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ASTANA CALLING

ISSUE NO 286 FRIDAY, 11 JANUARY 2013 WWW.MFA.KZ A WEEKLY ONLINE PUBLICATION OF THE MINISTRY OF FOREIGN AFFAIRS OF THE REPUBLIC OF KAZAKHSTAN

Prime Minister meets with First Deputy Chairman of Nur Otan Discussions center on implementation of Kazakhstan 2050 strategy

Productivity 2020 – Progress Update 51 projects approved for funding to date

Business Road Map 2020 – Three-Year Review

Second Wave of Public Sector Reform

Focus on entrepreneurship and job creation

Details outlined by Deputy Head of Presidential Administration

Things to Watch

Also in the News


Prime Minister Serik Akhmetov and First Deputy Chairman of Nur Otan, Bakytzhan Sagintaev

Prime Minister meets with First Deputy Chairman of Nur Otan Prime Minister Serik Akhmetov and the First Deputy Chairman of the ruling Nur Otan political party, Bakytzhan Sagintaev, met on January 4 to discuss the year ahead. The discussion covered cooperation between the Government and Nur Otan on a wide range of issues, with particular focus on the implementation of the Kazakhstan 2050 strategy outlined by the President in his address to the nation last December. The Prime Minister expressed his satisfaction at the level of cooperation between Government and the central party administration, as well as Nur Otan parliamentary deputies. Both parties noted the positive effect of the implementation of the nine key priorities of the Nur Otan electoral platform, “Kazakhstan Objectives 2017”. Mr Sagintaev said that the long term strategic goals of Nur Otan will be reviewed with a new planning horizon in alignment with the Kazakhstan 2050 strategy. At a party level, implementation of the strategy will begin with the drafting of new policy documents and laws envisaged by the strategy detail.

“We should continue with our plans for decentralization of governance to the regions. The substance of the decentralization lies in delegating the necessary resources to make decisions from the center to regional authorities. In 2013 we have to implement concrete measures for moving responsibility and powers from the center to the regions in order to strengthen local executive authorities.” President Nazarbayev’s address to the nation, Strategy Kazakhstan 2050

One of the key dimensions of the Kazakhstan 2050 strategy relates to the further strengthening of statehood and development of democracy in Kazakhstan. The strategy tasks Parliament to take action on the following measures: • Improved system of state planning and forecasting: during 2013 Parliament will review a new draft law introducing a state audit system based on best international practice and a multilevel crisis response strategy is to be put in place • Decentralization of responsibility and power to the regions will continue, with the introduction in 2013 of elections to appoint rural governors through local councils, while Parliament’s powers will be further strengthened • A professional state apparatus will be encouraged through improved methods of selection and training of public sector employees, and through increased accountability and transparency of decision-making at State level • A second stage of administrative reform will include implementation of the “New Public Service” law, which includes measures to counter corruption and establish a National Personnel Policy Commission to regulate public sector recruitment, career development and performance • Reform of law enforcement and special agencies: a cross-department task group has been established to report by mid-2013 on a program for further reform and modernization • Interaction between the State and the business community: development of a positive environment for business and entrepreneurship will be encouraged through further modernization of the legal system, to include the drafting of four new codes relating to criminal proceedings and administrative irregularities • Further measures to eradicate corruption, which the Kazakhstan 2050 strategy document describes as an undermining force and a direct threat to national security Nur Otan is expected to work closely with the Government in the coming months as implementation of these measures gets underway. Nur Otan received 81 percent of the vote in parliamentary elections held in January 2012, gaining 83 out of 107 parliamentary seats. ASTANA CALLING / ISSUE 286 / 2

