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A WEEKLY ONLINE PUBLICATION / WWW.MFA.GOV.KZ ISSUE NO. 379 / FRIDAY, NOVEMBER 07, 2014

OIC Sec Gen, Kazakh FM Discuss Food Security, OIC’s Role

Major Samruk Transformation Details Unveiled by Fund Chairman

Also In The News

New Kazakh-British Inter-Gov’t Commission Meets in Astana

OIC Sec Gen, Kazakh FM Discuss Food Security, OIC’s Role

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Foreign Minister of Kazakhstan Erlan Idrissov met Secretary General of the Organisation of Islamic Cooperation (OIC) Iyad bin Amin Madani on Oct. 30 in Astana to discuss bilateral cooperation and explore the possibility of establishing an OIC food security organisation with a headquarters in Astana.

The idea of creating an Islamic Organisation for Food Security (IOFS) proposed by President Nursultan Nazarbayev a few years ago became a focal point of negotiations on Madani’s visit, Idrissov told a press conference after the meeting, expressing gratitude for the OIC’s support for the idea. “The OIC and Kazakhstan will hold the first General Assembly of the Islamic Organisation for Food Security in March – April 2015 and the seventh meeting of OIC agriculture ministers for food security in Kazakhstan,” he said. The OIC leadership will help Kazakhstan organise a meeting of experts in Jeddah, Saudi Arabia, this January to prepare for the events.

In a related development, on Nov. 6 Kazakhstan’s Senate plenary session approved a draft law “On ratification of the Charter of the Islamic Organisation for Food Security,” the Kazinform news agency reported. The bill will now be sent to President Nazarbayev for his signature.

During the Oct. 30 meeting, Idrissov noted that the OIC provides a collective voice for the Muslim world, as well as a mechanism for promoting cooperation and security. Promoting peace and progress is a major OIC task, he said. He stressed Kazakhstan’s desire to build its relationship with the OIC, referring to the positive response to the country’s 2011-2012 chairmanship, during which some 40 events were conducted.

The parties also discussed enhancing cooperation between Kazakhstan and the Islamic Development Bank (IDB), a significant OIC instrument that Idrissov credited with helping reform and develop Kazakhstan’s economy. Increasing cooperation with institutions like the Islamic Centre for the Development of Trade, the Islamic Chamber of Commerce and Industry and the Statistical and Economic and Social Research and Training Centre for Islamic Countries was also discussed.

Kazakhstan was the first country among the Commonwealth of Independent States (CIS) to partner with the IDB. Kazakhstan’s 2011 OIC chairmanship and initiatives set forth by the OIC Astana Declaration promoted bilateral collaboration and the gradual integration of Islamic banking into Kazakhstan’s financial system.

Foreign Minister of Kazakhstan Erlan Idrissov (left) and OIC Secretary General Iyad bin Amin Madani during a meeting in Astana

Idrissov and Madani also touched on economic and humanitarian cooperation between OIC states in Central Asia, a recent success of which was the first investment forum on a 10-year action plan for Central Asian OIC states, held in Dushanbe on Oct. 27-28. Almaty will be the OIC cultural capital of the Islamic world for 2015, and the parties also discussed cultural events scheduled in that context, which are intended to expand cooperation and humanitarian ties.

Kazakhstan has recently been increasing efforts to cooperate with the global Islamic community, building economic and cultural ties and broaching political and security issues. In 1995, Kazakhstan joined the Organisation for Islamic Conference (later renamed the Organisation of Islamic Cooperation) and in 2011 – 2012 became the first Central Asian country to chair the organisation as head of its Council of Foreign Ministers.

Madani arrived in Almaty on Oct. 29 and met with students and faculty of the Al-Farabi Kazakh National University, briefing them on the OIC’s background and main areas of activity and emphasising Kazakhstan’s contribution to peace and economic development across the Muslim world.

