Contents GENERAL ............................................................................................................................2

MACRO-ECONOMICS & FINANCE ......................................................................................3

INNOVATION ......................................................................................................................5

ENERGY & NATURAL RESOURCES ......................................................................................6

TRANSPORT & COMMUNICATIONS ...................................................................................8

AGRICULTURE ....................................................................................................................9

CONTACTS....................................................................................................................... 11

EXHIBITIONS IN KAZAKHSTAN (2019) ............................................................................. 12

Economic Newsletter on Kazakhstan

|February 2019

The Economic Section of the Embassy of the Kingdom of the Netherlands in Kazakhstan intends to distribute this newsletter as widely as possible among Dutch institutions, companies and persons from the Netherlands. The newsletter summarises economic news from various Kazakhstani and foreign publications and aims to provide accurate information. However, the Embassy cannot be held responsible for any mistakes or omissions in the bulletin.

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

2

GENERAL President Nazarbayev dismisses the Government for economic failures, appoints acting PM On 21 February, President Nazarbayev dismissed Kazakh Government, citing in a video statement its failure to raise living standards and diversify the economy away from the energy sector: "In many areas of the economy, despite the adoption of many laws and government decisions, positive changes have not been achieved. The real earnings of Kazakh citizens are not rising. The share of food expenses in a family’s budget is increasing. The SMEs have not become the driving force of the economy". The Head of State stressed that the new Government’s leadership should take effective steps focused on raising living standards and stimulating the economy. The concrete proposals form the President's side will be advanced during the next congress of the ruling Nur Otan part on 27 February. Following the statement, Nazarbayev appointed Askar Mamin as Acting Prime Minister instead of the outgoing Bakhytzhan Sagintayev (akorda.kz, rferl.org, eurasianet.org). New composition of Kazakh Government approved ASTANA. KAZINFORM - Today President of Kazakhstan Nursultan Nazarbayev has approved the new composition of the Government of the Republic of Kazakhstan, Kazinform has learnt from the Akorda's press service. On February 25, the President decreed to appoint: Askar Mamin as the Prime Minister of the Republic of Kazakhstan; Alikhan Smailov as the First Deputy Prime Minister - Minister of Finance of the Republic of Kazakhstan; Zhenis Kassymbek as the Deputy Prime Minister of the Republic of Kazakhstan; Gulshara Abdykalikova as the Deputy Prime Minister of the Republic of Kazakhstan; Beibut Atamkulov as the Minister of Foreign Affairs of the Republic of Kazakhstan; Nurlan Yermekbayev as the Minister of Defense of the Republic of Kazakhstan; Yerlan Turgumbayev as the Minister of Internal Affairs of the Republic of Kazakhstan; Dauren Abayev as the Minister of Information and Social Development of the Republic of Kazakhstan; Marat Beketayev as the Minister of Justice of the Republic of Kazakhstan; Yelzhan Birtanov as the Minister of Healthcare of the Republic of Kazakhstan; Arystanbek Mukhamediuly as the Minister of Culture and Sports of the Republic of Kazakhstan; Askar Zhumagaliyev as the Minister of Digital Development, Defense and Aerospace Industry of the Republic of Kazakhstan; Kanat Bozumbayev as the Minister of Energy of the Republic of Kazakhstan; Berdibek Saparbayev as the Minister of Labor and Social Protection of Population of the Republic of Kazakhstan; Saparkhan Omarov as the Minister of Agriculture of the Republic of Kazakhstan; Kulyash Shamshidinova as the Minister of Education and Science of the Republic of Kazakhstan; Roman Sklyar as the Minister of Industry and Infrastructural Development of the Republic of Kazakhstan; Ruslan Dalenov as the Minister of National Economy of the Republic of Kazakhstan; Yerbolat Dossayev as the Chairman of the National Bank of the Republic of Kazakhstan. Kazakh Government to provide support for export-oriented domestic companies Kazakh Industry and Infrastructure Development Ministry has prepared a three-year comprehensive plan to assist export-oriented domestic enterprises in entering foreign markets. The results of a survey of more than 300 local non-oil exporting companies revealed nearly 60 % need of financial support in terms of concessional lending, refinancing, subsidies, tax preferences and others. The Ministry proposes to invite inspection commissions from China, Iran and the UAE to certify local companies' products in order to simplify their access to foreign markets. In addition, the Ministry suggests organising meetings this year between Kazakh producers and large foreign buyers such as Auchan (the EU, Russia), Metro (China, Middle East, Russia), Migros (Turkey),

