SPIID RK: manufacturing industry as one of the main drivers of growth of the Kazakhstan economy

Astana. 4 October. Kazakhstan Today - In 2010 the State Program for Accelerated Industrial and Innovative Development of the Republic of Kazakhstan for 2010-2014 (SPAIID) was launched in the republic. During the period of its implementation, the manufacturing industry has become the main driver of growth in the industry. For seven years, its real growth was 29% and outstripped the mining sector (6.2%).

Thanks to the measures taken, Kazakhstan is among the seven countries with the fastest growing manufacturing sector. Among the countries of the Customs Union, our country has become a leader in the real growth of manufacturing industry. Labor productivity grew by 67%.

According to the Ministry of Investments and Development of the Republic of Kazakhstan, for 7 years the gross inflow of foreign direct investment in the manufacturing sector has increased by 1.4 times. The volume of exports of manufacturing products had a large amplitude of fluctuations, but in the past year compared to 2009 grew by 7.5%, despite the fall in prices for export positions.

It is also worth noting that the processing sector, even in the last two difficult years, shows a positive trend and for nominal output for two years exceeds the volume of production in the oil and gas sector.

So, if in 2010 products for 6.2 trillion tenge were produced in the oil and gas sector, and only 3.8 trillion tenge in processing , then by the end of 2015 and 2016 in the manufacturing industries, the output was 6 and 7.7 trillion tenge, against 5.8 and 7.3 trillion tenge in the oil and gas sector.

Drivers providing growth were primarily the priority sectors of SPIID. So, in 2016 production of non-ferrous metallurgy products increased by 8.5%, ferrous metallurgy by 3.3%, food products by 3.9%, agrochemistry by 9.9%, agricultural machinery by 5.6%, oil products by 0.4%.

Since 2010, under the Industrialization Map, 1060 projects have been introduced for the amount of 5.1 trillion tenge, 100.2 thousand permanent jobs have been created. Such large projects as the Aktobe rail-track plant, the production of chlorine-alkaline products of JSC Kaustik, the production of Talgo passenger carriages and others have been put into operation.

Due to the industrialization program in Kazakhstan, the quality of the industry has been qualitatively updated. In addition to the traditionally strong industries of metallurgy and the food industry, 26 new manufacturing sectors have appeared. These are the automotive industry, railway engineering, the titanium industry, the production of medical equipment, solar and wind power, and others.

Clear objectives and actual plan

In 2015, the implementation of the State Program for Industrial and Innovative Development of the Republic of Kazakhstan for 2015-2019 (SPIID) began. The program is a logical continuation of the first five-year industrialization and part of the country's economic policy.

The first year coincided with a period of growing problems in the world economy. At the same time, a number of factors appeared that negatively affected the implementation of SPIID. In this regard, the program was updated in September 2016 by the Decree of the Head of State, and in December 2016 the Action Plan for its implementation was adopted.

The main goal of the program is to stimulate the competitiveness of the manufacturing industry, increase labor productivity and increase exports of processed goods.

The SPIID provides for four target indicators in the manufacturing industry until 2019: an increase in the value of exports of manufactured products, a real increase in labor productivity, an increase in the volume of investments in fixed assets and a decrease in its energy intensity.

Speaking about the results of the current year, then labor productivity by medium and large enterprises for the I quarter of 2017 by the same period of 2016 increased from $8.6 to 11.8 thousand (real growth 5.3%).

The volume of investments in fixed assets of manufacturing industry in January-August 2017 increased by 36.8 billion tenge. As compared to January-August of 2016 and made 526 billion tenge.

For the first half of 2017, 32 projects have been introduced with the creation of 3.9 thousand permanent jobs. Modern projects on the production of metal structures using robot welding methods (Zhigermunayservis, Atyrau region), a complex of plants for the production of dry construction mixtures, fine fillers and gypsum (Alina Holding, Zhambyl region), a glass plant (Almaty Glass, Almaty region) and others have been implemented.

These and other data show that the manufacturing industry has become more resistant to external and internal challenges - despite the situation in recent years, the sector has never shown a negative dynamics of development.

The impact of SPIID on the economy

Industrialization is changing the structure of the economy. Thus, according to the MID RK, the contribution of the manufacturing sector to the development of the economy (GDP) increased from 11.3% in 2010 to 11.7% in the first half of 2017, in exports from 27.9% in 2010 to 32.5% for 7 months of 2017, in the gross inflow of foreign direct investment - from 7% in 2005-2009 to 19% from the beginning of the Second five-year plan (from 2015 to the 1st quarter of 2017).

In addition, the complexity of Kazakhstan's economy is increasing, which characterizes its development, stability and diversification. Thus, according to the Harvard University's Economic Complexity Index, in 2010-2015 Kazakhstan rose in this rating by 14 positions from 92nd place to 78th.

This means that we began to produce and export more different products that are more competitive in the world market. Such goods include titanium, flat-rolled products, copper products, steam turbines, radiators, beverages, confectionery, etc. It should be noted that to date Kazakhstan's manufacturing products are exported to 110 countries.

Speaking in general, industrialization through the development of manufacturing industries is the catalyst and basis for diversifying the entire economy. It is a strong manufacturing sector that productive services will be formed, and an increase in exports of processed goods will give the economic stability and less dependence on commodity prices.

The manufacturing industry has an increasing influence on the formation of the middle class. Thus, according to the Information Technology and Innovation Fund (USA), the creation of one workplace in the manufacturing industry leads to the creation of two to five additional jobs in other sectors, the development of technology leads to an increase in the knowledge and skills of workers.

At the same time, it should be noted that the process of formation and development of competitive manufacturing industry requires a long-term and consistent state policy taking into account realistic business and state capabilities, the balance of economic, political and social development and progress. This is proved by the experience of South Korea, China and countries of Western Europe.

Projects for the future

According to the MID RK, until the end of 2017 it is planned to complete about 100 projects worth about a trillion tenge with the creation of 10,000 permanent jobs, including the production of railway wheels (Prommashkomplekt, Pavlodar region), oil and gas equipment and pipes (Kazakhstan plant of oil equipment, Aktobe region), food products (Marevan Food, Kapshagai), technical re-equipment of machine-building production (Netherlands) (Maker, Karaganda region), alloyed aluminum (Giessenhaus on Pavlodar SEZ).

It can be stated that Kazakhstan successfully conducts the chosen course for a new industrialization, development of production and a departure from raw dependence. It is still too early to speak about global changes in the structure of the economy: they are expected in the long run, but now we have a tangible socio-economic effect from the implementation of SPAIID and SPIID.

Source: Prime Minister of the RK press service