Information on limiting the participation of a legal entity association (consortium) as executors of the state defense order (SDO) in the draft law of the Republic of Kazakhstan “On the defense industry and state defense order” (draft law), distributed in a number of media outlets, is not entirely correct.
There are no restrictions for the participation of the consortium in the implementation of the state defense order. In accordance with the current legislation of the country, consortia can participate in any field of state activity, including the state defense order.
Note that the concept of “consortium” is legislatively enshrined in the Civil Code of the Republic of Kazakhstan. The draft law allows for the participation of enterprises in the consortium, subject to their compliance with the requirements of the Register of domestic producers, suppliers of works and services (Registry).
Association of domestic producers into consortia allows to increase the proportion of local content in the final product, which is of great importance when choosing the executor of the state defense order.
From its part, the Ministry of Defense and Aerospace Industry of the Republic of Kazakhstan is ready to consider in the Rules for the formation, placement and fulfillment of the state defense order with the possibility (other things being equal) to make a choice in favor of manufacturers who will offer a larger share of domestic content in the production of goods, performance of works and provision of services , even though the price will be 10%, and possibly 20% higher than other manufacturers.
Note that access to participation in the state defense order for domestic enterprises of light industry is not limited. Most of the enterprises, manufacturers of finished products in this industry that meet the qualification requirements for inclusion in the Register, can still participate in the SDO.
As for the “Zhasampaz” consortium specifically, at present its participants are represented in the Register, therefore, it is not a question of shutting down production or reducing 6 thousand light industry workers.
In addition, the planning of defense orders for 2019, was completed in May of this year, therefore, the current legislation in terms of the formation, deployment and implementation of the state defense order will be valid until January 1, 2020.
It should be noted that the share of light industry in the volume of industrial production is 0.4%, and in the volume of manufacturing industry – 1%. This clearly shows that, in general, the influence of the industry on the economy of our country is insignificant compared to other industries.
MDAI of the RK, within its competence, provides comprehensive support to the domestic light industry; the draft law enshrines the expansion of the range of goods in the SDO.
If earlier, in the composition of the state defense order there was only the production of military and special uniforms, insignia and personal protective equipment for security officials, now the bill enshrines the inclusion of all clothing and equipment, including bedding and underwear. This will allow increasing the volume of state defense orders for light industry enterprises, which will be one of the measures to support it, as well as allow them to increase production and the number of jobs.
As for the amendment to include the consortium in the executors of the state defense order, it was proposed by the deputies of the Mazhilis of the Parliament of the Republic of Kazakhstan, and this amendment did not fully resolve the issue of the consortium’s participation in the state defense order.
In this connection, the Government of the Republic of Kazakhstan gave an opinion on the support of this amendment, but subject to the establishment of additional rules in the draft law in order to exclude the creation of gaps and conflicts in the current legislation of the republic, in terms of the responsibility of the consortium participants, the procedure for including and excluding consortiums from the Registry and other important factors.
These issues were discussed in the Majilis of the Parliament of the Republic of Kazakhstan, after which the amendment was withdrawn from the draft law, with the further possibility of discussing it within the framework of other draft laws, since it requires a deeper and more comprehensive approach to this topic and provides for additional amendments to the current legislation of the Republic of Kazakhstan.
From its part, the MDAI of the RK is ready for an “open dialogue” and discussion of this topic with all interested partners not only within the framework of the adoption of this draft law, but also in combination with other issues of the implementation of the state defense order.