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New Sources of Foreign Investments



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New Sources of Foreign Investments

 

Measures included in the economic bloc of the Plan of the Nation stipulate the engagement of at least 10 transnational corporations in the processing sector of our economy.



Three groups of national companies of the manufacturing industry, infrastructure, energy and others will participate in the work on the creation of joint ventures with “anchor investors.”

The first group is represented by enterprises subject to comprehensive modernisation through reinvestment.

The second group includes enterprises that will attract the potential of transnational corporations.

The third group includes enterprises with a high level of market competition for “anchor investors” and promoting export brands.

Negotiations have been held with more than 26 TNC’s, and concrete agreements have been reached with some of them.

The core issue of the third direction of the Plan of the Nation is the establishment of the Astana International Financial Centre (AIFC), with an independent court system, its own jurisdiction based on the principles of English law using the English language and the introduction of the principle of investment residency.

The Constitutional Law of the Republic of Kazakhstan on the Astana International Financial Centre was adopted and came into effect.

The economic results of AIFC activities will be expressed by a boost in GDP growth, on average to the tune of 1 percent annually at the cost of foreign direct investments into the capital market of Kazakhstan.

Moreover, more than 2,000 qualified working places will be created within the AIFC.

Our capital Astana will develop as a business, cultural and research centre in Eurasia, which will make good use of modern international transport and logistics systems, including a new airport terminal.

 

Horizons of Innovative Industrialisation

 

The Plan of the Nation stipulates measures for the development of a number of potentially attractive sectors of the economy.



Primarily, it is subject to the industry of electric power and growth of energy efficiency.

It is important to achieve a 25 percent decrease in GDP energy intensity by 2020 and 50 percent by the middle of the century.

To that end, it is necessary to attract strategic investors to energy conservation through the mechanism of energy performance contracts.

It is important to enhance the development of private energy service companies and stimulate them to provide a range of services in the energy-saving sector.

The effective supply of electric power to the population is a major objective of the electric-power industry.

Amendments to the legislation of the electric-power industry are designed to ensure long-term guarantees to energy-producing organisations regarding the return of investments, which were made in order to modernise, reconstruct, expand and update fixed assets by introducing the model of “single buyer.”

The work on the enlargement of regional power grid companies and power providing organisations will be carried out to increase the efficiency of energy supplies and prevent uncontrollable growth in prices of electric power for end users.

That will create favourable conditions to attract investments to the sector, ensure control of power exchange in favour of domestic consumers and increase the quality of governmental management of the sector.

We will continue to work on the development of a science-based economy.

At this point, it is essential to increase the critical mass of competitive and high-tech industries.

Currently, 65 scientific projects are being conducted within the Technology Commercialisation programme implemented in conjunction with the World Bank.

The attraction of “anchor transnational corporations” will give an opportunity to establish centres of technological development.

A number of key indicators will be achieved following the second five-year programme of industrial and innovative development.

Innovative activities of the business sector will increase up to 20 percent of the GDP with the share of innovative productions up to 2.5 percent.

Seven-thousand kilometres of roads of national importance will be reconstructed with a view to developing transport and transit systems, as it was stipulated in the Nurly Zhol State Programme. It is planned to introduce a toll collection system on the roads.

By 2022, tolls for transit will generate almost 41 billion tenge (US$116.6 million), which will allow maintaining the whole network of roads of national significance.

To integrate Kazakhstan into international transport and communicational flows, the project on creation of a multimodal Eurasian transcontinental corridor was launched.

It will ensure free transit of cargo from Asia to Europe and cut costs in half for the delivery of cargo.

The attraction of additional cargo flows through Kazakhstan will increase transit traffic by all types of transport from the current 18 million tonnes to 33 million in 2020 and to 50 million in 2030.

Deregulation of container transportation will increase volumes by more than 500,000 tonnes in the next five years.

The transit potential of air transportation in commercial aviation will be persistently increased, predominantly by national transporters.

An international air hub near Almaty will be created in order to raise the profitability of air transportation

To make Astana an international financial centre before 2019, new international connections with leading financial centres, such as Tokyo, Singapore and Hong Kong will be launched.

A single regulatory instrument will be adopted in the construction sector that will regulate all licensing processes of a constructor based on a “one-stop shop.”

Particular types of inspections, depending on the technological complexity of works, shall pass to the private sector. In 2016-2020, it is planned to pass 90 percent of all projects to the private sector.

Additionally, it is planned to switch to the input costing construction method, which allows taking into account current market prices for construction materials, workforce and other services.

Moreover, new construction codes based on Eurocodes have been brought into force since July 1, 2015.

Tourism, being a very promising sector, is expected to achieve considerable growth, mostly because of lowering of administrative barriers, developing new tourist attractions and routes and increasing the quality of services.

