OLEG YU NAM Chairman of the Board of Directors Kuat Corporation

Kazakhstan has been performing extremely well: Since its independence in 1991 it has successfully embarked on political and economic reforms. The country has an enor-mous potential for foreign investments and long-term economic growth. It's something that is being confirmed not only by macroeconomic indicators but it's also being more and more recognized internationally. WTO-accession in 2006 is imminent. Kazakhstan has joined the WEF's list of competitive economies. The OSCE chairmanship in 2009 is on the table. The USA consider Kazakhstan to be its strategic partner in this region. More and more political figures are visiting this country. "Kazakhstan is pulling the whole region forward both economically and politically", Ms. Condoleezza Ri?e, Secre-tary of State. What differentiates Kazakhstan so strongly from other CIS-countries?

Kazakhstan is a very interesting country on its own. Being the 9th country in the world terri-tory-wise its population is slightly over 15 million people. The country has a host of various re-sources. Another factor is that the country has a huge industrial potential. When Kazakhstan was part of the former Soviet Union it had a very vigorous scientific and cultural potential as well as very strong intelligentsia.
Actually, in Kazakhstan one can find all the elements of Mendeliev's Periodic Table. The ultimate achievement of Kazakhstan is the people who are hospitable, talented, sagacious, creative, literate and well read. The country has all the means to develop actively. The crucial thing is that we have an outstanding president who implemented the policy of 'open doors' and invited investors in order to boost the country's economy. He had it done at the very early stage of development. The country has a conducive and transparent investment climate put in place. It, of course, enhanced the attractiveness of our country within Central Asia. All reserves of oil, gas, gold, and other min-erals had been made open. Numerous investors entered the country. It's necessary to highlight that at the very early stage, right after the dissolution of the socialist system, and at the begin-ning of the transition period no one had assumed or expected Kazakhstan to become the leader in the Central-Asian region. But our president and the government surpassed all the expectations.
History shows that the same stride was made by the great Russian Tsar Peter I, who 'having opened the window to Europe' made it possible for his country to develop by leaps and bounds. This historic fact confirms the projections related to further prosperity of our Kazakhstan.

The oil and gas sector is still the backbone of the country's economy. The government is however making great efforts to diversify the country's economy away from Petro-leum. Some other sectors are performing increasingly well: the banking sector is con-sidered the strongest within the CIS-countries and there is also the construction sector that is really standing out. It's experiencing impressive growth rates of 20% annually throughout the last 5 years. What are the key growth drivers for this?

The first driver is that all the conditions have been created for construction companies, specifi-cally, land lots are parceled out, architects and designers have enormous opportunities for creativ-ity. These are the things we have never had before. Another driver is the investments made by second-tier banks and investments that flow in from other countries. Literally everyone is inter-ested in the development of this sector - construction companies, constructors, project institutes, financial institutions, mayors of cities and heads of regions (oblasts), the government and the president himself, who has created all the conditions in the internal and external market for the given sector. We have really effective laws on residential construction, urban development as well as many others that make tremendous opportunities available for the construction sector. The President clearly emphasized that ''construction is the locomotive of Kazakhstan's economy'.

KUAT Corporation JSC was founded in 1992 and is one of the largest construction companies in Kazakhstan specializing in development of Business Class and De Luxe ac-commodation projects. You've been awarded many awards and have doubled turnover in 2005 to over 500mln USD. What separates you from the many construction compa-nies active in the country? How did you manage to become the market leaders?

In 1992 when we founded the company it was called a small private enterprise KUAT. The word 'kuat' when translated from the Kazakh language means 'power, vigour, energy'. Our office was a tiny one, 8?3 m. We had temporary premises. That was our beginning. Those times were not easy, and not quite joyful. That was the transition period that lasted until 1999. We imple-mented small-scale projects. At the very beginning we had no vehicles, no people, no money. It was not easy to keep head above water. Nonetheless, from the very beginning it was decided that we would only construct, construct and construct and do repair works of residential facilities. Be-fore I started up my own company, I had worked as foreman, site engineer, head of the produc-tion and technical department, chief engineer. I am very proud of the fact that I was appointed chief engineer at the age of 31, and I was the youngest chief engineer in the Building Board. Then, 1992 came. That was the time when many wanted to leave the country and move their business to other countries. I left that company as it had plans to move to the Russian Federation.

