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Review of accounting and audit sector
Review of accounting and audit sector
1. Description of the accounting and audit sector
A global trend of the Kazakhstan market of audit services is the lack of the national networks. Players of the audit market in Kazakhstan are integrated into the international audit networks. At the same time, the development of regional directions is carried out through the creation of the branch internal network by large market players. A characteristic feature of the market is that it represents all companies of the “Big Four”[1]. In addition, the audit market in Kazakhstan is constantly considered for the development by other international companies, not as well known as the companies of the “Big Four”. In general, the audit market in Kazakhstan may be called as a stable.
At this moment, because of the attractiveness of the investment climate in Kazakhstan, the market has become more attractive both for foreign and Kazakh investors. This is facilitated, above all, by:
- stabilization of legal regulation and taxation;
- quite liberal tax conditions for business, as well as incomes repatriation;
- joining of Kazakhstan the Eurasian Economic Union.
Due to the fact that there is observed the increase in the volume of investments and, as a consequence, demonstration of a significant business activity, there is observed growth of the audit and accounting market as a whole.
1.1. Contribution of accounting and audit sector in the economy
The quantitative indicators of volume of rendered audit and accounting services show the market saturation by players and volume of market services.
Dynamics of 2012-2014 shows the increase in the number of rendered services. However, in terms of amount, the number of rendered services decreased in 2012, due to the increasing number of players in the audit market, starting from 2010. During the period from 2010 to 2012, additionally 17 audit companies were registered in the market. Then, the market situation stabilized, and in 2014, the total increase in the cost of services rendered exceeded quantitative index of services rendered in the industry. The volume of services in terms of value for audit services has grown at 8-12% since 2010. Such growth exceeds the rate of inflation only in a minor way.
Table 1 - Volume of provided audit services by regions, Astana city and Almaty city for the period 2010-2014, thou. tenge
Regions |
2010 |
2011 |
2012 |
2013 |
2014 |
Akmola region |
2 408 470 |
2 214 603 |
2 480 435 |
2 745 962 |
2 881 840 |
Aktobe region |
362 155 |
173 694 |
194 544 |
238 115 |
280 303 |
Almaty city region |
6 564 616 |
6 566 877 |
4912232 |
5 489 072 |
6070561 |
Atyrau region |
523 113 |
564 507 |
632 268 |
742 198 |
841 358 |
West Kazakhstan region |
201 197 |
217 118 |
243 180 |
315 643 |
330 056 |
Jambyl region |
402 395 |
434 236 |
486 360 |
502 287 |
564 092 |
Karaganda region |
885 269 |
955 319 |
1 069 991 |
1 139 631 |
1 213 826 |
Kostanay region |
442 634 |
477 659 |
534 996 |
659 815 |
753 299 |
Kyzylorda region |
241 437 |
260 542 |
291 816 |
262 172 |
326 602 |
Mangystau region |
321 916 |
347 389 |
389 088 |
501 229 |
507 936 |
South Kazakhstan region |
804 790 |
868 472 |
972 719 |
980 574 |
1 039 947 |
Pavlodar region |
558 254 |
621 936 |
696 590 |
890 989 |
1 006 014 |
North Kazakhstan region |
487 973 |
811 043 |
908 397 |
998 458 |
1 027 497 |
East Kazakhstan region |
166 857 |
564 507 |
632 268 |
728 873 |
860 792 |
Astana city |
|
|
|
|
|
Almaty city |
|
|
|
|
|
Total |
|
|
|
|
|
Increase / decrease by year |
|
706 824 |
-633 017 |
1 750 133 |
1 509 106 |
Increase / decrease by year in % |
|
4.92 |
-4.20 |
12.12 |
9.32 |
Source: Committee on statistics of the Ministry of National Economy of the RK
In 2014 compared with 2013, the volume of accounting services increased by 9 408 000 thou. tenge or 37%. The average total growth for 4 years was 10.57% that indicates on a slight accounting market growth for the considered period in terms of value, taking into account the rate of inflation.