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

3

Vanguard, Wumart (China) and Yonghui (China). The Ministry estimates export earnings will reach KZT 725 billion (EUR 1.7 billion) by 2021 (astanatimes.com). EU-Kazakhstan business lunch with Foreign Minister Beibut Atamkulov On 14 February, the traditional working lunch meeting was held in Astana with participation of EU Ambassador Sven-Olov Carlsson, Ambassadors of the EU member states and Kazakh Minister of Foreign Affairs Beibut Atamkulov. During the meeting, the sides discussed further development of the EU-Kazakhstan trade and economic relations, as well as ways to strengthen cooperation in the political, cultural and humanitarian fields. To note, the EU is Kazakhstan's first trade and investment partner, representing over one third of Kazakhstan's external trade and over a half of total foreign direct investment in Kazakhstan. In 2018 bilateral trade turnover amounted to EUR 22.7 billion. The share of European FDI in Kazakhstan accounts for nearly 60%, according to (eeas.europa.eu, mfa.kz). Kazakhstan makes changes to applying for visa invitation Kazakh Foreign and Internal Affairs Ministries have amended the rules for issuing invitations for obtaining entry visas and cancelling or extending entry visas. An inviting party shall apply to either the Internal Ministry or Government for Citizens State Corporation and provide an identity document, a filled-in form and a visa fee receipt. Legal entities or individual entrepreneurs applying for a visa invitation for the first time this year should provide a state registration certification, proof of accreditation in line with the current AIFC law, a certificate of Astana Hub participant and a document confirming its representative authority. The inviting party applying for a tourist visa invitation should have a valid tourist operator license. A copy of the contract or a confirmation letter from Kazakh Invest is required for obtaining a multiple entry business visa invitation, except for the countries subject to simplified visa rules (Interfax-Kazakhstan, zakon.kz).

MACRO-ECONOMICS & FINANCE Kazakhstan's foreign trade surplus expanded 50% in 2018 In 2018 Kazakhstan's foreign trade surplus increased by 50% and reached USD 28.5 billion, the Statistics Committee of the National Economy Ministry said. In the reporting year the country's total foreign trade volume increased by 19.7% to USD 93.5 billion, including exports that grew by 25.7% to USD 61 billion and imports that were up 9.9% to make USD 32.5 billion. In 2018, exports to the Eurasian Economic Union's countries stood at USD 5.8 billion (12% up) and imports at USD 13.2 billion (5.6 % up). Last year, the main buyers of Kazakhstan-made products were Italy (19.3% of all exports), China (10.3%) and the Netherlands (10.2%). The main exporters to Kazakhstan were Russia (38.1% of all Kazakhstan’s imports), China (16.5%) and Germany (5.1%) (Interfax-Kazakhstan). Kazakhstan is of interest to foreign business: the number of foreign companies grown by 9% in a year Integration process contributing to the inflow of capital investments – the volume of direct foreign investments increased by 8% in a year. By the end of January 2019, the number of foreign legal entities reached 25.4 thousand, an increase of 8.9% yoy. The share of existing legal entities was 58.8%, or 14.9 thousand, 2 thousand more than a year earlier. In 2017, the number of operating foreign companies was 12.9 thousand. Traditionally, small foreign enterprises are the most active: their share is 98.1% of the total number of registered and 97.1% of the total number of operating foreign legal entities. At the end of January 2019, the largest share of operating foreign enterprises in terms of industries accounted for wholesale and retail trade: 45% (6.7 thousand), which, however, is 0.2 pp less than a year earlier. In second place is construction: 10.4%, or 1.5 thousand - by 0.2 thousand more than in the same period of 2018.The top three leaders are professional, scientific and technical activities: 1 thousand (+11.3 year to year), the share is 6.8%.

