CIC Occasional Paper No. 8 - What role for tourism in Kazakhstan's economic future?

February 2005


Introduction: An Unspoilt Land

Until now, Kazakhstan has been largely ignored by all but the most adventurous and independent of tourists. But it is has much to offer: un-crowded ski slopes, mountain scenery of outstanding grandeur, an abundance of wildlife including many rare species, rivers teeming with carp, unspoiled forests, tranquil lake land and vast silent tracts of desert and steppe. The combination of areas of great natural beauty with cities that are becoming cosmopolitan without losing their distinctive Central Asian flavour, mean that Kazakhstan has the potential to draw a growing number of international tourists.

Moreover, tourism may well be part of the answer to Kazakhstan’s compelling economic need to diversify its heavily oil dependent economy. The country has probably no more than half a century to lay the foundations of self-sustaining economic growth before its huge energy resources begin to dwindle. Although it has been slow to recognise as much, Kazakhstan may consequently need tourists as much as the steadily expanding world tourist industry needs new tourist destinations and facilities.

Climatic factors – bitter winters and blistering summers - together with the country’s land-locked location place some constraints on the potential expansion of its infant tourist industry (which scarcely existed prior to Independence in 1991). That potential remains considerable, however, with each of this huge country’s 14 regions containing significant attractions. Overall, Kazakhstan is capable of satisfying a wide range of tourist needs. There are ample opportunities for those who wish to ski, trek, climb, ride, hunt, fish, swim, canoe, raft or bird-watch as well as those who wish to explore the cultural inheritance and urban pleasures of one of the world’s least well known regions. Assisted by the [British] Voluntary Services Overseas (VSO), Kazakhstan is currently gearing up for an expected boom in eco-tourism.

Despite the gushing nature of the prose, the following passage from a recently published independent guide to Central Asia gets to the heart of Kazakhstan’s appeal to tourists:

“With whole steppe cities being refashioned with new money and a pioneer spirit, Kazakhstan is a surprise and a delight for visitors … Cafes on leafy avenues, picnics in verdant meadows, and scenic train rides across vast grasslands are lasting memories for the traveller; and it’s comforting to know that snow-capped peaks and rushing rivers are within sight of cosmopolitan Almaty. Although it remains predominantly Russian in culture, the Kazakhs are melding for themselves a hip and young identity, spinning a bit of their Central Asian roots into a new nation that is the definition of Eurasia.”

The same guide (which is highly recommended for its practical advice) lists the following as the country’s top tourist highlights:

The stunning mountain scenery in the Zailiysky Alatau, Aksu-Zhabaghly and Altay Mountains: “These are some of the most accessible and pristine in the region, while crossing between each requires lazy and long train rides across vast golden plains, a certain draw for train buffs.” The Zailiysky Alatau mountains, to the south of Almaty, are high and beautiful with many peaks of 4000m, many glaciers and Tian Shan firs covering the deep sides of the valley. In summer, the valleys are used for summer pasture by nomadic farmers who set up yurts (mobile homes constructed of felt). In the Altay mountain far north east of Kazakhstan, the traveller can observe endless rolling meadows, snow covered peaks, pristine lakes and rustic villages with Kazakhstan horseman making for scenery of epic proportions. Little has apparently changed since 1885 when George Kennan, an American journalist observed: “I have never seen such a picturesque alpine panorama that could compare with it in splendour, grandeur and beauty.”

Almaty, the former capital founded as a Russian frontier fort in 1854 and still reflecting a strong Russian influence in its architecture, was described by Mary Hemmingway, wife of the American novelist, as the most beautiful city she had seen. Its exposure to the outside world as the result of the oil boom has turned this city of 1.2 million into Central Asia’s most cosmopolitan city with some excellent but expensive hotels and restaurants

Lake Burbary, 200 km north of Astana, is situated in an area known as “little Switzerland.” Unusual rock formations, dense forests and scattered lakes are in marked contrast to the emptiness of the surrounding steppe. Burbary is regarded as an ideal centre for hiking, rock-climbing and cross-country skiing during winter months.

Ust-Kamenogorsk and Semey, in the northeast, both with elegant 19th century brick buildings and log cabins, relics of Russian frontier history and fallen Soviet might.

