Factsheet on the Third Modernisation of Kazakhstan

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

1. 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

2. 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

3. 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

4. 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

5. 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

Factsheet on the Proposed Constitutional Reform

Overview

President Nursultan Nazarbayev has proposed a constitutional reform aimed at furthering the democratic development of Kazakhstan. During a special televised address to the nation on 25 January, the President announced a number of functions that would be transferred either to the Government or Parliament. Public discussions on the proposed constitutional reforms will take place for the next month, concluding on 26 February. After this, the reforms will be presented to Parliament.

The objectives of the proposed reform

• President Nazarbayev said the point of the proposed reform was to create “a serious redistribution of powers and democratisation of the political system as a whole”. It will substantially contribute to Kazakhstan’s democratic development
• The proposed reform will strengthen the control of the legislature over the executive
• The reform is aimed at improving the efficiency of the public administration system and stability of the political system
• Increasing the role of the Government and Parliament will provide a more effective mechanism of response to modern challenges
• The reform will ensure that all branches of Government work effectively and responsibly and will create an appropriate system of checks and balances
• The proposed reform meets Kazakhstan’s long-term development objectives, including the five institutional reforms and the aim to join the top 30 most developed countries in the world by 2050

Summary of the proposed reform

Approximately 40 functions would be transferred either to the Government or Parliament through relevant laws. More importantly, numerous changes will require amending the Constitution. These may include:

New parliamentary powers

• Parliament will be empowered to negotiate the Government’s structure with the President
• Parliament’s control over the Government would be increased by simplifying the procedure of holding a “vote of no confidence” on a sitting Cabinet.
• Parliament will be granted greater authority over local government

New Government powers

• Government Ministers would have more power and responsibilities to manage social and economic development in Kazakhstan
• The approval of state programmes will be transferred to the Government

The role of the President

• The role of the President – who will focus mainly on strategic matters, foreign policy and national security – will be that of a “supreme arbiter” in relations between the different branches of Government

The President’s full address to the nation can be read here (in English)