Builders of Kazakhstan bring their proposals to the consolidated anti-crisis plan of the Government

The National Chamber of Entrepreneurs "Atameken" held a regular meeting of the Committee of construction, building materials and utilities, which discussed the development of the construction industry in the conditions of new monetary policy based on free floating tenge.

The National Association of the construction industry of Kazakhstan by the results of the survey of key stakeholders of the construction market has come to the conclusion that entrepreneurs working in the construction industry didn’t benefit from the devaluation. Partial benefit acquired only a few industrial construction companies and companies exporting products.

In particular, the Association of Builders of Kazakhstan, taking into account the analysis of the current situation and the past experience, came to the conclusion that the recent devaluation may in some way have a negative impact on the construction sector and housing construction.

Members of the Association believe that the decision about the transition to free floating tenge can slow the pace of construction of primary housing, and, accordingly, the effective demand from the population. The conclusion on the slowdown is also applicable in relation to the road, infrastructure and industrial construction.

According to experts of the Committee, the devaluation will increase the cost of imported building materials (steel framework, gauge material, ceramic tiles, elevators, mineral slab, construction equipment, etc.) and, consequently, to an increase in the cost of housing.

Operating with the preliminary calculations, the Kazakhstani Association of Building Materials Industry announces possible increase in the cost of imported building materials for more than 25%, domestic - by more than 10%.

It was noted that today in Kazakhstan are registered 30 548 legal entities, operating in the construction industry, of which only 16 613 are acting ones (54%). The rest of the companies (13 935) are idle. As a result of analysis, streamlining in the industry could reach 30%.

According to members of the Association of Builders of Kazakhstan, during the period from January to July 2015, the average actual cost of  1 square meter in an apartment building in Astana amounted to 200.0 thousand. tenge. Given the current changes in the monetary policy of the state, the average actual cost of 1 square meter amounted to 240 thousand tenge.

Meanwhile, according to the website of the Committee on Statistics of the Ministry of  National Economy of  Kazakhstan, for the budget formation and the allocation of funds for the construction, the average actual cost of 1 square meter in an apartment building equals 128.0 thousand tenge.

In this regard, the budget, provided for 2015, covering the cost and the amount of funds allocated for the construction of housing, taking into account the prevailing rate of  tenge may lead to the suspension of all state orders for the construction of housing due to lack of funds.

However, as it was reported by the representatives of the Holding "Baiterek", 58 current contracts will not be reviewed, the objects under the contracts need to be completed at the same prices, terms, and at the same time.

In view of the above, members of the Committee worked out a complex of measures to support the subjects of the construction market, which will have appropriate multiplier effect.

Experts recommend to adopt a common fixed exchange rate during the conclusion of long-term contracts for supply of  imported equipment, materials and products.

Members of the Committee of NCE consider it necessary to hold operational meetings with the Committee for Construction of MNE of RK, RSE "State Expertise", major customers and contractors to assess the detailed analysis of the impact of the devaluation on different types of construction (civil, industrial, transport, power generation facilities and the oil and gas industry) and develop a common mechanism for compensating the additional costs of the contractor.

NCE also considered it necessary to form a special group of experts to develop mechanisms to reduce the debt burden of the construction business through the restructuring of loans.

Experts recommend to continue the implementation of plans for the construction of housing and transport infrastructure where possible to ensure maximum local content, complete the construction of objects without freezing them.

According to NCE, it is necessary to preserve budgeted for 2016-2017 the volume of state investments and investment programs of national companies.

It is necessary to activate the construction of economy-segment of housing by the analogy with Zhilstroysberbanka program (lending to property developers through ZHSSBK)

It is necessary to allow customers (state procurement, national companies) to pay for the building materials for unfulfilled volume of work on the basis of the price lists of manufacturers or their representatives on all types of building materials and equipment, including domestic ones.

In order to ensure the unconditional commissioning of unfinished objects, to allow customers of construction (state procurement, national companies) to optimize projects by the replacement of equipment and materials for cheaper ones without sacrificing the performance of the objects or the exclusion of certain types of works, supplies or equipment.

It is recommended for the completion of objects of social housing, in case of failing to exclude any kinds of works, supplies or equipment from the project, to compensate the elevated costs  by allocating part of the property to contractors.

To maintain the construction industry it is necessary to ensure the maximum use of local building materials in the construction according to the generated by NCE the Register of domestic producers of building materials and products. It is also important to monitor and to oblige the administrators of budget programs and national companies to enter into agreements for rendering of construction and assembly works and purchase of building materials, equipment and products, strictly with domestic producers and suppliers.

The formulated consolidated proposals will be submitted to the Government of the Republic of Kazakhstan.