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NEW OPPORTUNITIES UNDER THE FOURTH INDUSTRIAL REVOLUTION
Dear people of Kazakhstan,
Today the world is entering the era of the Fourth Industrial Revolution, an era of profound and rapid changes: technological, economic and social. The new technological order significantly changes the way we work, exercise our civil rights, and raise children. The need to be prepared for global changes and challenges has prompted us to adopt the Kazakhstan-2050 Development Strategy. We have set the goal of entering the top thirty most developed countries in the world. The Plan of the Nation – 100 Concrete Steps – is being implemented. Sixty steps have already been executed. The rest are mostly long-term and are being systematically implemented. The Third Modernisation of Kazakhstan was launched last year. The Industrialisation Programme is being successfully implemented. The Digital Kazakhstan comprehensive programme has been adopted. A comprehensive Strategic Development Plan of the Republic of Kazakhstan until 2025 was developed. Our long-term goals remain unchanged. We have all the necessary programmes. This Address determines what we have to do for the successful navigation and adaptation in a new world – the world of the Fourth Industrial Revolution.
We created an independent Kazakhstan, which became a brand that inspires trust and respect in the world. In 2017, our country became a non-permanent member of the UN Security Council. In January 2018 we preside over it. We became the first state among the countries of the CIS and Eastern Europe to be chosen by the world community to host the International Specialised Exhibition, EXPO 2017. A successfully functioning model of a market economy has been built in Kazakhstan. In 2017, the country, having overcome the negative consequences of the global crisis, returned to the trajectory of strong growth. At the end of the year, the GDP growth was 4%, and industrial production grew by more than 7%. In addition, the processing sector exceeded 40% in the total volume of industry. Kazakhstan's successful development has allowed the formation of the middle class. Poverty declined 13-fold, the unemployment rate fell to 4.9%. The country's social and economic successes are based on civil peace, interethnic and interfaith accord, which continue to be our main values. Nevertheless, 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. Global trends show that it should be based primarily on the broad implementation of the Fourth Industrial Revolution elements. This brings both challenges and opportunities. I am confident that Kazakhstan has all the necessary attributes to join the ranks of leaders of the new world. Thus, it is essential to concentrate on the following objectives.
FIRST. Industrialisation should become the flagship of the introduction of new technologies.
Its results became one of the main stabilizing factors in the crisis years of 2014-2015, when oil prices fell sharply. Therefore, the focus on the processing sector with high labour productivity remains unchanged. At the same time, industrialisation should become more innovative, taking advantage of the new Technological Order 4.0. It is necessary to develop and test new instruments aimed at modernising and digitising our enterprises with a focus on exporting products. They should primarily stimulate the transfer of technology. A pilot project on the digitisation of several of Kazakhstan's industrial enterprises should be implemented, and then this experience should be widely expanded. The most important issue is the development of our own ecosystem of developers of digital and other innovative solutions. It should take shape around innovation centres, such as the Nazarbayev University, the Astana International Financial Centre (AIFC) and the International Technology Park of IT Startups. A serious revision is required of the organization of the activities of the Alatau Park of Innovative Technologies. The main factors for the success of the innovative ecosystem are stimulation of the demand for new technologies by the real sector and the functioning of the private venture financing market. This requires appropriate legislation. In addition, the development of IT and engineering services is of particular importance. Digitisation of the economy brings dividends, but there are also risks of a large-scale release of workforce. It is necessary to work out in advance an agreed policy on the employment of the released workforce. It is necessary to adapt education, communication and standardisation systems to the needs of the new industrialisation. In 2018, it is necessary to begin the development of the third five-year industrialisation period devoted to the emergence of the “digital age" industry.
SECOND. Further development of the resource potential.
The world of the 21st century still needs natural resources, which will have a special place in the development of the global economy and the economy of our country in the future. It is necessary, however, to critically rethink the organisation of commodity industries, approaches to the management of natural resources. It is necessary to actively implement integrated information and technology platforms. 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. The EXPO 2017 Exhibition held in Astana showed rapid progress in the sphere of alternative and clean energy. Today, renewable energy sources (RES) account for a quarter of the world's electricity production. According to forecasts, by 2050 this figure will reach 80%. We have set the goal to increase the share of alternative energy in Kazakhstan to 30% by 2030. Today, we already have 55 renewable energy facilities with a total capacity of 336 MW, which generated about 1.1 billion kWh of green energy in 2017. It is important to stimulate business, to invest in green technologies. 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. These and other measures will require the updating of legislation, including the Environmental Code.