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Productivity 2020 – Progress Update The Kazakhstan Institute for Industrial Development has reported that over 25 projects were approved during 2012 for funding from the “Productivity 2020” program, the Prime Minister’s website announced on January 4. The projects, spread across six industrial sectors, will ultimately receive aggregate funding of KZT 74.3 billion (USD 493 million). This brings to KZT 152.6 billion (USD 1 billion) the total amount of investment approved since Productivity 2020 was launched in April 2011. The funds have benefitted 51 innovative industrial projects in eight industrial sectors across 15 regions of Kazakhstan. Productivity 2020 is among a range of programs set up within the framework of the State strategy to support innovative industrial development. While Kazakhstan was one of the top three most rapidly growing economies in the world in terms of annual GDP growth between 2000 and 2010, and the economy has proved resilient to the global economic crisis, industrial innovation has a key role to play in ensuring continued economic growth into the future. Government policy is focused on diversifying economic development beyond the extractive industries which have driven economic growth and encouraging business innovation and entrepreneurship. The main focus of the Productivity 2020 program is on assisting large and medium-sized Kazakh companies in modernizing existing production facilities and managerial processes and, where appropriate, developing new facilities. Modern facilities and processes serve to increase the efficiency of the companies and enable them to meet the quality and production demands of global export markets. Target indicators of the program include: a 50% increase in labor productivity by 2015 and a 100% increase on 2011 levels by 2020; an increase in capacity usage to 80%; and a reduction of between 30-40% in energy consumption by participating companies. Productivity 2020 provides a wide range of business support, including: innovation grants; reimbursement of the costs of engaging highly-qualified foreign engineers and design-engineering companies, purchasing licenses, technical documentation and new technologies; and long-term leasing of industrial equipment at incentive rates. Funding from Productivity 2020 has so far been most actively deployed in Almaty and its regions, South Kazakhstan, Karaganda, Kostanay, Aktobe, East Kazakhstan and Pavlodar. The Institute for Industrial Development expects the majority of approved funds in the coming year to be allocated to the development of detailed business investment plans, innovation grants and long-term financing. The other principal programs within the industrial innovation framework include the Business Roadmap 2020 (which supports stable growth of regional enterprises) and programs focused on assisting companies in attracting investment funding and increasing exports. All in all, over 100 business support tools are available to Kazakh companies across the range of programs. In January 2012, a new law formalized the legal framework for state support for innovative industrial activities, which has made it easier for companies to access financing. The law defines state support measures and how they are to be organized and regulated. Among the measures outlined are the conditions and mechanisms for appointing financial agents to projects and financing projects in priority economic sectors by disbursing State funds through approved financial institutions.

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Business Road Map 2020 Three-Year Review In a recent meeting with Prime Minister Serik Akhmetov, the Managing Director of the Damu Entrepreneurship Development Fund, Gabit Lesbekov, provided an update on the achievements of the Business Roadmap 2020 programme, which was set up in 2010 to support the stable growth of regional businesses in Kazakhstan’s nonenergy sector.

Managing Director of the Damu Entrepreneurship Development Fund, Gabit Lesbekov

Established at the height of the global economic crisis, the Business Roadmap has, over its first three years, succeeded in creating 31,000 jobs and saving another 136,000, Mr Lesbekov said. Recent figures showing an increase in national business activity can in part be attributed to the success of the program in encouraging and funding entrepreneurial activity, he added.

To date, the Entrepreneurship Development Fund has paid out KZT 24.6 billion (USD 162 million) across three funding categories. The New Business Support fund has provided support to 2,136 projects, while the Reduction of Currency Risk fund has supported 183 projects; and under a new funding category created last December, Improvement of the Entrepreneurial Sector, 223 applications for funding have already been approved. The Fund has also provided subsidy agreements on 2,067 projects and credit guarantees on a further 105 projects. Now that the Roadmap is well established, the Entrepreneurship Development Fund has defined ambitious new goals for the next stage. Mr Lesbekov said that an important new target is to raise the culture of entrepreneurship to an international level by encouraging domestic businesses to look to export markets. Education and training was another area highlighted by Mr Lesbekov, who described the drive to develop the competency and proficiency of Kazakhstani business people, both in the financial and non-financial arenas. Educational opportunities include the senior SME management program at Nazarbayev University and the “Business Contacts” program which offers both domestic and international internship opportunities as well as support and advice to companies on forming strategic alliances and joint ventures. Regional development remains a key priority of the Fund, which last year joined forces with the program for single-industry towns in financing 12 new entrepreneurship support centers in remote, single-industry regions. The Fund also developed a mobile business support unit, which brought consultants and Kazakh business people to the remote regions of the country, to offer free advice to local entrepreneurs. Mr Lesbekov said that the success of this service led to the launch of 15 similar mobile units in the closing weeks of 2012, which will, over the course of 2013, bring the consultancy service to the regions of Pavlodar, Kostanay, Karaganda, South Kazakhstan and Zhambyl.

