Factsheet on the Third Modernisation of Kazakhstan

February 23, 2017

Overview

President Nursultan Nazarbayev’s annual address was published on 31 January. The President announced the Third Modernisation of Kazakhstan, which involves creating a new model of economic growth that will ensure the country's global competitiveness. The modernisation includes five main priorities, which are designed to ensure economic growth and sustainable development to help Kazakhstan join the top 30 most developed countries by 2050. The annual address followed a special announcement given by the President last week, in which he set out bold plans to increase the powers of parliament. President Nazarbayev stated that these constitutional reforms are aimed at furthering the democratic development of Kazakhstan, as the Government will be accountable to parliament.


Five Priorities of the Third Modernisation of Kazakhstan

First priority – Accelerate technological modernisation of the economy

Cultivate new industries created with the use of digital technologies and develop the country’s prospective sectors such as 3D-printing, e-commerce, mobile banking and digital services

Give impetus to the development of traditional basic industries (industry, agriculture, transport and logistics and construction)

Significantly increase the productivity of labour through widespread introduction of automation, robotics, artificial intelligence and exchange of “big data”

Continue industrialisation with emphasis on the development of competitive export industries in priority sectors

Integrate into global chains of production and distribution of goods and services by attracting transnational companies

Implement a joint investment programme with China to establish production facilities

Retain strategic importance of the metallurgical-mining, oil and gas complexes

The agrarian sector should become the new driver of the Kazakh economy

Develop the new Eurasian logistics infrastructure and increase the volume of transit

Develop the construction sector, which must become a driver of the domestic economy

Modernise the labour market by developing new industries that will incorporate new technologies

 

Second priority –Improve and expand the business environment

Ensure that by 2050, small and medium business contribute at least 50% to the country’s GDP

Expand the use of microcredit in order to ensure entrepreneurs are guaranteed the support they need

Adopt measures to decrease all cost types for business, including the cost of services in energy, transport and logistics, as well as housing and communal services

Achieve a decrease in the share of the state involvement in the economy to 15% of GDP

Transfer a number of state services to business and expand public-private partnerships (PPP)

Do not allow price and tariff collusions

 

Third priority – Macroeconomic stability

Achieve the phased reduction of inflation to 3-4% in the medium term

A reset of the financial sector is needed. The National Bank is instructed to develop a set of measures to improve the recovery of the banking sector

Further develop the stock market and further increase the opportunities for people to invest their savings in various types of securities

Radically improve the efficiency of budget spending - check the effective use of funds by ministries and departments

Reduce step by step the size of the guaranteed transfer from the National Fund to two trillion tenge by 2020

Build a monitoring and control system for the external and internal quasi-public sector loans

 

Fourth priority – improving the quality of human capital

Reform the education system and reduce the gap in quality of education between urban and rural schools

Start the “Free vocational education for all” project – free education that will cover unemployed and self-employed young people and people of working age who do not have a professional education

Reform the health care system, including introducing compulsory social health insurance system from 1 July

Social security initiatives:

From 1 July 2017 pensions for 2.1 million retirees will be increased by 20%

From 1 July 2017 the size of a one-time grant for a birth will be increased by 20%

from 1 January 2018 the threshold for providing targeted social assistance will be raised from 40% to 50% of the minimum living cost

 

Fifth priority – institutional change, security and the fight against corruption

Ensure that activities on the implementation of best practices and the OECD recommendations is in the framework of the Third Modernisation

Continue to carry out reforms aimed at protecting private property, the rule of law and the equality of all before the law

Ensure a secure state, free from the threat of terrorism, by preventing religious extremism propaganda and educating the youth

Fight against cybercrime by creating a “Cybershield of Kazakhstan” system

Intensify efforts to identify and eliminate the causes of corruption