Speech by Prime Minister Bakytzhan Sagintayev at extended meeting of the Government 09.02.2018

An extended meeting of the Government was held with the participation of the Head of State Nursultan Nazarbayev today in Ukimet Uyі. Prime Minister of the Republic of Kazakhstan Bakytzhan Sagintayev reported on the results of the work for 2017 and tasks for 2018.

Dear Nursultan Abishevich!

For the last 10 years, Kazakhstan has developed under the pressure of external shocks and world turbulence. These are difficult times of rapid and profound changes. Nevertheless, our country has avoided dramatic scenarios only thanks to your timely decisions.

The response to the global financial crisis of 2007-2009 was the program of forced innovative industrialization, the second five-year period of which we are implementing now.

In the conditions of external shocks of 2014-2015, you initiated a large-scale plan of infrastructure development of Nurly Zhol. To strengthen the state and implement the Strategy-2050 in the global reality, you, the distinguished Nursultan Nazarbayev, put forward five institutional reforms and the Plan of the Nation "100 Concrete Steps" for their implementation.

At a new stage in the development of the world economy and global changes in early 2017, you announced the course of the Third Modernization of Kazakhstan, setting clear goals for renewal in the political, economic and spiritual spheres.

Your Ruhani Zhangyru program article is of fundamental importance, as the formation of new generations of Kazakhstanis with modern thinking is the decisive factor of the country's competitiveness in the 21st century. Successful implementation of your new Address on the Fourth Industrial Revolution will place Kazakhstan on the list of developed countries, solving the most complex issues of the world's advanced agenda.

 

Dear Nursultan Abishevich!

You always foresaw the challenges ahead. In advance, the government and akims were given strategic attitudes and instructions. Thanks to your formula "crisis as a chance," Kazakhstan always mobilized in difficult times and came out of trials strong, with new plans and confidently looking ahead.

It was the implementation of your decisions that made it possible to achieve concrete results last year. The main of them are:

The economy has reached a stable development trajectory, which is confirmed by international rating agencies, which give the country a stable forecast. GDP growth was 4%. 60% of growth is provided by non-primary sectors. This is a fundamental moment, because it shows the stability of the economy and the change in its structure. Foreign trade turnover increased by 25% to $69.5 billion. Investments in fixed assets increased by 5.5%, including private investments – by 6.9%.

 

The macroeconomic situation has improved. Inflation is reduced to 7.1%. The sustainability of public finances is ensured at a safe level. The national debt does not exceed 26% of GDP. Incomes to the republican budget grew by 26.3%.

All social obligations of the state have been fully implemented. On your instructions, basic social benefits have been increased. The amount of labor pensions has been raised to 20%, one time birth allowances – by 27%. The unemployment rate was 4.9%.

An important international event of the year was the Expo-2017 – Future Energy exhibition, which was visited by almost 4 million people. The exhibition had a great multiplier effect on the development of small and medium business, trade, promotion of green technologies.

Thus, the Plan of the Nation and all the programs have worked. I will discuss in more detail the most significant of their effects on the economy.

 

The Plan of the Nation "100 Concrete Steps" is in the zone of special attention of the Government. Over three years of its implementation, 74 laws and more than 500 normative legal acts that meet the tasks of the new stage of state construction have been adopted. Since the execution of the Plan, 55 steps in total have been completed.

The first reform is the formation of a professional state apparatus. The transition to a career model of civil service gave equal opportunities to employees in advancing on competence. Comprehensive certification of civil servants was carried out. The approbation of a new system of labor remuneration based on the results has begun.

The second reform is protection of the rule of law. The transition from a five-tiered justice system to a three-tier system was implemented, which ensures the timely protection of the rights of citizens and business.

The quality of requirements for the judiciary has been increased, and their accountability has been strengthened. The legal proceedings on investment disputes, the International Arbitration Center of the AIFC have been created.

The local police service and community councils have been set up for receiving complaints from citizens about police actions.

