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State programme "National export strategy" is aimed at revealing the export potential of Kazakhstani business. In an interview with the "Capital.kz"  correspondent, Ruslan Iskakov, Chairman of the Board of "Export insurance company "KazakhExport" JSC told in which sectors of the economy Kazakhstan will have to make a breakthrough and which markets need to be mastered.

- Ruslan Viktorovich, the state programme "National export strategy" is aimed at increasing the volume of non-oil exports by 1.5 times by 2022. Do you think it is realistic to achieve the stated indicators?

- According to the state programme "National export strategy", the volume of non-primary goods, works and services exports should amount to $31.8 billion by 2022. Intermediate figure for 2018 – $22.7 billion. If you look at the statistics, the export of processed goods amounted to $15.7 billion, export of services – about $7.2 billion, that is, more than 100% execution. As for 2022, Kazakhstan in fact has another 4 years to make a breakthrough of $9 billion. For this, the government has decided to allocate 500 billion tenge to support exports. Given these resources, it is realistic to achieve the goals by 2022.

- What industries are the most promising?

- Composition of the projected "export basket" includes 116 products from such industries as: agriculture, food and light industry, ferrous, non-ferrous and precious metals, chemistry and petrochemistry, mechanical engineering, woodworking, building materials. A very big stake is placed on these sectors. In addition, basket includes the export of services: financial, business, space, as well as services in the field of transport, medicine, education and tourism.

In particular, transport services involve the use of Kazakhstan's transit potential. For example, participation in the project initiated by China to create a global transport and investment infrastructure – "One belt, one road". In the sphere of financial and business services, first of all, we are talking about the use of the "Astana" International financial center potential. Speaking about space services, we mean the ability to export services for the provision of satellite capacity of the "KazSat" series spacecraft.

It should be noted that the "export basket" will be updated annually in accordance with the criteria defined by the National export strategy. But, of course, support measures will be provided to all exporters of non-raw materials, regardless of the inclusion in the projected "export basket".

- And are priority markets, where the export flows are to be directed first, defined?

- Certainly. Export interest for Kazakhstan along with Russia and China are such countries as Belarus, India, Iran, Kyrgyzstan, Turkey, Uzbekistan and Ukraine. Afghanistan, Armenia, Azerbaijan, Georgia, Latvia, Mongolia, Netherlands, Poland, Tajikistan, Turkmenistan - countries of moderate export interest. Significant trade relations with these countries are possible in the long term, subject to the adoption of a number of measures that will increase the competitiveness of Kazakhstan products due to the limited market and the elimination of trade barriers. In the long term Kazakhstan is also interested in: UK, Germany, Italy, Finland, France, Switzerland, South Korea and Japan.

- The role KazakhExport to achieve the increase in exports, perhaps, is the key. Due to what, in your opinion, can there be radical changes in the country's economy?

- The work on the state programme "National export strategy" is large and capacious. It includes not only financial support for exports, that is, the part of the functions performed by KazakhExport, but also long-term lending to export-oriented enterprises. Domestic exporters need to re-equip, because foreign markets need a competitive product. And for this it is necessary to invest in equipment, increase production, improve the quality of products and improve the design of packages.

Other institutions of the holding company "Baiterek" are involved to boost exports. Together, they create an business ecosystem, contributing to the growth of Kazakh products and services exports.

- At the end of March, the decision of the sole shareholder – "Baiterek" MNH JSC, KazakhExport was recapitalized by 34 billion tenge. How will the increase in equity affect the company's development strategy?

- Indeed, company's equity increased from 43.8 billion tenge to 78 billion tenge. This will increase the volume of insurance support to Kazakh exporters of the manufacturing sector to 125 billion tenge per year. We are talking about such tools as: insurance of the letter of credit against the risk of default on the part of the importer's bank, insurance of deferred payment under export contracts against the risk of non-payment by the importer, insurance of the importer's advances against the risks of non-payment of the advance payment by the exporter, as well as insurance of exporters' loans aimed at export development.

But in fact it is not so much. For comparison: in Belarus, the capital of the export credit agency is $280 million, in Russia – about $1 billion. While they still have state guarantees to support exports worth more than $800 million and about $20 billion, respectively. KazakhExport equity barely exceeded $200 million. Comparing the size of our company even with colleagues from the Eurasian Economic Union (EEU), we understand that we have a growth potential.

- That is, the larger the amount of equity, the greater the opportunities to support domestic exporters?

- With a small capital, we can not handle large projects or accept a large amount of obligations. Accordingly, Kazakh exporters do not receive support that their competitors have in foreign markets. Companies from Russia, Belarus, Western Europe and China are backed by full-fledged export credit agencies with impressive resources. And a large company has more opportunities both in terms of the volume of transactions that can be implemented and the maximum amount of risk that can be held.

- Ruslan Viktorovich, to be frank, what amount do you need for a full-scale operation?

- In 2020, another tranche in the amount of 34 billion tenge was laid. When we receive it, the company's equity will be 111.8 billion tenge.

- Will that be enough?

- In the first stage – Yes. In addition, by the end of the year we hope to receive a state guarantee in the amount of 102 billion tenge, which will cover our obligations to beneficiaries and insurers. Relevant amendments have already been made to the Budget code and draft by-laws have been sent to the authorized ministries. We hope that they will be approved by the end of June.

- How the accurence of state guarrantee will affect export transactions?

- Last year we took insurance obligations in the amount of about 90 billion tenge, in 2016-2017 –60 billion tenge. At the end of 2018, equity amounted to 43 billion tenge, and insurance liabilities – about 110 billion tenge. Of course, banks and exporters, which accept our insurance policy as security for their risks, ask the question: "Will KazakhExport meet its obligations in case of occurrence of any adverse events or insurance claims?" Tools such as the government guarantee are essential for banks and exporters to not to be worried about it. This will allow us, on the one hand, to increase the capacity of the insurance portfolio, which we will be able to hold, and on the other – to participate in larger projects.

https://kapital.kz/business/77559/chto-gosgarantiya-dast-kompanii-kazakhexport.html