In 1992 I started from scratch. Owing to the experience gained and having gone through a very good school, the newly established company has increased its capacity year in year out. Initially we wanted to set up the company according to the pattern that can be found in Europe or the East, i.e. to act as client that would find a contractor, sub-contractor or a general contractor for this or that project. But the practice proved that neither the society nor construction companies were ready for that scenario. As a result we had to introduce crews and teams that would carry out construction and finishing works. It was a tough job, but at the same time the work we did was free, private, and not under socialism - everything depended just on you. Gradually we have been improving all the processes and increased the output. In 2000 we embarked on the rigorous development of the company. Every year, every 6 months, every 3 months we effect optimization, structuring and restructuring, i.e. we have ongoing improvements. For the last six years the com-pany's output has increased by 300 times. Today it has over 12,000 employees. We are the larg-est investor in Almaty and Astana in terms of constructing residential facilities, social and cultural premises. From 2004, a second year running, we are No. 1 construction company in the sector of residential facilities and social and cultural premises. Our results are as follows:
in 2000 we commissioned 4, 000 sq.m, in 2001 - 9, 000 sq.m, in 2003 - 25, 000 sq.m, in 2004 - 140 000 sq. m, in 2005 - 197, 000 sq.m and in 2006 we are to commission 592, 000 sq.m, which is in fact 3 times more than in 2005.
I think the main driver behind this pace of development is the fact that we have been building up in a market-determined way, overcoming all difficulties and problems throughout very hard times and along with formation of our country. Please, note, that the age of our company is almost same as that of sovereign Kazakhstan.

I understand you will expect to double turnover by 2006 to over 1 billion USD. You will triple your output (amount of square meters commissioned will be 592.000m² in 2006). You will double the number of employees to 25000. Where will you find neces-sary resources: people, contractors, engineers? Construction materials? How will you manage to do this?

The Corporation is enjoying a very rapid development. The experience I gained when I worked as a chief engineer at 31 - and you have to understand that at that time people were appointed to that position only when they turned 45, 50, 60 years old, namely at the end of their careers - was quite extensive. Back at that time under the socialism I worked the way people work under capi-talism. I came to realize what would be required for the company. The company should have so-cial safety nets for the employees. It's a must to create topnotch work conditions and have a fully transparent policy. The company should have the highest possible financial and moral incentives. It must have social programs for employees. It's also needed to design the company's trappings - a flag, an anthem, badges and build up a high corporate culture. We also had to work a lot in terms of staff training. Last year were certified in accordance with international management quality standards ISO 9001:2000. The British Standards Institute (BSI) conducted training for our employees and in stead of one year they had trained us for 1,5 years. We wanted to have in-depth and profound training, so that the staff learnt all aspects and nuances. When disparities and incompliance with this quality management system was almost zero, our company was certified. So, having studied the quality management system ISO 9001:2000, and having practiced it for a year the company got able to increase the construction output three-fold. Unlike all other enter-prises that pay salaries in cash we are the only construction company that transfers salaries to all 12, 000 employees to their bank accounts. I think it's a great achievement of our company as it testifies to the fact that the company is absolutely transparent. Employees get high salaries with all appropriate pension and social contributions. People feel they are protected and are very com-fortable. They give back more. Another factor is that our company has its own ideology. Currently we are in for loyalty and patriotism. We put in place all the tools for high productivity and per-formance. We want the people feel that they live in a wonderful society. Let alone other factors such as implementation of the best and the most beautiful projects in terms of architecture and design that cover huge areas of 18, 20 hectares, like that of Manhattan Kazakhstan. Last year I was in New York and saw Manhattan and I said right there: "Kazakhstan will have its own Manhat-tan!" I also named this project Manhattan Kazakhstan because it will be 'a city in the city' project where construction will be carried out using the most state-of-the-art production and architecture technologies and techniques, where apart from an outstanding design, we'll also employ landscape and illumination design. This city will have everything.

Everything that you have said about ongoing improvements, and corporate citizen-ship, certification of ISO 9001:2000 and transparency…. is all this in preparation for a listing at the LSE by 2008?