Including 57 countries and uniting a population of 1.5 billion people, the OIC is the largest interstate association in the Muslim world. The organisation was founded in 1969 and aims to ensure Islamic social, economic and political solidarity, to support Palestine and to maintain the fight against colonialism and racism.

Kazakhstan was the first country among the Commonwealth of

Independent States (CIS) to partner with the IDB. Kazakhstan’s 2011 OIC

chairmanship and initiatives set forth by the OIC Astana Declaration promoted bilateral collaboration and

the gradual integration of Islamic banking into Kazakhstan’s financial

system.

Major Samruk Transformation Details Unveiled by Fund Chairman

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The transformation of Kazakhstan’s Samruk Kazyna Welfare Fund will see a redistribution of responsibilities within the fund and changes to its portfolio structure and approach to investment, Chairman of the Board of Samruk Kazyna Umirzak Shukeyev said in a recent interview. The reform will require internal changes, including personnel training and seeking out foreign expertise, as well as legislative changes in Kazakhstan.

Samruk Kazyna’s transformation programme, which is expected to modernise Kazakhstan’s economy and add $11 billion to the country’s gross domestic product by 2020, was unveiled at a privatisation forum on Oct. 6.

Building a stronger board of directors that includes international experts is one key change. “The fund needs to strengthen its board of directors, involving international experts and providing them with full decision-making power. The fund also needs to significantly optimise interaction with government bodies, shifting the focus from statistical reporting to business activity,” Shukeyev said in an Oct. 27 interview. This will require changes to Kazakhstan’s business legislation and a review of tariff regulation, he said.

Fund personnel are also going to be directed away from the government and toward private industry, he said, as in successful peer funds employees spend at least three quarters of their time increasing the value of existing portfolio companies and finding and managing new projects, he said. “In Samruk Kazyna at the moment, 60 percent of industry employees’ working time is devoted to building up relationships with government authorities. Therefore, in order to improve the quality of asset management, the fund needs to reorient industry-specific teams to work more to add value to existing portfolio companies and develop new projects.” This will involve retraining existing employees and hiring new, highly skilled professionals with international working experience.”

Shares in 106 companies worth $9 billion, including some shares in strategic assets, have also been put up for sale as part of a massive privatisation process. Fourteen companies are currently up for sale completely.

The Samruk Kazyna Welfare Fund recently announced a major restructuring to improve the fund’s value

As long as they adhere to procedures enshrined in Kazakhstan’s legislature, foreign buyers will be able to purchase shares in strategic assets, Shukeyev said on Oct. 27, though there may be legal restrictions to ensure national security.

“Four national companies, including KEGOC (the Kazakhstan Electric Grid Operating Company), Kazakhstan Temir Zholy, Kazatomprom and Samruk-Energy, will come into the stock market in the framework of the People’s IPO programme. In addition, we are going to attract strategic investors to the Kazakhstan Engineering Company, 49 percent of the shares of which will be put up for sale as well,” Shukeyev said.

Samruk Kazyna intends to use the income to invest in innovative companies and technologies, with an emphasis on energy, mining, petrochemical, real estate and development businesses, Shukeyev said.

International best practices are guiding the transformation process, Shukeyev said. “The fund’s transformation process started with the study of international experience and comparative analysis. Among the success stories of transformation are the sovereign wealth funds Mubadala, Khazanah, Temasek, as well as the Sberbank, La Poste and Statoil companies.”

Singapore’s Temasek Holding, for example, increased its profits through restructuring its portfolio to follow a “Yellow Pages rule” that kept it from interfering too much in the private sector and bringing in more professional management.

“Since 2004, Temasek has been actively committed to building a professional investment holding company that would work in emerging markets, with more than 14 industry clusters and global geographic coverage,” Shukeyev said. The holding began investing around the world and now 69 percent of the company’s assets are overseas, he said, and in five years, the portfolio grew from $54 billion to $170 billion.

Transformations like those are informing Samruk Kazyna’s shift. “Even minor optimisation of operating expenses by 2 percent will save 90 billion tenge (US$49.75 million) in the Samruk Kazyna group of companies, while the fund is setting more ambitious goals,” the chairman said.

