For 5 months of 2021, domestic trade grew by 15.8% compared to the same period last year — Bakhyt Sultanov

Minister of Trade and Integration of Kazakhstan Bakhyt Sultanov, within the framework of a reporting meeting with the population, reported on the results of the department's work for 2020, as well as plans and tasks for 2021.

According to him, despite the fact that the decline in GDP by the end of 2020 had a negative impact on many sectors of the economy, including in the field of trade, 2021 began with an increase in key economic indicators. Thus, the growth of the sphere of domestic trade, as well as the volume of non-resource exports, is gradually recovering.

Speaking about the plans of the ministry, Bakhyt Sultanov noted 5 main areas of activity, the first of which is internal trade.

Against the background of a noticeable decline in the industry's indicators, due to the adoption of quarantine restrictions, there is a gradual recovery in activity in domestic trade. For 5 months of 2021, domestic trade grew by 15.8% compared to the same period last year.

“The strict quarantine, which we were forced to introduce during the emergency period, led to a complete halt of trade and other facilities. During this period, we lost more than 1 trillion tenge of trade turnover. However, an important characteristic of today's indicators is that for five months of this year we are already 0.5 trillion tenge ahead of the pre-pandemic 2019 indicator,” said the minister.

Trade is a key sector of the economy with a share in the structure of GDP of about 14.7% in the first quarter of this year. As a result of the pandemic, the share of trade has decreased and therefore now special attention is paid to its development.

In 2020, the physical volume index in comparison with 2019 decreased by 14.4 percentage points. and amounted to 92.7%. But in the first 5 months, according to preliminary data, there is a recovery and real growth in trade amounted to +6.7 percentage points. compared to the previous year. The growth dynamics of the industry is positively influenced by the weakening of quarantine and restrictive measures as a result of mass vaccination of the population. This is confirmed by forecasts of world experts.

According to the IMF forecast, in 2021, in the leading countries in terms of vaccination rates with a share of the vaccinated population of about 50%, the economy is expected to grow at the level of 5.7%. At the same time, in developed countries, where no more than a quarter of the population is vaccinated, the economy is expected to grow at 3.3% this year.

“Kazakhstan is no exception, while, according to the IMF forecast, we are expected to have economic growth of 3.2%. If the population is more actively vaccinated, then, accordingly, the growth rates of the economy in general and trade, in particular, will increase in our country,” he said.

The anti-crisis measures to support business last year made it possible to largely offset the decline in the trade sector. So, for example, in 2020, for the period of an emergency in the country, the regional akimats carried out work with 473 shopping centers and 337 markets for the release and reduction of rent for small and micro-businesses.

Despite quarantine and restrictive measures, in 2020 it was possible to attract investments in trade totaling 181.7 billion tenge. Since the beginning of the year, there has been a significant revival of investment activity.

For 5 months of this year, investments in trade amounted to 142 billion tenge, which is 20.1% more than the same period in 2020 (in 2020 — 117.4 billion tenge) and exceeded the level of 2019 (in 2019 — 127.8 billion tenge).

The trade sector plays an important role in providing employment for the population. The recovery in industry activity has led to an increase in the number of employees. In the first quarter alone, the number of employees increased by 20.8 thousand compared to January-March 2020, and by 57.3 thousand people compared to the first quarter of 2019.

Currently, almost 1.5 million people work in the field of trade, which is 16.6% of the total employed population of the country.

The Minister of Trade and Integration also noted that the task of the ministry is to form a balance of interests of all participants in the value chain: manufacturers and traders, logisticians and transporters, sellers and, finally, consumers. To ensure this balance, a clear coordination of all processes is required, as well as free and open competition between players at all links in this chain. Only then can the trading system provide fair, reasonable and predictable pricing on the shelves.

Violation of such principles has exposed problems with the impact of the pandemic. This has led to an explosive rise in the cost of food over the past year and a half. The government tried to react in a timely manner and adopted a Roadmap to stabilize prices for socially significant food products, which defines measures to address three systemic tasks:

  1. saturation of the market with goods;
  2. well-coordinated interaction of participants;
  3. systematization of all work through the development of infrastructure.

“A striking example of a lack of coordination is the recent shortage of potatoes. The imbalance in the market, when the autumn potatoes have already ended in the north, and a new crop has been harvested in the south, should be regulated by a timely interregional flow. Including due to forward purchase — booking by one or another region of the volume of goods necessary for consumption even at the sowing stage. Local executive bodies have resources for this,” Bakhyt Sultanov said.

