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Caspian Energy Journal Caspian European Club
Monday, 10 December 2018 15:30

The potential of the trade-economic cooperation between Azerbaijan and Kazakhstan is inexhaustible Featured

The potential of the trade-economic cooperation between Azerbaijan and Kazakhstan is inexhaustible

Caspian Energy (CE): Timur Muratovich, in 2018 Kazakhstan climbed to the 28th place in the Doing Business rating. How do you rate the ease of conducting business in Kazakhstan?

Timur Suleimenov, Minister of National Economy of the Republic of Kazakhstan: The fact that Kazakhstan has entered the top-30 countries of the world in terms of the comfort of the business environment speaks for itself. At the same time, the achievement of such result has been the fruit of the many years of work carried out by the Government of RK on system-wide improvement of conditions for national entrepreneurs. Over the past 5 years, we developed 6 packages of amendments into the legislation, aimed at reducing the number of procedures, the length of time and financial expenses of business.

At present, the work on development of the 7th package of amendments into the legislation is underway, which provides introduction of systemic changes in the context of key indicators of the Doing Business rating. 

According to the World Bank’s “Doing Business 2018” report, Kazakhstan took the 28th place as a result of the systemic work on business climate improvement. Besides, over the past 12 years Kazakhstan was four times seen in the list of top 10 countries implementing a high number of business climate improvement reforms.

This year, the World Bank has placed Kazakhstan among the countries which implemented regulatory reforms in the context of over 3 indicators on ease of doing business in 2017 and 2018. 

It is noteworthy that all undertaken measures are aimed at the final consumer – an entrepreneur. We want to create the most comfortable conditions to unleash potential of entrepreneurs and ensure their further development. Comprehensive support of the small and medium size businesses has always been a priority of the state policy of Kazakhstan.

In addition to regulatory reforms, a set of measures is taken in the country through adoption of different state and sectoral programs in order to support Kazakhstan’s entrepreneurship.

Owing to a comprehensive support of the state, entrepreneurship in Kazakhstan has become a relatively dynamic phenomenon. This is confirmed by 1.2 million small and medium-size enterprises operating in the country, which manufactured products worth 20.5 billion tenge. 

 According to 2017, the contribution made by small and medium-size enterprises to GDP makes 26.8%. At the same time, the employment in SME is growing year by year. Nowadays, more than third of the able-bodied population is employed in this area, which makes 3.2 million people.

CE: In your opinion, what potential exists for increasing interaction on the full range of economic cooperation of Azerbaijan and Kazakhstan?

Timur Suleimenov: In general, the potential of trade-economic cooperation between our countries is inexhaustible. We are ready to do our outmost to strengthen and ensure further expansion of the Kazakhstan-Azerbaijan multidimensional dialogue. Analysis of the bilateral trade has shown considerable prospects in export of the following products to Azerbaijan: oil and oil products, metallurgical and petrochemical products, wheat and accumulators.

At the same time, such products as accumulators, vegetable oilseeds, rice, barley, barium sulphate and et al. are main potential products for increasing export from Kazakhstan to Azerbaijan.

Besides, Kazakhstan and Azerbaijan should continue working over improvement and stimulation of mutually beneficial supply of goods and services, expansion of the range of supplied products and implementation of new joint projects.

CECould you please tell about the work which is carried out to build relations between business circles of Kazakhstan and Azerbaijan?

 Timur Suleimenov: Trade relations between the Republic of Kazakhstan and Azerbaijan are based on the Free Trade Agreement reached between the Governments of the Republic of Kazakhstan and the Republic of Azerbaijan on 10 June 1997.  The sides are applying no exemptions in mutual trade.

It is noteworthy that the bilateral cooperation is also maintained within the framework of the Kazakhstan-Azerbaijan Intergovernmental Commission for Economic Cooperation which promotes the development of trade-economic and investment relations in the field of energy, transit, transport, agriculture, education and tourism.     

Besides, Kazakhstan and Azerbaijan are the CIS members.

In this, Azerbaijan is not a party to the CIS Free Trade Area Agreement dated 2011.

Thus, to provide further unleashing of the trade potential of our countries, we wish to see Azerbaijan among the active participants of the above mentioned Agreement. 