Table 2 - Volume of accounting services by regions, Astana city and Almaty city in Kazakhstan, thou. tenge
Regions |
2010 |
2011 |
2012 |
2013 |
2014 |
Akmola region |
97 440.00 |
198 912.00 |
106 288.00 |
113 512.00 |
149 912.00 |
Aktobe region |
141 064.00 |
109 760.00 |
157 976.00 |
180 488.00 |
181 216.00 |
Almaty city region |
147 168.00 |
204 064.00 |
248 584.00 |
318 696.00 |
307 104.00 |
Atyrau region |
340 592.00 |
285 880.00 |
244 272.00 |
226 688.00 |
255 808.00 |
West Kazakhstan region |
81 088.00 |
109 872.00 |
238 784.00 |
245 168.00 |
189 392.00 |
Jambyl region |
187 488.00 |
39 592.00 |
63 560.00 |
81 816.00 |
41 496.00 |
Karaganda region |
312 312.00 |
299 432.00 |
397 544.00 |
778 904.00 |
557 088.00 |
Kostanay region |
117 208.00 |
133 056.00 |
193 368.00 |
218 008.00 |
252 616.00 |
Kyzylorda region |
153 104.00 |
41 328.00 |
149 408.00 |
283 920.00 |
339 864.00 |
Mangystau region |
352 912.00 |
141 960.00 |
117 768.00 |
158 088.00 |
186 368.00 |
South Kazakhstan region |
226 128.00 |
266 056.00 |
116 592.00 |
154 056.00 |
409 864.00 |
Pavlodar region |
215 880.00 |
239 680.00 |
253 736.00 |
252 392.00 |
381 416.00 |
North Kazakhstan region |
70 056.00 |
68 264.00 |
91 504.00 |
88 536.00 |
613 760.00 |
East Kazakhstan region |
132 104.00 |
142 800.00 |
157 024.00 |
191 576.00 |
408 968.00 |
Astana city city |
3 606 344.00 |
6 983 480.00 |
2 920 568.00 |
1 515 584.00 |
6 181 280.00 |
Almaty city city |
18 285 346.00 |
18 072 248.00 |
19 071 562.00 |
20 676 658.00 |
24 436 346.00 |
Total |
24 464 244 |
27 336 384 |
24 528 538 |
25 484 090 |
34 892 498 |
Increase / decrease in terms of value |
|
2 872 |
-2 806 |
954 |
9 408 |
Increase / decrease in % |
|
12% |
-10% |
4% |
37% |
Source: Committee on statistics of the Ministry of National Economy of the RK
1.2. Capacity of the internal market of accounting and audit sector
Capacity of accounting market per one active small enterprise is very high, given the fact that one company for accounting services has an average of 80 small businesses, excluding individual entrepreneurs:
- by regions -115 enterprises;
- in Almaty city and Astana city – 49 enterprises.
Table 3 - Capacity of accounting services market
Regions |
Number of accounting companies (AcC) |
Number of operating SE |
Number of SE per 1 AcC- |
Akmola region |
19 |
7 826 |
177.1147 |
Aktobe region |
35 |
9 286 |
114.0851 |
Almaty city region |
32 |
11 381 |
152.9322 |
Atyrau region |
39 |
7 215 |
79.5500 |
West Kazakhstan region |
33 |
5 940 |
77.4000 |
Jambyl region |
9 |
6 767 |
323.3122 |
Karaganda region |
74 |
16 354 |
95.0300 |
Kostanay region |
52 |
8 680 |
71.7769 |
Kyzylorda region |
23 |
5 773 |
107.9300 |
Mangystau region |
40 |
8 118 |
87.2685 |
South Kazakhstan region |
58 |
19 336 |
143.3531 |
Pavlodar region |
31 |
8 188 |
113.5755 |
North Kazakhstan region |
11 |
6 220 |
243.1455 |
East Kazakhstan region |
45 |
13 147 |
125.6269 |
Astana city |
334 |
35 239 |
45.3676 |
Almaty city |
244 |
31 642 |
55.7625 |
Total |
1079 |
201 111 |
80.1462 |
Source: Committee on statistics of the Ministry of National Economy of the RK
To determine the audit market capacity the data was formed in the context of the consumers of this type of services obliged to conduct the audit procedure. Total number of market consumers, excluding the public sector is 7690 companies, including:
- JSC (of various activities) - 1995 companies;
- Insurance companies – 2289 companies;
- subsoil users – 2611 companies;
- bank organizations – 394 companies;
- JSC and LLP with state participation, owned by the Republic - 194 companies;
- Republican state enterprises on right of the economic management -2 818 companies.
Total: 7690 enterprises obliged under the applicable law, to carry out the audit procedure. The number of operating companies in the field of audit is 297 companies. Therefore, one audit company is accounted for by 25.8 potential customers obliged to undergo compulsory audit procedure. However, given the fact that many companies conduct voluntary audit, the market capacity should be assessed based on the total number of registered in the Republic of Kazakhstan companies.
