Kairat Lama Sharif. Kazakhstan and the UAE: Building a Broad-Based Partnership

Kairat LAMA SHARIF, Ambassador Extraordinary and Plenipotentiary of the Republic of Kazakhstan to the United Arab Emirates

Kazakhstan and the UAE: Building a Broad-Based Partnership

Official visit to the United Arab Emirates. 24 March 2018. (Akorda.kz)

The Republic of Kazakhstan and the United Arab Emirates (UAE) continue to build close and trusting relations within the framework of mutually-beneficial bilateral cooperation, the foundations of which were laid right after Kazakhstan gained independence.

Undoubtedly, the dynamics of meetings at the highest level testifies to an unprecedented interaction from the perspective of international relations, thanks to which the cooperation between Kazakhstan and the UAE is moving forward.

In international affairs, we are united by similar or converging positions on major global and regional issues. Kazakhstan and the UAE effectively collaborate on multilateral platforms, including the United Nations (UN), Organisation of Islamic Cooperation (OIC), Conference on Interaction and Confidence-Building Measures in Asia (CICA) and a number of other international organisations and closely coordinate their actions to resolve the pressing problems of the international agenda. This fact objectively reflects the growing political weight of our country among the Arab states of the region against the backdrop of Kazakhstan's active role as a current non-permanent member of the UN Security Council in resolving complex international and regional issues, including through the conducting of inter-Syrian negotiations in Astana aimed at a peaceful settlement of the armed conflict in Syria and the stabilisation of the situation in the region as a whole.

The UAE supports the initiative of the Republic of Kazakhstan to establish the Organisation for Security and Development in Asia on the basis of the CICA.

The UAE commends the initiative of President of the Republic of Kazakhstan Nursultan Nazarbayev on hosting of the Congress of Leaders of World and Traditional Religions, which is designed to promote the initiatives of all sides of the world community, calling for equality, justice, tolerance and peaceful coexistence, as well as to counteract provocations and actions aimed at inciting hatred and violence.

The interaction of our countries is accompanied by active and systematic efforts in the field of economic diplomacy, focusing on effective promotion of the priority areas of the economic policy, which integrates the main objectives of the National Plan – 100 concrete steps on implementation of five institutional reforms, as well as other policy documents.

With the availability of extensive and promising investment opportunities and mutual interest, the UAE continues to be the largest regional investor in the economy of Kazakhstan. There are about 200 joint ventures in our country involving UAE's capital. According to the National Bank of the Republic of Kazakhstan, for the period 2005-2016 the gross inflow of direct investment from the UAE in Kazakhstan's economy amounted to about $2 billion.

The treaty and legal basis of bilateral relations is consistently being improved, numbering more than 100 inter-state, intergovernmental and inter-ministerial documents. The Kazakhstan-UAE intergovernmental commission on trade, economic, cultural and humanitarian cooperation continues its effective operations.

In recent years, the addresses of the President to the people of Kazakhstan were devoted to the Third Modernisation and new development opportunities in the conditions of the Fourth Industrial Revolution (4IR). Similar to our country, in September 2017 the Government of the UAE approved the Strategy for the 4IR based on its own experience and international practice. Convergence of approaches and views on the development prospects of our countries creates unique opportunities for our mutually-beneficial economic cooperation. Many of these opportunities are already being implemented in practice.

Thus, one of the fundamental components of our relations is the implementation of joint major projects in the field of petrochemistry with the production of high value-added goods. The largest and most breakthrough project in this area is the construction of an integrated gas chemical complex (IGCC) and a polypropylene plant in the territory of the National Industrial Petrochemical Technopark special economic zone (SEZ) in Atyrau Oblast testifies to the long-term nature of our partnership.

The estimated volume of IGCC investments is about $6.5 billion. This project enables the production of up to 1,250,000 tonnes of polyethylene per year in the territory of Kazakhstan, which will fully cover domestic demand and ensure stable export earnings. Furthermore, there are plans to create about 6,000 workplaces within the project for the construction period, 560 permanent workplaces in the period of operation and up to 3,000 jobs for related industries due to the multiplicative effect, leading to annual contributions to the budget in the form of individual income tax, social security tax and social and pension contributions.

As an outcome of the project's implementation, transfer of advanced foreign technologies will take place and the manufactured products will become raw materials for more than 50 types of polymer products for further processing (promoting the development of local polymer technology products). The contribution to the GDP of the Republic of Kazakhstan is estimated to be around 1.2 percent per year.

The work on the construction of a polypropylene plant is successfully progressing, the cost of which is estimated at $2.6 billion. The plant's capacity will be 500,000 tonnes of polypropylene per year. The construction completion date is 2021.

The creation of these production facilities allows Kazakhstan to enter one of the most promising world markets, given that polypropylene and polyethylene are the most popular polymers, accounting for 60 percent of the global demand.

The signing of an intergovernmental Agreement on the Promotion and Mutual Protection of Investments in Abu Dhabi on March 24 has given significant impetus to deepening investment cooperation. It is a timely step guaranteeing the protection of investments, the total volume of which from the two aforementioned projects amounts to $9.1 billion.

Following the official visit of the President of the Republic of Kazakhstan to the UAE in March, an agreement was reached on expanding cooperation with the UAE's Jebel Ali free economic zone in the field of management and attracting investments. As a result, a Framework Agreement on the Basic Principles of DP World's Participation in the Capital of the Management Company of the Khorgos-Eastern Gate SEZ and the Framework Agreement between the Akimat of Mangistau Oblast and DP World on the Purchase of 49 percent of the Shares of Morport Aktau SEZ were signed, the purpose of which is the development of the Aktau Seaport and Khorgos-Eastern Gate SEZs, as well as the expansion of the country's transport potential. The global operator of terminals, free zones and ports will utilise its best management experience of Jebel Ali free economic zone and together with Kazakh partners will ensure attraction of about $1 billion of investments in Kazakhstan by 2020.

