COVID-2019: How Business Club AKK copes with difficulties

State of emergency in Kazakhstan

On March 16, 2020, the state of emergency has been imposed in Kazakhstan. The number of measures like country entry restrictions, reduction of the working hours of companies and institutions, mass gatherings ban have been adopted due to the state of emergency. The subsequent events could not but be a shock for business and the economy as a whole.

On March 19, Nur-Sultan city, the capital, and the city of Almaty (with a population at the beginning of 2020 of more than 1,130,000 people and more than 1,100,000 people) have been closed for quarantine. On March 28, the government has ordered a stricter implementation of quarantine measures: it is allowed to move in the city with the required certificate of employment, to switch companies activity to remote work, if possible, to decline the number of taxi passengers to one, to put all international passenger flights, passenger rail services on hold and to reduce working hours of the public transport. The non-working regime has been extended until April 13, 2020. During this period, the activities of enterprises and organizations which were not included in the list of the permitted organization were suspended in the relevant regions and cities.

At the same time, the stability of tenge, the national currency, which depends on oil prices and export opportunities, was in a dangerous situation. Due to this situation, the entrepreneurs were engaged in developing longer-term strategies to keep business afloat.

The following decisions were taken to reproduction the vulnerabilities of economic sectors:

— for individual entrepreneurs - the provision of deferred payments on loans;

— for small and medium-sized enterprises the most affected by the crisis - the abolition for 6 months of the calculation and payment of taxes and other payments of the wage fund;

— state social support in the form of payment of 42,500 tenge for the period of emergency, etc.

The willingness of participants of the Business Club Association of Koreans of Kazakhstan (BC AKK)

The Business Club includes both kinds of business, a young (and only starting) business, for which the current crisis was the first, and enterprises which are existing from one year to more than twenty years, these enterprises work mostly on the Kazakhstan market or the markets of one or several regions/cities of Kazakhstan, as well as some of them are involved in the markets of the CIS countries.

On one hand, the decline in demand of goods and services, the cessation of supplies of materials/goods from abroad negatively affected certain types of activities that require direct contact with customers and depend on spatial conditions, on the other hand, where demand has grown, due to reorientation, the lack of resources for processing incoming requests/orders prevailed.

In a short survey, 11 participants of the BC AKK gave a proactive assessment (from 0 to 5) on the situation of their business, which showed a change from “stably excellent”, “satisfactory” (5-3), before the introduction of the state of emergency,  to “unsatisfactory” position (2 -0) after it has been forced into the application.

Enterprises involved in such activities as construction, food services, retail, and other industries that are not subject to closure continued to provide the living needs of the population to an acceptable extent, but certainly not without loss. Others needed to stop their activities to wait and think about options to strengthen their market position.

First of all, the attention of the interviewed managers was focused on the implementation of measures to support their employees and motivation to continue working. (see below).

Most of the enterprises have chosen the option of maintaining payroll and switching to distance working, using communication support. It is also a frequent occurrence to apply for state social assistance in the form of a transfer of 42,500 tenge, which can be noticeable when employees are forced to leave of absence or salaries were temporary reduced.

Concerning maintaining the customer base, promotion, the development of alternative proposals, the transition to an online format of interaction, and constant reporting of changes in work with the company remain good business tools.

In both cases, the helpful way of support of the business was active interaction with partners and lessors based on agreements and mutual support.

Priority measures after quarantine withdrawal

As the priority areas for state projects shortly are outlined, participants of the Business Club AKK are planning to begin actions to restore their business after the state of emergency is withdrawn, among which (according to the survey):

- fence-mending with the customer base;

- boosting obligations for ongoing projects;

- the introduction of new business process regulations;

- carrying out team events aimed at uniting employees;

- increase in occupied market share, expansion;

- transition to enhanced mode of operation;

- activation of the promotion of goods and services

- revision of expenses.

The issues of the need for more intensive use of online technologies and the search for suppliers in Russia (orientation on the ruble currency) were also updated in the BC AKK.

On the other hand, the current state provided entrepreneurs with a good opportunity to see gaps or moments that need to be finalized in established business processes, all of this led to the deliberation of changes, the testing of new ideas that complement or redirect the main activity.

Interaction within BC AKK

The question of the activity of BC AKK as a community arose naturally in connection with its essence. In April, an initiative member of the Business Club organized an online conference (using the ZOOM application), during which, in a discussion format, the opportunity was taken to share relevant information, exchange views, and offer support for each other.

The discussion was held on the following topics:

— Implementation of a soft loan program in Kazakhstan, developed in connection with the order of President Kassym-Zhomart Tokayev, according to which small and medium-sized businesses can apply to banks for a loan and working capital replenishment at a rate of not more than 8 percent per annum for up to 12 months.

— The special procedure for public procurement, approved by the Decree of the Government of the Republic of Kazakhstan dated April 10, 2020 No. 191. The tender for public procurement has been simplified, including the abolition of the procedures for a preliminary discussion of the draft tender documentation, admission and appeal within the framework of cameral control, that is, the procurement period has been reduced from 45-60 days to 7 days.

— Business participation in tenders for the latest construction projects (prefabricated infectious diseases hospital in Almaty, road repair in the Karaganda region)

— Attracting business from the IT (information technology) sphere to participate in the further development of the state program of Kazakhstan “Digital Kazakhstan” (2018-2022), aimed to transform the state infrastructure.

— Application of the system E-learning in the quarantine, introduced in 2011-2015 in 1,159 educational institutions of Kazakhstan;

— The dynamics of changes in prices in the real estate market of Kazakhstan;

— Opportunities for the employer to provide conditions for the transfer and residence of employees outside the city limits, in preparation for the resumption of work on April 20 in the cities of Nur-Sultan and Almaty according to the list of activities approved by the state commission on ensuring the state of emergency with the President. Presumably, by the end of May 2020, it is planned that the enterprises will be returned to work in Nur-Sultan and Almaty, the process will be divided into 3 stages.

— The need to provide social assistance to elder board members of the Almaty Korean National Center. At this difficult time, the business club is actively responding to support requests from the Association of Koreans of Kazakhstan and is ready to help needy families, elderly people.

It is also important that the restrictions on movement in closed areas also affected sports, which are an integral driving force of many Korean businessmen UKBC  and have become a traditional element in the programs of the forums. The positive point is that even in these conditions, leaders find ways to stay in shape and tone while attracting and motivating their employees and teammates to strengthen physical health.

 Despite all the difficulties, including affection of the world of business with the pandemic of the coronavirus COVID-19, the Business Club AKK is aware that maintaining unity both in the club, in UKBC, and within the Korean community in total has great importance, especially at this time.

The article was prepared by the correspondent of BC AKK - Kim I.