Leasing market of Kazakhstan: Business development in agriculture

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Leasing market of Kazakhstan: Business development in agriculture

State support for the leasing services industry in Kazakhstan is fully implemented. The history of the formation of leasing in the country can be divided into three stages. The first one describes the formation of entrepreneurship and the institution of private property in general. The second stage is characterized by the practical application of leasing. The third final stage is based on the adoption of fundamental normative legal acts, such as the Civil Code of the Republic of Kazakhstan (Special Part) in 1999, the Law of the Republic of Kazakhstan “On Financial Leasing” in 2000, the Code of the Republic of Kazakhstan “On Taxes and other mandatory Payments to the Budget” in 2001 and others.

In general, leasing is aimed at the purchase and renewal of fixed assets by enterprises to carry out work at the expense of lessors. At first glance, leasing can be mistakenly called a loan, however, being a financial service, it has a different character from a bank loan. Everyone is used to the fact that when receiving a loan, the client borrows from the bank, and also mortgages his property, covering the amount of the loan itself. In leasing, the collateral is directly the subject of the lease itself, that is, the machinery or equipment for which financial funds were requested. An important advantage of lessees is that by paying funds for leasing, the client thus buys back his collateral.

In addition, the lessor not only allocates funds to the client, but also offers a choice of suppliers from whom it is possible to purchase all the necessary equipment with leasing funds. Thus, the lessee is relieved of the need to find partners, which is a rather time-consuming process. The lessor, in turn, already having a list of verified suppliers, builds the process much easier and faster. So, according to the statistics of the leasing companies themselves, about 40% of their customers "come" from suppliers with whom the lessor has repeatedly worked, 20% from insurance companies and other partners, the other 20% account for repeat sales, and only the last 20% turn to leasing companies due to real customer attraction.

There are about 10 operating companies in the Kazakhstan leasing market. However, almost half of all requests are satisfied by KazAgroFinance JSC. Due to the fact that one of the key directions of the country's economic development is the improvement of the agro-industrial complex, the company has taken a strong place in the leasing market. The rest of the market is divided mainly by subsidiaries of second-tier banks.  

To date, KazAgroFinance has become the best partner for the subjects of the agro-industrial complex in updating agricultural machinery and equipment, which is also engaged in lending to the subjects of the agro-industrial complex of the country. The company's branches operate in all regions of Kazakhstan.

To date, the Company has already concluded financial leasing agreements totaling over 53 billion tenge. The financed equipment includes tractors, sowing complexes, cattle trucks and other equipment of Kazakhstani and foreign manufacturers.

According to most experts, it is not very correct to compare the market shares of leasing companies, since they all operate in different segments. Despite the fact that Kazakhstan lags behind some countries in terms of leasing development in the republic, the growth rate of the domestic economy allows us to hope that this financial instrument will still occupy a worthy niche. According to experts from the CIS countries, the republic has already created the most favorable legislative environment in the CIS for this purpose.

The state plays an important role in the development of leasing services in Kazakhstan, which stimulates this process by providing tax incentives. According to experts, it is tax breaks that are the competitive advantages of the country's leasing industry. Thus, in this area, a number of imported goods are not subject to value added tax (VAT), accelerated depreciation is provided, and remuneration to the lessor is exempt from corporate income tax and VAT. This is what allows you to reduce the interest rate, as a result of which the leasing product is cheaper than a loan.

At this stage, leasing in Kazakhstan is becoming an increasingly popular financial instrument. When it comes to developing small and medium-sized businesses, entrepreneurs increasingly prefer leasing to credit. The need for it with the growth of production and the need to upgrade fixed assets will only grow, and the service itself will become more and more popular.

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