situation. Planned preventive measures are being taken against 23 especially dangerous diseases of animals and birds. For 9 months of this year, 122.2 million vaccinations were carried out against especially dangerous diseases of animals and birds, or 100.9% of the plan for the specified period. About 60% of veterinary drugs are of domestic production. Kazakhstan has the official international status of a country safe from several dangerous diseases (African horse and swine fever, classical swine fever, etc.). For 9 months of this year, in comparison with the same period last year, the number of outbreaks of such especially dangerous animal diseases as listeriosis, anaerobic enterotoxaemia, rhino pneumonia has decreased in the country. In 2020, protective measures were taken against organisms which are harmful to crops including quarantine facilities on an area of 3.8 million hectares. Timely measures taken made it possible to reduce the locust distribution area by 3.3 times — from 1.7 million hectares in 2018 to 515 thousand hectares this year. In order to support domestic producers, a mechanism for subsidizing all types of pesticides has been launched this year to combat especially dangerous pests, quarantine objects and weeds. The prime minister emphasized the need to develop a set of measures to further strengthen the veterinary and phytosanitary service, strengthen the work on inspections, control and monitoring in the field of veterinary and phytosanitary measures, as well as quarantine measures.

Gross product output in the livestock sector of Kazakhstan increases by 3% on-year In January-September 2020, the gross output of livestock products amounted to 1.9 trillion tenge, with an increase taking into account by 2.7% on-year. In 2019, the figure amounted to 2.3 trillion tenge, 4% more in real terms than in the previous year. In the regional context, the largest value of livestock production occurred in the Almaty region at 291.3 billion tenge, 2.9% more in real terms than a year earlier. The East Kazakhstan region is second with 260.5 billion tenge production value, plus 2.7% on-year. The Turkestan region closes the TOP-3 at 216.5 billion tenge, plus 3.1%. As of October 1 of this year, the cattle population in Kazakhstan amounted to 8.2 million, which is 5% more than a year earlier. Among them, 4 million cows, mainly for the dairy sector. The number of sheep amounted to 19.5 million, 3.5% more than a year earlier. The number of horses also increased in the country by 9.1% to 3.1 million, goats by 0.6% to 2.5 million, pigs by 0.2% to 1 million. On the other hand, the poultry population decreased by 2.8%, to 46.1 million. In January-September 2020, 1.4 million tons of livestock and poultry, plus 3.8% on-year, were slaughtered on the farm or sold for slaughter in live weight and 784.8 thousand tons, plus 4.1%, in slaughter weight.

14

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan

The production of cow's milk increased by 3.1%, to 4.8 million tons, sheared sheep wool by 2.5%, to 39.4 thousand tons, large skins by 2.6%, to 2.2 million pieces. Production of lamb skins fell by 13%, to 2.700 pieces.

15

ECONOMIC NEWSLETTER, October 2020 Embassy of the Kingdom of the Netherlands in Kazakhstan CONTACTS

Embassy of the Kingdom of the Netherlands 62, Kosmonavtov Str. Chubary micro district, 3rd floor 010000 Nur-Sultan (Astana) T: +7 7172 555450 [email protected]

Comments and subscriptions The Economic Newsletter on Kazakhstan appears every month and is distributed by e- mail.

If you would like to be added to our mailing list or if you wish to unsubscribe, or if you have any comments or suggestions regarding the Newsletter, please contact:

Mr. Kuat Bolatuly tel.: +7 (7172) 555450 e-mail: [email protected]

Mr. Medgat Olzhayev tel.: +7 (7172) 555450 e-mail: [email protected]

Ms. Anastasia Shpakova tel. : +7 (7172) 555450 e-mail : [email protected]

Please mention your company and contact details.

16