Table 4 - Audit market capacity in 2014
Regions |
Number of audit companies (AuC) |
Number of operating enterprises |
Number of operating enterprises per 1 AuC |
Akmola region |
6 |
50 045 |
8340.83333 |
Aktobe region |
11 |
44 439 |
4039.90909 |
Almaty city region |
6 |
124 289 |
20714.8333 |
Atyrau region |
12 |
44 863 |
3738.58333 |
West Kazakhstan region |
4 |
39 394 |
9848.5 |
Jambyl region |
9 |
64 113 |
7123.66667 |
Karaganda region |
21 |
81 736 |
3892.19048 |
Kostanay region |
11 |
63 317 |
5756.09091 |
Kyzylorda region |
6 |
38 313 |
6385.5 |
Mangystau region |
9 |
44 244 |
4916 |
South Kazakhstan region |
22 |
136 423 |
6201.04545 |
Pavlodar region |
7 |
41 879 |
5982.71429 |
North Kazakhstan region |
5 |
33 175 |
6635 |
East Kazakhstan region |
13 |
108 521 |
8347.76923 |
Astana city |
109 |
80 435 |
737.93578 |
Almaty city |
37 |
150 310 |
4062.43243 |
Total |
288 |
1 145 496 |
3977.41667 |
Source: Committee on statistics of the Ministry of National Economy of the RK
1.3. Historical information on the development of the accounting and audit sector
In the development of the industry, the government has been actively involved through state regulators of the quality of rendered services. Expected audit and accounting services market growth depends only on the state regulatory policy, namely the government decision to transfer the development processes to self-regulation.
There is currently applied a mixed control system over companies that provide services in the field of accounting and audit in Kazakhstan. In this regard, there is a poor state control and poor control by the self-regulating professional organizations. In addition, weak legal framework in this sector allows companies to bypass the professional consolidation process. If the significant procedures for the entry into the industry are provided for audit companies, as well as certain requirements for the organization of enterprises in this sector, for accounting companies there are no such procedures.
As for the designed know-how in the industry development, at the current moment there is the use and borrowing of know-how in the post-Soviet countries. For example, the software for 1C is developed by a Russian company, involving companies that operate in the territory of the Republic of Kazakhstan. As for the specialized programs used in conducting the audit, there is no currently approved programs. Each audit company develops and approves software for itself.
2. Number of players in the market of the accounting and audit sector
Table 5 - Number of registered entities in the field of accounting and audit by regions on September 15, 2015:
Name of region |
Audit |
Accounting services |
Akmola region |
6 |
19 |
Aktobe region |
9 |
37 |
Almaty city region |
4 |
35 |
Atyrau region |
13 |
20 |
West Kazakhstan region |
5 |
33 |
Jambyl region |
10 |
9 |
Karaganda region |
22 |
74 |
Kostanay region |
11 |
51 |
Kyzylorda region |
6 |
23 |
Mangystau region |
8 |
44 |
South Kazakhstan region |
20 |
59 |
Pavlodar region |
20 |
59 |
North Kazakhstan region |
6 |
12 |
East Kazakhstan region |
13 |
45 |
Astana city |
45 |
243 |
Almaty city |
99 |
333 |
Total |
297 |
1 096 |
Source: Committee on statistics of the Ministry of National Economy of the RK
The leading position in the number of audit and accounting companies is accounted for Almaty city and Astana city, as well as South Kazakhstan, Pavlodar and Karaganda region. This statistic is associated with business activity in the considered cities and regions.
A high proportion of audit companies in Astana city and Almaty city is also explained by the presence of the possibility of studying and receiving the auditor's license. For example, OJSC conducts the qualification exams only in Astana city and Almaty city. Regional offices do not hold qualification exams in the regions.
Table 6 - List of major industry players among audit organizations
Name |
Location |
Provided works, services and goods |
ERNST & YOUNG LLP |
Astana city ALMATY CITY DISTRICT |
Audit |
ASTANA CITYAUDITSERVIS NS LLP |
Astana city ALMATY CITY DISTRICT |
Audit |
KAZAKHSTANAUDIT LLP |
Almaty city AUEZOV DISTRICT |
Audit |
ERNST & YOUNG LLP |
Almaty city BOSTANDYK DISTRICT |
Audit |
KPMG AUDIT LLP |
Almaty city MEDEU DISTRICT |
Audit |
DELOITTE LLP |
Almaty city MEDEU DISTRICT |
Audit |
PRICEWATERHOUSECOOPERS LLP |
Almaty city MEDEU DISTRICT |
Audit |
INDEPENDENT AUDIT COMPANY “CENTERAUDIT- KAZAKHSTAN” LLP |
Almaty city BOSTANDYK DISTRICT |
Audit |
AUDIT COMPANY “ADIL-AUDIT” LLP |
KOKSHETAU |
Audit |
INTISAR-INVEST LLP |
Astana city SARYARKA DISTRICT |
Accounting |
VILORA SEVER LLP |
PETROPAVLOVSK |
Accounting |
TRAINING CENTER “SODEL” LLP |
PETROPAVLOVSK |
Accounting |
CORPORATION “VOSTOK-MOLOKO” LLP |
VIL.UKRAINKA |
Accounting |
KZ UCHET LLP |
KYZYLORDA |
Accounting |
PROFBUHUSLUGI LLP |
URALSK |
Accounting |
AS CONSULTING LLP |
KOKSHETAU |
Accounting |
Source: Committee on statistics of the Ministry of National Economy of the RK
3. Barriers, constraints and recommendations for their elimination
1. Requirements for a professional audit organizations are weakened and do not require a proper amount of necessary organizational requirements, used in international practice, contributing to improvement of the quality of the profession participants;
2. The absence of a unified regulation in the industry that does not involve increased control by the professional organization;
3. Non-compliance of bodies structure of the professional organization with international practice (part of IFAC);
4. Organizations that have not passed quality control and excluded on these grounds of the members of a professional organization, have a right to join other professional organizations, without limitation;
5. The absence of a proper level of punishment in the deprivation of the certificate. In this case, the certificate deprivation is carried out in case of administrative offenses, and subject is entitled to apply again for a license in a year;
6. Lack of independence of the Qualification Commission on candidate’s certification for the assignment of qualification level.
