Opposition by AMANAT Party to Unofficial Imports (informal trade)

Hanging in the Balance: Kazakhstani Businesses Battle Soaring Certification Costs

In the heart of Central Asia, Kazakhstan’s domestic businesses are grappling with mounting certification expenses, leading to a flood of cheap, questionable imports. This issue was front and center at a recent gathering of the Republican Council on Agricultural Sector matters under the AMANAT party, as reported by Liter.kz.

Kicking off the meeting, government agencies, associations, and food producers conversed with Council chairman, Nurlan Ashimbetov, a Mazhilis deputy. Ashimbetov underscored the importance of collaboration with the Alliance of Associations of Processing Enterprises to devise state aid for Kazakh manufacturers.

"Right now, legislation amendments are awaiting government endorsement. Instead of outright rejection, we demand constructive suggestions to bolster the legislation. Support for domestic businesses remains our top priority," he asserted.

Andrei Kukushkin, the coordinator of the Alliance of Industry Unions, then weighed in, advocating for stricter sanitary and veterinary control at the border to keep low-quality goods out. He contended that without increased sanitary standards and accountability from regulatory bodies, it’s impossible to ensure the safety of supplies. Kukushkin also proposed additional laboratory checks and digital monitoring of supply routes.

"Given that around 40% of market products originate from gray channels, this is crucial for our domestic producers to get a fair shake," he declared.

Conversations even delved into the struggles Kazakh companies face when attempting to break into foreign markets. Exorbitant international product certification fees are a substantial barrier for exporters. Dinaara Zhaiylaubaeva, head of the state control department of the Committee for Technical Regulation and Metrology under the Ministry of Trade and Integration, confirmed that the department receives numerous complaints about this issue.

"We propose a mechanism for partial compensation of such costs through existing support programs, such as QazIndustry operator,” she suggested.

Business leaders gave their seal of approval to the proposal. Meanwhile, they lamented the current predicament—being told to expand their horizons globally, yet shouldering all the upfront costs for audits, certifications, and documentation updates.

"Over 70% of surveyed companies admitted to shying away from entering EAEU or EU markets due to hefty certificate costs, spanning anywhere from 5 to 30 million tenge based on the product and market," stated Kukushkin.

To refine the proposals, Zhaiylaubaeva proposed evaluating three essential factors: proof of actual exports (foreign trade contract or confirmed shipment), localization of at least 50%, and participation in the industrial certification program to expose phony companies. Ashimbetov concurred with the plan and delegated the task of refining the proposals with the Ministry of Finance and the Agency for Strategic Planning in the shortest time possible. They also suggested linking the proposed measures with existing state programs like "Made in Kazakhstan" for sustainable funding.

While the path to reducing certification costs is complex, measures like streamlining standard development, export subsidies, and enhanced partnerships with major trading partners offer a glimmer of hope for Kazakhstan’s businesses seeking a level playing field in the global market. In the meantime, cooperation between private enterprises and government entities continues in pursuit of practical, lasting solutions to this pressing challenge.

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To ease the burden of high certification costs for Kazakhstan companies, the government is taking several steps:
Cost Reduction for Standard Development: State audit identified inefficiencies and new norms, leading to 8% to 59% savings on developing national and interstate standards.
Export Subsidies: The Ministry of Agriculture introduced export subsidies to decrease transportation costs for grain exports, particularly for transit to Azov ports.
Trade Partnerships: Kazakhstan prioritizes partnerships with key trading partners like China, Russia, and the EU to simplify trade processes and possibly ease certification requirements through agreements.
Non-Resource Exports: There has been an upward trend in non-resource exports in Kazakhstan, which could encourage businesses to explore diverse markets and product lines, potentially reducing reliance on costly certifications associated with specific sectors.
Potential solutions for easing certification costs include:
Harmonization of Standards: Working towards aligning standards with those of the EAEU and EU to minimize duplication and complexity in the certification process.
Simplified Certification Processes: Implementing simplified or unified certification processes within trade agreements can help reduce costs and bureaucratic obstacles.
Training and Support: Offering training and support for companies navigating certification processes could boost compliance and lower costs due to misunderstandings or mistakes.

"The government agencies are striving to reduce certification costs for Kazakhstan's businesses, recognizing it as a substantial barrier. This includes proposing a mechanism for partial compensation through existing support programs like QazIndustry operator," suggested Dinaara Zhaiylaubaeva.

"Additionally, business leaders are advocating for partnerships with key trading partners like China, Russia, and the EU, aiming to simplify trade processes and potentially ease certification requirements through agreements," asserted Nurlan Ashimbetov.