We will exert every effort to maintain competitive enterprises - Head of Kazakhstan Development Bank Gali Iskaliyev

told about the work which had already been performed in this direction and shared the plans for the future in an interview to Kazinform.

Mr. Iskaliyev, could you tell, please, about the activity of the Kazakhstan Development Bank? What was the purpose of its establishment? What is its major difference from other second-tier banks?

The Development Bank of Kazakhstan finances large investment projects which have significant impact on economic development both of the regions and the country in whole. We give preference to the projects in metallurgy, energy, textile, industrial and transport infrastructure and petrochemistry. As a rule, our projects are capital intensive enough and have long payback period.

The main difference between the DBK and the second tier banks lies in our goal - we do not strive to profit from the project. Implementation of investment projects, diversification of the country's economy is the main criterion of the efficiency of our work.

Our Bank specializes in financing large projects requiring as minimum as USD 1 mln - USD 5 mln investments for export operations for the term of 5-20 years. The interest rates provided by our Bank are lower than those in the second tier banks.

Being one of the main participants of the Government's anti-crisis program how did you help other banks of the country? How do you intend to maintain the processing industry within the Government's Industrial Development Program?

Indeed, we are actively involved in the Government's anti-crisis program. Along with this, the Bank as the main development institute of Kazakhstan implements the Program of forced industrialization.

Maintaining infrastructure projects is the main task of the DBK that was outlined by the Government. For this we were provided with the funds to finance them.

Today the role of our Bank as well as other foreign development banks grows amid the crisis in bank lending spheres and the DBK continues financing strategically important sectors of the country.

It should be noted that last year we supported 19 investment projects of the second tier banks to the total amount of USD 344 mln.

Alongside, the Government allotted KZT 20 bln for us through the Stress Assets Fund. In turn, we attracted KZT 30 bln and spent this money for maintaining the projects in processing industry and lowering interest rates up to 8%.

In order to fulfill the Presidential instruction on ensuring long-term crediting of investment projects, the DBK plans to offer a new financial instrument to the second tier banks in the nearest time. The point at issue is interbank lending. We will offer targeted and long-term funding of the second tier banks for implementing regional investment projects with the total amount of investments from USD 5 mln to USD 50 mln. This will allow us expanding the geography and scale of our investments while the commercial banks will be able to provide investment credits to their corporate clients.

Besides, the Bank will continue recovery of the current enterprises of the borrowers and will provide support to new initiatives of the companies meeting the priorities of the state industrial policy and demonstrating prospects of development. Taking into consideration the President's tasks, we will exert every effort to support competitive enterprises in processing industry.

It became known that 24 projects are expected to be launched this year. How will it affect our economy?

We orient our activity on large-scale promising projects. To date we possess all necessary funds for their financing.

In March 2010 the Head of the State inaugurated a plant on ceramic granite production. Earlier we imported ceramic granite from other countries. Now we will produce it on our territory. Besides, we plan to commission 23 more projects, namely, a project on development of Shymbulak ski resort; construction of a gas turbine station in Uralsk; expansion of Aktau sea trade port to the north; development of textile industry in Ontustik free economic zone; modernization of Taraz Metallurgical Plant etc. Opening these productions will let us reduce unemployment and solve other social problems.

In world practice the development banks were usually founded in the periods of structural changes of economy. For example, the development banks of South Korea, China, Taiwan, Malaysia, Brazil and others. The DBK was established on the initiative of President Nursultan Nazarbayev in 2001 and this became a strategic step towards implementation of the strategy of the country's long-term economic development.

There are no certain standards for defining efficiency of the development banks activity. It is difficult to measure how the country benefits from it. For instance, implementation of the project on commissioning North-South high-voltage line allowed supplying up to 600 MW electricity to the southern regions. Due to realization of the project on establishment of transport-logistics centers in Almaty and Astana the leading companies of the country got an opportunity to store their goods in clean, well-equipped facilities and they do not worry over the safety of their products.

Over 15 thousand people are working at present at the enterprises opened under the auspices of the Bank. Probably, this figure is not as high as it is expected to be, but it should be noted that our projects are based on modern technologies and equipment which purpose at achieving productivity of labor and assets.

Tell, please, about the investment potential of the Bank. Do you borrow funds from foreign financial organizations?

Due to growth of our charter capital we got an opportunity to attract significant funds from foreign financial institutions. In conformity with the law on the Bank, we have no right to use the charter capital for implementing the investment projects. Internal and foreign investments are the major sources of financing.

In 2009 we could attract sufficient amount of foreign investments for funding infrastructure and industrial projects.

I must say that our Bank cooperates with two leading banks of China - the State Development Bank of China and the Export-Import Bank. The agreements reached during N. Nazarbayev's visit to China in spring 2009 underlay the relations with our Chinese partners.

The State Development Bank of China participates in a project of financing the Moinakskaya Hydro-Electric Power Station.

Earlier this Bank launched a credit line to the sum of USD 300 mln for us. In addition, the Chinese Bank is going to accommodate USD 3 bln loan for SamrukKazyna National Welfare Fund. As is known, the Development Bank of Kazakhstan was chosen as an operator on this issue.

One of the brightest examples of foreign financing is, certainly, attraction of USD 5 bln loan from the Export-Import Bank of China.

The DBK interacts also with other countries on attraction of investments. Despite the financial crisis in 2008 the Bank could attract USD 2.2 bln.

At the same time we develop trade financing sphere. Last year we entered into agreement with several Japanese and European banks on the matter.

In particular, within the visit of French President Nicolas Sarkozy to Astana we signed a EUR 10.2 mln agreement with Finnvera credit agency of Finland. That was the first deal after restructuring the debts of the Alliance Bank and BTA Bank.

Taking into account the current situation in Kazakhstani banking sector and a strong position of the DBK which is evaluated by its capital, state support, credit rating, our Bank is considered as the main strategic partner for foreign investors and export credit agencies in Kazakhstan for investment projects implementation. We will continue working in this direction in further.

Thank you for the interview!