4. List of potential opportunities for entrepreneurial initiatives
Scope of possible needs of consulting services buyers:
- Technology and innovative potential;
- Suppliers’ ecosystem.
Technology and innovation potential. Access to know-how, capabilities of its creation
One of the innovations in this area is the development of cloud technologies in the software 1C:Enterprise. The development of this technology allows you to use the software database anywhere in the world. This allows carry out the accounting services sufficiently mobile and efficiently. In addition, there are application solutions to the software, allowing customers to share information between databases automatically. In this case, packet data from one database can be converted into the packet data from another database with corresponding modification of the document type required for reflection. The issue of implementation of software that will allow the transfer and exchange of all forms of primary documents in electronic format are discussed and developed. The expected project in this regard is the use of electronic invoices. The difficulty in the development of technology is the presence of viruses and hacker attacks used for stealing and unauthorized use of information.
As for the audit market, development and implementation of a single unified program would be actual to reflect the audit procedures during the audit. Such programs currently operate in foreign countries, and significantly facilitate the auditor’s activities during the audit. Audit organizations currently have to purchase these programs from foreign developing companies.
Suppliers’ ecosystem
A characteristic feature of the ecosystem of accounting companies is that these companies actually get stuck at the stage of the ecosystem establishment. The main buyers of these companies remain as consumer-sponsors, not taking roots and refusing services for many reasons, one of which is the quality of the services provided. Players of providers of accounting services, striving to survive in a fairly uncertain market, try capture as much volume as possible, being still in the growth stage. However, due to the fact that companies providing accounting services are represented by small companies, the resulting volume is greater than the company is able to serve. In this regard, accounting services ecosystem currently is monotonous, without prominent leaders.
For the successful development of the industry in the future, it is necessary to develop and implement educational materials, practical guidance on the application of international standards in the field of accounting and audit. An important component of the development of the industry is the participation in the international events held specifically for the industry. After execution of an event, it is necessary to establish a procedure for communicating information about the changes and trends in the industry to the end user. Distribution of information the process of used software unification, introduction of documents, according to the international practice, through the professional organizations. In this regard, such organizations shall publish documents and distribute materials between the active members of the professional community.
5. SWOT-analysis of accounting and audit sector
SWOT - analysis of accounting control system
Strengths |
Weaknesses |
Presence of a unified system of primary documents and accounting rules |
§ Lack of quality control of rendered services; § Lack of a regulator that would oblige the consulting companies to be members of the professional organization in order to increase the qualification level of specialists; § Low quality of training, insufficient number of disciplines required to be studied to receive certification “Professional Accountant”; § Lack of control over the professional organizations by the law; § Lack of independent verification of audit organizations |
Opportunities |
Threats |
Introduction of additional regulators that can regulate weaknesses and balance the possibility of regulating the scope of activities at the state level |
Low qualification of employees due to poor control of the professional accountants certification by the accredited centers by the Ministry of Finance of the RK |
SWOT - analysis of audit regulation system
Strengths |
Weaknesses |
§ State regulation of the industry; § State control system is complemented by the existing system of internal control, i.e. non-state regulation
|
§ Lack of unified documents executed during the audit, except for the audit report form; § Biased estimate of audit reports; § Lack of common tools for inspections |
Opportunities |
Threats |
§ Participation at the state level in the industry regulation processes; § Introduction of additional regulators that can regulate weaknesses and balance the possibility of regulating the scope of activities at the state level |
§ Imbalance of industry regulation processes at the national level due to the growth of professional organizations that does not ensure quality of services provided; § Weakening of the control over the admission of candidates to the profession |
[1] Four largest companies in the world providing audit and consulting services (Deloitte, PricewaterhouseCoopers, Ernst & Young, KPMG)
Review of veterinary activities
List of potential opportunities for entrepreneurs
Description
The contemporary market of veterinary services in Kazakhstan is at the stage of development. The main feature of the market is low level of culture of domestic animals management and treatment (housing conditions, cleanliness, quality of fodder, vaccination and disease prevention). In livestock farming 90% of beef and 80% of milk are produced by small agricultural manufacturers, that significantly complicates the veterinary inspection[1].
