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Over 24 thousand business entities to be provided with microcredits in 2021 — Aset Irgaliyev

Tuesday, 04 May 2021, 13:34:06

At the government session chaired by the Prime Minister of Kazakhstan Askar Mamin, Minister of National Economy Aset Irgaliyev, Chair of NCE Atameken Ablay Myrzakhmetov, Chair of the Board of Damu Fund for the Development of Entrepreneurship Gaukhar Buribayeva presented their reports on measures to support the small and medium-sized business.

According to the Minister of National Economy Aset Irgaliyev, in the context of the pandemic and continuing restrictions on the activities of entrepreneurs, the support of small and medium-sized businesses is of particular importance.

“For 3 quarters of 2020, the share of SMEs in the economy reached 30.5%. In 2020, SMEs produced products worth 32.7 trillion tenge. The number of people employed in SMEs as of Jan. 1, 2021, amounted to 3.4 million people’’ said the minister.

The reforms undertaken to improve the business climate allowed Kazakhstan to rise to 25th place in the Doing Business rating in 2019.

The work on concessional lending to SMEs continues this year. For the first quarter of this year within the framework of state programs of concessional financing, more than 16 thousand projects for 663 billion tenge received support.

At the end of the year, more than 47 thousand projects will be provided with preferential financing for a total loan portfolio of 2.5 trillion tenge.

Support is provided in the framework of refinancing loans to SMEs in the affected sectors of the economy. For the period from March 15, 2020 to March 15, 2021, subsidies were provided for refinancing about 9 thousand projects in the amount of 475 billion tenge.

This year the list has been expanded by 145 economic activities. According to the expanded list, subsidies will be paid for 2 thousand projects for the amount of a loan portfolio of 132 billion tenge.

“On behalf of the Head of State dated April 1, 2021, on the extension of the term of subsidizing loans for the affected sectors of the economy, 93 economic activities were determined. The subsidy period will be 3 months from April 1 to July 1, 2021. It is planned to cover more than 6.7 thousand projects for the amount of loans of 425.5 billion tenge,” added Irgaliyev.

According to the results of the 1st quarter of this year. within the framework of the programs Business Roadmap-2025 and Economy of Simple Things, 5,884 projects were subsidized for a total amount of loans of 232 billion tenge, guarantees were provided for 6,892 projects for the amount of loans of 87 billion tenge. As part of the ACC, 134 projects were supported for loans of 5.9 billion tenge.

Last year, within the framework of Business Roadmap-2025, a business microcredit program was launched. Within the framework of this direction, loans are provided up to 5 million for working capital and up to 20 million for investment purposes.

At the same time, most of the loans up to 5 million tenge are issued on an unsecured basis at a rate of 6% for the end borrower.

Within the framework of the Enbek program, budget microcredits are provided in cities and villages at 6% per annum through FFSA JSC.

In the second half of the year, microcrediting will also be launched under the Employment Roadmap program. These microcredits will be issued to graduates of Bastau-Business through the established MFOs NCE Atameken.

At the end of the year, within the framework of these programs, it is planned to cover more than 24 thousand business entities with microcrediting.

Within the framework of the Business Roadmap-2025 and Economy of Simple Things programs, support measures are provided in the form of subsidizing the interest rate and guaranteeing loans to SMEs.

The final cost of borrowed funds for entrepreneurs under the Business Roadmap-2025 and Economy of Simple Things programs has been reduced to 6%.

It should be noted that last year, within the framework of Business Roadmap-2025, the maximum loan amount was increased to 7 billion tenge with a subsidy period of 5 years. Under Economy of Simple Things, the loan amount is not limited, and the subsidy period is 10 years.

In addition, in 2020, under the Business Roadmap-2025 program, industry restrictions were lifted, and under the Economy of Simple Things, the list of goods and services was significantly expanded to 150 economic activities.