The systemic saturation of the market is also facilitated by measures to stimulate the production and processing of goods in high demand - this is the task of the sectoral government agency and it is reflected in the Roadmap.

The main goal of all structural changes in the trade sphere is to ensure free competition, barrier-free movement of goods, uninterrupted and predictable trade flows, primarily food. Correct debugging of the entire system will adjust the imbalances between the players and form a fair pricing, the minister said.

“From the first days of independence, Kazakhstan has been developing on the principles of a market economy. It is built on such basic principles as private property, free enterprise and market pricing. In exceptional cases, there is a forced administrative tool to intervene in the market — setting price caps. We had to resort to it last year with the start of the pandemic. Then, on the rush wave, prices soared all over the world. These measures worked: we managed to provide the domestic market with food, we did not allow a deficit,” he explained.

Thanks to vaccination, economic activity is gradually recovering both in Kazakhstan and in the world. And now the main task is to return the market to healthy competition and balanced pricing. The transparency of all processes will be ensured through the creation of a modern trade infrastructure.

Starting from 2020, the creation of the National Commodity Distribution System has been widely discussed with the public, farmers, and retail chains. Considering that the private sector is involved in this process, the investor's initiative took a long time to undergo expertise in government agencies. And only now is the process of reaching the stage of signing a PPP agreement underway.

The National Commodity Distribution System will consist of 24 wholesale distribution centers. At the first stage of the project — 7 objects, these are:

  • 4 wholesale distribution centers for storage. In the area of ​​the cities of Aksu and Michurino (Pavlodar region) for receiving potatoes and carrots. In the area of ​​the cities of Kapshagai (Almaty region) and Shu (Zhambyl region) — for receiving onions.
  • 3 wholesale distribution centers for distribution. In the cities of Nur-Sultan, Almaty and Shymkent — for the supply of products to local retail chains, online stores and other wholesale buyers.

A single information system will become a key part of the ecosystem of the National Distribution System. It will allow ensuring the transparency of commodity flows, balancing the demand and supply of goods in the domestic market.

The ministry is currently working on an analytical platform for supply chain modeling. It will help to see the situation with production, forecasts for consumption in the regions, surpluses or risks of shortages of a particular product, and the pricing process. This information will allow, if necessary, to take measures to balance the market in the interests of all participants.

The second direction of the ministry's activities is consumer protection.

In 2020, more than 20 thousand complaints of Kazakhstanis were considered (3.5 times more than in 2019). About 250 million tenge were returned. For example, according to the initiated claims against the Bek Air airline, the rights of more than 1.7 thousand consumers are protected for a total amount of more than 110 million tenge.

Since the beginning of 2021, more than 6 thousand applications have been considered and more than 70 million tenge have been returned to consumers.

The largest number of complaints is about the quality of services in the areas of transport, retail trade, household and tourism services. In this regard, the 1st package of amendments to the Law "On Protection of Consumer Rights" was adopted in 2020 to protect and promote the economic interests of consumers.

As a result, a three-stage mechanism for considering consumer complaints was introduced, "state" control and a list of human rights defenders from among professionals was formed. Along with this, the status of consideration of consumer problems was raised to the Interdepartmental Council under the Government.

Legislative changes have allowed us not only to expand the tools of public control, but also motivated businesses to satisfy consumers' claims on a “here and now” basis.

For 5 months of work, it was possible to promptly solve the problems of 153 consumers in a pre-trial order. This was facilitated by the information system for receiving complaints on the principle of one window — e-Tutynushy, launched this year. Today, this platform allows you to track consumer complaints by industry, subject of dispute, and subjects of consideration. This, in turn, makes it possible to form various analytical data, identify and solve systemic problems in all spheres of citizens' life.

“This year we started developing a draft concept for the second package of amendments to the Law 'On Protection of Consumer Rights’. It involves the elimination of legal gaps, vague norms that have different interpretations in law enforcement practice. There are still gaps that make it difficult for consumers to understand their rights, and for businesses to understand their responsibilities,” Sultanov informed.

The pandemic has highlighted the need for improved e-commerce rights protection. In 2020 alone, 689 people contacted the ministry with complaints about the actions of online stores and the unfair provision of online services. As a result of the measures taken, 13.2 million tenge were returned to consumers.

For five months of 2021, 556 Kazakhstanis filed complaints, who were returned about 7 million tenge. In this regard, the draft concept provides for a separate section dedicated to strengthening the protection of consumer rights in electronic commerce. The rights and obligations of e-commerce participants will be clearly defined.

