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Kazakhstan
Competitive Profile
Consulting
address: 123 Hovsep Emin, Yerevan 0051, Armenia
tel.: + 374 10 21 97 40
e-mail: [email protected]
url: www.evconsulting.com
table of contents
general information
economy
competitiveness performance
sectoral performance
EV Consulting profile
General Information
fast facts
geography & demography
general information
fast facts
Fast Facts
Sovereign Country Ratings
Full name
The Republic of Kazakhstan
Moody’s
Baa2
Population
~16,400,000
Fitch (country ceiling)
BBB- (Dec 20, 2010)
Capital city
Astana
Area
2.7 million sq km
Major languagesKazakh (state language), Russian, English
Major religion
Muslim (70.2% of the population),
Christian 26.2%
Life expectancy
60 years (men), 72 years (women) (UN)
Monetary limit
Kazakhstan Tenge (KZT)
Exchange rate
Average for 2010: 147.4 KZT/USD
As of March 9, 2011: 145.6 KZT/USD
Main exports
Oil and oil products, ferrous metals,
chemicals, grain, wool, meat, cool.
GDP, current USD
$146.9 billion (2010)
GDP per capita PPP,
current USD
11,510 (2009, World Bank)
4
Kazakhstan’s Stand in International Rankings
Ease of Doing Business
(The World Bank)
59 (Rank, 2011, out of 183
countries)
Index of Economic
Freedom
(Heritage Foundation)
78 (Rank, 2011, out of 179 countries)
Global Competitiveness
Index (World Economic
Forum)
72 (Rank, 2010-2011, out of 139 countries)
Corruption Perception
Index (Transparency
International)
105 (Rank 2010, out of 178 countries)
Human Development
Index (UNDP) 66
66 (Rank, 2010, out of 169)
general information
Ninth biggest country in the world with a territory of 2,727,300 sq.km.
Petropavl
Qostanay
World’s largest landlocked country.
of the end of 2009:
3.0% of world oil reserves;
1.0% of world gas reserves;
3.8% of world coal reserves.
Industrial sector primarily focused on the
extraction and processing of these natural
resources.
Labour Force
16.4 million population as of February 2011.
Almaty - the largest city with a population
of 1.4 million. The second largest city of
Kazakhstan is Astana - the capital city with
684.000 population.
Total labour force - 8.7 million, with 5.8% unemployment rate in 2010.
High rate of literacy (100%)
Primary education - 108% gross enrolment
rate
Secondary education - 99% gross enrolment
rate
Tertiary education - 41% gross enrolment rate
5
q
Zhayy
As
•
•
•
Atbasar
Esil
Aqtobe
(Aktyubinsk)
Astana
Atyrau
(Gur'yev)
Ekibastuz
Oskemen
(Ust' - Kamenogorsk)
Shyghys
Qazaqstan
Oblysy
Oaraghandy
Torghay
Oblysy
Kazakhstan
Shalqar
Leninsk
(Tyuratam)
Aral
Sea
Ayagoz
Zhezqazghan
Aral
Beyneu
Caspian
Sea
Temirtau
Arqalyq
Embi
Aqtau
(Shevchenko)
tis
Pavlodar
Orsk
Enormous fossil fuel reserves and plentiful
supplies of other minerals and metals, such
as uranium, copper, and zinc.
Er
Koksnetau
Rudnyy
Oral
Aqsay
Natural Resources
Es
il
Geography
geography and demography
Balqash
Lepsi
Saryshaghan
Leke
Balkhash
Qyzylorda
Taldygorghan
Ile
Panfilov
Qapshaghay
Sy
rd
ar
iya
Shu
Zhangatas
Zhambyl
Turkistan
Shymkent
Almaty
Zaysan
Economy
economic growth
economy structure
inflation and foreign currencies
public sector performance
external sector
foreign trade partners
economy
economic growth
GDP per capita, PPP (current international $, 2009) and CAGR
(constant 2000 $, 2000-2009)
GDP Growth (Annual %)
%
20
10,000
15
8,000
10
13.4%
1 4 . 0 %
10.8%
1 2 . 0 %
9.2%
6,000
5
1 6 . 0 %
6.8%
4,000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-5
-10
2,000
0
1 0 . 0 %
8 . 0 %
6 . 0 %
4 . 0 %
8,684
7,257
3,904
2,468
2 . 0 %
0 . 0 %
Russia
Kazakhstan
Turkmenistan
Ukraine
-15
Kazakhstan
Russian Federation
GDP per capita, PPP (current int $ 2009)
Ukraine
Turkmenistan
CAGR (constant 2000 $, 2000-2009)
Source: National Statistical Offices
Source: World Development Indicators, World Bank
Kazakhstan has had recorded impressive GDP growth rates compared to
neighboring and several CIS countries during the last decade until global
financial crisis.