New Kazakh-British Inter-Gov’t Commission Meets in Astana

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The first session of the Kazakh-British Intergovernmental Commission on Trade, Economic, Scientific, Technological and Cultural Cooperation (IGC) took place in Astana on Nov. 5, providing a platform for learning about each other’s socio-economic situation and discussing bilateral cooperation. The high-level meeting was led by Asset Issekeshev, Kazakhstan’s minister of investment and development, and U.K. Minister for Trade and Investment Lord Ian Livingstone.

“During the meeting, it was announced that the volume of trade turnover of Kazakhstan and the U.K. for the first half of 2014 exceeded $643 million. The inflow of direct investment from the U.K. to Kazakhstan in the period from 2005 to the first quarter of 2014 amounted to about $ 10.5 billion,” said Issekeshev at a press conference.

More than 600 British companies are currently operating in Kazakhstan in the oil and gas, mining, energy, transport and banking sectors, and the U.K. representatives noted that their companies are interested in participating in Kazakhstan’s second five-year period of industrialisation.

The parties agreed to continue active cooperation between Kaznex Invest and U.K. Trade & Investment (UKTI). In particular, Kaznex Invest submitted to UKTI a list of 40 promising investment projects relating to mechanical engineering, chemistry, pharmaceuticals and the agro-industrial complex in Kazakhstan.

The parties also reached an agreement on the provision of consultancy support by U.K. companies and research institutes in the field of geology and mineral resources. With the participation of the Nazarbayev University Research and Innovation System (NURIS) and the Kazgeologiya national company, the two sides will aim at creating a world-class geological cluster in Kazakhstan.

Kazakhstan and the United Kingdom also praised the cooperation of Kazgeologiya and Rio Tinto for the implementation of their joint projects exploring porphyry copper ores in the Balkhash-Saryshagan area and the Korgantas area in the Karaganda region. Technological cooperation will be implemented throughout the exploration as the projects continue and Kazgeologiya employees will be trained by Rio Tinto.

The first Kazakh-British Intergovernmental Commission for Trade, Economic, Scientific, Technical and Cultural Cooperation meeting was held Nov. 5 in Astana

Among the visitors from the U.K. was Professor Charles Hendry, trade envoy of the prime minister of the U.K., who presented a special report to the working group of companies in the energy industry. His counterpart Magzum Mirzagaliev, vice minister of energy of Kazakhstan, was also in attendance.

David Wootton, co-chairman of the Kazakh-British Trade and Industry Council (KBTIC), presented the possibilities of partnerships between the National Bank of Kazakhstan and City of London companies. The City of London Corporation also showed an interest in helping Kazakhstan develop the Almaty Financial District as a regional centre for finance.

Also on the agenda of the first meeting of the IGC was the creation of joint ventures between small and medium enterprises in the energy sector in the framework of the Kazakhstan-British programme for the development of partnerships.

Special attention was paid to improving existing mechanisms for cooperation in science and education, including the development of Kazakhstan’s Bolashak Presidential Scholarship, which sends top students from Kazakhstan to study at universities overseas. Prospects for further cooperation within the Newton–Al Farabi Partnership Programme, as well as expanding relations in science, education and innovation, were also discussed during talks on educational cooperation.

Promising areas of bilateral cooperation were selected in culture, tourism and healthcare. Kazakhstan also expects British businesses to be actively involved in the organisation and conduct of the international specialised exhibition, EXPO 2017, to be held in Astana.

The large delegation of British businesses was met by several familiar high officials, among them Yerzhan Kazyhanov, former foreign minister and current ambassador of Kazakhstan to the U.K.

The establishment of the IGC was proposed during a meeting between President of Kazakhstan Nursultan Nazarbayev and Prime Minister of the U.K. David Cameron during Cameron’s first visit to Kazakhstan in 2013.