It is expected that the ongoing comprehensive work in this direction will ensure a more active involvement of civil society in the process of protecting consumer rights. It will also stimulate entrepreneurs to improve the quality of goods and the level of business culture, and will increase consumer satisfaction with the protection of their rights to 80% by 2025.

Technical regulation was highlighted by the Minister of Trade and Integration as the third area of ​​activity.

“The standardization and certification systems are also called upon to stimulate the growth of product quality turnover. On July 1, the new Law on Technical Regulation will come into force. The law creates an institute for market surveillance, which will work according to the ‘detection - testing - withdrawal from the market’ scheme,’’ the minister said.

A procedure for taking samples of unsafe products for laboratory testing is being introduced. At the same time, products will be monitored online — through information systems of certification and accreditation.

Subsequently, electronic certificates will be integrated with the general processes of the Eurasian Economic Commission. The innovations will ensure transparency and efficiency of control and supervisory activities in the field of technical regulation.

In order to inform the business community and consumers about the new legislation, extensive information and explanatory work was carried out everywhere. More than 100 events took place, including briefings, TV appearances, publications on social networks. Thus, there is a high readiness of the business community to introduce new approaches in the field of technical regulation and metrology.

As Bakhyt Sultanov added, the ministry pays great attention to the development of modern laboratory facilities. During the current year, several unique laboratories have received accreditation in Kazakhstan.

On the basis of Seifullin Kazakh Agrotechnical University opened a Kazakh-Chinese laboratory for biological safety, created to eliminate mutual technical barriers to trade. It is included in the list of laboratories "One Belt, One Road" and plans to obtain accreditation in the PRC.

In the coming years, the university is preparing two more laboratories for accreditation. One — for zootechnical analysis of feed and milk. The second is for controlling food safety of raw materials and food products. Previously, these studies were carried out by Kazakhstani entrepreneurs abroad.

This year, a testing laboratory for electromagnetic compatibility began to work, testing various types of equipment for safety — an anechoic chamber (BEC). There are no analogues of BEC in the CIS.

The opening of such laboratories in Kazakhstan allows Kazakhstani business to cut time and financial costs by at least 3 times. In addition, the presence of laboratories allows timely and high-level testing of imported products, excluding the handling of counterfeit and unsafe products.

Cooperation between cement manufacturers and the Sapa Intersystem testing laboratory has led to the creation of the first fully equipped cement testing laboratory in Kazakhstan. This will help protect the domestic market from imports of unsafe and low-quality products. Sales to domestic producers will also be provided.

The fourth direction of the ministry's activity is export.

The economic and social unrest caused by the COVID-19 virus has had a profound impact on global trade. According to UNCTAD, in 2020 the volume of international trade decreased by 9%: trade in goods — by 6% and trade in services — by 16.5%. At the same time, the foreign trade turnover of Kazakhstan in 2020 increased by 13%, the export of non-primary goods and services decreased by 13.5%.

“Quarantine restrictions and supply chain disruptions have led to a drop in demand for non-food products by nearly 20%. At the same time, lockdowns affected agricultural trade to a lesser extent. Rush purchases of basic food products by countries allowed to increase the export of Kazakhstani processed agricultural products by 18.1%,” said the minister.

To ensure the stability of the domestic market and the projected volume of exports, it is planned to conclude forward agreements with neighboring countries (Kyrgyzstan, Uzbekistan, Tajikistan, Iran and the Russian Federation) on the mutual supply of potatoes, onions, carrots and cabbage in the off-season and during the harvest period.

During the period of mass harvest, Kazakhstan can supply about 765 thousand tons of vegetables to neighboring countries. At the same time, the domestic market will be timely supplied with 280 thousand tons of imported early vegetables. As a result, the expected dynamics of price fluctuations for these products will be in the range of 7-10%.

In general, the ministry's proactive export policy is helping to increase non-resource exports. The department has identified 16 priority types of products with a forecast of an increase in exports by $13.5 billion. With each exporter, the process is being worked out literally "in manual mode.»

So, a couple of weeks ago, the Ministry of Trade and Integration of the Republic of Kazakhstan, together with the Embassy of the Republic of Kazakhstan in Qatar, helped to remove the export barrier to the Kazakh producer of halal meat products — the Pervomayskie Delicatesy company (stewed beef and lamb, sausages, semi-finished meat products: sausages for frying, beef steaks, cutlets). The company entered into a long-term contract for the supply to Qatar, and the first batch went through all import procedures in Qatar without any problems. However, the second batch got stuck for unclear reasons at customs. Together with representatives of the Foreign Ministry, the issue was clarified. As a result, the company was able to fulfill its obligations under the contract. Currently, the products of the Kazakhstani company Pervomayskie Delicatesy are sold on the shelves of Qatar.