THIRD. Smart technologies are a chance for a breakthrough in the development of the agricultural industry.
The agrarian policy should be aimed at a radical increase in labour productivity and growth in exports of processed agricultural products. We have learned how to grow various crops and produce grain. We are proud of this. But this is not enough. It is necessary to ensure the processing of raw materials and enter the world markets with high-quality end products. It is important to radically reorient the entire agricultural industry to solving this task. The development of agrarian science is a priority and requires significant attention. It should focus primarily on the transfer of new technologies and their adaptation to domestic conditions. In this regard, we must modify the role of agrarian universities. They should not just issue diplomas, but prepare specialists who will work in the agro-industrial sector or engage in scientific activities. These 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. For example, a significant increase in productivity can be achieved through the adoption of technologies which predict the optimum time for sowing and harvesting, along with those that provide “smart irrigation", intelligent mineral fertilisation systems, and targeted pest and weed control. Unmanned technology can significantly reduce the cost of farming, minimising human elements. The introduction of new technologies and business models and an increase in the scientific content of the agro-industrial sector reinforces the need for cooperative farms. It is necessary to provide comprehensive support to agricultural cooperatives. The State, together with the private sector, should find strategic niches in international markets and promote domestic production in these areas. Intensification of agriculture should take place in line with the preservation of quality and mindful of the ecological compatibility of products. This will create and promote a brand of natural food products “Made in Kazakhstan", which should become recognisable across the world. In addition, it is necessary to encourage those who use the land with the best returns, and take measures to address inefficient users. It is necessary to overhaul ineffective subsidies to reduce the cost of bank loans for agribusiness entities. I hereby give the order to ensure the increase of labour productivity in the agro-industrial sector and the increase of the export of processed agricultural products by at least 2.5 times within the next 5 years.
FOURTH. Increasing the efficiency of transport and logistics infrastructure.
Today several transcontinental corridors pass through Kazakhstan. Much has been said about this. In general, the transit of goods through Kazakhstan in 2017 increased by 17% and amounted to almost 17 million tonnes. The task is to bring annual revenues from transit in 2020 to US$5 billion. This will make it possible to return the funds spent by the State on infrastructure within the shortest possible timeframe. 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. Modern solutions allow us to organise the interactions of all links of the logistics. The use of “big data" will help provide high-quality analytics, identify areas of growth and reduce excess costs. To achieve this, it is necessary to introduce an Intelligent Transport System. This will allow us 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 networks. The total budget allocated annually for this should be increased to 150 billion tenge in the medium term. It is necessary to ensure active participation of all regional akimats (governments) in this work.
FIFTH. The introduction of modern technologies in the construction and communal sectors.
Thanks to the programmes being implemented, the volume of housing construction in Kazakhstan exceeded 10 million square metres commissioned per year. The financial system for house savings is effective and has made housing affordable for the general public. The provision of housing per capita has increased by 30% in the last 10 years and now stands at 21.6 square metres. It is necessary to bring this figure to 30 square metres by 2030. To achieve this goal, 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 requirements for the quality, environmental friendliness and energy efficiency of buildings. New buildings, existing houses and infrastructure should be equipped with intelligent management systems. This will increase comfort for the citizens, reduce the consumption of electricity, heat and water, and will encourage natural monopolists to increase their efficiency. It is important to introduce appropriate changes in legislation, including regulating natural monopolies. Akims (mayors and 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 annually from all funding sources.
SIXTH. “Reloading" the financial sector.
It is necessary to clean out “bad" loans from the bank portfolios. At the same time, the owners of banks should bear economic responsibility, accepting losses. The withdrawal of funds from banks by shareholders for the benefit of affiliated companies and individuals should be considered a serious crime. The National Bank should not be an observer of such practices. Otherwise, why do you need such a government agency? Supervision of the activities of financial institutions by the National Bank should be tough, timely and effective. The State will continue to guarantee the interests of ordinary citizens are observed. It is necessary to expedite the adoption of the law on bankruptcy of individuals. In addition, I instruct the National Bank to finally resolve the issue of mortgage currency loans that were provided to Kazakhstan citizens before January 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. This is one of the main tasks of the Astana International Financial Centre, which began its work this year. Using best international practices, it should become a regional hub, applying English law and adopting modern financial technologies. The successful listing of the “Samruk-Kazyna" Sovereign Welfare Fund companies in IPO will also contribute to the development of the stock market.
SEVENTH. Human capital is the basis of modernisation.