• Kazakhstan is ranked quite favorably in the region by the level of GDP
per capita PPP.
Key drivers of the growth
• The economic growth has been largely supported by the oil sector
which constitutes a significant proportion of GDP.
• Revival of oil prices after global economic crisis has improved nearterm growth prospects for the country.
7
• According to the World Bank classification, Kazakhstan is classified in
the group of upper middle income countries by its 2009 GDP volume.
economy
economy structure
GDP by Sectors of Economy, % in GDP
Change in GDP Structure, % in GDP
100%
90%
Retail
13%
Other
27%
80%
Mining
70%
Retail
60%
Manufacturing
50%
Agriculture
4%
Construction
Manufacturing
8%
Transport and
11%
Real estate logistics
8%
9%
Real estate
40%
Transport and logistics
30%
Construction
20%
Agriculture
10%
Other
0%
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Mining
19%
Source: Agency of Statistics, Republic of Kazakhstan
Source: Agency of Statistics, Republic of Kazakhstan
• Mining and manufacturing is the biggest sector in Kazakhstan which is
alone responsible for one-third of the output in the economy.
The recent trends in GDP structure in Kazakhstan are:
• Retail, transportation and financial intermediary services together comprise about 35% of GDP.
8
• Continuous increase in real estate and financial activities
• Expanding share of mining industry in GDP (by 4.9%) since 2000.
• Manufacturing industry has the opposite tendency and its share in
GDP has decreased by more than 5% during the last decade.
economy
inflation and foreign currencies
Inflation, 2000-2010, in %
Gross International Reserves in million USD and Exchange
Rate, 2000-2010
35
35,000
30
30,000
25
25,000
20
20,000
15
15,000
10
10,000
5
5,000
0
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
147
153
142
147
150
136
147.35
133
126
123
120
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Kazakhstan
Russian Federation
Total reserves (including gold, current mln USD)
Ukraine
Turkmenistan
Official exchange rate (Tenge/USD)
Source: National Statistical Offices
Source: Agency of Statistics, Republic of Kazakhstan
• The inflation rates have been traditionally lower in Kazakhstan than in
the compared countries.
• The volume of gross international reserves has increased drastically
since 2000.
• However, it has been showing stable tendency towards growing since
2002 peaking at the level of 17% in 2008.
• In 2009 prices dipped by 10 percentage points in Kazakhstan.
9
economy
public sector performance
GDP by Sectors of Economy, % in GDP
External Public Debt, in million USD
and its share, as % of GDP
25,000
4.3% 4.3%
4.0%
20,000
2.6%
3.0%
15,000
1.6%
10,000
5,000
0
5.0%
0.1% 0.1%
0.3%
2.0%
1.2%
1.0%
0.2%
0.0%
-0.6%
2,512 3,000 3,132 4,270 6,073 10,396 11,853 14,780 19,737 16,112
2000
2001
2002
2003
Expenditures (mln $)
2004
2005
2006
2007
2008
-1.0%
2009
Budget Surplus/Deficit (as % of GDP)
4,000
18%
3,500
16%
3,000
14%
12%
2,500
10%
2,000
8%
1,500
6%
1,000
4%
500
2%
0
0%
2001
2002
2003
2004
External public debt
2005
2006
2007
2008
2009
External public debt (% of GDP)
Source: Agency of Statistics, Republic of Kazakhstan
Source: Agency of Statistics, Republic of Kazakhstan
• Since 2000 Kazakhstan has been maintaining surplus in the state
budget. The year of 2003 was the only exception with negative budget
deficit.
• Compared to 2000, in 2009 Kazakhstan’s external public debt has
considerably decreased both in absolute and relative to GDP terms.
• Growing budget revenues allowed to increase public spending in the
recent years as well.
• Main targets of public spending are social security and social aid
(20%), public health service (12%), transport and communications
(9%) and defence industry (5%).
