Official Source of the
Prime Minister of the
Republic of Kazakhstan
Close button

Regions need to actively support projects until they receive the status of subsidized — Atameken NCE

Tuesday, 21 July 2020, 14:09:54

At the government session chaired by Prime Minister Askar Mamin, Chair of the Board of Atameken NCE Ablay Myrzakhmetov reported on the work being done to develop local content within the framework of the Economy of Simple Things program.

At an extended government session, the Head of State gave a number of instructions regarding the effective development of the Economy of Simple Things program, local content, and counter-obligations of businesses supported by the state.

To date, within the framework of the Economy of Simple Things program, the number of approved projects is 2,064 worth 991 billion tenge. At the same time, 1,457 projects were subsidized for 225.9 billion tenge. The difference between approved and subsidized projects is 265 billion tenge. 131 billion of them are currently pending in banks.

In order to effectively use the funds, Myrzakhmetov urged the regions to actively work to support projects to the status of subsidized ones.

Barriers to effective absorption of funds:

  • Long terms of consideration of applications from entrepreneurs. Unlike state financial institutions, the terms of consideration of loan applications of entrepreneurs by banks are not regulated by legislation (approved by internal documents of STBs).
  • High requirements of second-tier banks to the pledges of borrowers and the list of requested information. According to a study published on July 9, 2020, by the consulting company KPMG, entrepreneurs note high requirements for the collateral base, as well as "a general lack of desire of STBs to lend to certain companies."

The Economy of Simple Things is aimed at 4 sectors: processing in the agro-industrial complex, production in the agro-industrial complex, processing industry and services, spring field work.

In addition, Myrzakhmetov noted that the project office analyzed the need for working capital of projects in the agro-industrial complex, approved by the Prime Minister at the IMC on import substitution, on June 27, 2020.

Out of 131 projects:

  • Work on 64 has been suspended due to the epidemiological situation in the country.
  • On 67 it is necessary to replenish working capital in the amount of 188 billion tenge.

“For successful implementation of projects, it is necessary to replenish working capital. The analysis showed that 53% of projects are operating enterprises that need replenishment of working capital (enterprises are ready to increase the volume of their production). In the case of financing projects through the Agrarian Credit Corporation JSC, we note the absence of ACC's own funds for issuing loans,’’ Myrzakhmetov explained.

Chair of the Council of the Association of Financiers of Kazakhstan Elena Bakhmutova, in turn, reported on the optimization of the business processes of second-tier banks within the framework of the Economy of Simple Things program.

As noted by Bakhmutova, the promptly introduced changes to the Economy of Simple Things contributed to its activation as much as possible in conditions of strict quarantine, when not only business, but also banks were forced to reformat their operational processes in the shortest possible time into the mode of remote service provision.

"According to the second-tier banks, as of July 17, 78% of the number of applications received have been approved, and 70% of the applications received have already been financed," said Bakhmutova.

Ten banks take part in the Economy of Simple Things program. Market competition helps to maximize the reach of potential borrowers and improve the quality of services. The digitalization of business processes, which was carried out as soon as possible since the beginning of the pandemic, reduced the time for consideration of loan applications to a minimum.

“But at the same time, when most banks and businesses work in a remote format, digitalization is making its own adjustments and, perhaps, does not allow us to further optimize the timing of loan applications. Thus, according to the banks' information, the standard period for consideration of the application is 12 working days. But this is on condition that all the necessary information was provided by the borrower,” said Bakhmutova.

The project office raised questions about the discrepancy between the number and amount of projects approved by banks and subsidized by the Damu Fund.

The main reasons for this difference are the following factors:

1. Some of the projects have been approved with suspensive conditions, according to which the bank has provided additional time for the submission of documents, registration of collateral, etc.

2. According to STBs, some of the corporate clients, for which credit lines were approved to finance their projects, revise their business plans in the new difficult conditions or suspend them.

At the moment AFK, STB and Damu are clarifying the status of each project considered within the framework of the Program.

At the same time, given the deteriorating business activity index, it is necessary to take into account the increased credit risks of the economy and take a balanced approach to issuing new loans.

Statistics on the development of the program itself showed that entrepreneurs requested less than 15% of the amount spent on new projects. This indicates that the main business need in today's conditions is the modernization and expansion of existing production and services.

“Given the current difficult conditions, entrepreneurs today view the program not only as a development program, but also as a program to support and preserve an existing business. In this regard, the main proposals that business and banks are making were submitted to the National Bank, the Ministry of National Economy, the Agency for the Regulation and Development of the Financial Market, Atameken NCE," Bakhmutova noted.

