Technology transfer in Kazakhstan problems,
prospect and possibilities for foreign companies

Yerik Dukenbayev

President , Kazakhstan’s Association of Business Incubators

and Innovation Centers (KABIIC), Kazakhstan

Kazakhstan is the young and independent state with a fast developing economy. In 1991 after the dissolution of the USSR (Union of Soviet Socialist Republics), Kazakhstan became an independent state and according to the occupying area Kazakhstan takes the 9-th place in the world. Kazakhstan is recognized as a “Country with market economy”, but nevertheless raw material sector is dominating in state economy structure. From the one hand it is connected with the heavy stocks of oil, gas and minerals, ferrous and nonferrous metals, coal, uranium and other minerals, but from the other hand, it is because of the soviet economy structure, directed to the development of raw material sector, restructuring and movement to the processing sector has  just started. The Government of the country makes considerable efforts to create favorable investment climate. For this reason an appropriate legislative basis was created. The interests of private investors are protected by the government.   All these become a result of considerable range of foreign investments, growth of hydrocarbon stuff production and all other types of mineral recourses: ferrous and nonferrous metals, rare earth elements, uranium and etc.   The production and export of corn is growth in this period as well. Firm demand for oil, ferrous and nonferrous metals, corn, and their increasing cost in the world market become a result of year-on-year increase of internal national product in Kazakhstan, 9% on average per year, which is to permit to form our own financial reserves and start the process of economy diversification, i.e. transfer from extractive to processing sector of economy, issue of science intensive with high added cost products.  For this reason, “The strategy of industrial and innovation development of Kazakhstan by 2015” was created by the government.  One of the mechanism of strategy realization is the technology transfer, which implies the commercialization of domestic and foreign science and technical developments, creation of new technologies, as well as, transfer and implantation of new technologies from foreign countries. Nowadays the technology transfer is preferable for our country.  

The following stimulating factors promote the technology transfer in Kazakhstan:

Acceptable legislative basis, which protect the interests of entrepreneurs and investors;

General policy holding by the Government, directed to the economy liberalization and support of private initiative;

Strategic plans and goals of the Government, directed to the development of processing and high-tech sectors of economy;

Creation of development institutes and innovational infrastructure (Development bank, Engineering and technology transfer center, National investment fund, National innovational (venture) fund, State insurance corporation and others);

Creation of National technological parks ( in the form of Free economic area (FEA), with tax allowance), regional technological parks and centres of innovation;   

Prospect of Kazakhstan in joining to the World Trade Organization and aspiration of entrepreneurs of Kazakhstan to diversify their own business, attract new foreign technologies and start to produce high-tech, competitive products, which is corresponded to world standards;

A large amount of obsolete equipments (more than 70% of technological equipment has been used for more than 15 years) and necessity to modern functioning enterprises, including majors; 

Developing of new spheres of economy (aerospace, informational, petrochemical, complete processing of agricultural products, pharmacy and others);

Availability of well-qualified specialists, high level of education in the country, presence of high level technical universities and science institutes;

In spite of the many stimulating factors, the technology transfer has not developed as it is expected.  There are many reasons. The first of them is a: poor experience in the sphere of technology transfer, unready financial schemes in purchasing equipment and technology, absence of informational basis on new technologies, poor number of inside market consumers (the population of Kazakhstan is 15 million), aspiration of foreign and domestic companies to put up their money to developed (oil and gas and metallurgical) sectors of economy, poor experience of commodity promotion to international market. So in the present state of affairs foreign organizations experienced in technology transfer, promotion of goods to international market may have an advantage. And these companies are getting more and more required.

Creation in Kazakhstan of Engineering and Technology transfer center will help to cover a part of the mentioned problems.  This center is a coordinator of all technoparks in our country and according to the conception approved by the Government of the Republic of Kazakhstan, all technoparks will be engaged in organization of technology transfer, giving a huge resource for companies, who want to buy or sell their technologies.   

Nowadays many technical Universities create scientific subdivisions, which are also learning about organizing the technology transfer, transfer of knowledge and experience, and also provide consultation for people interested in it.

Recently the National Company “Kazakhstan engineering” was created by the Government. This company unites 23 large-scale and industrial enterprises of Kazakhstan, which earlier were the part of the military-industrial complex of the country.  The main idea of founding such kind of national company is an implantation of new technologies, production of equipment, and also fulfilling the program of joint work and issue the modern specimen of industrial products.   National company “Kazakhstan engineering” and large-scale company “SOUZINVEST - Auto” signed the memorandum of joint activity.  Realization of given memorandum provides  creation of joint enterprises, which will realize and give for leasing a large amount of special autotechnics (agricultural, municipal, road-building, buses), and also spare parts for them.  There was an agreement with the company “Singapore Technologies Engineering”, which is specializing in electronics, aerospace sphere, shipbuilding and arms production. This company is going to bring its experience, management, and new technologies in the sphere of oil and gas, agriculture, mineral resource industry and other spheres as well.

During the state visit of the President of the Republic of Kazakhstan N.Nazarbayev in China, the National Company “Kazakhstan Engineering” and china company ZTE sign the agreement on creating of the joint enterprise “KAZNURTEL”, which will produce telecommunication equipment with the standard CDMA 450 in Kazakhstan.  

