New Infrastructure for Kazakhstan’s Regions

Well-developed transport and communication infrastructure is crucial for boosting the competitiveness of any region. Such infrastructure provides high quality domestic transportation services as well as transit of goods and people through its territory.

The current conditions dictate such a model for development of the transport and communication infrastructure that would help to meet the present and future demand. The economic growth per se is very dependant on the quality of infrastructure as it means less inequality between the regions of a country in terms of their economic development and brings them closer to each other making the entire economy more cohesive. Good infrastructure helps modernization of economy, the newest and most advanced technologies are hard to introduce when the infrastructure is old and in poor condition. Thus, the quality of infrastructure is a crucial marker showing the overall development of the economy of entire regions.

Kazakhstan’s achievements in this respect are apparent. The government has taken a series of measures in order to create the conditions for competition of the transportation services with the ultimate goal being to integrate them into the international system and to boost the transit capacity of the country.

The large-scale project of the transcontinental Western Europe-Western China road is being implemented. The length of the highway is more than 8,000 kilometers, more than 2,000 of which are through the territory of Kazakhstan. The transcontinental highway, provided the project is successful, will reduce the time of the transportation of goods from China to Europe from 10 up to 40 days, according to some expert estimates. Additionally, the Western Europe-Western China road will boost the development of the related industries.

The considerable efforts are taken in the railway industry. So far, 1,200 kilometers of new railway lines have been built. The implementation of the Zhetygen-Khorgos project increased transit traffic from China to European and Asian countries due to the 500 kilometer reduction of the transit route. In 2013, the direct railway was opened between Kazakhstan and Turkmenistan that has the following benefits: 600 kilometer reduction of the railway lines and future access to the Persian Gulf.

The broader social impact of the projects shall be specially emphasized. In 2013, the building the Zhezkazgan-Beineu and the Arkalyk-Shu- barkol railway lines were launched to shorten the distance of transportation between China and Europe by 1,200 kilometers. The construction works within the project shall employ up to 80% of the local labor.

It is very important to note, however, that most of the projects being implemented are external by nature. At the same time, there is apparent need for better infrastructure between the regions of Kazakhstan. Over the past ten years there have been considerable investments (about 100 billion KZT) in reconstruction and modernization of the take-off runways, passenger terminals and more than 300 other facilities in the dozens airports throughout the country. However, more than 80% of all the current air traffic requires operation of the modern aircraft types and further modernization of the airport infrastructure as well as construction of new airports in Kostanai, Taldykorgan, Taraz, Semei, Petropavlovsk, Ust-Kamenogorsk and Uralsk.

On November 11, 2014, Kazakhstan adopted the National Program Nurly Zhol that stipulates precisely for the development in the transportation and logistic infrastructure. Such a modernization requires construction of the transportation and distribution hubs that would improve terminal infrastructure, attract the bulk of the cargo flow, and boost the quality of management. The hubs shall be built in the “spots of development” in each region. The most likely locations for such hubs are Astana, Almaty, Shymkent, Aktobe and Ust-Kamenogorsk.

The decision to locate the hubs in the major cities was primarily motivated by the fact that they are the centers for concentration of capital, resources, and the most advanced technologies. All these presuppose the development of the services that would meet the international standards of quality in these hub-cities. These, in turn, will boost the quality of human resources and human capital making these hub-cities more capable to compete with the other megacities throughout the Eurasian continent. The ultimate goal is to increase the general level of development in Kazakhstan so that the country would be ranked among the 30 most developed countries in the world. This goal is to be achieved via rapid urbanization and enhanced competitiveness.

These future hub-cities would connect the existing regional and sub-regional territorial- economic complexes and those that are only to be built. The competitiveness of the regions shall increase as each of them will have a well-developed transportation network comprising of an airport and land transportation infrastructure. The mobility of people and business shall rise considerably.

In order to implement the Nurly Zhol Program, it is planned to link the major hub-cities of Almaty and Ust-Kamenogorsk with the center in Astana. Therefore, the three integrated projects have to be implemented, namely the CenterSouth, Center-East and Center-West.

The Center-East Road will connect Pavlodar, Semei, Kalbatau, and Ust-Kamenogorsk with Astana to attract transit cargoes and domestic exports. The development of tourism cluster is also one of the expected outcomes; these would include the cities of Pavlodar with the population of more than 356,000 people and Semei with the population of 339,000 people.

The Center-South Road shall connect Astana with Karaganda, Balkhash, Kapshagay, and Almaty with the similar goal to boost the transit along the routes from the inland ports of the border areas, increase the exports, and improve the quality of the transport and logistic services. The zone covered by the project will include Karaganda, Balkhash and Kapshagay with the population of over 492,000, 59,000, and 78,000 people respectively.

The Center-West Road will connect Astana with Arkalyk, Yrgyz, Shalkar, Beineu, Aktau. Thus, the conditions will be created to increase the cargo flows between the Central and the Western regions and their better cooperation. Additionally, the implementation of the project will enable to build an integrated system of road, sea and rail transport. It is to make the new markets more accessible due to the better functioning of Kazakhstan seaports. The project will have an impact on the development the cities of Arkalyk and Aktau (with the population is nearly 50,000 and 185,000 people respectively) as well as on a number of smaller towns.

The hub-city of Almaty is inhabited by 1.5 million of people. It is the largest in Kazakhstan. Almaty already is a major transportation and logistical center within the network connecting it with Shymkent and Taras. The dynamics of the second-tier cities around the hub-city of Almaty will be determined by the pace of development of the Almaty agglomeration itself and its transit capacity.