Today there are about 600 active exporters in Kazakhstan. The task is to increase their number to 1,000 in the next 3-4 years. For this, work is being carried out to support exporters.

First. In 2020, on the basis of QazTrade, a new tool for supporting entrepreneurs was launched — an export accelerator. Its main task is to provide support to SMEs in intensive export development and accompany them all the way to entering new markets.

“Last year we chose the Chinese direction and trained the food industry enterprises. About 500 companies applied for participation, of which 35 manufacturers with the highest export potential were selected. As of today, according to the results of the work carried out, there are about 18 potential contracts worth about $167 million,” Bakhyt Sultanov said.

At the same time, in the course of acceleration, the problem of insufficient production volumes arose. In particular, the demand of Chinese companies for meat products, vegetable oils, sauces and salt exceeds the current capabilities of Kazakhstani participants in the program by 4 times. For example, the annual demand of a large company Luqioa Food Company (Shandong Ave) in frozen beef is about 70 thousand tons, in dry camel milk - 16 tons. Therefore, this factor should lead to an increase in production volumes.

The growth of exports is facilitated by conducting business missions. The result of the first business mission since February 2020 in Dushanbe was the signing of 5 agreements and memorandums for $81 million, including the supply of 4 locomotives and electric transformers.

By the end of this year, it is planned to conduct 9 more trade missions in countries with a favorable epidemiological situation.

Second. Since 2019, a tool has been introduced to reimburse exporters of processed products for the delivery of goods from the manufacturer to the importer. Thanks to the support of about 300 enterprises, they began to supply their products over longer distances. For example, the reimbursement helped with the supply of flax and rapeseed to Belgium, and metallurgical products to Japan.

In order to establish optimal options for the supply of priority export products, the ministry has begun work on the formation of cross-border hubs. In the development of modern cross-border trade and logistics infrastructure, the main "points of growth" will be the Khorgos junction on the border with China and the International Center of Trade and Economic Cooperation ‘Central Asia’ on the Kazakh-Uzbek border. Similar centers will be created on the border with Kyrgyzstan and Russia. This will ensure the coordination of goods, cargo and services along the East-West and North-South axes on international corridors passing through the territory of Kazakhstan.

Exporters also receive preferential loans and export insurance. To date, Kazakh Export has insured contracts for more than 200 exporters for almost 300 billion tenge. Through the Development Bank of Kazakhstan, 170 exporters received concessional loans for over 370 billion tenge.

“At the same time, the deputies raised the issue of the effectiveness of the activities of national institutions to promote non-resource exports. It should be noted that Kazakh Export is the only specialized insurance organization in the republic performing the functions of an export credit agency. It provides exporting enterprises of the manufacturing sector and second-tier banks with insurance protection against the risk of non-payment in foreign trade operations,” Bakhyt Sultanov explained.

The increase in the authorized capital of Kazakh Export directly affects the growth of non-resource exports. So, the formed authorized capital in the amount of 105.1 billion tenge made it possible to ensure export earnings in the amount of 326.3 billion tenge, or the efficiency was 1 to 3.

For the expansion and development of export directions, extensive opportunities of Internet trade are actively used. Compared to 2019, in 2020 the e-commerce market increased 2.5 times and its volumes reached about 1 trillion tenge.

The ministry is actively working on its further development, including the regulation of cross-border trade on the territory of the EAEU.

Particular attention is paid to improving literacy among university students and business entities. In this regard, an educational program has been launched, where training is carried out on the peculiarities of the transition to e-business and its further promotion.

“At the last reporting meeting, I promised to provide access to international trading floors, and today I want to report on this. We have held several rounds of negotiations on the three largest online trading platforms. We have achieved that since May of this year, Kazakhstanis have been allowed to trade on such Internet platforms as Amazon, Ozon and eBay. And this is an opportunity for our entrepreneurs to trade with more than 190 countries of the world. In addition, since 2020, we have been actively supporting domestic manufacturers in promoting the export of goods on the Alibaba Internet platform. Already 100 domestic companies operating on the platform as a ‘gold supplier’ have signed export contracts for $45 million. Among them are such companies as Aral tuz, Eurasian Foods, Agro product, Aktobe beef and Saumal,’’ said the minister.

At the reporting meeting, Bakhyt Sultanov said that on June 15 of this year, the next stage of selection of new 50 companies for listing on had started. It will run until July 15th.

Third. New digital solutions are also helping to reduce the costs of export trade.