Given the agreements about consideration of issues of joining the Agreement, we would welcome joining of the Azerbaijani colleagues to it, which would help to strengthen trade-economic relations between the state-participants and find new ways of economic growth in the midst of current global challenges.

 CE: To what extent has the rate of goods turnover between the two countries changed after adopting a road map on trade-economic cooperation for 2018-2020 in 2017?

Timur Suleimenov: The Governments of Kazakhstan and Azerbaijan are now taking measures to implement agreements reached in the course of the visit of President of RK to Azerbaijan and providing double increase of turnover by 2020 (from $140 million to $300 million).

Thus, at the meeting of the Intergovernmental Commission late in 2017 Energy Ministers of the two countries signed a Road Map on expansion of the trade-economic cooperation between the Republic of Kazakhstan and the Republic of Azerbaijan for 2017-2020. The road map provided a set of specific measures in the field of trade, energy, agriculture, transport and logistics.

I think that an active implementation of the Road Map will have a positive impact on increase of the turnover between our countries.

Kazakhstan has been traditionally exporting oil and oil products, metal and petrochemical products, wheat to Azerbaijan.

We should continue working to improve and stimulate mutually beneficial supply of goods and services, extend a range of supplied products and implement new joint projects.

According to the results of 9 months of 2018, the turnover between Kazakhstan and Azerbaijan totaled $202.5 million, which is 2.2 times higher than the similar period of the last year ($93.4million).

Export from Kazakhstan to Azerbaijan rose by 2.3 times between January and September 2018 and totaled $166.2 million.

Import to Kazakhstan from Azerbaijan grew by 73.8% and totaled $36.3 million between January and September 2018.

CE: Which economic sectors of Kazakhstan do you think can take towards the stable economic growth of the country in coming years?

Timur Suleimenov: In the medium term, Kazakhstan’s GDP growth for 2019-2023 is expected at 3.9-4.6%. Considering the ongoing reforms, it is expected that the non-commodity sector will greatly contribute to the economic growth in the medium term, as its growth (4.3%) will outpace the growth of the commodity-sector (3.9%).

The potential of traditional manufacturing industries will be increased (4.4%) at the expense of improvement of the comprehensive processing as part of the SPIID.

The State programme on the agro-industrial complex will promote the growth of the agriculture (6.4%) and food industry (6.9%) as its implementation provides broad range of production of ecologically clean food products and their competitiveness both in the domestic and external markets.

Owing to implementation of the state program on development of sphere of services, including Digital Kazakhstan, Nurly Zhol and Nurly Zher, the service economu (4.4%). Transport (3.4%) and construction sectors (4.2%) will play a key role in economic growth and employment.

At the same time, a commodity sector will continue influencing the rate of economic activity, as its high share will have a key role.

CE: What prospects for extending cooperation, especially in the field of economy, do you see in the frame of cooperation of the Turkic speaking countries? Which initiatives does Kazakhstan put forward?

Timur Suleimenov: Kazakhstan attaches great importance to further progress of the constructive dialogue on all levels and sustained development of the multilateral economic cooperation with the countries of the Turkic countries.

Trade-economic cooperation between our countries is carried out on basis of the bilateral and multilateral agreements.

In 9 years passed after the creation of the Council, the mutual turnover of the Turkic Council countries increased by 1.5 times. The volume of the turnover reached $6billion 35 million in 2017. The share of the turnover of the Turkic Council countries makes 0.03% in the global turnover.

We intend to keep maintaining a positive momentum of mutual trade, working on improvement and stimulation of mutually beneficial export supplies between our countries and expansion of the range of supplied products.

In this regard, in order to develop mutual trade and increase the turnover, the Kazakhstan side suggested to consider creation of joint trade houses at the 8th meeting (17 October 2018, Bishkek, Kyrgyz Republic) of the Ministers of Economy of the Turkic Council States, as their operation would promote the development of the trade-economic relations between producers and consumers, export of national products of our countries, and increase the flow of foreign investments into economies of the member states of the Turkic Council.

