Globalink Kazakhstan: from humble beginnings to infinite opportunities

ASTANA – Soon after the collapse of the Soviet Union in the early 1990s, the entire Central Asian region became uncharted territory. Many young, ambitious entrepreneurs faced the challenge of exhausted markets in the then-volatile area, while investors were particularly sceptical about starting new ventures.

One man with his own vision, however, dared to found a transportation and logistics company that later turned into one of the largest in Eurasia. The Astana Times sat recently with Siddique Khan, one of the earliest industry investors in Kazakhstan, in the hope of understanding the secret of his success.

“I established Globalink in 1993, when I was 24 years old. I had a vision of the future of the transportation and logistics industry, particularly the development of the East – West, North – South and cross-Caspian Sea mobility corridors, connecting landlocked Central Asian and Caucasus republics with China, Europe and the Middle East into a seamless transportation and logistics network,” he said.

After investigating all the USSR breakaway republics, Khan settled in the Kazakh capital and established Globalink Logistics.

“Fundraising at the age of 24 for a start-up based on a future vision that no one ever heard of or believed in was not an easy task, but family and friends came through with seed investment which helped me launch the Globalink Logistics project,” he said.

Choosing Kazakhstan as a start-up base was not a “popular decision in 1993,” he added, as the majority of foreign investors were entering the Commonwealth of Independent States (CIS) market through Russia.

“Today, I can say we are truly privileged to be titled as the very first international transportation and logistics company in Kazakhstan. We have operations in nine locations in Kazakhstan, more than 28 locations in the CIS and as a company we are represented in 51 countries and growing steadily,” he said.

Surviving the first two-three years is crucial for any business and his company was no exception.

“In 1995, after we proved that, yes, we can sustain our growth and are able to cover our operating costs, we opened three more locations. In 1996, we launched two more offices and then we just kept on expanding in the region and beyond. In 24 years’ time from the date of Globalink establishment, we expanded our business from China all the way to Europe, across the Black Sea, the Baltics, the Balkans and Eastern Europe, connecting to Turkey, Iran and the Middle East, further going into India and Pakistan and now eyeing east Africa for expansion. We truly created a multimodal transportation ‘land-bridge’ between Asia, China, Europe, the Middle East and the CIS like no other private sector logistics company has done so far,” said Khan.

Today, Globalink Logistics is one of the largest multimodal transportation and logistics companies not only in the Eurasia region, but in the world market, he noted.

“Together with our long standing partner Kerry Logistics, we have merged our businesses and now operate under the umbrella of our Hong Kong stock exchange listed company. I continue to be one of the proud shareholders of the company and serve as CEO for Eurasia and Middle East. Under the umbrella of Kerry Logistics Network, we own and operate more than four million square metres of warehousing and terminal space, have more than 1,000 service points and employ 25,000 people in 51 countries worldwide,” he added.

Although Kazakhstan is neither one of the biggest contributors of global revenues nor the global headquarters of Globalink Logistics, Khan considers Kazakhstan his second home. His entrepreneurial achievements, however, were not the best outcome of living in the country of the Great Steppe.

“Some of the best things in my life happened in Kazakhstan. One of my best achievements in Kazakhstan is my family. I met my wife in Almaty in 1994. We got married and have three beautiful children. The best outcome of my life in Kazakhstan is much more than business achievements. I met some of my closest friends in Kazakhstan. I met some great people in the early 1990s and we kind of grew together and became part of the new business face of Kazakhstan. We have so many great stories to share of our personal and business lives in post-Soviet Kazakhstan. If given a chance, I will do exactly the same again, without regrets,” he said.

Khan shared some key points why Globalink is among the leading transportation and logistics companies in Eurasia.

“For Globalink Logistics, every customer is a unique case study and source of learning. While we have many small and medium-sized businesses as our loyal customers in the CIS, the majority of our biggest revenue generators are the Fortune 500 companies having well-established global best practices that we focus on. Rather than modifying their logistical systems and standards region by region, we adjust our operating model to complement theirs. Rather than a one-size-fit all style, we always take a boutique approach and customise our service methodology to adapt to the needs of our customers. We thoroughly investigate our customers’ internal and external needs in regards to their supply chain, logistics management and compliance to develop fitting service solutions. Our backbone is our IT system – the one-stop-solution concept and our Global Network, which means we have technical, commercial and human resources on the ground in every major global market and trade centre of the world to serve our customers with utmost care,” he said.