The Ministry has begun work on the formation of the Digital-export architecture on the basis of the Unified Export Portal

In order to simplify the trade procedures of the CA countries and translate them into digital format, the four-year Ready4Trade Central Asia project is being implemented jointly with the European Union and the International Trade Center. As a result, the transparency of cross-border requirements will increase, and regulatory and procedural barriers will be removed. Compliance with trade formalities will be ensured and the volume of cross-border trade will increase.

The fifth area concerns the issue of integration.

Barriers are one of the limiting factors for export promotion. Despite trade associations, international trade is subject to protectionist policies and reciprocal restrictive measures by countries. In this matter, the mission of the Ministry of Trade and Integration of the Republic of Kazakhstan is to protect the national interests of domestic business through the use of trade diplomacy tools.

“We have specific cases. Our entrepreneurs are exempted from fulfilling additional requirements for product safety (other than those contained in technical regulations) and additional conformity assessment procedures. Also, when transporting goods across the EAEU, they are provided with internal tariffs. This made it possible for Kazakhstani exporters to double the assortment of Kazakhstan's export basket,” Sultanov said.

One of the tools for removing technical barriers to trade is the application of uniform standards in the EAEU and the CIS. This makes it possible to freely supply Kazakhstani products to the CIS countries. In this regard, a program was adopted to increase the development of such GOST by almost 2 times. So, today GOST is being developed for mare's and camel's milk. The plans include a GOST series for halal and national products such as horse meat, zhent, canned meat and others.

Since the beginning of the ministry's activities, it has been possible to remove 19 barriers for more than $120 million. This year, 8 more sensitive barriers have been assessed. Eliminating them will reduce business costs by $1 million. These are estimates, the actual effect may be much higher.

“In addition, from July 1, 2021, amendments to the Law on Commercial Activities come into force. We will now have the right to initiate retaliatory measures if barriers are identified in the markets of partner countries. To ensure the free movement of citizens between the EAEU countries, the mobile application ‘Traveling without COVID-19’ has been launched. The essence of the innovation is that the test result for the absence of coronavirus can be downloaded into the application. Thus, a kind of electronic passport of a person free from CVI will be formed,” the minister informed.

During these 2 years, another large layer of work has been carried out. Thus, the EAEU Development Strategy until 2025 was approved and more than 200 meetings were held in the EAEU and WTO bodies.

1,400 acts of the EAEU bodies were adopted and about 100 notifications were sent to the WTO on measures to protect the internal market. Agreements on free trade zones have been concluded with Serbia, Iran and Singapore. These countries are already providing Kazakhstan with more favorable conditions for the supply of domestic goods.

In general, the ministry will continue to work on the development of a modern trading system and increase the competitiveness of export goods and services. Until 2025, it is planned to increase non-resource exports and reach an indicator of $41 billion.

The Ministry of Trade and Integration of Kazakhstan launched a program on trade digitalization last year. At the moment, 7 projects are already being implemented. Along with the previously announced projects such as e-Tutynushy, information systems for certification and accreditation, and the Unified Export Portal, there are such projects as the National Product Catalog and the Analytical Trade Platform.

These initiatives are aimed at improving the processes of providing public services and providing the public with open and transparent information. It is planned to launch these initiatives by the end of the year.

Answering a question from journalists about updating national standards and applying sanctions to entrepreneurs who do not comply with the rules, B. Sultanov replied that, first of all, the duty of business is observed according to the certification system.

“The certification system has requirements, responsibilities and corresponding administrative responsibility for non-compliance with quality and safety standards. There is a special fund of standards. Several years ago it was 37%, and last year the use of standards reached 50%,” Sultanov noted.

According to the minister, work in this direction is being carried out on an ongoing basis. From the side of the state, the formation of a fund is ensured so that entrepreneurs have an appropriate base and basis for creating competitive products. It is planned to complete the work on updating the standards by the end of this year and make proposals for re-issuing some standards. A year, as the head of MTI noted, about 500 new standards are developed with the projection of world standards into the Kazakhstani system.

A particularly urgent question for today sounded about a possible rise in prices for socially significant food products due to unfavorable weather conditions. According to Bakhyt Sultanov, active work is underway in this direction to prevent a shortage of products in the markets.

“Our task is to ensure that the product is on the market, the price and quality are appropriate for it. We are constantly working with local executive bodies to conclude forward contracts and negotiable schemes. The tools of banning the export of agricultural products can be used, the issue is already being considered by the commission. Work is underway with local executive bodies on the movement and balancing of products between regions,’’ said Sultanov.

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