Economics of simple things: Kazakhstan will down imports to 37%

In his speech, Kazakh Minister of Industry and Infrastructure Development, Roman Sklyar, has outlined that out of KZT600bn, KZT400bn is allocated to develop the manufacturing and services sector, allowing to produce approximately 250 names of goods and reduce their imports from 82% to 59%. KZT100bn – to fund the agro-industrial complex’s production segment, and the remaining KZT100bn – the agro-industrial complex’s processing segment. As part of the development of economics of simple things, funding of businesses will result in the creation of 16 thousand highly productive permanent workplaces by 2025, being a special social and economic task, as well as tax revenues of KZT1.1bn to the budget, including the reduction in imports from 59% to 37%, a 2.4% contribution to the economy. Between 2019 to 2025, nearly 200 projects in the said sectors will be implemented.

According to him, the five second-tier banks are involved in the programme, with over 30 applications for KZT35bn have been received so far.

The Roadmaps’ actions, created under the development of economics of simple things, include solutions to systematic barriers, aiming at the creation of a full value chain and an increase in production. Speaking of the main directions of the Roadmaps, the Minister has said that in order to ensure the supply of raw materials, actions are envisaged to develop own raw materials base to produce highly marginal products.

“As for the light industry, it means the stimulation of production of cotton fibre, wool, the establishment of synthetic and artificial materials’ production. In terms of construction materials, an analysis of the country’s potential to move to more sophisticated upstream manufacturing will be carried out so to ensure the protection of the internal market, improve the customs administration instruments and technical regulation; low-quality products will be under tight control, including the improved rules for removing and eliminating unsafe products”, Sklyar said.

Additionally, the national standards aimed at improving the quality of goods and services will be worked out, the broad application of which will give way to the safety and competitiveness in the market.

“In general, we are facing a task of developing all these sectors covering a whole technological value chain from raw materials to end products”, Roman Sklyar said during his report at the Government meeting.

As for wool, Kazakhstan has established the production of coarse wool, with further production of felt, insulation, and others. Manufacturing of suits, coats and so on, requires fine wool produced in small amounts in our country. This product will be purchased from the third countries in the short run, with further mass production within our country in the long run.

In his speech, the Minister addressed Kazakh Prime Minister Askar Mamin, outlining the current policy of Kazakhstan’s closest trade partners calls on us to improve the country’s industrial policy.

Saparkhan Omarov, Kazakh Minister of Agriculture, noting that the agro-industrial complex’s main focus is food safety, told that KZT200bn was allocated to fund the agro-industrial complex, including KZT100bn to fund projects in the sphere of processing of agricultural products, and KZT100bn - to agricultural production, which provides the food and other industries with raw materials.

“The Roadmap to develop food industry consists of 6 main parts, including the development of a raw materials base, technical and technological equipment of enterprises, infrastructure and logistics development, scientific support, promotion of domestic products in the internal and external markets. Over the past 6 years and on, the food industry has been observing an annual 11.8% growth. The allocated funds will allow to increase the output to KZT25bn each year, ensuring an upward trend of up to 6% in this sector”, the Agriculture Minister stated.

Next speaker, Chairwoman of the Council of the Financiers Association of Kazakhstan Elena Bakhmutova, mentioning of the last year’s changes to the project to fund priority projects, and this year’s amendments in regard with subsidies in the field of agriculture, has noted a positive trend in the project’s implementation.

So, according to operative information, 116 projects have been submitted for consideration for a total sum of 72 billion 257.4 million tenge, with 8 approved projects for KZT5.9bn. 8 second-tier banks are involved in the project, with 7 already started accepting applications.

“In the structure of projects given, 9 were given in the agro-industrial complex’s processing area, 8 projects – in the agro-industrial complex’s production area, 99 projects - in the manufacturing sector, and 23 - in the service sector”, she informed.

As for the regions, a positive trend is also observed, with entrepreneurs from Almaty being more active (projects for over KZT12bn), followed by Almaty region, among less active regions are entrepreneurs from Western Kazakhstan and Zhambyl and Atyrau regions.

Baurzhan Baibek speaking on behalf of Almaty told that the city had established the raw materials industry, with almost each 7th enterprise involved in this sphere. Production has equaled KZT731.5bn, with the region placed 1st in terms of this area. Projects for KZT47bn are underway following the instructions of Head of State Nursultan Nazarbayev.

“As for economics of simple things, then its output occupies 23.6%, furniture – 4.7%, with a 23% growth or KZT11bn. A clothing enterprise is planned to be underway, that will create 400 workplaces. Products for KZT259bn have been manufactured, some enterprises underwent reconstruction, with further creation of over 300 jobs”, Baibek concluded.

We remind that Nursultan Nazarbayev in the State-of-the-Nation Address “Growing welfare of Kazakh citizens: increase in income and quality of life” stressed that the economy of Kazakhstan should cease to be inert, and therefore domestic producers need to start promoting their products in foreign markets. The President called for the development of “economics of simple things”, which consists in increasing the volume of production of consumer goods and saturating the domestic market with them.

Adlet Seilkhanov

Collage by Kairat Zhandybayev