“Our small and medium sized customers take enormous advantage of our adaptable, self-learning business model. We transfer general knowledge on best practices that we attain from our large-scale global customers to our local SME clientele to make their business model more efficient. The transfer of knowledge, localisation and education has indeed played an important role in our business development process. If you investigate Globalink as a start-up, we had mostly expatriate management, but today 99 percent of our workforce consists of national talent in every country we operate in,” said Khan.

Betting on the new talent, he believes, is the key for the future of Kazakhstan.

“Grooming and harnessing the talent is so important for businesses and governments alike. Change is the only constant in the world and the only way to cope with it is to develop a progressive education system, executive education programmes and a national talent pool that will face the future challenges with full confidence. If you want to focus on the future, the key is to have well educated younger policy makers, whose worldview is based on not only present but future realities. We must not dismiss the wisdom of the old school, but at the same time we need the inspiration of the new generation. I can already see the young akims (governors and city mayors), ministers and deputy ministers being appointed who hopefully will help realise the dreams of the President and the people of Kazakhstan,” he added.

The Kazakh government is continuously learning and taking steps to improve the country’s “ease of doing business” index managed by the World Bank Group, noted Khan. The government is also trying to enhance the competence of the national workforce. It’s a constant improvement cycle for which there is no short-term solution.

“Looking back some 24 years ago in Kazakhstan history, and this is coming from a person who has spent many of these years in the region, I can say that it is a real treat to see young entrepreneurs of Kazakhstan sitting in the lobbies of five-star hotels, working on their laptops and making business deals – we have come a very long way. We should stop here for a moment and be proud of what the people of Kazakhstan have achieved in such a short time. While we are aiming to have much more, which is a natural human desire, we must also ask ourselves, ‘which way do we go from here?’ And this is where I want to emphasise that improvement is a never-ending cycle,” he said.

Khan noted the Western China – Western Europe transportation corridor is a great opportunity for Kazakhstan which will help improve the business environment in the regions. This greatest opportunity must be inclusive, where private sector participation should be encouraged by the government by developing public-private partnerships and funding institutions.

He added the Nurly Zhol and Belt and Road initiatives are truly complementing one another. Both go far beyond logistics to focus on the overall development of infrastructure, transportation corridors and industrialisation.

“It is a win-win cooperation,” he said.



Akmola region attracts investments to processing industry, promotes export commodity production

ASTANA – The Akmola region administration set an ambitious task to implement numerous projects with foreign investment participation to bring innovation and boost industry profits.

Yerbol Ospanov.

The Astana Times interviewed the region’s entrepreneurship and industry department head Yerbol Ospanov to learn about investments attracted to the region and important projects launched this year.

Local authorities closely collaborate with the Kazakh Invest regional office, which supports investment projects from idea to implementation. The investor’s service centre based on the Yessil Socio-Entrepreneurial Corporation was also opened in July in Kokshetau.

The entrepreneurship and industry department manages and monitors industrial-innovative small and medium-sized business development, trade, common mineral resources subsoil use and other regulated types of investment activities in all sectors of the region’s economy.

“The expectation is to implement 100 projects worth a total of 144.5 billion tenge (US$436.6 million) and to create 2,600 jobs in the Akmola region. Thirty-four of these projects have already been put into operation for 14.2 billion tenge (US$42.8 million) and more than 500 jobs were created,” said Ospanov.

The largest executed projects include the data processing centre in the Tselinograd district, modernising the Tonkeris grain-collecting station in the Shortandy district, expanding the Makinsk grain reception site and producing flour at Nanar Company in the Bulandy district.

“The work is underway to attract foreign investment to the region. A project with foreign participation to construct AgroMax Astana, a mill complex with a capacity of 36,000 tonnes per year, was launched in the Shortandy district in June,” he added.

The volume of investments in fixed assets in 2016 was 223.1 billion tenge (US$674.2 million), or 106.6 percent of 2015.