The third reform is industrialization and economic growth through diversification. The antimonopoly legislation has been harmonized with the OECD standards. In the construction industry, the process of obtaining permits has been shortened, Eurocodes have been introduced, obsolete construction rules and regulations have been abolished. The new Code "On Subsoil and Subsoil Use" has been adopted. The implementation of the BAKAD (Big Almaty Ring Road) project has begun. The Astana International Financial Center has been established.

A new Labor Code has been adopted. Targeted social assistance has been enhanced. A single benefit for low-income families has been introduced. New Tax and Customs Codes entered into force. The tax reform will increase revenues to the budget in 2018 by 90 billion tenge, and in the three-year budget – by 300 billion tenge.

The fourth reform is the identity and unity. The Assembly of the People of Kazakhstan has been institutionally strengthened. New social elevators for young people have been created. Work has been done to promote the idea of ​​the "Society for Universal Labor."

The fifth reform is the formation of an accountable state. An institute of public councils and annual reports to the public has been created. A new model for monitoring and auditing the use of budget funds was introduced.

The law on the development of local self-governance is being implemented. The transfer of functions of state bodies to a competitive environment and self-regulating organizations has begun. An "open government" has been introduced. The Government for Citizens Corporation has provided 64 million services.

All these steps are of crucial importance for the creation of a new model of the economy and its sustainable development in the long term.

 

The State Program of Industrial-Innovative Development is the main tool for diversifying and improving the competitiveness of the industry.

Since 2010, 1148 new projects have been commissioned for 6 trillion tenge. 107 thousand permanent jobs were created.

There was a transition to the production of goods with higher added value. The release of new, previously not produced high-tech goods for export, including locomotives, electric locomotives, passenger cars, cars, mining and oil and gas equipment, has begun.

Significant growth has been achieved in pharmaceutics, automotive, electrical engineering, chemical industry, food production.

As a result, the contribution of the manufacturing sector to industry increased from 31% in 2010 to 40% in 2017. Labor productivity has increased. Each employee began to produce, on an average, $10 thousand more.

In 2017, the growth rate of the manufacturing industry reached its five-year maximum of 5.1%. 120 projects for 1.5 trillion tenge of investments and created 10 thousand permanent jobs. We are going to provide the same rates this year too.

Exports of non-primary goods grew by 22%. The geography of supplies covered 122 countries. Kazakhstan today exports more than 800 products of the manufacturing sector.

The government has launched an active work to implement the Digital Kazakhstan program you initiated. By 2022, all populated areas of the country will be provided with broadband access to the Internet. A plan has been adopted to train personnel for the digital economy and digital literacy of the population.

Measures have been developed for the technological re-equipment of basic industries and the introduction of elements of Industry 4.0. at the first 500 industrial enterprises. The creation of model digital factories based on the flagships of our industry – ERG, Kazzinc, ArcelorMittal, Kazakhmys, Kazatomprom – has been started.

Legislative norms have been prepared for the development of e-commerce, the venture finance industry, and the IT industry as a whole. The concept of the development of smart cities has been approved. By the end of the year, pilot projects will be implemented in each region.

 

Attraction of investments. Due to your personal involvement, during the years of Independence, about $300 billion of direct foreign investments were attracted to the country, now Kazakhstan is the leader in the region by this indicator.

Today, the structure of investment inflows has changed. 25% of foreign investment goes to the manufacturing industry, to non-primary sectors – about 50%. A new wave of foreign investment is entering the country.

Expanding the Tengiz project with Chevron's $37 billion of investment has no analogues in the world for today.

The implementation of your agreements with China, Russia, the United States, Japan, South Korea, Iran, Turkey and other countries to develop production capacity for a total of about $50 billion, is under the control of the Government.

 

The Nurly Zhol state program. Thanks to the large-scale construction of transport, industrial and social infrastructure, the Program annually creates at least 100 thousand jobs.

First, a modern network of highways has been created.

