NCE urges furniture enterprises to consolidate

The NCE of RK "Atameken" will establish a register of enterprises of the furniture industry, which will reveal the real operating companies within the industry.

This was announced during the second session of the Sub-Committee of the furniture manufacturing industry of the Committee of the Manufacturing Industry of the National Chamber of Entrepreneurs of Kazakhstan "Atameken" by the head of the Secretariat of the Committee of manufacturing Industry of the Chamber Nurlan Sakuov.

According to him, the establishment of such a register, which the Secretariat began to form in June of this year, will serve as a consolidation of the companies of the furniture industry. The statistics of  the Statistics Committee of the MNE RK, the State Revenue Committee MF RK were taken as a basis. Also, the Secretariat requested the Regional Chamber of entrepreneurs to conduct a survey that would show the real picture on the number of furniture companies in the regions.

According to Nurlan Sakuov the Association of Furniture and Woodworking Industry of the Republic of Kazakhstan is accredited by NCE RK Atameken, which includes about 30 companies, mainly, they are stationed in the city of Almaty and Almaty region. In Kazakhstan by the condition on August 1, there are 685 furniture enterprises.

"In today's conditions, the role of industry associations in consolidation of enterprises has greatly increased, which, indeed, could be a leader and could unite furniture enterprises in all regions to tackle industry problems", - said the head of the Secretariat of the Committee of the manufacturing sector, adding that as of 2015 NCE actively transfers part of its functions to established associations.

The national furniture manufactures have enough problems. It was noted, that the current situation in recent years, due to the global fall of oil prices, the increase of import of goods, including furniture products from Russia, has led to a drop of sales of furniture, manufactured by domestic enterprises of the furniture industry.

Currently, the Chamber, including the Secretariat, conducts daily monitoring of risks, possible losses in connection with the establishment of a floating exchange rate of tenge. The need for this work was approved by all the participants of the meeting of the Subcommittee of the furniture industry. It was noted that the acute need for such work is crucial in connection with the processes of accession to the WTO, which may also bear the increased risks of losses for domestic producers.

The chairman of the Committee of manufacturing industry NCE RK "Atameken", the president of the Association of Furniture and Woodworking Industry of the Republic of Kazakhstan, Mikhail Glukhov said what hinders the development of the furniture industry in the country.

"Since the establishment of the Customs Union, Kazakhstani furniture manufactures have strengthened their position in the domestic market. If earlier the share of domestic enterprises accounted for about 30%, according to statistics, and independent experts, today it is possible to speak about  40 to 60%. Why did this happen? In my opinion, thanks to the joint efforts of the Association of furniture enterprises, government agencies and NCE, there were created conditions for the development of domestic production against imports. It is, first of all, those protective factors that have played a role in the CU", - said Mikhail Glukhov. He added that it was possible to stop smuggling of furniture from China, Poland, Italy and other countries. During the development of a common customs tariff there was determined a zero rate of customs duties for many component items.

One factor that strengthened the position of domestic producers in the domestic market and reduced the amount of contraband of imported furniture, was the joint work of the Association and the Secretariat to develop recommendations for the customs authorities to improve the system of risk management, which provides enhanced forms of control and detection of cases, when the furniture was imported to Kazakhstan under cover.

"All this in the presence of a specific duty rates on finished furniture created additional conditions for domestic producers. As a result, we estimate that about 10% of the domestic market, we managed to "recapture" in the competition with their colleagues from other countries. The main battle is unfolding between importers of finished goods and domestic producers", - said the head of the Association.

He noted that the existing zero rates of customs duties on Kazakhstan's accession to the WTO will positively affect the development of the manufacturing industry, including furniture.

However there are problems, which face domestic furniture manufacturers. Thus, Mikhail Glukhov asked state agencies to consider the possibility of reduction of railway tariffs on transportation of plate materials. According to him, these concessions are applied only in relation to individual companies, that, in fact, is unfair and does not solve the problem.

"We need to provide special railway tariffs for board materials. We consume them in large quantities, about 400 thousand cubic meters, it is a huge number of carriages, they are transported to the distance of three thousand kilometers, mostly to our customers - Russian and Belarusian refineries, and, of course, shipping costs is a heavy burden on the cost of finished products, affecting our competitiveness", - lamented the entrepreneur.

Mikhail Glukhov also focused on some problems that need to be addressed in the near future.

"For years, we are talking about the reform of the taxation of SMEs. The situation in this area, unfortunately, can’t be solved as there is no discussion, which poses a big concern. Today in the taxation field there is no flexibility, which would take into account the real possibilities of business, during calculation of a rate of the tax burden. We would like to have a discussion with state authorities at the platform of NCE to address this issue comprehensively", - said the head of the Association.

On the problems of participation and receipt of orders for the furniture industry enterprises in public tenders, tenders of quasi-state enterprises and subcontractors said the director of "Tornado Plus” Igor Protsenko.

According to him, public procurement is often conducted with violations.

"Today, everyone has the status of domestic producers. To participate in the public procurement it is enough to purchase a certificate CT KZ”, - he said.

He also raised the issue of the use of conditional discounts when participating in public procurement, as the law allows to compete with unscrupulous players of the market.

"But the fact that the application of these discounts is not regulated and doesn’t take into account such factors as the length of participation in the market, the number of employees in the company, the tax burden, the positive experience of completed projects, the availability of certified production and products, letters of recommendation, etc."- said the businessman.

Igor Protsenko also drew attention to the need to implement the procedure in public procurement - an instrument such as a field survey of the potential supplier by the commission, which will confirm the status of the producer, and thus will help to compete with pseudo-entrepreneurs, the number of which increased lately.

As it was stated by Nursultan Saymasay, the head of the construction industry and wood processing industry of the Committee of Industrial Development and Industrial Safety of the Ministry of National Economy of Kazakhstan, there is an order given to state agencies to buy domestic goods to the maximum. According to him, if the bypass domestic producers bought products from abroad, entrepreneurs need to report these facts to NCE.

The issues of participation of domestic producers in the construction of the international exhibition “EXPO-2017”, including participation of furniture manufacturers were discussed at a meeting. Currently the discussion is being held with general contractors, who are working in this direction. According to Nurlan Sakuov, there is a plan to support domestic producers, there was created a list of companies wishing to participate in the construction of EXPO, which will be directed to the company itself, as well as the Akimat of Almaty within the framework of the participation in the upcoming construction of Winter Universiade.

By the way, the Ministry of Investment and Development, together with NCE, other government agencies develops road map for the development of the furniture industry, with which will enable solution of many problems of the industry.

Participants of the meeting also discussed the creation of furniture parks in regions (industrial zones), which have the largest number of furniture companies, reducing costs in the supply of raw materials for domestic producers, paying utility monopolies (electricity, w / d transportation). Touched upon the issues of increasing the Kazakhstani content in the procurement of goods by state bodies and quasi-government enterprises, as well as the volume of exports of the furniture industry, and the introduction of tariff and non tariff measures of protection of domestic producers.

"In this direction, we plan to work with government agencies. As the best international practice shows, the most effective solution in such a situation is consolidation of enterprises, the creation of a single authority for the collection of problematic issues, their analysis and the development of solutions for localization of problems, development of industrial enterprises", - concluded the head of the Secretariat of the Committee of manufacturing industry NCE RK "Atameken" Nurlan Sakuov.

Karlygash ZHUSUPBEKOVA