Kazakhstan
News Bulletin
Released weekly by the Embassy of the Republic of Kazakhstan
www.kazakhembus.com
                                               
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No 12, October 17, 2007

POLITICS
President Nursultan Nazarbayev arrives in Iran to take part in the Second Caspian States Summit
Kazakhstan’s Ambassador to the United States testifies before the US Helsinki Commission
China, Kazakhstan build on a solid foundation 

ECONOMY
Kazakhstan seeks diversification of routes for energy supplies – President Nazarbayev
Much to explore and tap in Kazakhstan

OTHER NEWS
Eleven Kazakh boxers to participate in largest world boxing championships in history



POLITICS

President Nursultan Nazarbayev arrives in Iran to take part in the Second Caspian States Summit

President Nazarbayev arrived in Tehran on October 15 to take part in the Second Summit of Caspian Sea Littoral States. After the official meeting ceremony President Nazarbayev and his Iranian counterpart, President Ahmadinejad, held bilateral negotiations.

The two Presidents expressed their satisfaction with the dynamic development of Kazakhstan-Iran relations and agreed that the two countries managed to establish a stable political dialogue, with growing bilateral trade turnover and strengthening cultural and people-to-people ties.

Iran is an important neighbor and large regional actor. Kazakhstan is interested in developing relations with Iran in a constructive way with respect to the national interests of both states. Today, the two countries closely interact within the framework of the UN, Organization of the Islamic Conference, Shanghai Cooperation Organization, Organization for Economic Cooperation, etc.

The two leaders underscored that their trade-economic and investment cooperation is based on large-scale partnership between Iran and Kazakhstan. They discussed in detail the possibility of broadening further the energy cooperation paying particular attention to continuing the mutually beneficial export of Kazakhstanian oil to Iran.

One of the successful examples of regional cooperation is the project that envisages the construction of a railroad Usen-Gyzylgaia-Bereket-Etrek-Gorgan. Implementing this project will allow Kazakhstan to obtain straight access to the Persian Gulf. The route has 650 kilometers in length and will cross Kazakhstan, Iran and Turkmenistan.

Kazakhstan is also interested in exporting its grain to Iran. Since early 2007 Kazakhstan has exported 187,000 tons of grain to Iran.  Kazakhstan is also open for Iranian investors who could finance viable projects in manufacturing, infrastructure, transport, telecommunications, etc. In turn, Kazakhstanian companies are interested in participating the privatization of a number of Iranian industrial enterprises.

“We have established good relations with Iran, signed a number of documents over the years. As a result, the volume of mutual commodity turnover has reached two billion dollars,” President Nazarbayev said at a press briefing after the high-level talks.


Kazakhstan’s Ambassador to the United States testifies before the US Helsinki Commission

On Tuesday, October 16, Ambassador of Kazakhstan, HE Erlan Idrissov, testified in the US Congress during the Helsinki Commission’s hearings on Kazakhstan’s bid to chair the Organization for Security and Cooperation in Europe in 2009.

Ambassador Idrissov highlighted the key points of his country’s official position on the OSCE chairmanship citing a number of arguments in favor of Kazakhstan’s bid. He strongly urged the US to support the young republic in achieving one of its main foreign policy goals. “Kazakhstan as a trustworthy partner of the US… has every right to count on reciprocity over this matter,” he claimed during the hearings.   

Other witnesses, including Freedom House’s Director of Programs, Dr. Robert Herman, US National Security Council’s former Central Asian affairs guru, David Merkel, and a prominent opposition figure from Kazakhstan, Evgeniy Zhovtis, offered their own insights into the issue.        

Dr. Herman and Mr. Zhovtis expressed rather critical views on Kazakhstan’s chances to chair the influential organization, whereas Mr. Merkel adopted a more optimistic approach calling for support of the Central Asian state’s aspirations as, according to him, Kazakhstanian ambitions fully comply with the best interests of the OSCE as well as those of the United States.

US Helsinki Commission’s co-chairman, Rep. Alcee Hastings, was all balance and impartiality in his comments, warning the participants however that no country is ideal and that becoming chairman-in-office is a heavy responsibility which can itself encourage further change and transformation in any state.

The questions & answers session, which followed the main discussion, brought about a lively debate involving the audience.   


China, Kazakhstan build on a solid foundation 

By Zheng Lifei, China Daily, October 15, 2007

For Ikram Adyrbekov, Kazakhstan's Ambassador to China, the cultural events that make up the Days of Culture of Kazakhstan in China are symbolic of the strong cultural ties between the two countries.

