Kazakhstan • 23 July, 2020

Production of building materials in Kazakhstan increased 3.3 times

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At the selector government session chaired by the Prime Minister Askar Mamin, the issue of developing local content within the framework of the Economy of Simple Things program was considered. Minister of Industry and Infrastructure Development Beibut Atamkulov reported on the development of Kazakhstani content in construction.

According to the minister, the building materials industry is actively developing. In the volume of the manufacturing industry, the share of this sector is 6%. Today, 1,965 enterprises with over 29 thousand employees are engaged in the production of construction products in the republic.

“The demand for construction products is increasing with the development of the construction industry. The volume of construction work over the past 11 years (from 2008 to 2019) has increased by 2.5 times (from 1.7 trillion to 4.4 trillion tenge). The growth impulse of the construction industry is due to large-scale investments within the framework of the Nurly Zher, Nurly Zhol State Programs, the Employment Roadmap, SPIID, the implementation of large social and cultural events,’’ Atamkulov said.

Due to the dynamic development of the construction industry, the production of building materials increased 3.3 times.

According to monitoring data, the average annual loading capacity of operating enterprises is about 56%.

Today, topical issues hindering the development of the construction industry:

  • high share of imports for some building materials;
  • underutilization of production facilities;
  • no guarantee of product sales;
  • low awareness of trading platforms.

In order to support the development of the construction industry, it is envisaged:

  • To create new projects for import substitution;
  • To introduce new mechanisms to stimulate the development of the construction industry;
  • To create an online platform ‘’Building Materials Marketplace";
  • To develop investment passports for the main imported building materials;
  • To introduce regulatory incentives for local content in construction.

As the head of the department noted, these measures will increase the utilization of enterprises' capacities, ensure the sale of products and the growth of production volumes.

Today, in the construction of residential and industrial buildings, social facilities, infrastructure, the market demand for construction products of basic materials is 934 billion tenge.

“Domestic enterprises produce construction materials for 586 billion tenge, imported for 348 billion tenge. To meet the market demand, 33 new projects are being implemented, of which 8 are import substitution projects. As a result of the implementation of these projects, it is planned to reduce the share of imports by 15% and increase the use of products of Kazakhstani content in housing construction up to 90%,” Atamkulov said.

Currently, during the construction of facilities, 11 types of building materials are most in demand: glass, polyethylene pipes, dry building mixtures, fittings, ceramic tiles, thermal insulation materials, ceramic refractory bricks, sanitary ware, wallpaper, roofing materials, paint and varnish products.

“Of course, many of the listed building materials are produced in the country, but not in such volumes to fully cover the market demand. This year we plan to launch 8 import-substituting projects for the production of 5 types of building materials (glass, polyethylene pipes, dry building mixtures, fittings, ceramic tiles) with a production volume of 103 billion tenge, which will reduce the share of imports in the domestic market by an average of 15%,’’ said Atamkulov.

Additionally, it is planned to implement projects for the production of thermal insulation materials, ceramic refractory bricks, sanitary ware with a production volume of 61 billion tenge, this will reduce the share of imports for these types of building materials by 8%.

“With the implementation of all planned projects for the main types of building materials, we plan to reduce imports by 23%. In general, the implementation of new import-substituting projects is being worked out jointly by SWF Samruk Kazyna JSC with large construction companies through the introduction of various new procurement mechanisms, including the conclusion of offtake contracts and direct contracts,’’ the minister said.

Along with this, in order to reduce the cost of products, the creation of a special information platform "Marketplace" for online trade in domestic building materials is being considered. This online portal will also allow in real time using computer vision technologies to monitor the progress of construction of each facility and the development of funds by akimats.

“This will reduce the cost of materials by 15% and ensure the transparency of the building materials market. With the support of the state, the online platform will provide an opportunity to sell construction materials at a fixed cost,” the minister said.

In the future, as Atamkulov emphasized, it is planned to develop investment passports for the main imported building materials, which will include market research of products, raw materials, the location of the project, a description of the equipment used. Investment passports will make it possible in reality to determine the prospects and economic feasibility of deploying the production of certain building materials.

Meanwhile, in order to increase the share of local content in construction, regulation is being carried out. To date, the necessary legal framework has been created, the requirement of which is the mandatory use of Kazakhstani building materials for projects financed from budget funds. This will minimize the unreasonable replacement of domestic materials included in the design and estimate documentation for imported ones, as well as increase the efficiency and responsibility of technical supervisions and customers to comply with local content in construction projects.

In addition, a Portal has been developed, where the consolidated resource sheets of all projects that have passed the expertise are posted. To this end, changes have been made to the relevant rules that will oblige:

  • contractors to use building materials and equipment of local content;
  • customers to publish a summary sheet on the Portal.

That is, domestic producers can see the number of planned construction projects, as well as the volume of demand for building materials, products, structures and equipment.

Also, in the Rules for Public Procurement, amendments were made to model contracts in the field of construction, obliging to purchase materials in accordance with the Register of Domestic Producers. As of today, according to this monitoring, the share of Kazakhstani content in projects that have undergone expert examination following the results of 6 months in 2020 amounted to 90%. This is 3% higher than last year.

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