With government support foreign markets opened for Kazakh companies – «KAZNEX INVEST» JSC Erlan Arinov
April 18. KAZINFORM. ASTANA
Kazakhstan Development Strategy until 2050 announced by President Nursultan Nazarbayev special attention is paid to the development of export potential of the domestic industry and agriculture. As a result of government incentives, the share of non-oil exports in the total volume is expected to increase twice in 2025 and three times in 2040. The Head of State stressed that everything had to be subordinated to the core mission, i.e. promoting our exports only to the world markets, which will be long-term demand for our products and services.
About what work is being done in this direction, in an interview with our correspondent says the chairman of the National Agency for Export and Investment “KAZNEX INVEST» JSC E.A.Arinov.
– Erlan Asataevich, will you tell us about the Agency – its history, about what kind of work it performs?
– National Agency for Export and Investment “KAZNEX INVEST» JSC is a subsidiary of the Ministry of Industry and New Technologies. Initially it had been a corporation to promote Kazakhstan’s non-oil exports called “KAZNEX.” It is not raw, because, for example, raw materials – oil and gas – without that are in demand in the world market, and government interference in their export is not necessary. International experience shows that if a country wants to export its goods, then it needs a special organization for promotion of exports. In the world now there are operating 119 of such organizations.
We worked as a corporation “KAZNEX” for two years, and quite successfully: we were able to show that the government can successfully promote the development of non-oil exports. Prior to this, in our economic block the view prevailed that the companies themselves must fight their way to foreign markets. We have elaborated the concept of state support for exports, and its provisions entered the law on the development of commercial activities, as well as to the relevant legal acts in connection with the adoption of the state program of forced industrial-innovative development. With our support many overseas markets have opened for Kazakhstan companies.
– What are the main forms and methods of work of the company? How can cooperation with the Agency start for Kazakh companies?
– Our work began with an analysis of global markets. We were looking for an export niche for Kazakh non-oil products. We were told that we must learn, first of all, nearby markets, and that has been right. Of course, we always focus on the markets of the countries of the Customs Union, the Central Asian countries. But we have, nevertheless, studied other markets, and showed them to our producers, how to do it, because the local companies have not used these tools to study the market. We got access to the international trade information, which is constantly updated. There is a very solid base of data on 180 countries, there is a block of information about what and where to buy, what country, in what volumes, and what kinds of goods. We impose on the picture all that is produced in Kazakhstan. In this case, we study the statistics in the dynamic, because you need to know where there is growth, and where there is a decline. If purchases are reduced, so this country has adjusted its production and procurement will soon cease altogether. We identify the specific headings for our exporters. Also, one needs to calculate the logistics, to know which way to deliver goods, what will be the cost of transportation. In order to assist companies in these isues, we applied to special logistics companies that have shown to our businesspeople the best way to organize the delivery of the goods.
Next, we export these businesses abroad, we include the representatives in trade missions, which are one of our tools. We contact with potential buyers in different countries, providing them with information about products and prices, and we visit these countries. The result of our trade missions are contracts signed by our companies. Over the past 3 years we have organized 19 trade missions to 12 countries: Russia, Tajikistan, Kyrgyzstan, Turkmenistan, Azerbaijan, Georgia, China, India, Iran, Romania, Belarus and Poland. We have also conducted 70 special measures to promote about 100 Kazakhstan trademarks abroad.
We place your information on our website: which products in which countries are in demand. In addition, the exporting companies that manufacture a particular sort of product, come to us with requests to hold brief analysis of finding potential buyers for their output. Commodity producer may also ask us what products have a high demand to get production up and running at its plant. Such brief-analyzes count up to 40-50 per year.
We know all of our export-oriented enterprises: what they produce and the countries they export the output. Our experts have been in all areas, at all enterprises. In addition, our support for producers is talked about by the local authorities, there is also “Damu” Fund which creates business service centers. So our producers do not need to look for us, we find them ourselves.
