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02 july 2020
3 min
1292
Author: Yevgeniy Fedotov

MIIID response regarding the introduction of utilization fee for agricultural machinery in Kazakhstan

MIIID response regarding the introduction of utilization fee for agricultural machinery in Kazakhstan

Last week, the order of the Ministry of Ecology on the introduction of utilization fee for agricultural machinery in Kazakhstan came into force. Earlier, the editorial staff of the World of Nan portal already covered this subject. In particular, the positions of many industry associations and ordinary farmers from different regions of the country were presented. We have also sent requests to government agencies to cover this issue from all sides.

Just the previous evening, the editorial office received an answer from the Ministry of Industry and Infrastructure. Moreover, if agrarians - the main buyers of agricultural machinery in the country - were strongly opposed to the introduction of utilization fee, claiming that such a step is ill conceived and harmful, the Ministry of Industry and Infrastructure of the Republic of Kazakhstan, on the contrary, spoke about the benefits of such a measure, backing up its response with relevant statistics. 

We would like you to read the responses of the MIID of Kazakhstan:

Why was the order to introduce a utilization fee was signed despite active objections from farmers?

– Before the introduction of utilization fee for tractors and combines, the regulatory impact analysis was carried out. At the same time, the issue of introduction of the fee was agreed and approved by NCE "Atameken". At the Interdepartmental Commission meeting on October 4, 2019 this analysis was approved without any exceptions.

At the same time, an exception was made in the order of the Ministry of Ecology at the suggestion of the Ministry of Agriculture, according to which the fee did not apply to the equipment of foreign manufacturers, who, in accordance with the Government of Kazakhstan, were potential investors in agricultural machinery: CLAAS (Germany), John Deere, AGCO, Case, New Holland (USA), SameDeutzFahr, etc. This exemption was introduced as a transition period before the launch of production of foreign machinery in Kazakhstan.

After the implementation of the waste collection, the Eurasian Economic Commission received an appeal from the Government of Russia on the issue of taking into account the interests of industrial enterprises of the EAEC Member States. The appeal referred to the existence of discriminatory measures in the collection of fees for agricultural machinery, which put the manufacturers of tractors and combines from Russia and Belarus in unequal competitive conditions with foreign manufacturers. In addition, this was contrary to WTO norms.

In accordance with the instruction of the Council of the Eurasian Economic Commission of February 21, 2020, the Government of Kazakhstan was recommended to ensure equal conditions for collection of utilization fee for agricultural machinery. In this regard, the previously introduced exemption was eliminated, and the utilization fee was extended to include all tractors and combines, regardless of the country of manufacturer.

Will the introduction of the fee lead to higher prices for foreign agricultural machinery? What measures will be taken to avoid this?

– Tractors and combines, the production of which is not localized in Kazakhstan, will become more expensive. Tractors and combines produced in Kazakhstan will not go up in price. 

To date, agreements have been concluded on industrial assembly of the following equipment of the world's leading brands:

– tractors: Case IH Steiger, Magnum, New Holland T9, T8, Buhler Versatile HHT, Versatile 2375, Lovol 354, 604, 904/1304, Kirovets K-700;

– combines: Case IH Axial Flow 4088 (5th class, rotary thresher), New Holland TS 5.90, TS 5.80 (5th class, drum thresher);

– rotary intelligent grain harvesters: TORUM 750, 785, ACROS 585, 550, VECTOR 450 Track;

– forage harvesters: RSM 1401, DON 680M.

In the process of implementation there is a project on organization of production of German brand CLAAS machinery on the territory of Kazakhstan. OJSC "Minsk Tractor Plant" became a part of Kazakhstani enterprise "Composite Group Kazakhstan" LLP, which produces tractors of Belarus brand.

Development of new models and implementation of new projects, including production of components for agricultural machinery, will create up to 4 thousand additional jobs in the agricultural machinery industry.

How will the introduction of utilization rate affect the situation with modernization in agriculture?

– Today the agricultural machinery fleet of Kazakhstan includes more than 145 thousand tractors (about 3.5 thousand of imported production) and more than 37 thousand combines (about 4.6 thousand of imported production). According to the Ministry of Agriculture of the Republic of Kazakhstan, about 4 thousand new tractors were purchased in 2019, of which about 15% (600 units) are imported. Also, about 1.2 thousand combines were purchased, where the import is about 35%.

At the same time, the measures provided by the state to support domestic manufacturers of agricultural machinery combined will give a huge boost to the renewal of the outdated fleet of combines and tractors.

What does utilization of domestic agricultural machinery give?

1. The push for disposal of decommissioned equipment by issuing discount certificates for the purchase of new domestic equipment or monetary compensation.

2. Stimulates opening of new plants in RK, expansion of existing production sites, and also excludes parallel import of analogues of machinery produced in RK.

3. It allows to increase the localization of produced machinery, which involves reducing the cost of production, creation of new production of components, additional jobs and ensuring the fulfillment of obligations under agreements on industrial assembly of agricultural machinery.

What cost of certificates will agrarians receive when turning their equipment over for utilization?

– There are plans to launch a program for utilization of decommissioned agricultural equipment, where a discount certificate for purchase of new equipment will be issued instead of the old one. It is proposed to set the certificate nominal value at 1.5 million tenge, but if two certificates are used, the discount can reach 3 million tenge. Today, when the combine is delivered for scrap metal, the compensation is 300-500 thousand tenge, and transportation is performed independently.

What should importers of agricultural machinery do in order to avoid the price increase of their products for the local population?

– It is recommended to localize production in Kazakhstan following the example of world brands, among which are CLAAS, Case, New Holland.

Does the transition to the category of domestic agricultural machinery manufacturer allow you to get an exemption from paying the utilization fee?

– Transition to this category on the basis of an agreement on industrial assembly will allow to receive incentives equivalent to the paid utilization fee, as well as to conclude a special investment contract, based on which the exemption from VAT and customs duties will be granted.

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