The role of BRK in the implementation of SPIID

Development Bank of Kazakhstan JSC (DBK, a subsidiary of "Baiterek" holding) summed up the interim results of the implementation of the State Program of Industrial-Innovative Development (SPIID), designed to stimulate diversification and increase the competitiveness of the manufacturing industry of the country. According to representatives of the DBK, the State Program is successfully implemented, which is proved by the achieved indicators and high socio-economic efficiency. As of the beginning of April 2019, 11 innovative projects have been put into operation. This refers to a wide range of industries, from engineering and logistics to the food industry.

For example, Makinsk Poultry Farm for broiler growing in Akmola region, implemented in the framework of SPIID. The total amount of the Bank's loan amounted to 16.1 billion tenge for a period of 10 years. The first stage of the enterprise was put into operation recently, in December last year. The flourish ceremony of the opening for business of production with the participation of Elbasy Nursultan Nazarbayev during the teleconference was covered by almost all news publications and TV channels. Such focused attention to the project is due to its uniqueness – in the longer term, Makinsk Poultry Farm will become the largest productive site with a production capacity of up to 50 thousand tons of poultry not only in the Republic but also in Central Asia. In addition to capacity, a feature of the company is its technical equipment. The equipment of the enterprise is provided by world producers taking into account the European requirements of quality to a finished product. This year the management of the poultry farm plans to start the construction of the second stage of production.

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Thanks to the support of DBK projects in the field of mechanical engineering, last year, a full railroad wheel production complex appeared in Ekibastuz. The share of DBK support is 36 billion tenge, which is more than 65% of the total cost of the project. The loan term is 19 years. The project is long-term and aims to create a railway cluster with a full production cycle on the territory of one enterprise.

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As part of the SPIID program, in 2018, an innovative project was launched to introduce LTE/GSM/UMTS networks throughout the country. For these purposes, the Development Bank allocated borrowed funds in the amount of 37 billion tenge for a period of 10 years. Now the fourth generation wireless connection (4G), providing broadband Internet access with data transfer speed up to 100 Mbit/s, is available not only to residents of Kazakhstan's megalopolises but also to the population of the regions.

Among other things, DBK actively finances projects in the energy sector and oil refining, thereby developing priority areas of the economy of Kazakhstan. Expansion and modernization of production of "Condensate" JSC in 2018 allowed the enterprise to deepen the process of hydrocarbon processing, and as a result, to increase the range of finished products and to extract additional volumes of light fuel products. After the improvement of production, "Condensate" JSC produces high-quality fuel that meets the Euro-5 standards, and covers the demand for engine fuel in the domestic market. The loan in the amount of about us $ 120 million for up to 11 years under the first stage of financing was provided by DBK, the loan amount at the second stage was 7 billion tenge for a period of up to 10 years.

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In June last year, a transport and logistics center was launched in Shymkent. The amount of financing of DBK amounted to 11.8 billion tenge, with a loan term of 15 years. The complex with the supplied infrastructure, equipped with modern warehouse terminals, production sites and an automated control system, promises to become the flagship in the development of the transport and communication industry of Kazakhstan. It is expected that the project will contribute to the growth of export-import and transit traffic not only within the country but also abroad. The prospects of cooperation with neighboring countries are already outlined because the complex meets all international standards of quality of services.

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It is worth noting that in the framework of the SPIID, thanks to the active work of the DBK on the implementation of the State Program, last year the modernization of all three oil refineries in Kazakhstan was completed in Pavlodar, Atyrau and Shymkent. All oil refineries have established the production of emission standard engine fuels and the production of high-grade petrol.

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Currently, another 9 major projects are awaiting launch, for example, the Turgusun HPP in the East Kazakhstan region is among them, as well as the "Zhylga" photovoltaic power plant in Turkestan region. The enterprises are at different stages of preparation, and the commissioning dates vary accordingly. Moreover, in 2019 YDD Corporation LLP is planning to launch the plant for the production of ferrosilicon in the city of Karaganda with a production capacity of 96,000 tons per year. It is going to be 100% export-oriented production.

However, nothing else says about the effectiveness/inefficiency of projects better than the actual figures. Over the past two years, the volume of sales of operating projects amounted to more than 251 billion tenge. In addition to the above, the volume of exports increased to 43.4 billion tenge. As a result, the state budget was replenished by 22.5 billion tenge through tax payments. With the increased number of new enterprises, the number of jobs created is growing respectively. Only last year, thanks to the implementation of DBK projects, about 700 Kazakhstanis found a professional vocation, and for the period from 2016 to 2018, their number amounted to more than 2 thousand people. This positive fact cannot be ignored, especially given the consistently high unemployment rate in the country over the past 3 years. According to the official data of the Statistics Committee of the Ministry of National Economy of the RoK, the share of unemployed population amounted to more than 441 thousand people in 2018.

It bears reminding that the Development Bank approved its own project financing programs for the implementation of the SPIID. 75 billion tenge was allocated from the National Fund of the RoK, and the Bank attracted 150 billion tenge from other sources. Thus, the total amount of financing of the State Program from the NF of the RoK amounted to 225 billion tenge, now these funds are fully utilized. The total amount of funds allocated from the National Budget to finance the projects of the second five-year plan of the industrialization program is 154 billion tenge, of which 117.11 billion tenge was utilized as of April 1, 2019. However, representatives of the DBK emphasize that the organization is not satisfied with what has already been achieved and continues to actively search for strategically profitable projects. Last year, the Bank held negotiations with more than 70 enterprises, to which about 10 letters of proposals for joint implementation of initiatives were sent. In parallel to the number of projects, the geography of DBK is also increasing. Thus, in 2018, the Bank took part in more than 24 regional events, in which the business community received the necessary information about the provided credit instruments of the organization.

It is worth noting that the key to the success of the DBK in the implementation of the Program is the readiness, as necessary, of full support of the launched projects and assistance to borrowers in solving various issues related to the management of financial resources at all stages, from the beginning of financing to commissioning. DBK supports cost optimization to reduce costs and increase the profitability of each project, this applies not only to the choice of technologies and technological solutions but also to the execution of contracts. Competence and extensive experience of the Development Bank allow to attract and finance strategic, large-scale projects, the implementation of which is beneficial not only economically but socially as well.

АО «Банк Развития Казахстана»
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