“This year, we plan to attract investments in the amount of 238.7 billion tenge (US$715.7 million), or 101 percent of real growth. Investments in the manufacturing industry totalled 24.9 billion tenge (US$75.2 million) and the task is set to attract at least 28.5 billion tenge (US$86.1 million),” said Ospanov.

From January-June, the volume of investments in fixed assets in the region was 88 billion tenge (US$265.9 million), or 110.8 percent compared to the corresponding period of the previous year. Manufacturing industry investments were 9.8 billion tenge (US$29.6 million) and foreign investment in fixed assets was 5.2 billion tenge (US$15.7 million).

The Akmola region presentation was developed including general information about the region, main niches for attracting investments and solid and common mineral resources.

“We also identified possible sales markets, transport infrastructure and other useful information for potential investors,” he said.

A list of projects requiring funding with specific information and initiator’s contact details was also created.

“We organise exhibitions and presentations promoting the region’s investment attractiveness at various regional and national events on an ongoing basis and hold meetings with foreign delegations,” he said.

This year, there are plans to implement seven projects worth 95.4 billion tenge (US$288.2 million) and create 1,100 jobs as part of the State Industrial and Innovative Development programme. Two projects, production expansion at the Samhat shoe factory in the Tselinograd district and launching the Invest-RT gold recovery plant for mineral processing in Stepnogorsk with a capacity of 108,000 tonnes per year, have already been initiated.

The Kokshe-Cement plant with a capacity of two million tonnes per year and three Kazakhaltyn Technology Company gold recovery plants are currently under construction in the Yenbekshilder district.

The main instrument of industrialisation is investment attraction to the priority sectors of the processing industry corresponding with the region’s sectoral specialisation. Traditional processing industries, including food production, metallurgy, mechanical, chemical and construction, are characteristic for the region.

“We also aim to get more cooperation of commodity producers in promoting processed exports in the near future. This is also directly related to attracting investments in export-oriented production, increasing the competitiveness of domestic products,” said Ospanov.

The specialisation map, presenting opportunities and state support mechanisms for project implementation stages to reach the designed capacity, helps to demonstrate the region’s potential advantages and attract private investments in priority sectors.

“A relatively low capacity of the domestic market, a high cost of energy resources and a shortage of highly qualified personnel are the main factors affecting attraction of investments to the region, especially foreign ones. We believe our joint efforts with Kazakh Invest will improve the situation significantly and help attract foreign investment,” he said.



Iluka Resources, Kazgeology launch exploration of titanium-zirconium deposits

ASTANA – Iluka Resources, an Australian mining company, is investing approximately 4 million Australian dollars (US$3.1 million) in geological exploration of titanium-zirconium deposits in the Kostanai and North Kazakhstan regions.

Photo credit: mid.gov.kz.

A drilling campaign on 60,000 square kilometres started in the second half of June in conjunction with Kazgeology National Exploration Co., noted Kazgeology’s press service. According to the latest data, about 2,500 running metres, or 100 wells, nearly a third of the planned volumes for the current year, have already been drilled. Iluka is expected to invest approximately 2 million Australian dollars (US$1.5 million) in the project this year.

“It is the first geological exploration project in Kazakhstan for our company. Drilling works will be conducted until September 2017 and will move towards the North-Kazakhstan region. The drilling rig that we use is used in Australia to search mineral sands, bauxite, copper, nickel, gold and uranium. Today, drilling at the site already shows very promising results. We are thankful for Kazgeology and the Kazakh government,” said Iluka Exploration Kazakhstan Director General Anthony Thornton.

Photo credit: mid.gov.kz.

Photo credit: mid.gov.kz.

The investment also includes transferring technology to Kazakhstan, analysing exploration data, importing drilling machinery and training meetings for local specialists both in the country and Australia.

The work is carried out using dry drilling technology developed in Australia in 1974. The method, widely used in Australia and Africa, accelerates the pace of the work ten times and reduces the impact on the environment.

The specialists tried to use auger drilling last year, but the quality of the samples was poor. Zirconium and titanium were explored in ore, but not in mineral sands.

“The opportunity to find a titanium-zirconium deposit is very high according to the works carried out in the Soviet period. If the prospects of the sites are confirmed by the end of this year, then we will start to work on the subsoil use contract for direct negotiations,” said Kazgeology Board Deputy Chairperson Kadyrzhan Kauldashev.