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Second Wave of Public Sector Reform Detailed plans for the second wave of public sector reform in Kazakhstan were outlined by the Deputy Head of the Presidential Administration, Baurzhan Baibek, in an interview with the online newspaper Liter published on December 29. The reform will be implemented within the framework of the recently-adopted Kazakhstan 2050 national strategy and will be facilitated by the new law On Public Service, signed by the President in the opening days of 2013.

Deputy Head of the Presidential Administration, Baurzhan Baibek

Mr Baibek said that the reform will have three key objectives: the efficient use of public funds, increased accountability of public servants, and an overall improvement in the quality of public service. Effective implementation will depend on a change in the mindset of public servants, who must understand that their task is to serve the people, while providing value for money in achieving maximum benefits and tangible results, he said.

Restructuring and simplifying the civil service organization and introducing new methods of recruitment and ongoing assessment of public servants will be among the key elements of reform. Mr Baibek said that in future, the majority of public servants will be selected through competition, by a National Committee reporting to the President, on criteria including management and organisational skills, a modern approach, knowledge of Kazakh, Russian and other languages, previous professional performance and experience of working both in the administrative center and in the regions. Up to 500 public servants selected on these principles of professionalism, fairness and merit will form the core of public sector management. Direct appointments by the President will be limited to heads and deputies of central state bodies and mayors and deputy majors of major towns and provinces. Putting this change in context, Mr Baibek said that there will be an eight-fold reduction in the number of public servants appointed without competition. Mr Baibek went on to discuss the new rating system which evaluates towns and regions across 45 indicators and will be another key element in achieving reform targets. A low overall rating over an extended period has already led to the dismissal of 12 mayors during 2011-2012 and six mayors in 2013. Mr Baibek emphasized that the purpose of the rating system is to ensure that towns and regions are led by mayors who are both highly competent and fully equipped to deal with the increased responsibilities which have devolved to them due to the program of decentralization. He also highlighted that additional financing and resources will be made available to mayors to enable them to successfully meet their new responsibilities and to address the social problems which are particularly acute in the regions. The extended powers of mayors and local leaders will be balanced by increased accountability. Mr Baibek confirmed that from next year, rural and village mayors will elect local governing bodies – rather than a senior mayor, as at present – which will increase the level of transparency and accountability to the local population. The principles of increased self-governance and accountability will, however, also apply to citizens: Mr Baibek emphasized that they must take the initiative to solve social and domestic problems in their towns and regions, while availing of the Government help which is readily available.

“The old relationship between an official and a citizen, when the representative of the authorities could look down on the people, should give way to the understanding that public service is there to serve the people, while providing value for money in achieving maximum benefits and tangible results.” Baurzhan Baibek, Deputy Head of the Presidential Administration

The ultimate outcome of the next wave of reform will be standardized public services, with clearly defined criteria for quality and performance and a high level of transparency and accountability, Mr Baibek said. In addition to the basic requirements of good management skills, fluency in both Kazakh and Russian and a detailed knowledge of the national administration and priorities, the need to attract ongoing investment means that senior public servants will need to be conversant with English, science and technology, industrial innovation and international communication. However, the most important demand made of a public servant is that they serve the people well. Every public servant must take personal responsibility for the quality of services and their transparency and citizens will soon have recourse to a civil service agency with any complaints on the standard of service. Mr Baibek emphasized that the full implementation of the proposed reforms is a challenge, but he pointed to the improvement in quality of public services which is already manifest and expressed his conviction that the citizens and public servants of Kazakhstan will work together to achieve the reform targets, which will yield a tangible improvement in quality of life for everyone. ASTANA CALLING / ISSUE 286 / 5

