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What are measures of government support and promotion of Kazakhstan’s exports? Interview with a representative of a dedicated Kazakh export insurance company covers such questions as how to increase production and output, enter foreign markets with your own goods and insure potential risks.

Export of processed products of the agro-industrial complex is one of priority tasks for economy of Kazakhstan. Dedicated insurance organization KazakhExport is in charge of supporting and promoting Kazakhstan’s exports on foreign markets. The company provides domestic exporting enterprises of the processing sector with insurance coverage against a payment risk in foreign trade operations and guarantees safety of export transactions.

The main task of government support is to provide assistance to an exporter at every stage of export cycle. Export Insurance Company KazakhExport JSC provides an exporter with timely, comprehensive support: it provides a free assessment of a foreign buyer and provides insurance against payment risks connected with a foreign counterparty, helps raise financing from banks to replenish working capital when an exporter does not have sufficient collateral.

Export Insurance Company KazakhExport JSC is a part of Baiterek NMH JSC. Mission of the company is to support growth of exports of non-primary goods, works, services in priority sectors of the economy and form a practice of financial, insurance and non-financial support of Kazakhstan’s enterprises. Vision of Export Insurance Company KazakhExport JSC is to become a key development institution in implementation of state foreign economic policy of the Republic of Kazakhstan in the Central Asian region and countries of the Eurasian Economic Union by 2023.

According to Kuanysh Mukazhanov, Director of the Insurance Department at EIC KazakhExport JSC, all the lines of activities, including processing, are of high priority for the company, including in the agricultural sector. In general, at the end of last year, enterprises engaged in agriculture and food industry favored by KazakhExport accounted to 37% of the total number of supported projects, or 48 enterprises (including 19 new ones), volume of accepted insurance obligations reached 49 billion KZT.

– Kuanysh Amangeldiyevich, production and export of what types of agricultural products does your company support?

– First of all, our support focuses on export of processed products, that is, for example, flour, compound feed, oil and derivatives of oilseeds processing, meat, etc. Second, we are ready to support agribusiness entities products of which do not require processing for consumption. For example, vegetables and fruits can be calibrated directly from greenhouses and orchards, packed and dispatched to shelves in Russian retail chains. Our potato is in demand in Uzbekistan, and we are also ready to support such exporters. When choosing objects of support, we are guided by the Exporter Support Policy, which clearly indicates which exporters KazakhExport should support.

– What are your requirements to manufacturers of processed products?

– We have no restrictions either in terms of size of a company or form of ownership. Our main request is that a manufacturer should be export-oriented, should know its advantages on one or another foreign market, see what export strategy it would stick to and should pro-actively look for its foreign buyers.

And of course, a potential exporter must comply with requirements of regulatory legal acts of the Republic of Kazakhstan and foreign states, including those related to protection of environment or health, protection of rights of population.

To get an initial consultation, you can contact us by phone or email. For convenience of our clients, our corporate Internet resource www.kazakhexport.kz provides ‘Order a call’ service, where a potential exporter can enter its data, select its region. Our regional managers will promptly respond, in a preliminary conversation they will discuss ways, conditions, opportunities and requirements to start partner relations.

– What opportunities can a producer of agricultural products receive in general in cooperation with your company?

– We offer financial support, which is mainly acceptance of financial risks arising from export activities. This gives exporters great opportunities and expands a range of potential buyers of their products abroad. For example, without such support, a manufacturer focuses only on a small number of potential buyers who are able to buy their products only on a prepayment basis. With our support, it is able to:

• Offer goods to those who already wish to buy goods with deferred payment, which means a several-fold increase in number of buyers;
• Increase your working capital;
• Get rid of receivables;
• Eliminate currency risks;
• Receive an advance payment from the buyer;
• And much more.

– What support measures do you provide for an exporter?

– We have 17 insurance products in our arsenal, which are also described in details on our corporate website www.kazakhexport.kz. Insurance is carried out against commercial and political risks, while we draw your attention to the fact that KazakhExport does not insure liability for goods / services.

KazakhExport provides insurance tools to support national exports which are developed in compliance with the best international practices in export credit insurance and also meet needs of a potential and current client as much as possible.

Available key products are grouped into three types according to a type of client: for exporters, for financial institutions and for investors.

KazakhExport products enable an exporter to:         

– What kind of consulting services do you provide to exporters?

– The company free of charge checks foreign counterparties and issues to exporters its opinion concerning reliability of the buyer.

– How are exporters financed, on what terms?

– KazakhExport does not directly finance entrepreneurs. In order to provide pre-export financing, we place funds as conditional deposits with second-tier banks for further lending by banks to exporters for the purpose of manufacturing export products and providing services under an export contract (replenishment of working capital).