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

4

The number of foreign legal entities, branches and representative offices with a joint form of ownership at the end of January 2019 reached 12.3 thousand, of which 7 thousand are active. Most of them are branches of Russian companies: almost 5,000, of which the proportion of existing legal entities is 61.8%. Turkey is in second place: 911 companies, the share of existing ones is 45.4%. China is also among the three leaders: 800 enterprises, the share of existing legal entities - 56%. It is important to note that among foreign enterprises the largest proportion of operating branches and representative offices is from the Netherlands: 86.2% of 276 registered legal entities. Along with the growth in the number of operating foreign companies in Kazakhstan, an increase in the volume of FDI * in the country's economy is recorded. Thus, in January – September 2018, FDI reached $ 17.3 billion, or 8.4% more than in the same period last year. The major investor countries are the Netherlands (4.7 billion US dollars), the USA (3.9 billion US dollars), Russia (1.2 billion US dollars), China (1.2 billion US dollars) and the Republic of Korea ($ 0.3 billion). (Finprom.kz) Kazakhstan annulled tax penalties of SMEs worth KZT 20 million Kazakh authorities under a tax amnesty program for SMEs have so far annulled tax penalties and fines of 968 taxpayers totalling KZT 20.4 million, the State Revenue Committee of Kazakh Finance Ministry informed. As of 15 February, as many as 29,000 taxpayers repaid a total of KZT 6 billion in tax arrears to become eligible for the tax amnesty. New rules for writing off penalties and fines from Kazakh SMEs, initiated by President Nazarbayev, came into force on 8 February (Interfax-Kazakhstan). International retail groups to visit Kazakhstan and meet with domestic producers Kazakhstan will invite international retail groups to visit Kazakhstan to hold meetings with the domestic producers, Kazakh Minister for Investment and Infrastructure Development Zhenis Kassymbek said. In particular, the Ministry plans to invite the representatives of Auchan (the EU, Russia), Metro (China, Middle East, Russia), Migros (Turkey), Vanguard, Wumart (China) and Yonghui (China). In order to support exporters, Kazakhstan will allocate KZT 30 billion in its 2019-2020 budget, including KZT 20 billion for compensation of transport costs and KZT 10 billion for service support (inbusiness.kz). Turkestan region signs memorandums to modernise trade system, healthcare, research centres ASTANA – Turkestan regional authorities recently signed memorandums of cooperation (MOC) with local and foreign companies and institutions to improve and modernise its trade system, build a pharmaceutical plant and develop its research centres. The documents include a MOC signed Feb. 16 by regional Akim (Governor) Zhanseit Tuimebayev and Kazakhstan’s Trade Unions Federation. The number of trade union enterprises and organisations in the region, which is Kazakhstan’s most populous, continues to grow. The federation is therefore interested in cooperating with regional authorities to conduct activities that “promote the system of development that will protect labour rights and interests of workers,” said Trade Unions Federation Chair Bakytzhan Abdraim. The akim signed another memorandum Feb. 14 with Niak, an Iranian pharmaceutical company, to build a plant that will comply with the latest Good Manufacturing Practice (GMP) standards. “I fully support your initiatives. This is an important step. We have all the conditions for investors. Also, it is worth mentioning the advantages of entering not only the Eurasian Economic Union market, but also Russia, Belarus, Kyrgyzstan and Armenia. I urge you to start implementing this project as soon as possible,” said Tuimebayev in addressing Niak representatives. Turkestan’s Regional Healthcare Department head Mukan Yegizbayev also signed a memorandum Feb. 11 with leading Uzbek medical institutions specialising in endocrinology and paediatrics to modernise medical institutions and telemedicine, as well as organise seminars and conferences. Uzbek National Specialised Scientific and Practical Medical Centre for Endocrinology in Tashkent prioritises its research in iodine deficiency disorders, a modern approach to diagnosing and treating diabetes mellitus, and measures for treating thyroid pathology, including various types of differentiated thyroid cancer. It seeks to create a register of pituitary adenomas and adrenal gland diseases and introduce high-tech methods of surgical treatment of various pituitary adenomas in compliance with the international standards to treat neuroendocrine patients.

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

5

Uzbek National Medical Paediatrics Centre conducts research, organisational and methodological work to improve the quality of medical care for children by coordinating and monitoring the activities of 13 regional children’s multidisciplinary medical centres. Turkestan region was established by a presidential decree in June 2018 as the former centre of the former South Kazakhstan region, Shymkent, was declared the city of national significance on a par with Astana and Almaty, and the regional capital was moved to the city of Turkestan famous for its 14th-century Khoja Ahmed Yassawi mausoleum commissioned by Timurlane.(astanatimes.kz).

