While Turkish and other foreign manufacturers of light industry products successfully place their goods in the large shopping centers of Kazakhstan due to subsidies from their countries, domestic entrepreneurs are forced to look for suitable options for selling their products in the domestic market. They can’t afford to pay a million tenge per month for the lease of 100 squares on the left bank of Astana.

The issue of cost recovery for the rental of retail space for domestic light industry was considered at the meeting at the Ministry for Investment and Development with the participation of government agencies, the National Chamber of Entrepreneurs "Atameken", business support institutions and manufacturers of light industry.

Deputy Chairman of the Committee of industrial development and industrial safety of the Ministry for Investment and Development the RK Timur Nurashev recalled at the beginning of the meeting that this issue is being discussed not the first year.

According to paragraph 33 of the Action Plan, after meeting of the Prime Minister of Kazakhstan Bakhytzhan Sagintayev with the expert and business communities in 2016, the Ministry for Investment and Development, the Ministry of National Economy, the Ministry of Finance and NCE were asked to consider the question of reimbursement of rental costs for domestic enterprises of light industry.

According to Deputy Director of the Department of manufacturing industry of NCE Hakim Sabirov, domestic producers of light industry are uncompetitive on the market.

"Turkish, Chinese and other governments subsidize exporters of brands of light industry and reimburse them the cost of rent in shopping centers of Kazakhstan with good money. And the company "Altyn Adam" addressed to us last December with a request to find a space to sell their products. They showed us the figures - in shopping centers on the left bank the rent of 120 square meters is 1 million tenge each month! Now the company will open an outlet on the right bank of the capital", - said the representative of NCE.

In turn, Deputy Chairman of the Committee of Industrial Development and Industrial Safety of MID Timur Nurashev reminded that there are three levels of state: the first - for all manufacturing industries, the second - 14 sub-sectors, the third - 7 sectors.

"From the point of view of the state program of SPFIID the policy on state applies to the first level. If we go on this path, we must move away from sectors and focus on the criteria of productivity and export orientation", - said Timur Nurashev.

The representative of MNE agreed that the essential criteria for the performance and development of new markets, and, in general, the state body is "not against" such a policy.

Deputy Chairman of the National Agency for the development of local content “NADLoC” Aigul Zakiryanova appealed to the instructions of the President of the Republic of Kazakhstan for a moratorium on the various initiatives until 2018, and said that now the agency is considering the issue of subsidizing the priority sectors within SP FIID.

"It is clear that the state can’t subsidize everyone. How to define the entity that will receive state support? It shall be the average, it must produce mass production on a commercial basis and to have a certain measure of capacity. Under these conditions, the company will register its trademark and receive a certificate of conformity. These are the criteria that are necessary to the state. And when we do that, we will get exactly those companies that will be included in the register of subsidy. Our department is working in terms of rule changes on CT-KZ, and there are interesting developments of the Association of Furniture, which will create a register of enterprises on the basis of qualification requirements", - gave a comparative picture the deputy director of the department of the manufacturing industry of NCE.

The representative of the Ministry Investment and Development noticed that the problem is not so much in the registry,  but in a mechanism of control:"supporting documents on retail space were very flimsy".

Expert of the department of manufacturing industry of NCE Batyrbek Aubakirov, commenting on the theme of the meeting, pointed out that 80% of domestic producers of light industry exist at the state order and the remaining 20% are waiting for the support measures being discussed today.

"At a meeting in September 2016, the Minister for Investment and Development Zhenis Kasymbek instructed the Committee of Industrial Development and Industrial Safety together with the NCE, the Association of light industry producers and the Union of products of light industry manufacturers to prepare proposals for the introduction of a new tool to support the industry to promote its products on the domestic market in the form of compensation for the lease of retail space costs. And when discussing a comprehensive plan for the development of light industry, direct serious measures of state support, in addition to subsidizing rent and advertising, was not provided. There is a risk, "bogged down" in other sectors - the process of harmonizing the criteria for support for all branches of the manufacturing industry will be long and difficult. It is important not to lose a year and, at least in the framework of the pilot project is to support light industry ", - said Batyrbek Aubakirov.

Chief specialist of the Union of Light Industry Producers Natalia Kuznetsova, in turn, cited the example of the Russian Federation.

"The Russians make reimbursement for the rental of retail space at the federal level. In the Nizhny Novgorod region for light industry producers this issue is regulated by the Governor decree, the money pays the Ministry of Industry. Similar examples are observed in the Chukchi and the Jewish Autonomous Districts - said Natalya Kuznetsova, adding that "We should understand the issue of high rents". - First, nowhere in the public domain there is any information on rental rates, not only in the so-called "golden square" of the capital, but also in other areas of the city. Although, according to the rules, this information should be. This situation allows managers of retail space to vary the rental rate".

Kuznetsov also recalled that in October 2016 the now ex-head of the State Revenue Committee Ministry of Finance Daulet Ergozhin gave instructions to prepare information on the cost of the rental premises of legal persons for entrepreneurs, selling products of light industry, as well as to check the tax reports of legal entities, who rent property at an inflated price which differs from the data in the tax reports. To what Deputy Chairman of the Committee of Investment Development and Industrial Safety of the Ministry said that it is necessary to request the appropriate information at the Ministry of Finance.

The meeting resulted in the decision to study the Russian experience of compensation to light industry producers rental costs and to hold the next meeting in the near future.

Nazgul Abzhekenova