The MIID of RK explained the rationale for the introduction of utilization fee for agricultural machinery

In early May, hot debates arose around the idea of introducing an utilization fee for imported agricultural machinery. Major agricultural associations of the country strongly opposed it, saying that such an initiative will deal a serious blow to agriculture and the economy of Kazakhstan. We have already prepared several materials on this subject, including interviews with Kairat Bisetayev, Chairman of the Board of the Union of Potato and Vegetable Growers of Kazakhstan, and Kanat Suleimenov, Chairman of the Akmola Branch of the RNGO "Union of Farmers of Kazakhstan", as well as a blitz survey among experts.

We have sent an official request to the Ministry of Industry and Infrastructural Development of Kazakhstan with a request to clarify the position of the state on this subject. Below is the list of our questions and answers from the Ministry of Industry and Infrastructural Development of the Republic of Kazakhstan:

Why do we need to introduce the utilization fee for agricultural machinery in Kazakhstan?

- The primary and main purpose of introducing the utilization fee is to renew the agricultural machinery fleet outdated by 80% as well as to stimulate an increase in the level of localization of production in the Republic of Kazakhstan.

For which types of agricultural machinery are utilization fees to be introduced?

- According to Order No. 95 of the Acting Minister of Ecology, Geology and Natural Resources of the Republic of Kazakhstan dated 5 December 2019 "On Amending Certain Orders of the Ministry of Energy of the Republic of Kazakhstan", in regards to tractors, harvesters and silage harvesters. The collection can be made on the basis of differentiated rates (from 500 thousand tenge to 11 million tenge). In addition, the principle of extended producer and importer obligations has been introduced depending on engine power.

How can the introduction of utilization fees affect Kazakhstan's agriculture? How will it affect the agricultural machine building industry? Other sectors of the economy?

- At present, the introduction of utilization fee solves the following problems:

- Encouraging the population to submit for utilization of agricultural machinery by issuing discount certificates for the purchase of new domestic machinery and monetary compensation;

- creating a comprehensive system for the utilization of agricultural machinery;

- opening new factories in the Republic of Kazakhstan and expanding existing production facilities;

- increasing the localization of produced machinery, which implies reducing production costs, creating new production facilities for components and additional jobs, and ensuring compliance with obligations under agreements on industrial assembly of agricultural machinery.

Thus, the introduction of the utilization fee will allow solving a number of environmental problems, help farmers to renew their equipment fleet and contribute to stimulating the development of Kazakhstan's economy as a whole, including attracting investments and creating additional jobs.

What alternatives do you see for the introduction of the utilization fee?

- At present, according to international experience, there are no other effective alternatives.

This is the position of the Ministry of Industry and Infrastructure Development on the introduction of the utilization fee. This subject still provokes active discussions, so we will continue to follow the developments.