 

Incentives of Social Modernisation

 

Rapid economic development demands special attention to the formation of a new type of labour relations.



With this objective in view, the new Labour Code of the Republic of Kazakhstan was adopted.

It is based on labour standards of the International Labour Organisation and the OECD.

Procedures on modification of a labour contract’s conditions were eased at the legislative level; measures to introduce a system of self-administration for labour collectives and mechanisms for collective negotiations between employees and employers were stipulated.

An increase in human potential will be facilitated by reforms in education, healthcare and social protection of the population.

Works are being carried out in the field of education on the development and adoption of new balanced standards for pre-school and formal education.

Educational processes will be carried out in three languages – Kazakh, Russian and English.

New measures to improve the level of qualifications among personnel for projects of the SPAIID were adopted.

The core objective in healthcare is the introduction of obligatory health insurance. For the cost of increasing the private sector’s share in providing guaranteed basic medical assistance, the competitive environment and quality of services in healthcare will increase.

A joint commission on the quality of medical services will be created.

The introduction of the model of corporate governance in healthcare institutions is prescribed.

It is also planned to improve the system of social assistance to the population in need through enforcement of its targeting.

It will be provided to families with incomes below 50 percent of the minimum subsistence level per family member. By doing so, the recipients will conclude the social contract on participation in programmes on employment assistance and social mitigation.

Such types and principles of providing social assistance will be introduced starting in 2018.

Overall, the most important aspect of the new social policy is connected to the gradual growth of investments into development of human potential.

We should persistently implement the idea of a Society of Universal Labour.

The Roadmap of Employment has been updated with an increased level of financing. Participation in its programmes will give an opportunity for the working population to take short-term retraining courses, improve their qualification and obtain microloans. Along with that, it will help overcome objective difficulties caused by the impact of the ongoing global crisis.

The implementation of a new project called Free Vocational and Technical Education for Everyone will start in 2017.

Participation in the project will help citizens obtain basic occupational skills, which will come in handy for them, especially for the young people of Kazakhstan.

 

Success of Reforms – Path Towards Unity of Nation

 

A quarter-century of Kazakhstan’s independence has shown that only a united country can reach incredible peaks of development.



Our country demonstrates the essential importance of stability, peace and reconciliation by its own model of successful development.

All developed countries in the modern world are consolidated nations.

They live by the same economic, political and cultural algorithms; they share common development goals and a single understanding that personal success is an integral part of the power and success of a state.

Today, all developed countries perform their modernisation projects on the basis of their identity. As for Kazakhstan, we have followed their example.

Global experience shows that there are no universal standards and recommendations in regards to identity and unity. No country has blueprints, ready models or solutions to challenges in that field.

No one in the world has invented a universal identity and a unity index or a formula which can measure this field of life.

In the meantime, the ultimate aim of our work in the field of identity and the unity of the nation, or, in technocratic parlance, expected outcomes, is similar to the OECDcountries’.

Our path is the path of unity and gradual development of the nation on the basis of civil identity.

The essence of the fourth reform, aimed at strengthening the Kazakhstan identity and unity of citizens, resides exactly in that.

We already have two baselines, which by developing we will gradually strengthen our Nation of the Common Future.

First, it is the Assembly of the People of Kazakhstan. Its mission is the path leading us to the sanctity of inter-ethnic peace and reconciliation.

Science tells us that every ethnos on Earth possesses at least one unique feature.

We witness that 100 ethnic groups in Kazakhstan have at least 100 unique traits. Altogether, they represent the unique advantage of our united country.

Multi-ethnicity is our common great treasure! The Assembly of the People of Kazakhstan has been successfully implementing its mission as chief guardian of this treasure for 20 years now.

The Assembly is the basis of our Kazakhstan identity.

First, we have acquired our national idea – Mangilik El.

The word El carries a big unifying force because the motherland has been and will remain the most intimate and magnetic value for every Kazakh.

The idea of Mangilik El as a mirror reflects our national belief in the future.

The basis of the constructive patriotism of people of Kazakhstan was formed by our grand actions.

In line with strengthening and enriching it, we have to hand it down from generation to generation through the ages.

This is where a historic and spiritual power of the patriotic act Mangilik El should come through.

Our aim is to strengthen the common identity and unity of our country via development of the Kazakhstan society on the principles of united citizenship and national values incorporated in the Mangilik El on the basis of consolidation of our achievements since obtaining independence.

These are our central priorities.

Definitely, the OECD system of tools is used to continue our work in these areas.

They are geared to the specific features of Kazakhstan, first of all in order to modernise culture, education, socialisation of youth and patriotic upbringing.

Along with that, our strategy on solidifying the identity and unity of the nation in a new stage of state-building contains an essential element.