10
• Though the volume of external public debt has increased by 46%
since 2007, Kazakhstan is still considered low indebted country according to WB classification.
external sector
Foreign Trade, in million USD
18,000
70,000
16,000
14,000
60,000
12,000
50,000
6,278
10,000
40,000
-
1,971
2,000
4,157
10,000
2,092
4,000
2,590
6,000
20,000
2,835
8,000
30,000
12,601
80,000
15,780
FDI Inflow, in million USD
11,119
economy
0
2002 2003 2004 2005 2006 2007 2008 2009 2010
Export
2001 2002 2003 2004 2005 2006 2007 2008 2009
Import
Source: Agency of Statistics, Republic of Kazakhstan
Source: Agency of Statistics, Republic of Kazakhstan
• Continuously increasing export and import volumes were significantly
cut down in 2009 as a result of global economic crisis.
• Kazakhstan has attracted over 80% of all foreign direct investment
(FDI) into Central Asia.
• The decline was the consequence of falling prices of oil and mining
products on global markets.
• Major foreign investors in Kazakhstan’s economy are Netherlands –
38% , USA – 17%, France – 7% and China – 4%.
• The sector of foreign trade began to revive already in 2010 with positive growth of both import and export volumes.
• The main investment targets in Kazakhstan are:
- Geological exploration activities – 56.4 %
- Mining and quarrying – 20%
- Manufacturing – 8.4%
- Retail – 3.9%
11
foreign trade partners
Mineral fuels, oils
Iron, steel
Inorganic chemicals
Ores, slag, ash
Copper
Precious stones, metals
Other
China
Italy
France
Netherlands
Russian Federation
Austria
Canada
Germany
United Kingdom
Other
6%
5%
4%
4%
2%
8%
8%
7%
5%
4%
4%
3%
2%
Import Structure by Partners
and Commodities, 2010
72%
18%
17%
Nuclear reactors, boilers, machinery
18%
Electronic equipment
10%
Mineral fuels, oils
10%
Articles of iron or steel
7%
Vehicles
4%
Pharmaceuticals
4%
Plastics
3%
Other
43%
Russian Federation
Import by Countries
Export by Countries
Export by
Commodities
Export Structure by Partners
and Commodities, 2010
Import by Commodities
economy
31%
23%
China
17%
Germany
8%
Italy
7%
Ukraine
USA
6%
5%
United Kingdom
3%
Turkey
3%
Other
30%
Source: UN Comtrade Database
Source: UN Comtrade Database
• Mineral products highly dominate in Kazakhstan’s export structure –
with over 70% of share.
• About half of the finished goods consumed within Kazakhstan are
imported.
• Other popular export commodities are metals, inorganic chemicals,
ores and copper.
• The largest importers are Russia, China, Germany and Italy.
12
• Machinery and equipment represent a significant portion of European
imports.
Competitiveness Performance
competitiveness ranking
comparative economic performance
economy diversification
export diversification
resource-intensity of exports
competitiveness performance
competitiveness ranking
GDP Dynamics and Global Competitiveness
Rankings for Kazakhstan
The Competitiveness Performance of Kazakhstan
by Competitiveness Pillars
Mln, USD
Rank
45,000
Pillar
2010
2009
Change in
ranking (points)
Institutions
91
86
-5
Infrastructure
81
75
-6
Macroeconomic stability
25
59
34
Health and primary education
85
80
-5
Higher education and training
65
59
-5
Goods market efficiency
86
84
-2
Labor market efficiency
21
18
-6
117
111
-6
Technological readiness
82
69
-13
Market size
55
55
0
Business sophistication
102
88
-14
Innovation
101
64
-37
40,000
35,000
5,000
0
2005
2006
2007
2008
GDP (constant 2000 mln USD)
2009
72 among 139
67 among 133
10,000
50 among 125
15,000
61 among 117
20,000
66 among 134
25,000
61 among 131
30,000
2010 est
GCI rank
Financial market sophistication
Source: World Economic Forum, Agency of Statistics, Republic of Kazakhstan
• According to the Global Competitiveness Report 2010/11 Kazakhstan is ranked 72nd by its competitive performance among 139 countries.
• Noteworthy, Kazakahstan’s competitiveness stance has notably deteriorated while the country enjoyed economic growth even during the economic crisis.
• The country’s key competitive advantages are effective labor market regulations and macroeconomic stability.
