Logistical restrictions, border closures, quarantine requirements, shutdown of some production facilities, global economic and trade slowdown — it is not easy for domestic exporters amid the pandemic. In such a situation, government support plays a particularly important role. In his Address to the people of Kazakhstan, President Kassym-Jomart Tokayev instructed to strengthen export support for domestic enterprises. Read more about the implementation of the Head of State’s order in the article.

The Ministry of Trade and Integration reported that in order to prevent a further decline in the volume of non-primary exports, support for exporters continued in all directions.

With the transition to the remote organization of labor, it was possible not only to preserve all business processes, but also to increase the efficiency of interaction with the business, since the solution of many issues moved to the online field.

The Anti-Crisis Center to support exporters is actively functioning, a hotline has been organized through the telegram channel, within which 800 applications have already been considered, assistance has been provided with the involvement of experts from relevant ministries and organizations.

Also, the ministry has prioritized 16 commodity items, for which new solutions will be developed for their promotion, including to new markets.

The ministry, together with the UAE Embassy, ​​organized the first air express for 22 tons of meat products in the UAE.

A practice-oriented export acceleration program was launched as an additional measure of state support. It includes a set of measures aimed at accelerating the development of export opportunities of Kazakhstani manufacturers, diagnostics of the export potential of enterprises, training, as well as support until the signing of export contracts with counterparties from China.

 

Concessional lending and export insurance for exporters

The Ministry of Trade and Integration of Kazakhstan has changed the rules for reimbursing exporters. In particular, the package of documents was improved, the list of goods was updated and new types of compensated costs were introduced. Domestic exporters will be able to receive preferential loans and export insurance.

JSC Export Insurance Company KazakhExport for November 2020 insured contracts of more than 70 Kazakh exporters for $148.2 million.

In 2020, state support allowed 205 exporters to reduce their costs by $11.7 million. These are the costs of transport costs, advertising, participation in exhibitions, certification and others.

A new educational telegram channel, SME on-line, was opened. Here entrepreneurs will find up-to-date information on how to start, manage and grow ecommerce, online lessons and partner suggestions.

Also, for a comprehensive solution of issues and problems of electronic commerce, together with the Digital Kazakhstan Association, a telegram group E-commerce was created.

Up-to-date expert analytics about in which countries there is a demand for products is posted on a single export portal — export.gov.kz. Through the portal, you can apply for participation in the export acceleration program, reimbursement of costs, as well as access to international electronic platforms.

 

Support provided to all interested companies

The main focus of all government support measures is manufacturing enterprises. These are active exporters and enterprises planning to export.

It should be noted that support is provided to all interested companies, both experienced in export and newcomers in this direction. However, there are a number of criteria by which companies are selected, that is, on a competitive basis. Companies wishing to participate in this program must first of all be willing, also be transparent and respond to inquiries. Taking into account the high export potential and demand in the world market, the food industry was selected as the main industry for the first stream of the Program, China was identified as the target market.

 

Export acceleration program launched in 2020

Kassym-Jomart Tokayev in his Address to the people of Kazakhstan emphasized that medium-sized businesses should be focused not only on the domestic, but also on foreign markets. Their export support should be strengthened. The president instructed the government to launch an export acceleration program aimed at medium-sized non-resource enterprises to provide targeted support from idea to result.

As noted in the ministry, this year the first practice-oriented export acceleration program in Kazakhstan was launched. Based on the results of the analysis, China was chosen as the target market, and the food industry was the priority industry.

In short, this is individual work with the enterprise and its complete preparation for entering the market.

In total, about 90 companies applied for participation in the program, which were further selected on the basis of an international scoring model. It is assessed on the basis of 6 criteria: Market, Product, Finance, Competence (Motivation), Organizational structure, Corporate culture. Each company was given an expert assessment for each of the 6 criteria.

Based on the assessment results, 35 companies were selected to participate in the second stage of export acceleration.

Within the framework of the second stage, training and informational seminars / coaching in the mode of online webinars on entering the Chinese market were held for 35 companies. Additionally, individual meetings were held with international experts on the readiness of products to enter the Chinese market, the taste preferences of Chinese consumers, and the optimal sales channels for a particular product category.

