DP World and government of Kazakhstan signed a memorandum of understanding in January 2016 to collaborate on the development of a new Special Economic Zone (SEZ). The United Arab Emirates-based maritime logistics leader has been active in collaborating in port development in the Caspian Sea region, and the partnership comes at a time when Kazakhstan is looking to increase its profile as a logistics hub in China’s Belt & Road Initiative (BRI). The country has ten SEZs, with the first dating 2001. The Port of Aktau, officially designated an SEZ since 2002, is Kazakhstan’s main sea outlet, and the government expects the partnership with DP World to help increase its shipping capacity and infrastructure.
Aktau currently has an annual port capacity of approximately 25 million tonnes, comparable to nearby Caspian Sea port Baku International Sea Trade Port in Azerbaijan, and ahead of Iran’s Caspian outlet at Bandar e-Anzali. However, it receives less annual ship traffic than both ports, a trend it hopes to change. The new SEZ will focus, along with expanding the value-adding logistics sector and facilitating light industry and chemicals exports, on expanding logistics for oil transport. Petrochemical products account for around 60% of the country’s nearly $69 billion in annual exports, with primary markets including Germany and Italy.
Carrying its weight: DP World Group Chairman Sultan Ahmed Bin Sulayem promised that progress in the SEZ “will stimulate economic growth of the country, and more importantly – it will make Kazakhstan the largest transport and logistics hub in Central Asia.
“We are delighted to have the opportunity to continue sharing our ports and logistics expertise with the government to develop the country’s modern logistics hubs as engines for economic development and to enable trade across the region.”
Mr Sulayem, in the same statement, also pointed to Kazakhstan’s, Aktau’s, and the Caspian Sea’s pivotal role in the BRI, which DP World has prioritised in its long-term investment and partnership strategy. “Kazakhstan is an important location along the New Silk Way [BRI] – a trade corridor that will benefit economies of the world. New and efficient infrastructure is needed to realise seamless cargo movement with multi-modal transport links essential for profitable growth. To attract investors there is a need to find innovative ways of working together with a focus on infrastructure provision, developing financial markets, mitigating risks and eliminating red tape.”
Emerging partnerships: Since 2014, China and Kazakhstan have collaborated on $20 billion in joint projects, and Astana Times reported in 2015 that the two nations had agreed $50 billion in infrastructure projects over the coming years, including plans to expand annual container shipments between the two countries to 500,000 by 2020. As it stands, China has overtaken Russia as Kazakhstan’s largest import market, sending over $5 billion of goods annually to Kazakhstan. The two nations have collaborated on a shared port terminal in Lianyungang, China, and in the development of the Khorgos Free Trade Zone on the Chinese-Kazakh border, established in 2011 and operational since 2014. Indeed, China’s BRI was first announced by Chinese President Xi Jinping in Kazakhstan, marking the significance of the countries’ bilateral relationship to the initiative. For this reason, DP World views Kazakhstan as a key new arena for BRI-related upgrades.
DP World is also advising the government of Azerbaijan on its new Alat Free Trade Zone and the Port of Baku, and its representatives have also visited Iran to assess Bandar Anzali Port and Bandar Anzali Free Trade-Industrial Zone. The company anticipates increased maritime trade in the Caspian Sea and is investing and lending its expertise to the emerging economies of the region. Alat FTZ, like Aktau, will focus on value-adding logistics, connecting European, Caucasian, and Central Asian markets and helping Europe secure its oil and natural gas supply. These developments mark the emergence of a region that could be a literal pivot in the bringing together of Europe and Asia under the auspices of the BRI.