So far we have talked about institutional support. In addition to it, we are providing financial support, we reimburse 50 percent of the company’s expenses directly related to the output exported. This, in particular, is advertising abroad, the cost of which for small and medium-sized enterprises is quite substantial. But advertising is justified. For example, last year the domestic beverage manufacturer advertised on the Russian TV channel, and the export process to Russia started. We also reimburse half the cost of the establishment of representative offices of our companies abroad. In total, in 2010-2012 refunding was for 131 exporters amounting to KZT 530 million (tenge).
– Recently, significant progress is noticeable in the promotion of Kazakh goods to foreign markets. Could you provide aggregate data on sales volumes and export geography?
– Yes, thanks to state support non-oil exports is growing. In 2001, our non-oil exports amounted to 3.1 billion dollars. In 2011, we were pleased that our non-oil exports for the first time in the history of Kazakhstan has exceeded 20 billion U.S. dollars. And last year the figure reached 25.5 billion dollars. Exports of finished products in 2001 amounted to 0.3 billion dollars, and in 2011 it was 3.3 billion dollars. That is, there is a trend of rapid growth of non-oil exports. It should be noted that exports in general, is also growing, but the share of non-oil exports in the total grows faster.
– In which sectors is the most successfully developing export-oriented production?
– Now I can name four industries in which there is a significant increase in exports. This is, firstly, engineering. Kazakh companies export these types of products, such as bearings, batteries, transformers. These have now been added with locomotives, cars and possibly helicopters. Secondly, growing export concerns metal. No metal itself and its products. This, for example, many kinds of rolling, wire, metal, building materials. Thirdly, food industry, which in the past, in the days of the Soviet Union, was working not only on Kazakhstan. Exported are flour, pasta, baked goods, juices, beverages, and rice. By the way, in the European countries perch fillet is very popular. The fourth sector is the chemical industry and the related to it pharmaceuticals. Traditionally, we have been exporting yellow phosphorus to Europe, this commodity is in the lead. More exported are chromium oxides and some other products. In the pharmaceutical industry, we have 6 powerful leading companies, the export of drugs is increasing every year. Of course, apart from these, there are intermediate goods, after the initial treatment. For example, refined copper, uranium, oil, and electricity.
We are working also in tourism sector: there is great potential for development. We have plans to work at four major tourist regions of the country. I think that this sector, within a few years, will be on a par with those sectors that I have called above.
– What is the impact of the state program of forced industrial-innovative development on progress of non-oil exports?
– Of course, without this program we would not have achieved such results. First, all of our tools are finally formed within this Program. In addition, within the framework of the state program production lines are established, initially focused on exporting, without it there will be no return. But in the second phase of the Program there is even more important work. I’m talking about the creating Kazakhstan’s export strategy. This is what I reported about to the President, and he supported the idea. Export strategies for today are approved in 100 countries of the world, it is essential: you need to have a common vision of how to support producers. You can spend a lot of money to maintain, but if businesses do not find markets, this work is meaningless. The issue of export development strategy is worked out by our Agency with the World Bank, and the WTO International Trade Centre.
– How did, in your opinion, our participation in the Eurasian integration process affect the state of Kazakhstan’s economy, in particular, increase of competitiveness of domestic producers?
– Of course, now there are different views on this issue, and it’s all right. But above all, we must take into account that the economy of the Russian Federation will necessarily have a major impact on our own, because it is 15 times more than ours. Elimination of tariff barriers is definitely a positive thing. Our exporters say it is good for them. Of course, except for the customs, there are other barriers: they are called non-tariff barriers. Permits are required, and licenses to trade in the countries of the Customs Union. They are gradually being canceled, but they will not disappear at all. Such barriers are still there, even in the European Union.
The bad news about integration is that our business is, compared with the Russian, if we take the average, less competitive. Our companies are at a disadvantage in the competition, because Russian companies are usually larger, they have the ability to influence decision-making in the state. But, overall, I think, before the entry into the WTO our business will benefit hardening through competition in the framework of the Customs Union.