Chairman of the Board of Socio-Entrepreneurial Corporation Tobol Kanat NURSHIN:
WE ARE READY TO BACK COOPERATION WITH ANY PARTNER IN CASE WELL-FORMED BUSINESS IDEA IS AVAILABLE
Socio-Entrepreneurial Corporation (SEC) Tobol, established as one of the first entities of this kind in the country in 2007, has been supporting the socio-economic development of Kostanai region for 10 years. Kanat NURSHIN, Chairman of the Board of SEC Tobol told Interfax-Kazakhstan about the results of the activity and plans for the future.
- What is the jubilee year 2017 like for your company?
- The best gift for us is, of course, the fruits of our labor. Such figures speak themselves in the first instance: about 1,500 new jobs created by the joint ventures, over 1 billion tenge in taxes and other mandatory payments paid to the budget. There is incredibly hard work behind such seemingly simple figures. I see the great merit of the staff in that, whose ambitions, energy and professionalism make the company move forward.
SEC Tobol is the only socio-entrepreneurial corporation, which has achieved the positive results of financial and economic activity since being handed over to communal ownership in 2010. Mainly such results are related to our flexibility toward the current market situation, as well as various tools of financial and non-financial business development. For example, when conducting its activities, the corporation applies financing tools such as the creation of joint ventures with participation of business, provision of loans and other forms of cooperation. At the same time, the creation of a joint venture remains the main form of interaction with business, which has a number of competitive advantages over the banking sector due to non-controlling participation in the joint venture's charter capital, adequate distribution of project risks, and support for an investment project at all stages of development.
- Have any innovations been introduced in the corporation this year?
- Of course, the imperative of our time requires change. The decline in prices for mining products in recent years has been reflected on the greater attention of investors to less profitable, but at the same time, to projects that really recoup themselves. I can put the projects in the agricultural and industrial sectors among such ones.
The proximity of our region to the multimillion-dollar sales market – the regions of Russia and Kazakhstan, developed railway infrastructure, qualified personnel attracted investors not only from within our country, but also from a number of foreign countries. We are holding substantive negotiations with representatives of companies in Uzbekistan and Russia, who plan to set up production in the city industrial zone.
It is also known that the attraction of investors to social infrastructure facilities is difficult, but the development of public-private partnership (PPP) in the country has stirred active interest on the part of entrepreneurs. In 2016 the PPP center started its work designed to establish a relationship between the local executive bodies and private partners. And if last year is said to be pilot, then this year its results are already noticeable.
- Please tell us about them.
- Since the adoption of the Law on Public-Private Partnership, modernization of business processes has begun in the field of joint activity between the state and entrepreneurship from usual state purchases to long-term cooperation. In general, processes taking place in Kostanai region in the PPP sphere carry a positive trend. To date, contracts have been concluded for 7 projects in the field of education, 4 projects in the field of physical training and sports, 1 project in the housing construction, housing, utilities and health sector.
Our region is leading in the republic by the number of concluded PPP contracts. One can notice a significant lead in terms of indicators analyzing targets set for the PPP Center for 2017. For example, the task was to provide consultative support for PPP projects planned for implementation, in the amount of no less than five. But in fact, 12 concepts of PPP projects were devised.
It should also be noted that there are businessmen in the region, who want to become partners of the state within the PPP project private financial initiative.
- What measures are being taken to create a favorable investment climate in the region?
- As you know, at the end of last month the National Strategy for Investment Promotion was adopted. As part of the work on its development, Kostanai region, at the initiative of the regional administration was defined as the first pilot region for which the World Bank experts with active participation of the business community of the region developed a roadmap for attracting and retaining investments for 2017-2021.
All the key aspects were carefully analyzed: the current regulatory and institutional framework, interaction processes between the investors and the government bodies; the existing barriers and opportunities for improving the investment climate in the region were identified and studied. As a result, the step-by-step action plan with clearly defined indicators was developed and adopted for implementation.
In particular, in April this year we took part in organizing a forum on the investment attractiveness of Kostanai region for the diplomatic corps in Astana. In parallel, we have proceeded to work with the advisers to Kazakhstan's ambassadors to foreign countries. At the moment, cooperation with four countries has been established: Japan, China, Singapore and South Korea. Information on investment projects in Kostanai region was sent for all of them to look for strategic partners.
In turn, interested foreign investors come to us for detailed acquaintance with the projects on the ground. This year we have already met investors from China, South Korea, Russia, Poland, Turkey and Uzbekistan.
