President Urges Country to Use “Window of Opportunity” of Next 15 Years

PresidentASTANA – In his widely anticipated State-of-the-Nation address on Jan. 17, President Nursultan Nazarbayev outlined in detail his vision of how Kazakhstan, a country only 22 years old, could become one of the world’s 30 most developed and competitive nations by 2050. To catch up with the developed world, he said, Kazakhstan will need to run twice as fast.

Addressing the 1,200 officials, including members of both houses of Parliament, ministers and selected guests from social, political, economic and cultural circles, who gathered at the Palace of Independence for the speech, Nazarbayev said the next 15-17 years will present a “window of opportunity” for Kazakhstan to reach a major breakthrough in its development.

“During this period we will have a favourable external environment, the growth of demand for resources, including energy and food, and the maturing of the Third Industrial Revolution. We should use this time,” he said in the speech called “Kazakhstan’s Way 2050: Common Aim, Common Interests, Common Future.”

According to the head of state, following his unveiling of the Kazakhstan 2050 Strategy in December 2012, the government developed a concept for how the country would achieve its goal of joining the 30 most developed nations by 2050.

Among the specific goals to be achieved by 2050 were at least a 4 percent annual growth in gross domestic product (GDP), an increase in investment from the current 18 percent to 30 percent of the total GDP, increasing the share of non-oil products in Kazakhstan’s exports to 70 percent, increasing financing for science to no less than 3 percent of GDP, halving the economy’s energy consumption, increasing the contribution of small and medium-sized enterprises (SMEs) from the current 20 percent to 50 percent of GDP and increasing labour productivity by five times, from $24,500 to $126,000.

All of these will lead GDP per capita to more than quadruple, growing from $13,000 to $60,000, while the middle class becomes the largest segment of the population and the share of urban population increases from the current 55 percent to about 70 percent of the total. The development of infrastructure, healthy lifestyles and advances in medicine are expected to lead to an increase in Kazakhstan’s life expectancy to 80 years.

“Kazakhstan will become one of the leading Eurasian centres of medical tourism. The formation of an advanced and competitive national educational system will be completed. Kazakhstan has to become one of the safest and most comfortable countries for living. Peace and stability, fair and effective justice and the rule of law are the basis of a developed country,” the President said.Address

 

Seven Priority Areas to Steer Country Forward

The President went on to outline seven long-term priority areas, including adjusting and strengthening the trend of innovative industrialisation; developing an agro-industrial complex on the basis of ongoing innovations; expanding Kazakhstan’s scientific capacity; dynamically developing the infrastructure triad, including agglomerations (Astana, Almaty, Shymkent and Aktobe), transportation and energy; promoting small and medium-sized businesses as the backbone of the economy; pursuing a host of programmes in education, healthcare and social protection to develop human potential further and improving the work of public institutions.

Regarding innovative industrialisation, Nazarbayev stressed that mining will need to be developed, as subsoil use provides the country with a natural competitive advantage, but that new approaches to managing, producing and processing hydrocarbons need to be developed. These new approaches are priorities for the second five-year plan of the State Programme of Accelerated Industrial and Innovative Development (SPAIID) for 2016-19. In fact, he suggested breaking the years between now and 2050 into seven five-year periods, each aimed at achieving this one goal, to become one of the 30 most developed countries, from its own standpoint.

“During the second and subsequent five-year plans, we should establish mobile and multimedia industries, nanotechnology and space technology, robotics, genetic engineering and explore the energy of the future,” the President said.

Turning to agriculture, he said competition in global agro-production will intensify; hence, in Kazakhstan, “agricultural lands should be used by those who introduce new technologies, continuously improve productivity and perform up to the best international standards.”

“The future lies in the creation of a network of new processing enterprises in the agricultural sector, mainly in the form of small and medium-sized businesses. In this area we should provide loans to business,” Nazarbayev explained.

