Neighborly exports: why Kazakhstan should increase supplies to Uzbekistan?
Uzbekistan belongs to the category of countries with high export interest for Kazakhstan and is a promising sales market. Based on the results of the 2020 coronacrisis, Kazakhstan entered the top three trading partners for the export of goods to Uzbekistan with a share of 10.5% - $ 2.1 billion, and even increased exports (for comparison, in 2019 this figure reached $ 1.9 billion).
Growth is planned for the current year as well. At the same time, according to experts' forecasts, in the medium-term perspective, trade between the countries is actively transforming from the sphere of transactions for the supply of raw materials to the sphere of cooperation in the production of final products.
We talked with Ruslan Iskakov, Chairman of the Board of JSC “Export Insurance Company “KazakhExport”, about how domestic goods are helped to get on the shelves of supermarkets in Uzbekistan, state support, and new prospects for strengthening trade relations between the two countries.
- Ruslan Viktorovich, KazakhExport has been developing exports to the countries of Central Asia and Uzbekistan for several years. Has the coronacrisis affected your work in the direction of Uzbekistan?
- With our insurance support, exporters have been supplying goods and services to Uzbekistan for many years. These are products of various industries: transformers, thermal insulation boards and ceiling skirting boards made of extruded polystyrene foam, coke, mineral wool, polyethylene pipes, furniture, cars, gas and electric boilers. In the food industry, these are confectionery, starch syrup, cattle meat, sunflower oil, flour and pasta, dairy products.
In the period from 2017 to May 2021, the volume of assumed insurance obligations to support export contracts of domestic manufacturing enterprises to Uzbekistan amounted to almost 37.8 billion tenge. Of these, the most significant volume of insurance support by KazakhExport fell on the coronacrisis last year - 26.9 billion tenge, which is six times more than the same indicator in 2019. At the same time, the amount of export contracts supported by KazakhExport in 2020 alone reached 87.3 billion tenge.
- What projects are you working on now? Is there still a demand for domestic products and services in the neighboring market?
- Of course, there is demand, and it is growing. At the same time, the focus of trade and economic cooperation is gradually shifting towards joint large infrastructure projects, the development of international industrial cooperation, for instance, in the automotive industry, which will increase the volume of mutual trade between our countries.
Recently, we held a number of meetings in the city of Tashkent with the participation of Kazakhstani manufacturers, importing enterprises, and representatives of the largest financial institutions of Uzbekistan.
Agreements were reached on the supply of Kazakhstan-made cement and reinforcing bars to the republic in the amount of $25 million for the construction of significant infrastructure projects. KazakhExport also already provides insurance support to one of the largest construction companies of the Republic of Kazakhstan, which, in order to expand the geography of services, is implementing a project for the construction of various facilities in Tashkent.
At the end of the second quarter of this year, with our support, it is planned to conclude and implement export contacts related to mining operations in the amount of $10 million, modernization of energy facilities in Uzbekistan, and implementation of engineering services in the amount of $20 million.
- You mentioned projects in the automotive industry, please tell us more about this?
- Since 2017, a large exporter, the “Saryarka AvtoProm” company, has been using our insurance support. It is the first production site in the country to launch a small-unit assembly of passenger cars. The company has experience in supplying products to Russia, Belarus, Uzbekistan, Tajikistan, and Kyrgyzstan, uses our tools such as export trade financing, export credit insurance and liability insurance to a creditor.
In the period from 2017 to April 2021, KazakhExport, as part of supporting the plant for export operations, assumed obligations totaling 18.8 billion tenge. Kazakh-made cars are successfully exported to Uzbekistan, and jointly produced Kazakh-Uzbek Chevrolets are exported to Russia and Belarus.
We are also actively working with a young and very promising passenger car manufacturing enterprise in Almaty - Hyundai Trans Kazakhstan (a subsidiary of “Astana Motors”). In April, it was one year since the first SKD vehicle rolled off the assembly line. While in October last year, a small-unit production line was launched at the full-cycle plant, including welding and painting operation.
Hyundai Trans Kazakhstan aims to fill both domestic and foreign markets. Let me remind you that agreements have been reached between Kazakhstan and Uzbekistan on the supply of Kazakh-made cars to the neighboring state. Our sister company Development Bank of Kazakhstan financed the pre-export operation of the plant to supply Hyundai vehicles to Uzbekistan. For our part, we insured a loan in the amount of 25 billion tenge, within the framework of which export deliveries of Hyundai cars started at the beginning of this year, and as the capacity of the enterprise increases, they will only grow.
- Do you actively support Kazakhstani food industry producers exporting to Uzbekistan?
- This is also a promising direction, we are working to ensure that products “made in KZ” are recognizable by Uzbek consumers. For this, last month KazakhExport organized a series of B2B meetings in the cities of Nur-Sultan, Almaty between the large trade network of Uzbekistan MAKRO and domestic producers of the food and non-food sectors.
In total, more than 50 enterprises were invited from Kazakhstani producers. Our common aim was to reach agreements on the promotion of domestic products from all regions of Kazakhstan to the shelves of the Uzbek supermarket chain.
It is always difficult to establish cooperation with retail chains. In Uzbekistan, this is a dynamically growing segment, so more and more consumers prefer to shop in supermarkets rather than in markets where Kazakhstani goods are traditionally present.
A logical continuation of this preparatory work were the meetings organized by us a few days ago on the sidelines of the 20th anniversary International Exhibition “Food, Ingredients and Food Technologies - UzFood 2021” in Tashkent.
We hope that soon Kazakhstani flour, pasta, confectionery and other goods will be constantly present on the shelves of the retail network.
In this direction, we see great interest from both exporters, and our partners in Uzbekistan.
- We wish you success and thank you for the interview!
For reference:
JSC “Export Insurance Company “KazakhExport” (part of the structure of JSC “NMH “Baiterek”) is a subordinate organization of the Ministry of Trade and Integration of the Republic of Kazakhstan to promote the export of non-primary goods and services. The mission of JSC “Export Insurance Company “KazakhExport” is to support the growth of exports of non-primary goods, works, services in priority sectors of the economy and the formation of the practice of financial, insurance and non-financial support of Kazakhstani enterprises.
