Proposals of “Atameken” on import substitution were included in SPFIID-2

At the National Chamber of Entrepreneurs of Kazakhstan "Atameken" was held a meeting of the working group on import substitution with the participation of JSC "Kazakhstan Industry Development Institute", JSC "National Agency for the development of local content "NADLoC", JSC National Agency for Export and Investment “KAZNEX INVEST”, as well as other sectoral business associations.

Deputy Chairman of NCE Nurzhan Altaev noted that due to the difficult economic situation, now we need to make more effort in order to help local companies to promote their products on the domestic market. In this regard, NCE works hard. So, last year were held dozens of meetings with all national companies and domestic manufacturers from different industries. According to Altaev, despite the fact that the memorandums were signed with the quasi-public sector, business associations criticize their execution.

"In this regard, the National Chamber develops a normative legal document - Concept, which will spell out specific measures of state support for businesses involved in import substitution", - said Deputy Chairman of the Board of NCE. According to him, the concept consists of two areas: support for existing domestic manufacturers (priority in public procurement, procurement of national companies and subsoil users, the development of industrial cooperation) and development of "niche" investment projects.

To determine the directions of the work, the Chamber studied the experience of the Russian Federation, where sectoral programs are designed with indication of specific goods and buyers in quasi public sector.

 "NCE RK "Atameken" has developed proposals for the development of the competitiveness of domestic enterprises, and stimulation of the demand at the domestic market under the program SPFIID-2. Thus, it is proposed to develop a road map showing quantitative indicators of decline in the share of imports for particular commodity items", - said Nurzhan Altaev.

According to him, in view of these amendments, NCE together with industry associations will be able to identify a specific work plan to increase the proportion of local content in certain sectors, which in the future will be approved by order of the Minister. So, the sectoral road maps, developed by the Chamber, will spell out specific items and the volume, which the national company should buy from them.

NCE RK identified priority products at the level of 10 digits of FEACN codes based on three main factors of import - the largest volume of imported goods, the presence of domestic producers of these goods and economic feasibility.

A preliminary list includes 102 items of goods that have the greatest potential for import substitution. For example, in steel industry - 17 goods, in the chemical industry – 8 goods, in engineering – 27 goods, in light industry – 12 goods, in food industry – 9 goods, in the packaging industry – 6 goods, for the production of building materials - 16 products. NCE together with LLP "Center for monitoring and market expertise" held procurement analysis of subsoil users, government agencies and quasi-public companies in order to identify the main consumers of the identified priority products. Total consumption of manufactured goods amounts in Kazakhstan to 23 220 billion tenge, of which 45% is for domestic goods and 55% for imported goods.

Within the developed approach for import substitution, we plan to reduce the share of imports in the manufacturing sector to 25% by 2020 by increasing the share of local content in the procurement of public and quasi-public companies, subsoil users, as well as the development of industrial cooperation.

Altaev also stressed the importance of industrial cooperation between sectoral business associations. "In this regard, we have started work on identifying the needs of industry associations and industrial enterprises in goods of the manufacturing industry: clothing, footwear, household chemicals, building materials, etc.", - he said.

According to the results of the meeting of the working group, there were reached agreements that "Atameken" together with industry business associations make proposals to JSC "KIDI" regarding industry roadmaps and the required support measures based on voiced import substitution approaches. NCE together with the "KIDI" will work with the Ministry of Finance on the issue of funding under SPFIID-2: lending to buyers of Kazakhstani products and compensation of 40% of transport costs. NCE RK jointly with JSC "Kaznex-Invest" and JSC "NADLoC" will study the issue of organization of negotiations between producers and retailers with a view to establishing cooperation between retail chains and domestic producers.

At the same time, it was decided during the meeting to consider the participation of the Business Ombudsman in the process of resolution of disputes that arise in the procurement of domestic producers.