A COMPLEX WEB
TBY talks to Bolat Zhamishev, CEO of the Development Bank of Kazakhstan (DBK), on the role that the bank is playing in diversifying the economy and what the New Silk Road project will mean for Kazakhstan's producers.
BIOGRAPHY
Bolat Zhamishev graduated from the Kazakh Agricultural Institute in 1981. He began his career as a postgraduate and researcher and scientific secretary at the Kazakh Research Institute of Economics and Organization of Agro-Industrial Complex (1984-1992). He has since held executive positions in the Congress of Entrepreneurs of Kazakhstan, National Bank of the Republic of Kazakhstan, National Pension Agency of the Ministry of Labour and Social Protection of Population, the Ministry of Finance, the Ministry of Internal Affairs, and the Agency of the Republic of Kazakhstan on Regulation and Supervision of Financial Institutions.What are the main reasons behind the 26.8% increase in profits between January and June 2016 compared to 2015?
We are a government-owned development institution and acquisition of high yield is not our major goal. As a development bank, our major role is to promote the diversification of the economy in Kazakhstan and implement a new economy industrialization program of the government. Therefore, the indicator that would characterize the contribution of the DBK in this direction is an increase in our loan portfolio through increase in financing of sectors other than raw material-based ones, such as processing sectors primarily, which provides for the diversification of the economy. Our consolidated credit portfolio as of August 1, 2016 was KZT1.394 trillion versus KZT843 billion in August 2015. The visible increase is about 65%; however, if we exclude the devaluation effect, the gross increase will be about 20%. As for net profit, it should be noted that steps taken by DBK affected this indicator in some way. This spring we conducted stress testing on all our projects and realized the volume of credit portfolio is more sensitive to foreign exchange risks. About 15% of our projects seemed to be exposed to this risk and we thus decided to restructure these loans. Thus, we have diverted the financing from foreign exchange to tenge. These measures resulted in a good quality credit portfolio as of today, excluded the formation of any additional provisions, and, certainly, had an effect on net profit.
What are your expectations of the prospects in Kazakhstan's economy for the next five years alongside the New Silk Road Project implementation?
After the initiative of China to create the “New Silk Road Economic Belt," this program has been further developed. Now it is not only about leveraging the transit potential of the countries that the Silk Road passed though historically, but also the implementation of investment projects that would economically link the countries of the “New Silk Road." At present, the Kazakhstan-China Program on development of productive capacity is being implemented in Kazakhstan; it includes 51 large investment projects. The DBK plans to participate in financing part of these projects. All these programs such as the revival of the Silk Road, the government's industrial development program, and the creation of the economic union are all measures that are supposed to promote and continue the efficient diversification of the economy of Kazakhstan and further develop our partnerships with neighboring countries.
What are some of the bank's ongoing and planned projects that will have the biggest impact on Kazakhstan's economy?
We invest in large projects relative to the size of Kazakhstan. There was a standard that the loan amount should be not less than USD20 million, which was then raised to USD30 million. For the processing sectors of our country such projects are considered large ones. Currently, we have 36 investment projects in our portfolio and 11 export loans. This year we took the decision to invest in poultry farm construction in Akmola region with the capacity of 60,000 tons per year, the construction of transport logistical center in south Kazakhstan regarding the infrastructure, the construction of Turgussun hydro power station in east Kazakhstan, expansion and modernization of plant on nitrogenous fertilizer manufacturing in west Kazakhstan for the chemical industry, as well as construction of the plant for sodium cyanide production in south Kazakhstan. The DBK has also invested in a project for the complete production cycle of railway wheels in the Pavlodar region. At the same time, we continue to finance important and significant projects to modernize the Atyrau and Pavlodar refineries, and to invest in greenfield projects such as the construction of a rail and structural steel plant in the Aktobe region. Rails have never been produced in our country before now. In total, 83 new plants were put into operation thanks to the DBK's funding.
