The Rise Of Landlocked Kazakhstan

The Rise Of Landlocked Kazakhstan

Sharing land borders with two superpowers — China and Russia — would intimidate any developing economy. The economic and military might of both these nations dwarf more than 90% of the world’s nations.

Kazakhstan, which shares the northern and western border with Russia and China on the east, has been able to capitalise on these giants to further its economic cause.

Being the largest landlocked country in the world, Kazakhstan strives to be one of the 30 developed countries of the world by 2050.

For the next three months, Kazakhstan’s capital Astana will host the prestigious EXPO 2017 international exhibition, making it the first country in the Commonwealth of Independent States (CIS) and Central Asian region to host the global event.

Under the leadership of President Nursultan Nazarbayev, Kazakhstan is plotting the path for the third modernisation of Kazakhstan, towards competitiveness regionally and globally.

The republic’s first modernisation began 25 years ago after declaring independence from the then Soviet Union. The country transited from a planned to a market-based economy.

Kazakhstan, which was previously the second-largest territory in the former Soviet Union, launched the second modernisation programme and the adoption of “Strategy-2030” including making Astana the new capital from Almaty.

The second modernisation programme has been successful as the country pulled itself out of economic backwardness and became one the 50 most competitive countries in the world.

Kazakhstan has the largest and strongest performing economy in Central Asia, growing at an average of 8% until 2013, supported by rising oil output and prices.

Buoyed by high world crude oil prices, gross domestic product (GDP) growth figures were between 8.9% and 13.5% from 2000 to 2007.

In 2016, the country’s economy continued to grow at 1.1%. Kazakhstan’s GDP advanced 3.4% year-on-year in the first-quarter of 2017, compared to a -0.2% contraction a year ago.

In a country coverage issued in April, International Monetary Fund (IMF) noted that Kazakhstan continues to withstand challenges from lower oil prices and slower growth in Russia, China and Europe.

“Growth in 2016 was positive, and a pickup is expected in 2017. Growth is projected to reach 2.5% in 2017 and non-oil growth should reach 4% by 2021,” the IMF had highlighted.

It tied the growth targets to the Kazakh government’s reform efforts, unlocking bank lending and a further increase in oil production.

Kazakhstan exports mining products, fuel, energy, the products of metallurgical and chemical industries, along with grain. The main trade partners of the country are Russia, China, Europe and the CIS.

Kazakhstan is a leading exporter of uranium, among the world’s top 10 exporters of grain and is one of the leaders in flour export. Nearly 70% of arable land in the north of the country is occupied by grain and industrial crops — wheat, barley and millet. Rice, cotton and tobacco are cultivated in the south of the country.

There are more than 5,000 deposits of mineral resources in the country, the estimated cost of which is said to be tens of trillions of dollars. The country is ranked first in the world for explored reserves of zinc, tungsten and barite.

Kazakhstan also has significant oil and gas resources and holds the ninth place in the world in proven oil reserves, mostly located in the western regions. In addition, the country’s uranium and coal deposits are the second- and the eighth-largest in the world respectively.

Not carried away by such rich economic resources, the Kazakh government has embarked on the third national modernisation journey.

In a televised announcement to the people of Kazakhstan in January, Nazarbayev spelled five key priorities for the country to realise its third modernisation goals.

The focus areas include — acceleration of technological modernisation of the economy; fundamental improvement and expansion of business environment; macroeconomic stability; human capital enhancement and institutional reforms, security and fight against corruption.

Nazarbayev, who has been the country’s president since 1991, also urged the government to develop a strategic development plan for up to 2025 for the third modernisation of Kazakhstan.

“We have no choice but to worthily accept the challenges of the times and fulfil the tasks of continued modernisation of the country,” he said.

Nazarbayev said the Kazakh government will accelerate the technological modernisation of the economy, by developing and adopting a separate “Digital Kazakhstan” programme.

“It is essential to develop in the country promising sectors such as 3D-printing, online trade, mobile banking, digital services — including in healthcare and education.

“These industries have already changed the economic structures of the developed countries and have added a new quality to traditional industries,” the president pointed out.

Kazakhstan’s traditional core industries include agriculture, construction, transport and logistics. The government was also told to prepare its personalised investment strategy by September 2017, in line with the republic’s target to double

non-commodity exports by 2025. Nazarbayev said Kazakhstan must retain its leadership in drawing foreign investment, as the country needs to integrate into the global chain of production, and sale of goods and services. The Kazakh government has also agreed with China to set up production facilities in Kazakhstan, which could create 20,000 new jobs for the locals.

“There will be modern production units creating over 20,000 new jobs for the people of Kazakhstan. Six projects have already been launched and two have started,” he added.

In line with the development of the new Eurasian logistics infrastructure, which envisions the revival of Kazakhstan’s historical role as the major bridge between the two continents, Nazarbayev urged the government to ensure that by 2020, the overall volume of transit traffic through Kazakhstan to increase by 100%.

This includes a sevenfold increase in freight transported in containers to two million containers, as well as US$4 billion (RM17.2 billion) yearly in revenues from transit carriages.

“Considerable investments have already been made and now economic returns must be gained from them,” said Nazarbayev.

He also proposed for considerable attention to be paid on expanding Kazakh students’ exposure to English language, without sidelining the official Kazakh language.

He said beginning in 2019, some subjects in schools would be taught in English. “Without English know-ledge, Kazakhstan will not achieve countrywide progress.”

Kazakhstan also aims to have 50% of its GDP by 2050, to be contributed by the small and medium enterprise sector.

Although ambitious, Nazarbayev said it would be achievable on productive employment and development mass entrepreneurship programmes.

The government should also take steps to drastically reduce all type of costs for businesses — especially in cost of power, transport, logistics, housing and utilities.

On the whole, Kazakhstan, with a population of 18 million and literacy rate of almost 100%, is set to rise.