Nowadays applied information systems do not allow viewing the course of production movement “from farm to table” and are not capable to conduct epizootic control, monitoring and prediction of infection outbreaks. The procedure of electronic identification of cattle is difficult due to number of challenges, such as decentralized procurement, duplication, loss of tags, non-return of the tags cost by owners, as well as electronic identification system, which s not available for rural settlements without Internet network. There is no strict control of veterinary preparations. The existing infrastructure of Kazakhstan does not provide the proper level of veterinary safety, veterinary institutions (municipal state-owned enterprises, regional and district veterinary laboratories) are not equipped properly with all necessary facilities[2].
“100 specific steps” program devotes two steps to the development of livestock farming: “Attraction of strategic investors for the development of milk and milk products output” and “Attraction of strategic investors for the development of meat production and processing”.
contribution to the economy
During the period from 2000 to 2013 the gross agricultural output increased by 2 035.9 billion tenge in total. At the end of 2014 the gross output of the livestock industry amounted to 1 189.5 billion tenge. Currently the livestock industry holds the highest position beginning from 1990. The positive dynamics of growth indicates that livestock farming stimulates favorable growth in the economic environment of Kazakhstan, as well as cultivates production efficiency. Positive changes are connected to a certain extent with the progressive development of Kazakhstan veterinary system.
Based on the data of animal products manufacturers, according to the questionnaire survey, the costs for veterinary products and services are on average 5.45% of the prime cost. Among them 3.81% of the product cost spends on average for veterinary preparations and 1.64% - for services. This suggests that the total consumption of veterinary services and preparations amounted to 64.82 billion tenge on average in 2014.
Picture 1. The proportion of veterinary services in the total volume of animal products in 2014
Source: Kazakhstan Association of veterinarians
On average the volume of veterinary preparations and services amounted to 271 495.7 during 2010-2014.
Picture 2. The market capacity of veterinary preparations and services, mln. tenge
Source: Kazakhstan Association of veterinarians
The costs for veterinary services amounted to: 12 695.33 million tenge (in 2010), 15 455.1 million tenge (in 2011), 16 583.54 million tenge (in 2012), 17 455.14 million tenge (2013), 19 508.7 million tenge (in 2014).
The costs for veterinary preparations amounted to: 29 493.43 million tenge (in 2010), 35 904.84 million tenge (in 2011), 40 551.28 million tenge (in 2013), 38 526.41 million tenge (in 2012), 45 322.06 million tenge (in 2014).
In 2011 there was a decrease in production compared to the level of 2010 year, associated with a decrease in the production volume of cattle breeding (dairy breed - by 2.7%, meat and other breeds – by 3%). Over the last five years there have been minor changes due to the increase in meat consumption, but full equipment of rural sectors with high-tech facilities is still a problem for the future.
Picture 3. The index of actual volume of gross output of livestock farming, in % to the previous year
Source: Statistics Committee of the MNE of RK
Despite f some stabilization of meat production in the country over the recent years, there is still a significant level of dependence on imports of meat and meat products: meat - 14%, sausage products - 40%, canned meat - 52%.
It should be noted that certain statistics to determine the turnover of goods and services of entrepreneurs, working in the veterinary sector, refers to a trade secret and is protected by law.
Market capacity
The balance of veterinary services consumption
а) The volume of preventive measures.
“Republican Veterinary Laboratory” RSE of the Committee of veterinary control and supervision of the Ministry of Agriculture of the Republic of Kazakhstan studied 26 005 319 researches for a total amount of 7239 491.0 thous. tenge, which is 100% of schedule plan achievement[3].
46 99873 researches for a total amount of 9 074 961171 tenge were conducted by “Diagnoses of animal diseases” subprogram №100 of “Veterinary activities and provision of food safety” budget program during the period from 2014 to 2016. 24 579 226 researches for a total amount of 4 059 377 309 tenge was conducted during five months in 2015.
Picture 4. The cost of conducted researches, thous. tenge
b) The volume of remedial measures (elimination of disease outbreaks damages)
The most common diseases are brucellosis of cattle and small ruminants, and leucosis of cattle. In 2011 a positive test for brucellosis was approved by 75 038 testing of cattle and 32 705 testing of small cattle, also there were 58 046 positive tests for leucosis. In 2012 the number of troubled areas of animal brucellosis accounted to 243, among them 229 focuses were revitalized during the year, areas of rabies accounted to 113, pasteurellosis - 8. The total number of tests for brucellosis among small cattle with account of identified in troubled areas was 43 550 animals.
