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LIST OF POTENTIAL OPPORTUNITIES FOR ENTREPRENEURS
DESCRIPTION
The information space of Kazakhstan is undergoing significant changes associated with the development and wide spread of new social media and internet technologies. Business structures of Kazakhstan began to actively use online resources to promote their products and services in the global Internet network. It is necessary to ensure the development of the information environment in Kazakhstan and the establishment of centers for the commercialization of information products. To solve these problems it is necessary to provide for investment in new business projects (start-ups), to continue the work on optimization of the regulatory activities of the state, reduction of administrative barriers and creation of conditions for the development of business initiatives and e-commerce.
CONTRIBUTION TO THE ECONOMY
In the growth dynamics of the industry by areas the most dynamic growth is observed in the area of e-commerce. In areas such as announcements, services, advertising, payment organizations, coupon services and information is observed the negative dynamics of growth of taxes, which may indicate a decrease in their shares of total financial market volume.
Table 1 - Taxes and obligatory payments of the industry in the area of "Information", the share of total financial market volume
Direction |
2010 |
2011 |
2012 |
2013 |
2014 |
2015 |
Trade |
1,93% |
4,88% |
6,93% |
25,09% |
49,51% |
54,90% |
Advertisements |
30,55% |
27,13% |
23,54% |
18,18% |
14,01% |
12,74% |
Advertising services |
3,33% |
6,38% |
12,14% |
11,73% |
7,53% |
5,83% |
Sale |
0,00% |
0,00% |
0,12% |
0,19% |
0,22% |
0,62% |
Food |
0,00% |
0,00% |
0,00% |
0,00% |
0,00% |
0,08% |
Payment organizations |
61,96% |
56,45% |
47,62% |
34,90% |
20,84% |
19,76% |
Coupon services |
0,00% |
0,68% |
4,29% |
4,53% |
3,18% |
2,09% |
Information |
2,23% |
4,47% |
5,37% |
5,38% |
4,71% |
3,97% |
Source: Internet Association of Kazakhstan ALE
STRUCTURE OF THE INDUSTRY
In 2014 the index of development of Kazakhstan's information and communication technologies was 6.08; thereby Kazakhstan occupies 53-d place in the rating of 188 countries1.
[1] according to the data of The International Telecommunication Union
For the analysis of the internal environment of the information space is used the following series of development indicators (value of the index in 2014):
§ number of Internet users in Kazakhstan per 100 people (63.9);
§ provision of the population with computers per 100 people (34.0);
§ Internet penetration among the adult population (72%);
§ the number of fixed-line subscribers (more than 28 million units);
§ the volume of communication services (more than 61.3 billion tenge);
§ the number of enterprises using the Internet (52 630 units).
One of the most important factors in the development of the information society of the country is a penetration rate of the Internet. Between 2008 and 2014 Internet penetration in Kazakhstan increased by 4.8 times.
Figure 1. Internet penetration rate in the Republic of Kazakhstan from 2008 to 2015
Less than 10% of households of RK use optical fiber, terrestrial fixed wireless broadband and satellite communications.
Figure 2. The use of connection types for Internet access in households in 2014
Source: Statistics Committee of MNE of the RK
The average number of subscribers with fixed Internet access in the world is 10.8 units, in developed countries - 29 units, and in developing countries - 7.1 units2. In Kazakhstan is observed significant growth of the Internet audience for the last 4 years.
Figure 3. Number of subscribers with fixed Internet access per 100 inhabitants from 2004 to 2014 in the dynamics
Source: Statistics Committee of MNE of the RK
Over the last four years (from 2005 to 2014) is observed growth of the Internet audience for the age category of 16-74 years.
Figure 4. Number of Internet users per 100 people (at the age of 6-74 years) from 2010 to 2014
Source: Statistics Committee of MNE of the RK
The fundamental leap in the number of enterprises that use the Internet has occurred in 2008 and from that moment there was observed a steady increase until 2013.
2 According to data of Statistics Committee of MNE of the RK
Figure 5. Number of enterprises using the Internet in Kazakhstan from 2004 to 2014
Source: Statistics Committee of MNE of the RK
The monthly audience of Kazakh Internet resources in 2014 amounted to approximately 25 million people. The most popular resource is the Mail.ru portal with a monthly audience of 5.3 million people.
