Kazakhstan’s Zhambyl Oblast faces stagnant economy

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TARAZ – Kazakhstan is known as an island of hydrocarbon-fueled wealth in Central Asia, but not all of its oblasts are sharing in the riches.

In June, at the international forum ZHAMBYL-INVEST-2010 in Taraz, analysts from Strategy & Partners stated that estimates placed Zhambyl Oblast’s economic development below that of the average Kazakhstani oblast.

“Presently, the region’s investment attractiveness remains low,” their report stated.

Reports cited corruption, administrative barriers and low purchasing power as reasons for the lack of appeal to investors.

The oblast’s primary industries are crop agriculture and livestock and poultry raising, Deputy Oblast Akim Maratbai Zholdasbayev said.

“This is explained by climatic factors,” Zholdasbayev said.

Subsidies are available, but are small

The government supports agriculture, giving 6,000 farms subsidies last year, Oblast Akimat Agriculture Department chief Murat Asilbekov said.

“The Agriculture Ministry will provide ten types of transfer payments this year, including support for seed production, increases in yield and crop quality; subsidies for irrigation water; and reduction of fuel costs,” Asilbekov said.

Only constant subsidies will allow agriculture to develop stably, but the current level of aid will not bring the region’s agriculture up to standard, said Zhambyl farmer Andrei Voronkov.

The subsidies that exist require gathering many documents and cutting endless red tape, he added. Zhambyl Oblast’s farms are small and the farmers are always sowing, irrigating and harvesting their crops and do not have time to deal with bureaucracy, he complained.

“Moreover, the subsidy is small; for example, for grains it is 300 KZT (US $2) for 1ha of crops,” Voronkov said.

The Zhambyl Oblast Statistics Department indicates the region’s average monthly pay is US $331, but the unemployment rate this year jumped 11% from last year to 6% of the overall population.

“The statistics are completely wrong,” said economist Aleksei Voloshin, who left the oblast, where he was unemployed, to find work in Astana. “The oblast’s development is coming very slowly … Many people are leaving the oblast in search of a better life. This is why they report such a low unemployment rate, since they count only those who stay behind.”

The oblast has 1,485 small and medium-sized enterprises operating; another 2,659 enterprises are inactive for various reasons, 1,919 were liquidated and 102 are being liquidated, according to the Statistics Department.

Lack of capital, loans hurts businesses

Zholdasbayev identified another problem for businesses: a lack of working capital and an unwillingness by banks to lend. This is primarily a problem for farms.

In recent years the only source of credit for farmers has been the State Fund for Agricultural Support, Asilbekov said. “However, in spite of the attractive terms, the fund has very limited loan potential. Each year, the funding decreases. In 2009, a total of 305m KZT (US $2.1m) in loans was granted to agricultural producers,” Asilbekov said.

The oblast’s development requires tourism and trade with bordering Uzbekistan and Kyrgyzstan, a press release from the Kazakhstani Chamber of Commerce said in June.

Zhambyl Oblast could become a regional distribution centre if it created a trade and logistics centre and developed wholesale food markets and cross-border co-operation, Department of Economy and Budget Planning Director Almas Madiyev said.

New akim, new future?

In 2009, Zhambyl Oblast replaced its akim. Many residents are now placing their hopes for the oblast’s development on the new leader.

“Even considering Zhambyl Oblast’s current economic status, I would argue that the resources to develop the region exist. Our oblast has the ability to serve as a lifeline in the post-crisis period for all of Kazakhstan,” said the new akim, Kanat Bozumbayev.

Foreign and domestic investors are now willing to invest in creating centres of economic growth in Zhambyl Oblast, Bozumbayev said.

Crop and livestock farming needs to be seen not in terms of independent small-scale production, but as the raw-material base and inseparable first link in the complex chain of production, he said.

“Then investors will necessarily be interested in projects in the agricultural sector,” he said. Businessman Bolat Isabekov predicted little will change for the better in the near future: “The widespread system of kickbacks and corruption renders null and void all government initiatives,” he said.

Changes for the better are still possible if the oblast accelerates the introduction of innovative technologies and increases productivity, according to Strategy & Partners’ analysts.

The akimat is drafting a five-year regional development programme, Bozumbayev noted. “This will be a clear strategic plan for us to live by. And we need to double the GDP in five years to catch up with the other oblasts.”