Nowadays leasing companies and leasing operations are developing in Kazakhstan. Leasing becomes the most accessible method of attracting (purchasing) new technologies. But nevertheless existing leasing companies can not satisfy the requirements of Kazakhstan businessmen. Special value for Kazakhstani entrepreneurs, interested in technology transfer may be companies that can  offer not just their technologies and equipments, but also the selling system of these technologies to external markets (i.e. companies, which have well known brands, trade networks, specialists, consultants)    

The perspective model of developing technology transfer in Kazakhstan is creating joint enterprises, joining up of the capital of the local and foreign entrepreneurs. This tendency also encouraged by the Government.    

Perspective spheres for foreign companies in Kazakhstan are:

Business in ecology (processing of industrial waste products, accumulated during the long time from the oil, mining, coal and mineral recourse industry;

· Intensive technologies of agricultural productions, deep processing of it, especially the corn and vegetables,  foodstuff production (Kazakhstan is a an agricultural country, and a huge exporter of the corn, about 40% of the population is engaged in the agriculture);

· Construction materials production (a new capital of Kazakhstan - Astana is being built actively, Housing program is accepted as well. This program implies building of low cost accommodation, which is made from local materials.  Construction of roads, building of business-centers and other immovable properties is also taken into consideration. Natural resources help to produce different types of construction materials. Wastes from coal, metallurgy and mineral resource industry can be used for production of construction materials;

· Processing of oil and oil products and production from them petrochemical products (at present time in Kazakhstan petrochemical sphere isn’t developed in spite of the petroleum reserves);

· Production of different types of accumulator batteries (all     components for production of different types of the batteries exist in Kazakhstan. Explored quartz reserves is about 267million ton. There is a field and spring of gallium, arsenic, cadmium, germanium. It is necessary to mention that arsenide-gallium beam antennas used in soviet space satellites);

· Production of technological equipment, spare parts for them, accessory, expences for oil and gas, metallurgy and mineral resource industry;

· Production of nonpolluting medicals and substances from vegetal matters (herbs medicals);

Mentioned spheres and other activities, interrelated to new technologies that can produce goods up to international standards can be developed in Kazakhstan, and the most optimal way to realize it is the organization of export related production, support for which will be source of raw materials. 

Except the mentioned prerequisites for the successful developing of the Strategy of industrial and innovation development of Kazakhstan, particular conditions and appropriate infrastructures are created. So for the development in Kazakhstan informational technologies as well as the creation of applied nuclear energy technology with utilization of radioactive nuclides in medicine and industry, elaborated by the Institute of nuclear physics, park of informational technologies “Alatau” was created, which is called as the Alatau IT-city.   Particular feature of this technopark is that it was created in the form of free economic area.  Registration of the enterprises is simplified; taxes reduced till 50%, and many other taxes and customs benefits. Nowadays in Alatau – It city  about 60 projects are being developed, 40% of which is being realized by foreign companies and 15% of the projects belong to the category of  Start up .There are famous foreign companies, which are registered in Alatau IT-city: Microsoft, HP, Siemens, Cisco Systems, Thales and others. We are holding the negotiation with the companies such as: Samsung, LG, Oracle, Sun Microsystems and many others. 

Alatau IT-city is a national technopark, which is created by the Government of Kazakhstan. This park operates just one year. It is situated near the Almaty with the population of 1,5 million people,   in submountain place. Its ground area is 340 hectares.

Except the Alatau IT-city, by the government of the Kazakhstan 2 more special national technoparks are being created. One of them is in the sphere of biotechnology; another is in the sphere of oil and gas.

Local administrations of big cities and administrative centers also create regional technoparks. One of the successful technopark is Almaty Technology Park, which is created by the local administration of Almaty. The territory of technopark is 3 hectares, in which 15 buildings with the total area 38 865 square meters. Almaty technology Park may offer to foreign companies different services and help them to make preliminary market research, present the information about legislation of Kazakhstan and conditions of conducting business in this country, support in regulation of partnership and help them to easily enter to Kazakhstan market.  Especially for foreign companies on the territory of technopark, the business-center with an appropriate infrastructure is being built. Total area of the business-center for foreign companies is about 16200 square meters.  

All technoparks in accordance with the “Concept of technoparks’ creating and development” and with the “Strategy industrial and innovational development of Kazakhstan” are engaged in technology transfer.  Not all of them have experience, but all of them interested in technology transfer, search and attracting of foreign new technologies, investments and partners. All of them are ready to help foreign companies to transfer and distribute their technologies in Kazakhstan.

Not just technoparks, business-incubators are also developed. Total number of them is about 40. Unfortunately just 9 of them are operating. All operating business-incubators and technoparks are members of Kazakhstan Association of Business-incubators and Innovation Center (KABIIC).  Our association applies force for developing technoparks and business-incubators in our country.

For this reason we participate in different governmental committees, workgroups, in developing state projects, and participating in developing the project of Industrial and innovational development strategy of Kazakhstan as well.  Our association holds an international meetings on technology transfer and thereby form conditions for business-incubators and technoparks and for the new technology transfer in Kazakhstan as well. Now taking into consideration the interests of many companies of Kazakhstan to the technology transfer, we think that we have reached our aim.

Taking into account all factors mentioned above, we can say that Kazakhstan became more attractive country to firms interested in transferring their technologies. So we may say that our association, which unites many business-incubators and technoparks of Kazakhstan can be a “Gate” for foreign companies. We are ready to negotiate with all foreign companies, help them and give them required support.

We tried to say about problems and possibilities for foreign companies in Kazakhstan in short. And I hope that you and your partners will use the principle “Change somebody’s problems to your objectives”.

Welcome to Kazakhstan. We are always glad to see you and co-operate with you. We will be glad to assist you in our country and justify your hopes. Thank you for your attention!