Effects of the Customs Union on Food Manufacturing Sector of Kazakhstan

Report on Effects of the Customs

Union on Food Manufacturing Sector

Of Kazakhstan

The development of the Customs Union will make changes in both national and international economy of Kazakhstan. First of all, the agreement between Kazakhstan, Russia and Belorus on the Customs Union development will affect the import and export tariffs, which means that new regulations will affect both exporting food manufacturing companies, due to new export tariffs, and those companies that operate within the country, due to reduced barriers of entry for enterprises from Russia and Belorus. Among opportunities to the food manufacturing sector it is possible to single out increasing number of potential customers from Russia and Belorus and a huge potential for strengthering this sector of the economy that could be realized through increased investments from Russia. However, reduced barriers could put additional pressure on the sector due to increased competition in the face of new rivals and substitue products on the market, which represents threats for the sector. Taking into account the entry of Kazakhstan into the Customs Union, it is possible to assume that the food manufacturing sector together with other spheres of the economy could benefit from the Union due to existing strong sides of the industry. Today Kazakhstan is in the stage of a constant development, and taking into account the stable economic situation and a huge territory compared to the population, food manufacturing industry can move to the next stage of development, which may imply the increased production of high value added food production. However, a relatively small number of existing food enterprises that produce high value added production may make potential customers seeking for such products to switch to competitors' production from Russia and Belorus.

In order to take advantage from the existing situation, the food manufacturing industry should use the best world practicies and innovations in...