Also Bakhmutova voiced several proposals, which in the opinion of the financial sector seem to be the main ones.

First. It is necessary in the program to return to the support of large businesses, which are not currently supported under this program. Because big business is the backbone of the economy and provides employment for citizens. Therefore, it would be logical to include large business entities from import-substituting industries in government programs, including in the Economy of Simple Things.

Second. One of the ways to solve the problem of collateral is to expand government guarantees. Including the possibility of using state guarantees by expanding the functionality of the Development Bank of Kazakhstan, which could do this for large business, as the Damu Fund is doing for SMEs today.

It is fundamentally important now to revise approaches and allow maximum lending to replenish working capital and refinance. This will allow and expand the opportunity to participate in the program and will facilitate the use of the allocated funds.

“It should be noted that the Project Office for Entrepreneurship has shown itself to be a very effective form of interaction, allowing to identify bottlenecks and promptly solve emerging problems. Currently, in accordance with the instruction of the Head of State given at the extended government session on July 10, 2020, banks, together with the Damu Fund and the Project Office, are making every possible effort to optimize procedures, reduce the time taken by banks to consider applications for loans, subsidies, guaranteeing and reducing the number of documents,” Bakhmutova said in conclusion.

In turn, Chair of Samruk-Kazyna Fund Akhmetzhan Yessimov spoke about the local content in the procurement of the SWF Samruk-Kazyna. According to him, first of all, in order to support the branches of the Economy of Simple Things, the mandatory use of Kazakh materials and equipment in the design estimates has been established. Moreover, the responsibility of the contractor for the non-use of Kazakh materials in the form of fines in the amount of at least 5% of the total cost of the contract was introduced.

“Taking into account the difficulties associated with the decline in economic activity and insufficient turnover of funds, the Fund has established a mandatory advance payment of at least 30%. Also, a requirement was introduced to pay for the delivered goods and services not later than 5 working days,” Yessimov said.

At the same time, the release of domestic producers from the security of the tender and the enforcement of contracts was introduced, the terms of procurement were significantly reduced, as well as the number of documents for participation in procurement.

“On the recommendation of the Government, the Fund, in an emergency, refused to apply penalties and to be included in the list of unreliable suppliers for non-fulfillment of contractual obligations,” Yessimov noted.

Simplification of internal administrative procedures made it possible to double the number of enterprises in the Register of commodity producers of the holding in a short period.

“Thus, the share of local content was 69%, which is more than 2 times more than last year. In total, according to the results of 6 months of this year, the total amount of contracts concluded with domestic business amounted to 2 trillion tenge. More than 9 thousand enterprises, which employ about 250 thousand workers, received orders. According to our estimates, the amount of tax revenues to the budget will be about 150 billion tenge,” Yessimov informed.

