President Nazarbayev’s annual address seeks to digitise Kazakhstan, strengthen social protection

ASTANA – Kazakhstan President Nursultan Nazarbayev announced Jan. 9 the state-of-the-nation-address “New opportunities under the Fourth Industrial Revolution,” which was published Jan.10 in full.

Nursultan Nazarbayev. Photo credit: Akorda press service

Nursultan Nazarbayev. Photo credit: Akorda press service

The new address is based on such fundamental documents as the Kazakhstan 2050 Development Strategy, the 100 Concrete Steps Plan of the Nation, the Third Modernisation, the Industrialisation Programme, the Digital Kazakhstan, as well as the Strategic Development Plan up to 2025.

The head of state outlined that the world faces technological, economic and social changes in the era of the Fourth Industrial Revolution. The new technologies enter our lives significantly changing the way we work, exercising our civil rights and raising children.

President Nazarbayev highlighted Kazakhstan’s non-permanent membership in the UN Security Council in 2017-2018 and the January presidency in this body, the success during the EXPO 2017 international specialised exhibition, the GDP’s 4 percent growth, industrial production’s 7 percent raise, poverty’s 13-fold decline and unemployment’s decrease to 4.9 percent.

The emphasis was put on 40 percent growth of the processing sector of industry. “We should clearly realise that Kazakhstan’s achievements are a reliable foundation, but not a guarantee of tomorrow’s success. The era of ‘oil abundance’ is almost coming to an end. The country needs a new quality of development,” said the head of state.

In this regard Kazakhstan intends to broadly implement the Fourth Industrial Revolution elements, concentrated on the following objectives. Following is the gist of the presidential address.

First, industrialisation is to be the flagship of the new technologies introduction. The new instruments aimed at modernising and digitising enterprises with a focus on exporting products have to be developed and tested. The best experiences on the digitisation of industrial enterprises will be widely expanded.

Innovation centres, such as the Nazarbayev University, the Astana International Financial Centre (AIFC) and the International Technology Park of IT Startups will be actively involved in the digitisation process. A serious revision is required of the organisation of the activities of the Alatau Park of Innovative Technologies.

To deal with associated risks of a large-scale release of work force, an agreed policy on the employment of the released work force should be worked out in advance.

In 2018, the development of the third five-year industrialisation period devoted to the development of the “digital age” industry will be started.

Second, the 21st century’s world still consumes natural resources. It is necessary to critically rethink the organisation of commodity industries, approaches to the management of natural resources.

It is important to increase the requirements for energy efficiency and energy saving of enterprises, as well as the environmental friendliness and efficiency of the energy producers themselves. Kazakhstan will increase the share of alternative energy to 30 percent by 2030. Akims (governors) of the regions should take measures on the modern disposal and recycling of solid domestic waste with a broad involvement of small and medium-sized enterprises.

Third, the wide use of the smart technologies in the agricultural industry should ensure a radical increase in labour productivity and growth in exports of processed agricultural products at least 2.5 times within the next 5 years. This will allow entering world markets with high-quality end products. The state, together with business, should find strategic niches in international markets and promote domestic production in these areas, creating and promoting a brand of natural food “Made in Kazakhstan.”

The entire agricultural industry should be radically reoriented and based on agrarian science. Agrarian universities need to update training programmes and become centres for the distribution of the most advanced knowledge and best practices in the agro-industrial sector. It is necessary to focus on the transfer of new technologies and their adaptation to domestic conditions.

It is necessary to encourage those who use the land with the best returns and take measures to address inefficient users. It is also necessary to overhaul ineffective subsidies to reduce the cost of bank loans for agribusiness entities.

Fourth, it is necessary to increase the efficiency of transport and logistics infrastructure within the framework of transcontinental corridors passing through Kazakhstan. The transit of goods through Kazakhstan in 2017 increased 17 percent to almost 17 million tons. The new task is to bring annual revenues from transit in 2020 to $5 billion.

It is necessary to ensure the large-scale introduction of digital technologies, such as blockchain, to track the movement of goods online and to ensure their unhindered transit, as well as to simplify customs operations.

An Intelligent Transport System introduction is required to effectively manage transport flows and determine the requirement for further infrastructure development.

To improve intra-regional mobility, it is important to increase funding for the repair and reconstruction of the local road network. The total budget allocated annually for this should be increased to 150 billion tenge ($454.5 million) in the medium term.

Fifth, the introduction of modern technologies in the construction and communal sectors should ensure 30 square metres of housing per capita by 2030. Currently, the volume of housing construction in Kazakhstan exceeds 10 million square metres per year. The financial system for house savings effectively makes housing affordable for the public. The provision of housing per capita has increased 30 percent in the last 10 years and is now 21.6 square metres. It is important to apply new construction methods, utilise modern materials and adopt fundamentally different approaches to the design of buildings and urban planning.

It is necessary to establish increased regulations for the quality, environmental friendliness and energy efficiency of buildings. It is important to introduce appropriate changes in legislation, including regulating large housing consortiums. Akims (governors) need to more actively address issues of modernisation in housing and communal infrastructure on the basis of public-private partnerships. To solve the issue of providing rural settlements with high-quality drinking water, the government needs to provide at least 100 billion tenge ($303 million) annually.

Sixth, “reloading” the financial sector, which means cleaning out “bad” loans from the bank portfolio. Bank owners will have to bear economic responsibility, recognising losses. The withdrawal of funds from banks by shareholders for the benefit of affiliated companies and individuals will be considered a serious crime.