Within the state program[4] some measures were taken to eliminate 211 focuses of highly dangerous animal diseases and sanitary measures for 172 troubled areas of animal brucellosis (162 troubled areas were registered in 2013 and 10 troubled areas moved from 2012). Among them 137 troubled areas were revitalized in 2013, and 35 areas moved to 2014.
In total 400 focuses of acute animal diseases were registered in 2014, including brucellosis - 206, tuberculosis - 2, bradsot - 3, anthrax - 1, variola - 4, ecthyma - 1, enterotoxemia - 4, listeriosis - 1, Newcastle disease - 12, epizootic weed - 4, pasteurellosis - 12, rhinopneumonia of horses - 1, blackleg - 39, rabies - 110. [picture 6]
In 2015 during 8 months there were registered 305 focuses of diseases in Kazakhstan. Among them rabies are 116, brucellosis - 115, pasteurellosis – 11.
Picture 4. Number of focuses of diseases, un.
Source: Committee of veterinary control and supervision of the Ministry of Agriculture of RK
All focuses of diseases were promptly eliminated and localized through the effective use of vaccines, diagnostic preparations and sterilizing agents, available in the national reserve of veterinary drugs, and through prompt measures of employees of “Republican antiepizootic squard” Republican governmental agency.
1 006 452 blood samples were taken at all for laboratory tests in 172 troubled areas of brucellosis (43 of small cattle and 2 of cattle in Almaty region, 10 of small cattle and 5 of cattle in West Kazakhstan region, 24 of small cattle in Jambyl region, 1 of small cattle and 2 of cattle in Karaganda region, 3 of cattle in Kostanay region, 6 of small cattle in Kyzylorda region, 43 of small cattle and 12 of cattle in East Kazakhstan region, 7 of small cattle and 8 of cattle in Aktobe region, 1 of small cattle in Atyrau region, 1 of cattle in North Kazakhstan region, 3 of small cattle in South Kazakhstan region, 1 of cattle in Almaty city), among them 904 631 were blood samples of small cattle, and 101 821 were blood samples of cattle. A total of 15 622 animals positively responded to brucellosis, among them 13 563 animals of small cattle and 2059 animals of cattle.
Animals of small cattle, positively responding to brucellosis, in accordance with the Decree of the Government of the Republic of Kazakhstan dated April 28, 2003 №407 “On approval of regulatory legal acts in the field of veterinary medicine” were taken out and killed with the payment of compensation, and animals of cattle were delivered to diseased animal slaughter.
Compensation payments to owners showed an increase in monetary terms by 736% in 2012, exceeded the amount of compensations by 8.36 times in 2009 due to increasing the out payments from 7 667.7 tenge on average per one animal in 2009 to 27 162.1 tenge on average per animal in 2013.
Table 1 – Information on compensations of damages of killed animals according to all types of diseases in the Republic of Kazakhstan
|
Compensated animals |
Amount (thous. tenge) |
2009 |
21 874 |
167 724.20 |
2010 |
15 487 |
145 498.50 |
2011 |
25 322 |
392 954 |
2012 |
44 667 |
1 402 185.70 |
2013 |
47 260 |
1 283 682 |
Source: Committee of veterinary control and supervision of the Ministry of Agriculture of RK
Most of compensations are paid for animals, diseased with brucellosis. An important addition to the fighting with infectious diseases, particularly with brucellosis, should be an informational support of farmers.
The balance of veterinary preparations consumption
The growth in consumption of veterinary drugs was observed during the period of 2012-2014. In 2014 the production of veterinary drugs amounted to 83 tons, 11.1 tons were exported, 203.8 tons were imported into the country. Thus Kazakhstan domestic market capacity amounted to 275.7 tons in 2014.
Table 2 – The balance of resources and usage of serum and vaccines in veterinary, tons
|
2010 |
2011 |
2012 |
2013 |
2014 |
Recourses |
11 632.9 |
12 751.1 |
268.5 |
189.8 |
286.8 |
Production |
11 523.9 |
12 665.8 |
195.8 |
52.4 |
83.0 |
Import |
109.0 |
85.3 |
72.7 |
137.4 |
203.8 |
Usage |
11 632.9 |
12 751.1 |
268.5 |
189.8 |
286.8 |
Export |
0.7 |
1.8 |
4.6 |
3.7 |
11.1 |
Domestic sales |
11 632.2 |
12 749.3 |
263.9 |
186.1 |
275.7 |
Source: Statistics Committee of the MNE of RK
а) Production of veterinary drugs
Over 5 years there was a significant reduction in the production of veterinary drugs in Kazakhstan. In terms of quantity in 2014 the production dropped by 138.8 times compared to 2010. This sharp decrease was due to the termination of production of the state-owned enterprises.