News feed
29 September 2020, 10:54
Mechanical engineering, support for SMEs and industrial projects — how Kostanay region developed during pandemic
29 September 2020, 10:11
Government session to be held Sep. 30 in Ukimet Uyi
27 September 2020, 17:48
Prime Minister of Kazakhstan Askar Mamin and President of Tatarstan Rustam Minnikhanov launch three projects in automotive industry 
25 September 2020, 16:35
Reorientation to fish farming, improvement of legislation and measures of state support — how fish industry developed in Kazakhstan
24 September 2020, 17:38
Prime Minister Askar Mamin holds seminar on development of country's fishing industry in Shardara 
24 September 2020, 12:14
Arman Shakkaliyev relieved as chair of Committee for Technical Regulation and Metrology of Ministry of Trade and Integration
23 September 2020, 17:50
Baiterek Holding increases financial support of manufacturing sector by 17% 
23 September 2020, 14:43
Astana EXPO-2017 wind power station to reach full capacity of 100 MW by end of 2020
22 September 2020, 12:12
Harvesting in Kazakhstan completed by 93.4% — Ministry of Agriculture 
22 September 2020, 11:16
Sixty-five public organizations for protection of consumer rights operate in Kazakhstan — Ministry of Trade and Intergation
22 September 2020, 10:05
Head of Government gives several instructions to strengthen consumer protection 
22 September 2020, 10:02
Export potential of harvest in Kazakhstan to reach 7.5-8 million tons of grain in 2020
21 September 2020, 16:51
Government session to be held Sep. 22 in Ukimet Uyi 
21 September 2020, 12:54
Government considers issues of mass sports development 
18 September 2020, 18:26
Issues of preserving jobs and timely payment of wages discussed in Government of Kazakhstan
17 September 2020, 18:56
Prime Minister Askar Mamin meets with President of Turkmenistan Gurbanguly Berdimuhamedov
17 September 2020, 18:45
Government of Kazakhstan discusses issues of social protection of disabled people
16 September 2020, 18:09
Yerlan Kiyasov appointed Vice Minister of Healthcare - Chief State Sanitary Doctor of the Republic of Kazakhstan
15 September 2020, 12:26
Work underway in Kazakhstan to saturate domestic market with basic products for stabilizing prices — Ministry of Agriculture
15 September 2020, 10:27
Price increase for socially significant food products will not exceed 6% by the end of 2020 — Ministry of Trade and Integration
15 September 2020, 10:07
Prime Minister of Kazakhstan Askar Mamin instructs to ensure strict control over stability of prices for socially significant food products
15 September 2020, 09:44
Under Industrialization Map in Kazakhstan, 206 projects worth 1 trillion tenge to be introduced in 2020
15 September 2020, 09:29
For 8 months of 2020, 4.3 thousand new jobs created under Industrialization Map — Ministry of Industry and Infrastructure Development
14 September 2020, 22:47
Introduction of Industry 4.0 in Kazakhstan, or how smart factories worked during quarantine period and global pandemic
14 September 2020, 18:42
Interdepartmental Commission adopts decisions on work of businesses
14 September 2020, 14:02
Government session to be held Sep. 15 in Ukimet Uyi
14 September 2020, 10:51
Strategic directions for development of Eurasian Economic Integration until 2025 considered at session of EEC Council
11 September 2020, 13:07
Prime Minister Askar Mamin introduces Minister of Emergency Situations Yuri Ilyin
10 September 2020, 23:45
Distance learning, epidemiological situation, provision of villages with Internet — how educational process organized in Kazakhstan
10 September 2020, 13:12
Production of electronics industry of Kazakhstan to increase 8.5 times over 3 years
09 September 2020, 15:06
Roman Sklyar pays working visit to Atyrau region
09 September 2020, 11:59
Ministry of Healthcare on CVI: In Kazakhstan, there is a 6-fold decrease in bed occupancy
09 September 2020, 11:31
Food production for 8 months of 2020 increased by 3.6% — Ministry of Agriculture
09 September 2020, 11:21
Market of Kazakhstan fully provided with petroleum products of domestic production — Nogayev 
09 September 2020, 11:19
In Kazakhstan, total volume of container transit traffic increased by 37% — Ministry of Industry and Infrastructure Development
09 September 2020, 11:02
Measures taken stabilized epidemiological situation in the country — Prime Minister of Kazakhstan Askar Mamin 
09 September 2020, 10:54
Following results of 8 months of this year, positive dynamics remains in basic sectors of economy
09 September 2020, 10:53
Government adopts National Plan for Implementation of Address of the Head of State to People of Kazakhstan
09 September 2020, 10:25
604 loans issued under Economy of Simple Things Program — National Bank
09 September 2020, 10:20
Following results for 8 months of 2020, state budget received 5.5 trillion tenge of revenues — Ministry of Finance
09 September 2020, 10:13
Growth in construction, agriculture and manufacturing industry — Ruslan Dalenov reports on results of socio-economic development for 8 months of 2020
09 September 2020, 10:06
Draft National Action Plan for implementation of President's Address includes 10 key areas
07 September 2020, 17:10
It is planned to double fines for violations in the field of environmental protection — Magzum Mirzagaliyev spoke about implementation of President’s Address
07 September 2020, 16:33
Digitalization of land relations to eliminate human factor, bureaucracy and corruption — Omarov on implementation of President's Address
07 September 2020, 16:27
Beibut Atamkulov on implementation of President's Address: Mechanism for subsidizing rent to be approved by the end of 2020
07 September 2020, 16:14
Government session to be held Sep. 9 in Ukimet Uyi
07 September 2020, 15:39
Focusing on industry and development of transport infrastructure in Kazakhstan — Roman Sklyar speaks about main aspects of President's Address
06 September 2020, 09:34
Video Digest: Main events of the week, No. 76
05 September 2020, 14:10
Session of EEC Council: Several issues of further development of Eurasian economic integration discussed
05 September 2020, 13:41
Production of stationary ventilators opened in Kazakhstan
© 2019 - 2020 Press service of the Prime Minister of the Republic of Kazakhstan.
Developed by SoftDeCo.