Figure 6. Monthly attendance of Internet resources in 2014 in Kazakhstan (in thousands of people)
Source: Statistics Committee of MNE of the RK
A characteristic feature of the appearance of telecommunications market in Kazakhstan was a monopoly on mobile communication. Altel company became the first mobile operator and received exceptional and exclusive rights (license) for the implementation of mobile communication in Kazakhstan from 1994 to 1999. After the termination of the exclusive license, the government of Kazakhstan has organized a tender for the granting of other licenses for the operator activity in the country, and since February 1999 in the country appeared two additional mobile operators - GSM-Kazakhstan and LLP "KaR-Tel". The number of mobile subscribers per 100 people in Kazakhstan amounted to 165 units as of 1 January 2015.
Figure 7. The number of mobile communications subscribers per 100 people from 2004 to 2014
Source: Statistics Committee of MNE of the RK
MARKET CAPACITY
In 2010, the main share of the market belonged to the payment systems (61.96%). The second place is occupied by announcements in a 30.55% share of the Internet market. The market share of on-line shops has increased from 1.93% in 2010 up to 49.51% in 2014.
Figure 8. Shares of participants of the Internet market in dynamics from 2010 to 2014
Source: Statistics Committee of MNE of the RK
One-third of online purchases accounts for the two cities of Kazakhstan: Almaty and Astana. Most payments are made in cash, and the average check is about 19 USD in a year per person. The proportion of online buyers is only 11% of the total number of Internet users in Kazakhstan.
Since 2013 the market of electronic money in Kazakhstan actively develops and demonstrates promising growth rates. In 2014 the number of transactions with electronic money in Kazakhstan has increased by 70% in comparison with 2013 year and reached 7.9 mln. of transactions for a total amount of 21.0 billion tenge.
Figure 9: The number of transactions of electronic money in Kazakhstan (thousands of transactions) in 2014
Source: Statistics Committee of MNE of the RK
From the point of view of the development of e-commerce, electronic money can act as the primary payment instrument for micropayments (payment of cable television services, Internet access, mobile communication and utility payments). According to the National Bank of Kazakhstan the average amount of one payment of electronic money is 2690 tenge. A significant proportion of payments may be the completion of accounts for online gaming, provision of services in social networks, etc.
KEY PARTICIPANTS
The telecommunications market in Kazakhstan is mainly composed of ten operating companies that serve more than 90% of users.
Table 2 - Major companies providing ICT services in Kazakhstan
Market segments |
Operators in Kazakhstan |
Fixed telephony |
- JSC "Kazakhtelecom" - JSC "KazTransCom" - "TransTelecom" - DUCAT (Arna) - Group of Companies "VimpelCom" (SA-Telcom, TNS-plus, SkySilk) |
Mobile communication |
- JSC "Kcell" - Group of Companies "VimpelCom" (LLP "KaR-Tel") - JSC "Altel" - LLP «MTS» (Tele2) |
Data transmission and Internet |
- JSC "Kazakhtelecom" - JSC "KazTransCom" - "TransTelecom" - DUCAT (Arna) - Astel - Group of Companies "VimpelCom" (SA-Telcom, 2DAY-Telecom) |
Services for operators |
- JSC "Kazakhtelecom" - Group of Companies "VimpelCom" (SA-Telcom, KZ-Trans) - JSC "KazTransGas" - JSC "TransTelecom" |
Pay cable television |
- LLP "TV Alma-TV" - LLP "Aina-TV" - "Sekatel" Company - JSC «Kazakhtelecom» IDTV and Digital-TV - ICON |
Source: Internet Association of Kazakhstan ALE
Regional companies "members of the Internet market" are represented by small companies in different directions. The large part of the market is occupied by republic-wide companies, such as Sulpak, Technodom and Mechta, competition with which is unfortunate for local and regional companies. As a result, local companies take only narrow areas, such as furniture, food and services.
For example, the information direction is particularly developed among the regions. Some players of the information direction have a huge impact on the local audience and shape public opinion on their resources. The most active and influential Internet resources are www.lada.kz (Aktau) and www.yk.kz (Ust-Kamenogorsk). Portal "Uralsk Week" (www.uralskweek.kz), which positions itself as a portal of West Kazakhstan region, also has a good performance. It is characteristic that Astana and Almaty cities have popular sites of the city akimats (local administrations).