• On the contrary, the level of Kazakhstan’s competitiveness by the indicators of institutions, innovation and business sophistication are comparably low.
14
competitiveness performance
comparative economic performance
Comparative Decline and Recovery of GDP in Benchmark Countries, 2009-2010
GDP growth rate estimate, %, 2010
-20
-15
-10
-5
0
5
10
15
10
Uzbekistan
8
Russia
Ukraine
Armenia
Lithuania
Moldova
Slovenia
Estonia
Hungary
6
Georgia
Slovak Republic
Lebanon
4
2
Czech Republic
Croatia
0
Azerbaijan
Kazakhstan
-2
Latvia
-4
-6
GDP growth rate, %, 2009
Source: WB, WDI-Online; National Statistical Offices of Benchmark Countries
• The economic performance of Kazakhstan has been quite competitive in comparison with benchmarked countries.
• Even during the global financial crisis the country maintained positive dynamics of gross output. Meanwhile, the majority of the benchmark countries
suffered from severe economic crisis with GDP decline reaching up to 15% in several countries, such as Lithuania, Ukraine, Armenia and Estonia.
15
competitiveness performance
GDP Diversification
Real GDP Growth and GDP Concentration
in Benchmark Regions, 2009
41%
15%
77%
76%
76%
75%
74%
74%
73%
72%
72%
71%
71%
71%
71%
70%
69%
69%
68%
67%
67%
65%
Real GDP growth, % (2008 -2009)
Bosnia and Herzegovina
Montenegro
Moldova
Georgia
Serbia
Macedonia
Latvia
Hungary
Estonia
Israel
Slovenia
Turkey
Czech Republic
Slovak Republic
Kyrgyz Republic
Armenia
Russia
Egypt
Ireland
Kazakhstan
Azerbaijan
economy diversification
10%
Egypt
5%
0%
-5%
0%
-10%
-15%
-20%
10%
Kyrgyz Republic Kazakhstan
Israel
Georgia
20%
30%
40%
50%
Bosnia Czech Rep.
Slovak Rep.
Russia
Estonia
Azerbaijan
60%
70%
Armenia
Latvia
GDP concentration index, % 2009
Source: WB, WDI-Online; UN Comtrade; National Statistical Offices of Benchmark Countries
Note: Diversification is calculated as the square root of normalized Herfindahl index total, “n” is the number of sectors.
GDP diversification is calculated based on 11 sectors.
1-
1-1/n
, where “s” is the share of the given sector/commodity group in
• The low diversification of economy (the concentration of value-creation activities in certain sectors) is one of the main impediments on the way of improving
Kazakhstan’s competitiveness.
• Several highly dominating industries significantly undermine the country’s opportunities to develop diverse income sources.
• The biggest industries rely on the extraction of fossil fuels and natural resources.
• Kazakhstan is one of the least diversified economies among the benchmarked countries measured by sectoral concentration of GDP.
• Despite very low diversification level Kazakhstan and several other countries rich in fossil fuels performed quite well even during the global economic crisis.
16
competitiveness performance
export diversification
Diversification in Exports/Imports and GDP in Benchmark Regions, 2009
Export diversification index (0-1)
0.8
Lithuania
Turkey
0.7
Belarus
0.6
Slovakia
Czech Republic
Ukraine
Kyrgyz Rep.
Hungary
0.5
Latvia
Macedonia
Lebanon
Moldova
Georgia
Albania
Israel
Armenia
Egypt
0.4
0.3
Russia
Kazakhstan
0.2
0.1
Azerbaijan
0
0.5
0.6
0.7
0.8
Import diversification index (0-1)
Source: WB, WDI-Online; UN Comtrade; National Statistical Offices of Benchmark Countries
Note: Diversification is calculated as the square root of normalized Herfindahl index total, “n” is the number of sectors.
Import and export diversification is calculated based on 21 commodity groups.
1-
1-1/n
, where “s” is the share of the given sector/commodity group in
• Conditioned by the high concentration of economic activities in a few sectors, the export and import bases are also very narrow in the country.
• By the indicators of export and import diversification Kazakhstan is among the outsiders in the list of benchmark countries.
