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Interview: "On the creation of the Fund for the Development of the Military-Industrial Complex"

Ormanbetova Kamilla is talking

On September 1, the Head of State, speaking with a Message to the people of Kazakhstan, focused on strengthening the military-industrial complex of the country.

Kassym-Jomart Kemelevich noted that the development of the defense industry plays a key role in ensuring national security. At the same time, the most important task is to create a production cycle with a high degree of localization, which will reduce dependence on imports.

Everyone knows that domestic enterprises in the defense industry have problems with financing. Financing and development institutions do not lend to military industrial plants.

In this regard, the President of the Republic of Kazakhstan, in order to create a mechanism for direct financing of our enterprises, proposed the creation of a Special Fund for the Development of the Defense Industry.

Isa Kairat, Managing Director of NC Kazakhstan Engineering JSC, answered questions regarding the Fund and its creation.

The head of state in his Address to the people of Kazakhstan conveyed the following: “We should continue to work on the transfer of modern technologies and the localization of new industries. A special Fund for the Development of the Military-Industrial Complex (FROIC) will become a mechanism for direct financial support for domestic enterprises. What does this mean?

- The factories of our holding are already actively engaged in the transfer of modern technologies and localization of new production facilities, respectively, with the support of the state, this work will be more effective.

- Unfortunately, for many years we could not get funding for new projects, increased localization and R&D. For example, the Industrial Development Fund, according to its charter, cannot finance projects related to the production of weapons, the Damu Fund does not work with quasi-state companies, and the rates on loans from commercial banks are about 20%, despite the fact that the maximum profitability in accordance with the norms of the State Defense Order and DIC - no more than 20%. In addition, these organizations are frequent issuers on international capital markets and raise funds from financial institutions by issuing Eurobonds. Considering that international financial organizations pay special attention to the issues of financing the arms production industry, projects directly or indirectly related to this area may limit the circle of investors and access to foreign capital.

The news about the creation of a special Fund made us happy, because, thanks to it, we will now be able to invest more in the development of industry, science, new projects and strengthen production capacities for the prompt repair of equipment, strengthen support for our domestic enterprises.

Without state funding, unfortunately, the active development of the same science cannot be realized. Private investments very rarely come into projects related to weapons and military equipment.

We need to concentrate production within the country as much as possible, which will not only bring new jobs and technologies, but will also become one of the conditions for increasing the defense capability of Kazakhstan. Therefore, FROPC is an ideal tool for the development of domestic scientific and technical developments and the modernization of defense industry organizations.

What is the role of "Kazakhstan Engineering" in the creation of the Fund?

- Since we are a subordinate organization of the authorized state body, and we are also interested in the creation of the FROPC, our team takes an active part in the creation of the fund. Over the years of the Company's work, a strong team of specialists in the field of the defense industry has been formed, who will apply their experience and knowledge in preparing the methodology and regulatory documents for the Fund's activities. To create a regulatory framework for the Fund's activities, specialists apply the practical experience of our factories.

What are your expectations regarding the fund and its activities? How do you imagine this?

- In this context, Kazakhstan Engineering has expectations regarding the activities of the fund:

1. Financial support: One of the key expectations of "Kazakhstan Engineering" from FROPC is access to the maximum development of the production capabilities of enterprises, the development of the latest products and solutions that require financing at a preferential rate;

2. Development of scientific and technological developments: The Foundation can support and stimulate scientific and technological research;

3. Localization of production: An important task is to create a production cycle with a high degree of localization. The Fund's support in realizing this goal will help strengthen production capacity and reduce dependence on imports;

4. Increasing the country's defense capability: The creation of the FROPC is also aimed at increasing the defense capability of Kazakhstan. The fund is aimed at supporting projects and initiatives that contribute to strengthening the national security of the country.

Are there any projects that you would like to finance through the FROPC?

- In the structure of our holding there are 11 enterprises - executors of the state defense order. The company today has a pool of promising projects that it prioritizes. Given the restrictions on the dissemination of confidential information, I cannot disclose all plans and projects, however, in general terms, we can outline:

1. A project to modernize and expand the production site of our research center. Currently, the assembly of unmanned vehicles and other equipment takes place on a small site. As the volume and turnover of the enterprise grow, it needs to expand and acquire its own laboratory and a large amount of equipment. Expansion of the production site and laboratory will allow more efficient development and production of innovative products;

2. Acquisition of documentation (technology transfer) in order to expand the range of manufactured products - the production of cases for artillery ammunition, as well as the construction of a new plant for their manufacture;

3. Development of a new type of repair and maintenance of aircraft equipment, which is on the balance sheet of law enforcement agencies and private civil organizations;

4. A project to create a new production base for the manufacture of the necessary raw materials.

Once again, I would like to note that all these projects contribute to the development of the domestic defense industry, the creation of new jobs and the development of the national economy. They will also help strengthen the defense capability of Kazakhstan and contribute to the national security of the state.

Thank you!