Government pledges $67 billion to Modernise Industry
President Nursultan Nazarbayev on Thursday told global oil and metals majors working in Kazakhstan he will force them to help the country diversify its economy as the government pledged $67 billion to modernise industries.
"We will adopt such laws, which will force you - all investors who are tapping Kazakhstan's resources riches - to cooperate closely on the industrialisation programme," he told a foreign investment conference.
"We will work only with those who propose executing projects directly aimed at diversifying the economy," he told investors including executives fr om ArcelorMittal, Chevron, Total and ENRC.
"And that means that in sectors wh ere required projects are not being realised we will look for new partners, offer them favourable conditions and resources to fulfil projects."
He gave no details but has previously identified the chemical and metals industries and agriculture as requiring special support.
Kazakhstan has attracted dozens of billion of dollars in investments from global oil and metals majors since the collapse of the Soviet Union to help it tap vast natural resources.
As the prices of commodities grew the country became more assertive and regained stakes in many projects while slapping higher taxes on foreign-led projects.
The global crisis has ended a decade of explosive growth after crippling booming construction and banking sectors and has highlighted the need to diversify the economy to reduce risks associated with lower commodity prices in the future.
The government said in documents prepared for investors some 10.015 trillion tenge ($67 billion) will be spent on an industrialisation programme between 2010-2015.
Some 459 billion tenge will be spent from the budget, another 511 billion from the National Fund while 2.4 trillion tenge has already been attracted via loans from China's EximBank, China Development Bank and Russia's state banking agent VEB, the government said, without giving details.
"As for investment ... we can say that we achieved a real breakthrough in 2009," said Nazarbayev. "Thanks to high-level contacts with countries like South Korea, China, Italy, France, Turkey and Belarus, we reached agreements on various projects worth more than $25 billion".
He said Beijing had asked Kazakhstan, a flat nation the size of Western Europe populated by only 16 million people, to allow it to use one million hectares of land to cultivate crops such as soya and rape seed.
Kazakhstan's GDP growth slowed to 3.2 percent last year from 8.7 percent in 2007 and Nazarbayev said economic growth was still achievable in Central Asia's biggest economy this year despite the lingering effects of the economic crisis.
"Industrial production reached last year's levels in the first 10 months of this year, which gives us reason to believe that this year we will achieve some growth, even if just minimal," said Nazarbayev.
Kazakhstan has tapped into its rainy-day oil fund to pump billions of dollars into the economy to reinvigorate business activity, but the banking sector remains in a critical state, with several top banks embroiled in tough restructuring talks.
Speaking to Reuters earlier this week, visiting European Bank for Reconstruction and Development chief Thomas Mirow expressed a less optimistic view, saying the economy was likely to shrink by up to 2 percent this year, according to Reuters.