"I strongly believe that cultural ties provide additional impetus to efforts to promote the genuine strategic partnership proclaimed by presidents Nursultan Nazarbayev and Hu Jintao in 2005," Adyrbekov said.

The ambassador hopes the weeklong cultural gala, which opens today in Beijing, will help Chinese people understand Kazakh culture's blending of tradition and modernity, the Orient and Occident and nomadic and sedentary ways of living.

"The leaders of both states, during their regular and efficient encounters, have consistently accentuated the importance of expanding the cultural and humanitarian spheres," the ambassador said.

"That kind of interaction is regarded as a major tool of grass-roots diplomacy, which has proved quite helpful for 16 years of diplomatic relations between the two countries," he said.

While growing numbers of Chinese people have been visiting Kazakhstan for sightseeing and business in recent years, more and more people from Kazakhstan are also showing interest in China.

The increasing interest of the Kazakh people in China, its civilization, language and culture, "is demonstrated by the fact that now up to 3,000 Kazakh students are studying in Chinese universities and colleges," the ambassador said.

The figure was 1,825 last year, according to Ministry of Education.

"The people of Kazakhstan have strong feelings for China and the Chinese people. It seems quite logical to me since our ancestors lived side-by-side for many centuries, mutually enhancing each other's international politics, everyday life, culture and traditions," Adyrbekov noted.

"Kazakhstan people regard modern China as an influential, constructive and friendly neighbor, which has proved to be a reliable political and economic partner," the ambassador said.

"The Kazakh society and establishment regard the future development of equal and pragmatic interaction as a firm guarantee of the stable and successful development of both Kazakhstan and Central Asia in general," he added.

Yet the cultural and humanitarian ties are just part of the relationship between China and Kazakhstan, which also includes economic, trade and political connections that have been blossoming since the two countries established diplomatic ties in 1992.

Kazakhstan is now China's biggest trading partner in Central Asia. The volume of trade between China and Kazakhstan reached $8.3 billion last year. The figure was $370 million in 1992.

The amount of trade between two countries, the ambassador said, is a crucial parameter of bilateral economic cooperation.

The two countries have vowed to make concerted efforts to push the annual volume of bilateral trade to $15 billion by 2015, according to a joint communiqu signed this year during a visit by President Hu Jintao to Kazakhstan in August.

"It's really satisfying that this year Kazakhstan and China will surpass the important psychological milestone of $10 billion worth of bilateral trade," the ambassador said.

Given the brisk expansion of trade in recent years, the two countries could hit their target well ahead of time, possibly by 2010.

Energy cooperation, the ambassador said, is a major part of Sino-Kazakh trade and economic cooperation.

The first stage of the multi-billion-yuan Kazakhstan-China oil pipeline was completed in 2005, and the two countries have agreed to construct a second stage, which will connect China to oil deposits in the Caspian region, the ambassador said.

The net annual output of oil produced by Chinese companies in Kazakhstan, such as Sinopec and CNPC, exceeds 13 million tons, he said.

"For Kazakhstan, the dynamic development of energy cooperation with China is of great importance as it fully corresponds to our desire to diversify export routes for our hydrocarbons," the ambassador said.

However, he said that though the two countries' bilateral economic cooperation is not balanced, they are aware of the problem and have decided to improve the situation.

The two countries have vowed to balance imports and exports and agreed to continue the transition from implementing large-scale oil and gas projects to conducting major cooperation in non-resource fields, according to the communiqu signed in August.

On the political front, "Kazakhstan and China have established very confidential and efficient cooperation in all spheres," the ambassador said.

China has given many security guarantees to Kazakhstan: for not possessing nuclear weapons in 1995; upon the settlement of borders in 1999; an agreement on the use and protection of trans-border rivers in 2001.

Beyond the bilateral framework, Kazakhstan and China have also developed strategic cooperation through various regional and global structures, Adyrbekov said.

The Shanghai Cooperation Organization (SCO) is one of them, he said.

"Kazakhstan fully supports the main purpose of the SCO," the ambassador said. With regard to its external relations, the SCO is not an exclusive block and is not directed against any other country, region or organization.

"We attach great importance to the SCO and regard cooperation within the organization as a milestone priority of our foreign policy," the Kazakh ambassador said.