Turkistan, an entirely Kazakh town in the extreme south, is the home to one of the remarkable architectural creations in Central Asia. The huge domed structure, begun by Tamerlaine in the 14th century, is an important place of pilgrimage for Central Asian Muslims. Restoration work has returned the site to its original glory.

Although not in the Lonely Planet list, most travel writers would include two other attractions in their list of top tourist draws.

The Silk Road, the ancient network of routes which once connected the Roman Empire with the Imperial court of China, and which is now being restored and developed as a major tourist attraction.

Shymbulak, Central Asia’s best downhill ski area, just an hour from Almaty (NB: nearly all sports related agencies also offer heli-skiing to remote high peaks.)


The endless growth of world tourism

A number of factors lie behind the rise in those taking holidays in Kazakhstan: greater prosperity, which has increased domestic demand for travel and leisure; easier access to Kazakhstan following Independence in 1991, including the relaxation of visa regulations; and the worldwide growth of the tourist industry.

Tourism is now the world’s biggest industry and also the most rapidly growing – at a current rate of around 7 per cent year. The industry now accounts for 10.7% of the world’s GDP, employing 260 million people and generating revenues of US$ 500 billion per year.

According to the World Tourism Organisation (WTO), international tourism arrivals in 2003 were 694 million, despite a record fall of 1.2% versus 2002. This drop was largely attributed to the Iraq conflict, SARS and a persistently weak global economy. Despite a series of difficult years, from 2001 to 2003, the number of international tourist arrivals had still managed to show an overall increase of seven million since 2000.

By 2020, the World Tourism Organisation predicts, 1.5 billion tourists will be spending $2 trillion a year - or over $5 billion every day. Meanwhile, at least three times as many people take holidays within their own countries as was the case thirty years ago. Tourism is a big, sometimes dominant, contributor to the GDPs of many developing countries.

In recent decades, most of the additional demand for tourism has come from the Western countries. However, as a result of their rapidly growing prosperity and huge populations, the number of tourists from China (with whom Kazakhstan enjoys increasingly cordial relations) and India is set to grow significantly. Even a very modest increase in the proportion of Chinese and Indians taking foreign holidays will be sufficient to give a major boost to tourism world-wide - which in turn will place strain on existing tourist facilities and encourage the development of new destinations and facilities.


Kazakstan’s infant industry

Natural advantages apart, a number of factors suggest that among Central Asian states Kazakhstan is well placed to exploit this situation, not least its reputation for stability, safe streets and public places, and its record in promoting religious and ethnic tolerance.

Banking reform and the near-universal acceptance of major credit cards in major cities and towns has eased practical problems for the tourists. There are, however, some negative factors: the lack of infrastructure and some forbidding relics from Soviet days – for example, large inhuman hotels run by hatchet-faced receptionists and clerks displaying a stubborn indifference to the needs and interests of visitors. These, however, are quite rapidly giving way to hotels matching Western standards of comfort and efficiency, especially in Almaty and Astana, and a new generation of helpful, energetic and mostly English-speaking hotel staff.

Improvements to infrastructure include new domestic and international air routes - led by the national carrier Air Astana which flies direct to Western Kazakhstan and Almaty from Heathrow and Schipol - although air travel inside Kazkhstan remains relatively expensive. Proposed improvements include a 3,000 kilometer rail ink connecting China with the European Union via Kazakhstan on which work is due to begin this year.

In a country in which hospitality is regarded as a near sacred obligation - an attitude which in the main appears to have survived the Soviet era - few, if any, are likely to feel out of place or unwelcome by virtue of their race or country of birth.

However, the traveler to Kazakhstan is left with the impression that Kazakhstan is a nation on the move which welcomes visitors – but that the dynamism which has been demonstrated in other sectors of the economy has not yet been reflected in the development of tourist facilities. The Caspian Business News, an English-speaking weekly newspaper serving the business community in the region, has been among those which have criticized the government for neglecting the industry’s potential as one of most beneficial sectors of the Kazakh economy and of consequently losing millions of dollars in possible revenue.