As far as the initiatives of Kazakhstan are concerned, first of all I would like to note the Concept of integration of Turkic speaking states. RK President N.Nazarbayev took the initiative to work out the concept as early as 2014 at the 4th summit of the CCTS in Bodrum (Turkey).

Thus, the Council of the Heads of State approved the Concept of integration of the Turkic speaking states in the frame of the 6th Summit held in the city of Cholpon-Ata (Kyrgyzstan).

Besides, at the summit of heads of state held on 11 September 2015 in the city of Astana, the Head of state offered to create a General Fund of the Turkic integration with the involvement of business circles from the member states of the Council. To date, the sides are actively considering this project of the concept of the Turkic world integration and we expect positions of countries following the consideration.

 CE: In 2017, the Ministry of National Economy of Kazakhstan expressed interest in increasing import of 23 items, mainly agricultural products, from Azerbaijan. Was it possible to extend assortment of products imported from Azerbaijan? What are the plans for the immediate future?

Timur Suleimenov: This work is carried out to expand the range of supplied products. Thus, in general, import to Kazakhstan from Azerbaijan has increased by 73.8% and totaled $36.3million over a nine-month period of this year, mainly at the expense of industrial products.

Share of agricultural products in import from Azerbaijan totals 6.3%. In the meantime, the number of imported agricultural products increased from 47 to 57 items at the end of 9 months of this year. This circumstance tells about existing substantial potential for developing mutual trade. We have all reserves and prerequisites to increase turnover by several times.

CE: An issue concerning the impact of Kazakhstan’s entry into the World Trade Organization is still being discussed at the expert level. Which evident positive changes in Kazakhstan’s economy could you note?

Timur Suleimenov: WTO membership provides a number of privileges to the country. Noteworthy among them are the development of the predictable trade-investment environment, intensification of integration of the country into the world economy, access for Kazakhstan’s goods and services to the world markets, reduction of tariff and non-tariff barriers in trade of industrial and agricultural goods, liberalization of international trade and creation of conditions for free and fair competition. 

Apart from this, Kazakhstan can take part in regulation of the international trade of goods and services on basis of single principles and rules, as well as in compliance with the regulations of the country’s trade legislation meeting international regulations and standards.

Besides, WTO membership makes it possible to use an efficient multilateral mechanism of settlement of trade disputes on the foreign markets, including using of WTO as a “negotiation platform” for holding multi-sided trade negotiations.

To date, Kazakhstan has to work in an increasingly competitive environment, which, in turn, stimulates working over quality increase of national goods.

In general, increase of competition is becoming an incentive for more efficient distribution of resources, attraction of new technologies and increase of competitiveness of goods. 

In the course of negotiations on entry into WTO the Kazakhstan’s legislation was brought to compliance with the key agreements of this organization.

For instance, taking of universally recognized standards as a basis when developing technical regulations and standards, will promote the entry of national products into the external markets.  In the meantime, it is possible to increase competitiveness also by means of taking systemic support measures (optimization of the tax burden, improvement of the business environment, reduction of the regulatory impact on business, etc.) 

It is noteworthy that the Government of Kazakhstan is now developing alternative measures of support of Kazakhstan producers, which would comply with the regulations and standards of WTO, and at the same time, make it possible stay competitive in new conditions.

Moreover, the state is taking different measures of support of national producers, which will help to raise competitiveness of national producers of goods. It is noteworthy that Kazakhstan’s obligations in WTO in regard to subsidization of industry are casual commitments of any developed member country of WTO.

It is forbidden to do direct subsidizing of exporters, as well as allocate subsidies which can be received only through use of national goods.

Kazakhstan’s enterprises engaged in foreign trade get equal conditions for accessing the external markets of the WTO member countries.

It is the main and major advantage for exporters. In the event of discrimination of Kazakhstan goods in the external markets, Kazakhstan will be apply to the Body settling disputes within WTO in order to lift discriminatory barriers or introduce response measures.

WTO membership provides an opportunity to trade with member companies by unified rules and mechanisms. WTO agreements provide member countries opportunities to expand foreign trade, and ensure strict multisided rules leading to creation of much safer and predictable trade environment. 

 

Thank you for the interview

 

 

 

 

 

 

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