INNOVATION Digital Kazakhstan measures increase labour productivity, reduce costs ASTANA – Measures implemented through Digital Kazakhstan have had a 218-billion tenge (US$579 million) economic impact and created more than 43,000 jobs, said Minister of Information and Communication Dauren Abayev Feb. 19. The positive trend is being observed in many sectors. The legislative base has improved and optimised approaches have been developed in production, business and state administration. The central and local executive bodies must create a uniform methodology for monitoring and evaluating the programme’s effects. “The most important thing is that all the work processes are established, the state bodies operate according to their duties and national and private companies have a vision of the work ahead. We are convinced that this year the economic effect from the new technologies will be higher,” said Abayev. Digital Kazakhstan has been implemented in five key areas and includes 17 initiatives and 120 events. Labour productivity has increased by 10 percent, energy savings by up to 33 percent and the equipment utilisation rate by 50 percent as a result of using Industry 4.0 elements at energy, mining and metallurgical facilities. Intelligent and digital projects were launched at seven large mineral deposits, with the number increasing to 12 this year. One hundred and two mining enterprises transferred to transparent production and the intelligent transport system has been introduced in transport and logistics. Sixteen mobile laboratories operate in the road asset management system. Elements of precision farming introduced in 14 pilot farms will reduce costs 15-20 percent and increase crop yields 2.5 times. Approximately 500 smart farms will begin operation. Tax concessions are provided to e-commerce entities. Six large banks were connected in pilot mode last year to a contactless payment service using mobile phones. “Sixty-four percent of all preschool organisations accept applications in electronic form. Ninety-four percent of schools use electronic grade books. The digitisation in education reduced the gap in the quality of education between rural and urban schools by more than 30 percent,” said Abayev. Nearly all healthcare organisations transferred to paperless documentation and 16.3 million citizens have regional e-health passports. Currently, 506 of 752 public services are provided online. Terms for providing services reduced by 40 percent and from 12 to 7 days on average. People received 30 million online services last year. Three migration, eight specialised and 16 digital public service centres (TsONs) were opened. Biometric data collection launched in the capital and Almaty. “This year, 80 percent of public services will be provided online. One digital and five migration service centres will be opened,” he added. Small and medium-sized businesses are also a priority. The Astana 1 information system was launched to monitor customs procedures and keep online duty payment records. The time needed to release customs declarations was reduced from several days to a minute. Approximately 859 electronic declarations were registered in the system, 85 percent of which were issued in 60 seconds without customs inspection. Electronic invoices and product labelling systems also prevent shadow transactions in trade.(astanatimes.com).

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

6

ENERGY & NATURAL RESOURCES Kazakhstan to open 16 new renewable energy facilities in 2019 16 renewable energy facilities will be launched in Kazakhstan in 2019, Minister of Energy of Kazakhstan Kanat Bozumbayev announced at the reporting meeting with the Community Council under the Ministry. "The renewable energy market is growing every year. In 2018, the country generated 1.3 billion kWh of green power, which was 118% in contrast to 2017. In 2018, five renewable energy facilities were commissioned in Mangistau, Zhambyl, Almaty and Karaganda regions," said Bozumbayev. According to him, in 2018, Kazakhstan's renewable energy sector attracted large investment by signing a number of agreements and memorandums totaling KZT 100 billion ($283 million). Kanat Bozumbayev also informed that in 2019, it is planned to launch 16 facilities of renewable energy sources with a total capacity of 629.35MW and generate 2.3 billion kWh of electricity from renewable energy sources. Presently, there are 67 operating renewable energy facilities with a total capacity of 531MW in the country. In 2018, Kazakhstan generated 106.8 billion kWh of electricity, which is 104.4% as compared to 2017. The target for 2019 is 105.7 billion kWh, as reported by Kazinform. Italy, Netherlands and France buy over 50% of Kazakhstan oil In the first 11 months of 2018, the share of Italy, France and the Netherlands in exports amounted to 54.7%, Forbes Kazakhstan reports with reference to the Analytical Centre of Kazakh Association of Financiers. China has not entered the top 10 for the purchase of Kazakh oil, but holds the lead in imports of Kazakhstan copper at 54.8%, natural gas at 47.1%, ferroalloys at 35.8%, products of inorganic chemistry at 34.2%. The Netherlands lead in the import of oil products from bituminous rocks and fuel oil at 70.4% and 78.4%, respectively, for flat roll products Russia is in the lead at 67.0%, Uzbekistan leads for wheat at 29.1%, Turkey leads for aluminium at 33.8%. Overall, 9 out of 10 key Kazakhstani export goods fall into minerals and their processed derivatives (forbes.kz). Oil production at Kashagan exceeds the planned volume by 2.2 million tonnes Last year oil production at the Kashagan field exceeded the planned volume by 2.2 million tonnes and amounted to 13.22 million tonnes of oil instead of planned 11 million tonnes. Production at the Tengiz field amounted to 28.6 million tonnes, which is 1 million tonnes more than planned. Production plans for Karachaganak were also achieved with the volume of production of 12.2 million tonnes. The total annual volume of the oil producing industry in Kazakhstan amounted to 90,36 million tonnes with an increase by 4.8% compared to 2017 (bnews.kz). Over 45,000 Kazakhstanis engaged in Tengiz expansion project ATYRAU. KAZINFORM: More than 45,000 Kazakhstanis are engaged in Tengiz project expansion, Kazinform correspondent reports. "All the Kazakh employees are engaged in the Future Growth Project-Wellhead Pressure Management Project (FGP-WPMP). This is 91% of the total number of project personnel in Kazakhstan. TCO attracts also Kazakhstani organizations to the design, procurement works and to purchase of modules for FGP-WPMP. Over 2,100 companies participated in preliminary selection. Contracts were signed with more than 400 companies," TCO press service says. The project representatives visited more than 160 Kazakh companies to assess their production capacities. Since the beginning of the project's implementation, the TCO has spent $5.6bn on local content," the press service adds. Recall that in 2018, TCO extracted 28.6mn tonnes (228.2mn barrels) of crude oil at Tengiz deposit in Atyrau region. Last year, the company sold more than 1.3mn tonnes of liquefied gas, 9.2bn cubic meters of dry gas as well as 2.5tonnes of sulfur. The implementation of the abovementioned projects will let increase production volumes by almost 12mn tonnes per annum or by 260,000 barrels per day. The total volume of production will make around 39mn tonnes per year or 850,000 barrels per day.

