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AKTOBE BUSINESSMEN SIGNED 2,200 CONTRACTS TO INCREASE THE SHARE OF LOCAL PRODUCTION IN PROCUREMENT

10 January 2019 - Aktobe Region
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This is the result of the effective work of the Commission on Monitoring of Usage of Local Products and Promoting Domestic Producers.

The Aktobe Region Chamber of Entrepreneurs is actively working to increase the share of local content in the procurement of subsoil users and the public sector. That’s why the regional Chamber holds B2B meetings, open days, meetings, production tours with the participation of local producers. The work is carried out together with the regional akimat.

The Aktobe Region Chamber has created a list of 285 local manufacturers that produce 2,419 items of products. Including a separate list of unique companies: the companies that manufacture the products to substitute for imported ones,  the companies from other regions, design and construction organizations,  construction materials’ manufacturers and food manufacturers.

The Commission on Monitoring of Usage of Local Products and Promoting Domestic Producers was established at the initiative of the Aktobe Region Chamber of Entrepreneurs in 2016. It includes representatives of the Aktobe Region Chamber of Entrepreneurs, government agencies, prosecutors, the department of technical regulation and metrology, public associations and associated businesses.

 “The Commission on Monitoring of Usage of Local Products held 17 meetings with the participation of large subsoil users and local producers in 2018. According to the results of the meetings, over 2,200 contracts with local producers in the amount of about 12 billion tenge were concluded in the public procurement and the procurement of subsoil users,” Didar Borankulov, head of the project support department of Aktobe Region Chamber of Entrepreneurs , said.

As part of the Commission’s work, the experts from the regional Chamber analyzed the coverage of the needs of customers with products of local manufacturers. Thus, the analysis of procurement of eight subsoil users was carried out - Alties Petroleum JSC, Voskhod Oriel LLP, TNK Kazchrome JSC, KMK Munai JSC, Copper Technology LLP, SNPS-Aktobemunaigas JSC. The demand for goods, purchased by the above-mentioned subsoil users, can be covered by the products of local producers for 34.1 per cent of the total volume of purchases of goods.

In addition the experts analyzed the procurement of 10 companies of the National Welfare Fund "Samruk-Kazyna" JSC - Intergas Central Asia JSC, KEGOC JSC, Kazpost JSC, Aktobe International Airport JSC, NC KTZ JSC, Passenger transportation JSC, Kazakhoil Aktobe LLP, Kazakhturkmunai LLP, Temirzholsu-Aktobe LLP, Urikhtau Operating LLP. The demand for goods, purchased by the above-mentioned companies of Samruk-Kazyna JSC, can be covered by the products of local producers by 25 per cent.

 “The possible coverage in demand for local products in public procurement is 31 per cent. In general construction works the share of local product made 72.2 per cent due to the fact that  the share of works in the total cost of construction and installation works is about 60 per cent. Accordingly, the share of materials is 45 per cent, including the potential of Kazakhstani products not more than 70 per cent (of the share of all materials used in the construction and installation works). It is necessary to take into account the proportion of local content in the final product. For example, in the construction of roads, Kazakhstani materials are mainly used: crushed stone, sand, sand and gravel, asphalt concrete, bitumen. The exception is road paint or special plastic and traffic signs (initial components for the production of signs are not produced in the Republic of Kazakhstan). Accordingly, during the construction and overhaul of the roads, the share of local products makes at least 80 per cent,” Vladimir Sukhoruchenko, an expert of the Chamber said.

Since the beginning of 2018, the Commission strengthened the focus on the procurement of construction and installation works of state institutions in order to effectively support a large number of local manufacturers of building materials.

So, in particular, an analysis of the purchase of goods in construction and installation work on facilities financed by budget programs showed that the materials used in construction are purchased from local producers: crushed stone, sand, sand and gravel, asphalt, asphalt concrete, bricks, reinforced concrete products, polyethylene pipes, plastic windows, manholes, etc. Cement due to the fact that transportation costs for the delivery of cement from other regions of the Republic of Kazakhstan affect the cost of production (railway tariffs, delivery time, etc.) were mostly purchased from the border regions of the Russian Federation. Also due to the fact that there is no metal rolling, timber, channel bars, sanitary products in Kazakhstan they were also purchased abroad.

To support local and domestic producers in the production of building materials, an analysis was conducted to determine the availability of materials for construction projects financed by budgetary funds. In addition, the Commission on Procurement holds retreats in the production areas of manufacturers with the participation of customers and domestic producers.

In addition, the Commission holds manufacturers’ presentation tours, Open Days, exhibitions of goods, works and services of local manufacturers, B2B meetings, regular meetings to discuss issues.

In particular, Open Days were held at SNPS-Aktobemunaygas JSC, TNK Kazchrome JSC, Aktyubinsk Copper Company LLP, C opper Technology LLP, Kazgeorud LLP, Voskhod Oriel LLP, Altynex Company LLP, Alties Petroleum LLP, ADA Oil LLP.

On the results of these actions the contracts worth more than one billion tenge were concluded. Basically, there were purchase contracts to buy clothing, coolants, technical oils, chemicals, pipeline parts, etc.

“In addition, SNPS-Aktobemunaygas  JSC agreed to hold an annual two-stage purchase of food products, which at the first stage provides for consideration of applications from local producers, and in their absence, from other manufacturers. According to the results of the purchases for 2018, the Company purchased  local food products in the amount of over 600 million tenge,” the head of the project support department of the Aktobe Region Chamber of Entrepreneurs, Didar Borankulov said.

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