Factor conditions

To mention the importance of factor conditions, it can be said that what we call “factor conditions” is kind of a contrary to conventional wisdom. Since Michael Porter argued about key or specialized factors’ creation (invention), but not inheritance. And all these specialized factors of production can be generally summarized in three dimensions:

• Skilled labor

• Capital

• Infrastructure

The Textiles sector is afforded priority status in the Republic of Kazakhstan, namely being in top seven promising sectors.

1. Skilled labor

There are a lot of companies, namely around 1500, which deal with textile manufacturing processes, but generally nineteen companies are the largest in this industry and the most well-known are “South Textiline KZ” LLP, JSC “Yuteks”, JSC “Melanzh”, “Khansuar Invest Company” LLP, cotton processing plant “Myrzakent” LLP and others. Actually, scale of employment varies between 200 and 1000 major plant workers depending on the size of the processing plant. It is important to mention here that according to G-Global (2015), problems of branch besides low level of technical equipment are also low labor productivity. This happens due to the low level of education and deficiency in the code of ethics, corporate governance and so on, namely when the unskilled employee may get a job offer because of being a related party.

Nonetheless, due to the development of this branch, it is planned to implement the idea of “Ontustik” Special Economic Zone. Subsequently, around 15,000 new workplaces will be available for potential workers and due to the importance of this project to the whole economy of Kazakhstan; it is expected to make proper selection and further trainings to properly work on a plant that will lead to gaining a competitive advantage in terms of new skilled plant workers.

2. Capital

The inflow of investments in all stages of production of the textile procurement of raw materials and to manufacture yarn, fabrics and garments has allowed since 2009 to increase production capacity by four times.

Positive development trends can be traced for the textile industry. According to the Kazakhstan Agency of Statistics, textiles production in 2012 reached USD 291,7 million. Prime minister of Kazakhstan, Karim Masimov states that the volume of investment in fixed assets in Kazakhstan light industry sector grew by 37.5% over last year. Thus, during 2013 the sector invested in fixed assets 5 211.6 million tenge, which is by 137.5% compared with 2012. The growth was registered mainly due to increased investment in the production of textiles. Moreover, in 2014 investments in textile production industry was 92 times higher than in 2012.

Major source of financing in the textile sector of the Republic of Kazakhstan comes from «Sovereign Wealth Fund «Samruk-Kazyna» JSC. Moreover, external sources of funds were attracted in 2015. So, China is going to invest around USD 2 billion in Southern Kazakhstan’s textile production sector in the nearest future.

Such big investments are going to create a good potential for Kazakhstan and to be distinctive from its competitors in the global market.