Also In The News... • AmbassadormeetswithEXPOOmanGeneralCommissionerinMuscat

Kazakhstan’s ambassador to Oman, Yerzhan Mukash, met with EXPO Oman General Commissioner and Deputy Trade and Industry Minister of Oman Mohsin bin Khamis Al Balushi on Oct. 29 to discuss bilateral cooperation between the two countries, including preparations for the international exhibition EXPO 2017 in Astana. Mukash briefed Al Balushi on the results of the first meeting of the EXPO 2017 international participants, held on Oct. 22-23 in Astana. Al Balushi said Oman would provide any assistance in preparing for and conducting the important international event. He also expressed interest in establishing business contacts with Kazakhstan’s EXPO Commissioner Rapil Zhoshybayev, and proposed holding bilateral negotiations within the Milan forum scheduled for Dec. 1-3. (mfa.gov.kz)

• Kazakhstan becomes co-founder of Asian InfrastructureInvestmentBankKazakhstan became a co-founder of the Asian Infrastructure Investment Bank (AIIB) in an effort to strengthen its bid for a nonpermanent seat on the UN Security Council for 2017-18 and contribute more to regional and international peace and security. Through the AIIB, developing Asian states will be able to create infrastructure and maintain rapid, stable and sustainable economic growth, while developed countries will get an opportunity to expand their demands in capital expenditures and stimulate economic recovery. The AIIB’s key mission is to provide additional assistance to Asian states by combining the efforts of its member states. Any state that observes the AIIB memorandum and receives its co-founders’ support can become a co-founder of the bank and earn the right to participate in negotiations on the AIIB Charter. The memorandum on establishing the AIIB was signed in October at a meeting of its founding states in Beijing. The AIIB’s co-founders include Bangladesh, Brunei, Cambodia, China, India, Kuwait, Laos, Malaysia, Mongolia, Myanmar, Nepal, Oman, Pakistan, the Philippines, Qatar, Singapore, Sri Lanka, Thailand, Uzbekistan and Vietnam, with the headquarters to be in Beijing. The AIIB Charter is to be signed and enter into force in 2015, while the bank is to officially open toward the end of 2015. (mfa.gov.kz)

• KazakhstanandArgentinagovisafreeOn Nov. 1, an agreement between the governments of Argentina and Kazakhstan entered into force, allowing citizens of the two states to make reciprocal visits without a visa for up to 30 days.Relaxing visa requirements for Kazakhstan’s citizens is one of the country’s Foreign Ministry’s priorities. Over the last year, Kazakhstan has relaxed or completely abolished visa regimes with six Latin American countries: Brazil, Argentina, Chile, Ecuador, Colombia and Mexico. Kazakhstan’s citizens can also now get five-year visas to the United States. This summer, Kazakhstan and South Korea also established visa-free travel for their citizens with an agreement signed during the visit of Korean President Park Geun-hye to Kazakhstan. Visa liberalisation with the European Union is also underway, though the new agreement on enhanced partnership and cooperation between Kazakhstan and the EU that, among other things, facilitates visa procedures.(mfa.gov.kz)

• Researchers from Kazakhstan create cheap method of DNAanalysisResearchers in Kazakhstan have developed an affordable and efficient PCR (polymerase chain reaction) test system that can be operated without expensive PCR cyclers, using a conventional fuser or water bath. Bauyrzhan Aytuov, biochemist Adilbek Zholzhasov and geneticist Bulat Sultankulov developed the new system. The main issue with PCR systems in Kazakhstan was that they were not produced domestically and had to be imported, he said, and conducting PCR analyses required multi-million dollar equipment, primarily PCR cyclers. The team’s final products are ultra-precise diagnostic kits for the entire spectrum of viral infectious diseases of humans and farm animals. This affordable test system can be used in urban diagnostic centres and rural hospitals, which often cannot afford to purchase expensive equipment. (astanatimes.com)