Taking into account the consequences of the pandemic, the Government has adopted a number of measures for tax incentives for business, in particular:

- from Jan. 1, 2020, there is a 3-year exemption from tax on income of small and micro businesses applying special tax regimes;

- from Jan. 1, 2021, a new special retail tax regime was introduced with a rate of 3% on income received in the affected industries (114 economic activities);

- From April 1, 2021 to July 1, 2021, deferrals will be provided for the payment of taxes from the wage bill in the affected industries.

Based on a survey of more than 50 thousand business entities conducted by Atameken NCE, a new package of measures to support SMEs has been prepared.

In particular, within the framework of the updated Comprehensive Plan for the Recovery of Economic Growth for 2021, more than 60 support measures are envisaged in the following areas:

- Reducing the burden on business, incl. a number of tax incentives and facilitation of tax administration.

- Facilitating access to finance for entrepreneurs. These measures will make it possible to provide preferential refinancing of bank loans to SMEs. Also, in pursuance of the instructions of the Head of State, deferrals for loans to SMEs will be provided from April 1, 2021 to June 30, 2021.

- Access to demand markets. This area includes measures aimed at facilitating access to public procurement and procurement of the quasi-public sector, including the introduction of a mechanism to support domestic producers for minor government purchases.

- Smart regulation includes the development and adoption of a law providing for the introduction of a new regulatory policy in the field of entrepreneurship.

A new regulatory policy is being developed, aimed at creating the most favorable and stimulating conditions for enhancing entrepreneurial activity and attracting private capital in a new economic reality. In order to drastically reduce the burden on business, the formation of an optimal and effective regulatory system, new approaches to regulating entrepreneurial activity are being formed from scratch.

They provide for:

- improving the basic principles of interaction between the state and entrepreneurship;

- the institution of regulatory appeal;

- experimental legal regimes;

- reporting automation;

- improvement of state control;

- exclusion of the retroactive application of legal acts for business.

“Today the bill has been agreed with all government agencies and submitted for consideration by the Government, measures are being taken to enter Kazakhstan into 20 countries of the Doing Business rating,” the minister said.

To achieve these goals, a draft Law "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Doing Business" is being developed.

The bill covers 23 important reforms in various areas of business.

The work to support small and medium-sized businesses is carried out in close cooperation with NCE Atameken, the business ombudsman, and the business community. This work is carried out within the framework of the Project Office for Entrepreneurship under the Government.

Ablay Myrzakhmetov, chair of Atameken National Chamber of Entrepreneurs, reported on introducing regulations from scratch.

According to him, together with the Ministry of National Economy, basic approaches have been developed in the regulatory policy of entrepreneurial activity.

“A draft law has been developed on the issues of a new regulatory policy, which provides for the introduction of conditions for the formation of regulatory instruments, the introduction of the ‘one in - two out’ principle, a register of mandatory requirements, an experimental legal regime, etc. It will cover 4 main sectors — trade, housing services and food, agriculture, transport. This bill will be submitted to the Majilis of the Parliament,” Myrzakhmetov said.

In general, it is necessary to:

- develop a methodological base and a conceptual model of legal support of the draft law;

- develop to ensure the implementation of the draft law;

- form, enter and update the register of mandatory requirements;

- to conduct a series of training seminars for participants in the revision (analysis) of requirements;

Further expert and consulting support of work on an ongoing basis.

As the chair of Atameken noted, one of the difficult issues is changing the culture of thinking of auditing government agencies, creating conditions for effective business development and competition, creating a new system of smart business regulation. All this will be done in an open manner.

Currently, at the Government level, a platform is actively operating to resolve problematic business issues.

A total of 282 questions were formed. As of May 1, 2021,103 issues were considered, 90 — resolved.

In connection with the coronavirus pandemic, the state provided large-scale support to entrepreneurs. On behalf of the President, a number of specific measures were taken, in particular, exemption from the payment of property tax until the end of this year, exemption of employees' incomes from IIT in the form of means of protection received from employers; setting the maximum threshold for tax arrears in the amount of 6 MCI, etc.

