Customs Rules Put the Squeeze on Imports

Customs Rules Put the Squeeze on Imports

Thursday, 27 September, 2007
New customs regulations in Kazakstan are choking imports, and could create a shortage of goods, causing prices to rise, say NBCentralAsia analysts.

Trade between Kazak businesses and their foreign partners has been disrupted for several weeks. NBCentralAsia understands that around 60 per cent of the goods currently being imported are held up in customs warehouses. Some sales contracts where goods have already been paid for have since been cancelled, or revised so that the items are exported to another country.

Gennadiy Shestakov, who heads the Association of Customs Brokers in Kazakstan, explained that the chaos is a direct result of a new law introduced in late August which makes it compulsory for imports to be accompanied by an export declaration from the country of origin.

This law was intended to make customs and tax procedures simpler, but in reality it has made them more bureaucratic than ever.

“Businessmen don’t mind submitting a declaration, but the actual form that the law demands of them doesn’t exist. Or rather, it does, but only as an internal document in the imported item’s country of origin, and no one over there is going to supply it to Kazakstan,” said Shestakov.

NBCentralAsia analysts warn that as the flow of goods is curbed, stoking inflation. One expert, Yaroslav Razumov, says the new law will have a serious effect on the Kazak economy, as most local manufacturers are reliant on imported equipment, parts and raw materials. Eighty per cent of the foodstuffs used in Kazakstan’s confectionary industry, for example, are imported.

“If this situation doesn’t change, the shortage of imports will soon have an impact, affecting Kazak-made goods as well as imported ones,” he said.

One area where the import restrictions are likely to bite hard is fuel. Although it has plenty of crude oil, Kazakstan only has three refineries so it imports petrochemicals from Russia, China, Uzbekistan and Finland.

In addition, the oil extraction industry itself could be hit. As Razumov points out, both extraction and refining in Kazakstan is reliant on imported technology.

Many of NBCentralAsia’s analysts said the reason why the new customs law had created such a mess was that the officials who conceived it failed to consult with the business community.

(NBCentralAsia draws comment and analysis from a broad range of political observers across the region.)

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