All works on identity and unity will be conducted in close connection with the Assembly of the People of Kazakhstan. This is the key principle.

The experience of the OECD countries shows that identity and unity could only rely on specific factors: meritocracy, effective work of a professional government, ensuring the supremacy of the statute law, economic growth and transparent and accountable work of the government.

In other words, it relies on the successful implementation of the 100 steps of the Plan of the Nation.

A number of documents in the format of laws, Presidential and governmental decrees and orders of the Secretary of State were developed in order to create the institutional foundation for the enforcement of the identity and unity of the nation.

The Parliament introduced amendments and additions to the laws on the Assembly of the People of Kazakhstan, national symbols and issues of culture, historic and cultural legacy, tourism and activities of non-governmental organisations in order to establish the legislative base to implement the fourth direction of the Plan of the Nation

Moreover, a new law on charity, sponsorship and philanthropic activities was adopted.

We drew up three new concepts – those of strengthening and developing identity and unity, developing the Assembly of the People of Kazakhstan until 2025 and developing physical education and sports until 2025.

Important changes were made to the concept of cultural policy and the state programme for the development and use of languages.

In addition, we elaborated the concept of tourism industry development and the trilingual education roadmap until 2020.

The government will approve an action plan to promote the national brand of Kazakhstan.

Work is being done to modernise Kazakhstan’s museums and state symbols system.

Of great importance is the strengthening of cooperation between the state and NGOs as part of a separate action plan.

A work plan to create a single calendar of national holidays is equally relevant.

Plans to modernise the Kazakh media, promote the idea of a Society of Universal Labour  and a series of cultural, educational and information projects will be implemented.

I want to emphasise that the identity of Kazakhstan is the identity of the success of the state, society and each citizen.

 

Open Government, Accountable to Society

 

As part of the fifth reform to ensure a transparent and accountable state, we need to address several key issues.



First, a state corporation Government for Citizens will be set up.

This new agency will incorporate the existing national state enterprises: Public Service Centre, Real Estate Centre, Research and Production Centre of Land Cadastre and State Centre for Pension Payments.

Citizens will only deal with this new single provider of public services.

This will ensure the transparency of their performance and reduce unnecessary administrative barriers and the number of requested documents.

Government service-providing agencies must provide maximum assistance to the corporation within its competence and ensure the transfer of all public services until the end of 2017.

The quality of public services will be monitored by a special public council created by the government, a single provider through the new corporation, as well as NGOs.

Second, the whole system of public administration will be focused on achieving concrete results.

To this end, every year target indicators will be set for the government, ministers, akims (heads of local or regional administration) and all structural units of state bodies. All civil servants will work according to individual plans approved by their leadership.

It is also important to streamline the current system of execution of instructions by civil servants based on subordination, their qualifications, functions performed and powers assigned to them.

Third, to ensure quality planning it is necessary to guarantee the accuracy of official statistics.

Therefore, it is important to increase the responsibility of respondents and administrative sources for the provision of high-quality statistics.

All these aspects have already been taken into account when making amendments and additions to the regulations.

Fourth, on my instructions, audits and optimisation of programme documents of state bodies were carried out.

In the future, when planning, developing and implementing programmes at all levels we need to follow five key principles based on the OECD recommendations – validity, continuity, transparency, monitoring and control.

Territorial development programmes must be restructured in the same vein.

All of the new state and government programmes must be reviewed by consultative and advisory bodies headed by the Prime Minister.

Fifth, amendments and additions to the Budget Code were adopted.

Public authorities were granted the right to ensure effective budget reallocation to achieve the final result.

Their powers in making decisions regarding structure and staff were expanded, which is important to attract qualified professionals.

Sixth, the new system of evaluation of public authorities is based on the principles of mandatory external, independent audit, publicity and feedback from the public and personal responsibility of executives.

It is important to establish a strong correlation of evaluations of the execution of programme instruments and activities of public authorities.

To improve the state audit system, it is planned to modernise the Accounts Committee and financial control institutions. They need to follow the model of global audit firms with the strengthening of the expert and analytical component.

In addition, the annual audit of quasi-public sector entities is outsourced, especially in terms of the use of budgetary funds.

Seventh, one of the main criteria for the transparency and accountability of the state is the increase of public access to information.

Starting in 2016, access to all information of public authorities and agencies will be provided at the request of individuals and legal entities, with the exception of state secrets and other secrets protected by law.

Private companies will also have to follow the rule of information transparency if they perform public functions or are the recipients of budget funds.

This will require the development and implementation of a new, user-friendly and understandable format of presentation of government agencies’ information. There is much work to be done to modernise existing websites and provide rural settlements with high-speed Internet.