Atameken also provides non-financial support measures to entrepreneurs. For 5 years, more than 34 thousand enterprises were opened, more than 23 thousand documents were prepared, 61 246 projects were supported, 107 813 business objects were paid, 16 companies expanded their business, 129 companies established cooperation.

Then Myrzakhmetov presented a plan for non-financial support measures for 2021.

So, incl. it is planned to provide service support to 21,300 SMEs. On April 1 of this year 6,983 SMEs received service support.

Within the framework of information support, it is planned to provide 156 thousand consultations. As of April 1, 2021, 34,972 consultations were provided.

Also, according to Myrzakhmetov, the functions of NCE Atameken on the creation of the portal Government for Business are legislatively enshrined.

“An additional agreement has been signed with the Government on the further integration of systems,” he said.

Until the end of this year, the integration and launch of the Government for Business project will be completed.

Chair of the Board of Dame Fund Gaukhar Buribayeva presented information on measures of state support for SMEs within the framework of the Fund.

So, at present, Damu Fund provides support to SMEs in 4 main areas, this is subsidizing the interest rate, guaranteeing loans, concessional lending and training under the EBRD programs.

“The Fund is the operator of such government programs as Business Road Map-2025, Economy of Simple Things, Nurly Zher, Enbek, and also provides entrepreneurs with support within its own programs to support SMEs,” she said.

As of April 1, 2021, as part of the implementation of financial support measures, the Fund supported 126.9 thousand projects of entrepreneurs for a total amount of loans of 7.4 trillion tenge.

In order to cover entrepreneurs with measures of state support, as well as in connection with the adoption by the Government of anti-crisis measures in 2020-2021, the following measures were implemented to increase the availability of state support for SMEs:

  • Unification of interest rates on loans for the final borrower to 6% within the framework of state programs;
  • Removal of industry restrictions in the state program for support and development of business ‘’Business Roadmap-2025»;
  • Reducing the time for consideration of applications to 5 working days;
  • Support for the affected sectors of the economy;
  • Introduction of microcrediting within the framework of portfolio subsidies and guarantees;
  • Increase in the amount of maximum loans for the instruments of Business Roadmap-2025 from 2.5 billion tenge to 7 billion tenge;
  • Automation of business processes of the Damu Fund up to 94%.

“It should be noted that in 2017 the fund began the process of automating public services. Entrepreneurs can submit online applications for support within the framework of state programs through the egov.kz portal and through the Foundation's own platform Online.Damu.kz,” Buribayeva said.

Today, the share of online applications for subsidies is 97%, and for guarantees — 86%.

Also, as of today, the signing of subsidy agreements by means of an electronic digital signature has been implemented; by the end of the year, the functionality under the guarantee agreements will be implemented.

In terms of instruments, the following support was provided. By subsidizing the interest rate for the 1st quarter of 2021, 6.2 thousand projects were supported for a total amount of loans of 277.5 billion tenge. In general, 38.5 thousand projects have been supported since the implementation of the programs.

In connection with the anti-crisis measures taken by the Government, the largest number of supported projects falls on trade and services, as well as the manufacturing industry.

Compared to 2015, the number of projects supported in 2020 increased 9 times.

In accordance with the instruction of the Head of State on subsidizing remuneration rates for SMEs in the most affected sectors of the economy, as of April 1 of this year. state support was received by 8.9 thousand projects for loans of about 475 billion tenge. In terms of the number of projects in the context of economic sectors, the leading sectors are trade, services, as well as transport and storage.

‘’Damu Fund made payments on an urgent basis within 1 month and brought the funds to each entrepreneur. In accordance with the decision of the Government of March 31 of this year, the deadline for accepting applications was extended until July 1. Damu plans to make payments in the second half of May,” said the chair of Damu.