A COMPLEX WEB
TABLE OF CONTENTS
Guest Speaker
Rt Hon Sir Alan Duncan, State for Foreign and Commonwealth Affairs, United Kingdom
TBY talks to the Rt Hon Sir Alan Duncan MP, Minister of State for Foreign and Commonwealth Affairs of the United Kingdom, on the importance of Kazakhstan for the UK as a strategic partner in Central Asia and the variety of ventures that are improving economic cooperation between the two.
read articleInterview
Doris Bradbury, Director, American Chamber of Commerce (AmCham) in Kazakhstan
TBY talks to Doris Bradbury, Executive Director of the American Chamber of Commerce (AmCham) in Kazakhstan, on strategies for supporting growth, developing supportive structures for SMEs, and creating a more sustainable agriculture sector.
read articleInterview
Ermek Sakishev, Chairman , Investment Fund of Kazakhstan (IFK)
Ermek Sakishev began his career in 2005 at the Ministry of Economics and Budget Planning as a Lead Specialist. From 2005 to 2007 he worked at various private companies. From 2008 to 2011 he worked in the Administration of the President in various roles, from expert up to sector leader of the Social and Economic Monitoring Department. In 2011, he became the Director of the Innovative Policy Department of Samruk-Kazyna. From 2012 up to 2014 he occupied managerial positions within the private sector, becoming Deputy Chairman of the Board at Baiterek Development in 2015.
read articleReview: Banking
A Crowded, but Orderly House
Imprudent business practice during boom times, volatile commodity prices, and currency turmoil have sent lasting shivers through Kazakhstan's banking sector. Yet bold remedial moves from the authorities have brought relative recovery to a listing economy.
read articleInterview
Alina Aldambergen, Chairman of the Management Board , Kazakhstan Stock Exchange (KASE)
TBY talks to Alina Aldambergen, Chairman of the Management Board of the Kazakhstan Stock Exchange (KASE), on the launch of commercial bonds, upgrading the image the exchange, and the strategy for achieving that.
read articleInterview
Davron Rustamkulo, Member of the Supervisory Board , RG Gold & Chief Investment Officer of Verny Capital
TBY talks to Davron Rustamkulov, Member of the Supervisory Board of RG Gold & Chief Investment Officer of Verny Capital, on RG Gold's goal of becoming a top mining player, future expansion plans, and the role of mining in Kazakhstan's development.
read articleFocus: Industrial Development
The Spiid Of Development
In 2014 Kazakhstan launched a five-year industrial development plan with the purpose of fostering growth of the industrial, mining, and manufacturing sectors. These areas, among others, were identified as being key to achieving the country's long-term vision of economic diversification.
read articleInterview
Aibat Akhmetalimov, Managing Director, Philip Morris Kazakhstan and Central Asia
TBY talks to Aibat Akhmetalimov, Managing Director of Philip Morris Kazakhstan and Central Asia, on introducing non-combustible products, remaining competitive in a health-conscious world, and the company's vision for a smoke-free future.
read articleFocus: ABU DHABI PLAZA
To The Steppes
A striking high-rise complex, funded and managed by UAE-based developers and constructors, will be launched in the heart of Astana in 2017, further contributing to the young capital's fascinating skyline and state-of-the-art architecture, as well as its growing status as an international hub.
read articleInterview
Arman Aldabergenov, General Director of Kazakhstan and Central Asia , Lactalis
TBY talks to Arman Aldabergenov, General Director of Kazakhstan and Central Asia of Lactalis, on the success of the company in the country, challenges in the agriculture sector, and expectations for 2017.
read articleFocus: Organic Growth
Soil & Grass
With vast natural pastures, Kazakhstan is extremely well positioned to become a major producer of organic agricultural products. As agriculture demonstrates increasing potential to become a driver of the economy, the government's new legislation on organic farming will boost the country's production and export of quality organic products.
read articleFocus: ECOTOURISM
So Good It Yurts
Kazakhstan is looking to make its mark as the region's main tourist destination. Out of the nine “stans," Kazakhstan is the largest and most topographically diverse, boasting miles of steppe, desert, and mountains, making it the perfect destination for an ecotourism industry.
read articleFocus: Mega Silk Way Mall
Mega Silk Way
A new iconic shopping mall incorporated in the state-of-the-art Expo architectural framework opens in 2017 and is set to be the symbol of the exhibition and of Kazakhstan's new flourishing retail industry, with positive effects on employment and the economy.
read articleReview: Doing Business
Sweet and Tenge Delight
Though Kazakhstan's macroeconomic outlook has suffered enormously in the past few years from the collapse in oil prices and currency devaluation, its political leadership strengthened long-term ties with the Russia, the West, and China and drastically increased the ease of doing business.
read articleReview: Accountancy
Precipitating A New Age of Oil & Gas Investment
Anthony Mahon, Partner of Caspian Energy and Resources Leader of Deloitte Kazakhstan, on the importance of creating a secure investment environment and updating the tax regime to attract investors to the extractive industry.
read article