Economic Newsletter on Kazakhstan |February 2019 Contents GENERAL ............................................................................................................................2 MACRO-ECONOMICS & FINANCE ......................................................................................3 INNOVATION ......................................................................................................................5 ENERGY & NATURAL RESOURCES ......................................................................................6 TRANSPORT & COMMUNICATIONS ...................................................................................8 AGRICULTURE ....................................................................................................................9 CONTACTS....................................................................................................................... 11 EXHIBITIONS IN KAZAKHSTAN (2019) ............................................................................. 12 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, February 2019 Embassy of the Kingdom of the Netherlands GENERAL President Nazarbayev dismisses the Government for economic failures, appoints acting PM On 21 February, President Nazarbayev dismissed Kazakh Government, citing in a video statement its failure to raise living standards and diversify the economy away from the energy sector: "In many areas of the economy, despite the adoption of many laws and government decisions, positive changes have not been achieved. The real earnings of Kazakh citizens are not rising. The share of food expenses in a family’s budget is increasing. The SMEs have not become the driving force of the economy". The Head of State stressed that the new Government’s leadership should take effective steps focused on raising living standards and stimulating the economy. The concrete proposals form the President's side will be advanced during the next congress of the ruling Nur Otan part on 27 February. Following the statement, Nazarbayev appointed Askar Mamin as Acting Prime Minister instead of the outgoing Bakhytzhan Sagintayev (akorda.kz, rferl.org, eurasianet.org). New composition of Kazakh Government approved ASTANA. KAZINFORM - Today President of Kazakhstan Nursultan Nazarbayev has approved the new composition of the Government of the Republic of Kazakhstan, Kazinform has learnt from the Akorda's press service. On February 25, the President decreed to appoint: Askar Mamin as the Prime Minister of the Republic of Kazakhstan; Alikhan Smailov as the First Deputy Prime Minister - Minister of Finance of the Republic of Kazakhstan; Zhenis Kassymbek as the Deputy Prime Minister of the Republic of Kazakhstan; Gulshara Abdykalikova as the Deputy Prime Minister of the Republic of Kazakhstan; Beibut Atamkulov as the Minister of Foreign Affairs of the Republic of Kazakhstan; Nurlan Yermekbayev as the Minister of Defense of the Republic of Kazakhstan; Yerlan Turgumbayev as the Minister of Internal Affairs of the Republic of Kazakhstan; Dauren Abayev as the Minister of Information and Social Development of the Republic of Kazakhstan; Marat Beketayev as the Minister of Justice of the Republic of Kazakhstan; Yelzhan Birtanov as the Minister of Healthcare of the Republic of Kazakhstan; Arystanbek Mukhamediuly as the Minister of Culture and Sports of the Republic of Kazakhstan; Askar Zhumagaliyev as the Minister of Digital Development, Defense and Aerospace Industry of the Republic of Kazakhstan; Kanat Bozumbayev as the Minister of Energy of the Republic of Kazakhstan; Berdibek Saparbayev as the Minister of Labor and Social Protection of Population of the Republic of Kazakhstan; Saparkhan Omarov as the Minister of Agriculture of the Republic of Kazakhstan; Kulyash Shamshidinova as the Minister of Education and Science of the Republic of Kazakhstan; Roman Sklyar as the Minister of Industry and Infrastructural Development of the Republic of Kazakhstan; Ruslan Dalenov as the Minister of National Economy of the Republic of Kazakhstan; Yerbolat Dossayev as the Chairman of the National Bank of the Republic of Kazakhstan. Kazakh Government to provide support for export-oriented domestic companies Kazakh Industry and Infrastructure Development Ministry has prepared a three-year comprehensive plan to assist export-oriented domestic enterprises in entering foreign markets. The results of a survey of more than 300 local non-oil exporting companies revealed nearly 60 % need of financial support in terms of concessional