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Tuesday, September 21st, 2021

Ministry of National Economy: 961.7 billion tenge provided to encourage business activity

by November 25, 2016 World Sports

Vice Minister of National Economy Aidar Arifkhanov briefed at the meeting with Senate Deputies on the measures of state support for SME and the Entrepreneurial Code of Kazakhstan.

The Vice Minister reminded on Entrepreneurial Codes entering into force on January 1, 2016, which systematized all the basic rules of law, business regulation, as well as the state support for private entrepreneurship.

According to the Vice Minister, there are 1,240,916 SMEs in Kazakhstan, which employ over 3.1 million people. In the first half of this year these entities have manufactured products 6.4 trillion tenge worth. There is a 1%-increase in employment rate and 11%-increase in SME production in nominal terms compared with the same period last year.

The reforms to improve state control and supervision resulted in transition from planned inspection to audits based on risk assessment, wherefore only the potential offenders are being selectively checked now, which allows to move from identify & punish policy to the policy of preventing and promoting bona fide entrepreneur.

The ongoing reform gives positive results. Thus, the number of inspections in respect of business entities reduced by 45% over the nine months of this year compared with the same period of 2013, i.e. prior to the reforms and a moratorium on inspections, Arifkhanov said.

In addition to measures taken to reduce the pressure on business entities on the part of government regulatory bodies, this year has seen launch of supervisory functions audit of state bodies, on the basis of which the number of audits and areas of control and supervision is planned to be reduced in 2017.

A.Arifkhanov noted that pursuant to the order of the Head of State to ensure Kazakhstans joining top 30 countries of World Banks Doing Business report, the Government carries out systematic work on reforming the existing legislation.

In order to accomplish the task, over the last three years there have been adopted 4 sets of legislative amendments aimed at reducing the number of procedures, terms and cost of business, which in turn reduces burden on business. In 2016, Kazakhstan was ranked 35th among 190 countries of the world in Doing Business 2017, increasing its ranking by 16 points compared to Doing Business 2016, where Kazakhstan was ranked 51st. Kazakhstan has been for the fourth time marked as the best reformer over the last 12 years, A.Arifkhanov said.

He stressed that this year the policy of state support for entrepreneurship is focused on the financing of SME basic needs.

This is the replenishment of turnover capital and refinancing of previously received loans, which are subject to contraction of domestic market of Kazakhstan and decrease of consuming capacity.

To stimulate business activity of entrepreneurship, 961.7 billion tenge is available this year for business, the Vice Minister informed.

He also informed that in the framework of Employment Roadmap 2020, as of November 1, 2016, 8,367 projects have been subsidized and 2,345 guarantees for credits amounting to 1,688 billion tenge have been issued. These measures are achieved due to the increase in April of the nominal rate of interest on loans from 16% to 19%. To increase the added value for the SME products and maximize the effect, the measures on subsidies and guarantees are redirected to an effective enterprise.

By the year-end, 36 SME projects 16 billion tenge worth will be provided engineering infrastructure. For the implementation of new business initiatives there are allocated 1,096 state grants in the amount of 2,817 million tenge, 1,018 microcredits in the amount of 3.3 billion tenge are provided for starting and expanding own business. In order to improve the business competence, over 125,000 entrepreneurs were trained, over 273,000 services have been rendered the Vice Minister informed.

According to the Vice Minister, 300 billion tenge was allocated for the concessional financing of business entities in the manufacturing industry in the framework of joint action plan of the Government and the National Bank of the Republic of Kazakhstan. Due to the revolving use of these funds 1,611 SME projects 404.2 billion tenge worth have been financed.

As part of plan of additional measures to stimulate economic growth and employment in 2016-2017, due to the reallocation of pending disbursements of UAPF and National Fund there is provided funding of turnover capital of business entities in the manufacturing industry in the amount of 155 billion tenge.

To achieve immediate effect in the economy the period of funds repayment is limited to a year. The effectiveness of funds is provided by attracting market project monitoring mechanisms used by the second-tier banks.

137.4 billion tenge of these funds has been placed in second-tier banks as of November 1, 2016. The banks in turn have financed 88 SME and 22 large business projects 54 billion tenge worth. At the same time, 200 billion tenge out of the UAPF funds has been directed to finance the SME needs in turnover capital and refinancing loans. The National Bank placed 112.8 billion tenge of these funds as of November 1, 2016 (56.4% of the total amount of funds), by which 374 projects 76.9 billion tenge worth have been funded, A.Arifkhanov informed.

To ensure repayment of funds there is provided cheapening the cost of such loans within Employment Roadmap 2020. This will reduce the debt load for the business and positively affect their capacity to meet credit obligations. At present, 45 projects 7.1 billion tenge worth are subsidized out of UAPF expenses within the Employment Roadmap 2020.

He stressed that an additional source of funding of second-tier banks for SME lending is attraction of credit lines from international financial institutions. This year, 156.4 billion tenge is attracted from the ADB and EIB (ADB � 68 billion tenge, EIB � 88.4 billion tenge) in addition on 93.2 billion tenge (ADB � 62.2 billion tenge, EBRD � 31 billion tenge) attracted in 2015.

Overall, the measures taken increased the SME production by 0.3%, employment � by 4.1% and SME loans by 35.8% since the year-beginning, and thus the old rate of SME growth has been preserved, A.Arifkhanov concluded.

Source: Government of the Republic of Kazakhstan