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State of the Nation Address by the President of the Republic of Kazakhstan Nursultan Nazarbayev, January 10, 2018

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.

 

Dear compatriots,

 

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. Further

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