The preliminary results of the geological subsoil survey will be announced at the end of October. The first results of the chemical studies of the samples will be revealed when the drilling process is completed, at which time the company plans to determine the next phase of the programme. Iluka intends to construct a rare earth metal processing plant upon successful completion of work and further exploration.

Kazakhstan is tenth in the world in titanium reserves. The Ust-Kamenogorsk titanium and magnesium plant, a fully integrated enterprise that extracts ore and produces finished goods with high added value, is the major producer in the titanium and magnesium industry.

Iluka Resources is the world’s largest producer of zircon and a global manufacturer of high-quality titanium products.



Three new brands to export Kazakh meat

ASTANA – Kazakhstan’s Ministry of Investments and Development along with the Ministry of Agriculture are setting up three meat brands to export to international markets, according to First Vice Minister of Investments and Development Alik Aidarbayev.

KazakhMeat, Qazaq Organic Food and Halal Kazakhstan are three umbrella brands controlled by the National Chamber of Entrepreneurs incorporating multiple local producers under one brand. This gives them an opportunity to push their products to foreign markets, otherwise hardly accessible if acting alone.

“In general, the agricultural products have a huge potential that we are not using fully. Thanks to such umbrella brands, local producers can use it and promote their products abroad,” Aidarbayev said.

The project is implemented within the 100 Concrete Steps programme initiated by Kazakh President Nursultan Nazarbayev in 2015.

The Kazakh Invest national company is running the project. Established this year, the company, with several offices worldwide, serves as a bridge between local producers and foreign investors and promotes Kazakh products abroad.

The concept and the roadmap stipulating further development and advertisement of these brands on international markets are ready, the minister noted.

The brands were also presented at international exhibitions in Russia and China, by far the largest importers of the Kazakh meat.

The agriculture ministry and the national chamber are in the process of certifying the brands, according to the ministry.



MFA, Kazakh Invest to cooperate on effort to attract investment

ASTANA – Kazakh Foreign Minister Kairat Abdrakhmanov and Board Chair of the Kazakh Invest national company Maksat Kabashev signed a memorandum of cooperation Aug. 10 to work together to attract foreign direct investment, boost exports and promote Kazakh Invest’s activities abroad.

The sides discussed establishing new Kazakh Invest foreign offices and ways to improve the work of its existing offices. They also discussed organising investment forums in Kazakhstan and abroad.

At a press conference after the signing, Abdrakhmanov noted Kazakh Invest was established to attract investment and promote exports. He also highlighted similarities between the work of the two organisations, which are conducive to cooperation. The minister said the MFA would utilise all of the ministry’s resources, including its diplomatic missions, to assist Kazakh Invest.

Kabashev thanked Abdrakhmanov for the ministry’s assistance, including as a member of Kazakh Invest’s Board of Directors and said he hoped the relationship between the two organisations would continue to strengthen.



Development Bank of Kazakhstan offers affordable financing for non-oil export trade

ASTANA – The Development Bank of Kazakhstan (DBK), a subsidiary of Baiterek National Holding, is seeking to provide financing for 13 non-oil exporters as part of the Nurly Zhol initiative 2015-2019 aimed at increasing production and exports. At an Aug. 4 press briefing in the capital, the bank presented a special programme to support exporters providing revolving loans for a period of up to 36 months with a reward rate of no more than 9 percent per annum.

During 2015-2016, the bank allocated 65 billion tenge (US$195.4 million) from the National Fund in three tranches, said DBK Managing Director Adil Ismagambetov. The bank also attracted an additional 30 billion tenge (US$90 million) by issuing bonds in the domestic market last year.

“All three tranches of the National Fund have been fully disbursed. The funds were allocated for 13 non-oil exporters for the supply of titanium ingots and alloys, steel pipes and steel reinforcing, confectionery, lead, copper, zinc, silver, yellow phosphorus, diesel locomotives, electrical transformers and substations, vegetable oil, soft drinks, nitrogen fertilizers and motor and transmission oils. The list of exporters-borrowers includes Aluminium, Arcelor Mittal Temirtau, Kazzinc, Kazakhstan KazAzot and Kazphosphate companies,” he added.

The bank has 8 billion tenge (US$24 million) from issuing bonds which it plans to invest before the end of the year.

