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Kazakhstan coming closer to Poland

9th December 2013
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WBJ asked the co-hosts of an economic forum - Polish Deputy Economy Minister Ilona Antoniszyn-Klik and the Ambassador of Kazakhstan to Poland, Yerik Utembayev - about Polish-Kazakh economic cooperation and the impact Kazakhstan's Customs Union with Russia and Belarus has on these relations

Ewa Boniecka: A meeting of the Polish-Kazakh Intergovernmental Commission for Economic Cooperation took place in Warsaw recently, with the participation of high-level government officials from both sides. What is the significance of these meetings for developing Polish-Kazakh economic cooperation?

Yerik Utembayev: A year ago we created the Kazakhstan-Polish Cooperation and Development Board as a forum for those genuinely interested in promoting bilateral cooperation.

To expand the scope of cooperation, our embassy also initiated the Kazakh-Polish Forum of Regions. We are working to organize its first edition in Kazakhstan in 2014. 

Yerik Utembayev
Courtesy of Kazakh Embassy in Poland

Among the accomplishments in our bilateral relations one should mention the rapid expansion of trade turnover, which has practically doubled within the past five years, during a period of global economic downturn. In 2012 it exceeded $2.1 billion, according to data from the Kazakh customs service.

But what we want to improve in our economic cooperation is the share of Polish companies investing in our country. We would like to increase the number of Polish firms investing in the production of goods and services in our country and not only exporting their products there.

Apart from Polpharma, which has already invested $100 million in a plant in south Kazakhstan, the true giants of the Polish economy, such as KGHM, Synthos, Bumar, Pesa have all expressed strong interest in entering our market with production, assembly or mining activities. We hope this interest will bring tangible results soon.

Ilona Antoniszyn-Klik: At the latest meeting of the Commission – the fifth so far – we dealt with the current and future perspectives for developing trade between Polish and Kazakh firms.

We encouraged Kazakhstan to invest in Poland, and discussed the possibilities of cooperation between our countries in the context of Kazakhstan’s participation in the Custom Union and Kazakh efforts to join the World Trade Organization (WTO). During our discussion we also addressed the barriers met by Polish entrepreneurs in the Kazakh market.

We also talked about Kazakhstan’s organization of the International Exhibition Expo 2017 and the possibilities of Polish firms’ engagement in the preparation towards that event.

Kazakhstan is rich in energy and mineral resources, and its economy is developing rapidly. What opportunities do Polish firms pursue in Kazakhstan? Which branches of the Polish economy are most promising for Kazakh firms?

Ilona Antoniszyn-Klik: Kazakhstan is already the main economic partner of our country in Central Asia. It is our fourth market in terms of export and import among the Eastern countries, after Russia, Ukraine and Belarus, and this is evidenced by growing trade and investment volumes.

Our exports in 2012 grew by over 15 percent, while turnover amounted to $961 million. After the first eight months of this year our mutual trade stood at $700 million.

There are around 160 companies with Polish capital registered in Kazakhstan, while in 2004 there were only 70 such economic entities. In 2002 that number was just 42.

I think that those results will continue to improve. We have opportunities for developing mutual economic cooperation, mainly in the mining sector, in agriculture, food processing, heavy industry, manufacturing, defense, pharmaceuticals as well as in logistics and transport services.

I want to underline that that we are not only interested in widening the presence of Polish business in Kazakhstan, we are also encouraging Kazakh entrepreneurs to conduct business in Poland. We already have examples of Kazakh firms investing on the Warsaw Stock Exchange, and we think that the attraction of our bourse – the fastest developing in our region – will increase the interests of Kazakh investors in our offer. 

Ilona Antoniszyn-Klik
Courtesy of Ministry of Economy

Altogether, Kazakhstan is one of top five prospective international markets for Poland. We will conduct very intensive promotion activity already within the framework of three domains: construction, mining machinery and defense industry. Already this year, we have presented our Kazakh partners concrete offers within the framework of those programs.

Yerik Utembayev: According to research by Ernst and Young, Kazakhstan was one of the three fastest-growing economies globally in the previous decade, along with China and Qatar. Between 2000 and 2007, average GDP growth reached 10 percent annually.

Like many other economies strongly connected to world markets, we felt the impact of the global financial crisis in 2008-2009, when our growth slowed down to 1.1 percent. Since 2010, however, we have been witnessing growth of no less than 5.5 percent on an annual basis.

Revenues from oil exports do significantly enhance the growth of our economy. However, most of them go directly to the National Fund, which is modeled on the Norwegian oil fund. By the end of 2012, it had accumulated around $70 billion.

This money is earmarked for long-term strategic investments. The only serious case of a reaction-based use of the money took place at the height of the crisis in 2009, when $12 billion from the National Fund was used for helping the troubled banking, construction, and SME sectors.

Our government understands too well that we cannot limit our growth opportunities to the petroleum and mining industries.

In fact, Polish companies are welcome in all branches of the Kazakh economy. Among the most promising, however, are the chemical industry, manufacturing, environmentally-friendly technologies, biotechnology, IT and agriculture. Meanwhile, we see the best opportunities for Kazakh companies active in the Polish market in industries such as transport and logistics, agriculture, mining, IT and financial services.

What impact does Kazakhstan’s being part of the Customs Union with Russia and Belarus have on its economic cooperation with Poland, an EU member?

Ilona Antoniszyn-Klik: The fact that Poland is a member of the EU and Kazakhstan belongs to the Customs Union increases the chances of creating a market not only for one country, but also for other members of those communities. The crucial thing is to reach entrepreneurs with information about the new possibilities on the Kazakh market.

We do not want to create a situation where a lack of knowledge will create unnecessary barriers for developing trade and investment or cooperation between Polish and Kazakh firms. For this reason we are organizing regular seminars at the Ministry of Economy about access conditions to the markets of Customs Union members.

Yerik Utembayev: Judging by the fact that Polish exports to and investments in Kazakhstan have increased since the establishment of the Customs Union in 2010, we do not expect any negative effects of the arrangement. In fact, Kazakhstan’s customs border has come now to within 200 km of Warsaw.

Yes, tariffs might have risen for some articles. However, on the positive side, foreign companies working in Kazakhstan now have significantly easier access to the Russian (and Belarusian) markets. We have arguably the best business environment regionally and a liberal tax regime. For example, VAT is at 12 percent while it is 18 percent in Russia.

Corporate income tax is at 20 percent in Kazakhstan. This and many other factors, we believe, encourage international companies to open businesses in Kazakhstan and to use our country as a base for expanding to the nearby markets of the Urals and Siberia, as well as our Central Asian neighbors and Western China.

Kazakhstan, however, intends to finish its accession talks with the WTO in 2014 and become a full member as soon as possible. We believe this would further improve conditions for Polish and other EU companies to work with our markets. 

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