Table 3 - List of regional players in the information direction
No |
Region |
Resource description |
Resource location |
1. |
Astana |
Website about the people and the interests of Atyrau in Astana. |
|
2. |
Astana |
City Web Portal |
|
3. |
Atyrau |
The popular portal about the city |
|
4. |
Aktau |
LLP "LADA Press" news of Aktau and Mangistau region, photos, videos, online interview |
|
5. |
Aktobe |
«Times KZ» Information Agency. Information portal, created in Aktobe, which highlights the events in the regions of Kazakhstan and business news on a daily basis, acquaints readers with the experts opinions, conducts investigative journalism, highlights sports and culture news |
|
6. |
Aksai |
Informational portal |
|
7. |
Karaganda |
eKaraganda - Karaganda online. News. Video news. Photoreports. Large Internet portal of the region |
|
8. |
Karaganda |
Popular City Forum |
|
9. |
Kokshetau |
The official website of the newspaper "Beloved City of Kokshetau" |
|
10. |
Kostanay |
Informational portal |
|
11. |
Kostanay |
Information portal of the region |
|
12. |
Kyzyl-Orda |
Information site |
|
13. |
Pavlodar |
Informational portal |
|
14. |
Pavlodar |
City news |
|
15. |
Pavlodar |
The regional newspaper "Zvezda Priirtyshya" (Star of Irtysh region) |
|
16. |
Taraz |
Informational portal |
|
17. |
Uralsk |
Uralsk Week (Uralskaya Nedelya). News portal of the West Kazakhstan region. |
|
18. |
Uralsk |
Informational portal |
|
19. |
Uralsk |
News of Ust-Kamenogorsk. Recent developments in East Kazakhstan, Semey, Ridder, Zyryanovsk, and East Kazakhstan region. |
|
20. |
Ust-Kamenogorsk |
Informational portal |
|
21. |
Ust-Kamenogorsk |
Information Portal - a citywide resource that represents the latest information about various aspects of city life. |
|
22. |
Ust-Kamenogorsk |
Information blogging platform |
|
23. |
Ust-Kamenogorsk |
Information portal of Shymkent, which includes editorial staff of the site, a TV studio and various departments in directions. |
|
24. |
Shymkent |
Portal about the administration, history, economy, culture, tourism, sports, education, the sites of the city, twin cities, as well as the latest news and events of the city. |
|
25. |
Shymkent |
The news portal in the Kazakh language |
Source: Internet Association of Kazakhstan ALE
BARRIERS AND LIMITATIONS
1. Overregulation of the ICT industry, which has a negative impact on business activity;
2. Lobbying the use of mechanism of customers’ money resources in the accounts of telecommunication operators for carrying out micropayments. SMEs cannot compete with mobile operators neither by quantity of users, nor on a regional scope. The business environment is forced to use outdated methods of working with paper mediums, which leads to additional costs with respect to time for the physical exchange of paper versions of contracts, certificates of work performed and invoices. Virtual and intangible nature of the industry creates additional complexity in its legal regulation;
3. As a result of introduction of root national safety certificates for Internet users Kazakhstan was counted among the countries with the most severe restrictive measures in relation to Internet users;
4. Conflicts and uncertainties in elucidating the principles of the legal structure and ownership of the Internet resource;
5. Controversial issue of valuation of the trademark and the domain name;
6. Kazakhstan's legislation extends the status of the mass media to all the Internet resources of the country. For example, a typical on-line shop may be listed in the same row with the information news portals;
7. The question of the legal status of the information posted on the Internet resources (including anonymous posting of information) is not resolved;
8. Absence of clear criteria for the recognition of responsibility of the legal owner of the Internet resource;
9. Problems of obtaining evidence in the form of research procedures and fixation of evidence on internet resources;
10. Lack of clear concepts between foreign or local Internet resources;
11. Excessive restriction of access to Internet resources by the court decision;
12. There is no single program (plan) of the information activities of state bodies in the information environment;
13. Limited content in the state language within the information environment and Internet space. There is also very small number of websites in the state language with versions for the visually impaired people;
14. Kazakhstan's space has little protection from the threats of virus attacks and mobile malware;
15. Concentration of a large number of Internet users on one or two platforms;
16. Practice of restriction (blocking) of Internet resources by public authorities of Kazakhstan without giving any reason;
17. Use of new technologies and innovations by SMEs is limited by a personal initiative and financial capabilities of enterprises;
18. Low activity on attraction of investments in the sector;
19. Low competence in the global marketing tools and promotion of projects. The low level of use of the information environment as a tool for promoting goods and services;
20. Low level of participation of small businesses in niche areas of industry in the cities of regional type and rural areas (services in the field of telecommunications, Internet connectivity, provision of wireless communication and coordination of activities of sectoral players in local markets);