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

7

Kazakhstan close to resolving dispute with oil consortium Excerpt from report by privately-owned Kazakh Telegraph Agency (KazTAG) on 8 February The work of signing the final agreement on the principles of settling the dispute over production sharing methods at the Karachaganak [oilfield] project is coming to an end, Kazakh Energy Minister Kanat Bozumbayev has said. "As regards the Karachaganak project, we have achieved an agreement with the consortium [of foreign companies] on the principles of settling the dispute over production sharing methods, which started in 2015. Now the work on signing the agreement is finally coming to an end," Kanat Bozumbayev told an Energy Ministry meeting on Friday [8 February]. He recalled that basic agreements had been reached on compensation payments (1.1bn dollars (for 2019-2021) and on increasing the country's share by 360m dollars by 2037 at an oil price of 60 dollars a barrel. "In line with the agreements, within the next five years we also expect additional investments of 5bn dollars for building facilities to process and pump gas, and to drill new wells in order to keep production stable in the long-term future," the minister said. According to BBC Monitoring. Tankers with Kazakh oil stuck in the queue for passage through the Bosphorus and the Dardanelles Oil tankers loaded approximately 41 million barrels of oil – mainly Kazakh and Russian from the Black Sea ports – stand in line to pass through the key Turkish straits, according to the port operator Tribeca Shipping. A total of 55 vessels were stuck in front of the Bosphorus and the Dardanelles, including 21 Suezmax class tankers and 26 Aframax class vessels. The waiting time for passage through the straits for tankers leaving the Black Sea is about 16 days, which is significantly longer than the usual 5-6 days. The delays are mainly due to the introduction by Turkey of new rules for the passage of ships in September 2018, which require escorting a tug for more types of vessels than the previous ones (maritimehealrd.com). Lukoil to invest USD 350 million in Zhenis block geological exploration Russia's Lukoil company plans to invest about USD 350 million in the Zhenis block exploration located in the Kazakh part of the Caspian Sea within 7-9 years, Lukoil President Vagit Alekperov said. On 18 February, Lukoil and KazMunyGas signed a protocol of direct negotiations on the subsoil use rights for exploration and production of hydrocarbons at the Zhenis block offshore. Earlier, on 30 November 2018, two sides reached a joint venture agreement and a financing agreement on the Zhenis block project. The companies plan to create a joint venture with both sides holding a 50% stake (Interfax-Kazakhstan). Italian Eni increases oil & gas production in Kazakhstan Italian oil and gas company Eni increased its oil and natural gas production in Kazakhstan by 8.3 percent in 2018 compared to 2017, Trend reports with reference to the company's data. Eni's oil and natural gas production in Kazakhstan in the 4th quarter of 2018 amounted to 162 kilobarrels of oil equivalent per day (kboe/d) compared to 130 kboe/d in the same period of 2017. The company's liquids production in the country totaled 110 kilobarrels per day (kbbl/d) in the period compared to 83 kbbl/d in the 4th quarter of the previous year. As for the natural gas production, in the 4th quarter of 2018 it made up 287 million cubic feet per day (mmcf/d) compared to 256 mmcf/d in the same period of 2017. In 2018, in general, Eni was producing an average of 143 kboe/d of oil and natural gas compared to 132 kboe/d a year earlier. Liquids production in 2018 amounted to 94 kbbl/d compared to 83 kbbl/d in 2017. Eni's natural gas production last year made up 265 mmcf/d compared to 264 mmcf/d in the previous year. The Italian company operates two oil and gas fields in Kazakhstan - Kashagan and Karachaganak. The company holds a 16.81 percent share in the North Caspian Sea Production Sharing Agreement, which sets terms and conditions for the exploration and development of the giant Kashagan field.

