Nursultan Nazarbayev, President of Kazakhstan, on implementing the third phase of Kazakhstan's modernization and the country's key priorities.

Nursultan Nazarbayev
Nursultan Abishevich Nazarbayev began his working career in 1960 at the Karaganda Metallurgical Industrial Complex. He entered politics in 1969 in the Karaganda region. In 1979 he worked as Secretary for the Central Committee of the Communist Party of Kazakhstan. In 1984 he then became Chairman of the Ministers Council. Between 1989 and 1991 he served as the First Secretary of the Central Committee of the Communist Party of Kazakhstan and Chairman of the High Council of Kazakhstan. He has served as the President of Kazakhstan since the nation received its independence in 1991.

Dear people of Kazakhstan, the country has passed its 25-year development phase. As part of the celebrations for the 25th anniversary of our independence, we highlighted Kazakhstan's achievements and progress, which are well known and appreciated by the world community.

Kazakhstan has become a non-permanent member of the UN Security Council since the beginning of 2017. Expo 2017 will be held in Astana this year, and we are the first country in Central Asia to hold such important global event. Also, the Universiade sporting event took place in February in Almaty, with the participation of over 1,600 athletes and delegates from 56 countries. All these are the results of the right political path and of Kazakhstan's great standing in the international arena. Kazakhstan shall join the world's top 30 developed countries by 2050. We will resolutely work towards this purpose.

As a result of the Nurly Zhol economic policy and the 100 Concrete Steps plan, we are going through the initial stage of a global transformation. Additional KZT1.7 trillion was allocated to support the economy for the 2014-2016 period alone. As a result, GDP grew by 1% in 2016, an important figure under the current difficult conditions. Today I pose a challenge to implement Kazakhstan's third modernization. It is necessary to create a new model of economic growth that will enhance the country's global competitiveness. I see five key priorities designed to ensure that economic growth above the world average, helping us steadily advance to becoming one of the 30 leading countries in the world.

The first priority is the accelerated technological modernization of the economy. We must cultivate new industries involving the use of digital technologies, such as 3D printing, online commerce, mobile banking, and digital services. In this regard, I charge the government to adopt the Digital Kazakhstan program. Also, supporting innovation and entrepreneurship is a factor of great significance in forming new industries. In parallel with creating new industries, we should give impetus to developing traditional industries such as manufacturing, agriculture, transport and logistics, construction, and other sectors. Firstly, it is important to boost productivity, starting from the introduction of elements like automation, robotics, artificial intelligence, and the exchange of big data.

Secondly, there is a need to focus on the development of competitive export industries in priority sectors. For this purpose I entrust the government with the task of increasing non-oil exports by half by 2025 and with creating a council for export policy. Thirdly, the country's mining and oil and metallurgical sectors shall retain strategic importance for growth. Much attention is given to expanding the mineral resource base through active exploration and I entrust the government to adopt the new Code on Mineral Resources by the end of the year. Fourthly, agriculture must become the new driver of the economy. In this regard, within five years, the area of irrigated land must grow by 40%, investment in agricultural research must be boosted, and exports of food must grow by 40% by 2021. The fifth point of the economy's modernization is logistics infrastructure development. Therefore, I instruct the government to increase, by 2020, goods carried in containers by seven times and air passengers transport by four times. The last priority in this context is the construction sector, which shall become a full driver of the domestic economy.

The second priority is to enhance the business environment. One of our strategic goals is to ensure that the contribution of SMEs to GDP will be at least 50% by 2050. It is an ambitious but achievable goal, and to achieve it the following is needed. Firstly, the government recently launched a program of effective employment and business activity growth. Now the citizens of Kazakhstan in rural regions and towns can get microloans of up to KZT16 million for business operations. Secondly, the government and the National Chamber of Entrepreneurs (Atameken) shall take measures on the front end to reduce all business costs. In addition, I instruct the government to elaborate the framework on business deregulation by July 1. Thirdly, a reduction in the share of the state in the economy to 15% of GDP in line with OECD levels should give a new impetus to economic growth. The government is tasked with completing the privatization of 200 companies by the end of 2018. Fourthly, public-private partnership outspread is a strong potential for promotion of entrepreneurship. This refers to transferring a number of government services to business. All forms of PPP are critical to be used for the utilization of private funds, including trust management of state property, service contracts, and others. PPP is set to become a primary mechanism for infrastructure development, including the social aspect.
The third priority is macroeconomic stability. The key objective here is the restoration of the monetary policy and involvement of private capital in financing the economy. At present the National Bank has an important inflation target of 3-4% in the medium term. Also, it is tasked with implementing measures for banking sector enhancement. The National Bank needs to be given more rights for the state banks' operational control. Lastly, we need to further develop the stock market, which should be boosted by privatization. As for fiscal policy, it is necessary to radically improve the efficiency of budget spending. Optimization of the existing tax incentives is critical. New special tax regimes shall be taken into consideration in a new angle on the eve of the universal declaration.

The fourth priority is the improvement of human capital. Firstly, the role of the education system will change and become central to the new economic growth model. Training programs should focus on the development of critical thinking abilities and skills, and at the same time we should focus on IT-knowledge, financial literacy and of youth patriotism. Currently, 90% of the world's information is in English. Kazakhstan cannot achieve progress without mastery of the English language. Therefore, from 2019 teaching in some subjects in 10th and 11th grade will be conducted in English. As for the healthcare system, from July 1, a system of compulsory social health insurance will be implemented based on joint and several liabilities of the state, employers, and citizens. This system's effectiveness has been proven around the world.

Furthermore, pensions for 2.1 million retirees will be increased by 20% compared to 2016. The basic pension appointment will be based on the new methodology from July 2018. All of these measures in 2018 will provide an increase of 1.8 times of the new basic pension size compared to 2017. About 400,000 children are annually born in the country, and to support this the lump sum birth benefit will increase by 20% from July 1, 2017.
The fifth priority concerns institutional transformation, security, and anticorruption efforts.The government needs to work on implementing the best practices and the OECD recommendations. Secondly, we carry out reforms aimed at protecting private property, the rule of law, and equality before the law. The administrative and criminal law also needs to be humanized. Administrative fines should be fair and proportionate to the offense committed

Kazakhstan is a new multi-ethnic and dynamically developing country. We have passed the 25-year mark on the path of development. In the next 25 years we expect even higher frontiers.

By accumulating a unique wealth of experience when creating a state, we have entered a new stage. I am certain that no matter what difficulties are ahead of us, we will overcome them. Our main strength is unity. We will turn Kazakhstan into a more prosperous country for our descendants.