The other project that is worth special mentioning is the Zhetygen-Khorgos. Its major goal is to increase the volume of the cargo transit from China to Europe and some Asian countries; it shall reduce the length of the Asia-Europe route by 500 kilometers. The SEZ Khorgos GateWay united with the Zhetygen-Khorgos railway and the Western Europe-Western China corridor into one transportation network will serve as the basis for a very large industrial and logistical hub that will provide the shortest access to Europe and Asia.

The hub-city of Aktobe with the population of over 439,000 shall connect the East and the West via the northern axis of Ust-Kamenogorsk, Semei, Pavlodar, Astana, Kostanay, Kokshetau, Petropavlovsk, Aktobe, and Oral the with access to the Caspian Sea through the ports of Atyrau Aktau. Additionally, a new road of Aktobe-Aktau is being constructed and the roads connecting Aktobe, Atyrau and Oral are being reconstructed.

Completion of the Western Europe-Western China international transport corridor will help to realize the transit potential of the city-hub of Aktobe and will give a powerful impetus to the full development of the other smaller cities and towns in the Western region of Kazakhstan.

Hub-city Shymkent with the population of nearly 712,000 people will be the center of the network connecting such routes as the South-West: the Dostyk Khorgos (on the Chinese border), Almaty, Taraz, Shymkent, Kyzylorda, Aktobe, and Oral, the South and North: Petropavlovsk, Yesil, Arkalyk, Zhezkazgan, and Shymkent, and the South and East: Almaty, Taldykorgan, Ust- Kamenogorsk, Semei, and Pavlodar.

The enhanced infrastructure of the Shymkent hub and whole Southern region will increase the mobility of people and resources. This is very important given that the Northern and CentralEastern regions experience labor shortages.

All in all, the Nurly Zhol Program is to make considerable impact on numerous aspects of social life. Thus, the increase in investment in transport by 1% would raise the GVA of transport by 0.7% and the number of jobs by 0.14%.

In other words, $1 billion investment in transport means 20,000 additional jobs in the transport enterprises and 11,000 more jobs in the related industries. Given the significance and mere scale

of the present and future tasks in terms of infrastructural development of Kazakhstan, the issue of investment is very important.

The next major objective is to develop the infrastructure in such a manner that would encourage the cooperation among the regions. In order to achieve such goals, the modernization of transportation and logistical system is necessary as well as those of the energy sector. All these will help considerably the realization of the national industrial policy.

Modern advanced infrastructure will connect the regional markets within Kazakhstan and boost Kazakhstan’s exports to the external markets that have been inaccessible so far. The study conducted by the Asian Development Bank showed that the improvement of transport infrastructure in Kazakhstan could reduce by 35% the time when traveling between the regional centers on highways and by 71% when travelling by train. Moreover, the cost of intermodal rail and road container traffic will be reduced by 24 %[5].

Apart from the Nurly Zhol, Kazakhstan adopted the Program of Rapid Industrial and Innovative Development (PRIID). The second stage of the five-year PRIID started in 2015.

The Program shall be completed by 2019. The Program stipulates for the implementation of the series of projects in the manufacturing sectors of the national economy. Along with the PRIID, the Nurly Zhol aims to promote the entrepreneurial activity by increasing the access to finance for small and medium-sized businesses as well as larger companies in the manufacturing sector.

It is vital for the regions of Kazakhstan to build a modern, ramous and convenient infrastructure that would be capable to provide the services of the highest quality; reduce the time of travelling and delivery from one region toanother; impact positively the economy in general and interregional cooperation in particular.

The high-quality infrastructure is to become the basis for the modernization of the economy of Kazakhstan’s regions that should be oriented at improvoment in terms of their accessibility in both geographical and business sense The quality of the services shall be enhanced considerably as well as the transit capacity of the infrastructure while the cost of transportation shall be reduced. The outcomes may be assessed by the following indicators: international transit transportation and investment in the transport infrastructure including those in the public-private and others formats.

In order to succeed, Kazakhstan should build a very particular system where various means of transport would complement each other providing for high efficiency of the entire transport sector. The transport and logistics centers (TLC) at the intersection of the most important routes will link the major cities of Kazakhstan and ensure the access to the foreign markets.

The transport and logistics centers are to be build as sort of hubs in the following locations:

  • Astana hub will be also comprising the cities of Petropavlovsk, Kostanai, and Pavlodar. The project involves building of the "dry ports" within the international border cooperation framework with the centers in the Russian city of Kurgan and Petropavlovsk in Kazakhstan;
  • Ust-Kamenogorsk hub together with the airport in Semei;
  • Aktobe hub would also include Uralsk and Aktau. The project stipulates for reconstruction of the airports in the cities of Aktau and Atyrau, the port of Aktau, construction of new port infrastructure in Kuryk and Bautino;
  • Shymkent-Almaty hub will solve the problem of the shortage of the terminal park in those cities by building a TLC in accordance with the international of information systems and other technologies standards. The hub infrastructure will be complemented by the Dostyk station and the Khorgos GateWay.

These hubs are supposed to become some sort of development spots and to even the regions of Kazakhstan in terms of their economic development, to boost interregional cooperation, and to enhance interregional infrastructure. All in all, the positive outcomes are expected in the following spheres:

  • more companies will be attracted by the improved quality of the transportation and logistical infrastructure in Kazakhstan given that it is the third most important factor for companies when choosing their localization;
  • new jobs through increased mobility of the labor forcel will be created;
  • less time and lower costs of the transport services, increased versatility of the short-distance railways, more energy efficiency of the long distance rail transport will be achieved;
  • favorable business climate will be provided;
  • international and domestic freight handling capacity increase;
  • better access to the intraregional and international markets will be reached.
Year: 2015
City: Almaty