Economy • 14 May, 2019

Number of online shoppers to reach 15 million people by 2025

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At the Government meeting chaired by the Prime Minister Askar Mamin, the development of electronic commerce was considered, the press service of the Prime Minister reports.

Minister of National Economy Ruslan Dalenov reported on the current development of the global e-commerce market, forecasts, as well as measures taken to develop e-commerce in Kazakhstan. At the end of 2018, the volume of the online trading market in Kazakhstan increased by 1.5 times and amounted to 269 billion tenge. The share of e-commerce is 2.9%. The number of active buyers increased by 2 times and amounted to 2.3 million people. There are more than 1,700 independent online stores on the market, about 20 electronic trading platforms (marketplaces), which enable more than 1 million SMEs to sell their goods.

The structure of the e-commerce market in Kazakhstan consists of 68% of trade in goods and 32% in services. Among the goods in great demand are building materials, household appliances, cosmetics, clothing and footwear. Services include the sale of air and railway tickets, payment for cultural events and utilities.

Dalenov informed that in Kazakhstan the volume of electronic trade in food and agricultural products is 15.4 billion tenge and accounts for 4% of all electronic trade in goods.

“Electronic commerce has no territorial boundaries. Therefore, for our domestic agricultural producers, this is a limitless opportunity to occupy new markets and find a buyer. Online commerce is an excellent opportunity for developing rural trade,” the minister emphasized. Kazakhstan is located in a very convenient geographical location between China and Europe, there are all the infrastructural and procedural possibilities for redirecting the existing volumes of Internet parcels through the territory of Kazakhstan.

April 2, 2019, a law was adopted on the development of the business environment and regulation of trading activities, which laid down systemic measures for the further development of electronic commerce. In particular, the concept of “e-commerce” is enshrined at the legislative level. It includes trade in goods and services. The institute of consumer protection has been strengthened. Now the buyer in electronic commerce is protected in the same way as in regular trading. The procedure for the declaration of goods for export has been simplified. Also, the boundaries of the rights and obligations of participants in electronic commerce have been defined.

To stimulate online trade, tax breaks are provided (a decrease in IIT and CIT by 100%) until 2023. 509 applications from business entities were submitted for their receipt. For the development of non-cash payments, tax incentives are provided for reimbursement by the state to pay taxes on the costs of purchasing online cash registers and an Enterprise Resource Planning system. Reimbursement is provided for up to 120 thousand tenge within two years. For the development of instant payments, the National Bank introduced a project that allows using a mobile phone as a means of payment (from Sep. 7, 2018). Important factors in the development of e-commerce are the availability of affordable and high-tech infrastructure. Therefore, the law simplified the procedure for declaring goods for export. Now postal documents are recognized as a declaration.

Minister of Digital Development, Defense and Aerospace Industry Askar Zhumagaliyev reported on the infrastructure and services for e-commerce. The planned indicator of the share of e-commerce in total retail sales was made and amounted to 2.9%. In 2025, e-commerce will be 24% of retail sales. In addition, the number of online shoppers in 2018 amounted to 2.32 million people. Accordingly, by 2025 this figure will reach 15 million people. In 2018, 43 thousand jobs were created in electronic commerce.

Last year, measures were taken to improve legislation in the field of electronic commerce. As a result, business-friendly norms were introduced into the new Tax Code, the conceptual apparatus was expanded, and the principle of consumer protection was approved.

“The Internet directly affects the development of electronic commerce. Therefore, the ministry is implementing projects to provide broadband access to the Internet in rural areas of the Republic of Kazakhstan on fiber-optic communication lines and wireless access networks on such technologies as LTE and satellite technologies. As a result of creating the necessary telecommunications infrastructure in 2022, 100% of rural settlements will be provided with broadband internet access,” Zhumagaliyev said.

About 12.3 million people were trained digital skills in four areas (basic digital skills, open gov, e-gov, e-commerce). This work will continue in 2019. Within the framework of the existing tasks, mobile payment systems are being formed, the reduction of settlement rates and the development of non-cash payments, which contributes to the reduction of shadow trade. Thanks to ongoing activities, the e-commerce market in Kazakhstan shows a steady annual growth. Last year alone, on Kazakhstan's internet sites, e-commerce sales grew by 34%. By 2025, an increase of 282% is expected.

It is noted that the number of domestic and foreign shipments increases annually. Kazakhstan, due to its convenient geographical location, has a high transit potential in the framework of electronic commerce. Kazakhstan is the shortest way between Europe and China. To use the transit potential of the country, work is underway to launch bonded warehouses (note — a warehouse assigned to a specific customs office where you can store imported goods), concluding contracts and agreements with postal operators in other countries, as well as with the largest trading internet sites. According to the forecasts of the Ministry of Digital Development, the volumes of transportation of parcels from China to Russia and countries of the European Union will grow exponentially. The transit volume of mail through Kazakhstan in 2025 is expected to increase 12 times and is estimated at over 800 million parcels.

Considering the world experience in the sale of agricultural products via the internet, in order to stimulate and increase exports of agricultural products, it is necessary to bring domestic agribusiness to large online trading sites.

Chairman of the Board of Kazpost JSC Saken Sarsenov reported on the structure of electronic commerce. The development of postal infrastructure is taking place within the framework of the Samruk-Kazyna Sovereign Wealth Fund's transformation program. To date, all modern postal infrastructure has been introduced in Kazakhstan. An automated sorting machine capable of processing up to 120 thousand parcels has been installed in Almaty. Fullfilment centers (logistics center, where the owner of an online store can get a full range of services from acceptance and processing of goods to packaging, storage and sending to customers) and e-commerce centers were launched. Vehicle fleet have been updated. The Paypost internet acquiring was launched to accept payment cards and electronic money when paying for online orders with postal and logistics services. At the same time, work continues on the development of a network of supermarkets parcels. The time of receipt of parcels was reduced from 20 minutes up to 2 min. To date, there are 214 supermarkets and 151 post offices.

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