ECONOMY

Kazakhstan seeks diversification of routes for energy supplies – President Nazarbayev

Astana is committed to diversifying energy export routes and counts on EU's assistance in this respect, Kazakh President Nursultan Nazarbayev said, according to Interfax-Kazakhstan news agency’s article.

"Attention should be focused on diversification and securing stable routes for future energy supplies to foreign markets. We will stick to the principle of pursuing multi-vector policy in this regard," President Nazarbayev said at the international conference ‘Kazakhstan-2030: First Decade Results and Prospects' in Astana on Friday.

Kazakhstan "is aware of its responsibility for providing global energy balance and security in the world. We will rank among top ten hydrocarbon exporters by 2017, and this will determine Kazakhstan's economic role in the dynamically changing global economic system in the 21st century to a large extent. We count on close cooperation with the European Union in this respect," President Nazarbayev stressed.

Kazakhstan should however “provide faster growth of oil and gas advanced processing industries in order to secure swift access to markets with high added value," he warned.


Much to explore and tap in Kazakhstan

By Danny Yap, The Star Online, Malaysia, October 15, 2007

Malaysians probably know Kazakhstan as a place near the Russian border or that it was where the first Malaysian astronaut (Dr Sheikh Muszaphar Shukor) was launched into space recently.

But Kazakhstan has much more to offer, especially to local companies wanting to expand their businesses beyond local shores. 

Kazakhstan is one of the fastest growing economies in the world – besides China, India, and Vietnam – with an average gross domestic product (GDP) growth of 9.4% per annum for the past five years.

The republic is rich in oil and gas (O&G) and minerals and has the third or fourth largest O&G reserves in the world, which is why many established O&G companies such as Murphy and Shell have set their operations there for deep-sea O&G explorations.

Claiming its independence in the early 1990s and with the discovery of huge oil reserves in the Caspian Sea, Kazakhstan's open economy attracted large amounts of foreign investment totalling US$50bil, of which over half were invested for the extraction of O&G. 

With global demand for crude oil generally on the up-trend and oil prices soaring above US$80 per barrel of late, the prospect of deep-sea O&G exploration in Kazakhstan has become very attractive and commercially viable. 

While O&G remains a strong contributor to GDP (over 70%), Kazakhstan also has an abundance of natural resources.

However, the Kazakhstan government is not resting on its laurels and has a comprehensive plan to create sustainable growth in seven sectors – agriculture, manufacturing, industrial, social, cultural, tourism and city building and infrastructure – until 2015.

In city building for instance, Astana's (Kazakhstan's administrative capital) master plan reveals a gross development value of US$13bil (RM45.5bil) covering 71,000 hectares.

A senior analyst from TA Securities said: “The master plan development of Astana alone is about 15 times the size of Malaysia’s Putrajaya township.”

Other towns such as Almaty (former capital city of Kazakhstan) has also expanded and the city is now a vibrant commercial hub. 

A Kazakh taxi driver taking this writer to a city hotel said: “Four years ago I could count the number of cars on the main road but now the roads are always full of cars.” 

Demand for housing, shopping complexes and entertainment outlets have also grown fuelled by the republic's strong economy.

Many infrastructure projects such as roads have been built to improve the transport system leading to the cities. 

Moreover Kazakhstan is playing host to the 7th Asian Winter Games in Almaty in 2011. As such infrastructure and hotels have to be developed for the event.

Some Malaysian companies such as Steppe Cement Ltd and LCL Corp Bhd have followed the oil trail, which led it to Kazakhstan. 

Steppe Cement now has several cement making factories there and are enjoying the fruits of their labour. 

In the case of LCL, the interior fit-out (IFO) specialist ventured into Kazakhstan about two years ago after building a firm footing in the Middle East in particular Dubai with its IFO business. 

LCL group managing director Low Chin Meng said: “We were following the oil trail and it led us to Kazakhstan but we also need to thank the Malaysian ambassador to Kazakhstan, Datuk Than Tai Hing who encouraged us to go there.”

LCL now sees huge potential for the company to expand its business in the republic and across central Asia. 

On April 27 LCL tied-up with a Kazakhstan-based company – JSC Stroy Contract Corp, to set up LCL-SC Interior Creations LLP on a 51:49 joint venture.

Under the joint venture, LCL-SC Interior Creations would build, design and provide interior fittings for commercial properties and projects such as complexes and hotels secured by Stroy Contract. 

