Politics • 28 May, 2019

In Kazakhstan, terms of lending business for projects of the “economy of simple things” to be simplified

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May 28 at the regular meeting of the Government chaired by the Prime Minister Askar Mamin, the issue of developing the “economy of simple things” and promoting non-primary exports was considered. It is reported by the press service of PM.

Recall, pursuant to the instructions of the Head of State, voiced in the Address to the people of Kazakhstan Oct. 5, 2018, 600 billion tenge was allocated for the development of the “economy of simple things.” Dec. 11, 2018, Government Decree adopted a program of preferential loans for priority projects.

Deputy Prime Minister Zhenis Kassymbek said that in order to monitor the implementation of this Program and actively engage business on the basis of Atameken NCE, from March 27, 2008, the Project Office for the Development of Branches of “Economy of Simple Things” has been operating with the participation of state bodies and regions and development institutions.

About 300 meetings were held on the site of the Project Office on a weekly basis, over 1000 potential entrepreneurs from all regions were heard, and amendments to improve the Program are being developed to solve systemic business problems, some of which were adopted by the Government Decree.

Thus, the first package of changes was made to the Program by a Government Decree of May 4, 2019, valid from May 17. These are amendments regarding the introduction of a guarantee instrument, an increase in the amount of financing for the replenishment of working capital from 30% to 50% and the inclusion of a number of goods, such as poultry meat and cotton fiber.

It is expected that these changes will provide support to more than 150 enterprises for 270 billion tenge, create more than 10 thousand jobs, increase tax revenues by 38 billion tenge. In total, about 900 potential projects worth over 700 billion tenge are in the work of the Project Office, of which 41 projects worth 25 billion tenge were approved by second-tier banks, 111 projects worth 126 billion tenge were under consideration.

Among the industries, business projects in the field of food, light industry, agriculture and the service sector are the most interested.

In addition, a second package of amendments to the Program is being developed on the basis of the Project Office, providing for a reduction in the interest rate for the final borrower, with a fixed part of the state-subsidized part. This change will reduce the cost of the loan for the entrepreneur and remove the arbitration between the programs.

The second package of amendments provides for the introduction of a grace period for a loan of no more than 1/3 of the loan term (no more than 2 years and 3 months) and the inclusion of new products for lending under the Program.

As noted by Kassymbek, the effective implementation of the Crediting Program will allow, by 2025, to reduce the share of imports on goods credited under the Program from 59% to 37%, to create about 16 thousand jobs, to increase tax revenues by 1.1 trillion tenge.

In order to strengthen the financial and non-financial support of domestic enterprises in the next three years, 500 billion tenge will be sent, including 470 billion tenge through the tools of Baiterek Holding. The volume of export financing through Development Bank of Kazakhstan and Damu over 3 years will amount to 300 billion tenge.

Kassymbek also informed that systemic measures had been prepared to increase the local content in public procurement: an order from the Ministry of Finance was adopted, which establishes purchasing “simple things” from July 2019 only among producers included in the Register of qualified suppliers. The only criterion for inclusion in this Registry will be the Industrial Certificate.

It was noted that the Ministry of Finance together with the National Chamber of Entrepreneurs Atameken developed model contracts for construction and design, which included requirements for the mandatory use of the Register of domestic building materials in the design and procurement of building materials. In June of this, they will be fully implemented in the legal framework.

As part of the implementation of the Roadmap for Developing Light, Food and Furniture Industries, as well as the production of building materials approved March 5, 2019, key performance indicators for local authorities were developed for state bodies and regions. In June 2019 they will be approved and sent for implementation to the regions.

In order to ensure procurement from domestic producers, regional Commissions for the control of local content have been created. Their mandate has been expanded on products of the "economy of simple things." The tasks of these commissions include monitoring of the plan and the fact of procurement, the local content and weekly informing the Government about the results.

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