It has complained that because the concept of tourism in Kazakhstan is closely associated with health and sport, the economic dimension of tourism has not been grasped in the public mind. It has also suggested that the development of tourism has suffered because the government has geared the economy excessively towards the needs of the extraction industries. Given the need to diversify the Kazakh economy, it would seem there is a strong case for giving tourist-related issues greater salience.

The recent replacement, in December 2004, of the Agency for Tourism & Sports by the newly established Committee on Trade & Tourism Regulation, reporting to the Ministry of Industry & Trade, may signal a growing understanding by the Government of the importance of tourism for the country’s economic growth. It remains to be seen how successful these efforts will be in bolstering tourism and supporting the private sector’s involvement in its development.

Nevertheless, recent figures from the RK Statistics Agency suggest that a significant growth in tourism is now occurring. These show a rise among those visiting Kazakhstan from abroad, a rise in domestic tourism as well as an increase in the number of Kazakh citizens visiting foreign countries. Most international tourists come from Germany, the USA, China and the UK. Most Kazakhstani tourists go to Turkey, China, Germany and the UAE.

The statistics show that in 2003, 713 tourists organizations served 233,979 tourists (nearly double the 2002 figure of 126,781). This figure included 44,974 inbound tourists and 94,692 outbound tourists. Those visiting the country from outside the CIS represented 86 per cent of the inbound total compared to 68 per cent the previous year, which suggests that Kazakhstan’s tourist attractions are gradually becoming more widely known. Total revenue from all tourist activities in 2002 amounted to $12.1mn. Although revenue from tourism has risen four fold since 1991, this represents less than half a per cent of GDP.

Tourism was officially declared a priority sector in 2001 in the Law on Tourism in the Republic of Kazakhstan and the Tourism Development Plan for 2003-5. But equally significant was the involvement of 170 companies from 17 countries – many attending for the first time - in the county’s fourth international tourism fair, Travel and Tourism KITF 2004, held in Almaty in April of last year.

Introducing the event, which was supported by the World Tourist Organisation, Mr Francesco Frangialli, General secretary of the WTO, made it clear that he believes that Kazakhstan has a promising future as a major tourist destination. “The exhibition clearly reflects Kazakhstan’s enormous tourist potential, he said. “Its essence lies in the country’s vast territory with the most diverse landscapes, its ancient historical heritage, a rich culture and the cordial hospitality of the Kazakh people with rich living customs and traditions.”

To realise that potential, however, it is evident that to prevail in a highly competitive market the following will be necessary:

• The strengthening and enlargement of the newly established Committee on Trade and Tourism Regulation.

• Major advertising campaigns in potential markets, especially those in North America, Europe and China where many remain wholly unaware of Kazakhstan as a tourist destination;

• Greater investment in the development of hotels and hostels, especially in the middle price range;

• Greater flexibility in air tariffs leading to lower fares;

• An acceleration in the development of economic infrastructure and tourist facilities.

Conclusion

Kazakhstan’s economic strategy presently places great emphasis on the development of modern high-status, high-tech industries in order to achieve its goal of economic diversification. It may be a decade before it will be possible to know whether the strategy has succeeded, but even if it succeeds earnings from high-tech are unlikely to fill the gap in national revenues when oil revenues start to decline.

This could happen more quickly than expected as a result of increases in supply from the Middle East (e.g. from Libya, Iran or Iraq). The extractive industries apart, one of the most promising areas for economic development is that of tourism, an industry which is labour intensive. Both the theory of competitive advantage and Kazakhstan’s formidable range of tourist attractions, natural and man-made, suggest that it would be foolish to neglect the needs of Kazakhstan’s infant tourist industry. An interim assessment on the Kazakhstan government’s programme to encourage tourism so far might be: “Has made a promising start – but it must try harder if it is to fulfill the country’s considerable potential as a tourist destination.”



Useful Tourism Links:

www.chimbulak.kz
www.kantengri.kz
www.group.kz
www.kazakhstan-ecotourism.org
www.morgana.kz
www.ren.kz
www.turanasia.kz
www.travelers.kz
www.wild-natures.com
www.yassawi.kz
www.kazakhstanbirdtours.com
www.asiatourservice.com
www.ecotourism.kz
www.acs-almaty.kz
www.centralasiatourism.com
www.calipso.kz
www.indra.by.ru
www.jibekjoly.kz
www.expat.kz