Yes, we do have the aim to get listed at LSE. Currently the company has enough funds in the domestic market. At the same time the company enjoys a skyrocketing development and moves onward. We are fully aware that we need to invest more and more and enter new markets. First, we need to get listed at the Stock Exchange of Kazakhstan and then at the LSE. These steps are necessary to enable us to invest about $ 1,5 - 2 billion as the implementation of such projects as, e.g. Manhattan Kazakhstan which will be completed within 7 years, will require investments amounting to $ 2 - 2.5 billion. Within the framework of this project we'll have 3.5 million sq. m of residential facilities constructed, including elite, Business class and Deluxe apartments as well as social and cultural facilities such as 6 schools, 8 kindergartens, out-patient clinics, hospitals, park-ing, parks and alleys, hotels, restaurants. We also plan to build a fire station and the area office of internal affairs. Two stadiums will be reconstructed. We'll have lines of communications built. Ac-tually, the whole neighborhood will be completely changed. The people in that neighborhood, in that 'city' will feel much better than in any other neighborhood of Almaty. As the center of a city is not where main streets go but where all the conditions and the infrastructure are in place for work, labor and life, and the quality of life will be the highest possible.

You are working a lot on the company's brand. There is no doubt about the signifi-cance of the reputation for a company. Currently, image is one of the most important indicators of success and prosperity. In its third annual study of the "50 Best Companies According to Reputation" Exclusive Journal included Kuat Corporation. How are you branding your company, how do you want to be perceived and how is this helping you in attracting investment, receiving credit, promoting your interests, entering new mar-kets? What are you doing to take the company's brand, the corporate image out of the country?

Our Company is well known in 166 countries of the world. We get awards every year. You are familiar with such a famous company as Business Initiative Directions headed by Mr. Priedo. In 2002 in Frankfurt we were awarded the prize for quality and technology "The Arch of Europe. Gold". In 2003 in Geneva we were awarded "Platinum Star for Quality". In 2004 in Geneva we got Century International Diamond Quality ERA Award. In 2005 in New York we got another Diamond award for "For corporate spirit and business prestige". All these events have a ripple effect in 166 countries of the world. We have business relations with South Korea, Germany, the USA, France, China, Italy, Spain, Israel, and we work a lot with Russia and many other countries that supply to us materials, provide technologies, equipment. KUAT Corporation is known as a very solid and reliable company. Our company is oriented to construct not only in Kazakhstan. In the future we are planning to construct in other countries as well. In particular we'll for sure construct in Ger-many, in Berlin, as there was a wish extended to us. They invite us to build in the UAE and in many cities of Russia. But the current strategy of our company is to solidly build up the company in Kazakhstan. In a year or two the company will enter the international market.

With our report we'll reach 3 million readers in the USA. As you know we want to put Kazakhstan on the map, to raise awareness about the investment climate, the many op-portunities that exist here. I would like to offer you an open space, a platform to com-municate with our American readers.

Kazakhstan has a wonderful investment climate created. We have quite attractive laws such as on land, labor, residential construction, foreign investments, as well as the tax code. All the condi-tions for foreign investors to come to Kazakhstan and invest into the country's economy are there in place. One can show himself here, and implement remarkable projects. Kazakhstan needs to produce and manufacture a lot of various goods and services. Actually, Kazakhstan is at its early stage of development. The country has an enormous potential. Kazakhstan became a sovereign state only 14 years ago. It's a young country and a young republic. We do need partners and they are important for us. The Corporation and I, personally, are ready for close cooperation with new partners. We have splendid projects related not only to construction but also to the production of construction materials. The construction sector only requires thousands of various construction materials, in particular, it's needed for Kazakhstan to manufacture laminate, different floorings and coatings, paints, namely, a host of different finishing materials. We need to improve and up-grade technologies for production and construction, design and architecture, let alone other sec-tors where investments and partners should be attracted. It'll be a 'win-win' situation for everyone - Kazakhstan, partners and KUAT Corporation. Everyone wins. I know that improvement and per-fection require a lot of time. There is no limit to perfection. It concerns not only technologies, construction but also human relations. Money is just a tool that enables to reach the peaks of per-fection.