lending, refinancing, subsidies, tax preferences and others. The Ministry proposes to invite inspection commissions from China, Iran and the UAE to certify local companies' products in order to simplify their access to foreign markets. In addition, the Ministry suggests organising meetings this year between Kazakh producers and large foreign buyers such as Auchan (the EU, Russia), Metro (China, Middle East, Russia), Migros (Turkey), 2 ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands Vanguard, Wumart (China) and Yonghui (China). The Ministry estimates export earnings will reach KZT 725 billion (EUR 1.7 billion) by 2021 (astanatimes.com). EU-Kazakhstan business lunch with Foreign Minister Beibut Atamkulov On 14 February, the traditional working lunch meeting was held in Astana with participation of EU Ambassador Sven-Olov Carlsson, Ambassadors of the EU member states and Kazakh Minister of Foreign Affairs Beibut Atamkulov. During the meeting, the sides discussed further development of the EU-Kazakhstan trade and economic relations, as well as ways to strengthen cooperation in the political, cultural and humanitarian fields. To note, the EU is Kazakhstan's first trade and investment partner, representing over one third of Kazakhstan's external trade and over a half of total foreign direct investment in Kazakhstan. In 2018 bilateral trade turnover amounted to EUR 22.7 billion. The share of European FDI in Kazakhstan accounts for nearly 60%, according to (eeas.europa.eu, mfa.kz). Kazakhstan makes changes to applying for visa invitation Kazakh Foreign and Internal Affairs Ministries have amended the rules for issuing invitations for obtaining entry visas and cancelling or extending entry visas. An inviting party shall apply to either the Internal Ministry or Government for Citizens State Corporation and provide an identity document, a filled-in form and a visa fee receipt. Legal entities or individual entrepreneurs applying for a visa invitation for the first time this year should provide a state registration certification, proof of accreditation in line with the current AIFC law, a certificate of Astana Hub participant and a document confirming its representative authority. The inviting party applying for a tourist visa invitation should have a valid tourist operator license. A copy of the contract or a confirmation letter from Kazakh Invest is required for obtaining a multiple entry business visa invitation, except for the countries subject to simplified visa rules (Interfax-Kazakhstan, zakon.kz). MACRO-ECONOMICS & FINANCE Kazakhstan's foreign trade surplus expanded 50% in 2018 In 2018 Kazakhstan's foreign trade surplus increased by 50% and reached USD 28.5 billion, the Statistics Committee of the National Economy Ministry said. In the reporting year the country's total foreign trade volume increased by 19.7% to USD 93.5 billion, including exports that grew by 25.7% to USD 61 billion and imports that were up 9.9% to make USD 32.5 billion. In 2018, exports to the Eurasian Economic Union's countries stood at USD 5.8 billion (12% up) and imports at USD 13.2 billion (5.6 % up). Last year, the main buyers of Kazakhstan-made products were Italy (19.3% of all exports), China (10.3%) and the Netherlands (10.2%). The main exporters to Kazakhstan were Russia (38.1% of all Kazakhstan’s imports), China (16.5%) and Germany (5.1%) (Interfax- Kazakhstan). Kazakhstan is of interest to foreign business: the number of foreign companies grown by 9% in a year Integration process contributing to the inflow of capital investments – the volume of direct foreign investments increased by 8% in a year. By the end of January 2019, the number of foreign legal entities reached 25.4 thousand, an increase of 8.9% yoy. The share of existing legal entities was 58.8%, or 14.9 thousand, 2 thousand more than a year earlier. In 2017, the number of operating foreign companies was 12.9 thousand. Traditionally, small foreign enterprises are the most active: their share is 98.1% of the total number of registered and 97.1% of the total number of operating foreign legal entities. At the end of January 2019, the largest share of operating foreign enterprises in terms of industries accounted for wholesale and retail trade: 45% (6.7 thousand), which, however, is 0.2 pp less than a year earlier. In second place is construction: 10.4%, or 1.5 thousand - by 0.2 thousand more than in the same period of 2018.The top three leaders are professional, scientific and technical activities: 1 thousand (+11.3 year to year), the share is 6.8%. 3 ECONOMIC NEWSLETTER, February