Gaziz Amreyev, Head of the Directorate for Creating an SME Belt around Large Enterprises, spoke about the issues of improving the competitiveness and potential of SMEs, existing barriers and problems in an interview.

- Good afternoon, Gaziz Sagynovich! What government programs do you consider to be the main driver in the development of the competitiveness of SMEs?

- Good afternoon. The import substitution program developed at the moment definitely plays an important role in the entire development strategy chain. The program was developed in accordance with the instruction of the Head of State dated January 11, 2022 and is aimed at creating systemic long-term incentives for the modernization and formation of new production facilities and increasing the competitiveness of Kazakhstani companies in the domestic and foreign markets.

The program is focused on stimulating the growth of SMEs through the implementation of projects, updating funds, revising the existing regulatory framework to increase the localization of production to saturate the domestic market with subsequent export.

- What tasks are set for the Import Substitution Program and what are the target indicators?

- The purpose of the program is to reduce dependence on imports of raw materials and components, and saturation of the domestic market with high-quality products of domestic production with subsequent export. This goal will be achieved by expanding the production of competitive non-primary industrial products, removing barriers and creating parity conditions for bringing products to the market. It is planned to put into operation about 700 projects, create at least 100 thousand new jobs;

- In the work of the center, what are the main problems you face with the assistance of suppliers and customers in cooperation?

- There are enough barriers. However, one of the main challenges now is the existing challenges on the world stage in general and at the regional level, in particular, which complicate capital investment plans for the long term. For example, in the conclusion of offtake contracts, the problem for subsoil users is a high risk when investing in new production.

The rapidly changing geopolitical situation in our region and the associated fluctuating exchange rate affect the pricing of goods, which is a tangible barrier to the conclusion of long-term contracts.

In addition, there are a number of other issues that are systematically solved by the state, such as the lack of a sufficient number of highly qualified personnel (turners, welders, etc.), as well as the developing hard and soft infrastructure. I would like to note that the state is systematically continuing its course towards an industrial policy aimed at creating a high-performance and export-oriented manufacturing industry. And this means that in the future the course will continue to improve the conditions of development in the manufacturing industry.

It is also possible to note private problematic issues. For example, subsoil users note that they are often unable to provide technical specifications, since foreign suppliers of goods do not provide detailed technical specifications when concluding a contract. Accordingly, when considering local manufacturers, the company is not able to evaluate and compare products properly.

- And what problems do suppliers note when working with subsurface users?

- Kazakhstani manufacturers note that foreign suppliers often bring down the price of products to a minimum that manufacturers cannot afford. In addition, unstable prices for primary and secondary raw materials force producers to raise prices for final products. Also, many subsoil users have high requirements for the availability of international certificates and production volumes, as a result of which enterprises, in order to participate in the procurement of large customers, need to invest huge amounts of money to obtain certificates and modernize production.

- How can the import substitution program solve the barriers between customers and suppliers?

- As part of the promotion of domestic value, obligations will be established in subsurface use contracts to create a belt of SMEs around their own production facilities by attracting and creating enterprises, as well as priorities for the purchase of goods and the sale of their own raw materials from these enterprises.

In addition, the company will create its own programs for the development of intra-country value for subsoil users and large enterprises for a period of at least 5 years with a mandatory condition for the conclusion of long-term contracts and offtake contracts with Kazakhstani enterprises.

Enterprises will be involved in the processing of raw materials or in the provision of goods of their own production and/or services to the backbone enterprise. These measures will allow to bypass the barriers associated with technical specifications, increased risks of customers.