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Growing welfare of Kazakh citizens: increase in income and quality of life

State of the Nation Address of President of the
Republic of Kazakhstan Nursultan Nazarbayev

Dear Kazakh citizens!

Over the years of our independence we have achieved a great deal.
Having created a modern progressive state with a dynamic economy, we have ensured peace and public harmony.
We have made qualitative and historically significant structural, constitutional and political reforms.
We have managed to strengthen the international standing of Kazakhstan and its geopolitical role in the region.
We have proved to be a responsible and international partner, in-demand to address regional and global challenges.
Kazakhstan has become the first state among the CIS and Central Asian countries to be chosen by the global community to host the international exhibition – EXPO 2017.
We have built a new capital, Astana, which has become a financial, business, innovative and cultural centre of the Eurasian region.
The population of the country now exceeds 18 million people, with life expectancy reaching 72.5 years.
We have established a strong economic framework.
Over the past 20 years, the country has raised $300 billion of direct foreign investment.
We see the development of small and medium-sized enterprises serving as the foundation for our economic prosperity.
Kazakhstan now ranks 36th among 190 countries in the World Bank Doing Business index.
We have always responded to external challenges in a timely manner and have been prepared for them.
In this regard, I have put forward relevant policy initiatives to modernise the country. Their implementation has become the main factor of our successful development.
Our strategic goal is to join the club of 30 developed countries of the world by 2050.
In 2014, we started implementing a comprehensive programme Nurly Zhol designed to modernise the country’s infrastructure.
Three years ago we announced the Plan of the Nation – 100 Concrete Steps.

Furthermore, we launched the Third Modernisation of the country. Its main aim is creating a new model of economic growth ensuring Kazakhstan’s global competitiveness.
The sustainable development of our country inspires great hope to further increase our quality of life.
We are ready to tackle new challenges.

Dear compatriots!

Recently we have seen the strengthening of the world’s political and eco­nomic transformation.
The world is changing rapidly.
The foundations of the global security system and international trade rules that seemed unshakable are now crumbling.
New technology, robotics and automation complicate the requirements for labour resources and the quality of human capital.
A completely new financial system architecture is being built. At the same time, stock markets are creating another “bubble” that may provoke another financial crisis.
Today, global and local problems are intertwined. In this context, the development of the state’s main asset – an individual – is the response to challenges and the guarantee of its success.
The Government, each and every head of a state agency or state company needs to reconsider their work approaches. The growing welfare of Kazakh citizens must be the highest priority.
This is the criterion I will refer to in assessing personal performance and compliance with the office.

***

Well-being of Kazakh citizens depends, first and foremost, on the steady growth of income and quality of life.

I. GROWING INCOME
OF THE POPULATION

Income grows if a person is a hard-working professional in his or her area, has a decent salary or has an opportunity to start and develop his or her own business.
Only by concerting our efforts can we create the Universal Labour Society.
First, I instruct the Government to raise the minimal salary by 1.5 times from 28 thousand to 42 thousand tenge from January 1, 2019.
This will directly cover 1.3 million people, who work in enterprises of different types of ownership in all industries.
The increase will apply to 275 thousand workers of state-funded organisations, whose salaries will grow on average by 35%.
For these purposes, we have to allocate 96 billion tenge annually from the republic’s budget for 2019-2021.
From now on, the minimal salary will not depend on the subsistence level. In general, the amount of the new minimal salary will boost the labour remuneration covering the whole economy.
I hope this initiative will be supported by large companies in terms of increasing the salaries of low-paid workers.
Second, we need to create stable sources for business growth and foster private investment and facilitate freedom of the market.
It is business that creates new jobs and provides higher income to the majority of Kazakh citizens.
FIRST. In 2010, we launched the Business Road Map – 2020 Programme.
I realised its effectiveness while visiting regions of the country.
The programme should be prolonged until 2025.
An additional 30 billion tenge has to be annually allocated to implement the programme.
In three years this will allow the additional creation of at least 22 thousand new jobs, ensure 224 billion tenge of taxes and production of goods for an amount of 3 trillion tenge.
SECOND. We need to take decisive measures to develop economic competition and get utilities tariffs and natural monopolies under control.
Tariff setting and spending of consumers’ money are still not transparent in the field of utilities and regulation of natural monopolies.
We lack the efficient monitoring and control over investment obligations of monopolies.
he Government needs to address this issue within three months and reform the anti-monopoly agency, significantly strengthening functions for competition protection.
This is important because this leads to the growth of business costs and reduction of real income for people.
THIRD. We need to enhance the protection of business from unlawful administrative pressure and criminal prosecution threats.
I am instructing to raise from January 1, 2019, the threshold of criminal liability with regard to tax violations up to 50 thousand MCI and increase fines.
In addition, we need to reorganise the Service of Economic Investigation by transferring its functions to the Financial Monitoring Committee that should be focused on the fight against the shadow economy.
We need to move towards a cashless economy. Here we have to be guided by not only repressive tools but also incentives, for example, by encouraging business to use cashless transactions.
Completion of the integration of tax and customs information systems will make administration more transparent.
The Government needs take effective measures to reduce the shadow economy by at least 40% within three years.
To give business an opportunity for a fresh start, I instruct to launch tax amnesty for SMEs starting from January 1, 2019 by cancelling fines and penalties provided the principal tax amount is paid.
FOURTH. Export-oriented industrialisation should be a central element of economic policy.
The Government must focus on supporting exporters in the manufacturing sector.
Our trade policy needs to stop being passive.
We need to make it vigorous in order to effectively promote our goods at regional and global markets.
At the same time, we need to support our enterprises in developing a wide range of consumer goods and promote the so-called “simple things economy”.
This is essential not only to develop export potential, but also to fill the internal market with domestic goods.
I instruct the Government to allocate additional 500 billion tenge to support the manufacturing industry and non-commodity export in the next three years.
To address the issue of affordable loans for priority projects I task the National Bank to allocate long-term tenge liquidity of no less than 600 billion tenge.
The Government together with the National Bank needs to ensure strict control over the targeted use of these funds.
To implement big breakthrough projects we need to consider the establishment of a direct investment fund in the non-commodity sector that will function based on the principle of co-investing with foreign investors.
We also need to intensify our activity to develop transport, logistics and other service sectors.
We need to pay special attention to the development of inbound and internal tourism to use our rich natural and cultural potential. The Government should adopt a sectoral programme at short notice.
FIFTH. We need to fully develop our agricultural and industrial potential.
The main objective is to increase labour productivity and export of processed agricultural products 2.5 times by 2022.
All state support measures should be focused on the large-scale attraction of modern agricultural technology to the country.
We need to use the best experience in managing the sector by introducing flexible practical standards and attracting reputable and experienced foreign experts to oversee agriculture specialists.
We need to build a system of comprehensive teaching of new management skills among rural entrepreneurs.
For these purposes, I instruct the Government to additionally allocate at least 100 billion tenge annually in the next three years.
SIXTH. Special attention should be paid to the development of innovation and service sectors.
First of all, we need to ensure the development of areas of the “future economy” such as alternative energy, new materials, biomedicine, big data, the internet of things, artificial intelligence, block chain, etc.
They determine the global position and role of the country in the future.
I instruct the Government together with Nazarbayev University to develop special programmes with specific projects for each area.
The opening of a think-tank for the development of artificial intelligence technology within the university may be one of them.

(To be continued)


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