A new quality of education. It is necessary to accelerate the creation of our own advanced education system, covering citizens of all ages. The key priority of educational programmes should be the development of the skills which allow students to constantly adapt to changes and assimilate new knowledge. Preschool education should, by September 1, 2019, have uniform standards for early childhood development and provide enhanced social and self-learning skills. In secondary education, we have launched a transition to updated content and will complete it in 2021. It includes completely new curricula, textbooks, standards and human resources. It is necessary to further examine approaches to training and raising the qualifications of teachers. At the higher education institutions across the country, it is necessary to develop pedagogical departments and schools. It is necessary to strengthen the quality of teaching mathematical and natural sciences at all levels of education. This is an important condition for preparing young people for a new technological order. To increase competition between educational institutions and attract private capital, per capita financing in urban schools will be introduced. It is necessary to reduce our students' academic load taking into account that it is the highest among the CIS countries and on average by more than a third higher than in the OECD countries. In all regions, it is necessary to set up a network of children's tech parks and business incubators on the premises of schoolchildren's centres, with all the necessary infrastructure, including computers, laboratories, and 3D printers. This will help successfully integrate the younger generation into the research and industrial and technological environment. The future of the people of Kazakhstan lies in the fluent use of Kazakh, Russian and English languages. A new methodology for studying the Kazakh language at Russian-language schools has been developed and is being implemented. If we want the Kazakh language to live in the centuries, it is necessary to modernise it, without loading it with excessive terminology. In recent years, however, 7,000 well-established and globally accepted terms have been translated into the Kazakh language. Such “innovations" sometimes go to ridiculous lengths. Among them are “ғаламтор" (“Internet"), “қолтырауын" (“crocodile"), “күй сандық" (“piano") and there are many other examples. It is necessary to revise the approaches to the validity of such translations and to bring our language terminologically closer to the international level. The transition to the Latin alphabet will help to resolve this issue. A clear timetable for the transition to the Latin alphabet up to 2025 should be established at all levels of education. Knowledge of the Russian language remains important. Since 2016, in updated curricula, Russian is taught in Kazakh-language schools already from the first grade. The transition to teaching certain natural science disciplines in English in the tenth and eleventh grades will start in 2019. As a result, all our graduates will master three languages at the level necessary for life and work in the country and in the global world. Then a genuine civil society will emerge. A person of any ethnic group will be able to choose any kind of work, up to the extent of getting elected as the President of the country. The people of Kazakhstan will become one nation. The content of training should be harmoniously complemented by modern technical support. It is important to continue work on developing digital educational resources, connecting to broadband Internet and equipping our schools with video facilities. It is necessary to update the training programmes in technical and vocational education with the involvement of employers and taking into account international requirements and digital skills. It is necessary to continue the implementation of the “Free Vocational Education for All" project. The State gives the young person the first profession. The government must fulfill this task. Video lessons and video lectures from best teachers of secondary schools, colleges and universities should be posted online. This will allow all people of Kazakhstan, including those living in remote areas, to gain access to the best knowledge and competencies. In higher education, it is necessary to increase the number of graduates trained in information technology, artificial intelligence and “big data". In addition, it is necessary to develop university science with a priority placed on research in metallurgy, oil and gas chemistry, agro-industrial complex, bio- and IT technologies. It is necessary to implement a phased transition of applied scientific research in English. Higher education institutions need to actively implement joint projects with leading foreign universities and research centres, large enterprises and multinational corporations. Co-financing from the private sector should become a mandatory requirement for all applied research projects. We need to marshal a consistent policy to support our young scientists by allocating quotas within the framework of scientific grants. It is time to treat education as a separate branch of the economy with its investment projects and export potential. It is necessary to legislatively consolidate academic freedom of universities by giving them more rights to develop educational programmes. It is necessary to strengthen the retraining of teachers, to attract foreign managers to universities, and to open campuses of world universities. The building up of the nation's potential requires further development of our culture and ideology. This is precisely the purpose of the Rukhani Zhanghyru programme. Our society's role model should be a citizen of Kazakhstan who knows his or her history, language, culture but who is also modern, fluent in foreign languages and has progressive and global worldview.