The export proceeds of DBK’s borrowers increased 269 billion tenge (US$808.8 million) for the period from 2015 to the first quarter of this year.

Ismagambetov said the number of export loans in the processing industry “has significantly intensified” during the past three years. The bank provided 14.2 billion tenge (US$42.6 million) in pre-export financing to two companies in 2013-2014. It has supported 13 borrowers with 223 billion tenge (US$670.5 million) from 2015 to the first half of 2017.

Such dynamics are primarily attributed to the fact that Kazakhstan has established a system of state support for non-oil exports.

In October, the financial institution revised the lower threshold level of export loans taking into account the needs of borrowers. Currently, the threshold stands at 1 billion tenge (~US$3 million) instead of $5 million.



Kazakh economy grows 4.2 percent, other indicators positive, according to 7 months economic report

ASTANA – The Kazakh economy grew 4.2 percent, the unemployment rate was 4.9 percent and investment in fixed assets increased 3.7 percent over the first seven months of this year, according to a report presented August 7 by Kazakh Prime Minister Bakytzhan Sagintayev to President Nursultan Nazarbayev.

Photo credit: akorda.kz

Inflation increased 0.1 percent compared to June last year, food prices declined 0.5 percent and the level of oil production exceeded 100 percent in all regions except, Kyzylorda and Mangistau, where the level of oil production decreased. Authorities are working with those regions to use new reserves.

The country’s industrial programme launched 31 projects in the first quarter and plans to launch 69 projects in the second quarter, creating 10,000 jobs, reported Sagintayev.

Sagintayev also reported on the Nurly Zhol programme, noting that this year356 billion tenge ($1.1 billion) has been allocated for road construction and 600 km of roads have been built. By the end of this year, 469 km of roads will become toll roads, including the Astana-Temirtau route. The first operating toll road in Kazakhstan, he said, generates up to 1.5 billion tenge (US$4.5 million) per year, covering the cost of construction.

The Nurly Zher programme also built in the first six months of this year 5.5 million of 10.2 million square metres it hopes to complete by year’s end.

“My opinion, said President Nazarbayev in response to the report, “is that the government is working hard. I call on everyone: we have to work hard until the end of the year in order to end up with good performance indicators. There are risks, price fluctuations for our energy resources, raw materials, perhaps the influence of Western sanctions against Russia. This must be taken into account.”



Zhambyl region promotes renewable energy projects, expands production at 50MW solar park

ASTANA – Burnoye Solar – 2, the first large-scale solar plant in the country with a capacity of 50 megawatts, will be constructed in the Zhualynsky district of the Zhambyl region.

Photo credit: bs-1.kz

The project, implemented by Samruk Kazyna United Green Energy, is a joint venture of the UK-registered private investment company UG Energy and Samruk Kazyna Invest, reported the regional administration press service in early August. The European Bank for Reconstruction and Development (EBRD), in partnership with the Clean Technologies Fund, will finance plant construction.

As an environmentally-friendly project that meets world standards, the solar plant is expected to lead to a significant reduction in carbon dioxide emissions in the region. It may also cover energy shortages in the southern regions.

“Twelve investment projects for the construction of hydro, wind and solar power plants with a capacity of seven-300 megawatts have been implemented and are planned for launch with the adoption in 2009 of the law on Renewable Energy Sources Support in Kazakhstan. There are plans to implement seven renewable energy projects with a total capacity of more than 230 megawatts. The development of renewable energy sources is becoming increasingly urgent due to hydrocarbons’ falling prices. This will be our contribution to the development of the green economy,” said Zhambyl Region Akim (Governor) Karim Kokrekbayev.

The Zhambyl region is one of the leaders among the regions in developing renewable energy sources. The list of projects includes the first 1.5-megawatt industrial wind power plant at Kordai pass, the small 9.2-megawatt hydropower station at Tasotkel reservoir, the 1.5-megawatt Merken hydroelectric power station and the 2.3-megawatt Karakystak hydropower plant in the Ryskulovsky district.

The share of green energy in the region’s total electricity production will increase to 40 percent.

The Otar, the first solar power plant in Kazakhstan and Central Asia with a capacity of seven megawatts, was put into operation in the Kordai district in 2012 using $1.3 million in private investments.

