What are Kazakhstan’s exports and how does it support local exporters
NUR-SULTAN. KAZINFORM - In 2021, Kazakhstan's trade turnover was 17.4 percent higher than in 2020 and reached $101.5 billion. While over the years of independence, Kazakhstan’s economy was supported by its huge oil and gas exports, now it seeks to increase its non-commodity exports to $41 billion by 2025. What the government is doing to achieve that goal is in the latest article of Kazinform.
In 2021, exports from Kazakhstan increased by 26.9 percent to $60.3 billion. Of this, US$22.1 billion are non-resource exports, and US$38.2 billion are commodity exports. Imports increased by 5.8 percent to $41.2 billion.
According to the data from the government, between January and April, exports reached US$26.5 billion, 60 percent more than over the same period in 2021. Exports of processed goods rose 32 percent to $7.3 billion. 53 percent of Kazakhstan's total production was exported.
While the bulk of exports still accounts for oil, Kazakhstan has been trying to diversify its exports.
According to the government data, between January and March, key non-commodity exports were copper and copper cathodes ($988.8 million), ferroalloys ($796.7 million), uranium – ($355.1 million), natural gas ($250.9 million), raw zinc ($246 million), hot-rolled steel ($234.5 million), petroleum products ($224.5 million) and wheat and rye flour ($172.8 million).
Kazakhstan exports to 122 countries around the world. In 2021, the geography of Kazakhstan's exports expanded in all directions, except for China, Afghanistan, Greece, India, and Spain, where the supply from Kazakhstan decreased by 7.6 percent or $416.7 million. This was due to a decrease in exports in value terms, including uranium by 33.2 percent, unalloyed hot-rolled flat steel by 86.9 percent, and natural gas by 66.7 percent.
What does Kazakhstan do to promote its exports?
Promoting exports is the area of responsibility of the Kazakh Ministry of Trade and Integration.
Following President Tokayev’s instruction to build a high-quality system of support for exporters, the government created QazTrade Center for Policy Development in September 2019.
«Export development and support of export-oriented industries are one of the government’s key objectives. Several years ago, QazTrade was identified as the main operator of state export support measures. All in all, there are more than 20 instruments in the country today that help entrepreneurs enter foreign markets. Practically all of them are provided by our company. The only exception is for export insurance, which is handled by KazakhExport,» said QazTrade CEO Azamat Askaruly in an interview for this story.
According to the ministry, the number of active exporters in Kazakhstan exceeded 540 in 2021, 100 companies more than in 2020.
Among the 20 instruments, Askaruly highlighted trade and economic missions and specialized exhibitions as the most demanded tool. These measures are aimed at establishing direct contacts and boosting trade relations between Kazakh enterprises and potential importers, traders, and distributors. The ease of coronavirus-related restrictions and the opening of the borders stimulated the demand.
«This year, their popularity has increased a lot. If for 10 trade and economic missions held last year the businesses signed contracts for the supply of goods for $163 million, only for six missions of this year the volume of contracts exceeded $278 million,» said Askaruly.
Local exporters can get assistance from the center free of charge including consultative and analytical support. The center’s experts analyze the potential market for exporting a particular commodity, assist in forming and conducting a marketing campaign to promote the commodity, and provide Kazakhstan’s companies with recommendations on improving export activities.
The export accelerator program is another tool gaining popularity. Launched in 2020, the companies selected for the program have access to a wide range of services from analysis of their export potential to assistance in selecting a market, finding a buyer, conducting a marketing campaign, B2B meetings, and drafting necessary documents for export. Potential and existing exporters can participate in the program, which is free of charge.
The first accelerator took place in 2020 having 35 companies, which were directed to the market of China. They had more than 160 B2B meetings there. Some companies had the opportunity to get the right to export to China, which is often challenging considering the specifics of the Chinese market and its strict regulations for certain products.
In 2021, 101 companies were selected for the accelerator, and the geography has also expanded to China, Russia, Kyrgyzstan, Uzbekistan, and the United Arab Emirates (UAE). 61 of them were able to pass the selection for Central Asia and the United Arab Emirates, and the selection for the Russian market (25 companies) and the Chinese market (15 companies) was just as tough.
Most of these companies were manufacturing enterprises in the food industry, machine building, light industry, and chemical industry. For about a fifth of the selected companies, the accelerator was the first export experience.
«This year we have our third cohort of companies. Accelerator-2022 is focused on companies in the food, chemical, engineering, light industry, and service providers. These sectors are now a priority for increasing export supplies. Russia, China, Uzbekistan, the UAE, Ukraine, Azerbaijan, and Saudi Arabia have been selected as promotion markets,» said Askaruly.
Challenges related to geopolitical developments
The past two years have been challenging for exporters that had to adapt to several shocks, which affect supply chains. The COVID-19 pandemic and the Ukraine were the biggest ones.
«The work to support the formation of convenient logistics routes is carried out not only by our company and the ministry but by the entire government. This is especially relevant now given the disruptions along the traditional corridors through Russia. As part of our trade and economic missions, we held meetings not only with the business of other countries but also with logistics companies, seaport, and railroad managers. This is why state support of our export is not only about some measures, like holding exhibitions or missions, but trade diplomacy at the level of negotiations to decrease tariffs or provide privileges during transportation of Kazakh cargos,» said Askaruly.
This year, the center received many requests from companies related to bans and restrictions, as well as requests for estimates and search for logistics partners.
«We are in constant contact with entrepreneurs. Almost all export managers of Kazakhstan’s companies know the phone numbers of our employees. Therefore, any problems faced by businesses automatically become known to us, and we get involved in their solution. This is our key task - to help businesses do business and create maximum comfortable conditions for increasing Kazakhstan’s export,» said Askaruly. Considering the changes in the geopolitical landscape, the center also seeks to move into new niches that are becoming vacant.
Kazakhstan’s Halal exports as a promising area
On May 28, Kazakh Minister of Trade and Integration Bakhyt Sultanov announced Kazakhstan’s KazStandard laboratory has received accreditation from the International Accreditation Centre of the UAE which grants it the right to certify Halal products. This makes the Kazakh laboratory so far the only one accredited according to international requirements in the Eurasian Economic Union and Central Asia and opens significant opportunities for local companies in new markets.
This is expected to stimulate exports because it will decrease the cost companies have to incur to obtain the certificate. Previously, to obtain a Halal certificate in the importing country the enterprises had to spend from $7,000 to $30,000 for a batch, and now the cost of certification in Kazakhstan will range from 90,000 to 700,000 tenge ($1,500) for serial production.
The companies having this certificate will be recognized in the territory of Arab states, such as Bahrain, Qatar, Kuwait, the UAE, Oman, and Saudi Arabia.
«We can potentially increase exports to other regions - CIS, Turkey, Iran. Even more so since there are more than 4,200 Halal manufacturers in Kazakhstan in food, textiles, pharmaceuticals, household chemicals, and cosmetics,» said Sultanov.
The stimulus comes at a time when the demand for halal in the world is growing. According to the data cited by Sultanov, the volume of Halal imports in the world is estimated at more than $250 billion, and the three largest importers are the countries of the Middle East and North Africa - Saudi Arabia, the UAE, and Egypt.
Written by Assel Satubaldina