Samruk Kazyna total assets should reach $200bln: Nazarbayev

Speaking about transformation of Samruk Kazyna Kazakhstan's wealth fund, President of Kazakhstan Nursultan Nazarbayev said that it was supposed to lead to doubling of the Fund’s assets, Tengrinews reports.

"The Fund faces tasks of nation-wide scale. As part of the transformation, in the first place efforts should be focused on creating new value of the Fund's companies, so that within 5 years its total assets double, meaning they should reach $200 billion, and not in 15, 20 or 50 years from now, as my friend Richard Evans [member of the Board of Directors of Samruk Kazyna] said,” Nazarbayev declared at Samruk Kazyna Transformation Forum earlier this week.

Samruk Kazyna owns, either in whole or in part, many important companies in the country, including the national railway company Kazakhstan Temir Zholy, national postal service KazPost, the state oil and gas company KazMunayGas, the state uranium company Kazatomprom, the country's largest air carrier Air Astana, and numerous financial groups. The state is the sole shareholder of the fund. Samruk-Kazyna controls $78 billion in assets, or nearly 56% of GDP. Kazakhstan’s government expects the assets held by its sovereign wealth fund to reach $100 billion by 2015.

“We managed to create a country in a short period of time (after the USSR collapsed in 1991), and we are able to achieve this task, we have the capacity and resources. The growth should be achieved through creation of new value of the portfolio companies, this can be done via increasing their productivity," he continued.

Nazarbayev said that at least three companies of the Fund had to enter the list of the largest companies in Fortune Global 500. The President said that the rating consisted mainly of Western companies but the share of Asian companies has been on the increase lately, with the most recent ranking including 95 Chinese companies.

He pointed out that the main criteria for entry into the list of Global 500 were the size of revenues and transparency in financial reporting. "Here we have a big problem," Nazarbayev said, noting nevertheless that in terms of revenues at least two of the Fund's companies - KazMunaiGas oil and gas company and national rail operator Kazakhstan Temir Zholy - were eligible for the list even then.

The President also said that Air Astana airline company, and Kazatomprom nuclear company - both owned by the national wealth fund -were also successful.

"But other Fund companies, unfortunately, cannot boast such success: Kazpochta [national mail operator], KEGOC [Kazakhstan Electricity Grid Operating Company] remain local companies with low efficiency and at present they cannot compete with similar companies in the world," he said.

The President reiterated that the Fund had to significantly improve its efficiency and productivity and emphasised that 30-40% growth had to be achieved within the next 5 years. "I know that this is absolutely achievable," Nazarbayev said.

“This requires attracting strategic partners and investors who have the production and management technologies and the market expertise. With this in place, the companies of the Fund should go out and compete, first at the markets of the Customs Union (Russia, Belarus and Kazakhstan), and then at foreign markets,” he said.

He also said that the Fund needed to develop its R&D potential, set up research laboratories and attract leading internationally-renowned scientists. Expenditures on research and development should be increased 10-fold, according to Nazarbayev.

"Without creating our own innovations, technologies and new products the Fund will never be able to improve its productivity and enter the world markets," he said.

The Fund should also contribute to development of the private sector in Kazakhstan. Development of small and medium-sized businesses is a national priority for Kazakhstan. By 2050, the contribution of SMEs to the GDP is expected to reach 50 percent from the current 20%.

"We need to create international recognised brand names and should aim high with no fear, we have created a country from the scratch and on ruins of the partially broken plate that was called the Soviet Union. We have built Kazakhstan out of nothing, no one knew about the Kazakhs, nobody knew Kazakhstanis. Today the whole world knows where Kazakhstan is, and we are not the last on the list. We must secure a place in the global distribution of labor,” the President said.

Reporting by Renat Tashkinbayev, writing by Dinara Urazova, editing by Tatyana Kuzmina