The 50-megawatt Burnoye Solar – 1 solar power station, situated on 150 hectares with approximately 192,000 energy-producing solar panels, was built in the Zhualynsky district in 2015. The plant, which is able to produce 73 million kilowatt-hours of electricity per year, has created nearly 250 jobs.



South Kazakhstan attracts $543 million in investments in first half of 2017

ASTANA – Over first six months of 2017, the volume of attracted investments in the South Kazakhstan region reached 180.6 billion tenge (US$543.78 million), having increased 33 percent compared to the same period last year, according to the regional akimat (administration) press service.

Photo credit: ictsd.org

Under the State Programme for Accelerated Industrial and Innovative Development, 162 projects totalling 208 billion tenge (US$626.2 million) were implemented in the region, creating 13,500 jobs. To date, three new plants worth 37 billion tenge (US$111.4 million) have been put into operation.

In addition, the region plans to introduce 17 projects totaling 37.1 billion tenge (US$111.7 million) this year.

“One of the implemented projects is a waffle production plant in Shymkent, which is capable of producing 1,700 tonnes of products per year. The second project is the Asia Agro plant in the Otyrar region for corn processing. The third project is a polyethylene plant, designed for servicing the production of uranium in the Sozak district,” head of Regional Department of Entrepreneurship, Industrial and Innovative Development and Tourism Batyrkhan Kurmanseit said.

The South Kazakhstan region is considered an attractive destination for investors. Shymkent, as well as Otyrar, Tolebi and Saryagash districts lead in investment attraction. Along with this, the South Kazakhstan region is among the first to implement investment projects. Investors have expressed interest in the pharmaceutical industry, the production of textiles, light industry, agriculture and processing industry.

Local specialists plan to visit Germany, Great Britain, Georgia, Spain, Italy, Turkey, Russia and other countries with business trips to boost machine-building, tourism and agriculture, and share experience on building smart cities. Such measures will familiarise foreign business community with the investment opportunities of the region, and contribute to the development of cooperation.

Five years ago, the region had 120,000 small- and medium-sized business entities, while today this figure soared to 176,684 enterprises. Moreover, the region has emerged as a leader in attracting investments in this sector. In general, the region’s economy attracted 380.6 billion tenge (US$1.14 billion) of investments last year.



Turkish AIGP invests $30 million in pharmaceutical plant in Kazakhstan

ASTANA – This year marks the fifth anniversary of the presence of Turkish pharmaceutical industry leader Abdi İbrahim on the Kazakh pharmaceutical market. Over these years, the company has been expanding its operations in Kazakhstan as well as constructing a modern pharmaceutical plant worth $30 million in Almaty region.

Photo credit: abdiibrahim.com

In 2012, Abdi Ibrahim bought a 60 percent share of Global Pharm, a leading Kazakh pharmaceutical producer.

The agreement envisaging the construction of the plant was signed in 2013 at the Turkish-Kazakh business forum in Istanbul. Kazakhstan President Nursultan Nazarbayev and then Turkish Prime Minister Recep Tayyip Erdoğan took part in the ceremony.

The facility with an annual production capacity of 24 million boxes and extensive portfolio of more than 100 varieties of pharmaceutical products now employs 200 people.

Increasing its presence in Kazakhstan allows the company to access the markets of the Commonwealth of Independent States countries and the Eurasian Economic Union members.

“Abdi Ibrahim managed to transfer its huge experience in pharmaceutical industry and advanced technologies in this field to AIGP, which produced a significant boost in the entire pharmaceutical market in Kazakhstan. At this moment, AIGP have several goals – further development of the industry, import substitution program and increasing export volumes,” said AIGP General Manager Ziyatkhan Gassanov.

AIGP is among 300 pharmaceutical companies in Kazakhstan that together generated 457 billion tenge (US$1.37 billion) in revenues in 2016, a two-fold increase from 274 billion (US$823.92 million) in 2013.

The Turkish producer launched a supply of pharmaceutical products from the Kazakh plant to Afghanistan, Azerbaijan and Georgia in April.

Apart from Kazakhstan and Turkey, the company also operates in seven countries – Albania, Algeria, Azerbaijan, Bosnia-Herzegovina, Georgia, Iraq, and Portugal.