Another reason of decline in production of domestic drugs is non-competitive market price due to uncontrolled import and use of veterinary drugs and dumping of prices by Russian companies.
Picture 5. Production of veterinary drugs, kg
Source: Statistics Committee of the MNE of RK
b) Volume and dynamics of veterinary drugs import
After the demise of the Soviet Union all biological plants for veterinary drugs production stopped functioning in Kazakhstan. Today up to 70% of the total amount of drugs used in the country comes from abroad. In connection with the development of livestock farming this figure is growing every year.
Picture 6. Import of veterinary drugs, tons
Source: Statistics Committee of the MNE of RK
Over five years from 2010 to 2014 the imports increased twofold. This means that the production of veterinary drugs in Kazakhstan does not develop properly. The jobs are not created, fewer taxes are paid. In 2014 the import of the total number of used drugs amounted to 71%.
Table 3 - Ten major countries, importing veterinary drugs in 2014, market share in the Republic of Kazakhstan
India |
18.1% |
Egypt |
14.3% |
Russia |
13.7% |
Germany |
11.2% |
Netherlands |
7.7% |
Saudi Arabia |
6.9% |
Turkey |
3.4% |
Spain |
3.4% |
China |
3.2% |
USA |
2.4% |
Source: Committee of veterinary control and supervision of the Ministry of Agriculture of RK
c) Volume and dynamics of veterinary drugs export
The volume of exports in terms of value tends to growth, increased by 59.2 times during 2010-2014.
Picture 7. Export of veterinary drugs, tons
Source: Statistics Committee of the MNE of RK
Main participants
The companies, engaged in veterinary activity, are represented in every region of Kazakhstan. Organizations, which support good epidemiological situation in the country, are the veterinary stations, animal clinics and private veterinarians, laboratories, veterinary pharmacies, warehouses, pet stores.
Table 4- List of main industry-specific players in the regional context:
Type of activity |
Region |
Number of enterprises |
Veterinary stations |
Astana city |
1 |
Almaty city |
1 |
|
Akmola region |
19 |
|
Aktobe region |
13 |
|
Almaty region |
19 |
|
Atyrau region |
8 |
|
East Kazakhstan region |
19 |
|
Jambyl region |
11 |
|
West Kazakhstan region |
13 |
|
Karaganda region |
18 |
|
Kostanay region |
20 |
|
Kyzylorda region |
18 |
|
Mangystau region |
7 |
|
Pavlodar region |
13 |
|
North Kazakhstan region |
14 |
|
South Kazakhstan region |
15 |
|
Animal clinics, private veterinarians providing medical services |
Astana city |
4 |
Almaty city |
18 |
|
Akmola region |
2 |
|
Aktobe region |
2 |
|
Almaty region |
1 |
|
Atyrau region |
1 |
|
East Kazakhstan region |
5 |
|
Jambyl region |
4 |
|
West Kazakhstan region |
1 |
|
Karaganda region |
6 |
|
Kostanay region |
11 |
|
Kyzylorda region |
1 |
|
Mangystau region |
3 |
|
Pavlodar region |
1 |
|
North Kazakhstan region |
2 |
|
Veterinary pharmacies, warehouses |
Astana city |
2 |
Almaty city |
41 |
|
Akmola region |
3 |
|
Aktobe region |
3 |
|
Almaty region |
2 |
|
Atyrau region |
1 |
|
East Kazakhstan region |
5 |
|
Jambyl region |
2 |
|
West Kazakhstan region |
1 |
|
Karaganda region |
6 |
|
Kostanay region |
10 |
|
Kyzylorda region |
1 |
|
Mangystau region |
1 |
|
Pavlodar region |
3 |
|
North Kazakhstan region |
4 |
|
South Kazakhstan region |
5 |
|
Laboratories |
Astana city |
2 |
Almaty city |
2 |
|
Akmola region |
13 |
|
Aktobe region |
13 |
|
Almaty region |
11 |
|
Atyrau region |
7 |
|
East Kazakhstan region |
13 |
|
Jambyl region |
10 |
|
West Kazakhstan region |
17 |
|
Karaganda region |
14 |
|
Kostanay region |
18 |
|
Kyzylorda region |
8 |
|
Mangystau region |
4 |
|
Pavlodar region |
12 |
|
North Kazakhstan region |
16 |
|
South Kazakhstan region |
15 |
|
Laboratories of veterinary sanitary-epidemiological expertise |
Astana city |
6 |
Almaty city |
9 |
|
Akmola region |
4 |
|
Aktobe region |
3 |
|
Almaty region |
5 |
|
Atyrau region |
3 |
|
East Kazakhstan region |
3 |
|
Jambyl region |
7 |
|
West Kazakhstan region |
5 |
|
Karaganda region |
11 |
|
Kostanay region |
4 |
|
Kyzylorda region |
1 |
|
Mangystau region |
3 |
|
Pavlodar region |
4 |
|
Farmers with own veterinary service |
Astana city |
2 |
Almaty city |
0 |
|
Akmola region |
4 |
|
Aktobe region |
2 |
|
Almaty region |
2 |
|
Atyrau region |
1 |
|
East Kazakhstan region |
1 |
|
Jambyl region |
2 |
|
West Kazakhstan region |
2 |
|
Karaganda region |
2 |
|
Kostanay region |
2 |
|
Kyzylorda region |
1 |
|
Mangystau region |
1 |
|
Pavlodar region |
2 |
|
North Kazakhstan region |
2 |
|
South Kazakhstan region |
2 |
|
Production of veterinary drugs |
Almaty city |
5 |
Akmola region |
2 |
|
Jambyl region |
1 |
Source: Kazakhstan Association of veterinarians
development factors
Creation of EEU and the customs union has positively affected on the business operations in the industry. Entrepreneurs, working in the veterinary sector, note an increase in turnover in EEU.