17
competitiveness performance
resource-intensity of exports
Resource-Intensity of Merchandise Exports, 2009
Share of resource-intensive exports in total
exports, 2009
100%
Azerbaijan
90%
Kazakhstan
80%
Armenia
70%
60%
Belarus
50%
40%
30%
Russia
Kyrgyzstan
Lithuania
Latvia
Israel
Albania
Romania
20%
Bulgaria
Estonia
Croatia
Slovenia
10%
Jordan
Czech Republic
0%
-30%
-20%
-10%
0%
10%
20%
Change of share of resource-intensive exports in total exports, compared to 2008
Source: UN Comtrade; National Statistical Offices of Benchmark Countries
• The highly concentrated exports are dominated by natural resources and other resource-based commodities.
• Exports of Azerbaijan, Kazakhstan, and Russia are the most resource intensive in the observed region.
• Kazakhstan’s export resource-intensity has the tendency to escalate in the recent years.
18
30%
Sectoral Performance
economy structure
industry
trade
construction and real estate
agriculture
financial sector
sectoral performance
economy structure
GDP Structure, % of Total
19.3
Mining
Retail
11.4
Manufacturing
Real estate
8.1
7.7
Transport and logistics
Construction
Agriculture
Professional, science and technical services
Financial and insurance services
Education
Information and communication
Public governance
Administrative services
Electricity supply
Healthcare
0.9
0.8
0.6
0.3
Other services
Services for residence and nutrition
Art, entertainment
Water supply
0
1.9
1.9
1.8
1.7
2
3.2
3.1
4
4.4
3.9
3.9
6
8
8.7
10
12
13.1
14
16
18
20
%
Source: Agency of Statistics, Republic of Kazakhstan
• The dominating economic sectors - mining and manufacturing industries together account for over one-third of the gross output in the country.
• A number of state initiatives are currently underway and target the diversification of the economy. The development programs aim at attracting investments, particularly FDI, into non-traditional sectors and support export growth in these sectors.
• A recent competitiveness strategy elaborated by OECD suggests a few sectors for prioritization, including the clusters of agriculture and IT and business support services.
20
sectoral performance
industry
Industrial Output in Kazakhstan
Mining Industry Output
Mln. USD
90,000
Metallurgy
Mining
80,000
Energy distribution
70,000
Water distribution
50,000
Metal ore
mining
Cokes and products
based on refined oil
Technical services
for mining
Products based
on refined oil
40,000
30,000
Other non-metal
mineral production
20,000
Coal and
lignite mining
Beverages
10,000
0
Oil and gas
mining
Food
products
Machinery
Manufacturing
60,000
Mining Industry Output
2008
2009
Chemicals
2010
Source: Agency of Statistics, Republic of Kazakhstan
Other mining
sectors
Other
0 2,000 4,000 6,000 8,000 10,000 12,000
Mln. USD
Key players
Tengischevroil
Sales, mln USD, Change in sales
2009
2009/08
12,013
3%
Ranking in 100
largest companies
1
Kamunayzag
10,714
-15.7%
2
ENRC
3,831
-31%
3
Kazakhmys Plc
3,680
-12.3%
4
PetroKazakhstan
3,489
12.7%
5
Key issues of the sector
Key opportunities
• Prevalent corruption practices
• Poor accounting and audit practices
• High domestic prices for exportoriented products
• Abundant natural resources
• Low production costs
• Extensive opportunities in diversification and promoting new
processing sectors
0
20,000
40,000
Mln. USD
60,000
• The independent Kazakhstan, as many post-Soviet countries, found
itself in a deep economic recession after the collapse of the Soviet
Union.
• Only within 5 years from 1990 to 1995 the industrial output decreased
by over 50%.
• Signs of rehabilitation were noticeable only at the end of 1990s. The
increasing interest of international investors led to extensive FDI especially in mining industry.
• The increasing presence of foreign capital supported the development
of sophisticated business practices in the sector and multiplied export
opportunities.