In the area of science, “we should improve legislation on venture financing, intellectual property protection, research and innovation support, as well as commercialisation of research,” the head of state said as he charged the government with developing and submitting to Parliament a package of relevant bills by Sept. 1.

To accelerate the transfer of knowledge and new technologies to the country, Kazakhstan needs to fully use the potential of foreign direct investment.

“In cooperation with foreign companies, we need to set up design and engineering centres. We need to invite leading transnational companies operating in major oil and gas and mining facilities to establish production facilities for their own needs and services here in Kazakhstan. I know some large companies are ready for this. The government must elaborate on this issue and provide favourable conditions for the process if necessary,” Nazarbayev said. He also called for more activity in the country’s technology parks, including the intellectual innovation cluster already operating around Nazarbayev University in Astana and the Alatau Information Technology Park on the outskirts of Almaty.

As far as the triple priority of agglomeration, transportation and energy are concerned, the specific tasks included developing four cities—Astana, Almaty, Shymkent and Aktobe—into major agglomerates, contemporary urban centres driving economic growth. “They should become centres of science and investment, attract talent and provide high-quality education, healthcare and social and cultural services,” he explained.

Developing transport infrastructure and augmenting Kazakhstan’s transit potential in the heart of Eurasia will continue to be a top priority, with attention paid to improving both domestic infrastructure and transit routes. Domestic highways now under renovation include the Astana-Karaganda-Almaty, Astana-Pavlodar-Ust Kamenogorsk and Almaty-Kapchagay-Ust Kamenogorsk routes.

“We need to develop the logistics services sector,” the President continued. “First of all, it is a question of the maximum use of the Customs Union territory for transportation of our goods. Construction work on the Western Europe-Western China corridor is coming to an end. We have built a new railway to Turkmenistan and Iran, with access to the Persian Gulf. In the future, Kazakhstan must invest in the creation of logistics centres in countries with access to the sea. It is necessary to reduce the customs clearance time for goods, increase the capacity of border checkpoints, strengthen the efficiency of the Aktau seaport and simplify exporting and importing procedures.”

Also significant is the new 1,200 km railway connecting Zhezkazghan-Shalkar-Beineu currently under construction, which will connect the country’s west and east by 2015. “These routes will enable us, through the Caspian Sea and the Caucasus, to reach Europe and, in the East, the Lianyungang seaport on the Pacific Ocean, regarding which there is an agreement with the People’s Republic of China,” Nazarbayev said.

Turning to the energy sector, he said traditional sources of power will be developed, while preparation for EXPO 2017 will provide an opportunity to promote the development of non-traditional sources. The head of state also announced plans to build a fourth oil refinery (the existing three are in Atyrau, Pavlodar and Shymkent) and a nuclear power plant.

Small and medium-sized businesses will continue to be looked at as the foundation of economic wealth creation as well as the most assured way to expand the middle class and social stability.

“The greater the share of small and medium-sized businesses in our economy, the more developed and sustainable Kazakhstan will be. Currently we have more than 800,000 small and medium-sized enterprises employing 2.4 million of our citizens,” Nazarbayev said as he urged greater assistance and better conditions for SMEs. “Small and medium-sized business is the economic basis of our Society of Universal Labour. For its development, we need to comprehensively address private property rights. It is necessary to repeal all the outdated legal norms impeding business development. Small businesses should become a family tradition, passed down from generation to generation.”

As he urged the “unleashing” of human potential, Nazarbayev set specific goals for improving the quality of education and the quality of primary healthcare, promoting culture and the Kazakh language, raising pay for civil servants from the middle of 2015 and supporting those with disabilities.

“Kazakhstan must become a barrier-free zone for them,” Nazarbayev said. “It is our duty to take care of those people. Countries around the world are tackling these issues. People with disabilities can work in the service sector, food processing and agriculture industries. I am calling upon our businesses to encourage the employment of people with disabilities. An introduction of a special quota of 5-10 people should be considered. We will incorporate these people into active life, and they will not only receive disability benefits, but also feel themselves to be fully-fledged members of society.”