It is necessary to increase the speed that the law on bankruptcy of individuals is adopted. The National Bank should finally resolve the issue of mortgage loans that were provided to Kazakh citizens before Jan. 1, 2016, when the law to prohibit their issuance to individuals was introduced.

The National Bank and the government should jointly address the issue of providing long-term business lending at rates that take into account the real profitability in the sectors of the economy.

It is important to further improve the investment climate and the development of the stock market within the framework of the Astana International Financial Centre, applying English law and adopting modern financial technologies. The successful listing of Samruk Kazyna Sovereign Wealth Fund companies through the initial public offering (IPO) will also contribute to the development of the stock market.

Seventh, human capital is the basis of modernisation. It is necessary to accelerate the creation of Kazakhstan’s advanced education system, covering citizens of all ages. The key priority of educational programmes is the development of the skills which allow students to constantly adapt to changes and assimilate new knowledge.

Preschool education should, by Sept. 1, 2019, have uniform standards for early childhood development and provide enhanced social and self-learning skills. In secondary education, Kazakhstan has launched a transition to updated content and will complete it in 2021.

To improve the prestige of the teaching profession, the salary of teachers who are versed in the updated contents of teaching materials will increase 30 percent. The updated contents are modern programmes of study, which meet international standards. These have been adapted in the Nazarbayev Intellectual Schools.

In order to improve the effectiveness of diagnosis and treatment, it will be necessary to establish genetic testing and artificial intelligence in medicine. The quality of healthcare personnel training is an important issue. The medical centres should be integrated within all medical universities.

A new edition of the Code on Public Health and Healthcare System should be developed to implement these and other measures.

It is critical to ensure the efficiency of the labour market by creating conditions that enable everyone to fulfil their potential. It is necessary to develop modern standards for all major occupations. It is necessary to develop new or update existing educational programs in line with professional standards. The work of the Atameken National Chamber of Entrepreneurs on training businesses deserves support.

The full-scale implementation of an online labour exchange database is required, where all information on vacancies and job-seekers will be collated and advertised. Citizens will be able to take vocational guidance tests, learn about training courses and state support measures, and find interesting work without leaving their homes. The law on electronic labour exchange must be adopted before April 1.

The pension system is fully dependent on length of service. Expenditure on the social sector in 2018 has increased by 12 percent, exceeding 4.1 trillion tenge ($12.4 billion). An increase in social benefits, including pensions, will raise the income of more than three million Kazakhstan citizens.

A new method of providing targeted social assistance to low-income population groups will be shifted from 2018. The threshold has risen from 40 to 50 percent of the living wage. From Jan. 1, solidary pensions have risen by 8 percent. The allowances for disabled people, families who have lost their primary income, and families raising disabled children have increased 16 percent.

Eighth, effective public administration should be further ensured to reduce the expenses of the businesses and the wider population, when they apply for public administration. It is necessary to ensure the digitalisation of public services for businesses, and their rendering on a “one-stop-shop” principle. State bodies should use modern digital technologies to listen to citizens’ remarks and suggestions in real time and provide prompt responses.

Integration of state information systems will help to move from the provision of an individual public service to the provision of a set of services on the “one application” principle. The quality of natural monopolies services should be improved. It is important to establish reasonable tariffs for these and for energy producers, taking into account investment programmes.

The civil servants’ salaries in the regions and the centre will be rebalanced taking into account the nature and effectiveness of their work. The potential of the effectiveness of the public service in the regions should be more fully revealed through increasing their economic independence and responsibility. In general, the focus of regional policy will be shifted away from equalising expenditures and towards stimulating the growth of the region’s own revenues. Domestic tourism is one of the most promising sources for any region.

Since Jan. 1, in cities of district significance, as well as villages and rural districts with a population of more than two thousand people, the legislation provides for the introduction of an independent budget and municipal ownership of local government. From 2020, these norms will operate across all settlements.

Ninth, the digitisation of processes in government bodies, including their interaction with the public and business, is most important in the fight against corruption and ensuring the rule of law. Citizens will see how their appeals are reviewed and receive timely and qualitative answers. Institutional reforms of judicial and law enforcement systems are being carried out. Norms providing for strengthening the protection of the rights of citizens in criminal proceedings, reducing its repressiveness have been introduced to legislation. The rights of lawyers have been expanded, as well as judicial control at the pre-trial stage. The powers and areas of responsibility of law enforcement bodies are being delineated.

Tenth, Kazakhstan will promote smart cities for a smart nation. 2018 is the year of the 20th anniversary of the capital of Astana. Modern technologies provide effective solutions to the problems of a fast-growing metropolis. Comprehensive management of the urban environment based on the Smart City concept and the development of competences of those people moving to the city should be introduced. “Benchmark” standard for a Smart City should be formed taking into account the experience of Astana. The best practices of Astana and an exchange of experiences between the cities of Kazakhstan has to be expanded. Smart Cities will be the engines of regional development, spreading innovations and improvement to quality of life throughout the country.

Concluding his address, President Nazarbayev underscored that thanks to political stability and public consensus, Kazakhstan will begin to modernise its economy, policy and national consciousness. “The impetus for a new stage of technological and infrastructural development has now been provided. Constitutional reform has established a more precise balance of power between the different branches. We are in the process of updating our national identity,” he said.

“In fact, these three basic aspects are a comprehensive triad of Kazakhstan’s modernisation. To fit with the new times, we must unite as a single nation – a nation on the verge of a historic ascent under the conditions of the Fourth Industrial Revolution,” President Nazarbayev stressed.

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