Cooperation with the largest port operator will allow Kazakhstan to strengthen the activities of SEZs in Aktau and Khorgos and will give a powerful impetus to the growth of the investment potential of Kazakhstan.

A special pride of our countries is the implementation of Central Asia's largest investment project Abu Dhabi Plaza in Astana with a total value of $1.6 billion. The multifunctional complex consists of five towers located on a single stylobate with an area of 500,000 square metres united around the main building with a height of 75 floors. The multifunctional complex includes retail facilities, offices, a hotel and residential premises. As of March, 72 percent of the works were completed. The completion date for the first stage is July 1, 2018. The complex will be fully finalised and commissioned in late 2019.

Ongoing construction of Abu Dhabi Plaza

The issues of development of military and technical cooperation and assistance in accessing of machine-building enterprises in Kazakhstan for the UAE's distribution channels are also one of the promising areas of bilateral cooperation. At present, a representative office of Kazakhstan Engineering has been established in the territory of the Khalifa Industrial Zone (Kizad) in Abu Dhabi.

Kazakhstan and the UAE have good prospects for the development of mutually-beneficial cooperation in the space industry and exploration of outer space for peaceful purposes. Our country is among the 30 countries possessing space technologies and among the top 10 in terms of high definition technologies. In this regard, the UAE is interested in investment projects in the space sector, in particular, in joining the Baiterek joint Russian-Kazakhstan space project.

On March 21, during a meeting in Baikonur, representatives of the space agencies of Kazakhstan, Russia and the UAE signed a protocol on expanding trilateral cooperation in space activities. This project is expected to be implemented by 2025 and this year the development will commence and the feasibility study of the Baiterek project will be carried out. Financing of the project itself should begin in 2019 and in 2025 there are plans to initiate the first launch within the framework of this space project.

UAE's advancement of the programme on the peaceful uses of nuclear energy in the power sector is another key area where the interests of our countries can find common ground. In the near future, there are plans to open the first power unit of the four Barakah nuclear power plants. Kazatomprom considers the UAE market as the most promising in the Middle East region and in this regard seeks to establish cooperation to supply the reactors under construction and reactors planned for construction in the UAE with raw material components from Kazakhstan, both in the form of natural uranium and in the form of an enriched uranium product.

The most important indicator of the economic cooperation between the two countries is trade.

“With the implementation of mutual agreements only within a year in 2017, trade has doubled from $374 to $643 million and since 2015 it has increased six-fold," the President said during the meeting with the Crown Prince of Abu Dhabi.

Thus, the UAE is of key importance for Kazakhstan in terms of increasing the positive dynamics of foreign trade with the (Persian) Gulf countries and improving the competitiveness of the domestic economy. This is dictated by at least three determining factors:

1.The UAE is becoming the epicentre of the interests of an increasing number of Asian and European shippers. According to experts' forecasts, a large volume of cargo traffic from China, the Middle East and Central Asia in the near future will be reoriented to the zone of the Gulf.

2.The presence of port and storage capacity in the UAE at the world's largest hubs of international container transportations, which provide the shortest routes towards Southeast Asia, the African continent, India, etc. These parameters allow the UAE to service more than 60 percent of the sea cargo destined for the Gulf Cooperation Council (GCC).

3.The possibility of expanding the export potential due to the high demand in the Gulf countries for food products, including grain and meat (the region is 80-90 percent dependent on food imports).

Within the framework of bilateral economic cooperation, the effective implementation of agreements in the economic sphere, reached during the official visits of the President to the UAE in January 2017 and March 2018, is of particular importance. In order to translate these agreements into practice, the possibility of opening the House of Kazakhstan in Dubai is currently being considered, aiming to promote the country's economic interests in the Middle East and combining issues relating to trade, investments, tourism, transport and logistics, including with the use of public-private partnership (PPP) instruments.

In this context, the creation of this structure will allow concentrating on the following tasks:

1.Participation of Kazakhstan Temir Zholy in an international tender for the construction of a 406-km long single-track railway with a gauge of 1,435 mm, which will connect the developing cities and industrial zones of Abu Dhabi and Dubai to the border of Saudi Arabia. Subsequently, the railway network will be connected to the trans-regional railway network of the Arab countries of the Persian Gulf, which will cover the territories of the UAE, Saudi Arabia, Bahrain, Kuwait and Oman.

2.Advancement of imports of Kazakh grain and other types of food to the UAE and other countries of the Middle East, including for humanitarian programmes.

3.Promoting products of domestic manufacturers and facilitating access for exporters to distribution channels of high value-added products.

4.The possibility of the development of advanced technologies and business competencies, including the use of the model of development of the Dubai International Financial Centre and Islamic banking and financial institutions.

Dubai, which should be regarded as a special partner in the sphere of foreign economic relations considering the scale of its investment and financial potential in the UAE, may be of the greatest interest in the medium and long term for the creation of the House of Kazakhstan. To date, a network of seven industrial zones, one business park, three special free economic zones and two world-class maritime ports effectively function in the Emirate. There are headquarters and representative offices of companies included in Global 2000. In addition, Dubai is actively preparing for the World Expo 2020, creating favourable conditions for attracting foreign direct investment. These aspects will help to synchronise the issues of building transport and logistics routes with the assistance of Kazakhstan's exporters in accessing the distribution channels in the target markets of the Middle East.

Created at : 8.06.2018, 11:05, Updated at : 8.06.2018, 11:05