First class healthcare and a healthy nation. With an increase in the life expectancy of our people and the development of medical technologies, the volume of consumption of medical services will grow. Modern health care should focus more on disease prevention rather than on expensive hospital treatment. It is necessary to strengthen public health management by promoting a healthy lifestyle. Particular attention should be paid to protection and strengthening of the reproductive health of young people. It is necessary to transition from an ineffective and costly for the state medical examination to managing major chronic diseases with the application of remote diagnostics, as well as outpatient treatment. This approach has long been practiced in the world. It is necessary to implement it boldly and actively. It is necessary to adopt a comprehensive plan to combat cancer, to establish a scientific oncological centre. Highly effective early diagnosis and treatment of cancer should be provided on the basis of international best practices. It is necessary to carry out the same work that we conducted in cardiology, tuberculosis control and obstetrics. Public health will gradually transition to the system of compulsory social health insurance based on the joint responsibility of the population, the State and employers. The need for its implementation is beyond doubt. However, a more thorough preparatory work is required, which has not been carried out by the Ministry of Healthcare and the Ministry of Labour and Social Protection. It is necessary to develop a new model of the guaranteed scope of free medical care by defining clear boundaries of state obligations. People will be able to receive services not guaranteed by the state by becoming a member of the system of compulsory social health insurance or through voluntary medical insurance as well as co-payment. It is necessary to increase the availability and effectiveness of healthcare services through the integration of information systems, the use of mobile digital applications, the introduction of electronic health passports, and the transition to “paperless" hospitals. It is necessary to introduce genetic testing and artificial intelligence in medicine which will significantly improve the effectiveness of diagnosis and treatment. An important issue is the availability and quality of healthcare personnel training. An integrated university medical centre is now operating at the unique Nazarbayev University School of Medicine. This approach should be emulated across all medical schools. To implement these and other measures, a new edition of the Code on Public Health and Health Care System should be developed.
Qualitative employment and an equitable welfare system. 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. In these standards, employers and the business community will clearly stipulate the knowledge, skills, and competencies required of employees. It is necessary to develop new or update existing educational programmes in line with professional standards. The self-employed and unemployed represent the reserves of economic growth. I have repeatedly asked for a solution on the issue of the self-employed. The Ministry of Labour and Social Protection of Population has shown irresponsibility and superficiality in this matter. It is necessary to provide greater opportunities for productive employment – whether through starting a business, obtaining new qualifications, or entering the workforce. The work of the “Atameken" National Economic Chamber on business training deserves support. It is important to extend coverage of these demographics through the Programme for the Development of Productive Employment and Mass Entrepreneurship by strengthening its instruments. The process for registering the self-employed should be simplified as much as practically possible. Conditions which will encourage faithful fulfilment of obligations to the state must be created. The people of Kazakhstan should have the opportunity to find new employment relatively quickly, including in other localities of the country. The full-scale implementation of an online labour exchange database is required, where all information on vacancies and job-seekers will be collated and presented. 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. Employment record books should also be converted into an electronic format. The Law on Electronic Labour Exchange must be adopted before April 1, 2018. Social policy will be implemented by involving citizens in a fully-fledged economic life. The pension system is now fully dependent on the length of service. Those who have worked longer will receive larger pensions. In this regard, all Kazakhstan citizens should seriously consider legalising their labour activities. In terms of social insurance, there will also be a strengthened relationship between the length of service and payment. Starting in 2018, we have shifted to a new method of providing targeted social assistance to low-income population groups. The threshold has risen from 40% to 50% of the living wage. Able bodied low-income citizens will receive financial aid provided they participate in employment promotion measures. State support measures for disabled citizens will be strengthened.
Dear people of Kazakhstan!
All social obligations of the state will be fully realised. I would like to remind the people of Kazakhstan that in 2016-2017, pensions and allowances were increased three times. The basic pension rose in total by 29%, the solidary pension rose by 32%, the childbirth allowance rose by 37%, and allowances in the case of loss or disablement both rose by 43%. The salary of healthcare workers increased by up to 28%, the salary of education workers increased by up to 29%, the salary of social protection workers rose by up to 40%, the salary of Corps B civil servants rose by 30%, and scholarships increased by 25%. Few other countries around the world have managed to increase their social spending, during what is a crisis. National budget expenditure on the social sector in 2018 were increased by 12%, exceeding 4.1 trillion tenge. An increase in social benefits, including pensions, will raise the income of more than three million Kazakhstan citizens. From January 1, 2018, solidary pensions have risen by 8%. A 16% increase in allowances for disabled people, families who have lost their primary income, and families raising disabled children has been realised. From July 1, 2018, the basic pension will increase by an average of 1.8 times, depending on the length of service. In addition, I order the introduction of state allowances for parents taking care of Category 1 disabled adults from childhood as of July 1, 2018. Approximately 14,000 families will receive these monthly benefits, which will exceed one subsistence wage. Up to three billion tenge will be required to fund these benefits in 2018. To raise the prestige of the teaching profession, I order a raise in the salary of teachers who are versed in the updated contents of teaching materials by 30%. The updated contents are modern curricula which meet international standards and have been approbated in the Nazarbayev Intellectual Schools. They give our children the necessary functional literacy and skills for critical thinking. I also order the introduction of a new structure for teachers in 2018, which will take into account levels of qualifications and the increase in gaps between levels. Qualifications should be awarded through a national qualifications test, as is the model all over the world. This will encourage teachers to continue to improve their teaching abilities. As a result, teacher's salaries will grow in total from 30% to 50%, depending on the qualification obtained. In 2018, the state will allocate an additional 67 billion tenge for this purpose.