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

8

Eni's interest in Karachaganak is 29.25 percent. Operations are conducted by the Karachaganak Petroleum Operating Consortium. (Baku.kazinform.kz) Kazakhstan to intensify exploration of gas fields President Nazarbayev has instructed to intensify geological exploration of gas fields, Energy Minister Kanat Bozumbayev said. Kazakh Energy Ministry together with KazMunayGaz national company will work on implementation of the geological exploration program for 2021-2025. In 2018, gas production in Kazakhstan amounted to 55.5 billion cubic meters (5% up compared to 2017), while the marketable gas production reached 33.3 billion cubic meters (5.4% up). As of 1 January 2019, the country gasification level reached 49.68%, the target for 2019 is 50.5%. In December 2018, Kazakhstan started the construction of Saryarka gas pipeline, which will supply natural gas to Astana as well as to the northern and central regions of Kazakhstan (Interfax-Kazakhstan, inform.kz). Kazakhstan starts transit of gas to Tashkent Kazakhstan has started transit of natural gas to Tashkent, Energy Minister Kanat Bozumbayev informed. Transit of natural gas through Kazakhstan will ensure energy security for Tashkent in winter time and will supply gas to southern Kazakhstan. In late 2018, UzTransGas and KazTransGas signed the agreement on natural gas supplies to Tashkent through Kazakhstan. One billion cubic metre of gas will be pumped under the agreement (Interfax-Kazakhstan). Oil refining in Kazakhstan to grow by 5% in 2019 In 2019, it is planned to process 17.2 million tonnes of oil, which is 5% more than 2018, Deputy Energy Minister Makhambet Dosmukhambetov said. In 2018, the volume of refined oil at the three large oil refineries amounted to 16.4 million tonnes. To recall, Kazakhstan plans to start export of oil products to the Central Asian countries in April this year. Earlier, Astana and Moscow signed an agreement to lift the ban on the export of Kazakh gasoline abroad, which has been in effect since 2015. Moreover, in March the country will introduce three months temporary ban on imports of gasoline from Russia (kursiv.kz).

TRANSPORT & COMMUNICATIONS Kazakhstan and US to sign "open sky" agreement in March Kazakhstan and the US will sign an agreement on launching direct flights between the two countries on "open sky" principle in March, Kazakh Minister of Industry and Infrastructure Development Zhenis Kassymbek said during the Governmental meeting on 5 February. The procedure of accreditation for flights to the US has been launched this year. Kassymbek noted that Kazakh Industry and Infrastructure Development Ministry and Air Astana company will work this year on opening air service to Japan, New York, Shanghai and other large cities of the world. Earlier, President Nazarbayev has instructed to open direct flights between Kazakhstan and the US, as well as with Japan (aviationpros.com). Air Astana may launch direct flight service to US in late 2020 During the expanded meeting at Kazakh Ministry of Industry and Infrastructure Development, Air Astana President Peter Foster noted that launching a direct flight to the US from Kazakhstan may become possible at the end of 2020. Deputy Minister of Industry Roman Sklyar said that in 2019, the authorities will be searching for options to provide state support to domestic companies for opening flights to Japan and the US. The open direct flight to Japan is scheduled for the second half of 2019 (Interfax-Kazakhstan, akipress.com). Russia's Red Wings to launch St.Petersburg-Astana flight Russia's Red Wings air carrier is set to launch Saint Petersburg-Astana flight, Kazinform reports citing the Civil Aviation Committee of the Industry and Infrastructure Development Ministry. "The Committee is working now over development of international flights. Red Wings Airline Company