21
sectoral performance
trade
Retail Turnover
Most Tradable Consumer Goods, mln USD
25,000
0 . 4
Non-food
products
Clothes
0 . 3
20,000
30%
18%
0 . 2
23%
21%
20%
15,000
0 . 1
Food products
0
- 0 . 1
10,000
- 0 . 2
- 15%
- 0 . 3
5,000
0
- 0 . 4
2004
2005
2006
Key players
2007
2008
2009
Retail trade, mln USD
-
47%
0 . 6
-
2010
Annual growth rate, %
2011
Helios
Ranking in 100
largest companies
11
Astana
287
200.6%
34
Anvar
171
4.9%
42
Meloman
83
-2.6%
61
Abdi company
50
2%
73
Source: Bulletin 2010, “Expert Kazakhstan” Rating Agency
• Decreasing labor productivity
• Slow progress in the expansion
of export markets
• Increasing tariffs on imports
leading to low profitability of
importing companies
• Diluted distribution of consumer
base
22
Construction materials
Computer software
Beverages, including alcoholic
Meet
Dairy and eggs
Bread and flour confectionary
0
200
400
600
800
1,000
1,200
Source: Agency of Statistics, Republic of Kazakhstan
Sales, mln USD, Change in sales
2009
2009/08
1,489
-20.1%
Key issues of the sector
Passenger cars
Key attractiveness of the sector
• Favorable geographic location
for international trade
• Increasing income levels boosting local demand
• Rapidly expanding retail chains
and opportunities to attract international brands
• Retail is one of the most stable sectors in Kazakhstan’s economy.
• The sector has grown by an average annual growth rate of about 20%
within the period of 2004-2011.
• This is one of the few sectors which maintained although small but
positive growth even in the period of the global economic crisis.
• Non-food products dominate in the consumption basket of Kazakhstan’s population. The structure of retail consumption by the shares of
food and non-food remained quite stable over the time.
• Modern supermarket chains and retail networks rapidly expand in
Kazakhstan.
• The sector is expected to see the entry of well-known international
chains and consolidation of the market.
sectoral performance
construction and real estate
Residential Construction, thsnd sq.m.
Construction Volume and Real Estate Services, mln USD
8000
16,000
7000
14,000
12,000
6000
10,000
5000
8,000
6,000
4000
4,000
3000
2,000
2000
0
1000
2003
Key players
10
09
20
08
06
07
20
20
20
05
20
20
04
02
03
20
20
01
20
20
99
98
00
20
19
97
19
19
96
95
94
93
19
19
19
19
92
19
19
91
0
Kazstroyservice
Sales, mln USD, Change in sales
2009
2009/08
1,010
279.5%
Ranking in 100
largest companies
16
Imstalkon
210
-7.4%
39
Akmola Kurlys Materialdary
20
-51.4%
99
Source: Bulletin 2010, “Expert Kazakhstan” Rating Agency
Key issues of the sector
• Extensive shadow sector, conditioned by a great number of
self-employed persons
• Tax evasion due to the prevalence of unregistered construction and unregistered employees
• Insufficient production of construction materials and high dependence on imported materials
23
Key attractiveness of the sector
• Lucrative development prospects
driven by the need for large scale
infrastructure and urban development projects
• Accelerating demand for commercial property
2004
2005
2006
Construction volume, mln USD
2007
2008
2009
2010
Real estate activities, mln USD
Source: Agency of Statistics, Republic of Kazakhstan
• After the steep decline in the post-independence period the construction sector has been reviving in Kazakhstan since 2003.
• The sector’s further development was largely fuelled by state investments and urban development projects particularly large-scale new
construction in the new capital city – Astana.
• The construction of residential spaces continuously decreased in the
decade of 1991-2000. The contraction accounted for 80% of the output.
• 2000s saw growth in the volume of residential construction at 25%
average annual growth rate. The financial crisis in 2008-09 affected the
sector development non-significantly.
sectoral performance
agriculture
Agriculture Output, mln USD
14,000
• With decreasing share in GDP agriculture remains the largest employer of the country. About one-third of the labor force is working in the
sector.
12,000
10,000
8,000
• Kazakhstan’s agriculture sector is distinguished by its high level of
productivity both in the Central Asian region and on the global scale.
6,000
4,000
2,000
-
2000
2001
2002
2003
2004
Livestock
2005
2006
2007
2008
2009
Horticulture
Ranking in 100
largest companies
28
• Grain sector with its major cultivation being wheat is the largest agricultural sector in Kazakhstan. The growth of the agricultural sector was
mainly driven by favorable climate and large harvest volumes due to
which Kazakhstan became one of the biggest exporters of grain in the
world.
• Meat and wool production are the next biggest agricultural subsectors.
