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Output of industries of Economy of Simple Things for three years increased from 8.9 trillion tenge to 10.1 trillion tenge

Tuesday, 15 December 2020, 11:41:25

At the government session chaired by Prime Minister Askar Mamin during the discussion of the progress of implementation of the Economy of Simple Things program and increasing the domestic content, Minister of National Economy Ruslan Dalenov, First Vice Minister of Finance Berik Sholpankulov and Minister of Industry and Infrastructure Development Beibut Atamkulov made reports.

Over the past three years, there has been a significant increase in the production of finished, processed products. Thus, the volume of output in the industries of the Economy of Simple Things increased from 8.9 trillion tenge in 2018 to 10.1 trillion tenge in 2019. Growth continued this year. For 10 months, the index of physical volume amounted to 104%. The output of finished, processed products is growing faster.

“Due to the growth in the output of finished, processed goods, the share of imports is decreasing. The share of production of Kazakhstani goods in consumption is growing. So, in 2020, the share of domestic production increased by 2.5 percentage points. The production of food products, building materials, light industry products, furniture, machinery and equipment has grown. Over the past 2 years, for a number of types of products, the growth has reached double-digit indicators, and for certain types — by 1.5-2 times. This year, the rate of growth of production continued,” Dalenov stressed.

The implementation of the Economy of Simple Things program is accompanied by the growth of finished and processed products. A number of measures have been taken this year to improve the Economy of Simple Things program.

First. Collateral security. The size of the provided state guarantee has been increased, the terms for issuing guarantees have been reduced by 2 times, and a guarantee has been provided for projects of agricultural production.

Second. The total amount of lending was increased to 1 trillion tenge with the extension of the program until the end of 2021. To increase lending, the limits have been increased for each second tier bank.

Third. In order to increase lending, the types of economic activities were expanded, as well as financing of processing industries through the Development Bank of Kazakhstan JSC was increased. Within the framework of the Economy of Simple Things JSC Damu Fund subsidized 509 projects.

“By the number of projects, the main share falls on the areas of food production, building materials, metal products, plastics, furniture and clothing. The loan portfolio of subsidized projects on the Economy of Simple Things through Damu Fund is 338.6 billion tenge. The manufacturing industry accounts for the bulk of the loan portfolio. The monitoring of enterprises covered by the support for the Economy of Simple Things shows a positive trend. This year, such enterprises managed not only to preserve, but also to increase their incomes and, accordingly, the amount of taxes paid,” stressed the minister of national economy.

This year, the volume of financial support for all lending programs has been significantly increased. So, the amount of the supported loan portfolio reached 2 trillion tenge and more than 34 thousand projects were covered.

Overall, the results show that lending programs stimulate the production of domestic finished goods and have a positive macroeconomic effect.

Also, First Vice Minister of Finance Berik Sholpankulov made a presentation. According to him, the Ministry of Finance, on an ongoing basis, together with interested government agencies and NCE Atameken, is working to support local content.

In order to support domestic producers, the following measures have been taken.

First. Two government decrees were adopted to establish exemptions from the national regime:

1) cars, transformers and cables;

2) goods of light industry, furniture and cement.

Second. The specified items are included in the List of goods that are purchased only by means of a tender with a preliminary qualification selection (PQS). The main criterion for passing the PQS is the presence of an Industrial certificate.

Third. The public procurement law establishes the obligation of customers to indicate national standards in technical specifications.

Fourth. Model agreements on state purchases of works in the construction sector have been approved, providing for the use of building materials included in the Register of domestic producers.

“As part of the further development of local content, the following amendments are being worked out with the draft law on public procurement in the Parliament. First, the use of guaranteed purchase of goods, off-take contracts in government procurement. Second, the introduction of the Electronic catalog of goods using a unified codification for all types of regulated purchases, with reference to national standards, Industrial certificates and ST-KZ certificates. Third, the transition to full centralization of public procurement, which will allow to centrally regulate issues of increasing local content,’’ said Berik Sholpankulov.

At the same time, it should be noted that the most effective mechanism for supporting domestic producers from the listed measures is the establishment of exemptions from the national regime, therefore it is proposed to the relevant ministries to more actively use this tool.

According to the Minister of Industry and Infrastructure Development Beibut Atamkulov, today 994 subsoil users are registered in the country. At the end of 2019, the volume of purchases by subsoil users amounted to 7.7 trillion tenge. The share of local content is 45%.

“For 9 months of this year, the indicator excluding solid minerals amounted to 3.8 trillion tenge. The share of local content was 46.6%. From Jan. 1, 2021, under the terms of Kazakhstan's accession to the WTO, a phased cancellation of preferences for enterprises is envisaged. In the field of subsoil use, requirements for local content in goods are excluded,” Atamkulov said.

At the same time, for works and services, the share of local content in subsoil use contracts is set at no more than 50%.

In order to further develop the domestic market, taking into account the obligations to the WTO, the development of domestic production continues:

  • by the end of 2020, a special procedure for the acquisition of goods, works and services is in force in public procurement, where about 3400 domestic enterprises are accredited;
  • On Nov. 30, 2020, the Ministries of Industry and Infrastructure Development, Energy and major oil and gas operators signed an Agreement of Intent to create an International Center for the Development of Oil and Gas Engineering;
  • work is underway to expand the list of names subject to withdrawal from the national regime;
  • in 2021, a mechanism for concluding tripartite agreements to stimulate entrepreneurship in the Republic of Kazakhstan is introduced with the participation of state bodies, Atameken and subsoil users.

Within the framework of the introduced tripartite Agreements on stimulating entrepreneurship between authorized bodies (Ministry of Industry, Ministry of Energy) NCE Atameken and subsoil users on a voluntary basis.

The agreement will contain obligations on local content in goods, upon fulfillment of which subsoil users will be able to purchase goods without applying the rules of the regulated procurement procedure.

This measure will shorten the time for purchasing goods, as well as eliminate restrictions when choosing a supplier.

For the implementation of these proposals within the framework of the draft law on public procurement, appropriate amendments are made to the Code of the Republic of Kazakhstan "On Subsoil and Subsoil Use". The measures taken will allow in the future to conclude agreements with subsoil users to stimulate domestic production. Also, currently, within the framework of the draft Law of the Republic of Kazakhstan "On Industrial Policy", new additional measures to support domestic producers are being developed.

According to Deputy Prime Minister Roman Sklyar, the Project Office under the Government has been systematically monitoring the Economy of Simple Things program for 1.5 years. Taking into account the investment direction of the program, 2,254 projects provide for the renewal and expansion of existing production facilities, 332 projects — the creation of new production facilities.

“All projects are aimed primarily at import substitution of consumer goods and ensuring food security. The project office is monitoring the increase in the share of local content in purchases, restarting production enterprises in order to increase the consumption of domestic products. According to the data for 11 months of this year, most of the akimats have reached the KPI indicators approved for the current year,” Sklyar said.

Next year it is planned to increase the share of local content by 20%. The procurement work will be strengthened.

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