Individual roadmaps have been prepared with instructions for entering the Chinese market, as well as commercial proposals for each product.

Currently, online business missions are being conducted, in which many Chinese companies express their interest in Kazakhstani products.

That is, support — to prepare a company for the Chinese market and find a potential buyer for it — has been practically implemented.

 

Economic effect of export acceleration program

Considering that the project is starting for the first time and has no analogues in our country and the year is not over yet, it is too early to summarize, but the program is expected to conclude 10-15 potential export contracts in the following industries: meat and fish products , vegetable oil, flour-grinding products, confectionery and honey, etc. However, the conclusion and establishment of trade relations depends both on internal (depending on the conditions of the Kazakhstan company) and external (intercountry trade relations, the situation at the border, epidemiological situation, and other) circumstances.

To date, more than 100 B2B meetings have been held between Kazakh and Chinese companies.

According to the data received from the participating companies, the total aggregate export volume of only 27 companies out of 35 is more than 100 billion tenge over the past 2019. According to rough calculations, the current volume is expected to increase in connection with the new Chinese markets in the amount of 20%, respectively, additional exports of food products from Kazakhstan to China may amount to 20 billion tenge, or 40% of the current export of food products to China.

In addition to financial receipts to the budget, it is planned to achieve such indirect effects as the creation of jobs, an increase in production, and the establishment of an ecosystem.

 

Online Export: Sales on Alibaba.com from Kazakhstan

E-commerce is growing at a fast pace. There is a need to promote the export of goods through e-commerce channels.

To date, as part of the support of the Ministry of Trade and Integration, 100 Kazakhstani companies are represented on the international Internet platform Alibaba.com. Companies are selected on a competitive basis by submitting applications on the export.gov.kz portal in accordance with the approved Selection Rules. To participate in the selection, companies must provide the tender committee with a package of documents and a completed application form. The selection results are posted on the portal export.gov.kz.

Companies listed on the platform have been granted access to the international Alibaba.com platform as a "Gold Supplier". This premium status provides access to a global audience, the ability to comprehensively promote within the marketplace. By entering the Alibaba.com platform, companies can find a new sales channel and use it effectively. This will help increase the recognition of Kazakhstani products and increase the export of non-primary goods.

The goal of the state is to support and develop a new format of trade and entrepreneurship in Kazakhstan. Thanks to service support, agreements have already been concluded for the sale of products for 7.1 billion tenge or $16.4 million. Kazakhstani companies have received more than 500 requests for goods. It should also be noted that more than 4 thousand Kazakhstani goods have already been placed on the trading platform, which include pasta, flour, honey, confectionery, meat, drinks, vegetable oils, furniture, clothing, goods for children and much more. The countries that sent most of the requests are China, Germany, Morocco, Hong Kong, Saudi Arabia, Uzbekistan, Kyrgyzstan, Ukraine and others. Most of the requests are for such food products as honey, cereals, meat, oil, etc.

Taking into account the demand for this measure and its practicality, the withdrawal of domestic manufacturers to the global marketplace Alibaba.com continues, where sales are growing annually, and if we compare the latest data, it is almost 2 times. Therefore, the potential of the platform will inevitably affect the export of the next 50 commodity producers and trading companies, which will be provided with accounts with the “Gold Supplier” status.

As of today, the Standard Gold Supplier for a single company costs $2,999 according to Alibaba's official rates.

 

Long-term plans

The Ministry of Trade and Industry has initiated a national project aimed at increasing the competitiveness of Kazakhstani products in foreign markets and increasing the number of mature exporters.

Work is envisaged in such areas as:

• technical regulation aimed at introducing international standards to improve product quality;
• attracting investment in export-oriented projects;
• creation of a national commodity distribution infrastructure, which will allow building efficient transport and logistics channels for key areas of fresh produce supplies, including to the EAEU countries, Central Asia and China, which will significantly expand sales markets;
• formation of a comprehensive targeted package of financial and non-financial measures of state support for domestic exporters from idea to delivery of products to new markets.

All this combined will increase the export of non-primary goods and services to $41 billion.