NO LIMITS

Kazakhstan 2016 | ECONOMY | INTERVIEW

TBY talks to Kuandyk Bishimbayev, Former CEO of Baiterek Holding, on new investments, the holding's role in the Kazakh economy, and plans for the future.

Kuandyk Bishimbayev
BIOGRAPHY
Kuandyk V. Bishimbayev graduated from the Kazakh State Management Academy with a specialty in international economic relations. In 2001, he received an MBA from George Washington University. From 2005 to 2007, he was an Advisor to several government ministers, and from 2007 to 2008 he was the Vice-Minister of Industry and Trade. From 2011 to 2013, Bishimbayev served as the Deputy Chairman of Board for the National Welfare Fund Samruk-Kazyna. After being CEO of Baiterek Holding, he was appointed Minister of National Economy in May 2016.

Since its establishment in 2013, what have been the major achievements of the group?

When we were established, the government was looking to take the welfare decisions away from Samruk Kazyna in order to reinvent and reactivate it. In Samruk, the development institutions were only a portion of the assets. Development institutions were never the focus of management, although they play a critical role in the economy, especially during difficult economic times. The banking system was in bad way because of the overwhelming debt burden; it was not functioning as it had prior to the 2008 crisis. The government took an active role of investing in the economy through various programs. We have engaged in many government programs that vary in size and scope. The industrial program has initiatives such as Kazakh National Development, the Development Bank of Kazakhstan, and the Investment Fund of Kazakhstan, all of which play a critical role. We finance many industrial projects, as they provide various instruments, such as lines of credit, export financing, and credit insurance; we also offer equity and private equity investments. Because we posses this wide range of financial instruments and services, we can make tailor-made decisions and solutions for the needs of the entrepreneur or investors who want to invest in Kazakhstan. In terms of burgeoning sectors, the next major area is the development of SMEs. The government has tasked Baiterek with increasing the SME portion of GDP. When Baiterek was established, the contribution of SMEs to GDP was around 19%. Today, two-and-a half-years later, this figure has grown to 25%, and almost 75% of all the financing provided in 2015 to non-mining and non-service sectors of the economy for SME was provided by Baiterek Holding. When you take into account the banking system, private investors, and local private sources of the business owners who are reinvesting back into business, 75% of all investment channeled into the SME development was provided by Baiterek. We are also the main operators in the regional development program for housing investments through our subsidiaries. Our task for 2016 is to renovate and complete 7,000 apartments across Kazakhstan.

How are your operations impacted by the $600 million infrastructure investment deal that was signed last month with CITIC from China?

We have managed to sign investment deals that will bring almost $6.5 billion to Kazakhstan, some of which is coming from long-term soft credit lines, while other parts come from private direct investment. The $600 million fund that we signed with CITIC Capital is an example of when foreign investors use Baiterek as a reliable and stable partner. The focus of the fund will be Kazakhstan, Customs Union countries, and Central Asia. In terms of industries, the focus is on mining and logistics, agriculture, food processing, energy, and infrastructure. That is not the first fund that we established with CITIC. Five years ago, the CITIC Kazyna fund was established with $200 million, and today it is fully invested. Therefore, the CITIC had a positive experience in Kazakhstan and decided to go ahead with further and more significant investment. This $600 million is not the limit, our plan is to increase the fund to $1 billion and we have interest from other sovereign and private foreign funds who would like to join. We believe that in the next year we can actually increase the amount to $1 billion, and this will be significant.

What are your expectations for Baiterek in 2016?

The economic climate is volatile due to the drop in oil prices and the situation in Russia. Therefore, it is time for Baiterek to become a locomotive for the economy. This is the time when development institutions can show that they are capable of pushing the economy ahead, creating new jobs, and assisting business in their investments despite the current economic difficulties.