In 2015-2017, 2000 km of motorways connecting Astana with all regions of the country on the principle of ray, was built. In 2017, construction and reconstruction were carried out on 4000 km of roads. The movement is open for 600 km.

In 2018, more than 500 km of roads will be completed. In accordance with your new Address, special attention will be paid to the development of local roads. The volume of their financing will be brought up to 150 billion tenge, which will improve the quality of life in cities and auls.

Second, the railway and aviation infrastructure has been modernized and expanded. For three years, 1376 km of railways have been built, which increased the carrying capacity and speed of transport of goods to new markets.

Reconstruction of runways of the majority of airports and passenger terminals of the country was carried out. In Astana, new railway station and International terminal of the airport were built.

Third, the transit potential of the country as a transport and logistics hub in Central Eurasia is being realized. The construction of the Kazakhstan section of the Western Europe - Western China International Corridor has been completed. Is is 2857 km in sum.

The highway covers more than 240 settlements of 5 regions with a total of about 5.5 million people, and already gives its effects for economic development. So, the freight turnover between the regions increased 2.5 times, transit freight traffic – 3 times. The average annual effect from the project for today is about 180 billion tenge and will grow every year.

New logistics hubs have been built in the East and West of the country, as well as a joint Kazakh-Chinese logistics terminal in the sea port of Lianyungang.

The work on filling the Transcaspian international transport route with cargo flows has started, taking into account the completion of the Kars-Akhalkalaki railway section between Turkey and Georgia. As a result, the volume of transit cargo increased by 20% to 18 million tons. Incomes from transit traffic amounted to 353 billion tenge.

The task is to bring the profit from all types of transit to $5 billion and transit up to 2 million containers from China to Europe by 2020.

 

The Nurly Zher program. From the first days of Independence, you, Nursultan Abishevich, pay special attention to providing Kazakhstan citizens with quality and affordable housing.

In these years, about 130 million m2 of housing have been built, providing a million and two hundred thousand families with housing. In 2017, a record 11.2 million m2 of housing was commissioned. More than 100 thousand families received new housing.

It is encouraging that now the construction of housing is dominanated by non-state funds – their participation is 84%. For 1 budget investment there is 5.4 tenge of private investments attracted.

Large-scale housing construction has produced a multiplier effect of the construction industry. The volume of production of construction materials amounted to more than 440 billion tenge.

 

Agro-industrial complex. The effectiveness of state support measures has been increased. 65 types of subsidies have been revised and the coverage of the subjects of the agro-industrial complex has been expanded. The volume of the support for AIC in 2017 increased by 18% and amounted to 260 billion tenge.

Maps of agro-processing in the context of regions have been developed. Investments in fixed assets increased by 30%.

In 2017, Kazakhstan fully obtained the status of a zone free from foot and mouth disease, which enables our livestock products to enter new markets.

Thanks to your personal arrangements with the leaders of China, Uzbekistan, the UAE, Saudi Arabia, Iran, the markets of these countries were opened for the export of Kazakhstani production. For example, exports to China alone grew by 30%. In total, the export of agricultural products and products of its processing grew by 10%.

As a result of the measures taken, the growth of gross agricultural output was 2.9%, of food products – more than 4%.

 

The Program for Productive Employment and Entrepreneurship Development. Over the first year, more than 570 thousand people became its participants, of which 315 thousand have been arranged for permanent jobs, including 136 thousand people – for new jobs.

Your order for the introduction of free vocational education for young people has been fulfilled. An additional 21 thousand young people began to study.

To support private business, decisive deregulation has been carried out, and a new Business Code has been adopted. Permits have been reduced 3 times, checks – 4 times. Support was provided to 192 thousand business entities for a total of 286 billion tenge. Conditions for the development of PPPs have been improved. A total of 160 contracts have been concluded for 146 billion tenge.

The measures taken helped increase the output of small and medium business by 29%, and the share of SMEs in the economy reached almost 27%.

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