Representatives of business and state agencies discuss issues of SPIC reception
Since January 1, 2019 the Investment Committee has been assigned to the Ministry of Foreign Affairs of the Republic of Kazakhstan. The Committee has retained the function of concluding Special investment contracts (SPIC) provided for by the Business Code. However, in fact, it is not performed.
A number of companies in the manufacturing sector, including agricultural machinery manufacturers (the Kazakhstani Afro-Innovation Corporation, KazKioti, Vector) and enterprises of light industry (residents of the Ontustik FEZ) are under attack. The companies applied to conclude SPICs but their applications have not been considered or renewed for several months. Consideration of some applications has been delayed since October 2018. Whereas, according to the rules, a contract must be signed within 15 days or the applicants should be given justified rejection.
According to the Investment Committee of the Ministry of Foreign Affairs of the Republic of Kazakhstan, a draft Government Decree on the transfer of the right to sign SPICs to the Industrial Development and Industrial Safety Committee of the MIID RK is currently in the process of approving by state agencies. The agencies had previously had long negotiations. However, business cannot wait.
An open discussion of the problem was held on the platform of the Atameken with the participation of representatives of the Investments Committee, interested enterprises and industry associations.
“Manufacturers of agricultural equipment have been left idle or working for a warehouse for 3 months. The season of sowing has come but the contracts with agricultural producers are falling apart. Price increase in the amount of VAT is unacceptable. The Investment Committee unreasonably delays the consideration of applications, which is confirmed by the conclusions of the MIID RK and the MNE RK,” Esirkep Abdrakhmanov, the chairman of the KazAgroMash ULE, said.
The preferences for VAT and customs duties are provided under the special investment contract. At the same time, agricultural machinery manufacturers are liable for the localization of production in accordance with the Industrial Assembly Agreement.
“We are proposed to conclude a SPIC for 3 months, although the law provides for a period of up to 15 years, which corresponds to the term of the Industrial Assembly Agreement. There are no grounds for applying a 3-month period, and it contradicts the duration of production cycles,” Serikbay Chegeev, Development Director of the Kazakhstani Afro-Innovation Corporation LLP, said.
The argument that such a short term contract is adopted in connection with the transfer of functions to another department is not consistent, since earlier it was assigned to the Investment Committee.
The urgent conclusion of the SPIC is also advisable given that the procedure for applying customs exemptions (clause 7.1.11 of the Decision of the Commission of the Customs Union No. 130 of 27.11.2009), which was previously planned to be introduced from January 1, 2019, is currently under additional study in connection with the proposal of the Belarusian side.
In addition to agricultural machinery manufacturers, enterprises of light industry found themselves in a difficult position.
“The situation in the Ontustik free economic zone is critical, we risk losing both national and foreign investors in the sector of light industry. An urgent decision on the submitted applications by our enterprises is needed,”Yerbolat Sariev, director of the Strategic Development Department of the Ontustik Free Economic Zone, said.
The problem inevitably has a social aspect.
“The fate of several thousand employees of our enterprises is under threat. In addition, agreements with large TNCs on attracting investments are falling apart, ” Elmira Akimbayeva, managing director of KazKioti LLP, said.
Unfortunately, the meeting participants failed to get a clear answer from the authorized agency once again.
“As we see, there are no barriers to delaying consideration of applications by enterprises. Given the urgency of the issues raised and the high risks for domestic business, if the issue is not resolved by the Investment Committee in the very near future, the National Chamber will have to contact the Government and the Agency of the Republic of Kazakhstan for Public Service Affairs and Anticorruption with an appropriate appeal about the omission of the authorized state agency,” the deputy Chairman of the Board Kuanysh Bishimov said.
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