Henry Kirby in London -

Kazakhstan must turn its broad programme of industrial diversification into a more focused effort at improving efficiency if it is to bridge the gap between itself and more developed economies, according to speakers at a two-day event in London hosted by the Kazakh Ministry for Investment and Development.

At the event, the Kazakhstan trade delegation laid out a new five-year plan to boost foreign investment in Kazakhstan’s economy and to develop existing industrial sectors. The workshop, organized by both the Kazakh Ministry for Investment and Development and the national coordinator of EU Framework Programme Horizon 2020 in Kazakhstan, was entitled “EU-KZ cooperation in research, innovation and new technologies” and was focused on sustainable industrial-innovative development in Kazakhstan.

Leading the delegation was Minister of Industry and Trade Asset Issekeshev, who said that the visit “has been important for us to work out, with the European Commission, a roadmap with which we can define priority directions”.

The delegation laid out the second of two five-year plans under the state programme of the industrial innovation development of the country (SPIID), which aims not only to drive growth and innovation in new high-tech industries, but also to increase the efficiency of pre-existing industrial sectors - a point that many attendees of the workshop echoed.

Zhumatay Salimov, deputy chairman of the board for the National Agency for Technology Development, conceded that “there was a time when we were all obsessed with those fancy words and trends, with trips to Silicon Valley”, but added that, as well as developing high-tech industries, efforts must be made to “bridge the gap between our traditional sectors and their worldwide counterparts”.

Attendee Burghard Scheel, of Germany-based industrial research institute Fraunhofer IFF agreed, saying that development must be achieved “step-by-step and bottom up”, pointing the finger at “unrealisable white elephant projects”, which have previously hindered progress.

Adopting new technologies in existing sectors was a key theme of the discussion, addressed by delegates and guests alike. Agris Preimanis, the lead economist for Central Asia at the European Bank for Reconstruction and Development (EBRD), spoke of a necessary “change of culture” and “targeted approach to get the traditional sectors more efficient in what they do”.

“Innovation is not just about kinetic arms and high-tech sectors.

We need to think about the less sexy elements of innovation as being as important for the economy. There’s nothing wrong with taking an existing model –you’re not stealing anything,” he said.

Speaking to bne IntelliNews, Borisbiy Zhangurazov, Executive Chairman of Kaznex Invest, explained that the first of the government’s five-year plans had been designed in recognition of the fact that Kazakhstan’s economy was overly reliant on oil revenues and, therefore, the externality of oil prices. Indeed, at the outset of the first five-year plan in 2010, Kazakhstan relied on hydrocarbons for 39% of its total export revenues.

“In the first phase, the government basically supported all industries. Now they want to focus more and, given the scarcity of financial and other resources, they have determined six key sectors: metallurgy; oil refining; food processing; chemicals; the manufacturing of machinery and the manufacturing of construction materials,” he said.

The development of these sectors will be focused on exploiting the export market, rather than aiming to grow their domestic revenues. Borisby explained that Kazakhstan’s population of 17mn “is not really sufficient for the scale of production” that purely domestic sales would require.

“We’re between two huge markets; Russia and China, as well as all the ‘Stan’ countries, Azerbaijan, Armenia and, of course, Iran, so there is great potential for export growth in all directions,” he said.