We created an interactive investment map of KostanaI region (http://map.investinkostanay.kz) to provide open access to information on investment platforms, projects and free land plots from any part of the world.
- What new projects are being implemented at the moment?
- In 2017, in the field of subsoil use, which represents the largest number of projects - 19 projects - implemented by the Corporation or 40% of the investment portfolio, it has started together with its strategic partners the development and exploration of deposits attributed to the Turgai coal basin. In particular, the projects on extraction of brown coal at Open Cast No. 2 of the Kushmurun deposit, exploration of brown coal at Eginsay area, and geological exploration of Adaikol area are at various stages of implementation. The total amount of planned investments in the region exceeds 200 billion tenge (334.21 tenge/$1).
Let me note that in accordance with the legislation the Corporation participates in subsoil use projects exclusively through exploration or production contracts that it receives outside the bidding process and passes them onto a joint venture, and a partner provides for cash investments. Thus, it is possible to say that the Corporation attracts large investments to the region through its participation in projects with subsoil use contracts.
As for projects in non-resource sectors, for example, let me note the Corporation’s first ever participation in the renewal of the fixed assets of the municipal utilities by purchasing special equipment to ensure current maintenance of the city streets. Using an investment of 123.7 million tenge offered by the Corporation 5 pieces of new modern hardware have been purchased, thanks to which the enterprise enhances its work efficiency and reduces the cost price of provided services. The duration of the investments provided is 7 years.
- What other projects do you plan to implement? Tell us about the largest ones.
- At an investment forum held in Kostanai we decided together with the Russian company VEK to implement an elevator equipment production project in our city industrial zone.
Currently a joint venture - VEK Qazaqstan - has already been established with the partner, which should soon proceed to build the production facility, equipment installation and commissioning. The initial production capacity will be at least 700 elevators with a production localization rate of at least 30% plus production of 1,300 components for elevators per year. The project also envisages employing as many as 125 people for staffing the joint venture.
Also, currently the Corporation is considering opportunities for implementing a project jointly with Tobol Nan LLP for construction of a bakery in the city of Kostanai through co-financing. So, the Corporation is considered as a lender for purchasing equipment for bakery products. The capacity of the equipment to be purchased is 25 tonnes of bakery products a day. Currently a potential partner is already developing its design and estimates, choosing equipment suppliers for the corporation's project analysis.
Within the framework of a joint Kazakh-Uzbek project - Ravon Nexia R3 cars production - with JSC GM Uzbekistan a permit for the full scale semi knocked down (SKD) assembly was obtained in March 2017. The capacity is 500 cars a month. These cars are popular in Kazakhstan due to their technical characteristics and reasonable prices.
The new aspect of a project - production of non-frame construction models using the CKD monocoque method - was launched in order to increase the localization rate of PEUGEOT and JAC vehicles. Currently, experts are working on programming robots under JAC S3 and Peugeot 301 car bodies. The start-up and commissioning of the two lines are scheduled for Q4 2017.
At the same time, under an agreement between the group of companies Allur and holding Asia Group Tajikistan, a trial batch of 55 JAC S3 cars was shipped to Tajikistan. Under this agreement up to 2,000 cars are to be exported to Tajikistan per year.
- What are currently the priority areas in your activity?
- Our main mission is to promote the socio-economic development of Kostanai region on the principles of partnership between the state and business. Currently we position ourselves as a regional development institution, which focuses a significant part of effort and resources on ensuring the growth of sectors such as agribusiness and agricultural processing, machine building, mining and metallurgy, construction and construction materials, and light industry. The identification of priority sectors for the Corporation has been carried out given existing economic specialization of the region and the main aspects of the state industrial-innovative policy. I would like to note that we do not limit ourselves to these sectors, we are ready to offer or support cooperation with partners in case a well-formed business idea is available.
- What are your prospects?
- The work of our company is built on a well-defined plan. The current activity is focused on fulfilling the range of objectives and those goals that the government has set for us by adopting a development strategy until 2023. In particular, the strategy outlines the Corporation’s two main functions - operational and investment, which feature asset management, investment activities at the expense of its own and borrowed funds, development of public-private partnerships and industrial zones, search and consulting support for investors to implement the region's projects.
Close cooperation with the regional administration allows us to direct common efforts and resources at addressing the issues of social and economic development in the region. In the first instance, through the implementation of projects in single-industry towns jointly with major enterprises. In this aspect a big scope of work is lying ahead, which should be started in the near future. We are also establishing a relationship with the local representative office of JSC Kazakh Invest to attract partners in order to create new production facilities and upgrade existing production facilities.
- Thank you for the interview.
October, 2017
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