Source: Agency of Statistics, Republic of Kazakhstan
Key players
Holding Kazexportastyk
Sales, mln USD, Change in sales
2009
2009/08
401
72.6%
APK-Invest
392
-18%
29
Food contract
corporation
Asia-Sugar
382
61.6%
30
93
730.8%
57
Almaty sugar
90
186.7%
59
Source: Bulletin 2010, “Expert Kazakhstan” Rating Agency
Key issues of the sector
• Fragmentation – lack of vertically
integrated agro-complexes
• Limited financial resources
• Low usage of advanced technologies for sophistication of the
processes
• Need of upgrade of physical infrastructure
• High unemployment in the sector
leading to high urbanization rates
24
• Horticulture accounts for the majority of the agriculture output. This
sector expressed strong growth dynamics not only recovering but also
exceeding production levels before the collapse of the Soviet Union.
Key attractiveness of the sector
• Highly productive land resources
• Immense local consumption
market
• Low production costs
• The sector has undergone a number of stages of reforms. The slow
progress in privatization hindered the rapid development of smallscale farms.
sectoral performance
financial services
Number of Short-Term and Long-Term Loans
Insurance Premiums, mln USD
Pension Funds
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
-
500
14,000
30.00%
400
12,000
25.00%
Number of short-term loans
300
Number of long-term loans
200
6,000
100
4,000
2005
2006
2007
2008
10,000
2006
2007
Sales, mln
USD, 2009
Change in sales
2009/08
Ranking in 100
largest companies
Kazcommercebank
2,655
-2.1%
7
National Bank of Kazakhstan
1,575
6.3%
10
BTA Bank
1,422
-50.6%
12
ATF Bank
856
-0.4%
19
Bank CenterCredit
844
-1.2%
20
Source: Bulletin 2010, “Expert Kazakhstan” Rating Agency
25
10.00%
5.00%
2009
-
0.00%
Voluntary personal insurance
Pension funds, mln USD
Investment profit margin, %
Key players
• High burden of external debts by
commercial banks
• Need for restructuring in the
banking sector
• Underdeveloped stock market
2008
Voluntary property insurance
Source: Agency of Statistics, Republic of Kazakhstan
Key issues of the sector
15.00%
2,000
Obligatory insurance
2009
20.00%
8,000
Key attractiveness of the sector
• Rapidly expanding credit markets
• Increasing demand towards
more sophisticated financial
products
• Expected upheal in the stock
market
• Reforms in the regulatory field of Kazakhstan’s banking sector, initiated by the National bank in 1995 significantly supported the sector’s
further development.
• Stringent regulations, applied in the field diminished the number of
operating commercial banks from 130 in 1995 to 38 in 2009.
• Backed with economic revival the consumption of loans was increasing at accelerated rates until 2008. During and after the financial crisis
the growth in the number of loans provided by commercial banks
considerably slowed down.
• Loan products are mostly demanded by companies in industrial, construction and retails sectors.
• The insurance sector, mainly driven by voluntary property insurance,
has a deep contraction in the volume of turnover in 2009. The volume
of insurance premiums decreased twice only in one year after 2008.
• Investment profit margins in pension funds fluctuate in the range of
25-30%.
EV Consulting Profile
service lines
expertise
advisory practice leaders
EV Consulting
service lines
STRATEGY
ADVISORY
PUBLIC POLICY INVESTMENT
& DEVELOPMENT ADVISORY
ADVISORY
MARKETING
ADVISORY
PERFORMANCE
IMPROVEMENT
ORGANIZATION
DESIGN
Designing mid to
long-term strategies; comprehensive
competitive analysis;
crafting and installing strategy execution tools based on
balanced scorecards;
linking strategy to
operations through
operational dashboards
Helping public sector
organizations effectively design, implement and monitor
sector development
strategies and large
scale, high impact
projects. Sector
strategies, impact
analysis, complex
studies, development
support, etc.
Market studies and
analysis by using
quantitative and
qualitative research
tools (customer segmentation, customer
loyalty and satisfaction assessment,
brand health tracking etc.); commercial
due diligence; deve­
lopment of market
entry and expansion
strategies etc.