Our deposit is placed with second-tier banks for maximum 365 calendar days.  Interest rate for an exporter on a bank loan should not exceed 50% of the Base Rate of the National Bank of the Republic of Kazakhstan, increased by 4%. If the base rate of the National Bank of Kazakhstan as of May 24, 2021 is 9%, then half of this rate plus bank's margin of not more than 4% will make an interest rate for an exporter of around 8.5% p.a.

– Are you looking for importing buyers or should an exporter do it on its own?

– This is not a core activity of KazakhExport, however, for convenience of domestic producers, we provide assistance in arranging business contacts with foreign counterparties in order to find opportunities to boost exports.

KazakhExport runs offices of its foreign representatives in Tashkent (Republic of Uzbekistan), Dushanbe (Republic of Tajikistan), Yekaterinburg and Novosibirsk (Russian Federation), Bishkek (Kyrgyz Republic), Kazan (Tatarstan) and Xian (China).

– Do you support only large and medium–sized enterprises in agriculture or small enterprises as well?

– The company provides support to Kazakhstan’s exporters regardless of company's size as a business entiy (small, medium or large business).

– Tell us about successful projects.

– I would like to emphasize that there are projects supported by us in every region of Kazakhstan, and, for the most part, these are small and medium-sized businesses. I will give just a few examples of cooperation.

Currently, we are participating in upgrade of an idle poultry farm in Karabalyk District of Kostanay Region, which as early as at the first stage will produce twelve and a half thousand tons of broiler meat annually. Also, with our support, this year, two large oil mills will start operating in full, with a focus on export; overall, 16 oil mills in Kazakhstan receive our support.

Last year, despite challenges with goods crossing the border with China, our company for the first time introduced an advance payment insurance tool, with the help of which it was possible to supply safflower oil from Zhambyl Region to Chinese provinces of Shaanxi and Hubei, where KazakhExport completely covered a risk of non-refund of advance payment to Chinese buyers.

Flour mills are also our long-term customers. Thus, Kostanay Region processes almost one third of a total volume of Kazakhstan’s flour. Local businesses are successfully exporting to foreign markets. One of them is Salamat LLP, which cooperates with dozens of clients from different countries, purchasing high quality flour. The government has provided several convenient and really necessary support tools that exporters can use through KazakhExport. Salamat LLP has raised a loan to replenish its working capital and purchased raw materials during the season, which allowed the company to cut production costs and compete on external markets of Tajikistan, Uzbekistan, Kyrgyzstan, Turkmenistan and Afghanistan.

The new exporter supported by KazakhExport in 2020 was Aktobe-based company - Novo-Aldzhansky flour mill, which produces different types of flour, pasta and zhaima. 85% of finished products today remain on the market of Kazakhstan. The rest is exported to China, Russia, Turkmenistan, Uzbekistan, Kyrgyzstan, Mongolia, Afghanistan under  GRANUM brand.

For the first time KazakhExport tools were used  in 2020 by CG FOOD Central Asia LLP, which is a part of large international corporation CG Corp Global LLP that brings together 122 companies and runs 76 representative offices in different countries. Within expansion of its production network in December 2019, the corporation launched an instant noodles plant Turkestan Region. CG FOOD Central Asia LLP received export credit insurance for three foreign buyers in the Russian Federation. Today, the exporter can safely ship its products to foreign counterparties with a deferred payment, while boosting its volume of supplies.

Ramazan Agro LLP – provision of insurance coverage to the Company for advance payment refund to a foreign buyer for an amount of USD 1 million allowed the company to receive an advance payment, purchase raw materials on favorable terms and, as a result, increase its export volumes.

Altyn Shyghys LLP (Eastern Kazakhstan Region) is a subsidiary of Sey-Nar Production Complex LLP. Core activities of Sey-Nar group of companies is procurement, processing and sale of agricultural products. Altyn Shyghys was established to implement an investment project for construction of a unified vegetable oil extraction plant. Products of the company will be oriented not only to meet needs of the domestic market through import substitution but also develop an export potential of the Republic of Kazakhstan. Export Insurance Company KazakhExport JSC has provided support to the company through insurance coverage for an amount of 8 billion KZT as a collateral for loans from Halyk Bank of Kazakhstan JSC raised for the construction of a butter dairy. With implementation of the project, it is planned to create 80 jobs. Domestic oil will be exported to China and Uzbekistan. Launch of the butter dairy is scheduled for the summer of 2022.

– Thank you for the conversation and we wish your company successes in the future!

Zhanna Batabayeva
https://agroinfo.kz/gospodderzhka–otechestvennogo–eksporta/