Specific examples of benefits of the integration processes for entrepreneurs:
- lack of customs procedures, free movement of goods and capital;
- opportunity to participate in public procurement of EEU countries;
- more favorable tax regime and availability of special economic zones create advantageous conditions to attract investors to the economy of Kazakhstan;
- production increase due to market capacity growth.
Barriers and limitations
1. Access to the EEU market, failure of Kazakhstan entrepreneurs to participate in public procurement in the Russian Federation;
2. Absence of guaranteed sales market for products reduces the ability of local manufactures to replace and purchase new equipment;
3. Transport and logistics infrastructure does not provide import of qualitative veterinary drugs in appropriate conditions of transportation;
4. Lack of qualified personnel in rural areas;
5. Unavailability of financial resources for veterinarians to purchase premises, equipment and so on;
6. Problems in the sphere of technical regulation and customs control within EEU;
7. Problems in obtaining of registration certificate for veterinary drugs;
8. Absence of veterinarians responsibility;
9. High rate of excise tax on alcohol, used for veterinary purposes;
10. Difficulty in access to information on the planned public procurement in Kazakhstan.
List of potential opportunities for entrepreneurs
1. Establishment of private laboratories to study animal analysis, except for analysis related to highly dangerous diseases;
2. Establishment of private research centers for innovative developments and implementation of veterinary drugs, modification of existing drugs and other services for veterinary science and agriculture;
3. Implementation of electronic accounting system of small domestic animals;
4. Production of veterinary drugs;
5. Production of veterinary equipment.
SWOT-analysis
SWOT-analysis of veterinary services sector
Strengths |
Weaknesses |
§ Development of meat and dairy cluster, which is associated with the veterinarian activity; § Companies access to know-how |
§ Low qualification of personnel
|
Opportunities |
Threats |
§ Worldwide increase in population and relevant growth of food consumption; § Expansion of sales markets for Kazakhstan due to the accession to the WTO and participation in the EEU; § Establishment of private laboratories to study animal analyses; § Implementation of electronic accounting system of animals; § Improvement of services quality; |
§ Improvement of competition on the part of neighboring countries; § Decrease in consumption of meat and dairy products due to deterioration of the macroeconomic situation
|
SWOT- analysis of veterinary drugs sector
Strengths |
Weaknesses |
§ Development of meat and dairy cluster, which is associated with the use of veterinary drugs |
§ Low qualification of personnel |
Opportunities |
Threats |
§ Worldwide increase in population and relevant growth of food consumption; § Expansion of sales markets for Kazakhstan due to the accession to the WTO and participation in the EEU; § Improvement of the quality of produced veterinary drugs and expansion of the range of products |
§ Improvement of competition on the part of neighboring countries; § Decrease in consumption of meat and dairy products due to deterioration of the macroeconomic situation |
[1] Agricultural policy in OECD countries and emerging-market countries: Monitoring and Evaluation 2013
[2] “Agribusiness – 2020” program for the development of agro-industrial complex in the Republic of Kazakhstan for 2013 - 2020 years
[3]The contract № D-1 “On public procurement of services on the diagnosis of animal diseases” according the specificity №159 (Payment of other works and services) for 2013 dated January 18, 2013 under “Diagnosis of animal diseases” subprogram №100 of “Veterinary activities and provision of food safety" budget program №216
[4]“Antiepizootic measures, elimination of focuses of acute and chronic infectious diseases of animals and birds”, “Elimination of focuses of acute and chronic infectious diseases of animals and birds” subprogram №101
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|
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|
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|