In the event of a lack of collateral for loans, entrepreneurs are provided with a guarantee of the Damu Fund under the state program Business Road Map 2025, Economy of Simple Things and its own program Damu Optima. So, in the 1st quarter of 2021, 6.9 thousand projects were supported for a total amount of loans of 89 billion tenge.

In general, since the implementation of the programs, 22.8 thousand projects have been supported for the amount of loans of 667 billion tenge. The largest number of projects falls on the state program Business Roadmap-2025 in the framework of microcredit support.

In the 4th quarter of 2020, the first direction of the State Program Business Roadmap 2025 "Portfolio subsidies and guarantees for loans to micro-small businesses" was launched. The purpose of this direction is to increase the coverage of micro and small entrepreneurs with measures of state support.

Currently, within the framework of this direction, a total of 18.9 thousand projects were supported for a total amount of loans of 103.3 billion tenge, incl. for subsidies — 8 thousand projects for 43.5 billion tenge and for guarantees — 10.9 thousand projects for 59.8 billion tenge.

In 2021, 13.1 thousand projects were supported for the amount of 71.9 billion tenge, which is 2.2 times more in the number of projects and 2.3 times more in terms of the amount of loans in comparison with the results of 2020.

According to the results of 1 quarter of 2021, the following regions can be noted regarding their participation in the main state support programs.

As for the subsidizing instrument, these are Kyzylorda, East Kazakhstan, Almaty city, as well as Almaty and Karaganda regions.

Partial guarantee — Almaty, Nur-Sultan, as well as Zhambyl and Pavlodar regions.

One of the important areas of support for SMEs is also the provision of concessional lending in various sectors of the economy under such programs as Damu Ondiris from the funds of the National, Enbek, Damu Micro, as well as programs at the expense of funds attracted from international financial institutions for financing entrepreneurs.

For the 1st quarter of 2021, within the framework of concessional lending, 3.9 thousand borrowers were supported for a total amount of loans of 44 billion tenge.

In general, about 72 thousand projects were supported for the amount of loans of 2.4 trillion tenge.

Participants of state programs to support entrepreneurship in 2010-2019 produced 27 trillion tenge of products, paid 2 trillion tenge in taxes, saved 600 thousand jobs, of which 170 thousand were created. It should be noted that the average growth in annual indicators of the socio-economic effect is about 30%.

As a financial operator of government support measures, the Fund continues to work to increase the availability of financing for SMEs. So, in 2020-2021. The Fund took a number of additional measures:

  • an agreement was concluded with the European Investment Bank with a limit of 200 million euros;
  • funds were raised by issuing green bonds in the amount of 200 million tenge;
  • the program of Islamic financing of SMEs was implemented;
  • an agreement was signed with UNDP to launch the program Reducing the investment risks of small projects of renewable energy sources (RES).

Until the end of this year. a number of activities are also planned:

  • expanding the coverage of the Guarantee instrument with the help of leasing companies;
  • development of the Women in Business program;
  • strengthening analytical activities, creating a center of competence in the field of SMEs.

The above and current measures will increase the number of supported projects in 2021 by 15% compared to 2020, create 10 thousand new jobs and ensure the production of goods and services by entrepreneurs by 5.5 trillion tenge.

According to First Deputy Prime Minister Alikhan Smailov, the development of small and medium-sized businesses is one of the most important factors in ensuring the sustainability of the economy.

Amid the pandemic, since last year, unprecedented measures have been taken to support SMEs.

So, in 2020, about 700 thousand business entities took advantage of tax benefits in the amount of over 1 trillion tenge.

“This year, by updating the Comprehensive Plan to Restore Economic Growth, a new package of specific measures aimed at supporting business has been adopted,” Smailov said.

These measures include tax incentives, easier access to finance for SMEs, loan deferrals, exemption from lease payments, easier access to government procurement and procurement by the quasi-public sector, and reduction in administrative costs.

All proposals for supporting entrepreneurs are prepared in constant and close cooperation with NCE Atameken and industry business associations.

In addition, work is being carried out on a systematic basis to solve problematic business issues.

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