The seventh and final priority mentioned by the President is improving public institutions, ensuring equality before the law, fighting corruption, cutting red tape and introducing the principles of meritocracy in state-financed organisations.

According to the President, there will be two stages for the country as it seeks to join the 30 most developed nations: one before 2030, which he called a “window of opportunity” during which the country “will ensure dynamic growth in our traditional sectors and create a strong manufacturing industry,” and the other between 2030 and 2050, during which development will be based on the principles of a knowledge-based economy.

 

- 2014, 7 17.01.14Seven Goals for 2014

Turning from long-term plans, the President set seven specific development goals for 2014.

These include ensuring the economic growth of 6-7 percent (GDP grew an estimated 6 percent in 2013) and the increase of GDP per capita to no less than $14,500.

Secondly, by May 1, the National Bank and the government are to develop a set of measures to bring inflation down to 3-4 percent in the medium term.

By June 1, the government and the National Bank are to develop a comprehensive financial sector development programme to run until 2030.

Fourth, the government and the Samruk Kazyna Fund are tasked with analysing all state-owned companies and defining a list of enterprises to be privatised. The same review should be done for the rest of the public sector. In the first quarter of 2014, a comprehensive privatisation programme for 2014-2016 is to be adopted.

Fifth, by the end of 2014, the government must prepare draft strategies on the formation of agglomerations in Astana and Almaty from now until 2030.

Sixth, by Sept. 1, the government must prepare Kazakhstan’s transit potential development programme to 2030, envisaging the removal of barriers to international trade.

Seventh, by the end of the first quarter of this year, the government has to agree on the location, investment sources and construction schedule for a nuclear power plant and the fourth oil refinery.

 

Following Clear Principles, Promoting Patriotism and Cultural Values

According to the President, following a specific set of principles will help Kazakhstan achieve its ambitious goals.

The first principle is pragmatism and the evolutionary nature of all decisions. “No leaps, thoughtless experiments or adventures should be accepted in the economy, politics or social life. Our country and society will change as fast as the surrounding world,” he said.

The second principle is mutually beneficial openness. “We will attract a wide range of foreign investment, technology and innovation to our economy. We will create favourable conditions for the investors,” the head of state noted. “We see the deepening integration of our economy in regional and global economic systems as an important mechanism for joining the 30 most developed countries. This is, above all, linked to our participation in building the Eurasian Economic Union and joining the World Trade Organisation.”

The third principle is improving people’s well-being; the fourth is ensuring nationwide support.

Such support, according to the President, can be based on values seen as the embodiment of the “Kazakhstan Way” of development demonstrated over the 22 years of its existence as a sovereign state. These include the independence of Kazakhstan and Astana; national unity, peace and harmony; a secular society with high spirituality; economic growth based on industrialisation and innovation; the Society of Universal Labour; a common history, culture and language; and the country’s national security and its engagement in addressing global and regional issues.

According to President Nazarbayev, these form the foundation of the “New Kazakhstan Patriotism.” He called on the Assembly of the People of Kazakhstan and the recently established Kazakhstan 2050 national movement to organise the drafting and the adoption of a Patriot Act Mangilik El (Eternal Land), a document outlining the principles of patriotic activism.

“The concept of the Eternal Land [Mangilik El] is the foundation of the nation’s great course, the Kazakhstan 2050 Strategy,” Nazarbayev said. “It is more difficult to sustain independence than to achieve it. It is a centuries-old truth, proven by many nations of the world. Mutual hostility and lack of cohesion have caused the disappearance of many nations. Many nations are lost forever, having been unable to withstand the tests of time. We must learn from the mistakes of others and draw lessons from the past. One lesson is that the creation of the Eternal Land lies in our own hands. We need to encourage ourselves to keep moving forward. We absolutely must preserve our undeniable independence: that is our wealth and our happiness.”

 

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