• Astana 2017 Company, Chinese Chamber of Tourism signagreementduringTourismEconomyForumThe third Global Tourism Economy Forum (GTEF) took place in Macau on Oct. 27-28. Kazakhstan’s delegation, headed by First Deputy Foreign Minister Rapil Zhoshybayev, reported on the upcoming EXPO 2017 and Kazakhstan’s tourism potential. A special session devoted to tourism in Kazakhstan and EXPO 2017 provided information about the upcoming international specialised exhibition and sights of Kazakhstan. A memorandum of cooperation between the Astana EXPO 2017 National Company and the Chamber of Tourism of China was signed during the forum. Membership of the state-owned company in the Pacific Asian Travel Association

(PATA) was agreed upon and a memorandum of cooperation was signed. Another point of interest at the forum was a face-to-face session between private sector global leaders and tourism ministers from Europe and Asia. At the session, Zhoshybayev described trends in world tourism and measures undertaken by the government of Kazakhstan to improve the tourism climate, as well as plans to develop infrastructure. Zhoshybayev, who also serves as the national EXPO 2017 commissioner, stressed that EXPO 2017, to be held in Astana in from June to September 2017, will drive tourism in the country. Zhoshybayev held talks with the ministers of tourism of Cambodia and Croatia, as well as Director of the UN World Tourism Organisation (UNWTO) Márcio Favilla and Chairman of PATA Scott Supernaw. Kazakhstan and the UNWTO agreed on a joint action plan, which will include training volunteers from Kazakhstan and developing research to improve the country’s visa policy. Following the meeting, Zhoshybayev invited participants to visit Kazakhstan. (astanatimes.com)

• AirAstanasignscode-shareagreementwithAirIndiaKazakhstan’s largest airline, Air Astana, signed a free flow code-share agreement with state-run airline and Star Alliance member Air India on Oct.28 in New Delhi. Air India will be a marketing carrier while Air Astana operates daily flights on the Delhi-Almaty route. “As a state-run airline and Star Alliance member carrier, Air India feels honoured to enter into this code-share agreement with Air Astana. This agreement has enabled Air India to reach out to the CIS [Commonwealth of Independent States] and eastern European market,” said Chairman and Managing Director of Air India Rohit Nandan. The agreement means a customer can purchase a ticket from any of the parties, while the flight is conducted by only one of them. It facilitates routing for customers, as cooperating airlines strive to synchronise their schedules and coordinate luggage handling, making transfers between connecting flights less time-consuming. The cooperating airlines also share the responsibility for late luggage and subsequent missed flights resulting from delays by one of the partners. (astanatimes.com)

• ShabytinternationalartsfestivalkicksoffinAstanaThe 17th Shabyt International Festival of Creative Youth started at the Palace of Peace and Accord in Astana on Nov. 3 and will run through Nov. 8. The event was organised by the Astana city administration, the Culture Department of Astana City and the Kazakh National Arts University. According to organisers, most applications to the festival came from the North Kazakhstan region and Shymkent. This year’s festival has two new nominations: folk music and chamber choir. In addition to the competition, festival participants can take master classes by internationally-renowned musicians and performers. (inform.kz)

• AstanatohostfirstEurasianCongressofConstructionIndustryOn Dec. 2-3, the first Eurasian Congress of the Construction Industry will kick off in Astana, providing an opportunity to compare positions on economic development issues in Belarus, Kazakhstan and Russia; discuss problems and prospects of the construction industry; seek new solutions and ideas for the development of construction in the three countries and negotiate a plan for Astana’s preparations for EXPO 2017. An exhibition at the congress will present the latest developments in building technologies, equipment and goods and services, as well as large-scale construction projects. Projects on EXPO 2017, green technology, architects and designers, highly intellectual solutions for industry and high-tech industries and investment will be presented. The congress is to be attended by representatives of the construction industry; leading experts of the Eurasian Economic Union; heads of government agencies, construction companies, industry associations and unions; manufacturers of materials and equipment and representatives of educational and scientific and financial institutions. The event was founded Kazakhstan’s National Chamber of Entrepreneurs and is being organised by the KazExpoService Company. (inform.kz)

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