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Kazakhstan 2017 | ECONOMY | INTERVIEW

TBY talks to Albert Rau, former First Vice Minister of Investment and Development, on main initiatives, partnering with multinationals, and outlook for the year ahead.

Albert Rau
BIOGRAPHY
Albert Rau graduated from the Rudny Industrial Institute, specializing in mining with a qualification of engineer-electrician. In 2004 he attended the Russian Academy of Public Administration. He achieved his doctorate of economic sciences. Over the years, he has served as Mayor of Lisakovsk, Deputy Mayor of the Kostanai region, and Mayor of the Akmola region. Between 2010 and 2014 he served as First Deputy Minister of Industry and New Technologies of Kazakhstan, and from 2014 he was Deputy Minister for Investment and Development of Kazakhstan, becoming First Deputy Minister in 2016. In 2017 he was appointed Member of the Committee on Finance and Budget of Mazhilis of Parliament of Kazakhstan.

What have been the main projects implemented by the ministry in the last two years and what has been their impact on the economy?

We have been modernizing industry in the country as per our overall goals, and that started back in 2010. Our economy has begun diversifying since then and focused more on the processing and manufacturing industry. We have created a complex assortment of new tools in support of business and industry in this period. Our main priority has been to attract more foreign investment into the processing industry. We wanted to start with modernization projects in metallurgy, and now we are at the point where we export aluminum to Russia, whereas before we used to import aluminum from Russia. Our plan now is to increase the production of aluminum and diversify our production of aluminum goods. We are also developing small-scale steel plants and modernizing our metallurgical company ArcelorMittal. Right now it produces 4 million goods, and we have plans to increase that to 6 million and to diversify the production catalog. We also plan to build new railroads, with technology from Siemens, located in Aktobe. We have a partnership to produce locomotives with GE. We are trying to shift from raw material production to value added and manufactured goods. In chemicals we are modernizing our capacity for production of fertilizers. Russian company Eurochem is building a new fertilizer plant with an investment of USD1.5 billion. We also prioritize machinery production. About 40% of our imports are for machinery, so we are working on that. Machinery importation is also a great sign of industrial and economic development and demand, but we want to start producing our own machinery, too. We are also modernizing our refinery plants. We want to refine as much as possible of the 80 million tons of oil produced.

These initiatives are part of the State Initiative Program for 2015. What is your assessment of the success of this program and how has it changed the country over the past two years?

It is a long-term program that will go on until 2025 and even on to 2035. But already employment and job creation is up, and we are continuing with our goals to meet OECD standards for labor production.

How important is it for Kazakhstan to initiate strong partnerships with big companies like GE and Alston, and how do you ensure you are able to establish partnerships with these kinds of multinationals?

We place a great deal of importance on working with multinational corporations and attracting more FDI. We have a list of 50 multinationals that we hope to attract to Kazakhstan for various diverse projects. We have plans for each company, and are in contact and talking to all of them about potential projects that we can work on. We already work with 30 of those companies and want to make that 50. Our strategy to attract more FDI and multinationals involves meeting international and OECD standards, and we aim for a membership seat on the OECD Investment Committee this year. That membership would mean we are meeting all of the OECD's standards, and that is important to attract FDI and multinational investors. We are also working on institutional support for these initiatives to push them forward. Our investment company Kazakh Invest is a major step toward this goal. That company has the necessary authority and is a one-stop shop for all investors and transnational corporations. We also have another company, Kazakh Export, which will focus on export financing.

Which sectors have the most potential for investors and in terms of driving the Kazakhstan economy in the coming years?

We are focusing on four main sectors, namely chemistry, machinery, food processing, and retail. Those have the most potential for us, the country, and investors.

What is your general outlook for 2017?

We have many goals in investments, industry, energy efficiency, labor productivity, and so on. We have annual goals that we always seek to achieve. By the end of 2017, we need to develop industry 4.0 in the country, which essentially involves digitalization and computerization. It is complex and ambitious, but that is our objective, and the contribution this will make to industrial efficiency and productivity has been proven in other countries, like Bulgaria. We need to make sure industry is ready for that.