From 2016 onwards, central and local government bodies will create new public councils as well as restructure existing ones based on the principles of autonomy, independence, publicity and periodic rotation.

In accordance with the law On Public Councils, this institution received new effective instruments of social control.

Councils will be formed on quota principle, but at least two-thirds of their membership should be represented by the general public.

Councils shall be chaired by well-known public figures who do not exercise civil service functions.

Public councils are granted the right to discuss draft budget programmes of government agencies and their implementation, strategic plans and territorial development programmes.

Their meetings will hear reports of executive bodies on the achievement of target indicators and consider draft regulations relating to the rights, freedoms and duties of citizens.

Reporting to citizens of all levels of the executive power and members of the government is planned.

They will also develop and submit proposals to public authorities to improve the legislation.

The decisions of councils will be advisory, but public authorities will be required to consider them.

 

State Functions – Towards Competitive Environment and Local Self-Government

 

State development requires the transmission of a number of government functions and currently there are nearly 4,500 of them in the competitive market.



To this end, a permanent commission chaired by the Deputy Prime Minister is being created, composed of Parliament members, the management of central executive bodies, representatives of Atameken NCE and the Civil Alliance of Kazakhstan.

It will identify a list of functions of all public authorities to be transferred to the competitive market. Also, we need to choose the form of their transfer, taking into account the readiness of the competitive market to implement transferred state functions and current regulations, as well as price-quality criteria.

The commission will consider the regulations of state functions transfer and monitor and control the quality of their implementation.

Reforms at the central level should be naturally followed by conferring additional powers to local authorities which will be transferred to them in three stages.

First stage (2016-2017):

– approval of candidates for the post of akim (mayor) of the city of regional significance, town, village and rural district presented by a region akim for further inclusion in regional maslikhat (local executive body) and elections;

– initiation of a discussion on dismissal of the akim;

– consideration of draft programme documents on the development of the local community and discussion of topical issues of site improvement and public order;

– consideration of proposals of the regional akimat (municipal administration) on the sale of property acquired on the cash control account;

– control over the intended use and prevention of illegal occupation of land by individuals within settlements;

– making proposals for the appointment of heads of public institutions of local communities;

– enhancing the tax capacity of local self-government by transferring the right to charge two additional taxes – transport and land tax from legal entities;

Second stage (from 2018):

– gradual formation of the local government budget approved by the regional maslikhat;

– coordination by the meeting of the draft budget of the local community introduced by the akim for the regional maslikhat’s approval and approval of the report on its implementation for submission to maslikhat;

– issues of management of communal property of the local community;

– budget implementation only for administrative divisions with a population of more than 2,000 people and with the approval of the regional maslikhat;

– introduction of an institute of communal property of local self-government;

– consideration of integration of administrative divisions at the level of rural districts to increase their capacity.

Third stage (from 2020):

– establishment of a representative body of local self-government;

– implementation of a separate local self-government budget in towns with a population of less than 2,000 people;

– introduction of procedures for consideration of citizens’ proposals for projects of local budgets that affect public interest issues.

Implementation of all these measures will increase the transparency of decision making by public authorities and promote the development of the local self-government system.

 

Plan of the Nation – Project of Large-Scale Modernisation of Kazakhstan

 

The practical phase of the implementation of the Plan of the Nation has started. It will be monitored by the National Commission for Modernisation.



All state bodies, public institutions and citizens will be required to demonstrate coherence, perseverance, creativity and persistence.

We have a long way to go and now we are taking our first 100 steps.

There will be others; I’m absolutely positive of it.

An evolutionary and comprehensive approach is the main principle of modernisation, which now drives our history of independence, marking its quarter-century anniversary.

It is important to remember that only a strong state and a united nation can achieve successful modernisation. It should lead to the sense of order.

First, to the order in a state.

Second, to the establishment of clear and binding business rules for all, embodied in the letter of the law mandatory for all.

Third, to order and harmony in social and political life.

We have stood many tests with honour and tempered and strengthened our spirits. We have created a new Kazakhstan – Uly Dala Eli, the Country of the Changed Great Steppe.

By implementing the Plan of the Nation, we expand the horizons of our Era of Ascension of the Nation. We use all the opportunities we have gained over the years of independence and those given to us by global development.

The world certainly has examples of countries who stepped out from the Third World to the First. We study and consider their vivid experience.

Now, we are trying on the most successful global models of economic, state and social development.

Today, few countries in the world formulate their national dream in the same way: being on a par with the greatest nations of the world after coming out of centuries of oblivion.

We believe in this historical destiny of Kazakhstan.

I call on the people of Kazakh to take an active part in the implementation of the Plan of the Nation and reforms and enjoy the opportunities they offer.

We will confidently pursue our Kazakhstan dream and the prosperity of Kazakhstan!







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