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

9

has been designated by the Russian aviation authorities to operate flights en Saint Petesrburg-Astana route 7 times a week," the press service of the Kazakh Civil Aviation Committee says. Air Astana presently performs direct flights from Astana to Saint Petersburg 6 times a week. From the Russian side this flight was previously operated by Rossiya air carrier. (inform.kz) Kazakhstan, Iran to launch Aktau-Gorgan direct flight Iran's Pouya Air is planning to launch Aktau-Gorgan flight, according to Kazakh Civil Aviation Committee. The flights are expected to start in spring-summer 2019, and will be carried out twice a week. The launch of the new flight will help develop further Kazakh-Iranian trade and economic relations as well as increase volume of passenger traffic. To note, in the Iranian city of Gorgan reportedly live around 5000 ethnic Kazakhs (Interfax-Kazakhstan). Kazakhstan is looking for the general subcontractor to create KazSat-2R Kazakhstan negotiates with foreign manufacturers on the creation of KazSat-2R satellite, as reported by Ministry of Defence and AeroSpace industry of Kazakhstan. At the moment, the project is at the development state and financial expertise. Currently space satelites of KazSAt-2R system provide services to 14 telecom operators, digital TV & Radio, Internet and data transfer all over territory of Kazakhstan. Compared to 2017, the last year income from exploitation of space systems grew by 25% (from 6.5 bln KZT to 8.9 bln KZT). (kaztag.kz) Kazakhtelecom and Swedish Ericsson to develop 5G in Kazakhstan The national communication operator Kazakhtelecom and Sweden’s Ericsson signed a memorandum of intent to develop 5G services in Kazakhstan. The document was signed during the Mobile World Congress in Barcelona. According to the memorandum, Kazakhtelecom and Ericsson will conduct research in the next three months and develop recommendations for switching the existing mobile networks of Kcell and Altel/tele2 to 5G standards, which will be tested in Kazakhstan in 2019-2020 (Interfax-Kazakhstan).

AGRICULTURE 2,5 mln ha of unused land revealed in 2018 During last year 2,574 thousand hectares of agricultural lands not used for their primary purposes or with the violation of land law had been identified, according to the Agriculture Vice-Minister, Arman Yevniyev, at the Majilis (lower Chamber of the Parliament) round table devoted to the rational utilization of land resources. According to him, Kazakhstan possesses 272 mln ha of land fund, 74% of which are meant for agricultural use. Ministry of Agriculture press-service informed that as a result of certain response measures, 388 thousand hectares are under development, 804 thousand hectares returned to state property. The rest 1 382 thousand hectares are under court measures for return. (kazinform.kz) Kazakhstan to build integrated veterinary control system "Kazakhstan plans to build the integrated veterinary control system," head of the veterinary control committee of the Kazakh Agriculture Ministry Arman Utegulov told the roundtable discussions at the Senate. "The committee's plan for 2019-2021 involving regions has been elaborated pursuant to the recommendations of the World Organization for Animal Health (OIE) following the results of the OIE PVS Missions (Tool for the Evaluation of Performance of Veterinary Services). "The draft laws of the agro-industrial complex provide for the following changes: development of the integrated veterinary control system, development of vertical veterinary service of the local executive authorities, setting up vehicle checkpoints for animals and products movement, funding of inspections at Kazakhstan's enterprises to include them into the registries of the third countries from the republican budget," Utegulov said.