“This venture has been fruitful right from the start and collaboration with Stroy Contract – a reputable developer and contractor of high-end properties will enable LCL-SC Interiors to potentially secure many projects in future,” Low said.

He said LCL-SC Interiors was targeting to achieve a revenue of RM175mil by end-2008. 

“While Dubai remains our biggest revenue contributor at the moment, the IFO business in Kazakhstan could provide us with better profit margins,” he said, adding that LCL had first mover advantage in the IFO industry in Kazakhstan.

Currently LCL has a workforce of over 400 in Kazakhstan, of which many are Malaysian. 

Another company with Malaysian equity that is performing well in Kazakhstan is Steppe Cement Ltd.

Steppe Cement's involvement in Kazakhstan could be traced back to 1995, when Tan Sri Azmi Wan Hamzah and fund manager David Crichton-Watt were invited by President Nursultan Nazarbayev to look at opportunities in the then fledgling nation. 

The company initially bought over a non-operative Soviet-era cement plant in the northern city of Karaganda and resuscitated the plant. 

Steppe Cement chief executive officer Javier Del Ser Perez said in the early days the company faced challenging times reviving the cement factory and demand was low. But cement demand now outstrips supply in Kazakhstan. 

“Over the years things have improved a lot,” he said, adding that the conducive business environment should help improve the company's bottom line.

Javier said any cement deficit should be covered, mostly from supply coming from the refurbished lines of its subsidiary Karcement, de-bottlenecking in the other factories and new factories being built.

Presently Kazakhstan still imports about 33% of its cement requirements. 

On the performance of Steppe Cement, Javier said the company had performed well.

“Since Steppe Cement's listing on the London Stock Exchange on September 2005, the company's share price has appreciated 600% in two years from an initial listing price of £0.46 per share,” he said.

He said the market capitalisation of Steppe Cement now stood at £370mil (RM2.5bil). 

“Since January, the share price has been on the up-trend again reflecting continued investor confidence in our company and the Kazakhstan economy,” Javier noted. 

The company currently employs over 700 workers, including 25 engineers and Malaysians continue to figure prominently in the management team. 

Other Malaysia companies with a physical presence in Kazakhstan are Malaysia Airports Holdings Bhd (MAHB), Universal Trustee Bhd and Exim Bank. 

Currently MAHB is managing Astana International Airport in Kazakhstan under a joint trust management agreement.

An official from the company said there was a chance MAHB would manage other airports in Kazakhstan in time.

“A lot depends on how we manage Astana International Airport,” he said, adding that the Kazakhstan government had made changes to the legislation to enable MAHB to manage its airport reflecting its confidence in MAHB.

Currently MAHB also manages two other airports abroad – one in India and another in Turkey.

Other local companies in Kazakhstan include SP-Eco Link Sdn Bhd, a transport company which exports goods from Malaysia to the republic and a food-based company – Noraini group of companies, which has a restaurant Astana Nura in Astana under its unit Noraini Atamekent. 



OTHER NEWS

Eleven Kazakh boxers to participate in largest world boxing championships in history

Eleven of Kazakhstan’s top boxers will compete in the AIBA World Boxing Championships Chicago 2007, according to a press-release by World Boxing Championships.

The AIBA World Boxing Championships Chicago 2007, which is the opening qualifying event for the 2008 Olympic Games, begins on October 23 and finishes on November 3.

The International Boxing Association (AIBA) is a non-profit making international organization, which was founded under the name Fédération Internationale de Boxe Amateur (FIBA) in 1920.

The championship in Chicago will be a record-breaking event after the enlisting of 623 boxers from 114 countries, including a talented team from Kazakhstan, following the close of the entry deadline on August 17th. The total number of boxers and countries, which has the potential to increase due to extensions allocated by AIBA prior to the deadline, will make the AIBA World Boxing Championships Chicago 2007 the biggest World Championships in AIBA history.

The Kazakh team is packed with four medal-winners from the 2005 competition, including Serik Sapyev and Yerdos Janabergenov, who will look to defend their gold medals. 

Tickets are on sale and can be purchased by calling 866-WBC-T1X1, or through Ticketmaster at 312-559-1212 or www.ticketmaster.com




News Bulletin of the Embassy of the Republic of Kazakhstan
Contact person: Zhanbolat Ussenov
Tel.: 202-232-5488 ext 104; Fax: 202-232-5845
E-mail: zhan@kazakhembus.com
Web-site: www.kazakhembus.com  


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