08 February, 2019

Askar Mamin: Digital labeling of goods will create a multiplier effect for economies of EAEU countries

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First Deputy Prime Minister Askar Mamin took part and spoke at the forum “Digital Labels in the EAEU as the Basis of a Transparent Environment for Business, Government and Consumers.”

The forum was attended by Board Member, Minister for Trade of the Eurasian Economic Commission Veronika Nikishina, Minister of Industry and Infrastructure Development of Kazakhstan Zhenis Kassymbek, Deputy Minister of Industry and Trade of Russia Alexey Besrozvannyh, Deputy Minister for Tax and Duties of Belarus Vladimir Mukvich, Deputy Minister of Economy of Kyrgyzstan Dastan Kadyrov.

First Vice Premier of Kazakhstan noted the importance of developing digital technologies in industrial and excisable products, agriculture, pharmaceuticals and the creation of new opportunities for trade growth in the context of further integration within the EAEU.

“Thanks to joint efforts to stimulate trade, eliminate barriers, standardize the institutional environment, we created new and expanded the existing growth mechanisms of our economies, which contributed to the high growth rates of the economies of the EAEU countries,” said Mamin.

Against the background of a tightening monetary conditions and a steady reduction of the space for investment policy, the introduction of a labeling and traceability system for goods in the EAEU space is of particular relevance.

“Combating the circulation of unlicensed products is a practically untapped mechanism for creating additional space for the development of industries, reducing costs for domestic producers, increasing the base for expanding the state budget revenues and increasing citizens' well-being,” said the First Deputy Prime Minister.

According to the International Chamber of Commerce, the volume of under-collection of sales taxes, caused by the displacement of legal producers, is almost $90 billion a year, with a disproportionately high share in developing countries.

“At the same time, the technological equipment of unscrupulous manufacturers and suppliers is being improved, products of inadequate quality cover all price segments during each stage of the creation of added value,” said Mamin.

It is natural that the widespread implementation of projects in the field of labeling and tracing of goods has been one of the main trends in international and domestic trade over the past 10 years. According to research conducted by the international consulting company Boston Consulting Group, in the next 10 years the list of groups to be labeled will reach 70-80% of all types of goods. Projects operating in the PRC, Brazil, Turkey, the United States and the European Union have demonstrated their success, already allowing for increased tax collection in the affected industries by 20–40%.

After the launch of labeling projects, countries have significantly reduced the “gray” market, expanded the budget revenues. A bona fide business returns the revenue lost due to counterfeit revenue, increasing sales due to unfair competition leaving the market.

“Thanks to the common efforts within the framework of cooperation of the EAEU, a successful trend is becoming a reality in our countries,” said Mamin, noting that “the necessary legal basis for implementing this direction has been laid within the framework of the EAEU, there are successful examples of the initiative’s implementation.”

Running processes will have a positive impact on the economy of Kazakhstan. A 1% reduction in counterfeit volume will lead to the release of space for legal business only in retail sales of up to $100 million.

“We have one goal — to increase commodity turnover and create a legal market, reducing the shadow economy, leveling the competitive conditions of doing business within the Union,” said Mamin and noted that a joint integrated approach will have a multiplicative effect for the economies of the EAEU countries.

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