21. Low participation of SMEs in the provision of services in the industry.
LIST OF POTENTIAL OPPORTUNITIES FOR ENTREPRENEURS
1. Outsourcing work related to the development of software for the ERP, SCM and CRM systems;
2. Design and creation of modular visualization packages for various sectors of the economy not only in Kazakhstan but also in other countries (mechanical engineering, aviation, energy, modeling systems, etc.);
3. Development and implementation of services for the production of component parts for high-tech companies, which specialize in the production of the final product. Delivery of the components will allow entrepreneurs to enter into a close partnership with client companies;
4. Design and creation of applications for mobile devices that provide services to the end user (parking services, the provision of statistics and operational data on the new media services, accounting and control of the movement of children, and much more);
5. Organization of the work of on-line shops;
6. The information field of such niche areas as "show business", "sport", "mother and child", "fashion", "food" and so on is not filled in the Kazakh language;
7. Provision of cloud services for societies by means of:
creation of full range of services for the provision of server hardware for large companies and financial institutions. The provision of outsourcing services of data centers will allow large businesses and financial institutions to significantly reduce support costs of their own server centers;
provision of a physical space for servers in the data center (known as "colocation") in order to reduce capital and operating expenses of enterprises for IT during the crisis;
provision of cloud services of business model "application as a service", such as services for the provision of system infrastructure software, application for the development and deployment of cloud-based software;
8. Sustainable Development of the preparatory process of qualified personnel in the ICT industry:
the creation of short-term programs (up to 1 a month) for the heads of small and medium-sized businesses, mid-level managers with the purpose of training in modern methods of work and promotion on the international market;
the conclusion of long-term contracts of entrepreneurs with educational institutions on training of specialists in the dual system of education;
the ensuring of cooperation of IT companies and universities of Kazakhstan with foreign educational institutions and the leaders of the IT industry by opening a joint training departments, as well as teaching and research laboratories;
the creation of continuous education and self-training system with the help of private competence centers that have a distributed system of distance education based on advanced interactive Internet technologies;
9. Creation of the domestic market of consulting services in the field of marketing and in-depth study of the information environment. Companies within the industry are experiencing a greater need for the analytical market research undertaken at the global level.
SWOT-ANALYSIS
Strengths |
Weaknesses |
§ High Internet penetration in Kazakhstan; § Availability of basic legislative and institutional framework for the development of the information environment; § Developed system of e-government in Kazakhstan; § Development of telecommunication infrastructure of the country; § High solvency of the population; § Developed system of state support for start-ups |
§ Lack of reliable statistical high quality information on the information space; § Low investments in the industry; § Weak transport and logistics infrastructure for e-commerce in rural areas; § Weak and unformed advertising market in Kazakhstan; § Lack of development of internet marketing and weak marketing business strategies; § Lack of Kazakh commercial projects abroad; § Deficit of current assets and the difficulty in obtaining of loans; § Long-term profitability of Internet projects (up to 5-7 years) |
Opportunities |
Threats |
§ Development prospects of Internet services market, growth in the number of Internet users in Kazakhstan; § Development of a network of transport and logistics centers; § State support of socially important directions for the country; § Promotion of products produced in Kazakhstan; § Advantages of suppliers of domestic products over foreign suppliers; § Presence of large service consumers of the industry in the domestic market; § Participation of Kazakhstan's business in the legislative sphere of regulation of the information environment through GMP RK |
§ Repression and absorption of domestic players by large foreign companies; § The unstable economic situation in the country |
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