Russia is ready to supply this raw material to Kazakhstan, but in reality it created its artificial shortage

Kazakh processors of polymers discussed commodity issues at the site of the National Chamber of Entrepreneurs of Kazakhstan "Atameken". The meeting was headed by the Deputy Secretary of the Committee of manufacturing industry  Batyrbek Aubakirov.

"The Governments of Kazakhstan and Tatarstan signed a memorandum on cooperation. There have been identified discussed issues of polymers in the memorandum. Some businesses have complained that there are serious problems with raw materials. In this regard, the Government of Tatarstan organized a forum in Almaty this summer. Tatar companies offered to specify the problems and to create conditions so it is easier for them to deliver products to Kazakhstan, and they, in turn, will provide preferences", - he said at the beginning of the meeting.

Aubakirov immediately outlined the main problems of the industry. According to him, the main issue is that there are not enough raw materials, in principle, for all processors of EAEU. In Kazakhstan, there is only one company that produces a single type of polymer - polypropylene. It is Pavlodar "Neftochim".

"Prior to joining the Customs Union, the tariff rate on imports of raw materials was 0%. After creation of CU it jumped to 10%. That is Kazakh refiners are driven in such conditions that we can buy raw materials only in Russia. The Russian government has said that they have their own large-scale production, which can saturate the Kazakhstan market, so we decided to wait and to see how things develop. Now the situation is such that there isn’t enough raw materials for refiners of Kazakhstan", - he said.

The second problem, according to the moderator of the meeting, is the high cost of raw materials. "There are intermediaries, who sell raw materials, which don’t depend on oil prices. The price of oil fell, then commodity must get cheaper. But it remains the same. The third problem is a 100 percent prepayment, which creates additional difficulties in trade", - he said, and asked the participants of the meeting to express their views on this issue.

According to Kayrbek Bergalipov, the representative of the Almaty factory of polyethylene pipes, the most urgent problem is return to the 6.5 percent rate of duty on the black polyethylene pipes for foreign countries.

"Accordingly, we should expect an increase in prices for raw materials from foreign countries. I openly say, the Russians, without thinking twice, adjust their prices to the European level, due to the large demand and the lack of raw materials in Kazakhstan. Mazhilis interfered in this matter, as a result there was issued a decision, to provide grace period until January 1 on the basis of licenses for manufacturers to obtain raw materials from foreign countries at a zero rate. It applies only to black, although we have a great need in white polyethylene. I stand for the complete abolition of duties on white and black polyethylene", - he said.

"I'm ready to buy it from Russians. It is not more than two weeks, quick transportation by trucks", - said the businessman.

The moderator asked him the question, what is the role of NCE RK in solution of these problems? "The role is very big. There are professional associations, but there is no single approach. The market is common, as it is production. I think we need to team up with professional associations and to develop a common strategy", - said Bergalipov.

"In January we paid 295 tenge per kilogram, now, given that it is not the season, the price is 545 tenge. Can you imagine what will happen to the price, when we introduce a 6.5 % duty? This is a serious moment, it is necessary to raise it to the level of the Government", - he stressed.

Batyrbek Aubakirov, in turn, noted that the problems voiced by businessman are not only problems of manufacturers, but also concern packers, transporters and manufacturers of electronics, medical industry, agriculture, it is a general question.

"There are lots of companies that buy polymers from intermediaries by 10-20 tons per month because of the fact that they can’t buy directly from the plant - producer of raw materials. It is necessary to solve this question. We offer to minimize the influence of intermediaries that keep the price high and hinder the development of domestic production. In this connection, NCE need to present an application for a dingle order. Tatar partners ask us to give them one general application for an order, and they will give us a good discount and a guaranteed supply", - he said.

Nurlan Ramazanov, representing "Astana polymer", also expressed his opinion. "That's right to raise the question of the abolition of customs duty as it relates to the project “EXPO-2017”. If polyethylene is expensive, it certainly affects the cost of production. Well, we are ready to buy big volume of commodities from Russia, but I have a question, how to pay for it and who will pay? Unfortunately, we are all dependent on the state. If the government delays the payment to us, then we delay as well. Who is willing to pay for it and to ensure that this volume will be delivered? Everyone is ready to order in Kazan and Nizhnekamsk. But who will pay for it? This year the budget was adopted very late, payments are late, and we are all hostages of this situation", - he said.

The entrepreneur said that the Russian manufacturers of polymers fix prices that are not much cheaper than the European, but the quality of raw materials is inferior.

The representative of the Almaty plant “Plast Invest Production” Darkhan Rakhimgaliev said that Russian producers of raw materials create an artificial shortage. "While we do not place an order, all 4 major manufactures simultaneously close their plant for repair, inspections and so on, thus creating an artificial shortage for Kazakh producers. Then they will raise prices. We are now ready to buy raw materials in Russia for 100 percent payment, but they create an artificial shortage", - he said.

In conclusion, Batyrbek Aubakirov addressed to all entrepreneurs, assuring that NCE will support them. "I propose to study the issue of creating a single procurement mechanism. This alternative instrument of reduction of the customs duty to 0 %. Offer your solutions. NCE RK fully supports you and protects you in this situation", - summed up the representative of NCE RK.