Kazakhstan’s defence industry: Development and partial conversion

business and economy

Kazakhstan’s defence industry: Development and partial conversion

By SRI ⋅ July 14, 2008 ⋅

(www.defsec.info) - Out of the 23 Kazakhstan defence companies, only 13 - 14 remain in the business, covering national, regional defence demands, the rest goes the way of conversion.

Peter Dunai in Astana (www.defsec.info)

Out of the 23 Kazakhstan defence companies, only 13 - 14 remain in the business, covering national, regional defence demands, the rest goes the way of conversion, Mr Bozumbayev, Chairman of the Board of the Samruk State Holding last week told special correspondent of www.defsec.info in Astana. Talking about a strategy change regarding defence industry development plans, he said they are looking for Western partners to develop electronics. They set up technology centres (among others an Airbus service facility) with collaboration of leading Western companies as EADS/Eurocopter, General Electric, Thales, he added. A month ago as President Nazarbayev visited France, a collaboration agreement was signed with Thales to establish a joint venture manufacturing electronic control systems for pipelines and railways.

As part of the 15 years long-range development plan of the holding, the Kazakhstan Engineering Group (comprising 23 defence industry companies of the country) only 13 - 14 companies remain in the purely defence oriented business, satisfying local and regional needs, including Russia, Kyrgyzstan, Azerbaijan - and China. Main foreign partners of the “pure” defence industry companies are France, Israel and the United Kingdom. (Russia’s role in defence industry development seemingly declines).

The rest of the defence industry companies goes the way of conversion. Talks are going on to set up joint ventures manufacturing electric locomotives (with collaboration of the General Electric - based on the Evolution series). Some of the companies belonging to the “conversion” group will be reprofiled to satisfy the Kazakhstan railways (Temir Zholy) and gas/oil pipeline operators’ needs, Mr Bozumbayev said.

As a basic principle of Samruk, they are open towards new solutions such as involvement of private capital (PPP constructions), Mr Bozumbayev emphasized. A new tax system will be introduced from 2009 offering special treatment to private firms, promote PPP. Out of the 334 companies belonging to the Samruk Holding, some 100 will be expected to launch IPOs.