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

10

He also focused on efforts aimed at combating highly pathogenic avian influenza and the strategy to counter goat fever.(kazinform.kz) SPE "Atameken": certification of Kazakhstani producers of organic products must be cheaper SPE "Atameken" set out to reduce the cost of the certification process of Kazakhstani producers of organic products. This was announced by director of "Competence Center" SPE RK "Atameken" Arsene Kerimbekov, informs the press service of the company. In particular, he noted that currently only 15 companies exist in the world, certification of organic products. "Nearest to our centers are located in Kiev, Vilnius and Germany. There is a center in Kazakhstan, however, he does not enjoy popularity. Over 1.5 years of operation the center has been granted the certificate no. Quite simply, we have a center, but he is not accredited in the EU. Europe agrees that our product is clean, believe, but requires evidence ", - said Arsen Kerimbekov. In addition, he said, it complicates the situation and the fact that on average, the transition to organic production takes several years, and only the third year of the harvest may be for sale. "During this time, you do not earn anything. In Europe, during this period the manufacturer receives a subsidy ", - he stressed the expert. Also, the expert noted, in Kazakhstan there is no need to create a national program for the production of bio-products. "There will be a program governorates immediately put before the business of the development plan. While the transition to organic production should be voluntary ", - he said. According to the Arsen Kerimbekova potential of Kazakhstan for production of bio-products per year about 200 million., Whereas in European countries currently supplied organic produce only 10 million. Euro per year. "The barriers to exports - the high cost of certification (at least 5 thousand euros.) And laboratory studies. While in Germany only need 10 billion euros, while production covers only a fifth part, "-. The expert said. (agrosector.kz) Mass slaughter At Taldykorgan poultry farm the hens were laid under the knife This is not an epidemic of birth flu and not any different infection, but a necessary measure. Just the poultry houses were on the verge of bancrupcy and they have nothing to feed the bird. In this situation, they were due to the delay of subsidies and donations. In total more than 600 thousand birds out a million and a half will go under the knife. If you do not intervene in the situation, perhaps the market will flood the eggs of dubious quality. Another reason for the mass slaughter - is the rise in prices for feed. Wheat from which it was made, not only increased in price from 60 tenge per kilogram to 70, but also became a deficit. In the regional department of agriculture they reported that the debt of the budget to the producers of the region, and this is almost 2000 companies, today amounts to 6 billion tenge. Of this amount, 70 percent is debt to poultry farmers. According to officials, they regularly conduct correspondence with the government and the Ministry of Agriculture. Now we are preparing a resolution and additionally asked for finances from the government. Only recently they wrote another letter to the Minister of Agriculture, ”stated Dimash Sydykov, Chief Specialist of the Department of Agriculture of the Almaty Region. According to the poultry farmers, in order to stay afloat, they need not only subsidies, but also real market conditions. When the price of their products will not be regulated by orders from above, but by the main principles of the market: supply and demand.(time.kz) Kazakhstan bans import of agricultural goods from Kyrgyzstan, Uzbekistan Kazakhstan has imposed temporary quarantine phytosanitary ban on import of agricultural products from Kyrgyzstan and Uzbekistan since February 19, Kazakh Agriculture Ministry informed. Particularly, a temporary ban is imposed on import of potato and potato seeds, apples and persimmons from Kyrgyzstan, as well as import of pomegranate from Uzbekistan. The ban is connected with presence of pests in the products (akipress.com).

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

11

Dutch Fruit Solutions discovers Kazakhstan! On 12 December 2018, a cluster of 11 Dutch companies and the Netherlands Enterprise Agency (RVO.nl) signed a cooperation agreement "Dutch Fruit Solutions Kazakhstan", in the framework of the programme 'Partners for International Business' (PIB). The cluster will work together to establish the Netherlands as a (knowledge) partner to the Kazakh fruit sector for the production of plant material and associated cultivation care, harvest, post-harvest treatment (refrigerated storage, sorting, packaging), and processing technologies. The programme focuses on the sustainable positioning of the Dutch chain approach as a solution to challenges such as food security, health, food quality and reducing losses. In addition, attention is paid to sustainable relationship building through knowledge exchange between Dutch and Kazakh knowledge institutes. This PIB program was developed in cooperation with the Agricultural Attaché in Moscow and the Embassy in Astana, office Almaty and will focus on the South East Kazakhstan province. The market share of Dutch involvement in fruit growing is worldwide 15%. Taking into account the ambitious plans of the Kazakh Government in the fruit sector, the Dutch fruit chain could potentially develop 600 ha yearly. Next to the Government-to-Government (G2G) and Knowledge-to-Knowledge (K2K) activities aimed at establishing a sustainable Kazakh fruit sector, activities are planned like trade missions, matchmaking, workshops, and joint attendance at trade fairs. Furthermore, a Dutch demonstration pilot with intensive orchard, supported by state of the art technology is planned. This orchard with the latest fruit cultivation should become a centrepiece or hotspot for applied research, education (Train the Trainer) facilities and agricultural extension.(rvo.nl)

CONTACTS

CONTACTS Embassy of the Kingdom of the Netherlands 62, Kosmonavtov Str. Chubary mcrd, 3rd floor 010000 Astana T: +7 7172 555450 ast@minbuza.nl

Embassy Office in Almaty 41, Kazybek Bi Str. 050010 Almaty T: +7 727 2503773 alm-ea@minbuza.nl

Comments and subscriptions The Economic Newsletter on Kazakhstan appears every month and is distributed by e-mail. Back issues can be downloaded from our website http://kazakhstan.nlembassy.org/. If you would like to be added to our mailing list or if you wish to unsubscribe, or if you have any comments or suggestions regarding the Newsletter, please contact: tel.: +7 (727) 2503773 e-mail: alm-ea@minbuza.nl Please mention your company and contact details.

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

12

Greenhouses. Vegetable growing. Irrigation. Flowers Almaty 2019. Date: 18-APR-19 to 20-APR-19 City: Almaty 11th International Exhibition. www.greenhouses.kz

EXHIBITIONS IN KAZAKHSTAN (2019)

ECONOMIC NEWSLETTER, February 2019 Embassy of the Kingdom of the Netherlands

13