Turkey and Kazakhstan are no exception, as we have a close partnership of 29 years. Development Bank of Kazakhstan (DBK, a subsidiary of Baiterek Holding), one of Kazakhstan's largest financial institutions, which provides financing for industrial and infrastructure projects and is a leader in assessing and structuring large infrastructure as well as industrial projects for the private sector and the Government of Kazakhstan, could play a key role in the updated strategy of Ankara-Nur-Sultan relations.
Turkey is one of the world's major economies, with the status of an authoritative international player and an undisputed leader in scientific and technological development. For the past 29 years, Turkey has actively maintained friendly partnerships with Kazakhstan, not only politically but also economically, commercially, and culturally. However, the locomotive and driver of cooperation between our countries remains trade and economic interaction. Turkey is among the top 10 major trading partners of Kazakhstan. The trade turnover between Kazakhstan and Turkey in 2019 exceeded $3 bln. In the first 8 months of 2020 year, bilateral trade increased by 1.4% year-on-year, amounting to $2.1 bln. According to official information, over the years of Kazakhstan’s independence, the inflow of direct investments from Turkey to Kazakhstan amounted to over $3.7 bln.
Given Turkey's strong interest in Kazakhstani products (wheat, copper, gas, oil, aluminum, zinc, etc.), the Development Bank of Kazakhstan, as a specialized state development institution providing financing for industrial and infrastructure projects, is the key to boosting business activity between Ankara and Nur-Sultan in the post-coronavirus era.
DBK as one of the largest financial institutions in the Central Asian region has invested KZT 506.2 bln. in Kazakhstan's manufacturing and infrastructure sectors in 2020. Despite the Covid-19 pandemic that paralyzed global trade and the economy, Development Bank managed to maintain financial integrity and stability during the corona-crisis. Last year, DBK commissioned 9 and financed 34 major projects with high social and economic attractiveness in different regions of the country, including enterprises with Turkish partners. These include the launch of the first phase of “Aktau Resort Hotel” multifunctional hotel and tourist complex in Mangistau region and the construction of “Karavan-Saray” multifunctional tourist complex in Turkestan region.
The mission of Development Bank, established in 2001 by decree of the first President Nursultan Nazarbayev, is to actively promote the sustainable development of the national economy by investing in the country's non-resource sector. Over almost 20 years of its existence, DBK has approved and financed about 150 investment projects worth KZT 9.7 trln. with its own contribution of KZT 4.6 trln., as well as 105 export operations worth KZT 0.51 trln. in various industries, including oil refining and petrochemicals, energy, transport and logistics, industrial production, and food industry. Thanks to the DBK's financial support, more than 120 investment projects were launched, creating around 30,16 thousand permanent jobs.
“Last year we set kind of a record - we had the highest volume of investments in manufacturing and infrastructure in DBK's history. By January of this year the total volume of the Bank's loan portfolio increased by 14.3% and reached KZT 1 trln. 974 bln. and the country's economy last year received nine new ready-made production sites, which during the crisis period immediately worked “from the wheels” and already paid KZT 17 bln. to the country's budget in taxes,” - said Abay Sarkulov, Chairman of DBK's Management Board.
Among the launched enterprises are energy facilities, such as 50 MW Astana EXPO-2017 wind power plant in Aqmola region, industrial facilities - Hyundai car manufacturing plant, processing facilities - second phase of a broiler poultry farm in Aqmola region, and service facilities - first phase of Aktau Resort Hotel multifunctional hotel and tourist complex in Mangistau region. By the way, the latter is a joint project of representatives of Kazakhstani and Turkish businesses, it was put into operation in August 2020. The total cost of the project is KZT 68.4 bln., with DBK's share of KZT 42 bln. and the remaining KZT 26.4 bln. being the borrower's own funds.
“Our partners from Turkey are more involved in the implementation of projects in the tourism sector. This fact is logical, as Turkish business representatives have extensive experience and competence in implementing such projects. Currently, Development Bank has another joint project of this kind in its piggy bank - construction of multifunctional tourist complex “Karavan-Saray” in Turkestan region. We are looking forward to its launch in 2021”, - said Abay Sarkulov, Head of the Bank.
According to DBK representatives, it will be the largest project in the region, where tourists will be able to get closer to Turkestan's history, culture of Kazakhstan, historical personalities, and national sports. The total project cost is KZT 87 bln., with DBK loan amounting to KZT 40 bln. for 20 years and the borrower's equity share of KZT 47 bln. The Bank financed the purchase of equipment and construction and installation works. The transaction was implemented under the Comprehensive Plan of Social and Economic Development of Turkestan region until 2024.
To date, the full list of the Bank's financial support instruments consists of nine areas: medium- and long-term lending for investment projects, lending for export (pre-export) operations, lending for ongoing activities within an investment project to replenish working capital, financing leasing transactions, bank financing to stimulate lending to the economy, co-financing/syndicated financing, financing through a bond issue, mezzanine financing and other. Each instrument has different conditions, characteristics and financing limits. In particular, the minimum amount of financing by Development Bank of an investment project is set at the amount equivalent to KZT 7 (seven) billion, while the minimum amount for an investment project in food and beverage production is set at the amount equivalent to KZT 3 (three) billion and the minimum amount for financing an export (pre-export) operation is set at the amount equivalent to KZT 1 (one) billion. It is noted that details of the Bank's services are available at DBK's website https://www.kdb.kz/services/
“The lending conditions at DBK are flexible, this is our hallmark. For example, property can be considered as collateral for a future business plan or project feasibility study. Moreover, the application procedure is automated and optimized: it is carried out online as soon as possible and is divided into 3 stages, which allows the Bank's clients to see the weaknesses of their business plans and discuss all the details with the front-office representatives at an early stage. All this allows the Bank to keep the quality and speed of our services at a high level”, - highlighted Abay Sarkulov.
Within the implementation of the automated management system, the Bank carried out a complete re-engineering of its core business processes, developed, and implemented the external customer communication interface - CRM (Client Relation Management). For the convenience of the Bank's potential clients, CRM system allowed the Bank to digitize the process of accepting documents, signing electronic agreements and notifications at each stage of the application process.
How does it work? CRM system is available at the Bank's website https://my.kdb.kz/login, where current and potential clients can log in with an EDS, submit loan application documents, track the status of their application and much more. Documents received through CRM are automatically transmitted to BPM (Business Process Management) for processing. Once the documents have been submitted, the client is able to track the status of their application and conduct the entire transaction process through CRM.
DBK's IT upgrade minimized the negative impact of the rapid coronavirus spread and subsequently became part of an ambitious anti-crisis plan, developed back in early 2020. As part of this plan, DBK team has analyzed the loan portfolio and conducted stress tests for each project and borrower. It should be emphasized, that Development Bank staff are still monitoring emerging problems to this day.
According to the strategic plans of Development Bank, a new syndicated financing instrument will be introduced in 2021, and projects worth up to KZT 820 bln. and loans worth KZT 460.8 bln. will be considered, respectively. DBK is expected to commission and upgrade a further 10 facilities this year.