Design and install
performance measurement systems;
improve planning,
budgeting and forecasting systems;
streamline and
improve finance and
marketing function;
improve sales force
organization, compensation schemes,
customer service
standards; operational dashboards
Designing corporate
centers or holding
structures for diversified businesses;
mo­deling effective
organization structures best suited to
company strategies;
developing organization culture and
motivation metrics;
staffing and competence needs assessments
27
Investment strategy
formulation, investment proposals,
business plans and
feasibility studies,
M&A advice; business
valuation; capital
attraction; deal structuring and negotiation support
EV Consulting
expertise
Industry expertise
Information Technologies
Mobile telecommunications
Internet services
Key highlights
EV Consulting has accomplished over 170 consulting
and research projects in a broad range of sectors.
•
Development of corporate and business level strategies,
introduction Balanced Scorecards, performance management
systems, performance improvement programs .
•
Development of over 80 investment plans and memorandums,
as a result of which more than 60 mln USD were attracted in a
form of equity or debt financing.
•
EV Consulting has worked with major international financial
institutions such as EBRD, World Bank, IFC, Black Sea Trade
and Development Bank, etc.
•
EV has been at the forefront of introducing modern management tools in Armenia. Thus, it has introduced the Balanced
Scorecards (BS) to develop long-term strategies and execution mechanisms in several companies.
•
With close to 100% return rate of its customers EV has become a long-term consulting partner of many local and international companies.
•
Together with its research branch EV Consulting publishes
Armenian Competitiveness Report (ACR) annually. The report
became a key analytical platform for public dialogue on key
strategic issues in Armenia. Many of the ideas have been included in the government agenda.
•
EV Consulting’s research arm - EV Research Center partners
with World Economic Forum and Harvard Institute for Strategy
and Competitiveness.
Science and R&D
Education
Engineering services
Tourism & Travel
Construction materials
Real estate and construction
Alcoholic and non-alcoholic beverages
Confectionary and chocolate
Agriculture, in particular pig farming, poultry, feed production
Dairy and ice cream
Health care and pharmaceuticals
Logistics
Retail
Mining
28
EV Consulting
advisory practice leaders
MANUK HERGNYAN
SEVAK HOVHANNISYAN
SONA GRIGORYAN
Managing Partner
Partner; Head of Research and
Market Advisory
Manager
Mr. Manuk Hergnyan is the founding managing
partner of EV Consulting and the founding chairman
of EV Research Center. Manuk has had consulting
experience with the US-based Setrakian Financial
Group (head of Yerevan office), Arlex International
and KPMG Consulting-Barents Group in Armenia and
with Global Investment Union in Russia. He teaches
Strategic Management and the Harvard Business
School course on Microeconomics of Competitiveness developed by Michael Porter. Manuk holds a
Ph.D. from Moscow State University. He has been
trained at Cambridge (UK), Harvard (USA) and Central European Universities (Hungary), and is currently
pursuing modular EMBA course at Oxford Said Business School (UK). Manuk is certified by the Palladium Group (founded by Drs. Norton and Kaplan) in
Ba­lanced Scorecard execution. Manuk is a member
of the Board of Directors (BOD) of the leading dairy
in Armenia and EBRD nominated BOD member at
Liqvor Pharmaceuticals. He directly leads EV’s strategy advisory practice.
Mr. Sevak Hovhannisyan is leading research and
market advisory practice at EV Consulting and is
founding board member of EV Research Center. At
EV he has managed numerous research and economic development assignments for public sector
institutions and companies. Mr. Hovhannisyan’s
professional career started in 1997, at the Investments Department of the Ministry of Trade and
Industry of Armenia, where he was promoted to
lead the development and implementation of foreign
investment policies. In 2000 Mr. Hovhannisyan joined
the ProSME project, getting directly involved in the
development of SME related legislation and policies.
Sevak played key role in developing pharmaceutical
cluster policies and support organizations through
USAID CAPS project. Sevak holds a PhD in International Economics from the Yerevan State University
(Armenia), and has been trained in management at
the Cambridge University (UK), Aachen University
of Technology (Germany) and Mercy Corps (Cambridge, US).
Ms. Sona Grigoryan holds the position of manager
with EV Consulting, focusing in the practice areas of
strategy, performance management and investment
advisory. She has managed complex projects in corporate finance and investment advisory fields. Sona
has had a hands on experience on balanced scorecard projects for several years. She has been trained
with the practical knowledge in the field by London
headquartered 2GC Consultancy.
29
Sona is currently in the process of becoming a certified member of ACCA (Association of Chartered and
Certified Accountants). Her educational background
is in economics, with major in marketing in Yerevan
State Institute of Economics (Armenia).