EIGHTH. Effective public administration.
It is necessary to continue work to reduce the expenses of the business community and the wider population, when providing public administration. It is therefore important to expedite the adoption of a law aimed at further deregulation of the business sector. It is necessary to ensure the digitalisation of public services for businesses, and their rendering on a “one-stop-shop" principle. 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. Further work should be carried out to improve the quality of services of natural monopolies. It is important to establish reasonable tariffs for these and for energy producers, taking into account investment programmes. Decisive actions are needed to improve the business climate, especially at the regional level. The Government should prepare a new package of systemic measures to support business and to bring it out from the shadow and into the light. It is important to accelerate the implementation of the privatisation plan, expanding it by reducing the number of subordinate organisations of state agencies. Those subordinate organisations, which are genuinely necessary, should be consolidated as much as possible to reduce administrative costs. The funds which this releases should be directed towards the introduction of a new system of remuneration for civil servants based on a factor-point scale. This will reduce the imbalance in civil servants' salaries in the regions and the centre and take into account the nature and effectiveness of their work. I instruct the Government, together with the Agency for Civil Service Affairs, to implement pilot projects in central and local state bodies to introduce this system in 2018. It is necessary to unlock the full potential of the effectiveness of the public service in the regions through increasing their economic independence and responsibility. In general, the focus of regional policy should be shifted away from equalising expenditures and towards stimulating the growth of the regions' own revenues. In particular, one of the most promising sources for any region is the development of inbound and domestic tourism, which today creates every tenth job in the world. The government, in turn, must take a package of measures, including simplifying visa procedures, developing infrastructure and removing other barriers in the tourism industry. Within the framework of fiscal decentralisation, it is necessary to solve the issue of transferring corporate income tax from small and medium-sized businesses to regional budgets. Starting from January 1, 2018, 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 in all settlements across the country. Seven types of tax and other non-tax revenues, as well as 19 directions of expenditures, have been transferred to village budgets. This will involve the population in solving local issues. In addition, state bodies should use modern digital technologies to listen to citizens' criticism and suggestions in real time and provide prompt responses. Through the implementation of new technologies, the state and companies should ensure reliable protectionof their information systems and devices. Today, the notion of cyber security includes protecting not only information but also access to the management of production and infrastructure facilities. These and other measures should be reflected in the National Security Strategy of Kazakhstan.
NINTH. The fight against corruption and the rule of law.
A preventative fight against corruption will continue. Much work is already being done. Over the past three years alone, more than 2,500 people, including top officials and state-owned company executives, have been convicted of corruption. During this period, damage caused by them to a value of around 17 billion tenge was reimbursed. The digitisation of processes in government bodies, including their interaction with the public and business, is important. In particular, citizens should 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 their 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 have been delineated. The work on strengthening the guarantees of the constitutional rights of citizens, ensuring the rule of law, and humanising law enforcement must continue. In the field of protection of public order and security, it is necessary to actively implement intelligent video surveillance and recognition systems on the streets and in places of mass gatherings, as well as providing control over traffic.
TENTH. Smart cities for a smart nation.
2018 is the 20th anniversary of our capital – Astana. ts formation as one of the most important centres of Eurasia's development is a source of our common pride. Modern technologies provide effective solutions to the problems of a fast-growing metropolis. It is necessary to introduce comprehensive management of the urban environment based on the Smart City concept and the development of competences of those people moving to the city. The world has come to an understanding that it is cities that compete for investors. They choose not a country, but a city in which it is comfortable to live and work. Therefore, based on the experience of Astana, it is necessary to form a “benchmark" standard for a Smart City and start expanding best practices and an exchange of experiences between the cities of Kazakhstan. Smart Cities will be the engines of regional development, spreading innovations and improvement to quality of life throughout the country.