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Paved with Gold

The Business Road Map 2020 is the government’s plan for the development of the local business landscape. After a successful pilot year in 2010, the program is now in full swing.

Aware of the challenges of increasingly competitive global markets and ambitious to make Kazakhstan a leading emerging economy, the government has developed the Business Road Map 2020 to shape the future of the country’s economy. Launched in January 2010, it provides for the accelerated development of non-oil sectors of the economy, tailored with a view to enhance the country’s resilience to global shocks from the commodities market. The program authorizes local executive bodies to use allocated budget funds for the further subsidization of interest rates on loans, the issuance of partial loan guarantees, the development of industrial infrastructure, the provision of service support to SMEs, internships, training, and social assistance. The target sectors of the program include agribusiness, light industry, building materials, and non-metallic mineral products, metallurgy, metal processing, mechanical engineering, transportation, warehousing, tourism, health, and social services, and supports new business initiatives and export-orientated industries. To reach its goals, interest rates on bank loans will be subsidized, while debtors will be granted a grace period on the repayment of tax arrears to the budget without penalty fees. Furthermore, entrepreneurs will be supported to develop exports.

Entrepreneurs may participate in the program for the subsidization of interest rates on available credit. For credit with an interest rate not more than 12%, the state will compensate 8%, leaving the exporter not more than 4% on repayments.

The initiatives are tailored to enable the program to: (1) increase the availability of financial resources for the private sector in the implementation of new investment projects aimed at industrial and innovative development; (2) attract private sector funds, primarily from financial institutions, for investment projects in non-oil sectors of the economy, and; (3) increase the financial and economic stability of industrial enterprises, primarily medium- and large-scale businesses.

The ambitious program is based on a Ministry of Industry and New Technologies audit, conducted together with the National Economic Chamber of Kazakhstan. The program’s targeted content is a result of the lack of industrial infrastructure, the underdevelopment of business support infrastructure, the large debt burden of enterprises, and the wear of fixed assets identified in the audit, which was carried out after a review of production technologies in 187 enterprises across 16 regions and 10 industries.

The program will be implemented across two phases. While 2010 was a pilot year, the period up to 2014 represents phase one. This period will be focused on supporting new business initiatives, modernizing existing enterprises, and strengthening human resource capacities in industrial enterprises. To this end, KZT1.2 billion was allocated from the national budget for projects in Almaty in 2010. Over the course of the year, the number of SMEs grew 6%, employment increased by 4%, and the production of goods and services grew by 5%. At the beginning of 2011, KZT19.9 billion was allocated to support the program over the year.

The second phase of the scheme will run between 2015 and 2020, with a more pronounced emphasis on promoting export-oriented business. By 2020 the state hopes to double productivity in manufacturing, and increase the average capacity utilization rate by 80%.