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Also in The News… • Kairat Umarov has been appointed Kazakhstan’s Ambassador to the United States. In his last position he was Deputy Minister of Foreign Affairs. Over the course of his career, Mr Umarov has acquired extensive experience of the US. In the 1990s he worked in the Ministry of Foreign Affairs’ European and American Department, and served twice at Kazakhstan’s Embassy in Washington, latterly as Deputy Ambassador (1998-2004). From 2004-2009 Mr Umarov was Kazakhstan’s Ambassador to India and Sri Lanka. He graduated from the Almaty Institute of Foreign Languages in 1985 and holds a doctorate in political science. He is married with a son and speaks English and French. • The National Bank of Kazakhstan predicts that the country’s GDP will rise by 5-6% in 2013, the bank’s head, Grigoriy Marchenko told a press conference in Almaty on Wednesday. He also said the forecast for the level of inflation in 2013 would remain at 6-8%. In 2012 inflation was at 6%, down from7.4% the year before. (Newskaz) • Kazakhstan was ranked 68th in terms of economic freedom. The Heritage Foundation and the Wall Street Journal published an annual ranking of countries in terms of economic freedom known as the Index of Economic Freedom 2012. The degree of economic freedom is calculated on 10 factors; freedom of business, trade, financial sector, investment, labour, monetary and fiscal freedom, extent of bureaucracy and level of protection against corruption. Countries in the index receive a rating of ‘free’, ‘mostly free’, ‘moderately free’, ‘not particularly free’ or ‘not free’. Hong Kong came top of the list with Russia at the bottom in 139th position. (zakon.kz) • Kazakhstan plans to become one of the top 40 countries for developed logistics. The State company ‘Kazakhstan Railways’ has set itself the goal of becoming by 2020 one of the top 40 countries in the Index of Logistical Development as calculated by the World Bank. To achieve this, KZT 410 bn will be invested this year, to finance the renovation of hundreds of trains, wagons, passenger cars as well as the repair of 726km of track and the construction of new lines. (primeminister.kz) • The Prime Minister led a meeting to review the results of ‘Kazakhstan Railways’ in 2012. The President of ‘KR’ opened the proceedings by saying that the company had reached and in some place exceeded its targets for the year, in particular, profits had risen by 15.7%. The Prime Minister noted the successes of ‘Kazakhstan Railways’, and went on to lay out a number of objectives for the company going forward. He stressed the need to upgrade the rail transport network and further develop transport engineering. Attention should be paid to increasing the quality of passenger and freight transportation services. He emphasized that if the economy is to grow and develop it must be supported by a well connected transport system. This is also necessary to enable further integration into foreign markets, he said. (primeminister.kz) • As the nation enjoyed three days of public holiday this week, President Nazarbayev wished Orthodox Christians and all Kazakhstanis a Merry Christmas. The President spoke of the values that have provided for a peaceful society, shared by all those for whom Kazakhstan is home, regardless of faith. He expressed pleasure with the progress made in the economic, political and social spheres over the past year and the prospect of a positive future with the announcement of Kazakhstan 2050. (President’s Website)

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• January 10, 2013 marked the 21st anniversary of the formation of the unit of Interior Ministry troops. Veterans, associated organisations and the media were invited to an event to mark the anniversary, at which distinguished officers and NCOs of the service were presented with awards. On January 12th young recruits stationed at barracks of the capital garrison will swear the oath of allegiance. At the same time, the autumn intake of around 500 young men will also swear the oath of allegiance to the Fatherland. The young men, having sworn the oath, will then march past commanding officers, veterans as well as representatives of the City of Astana, Clergy and other agencies. Interior troops currently serving, military athletes and winners from London 2012 and other international events will also attend. (zakon.kz) • On Wednesday, 9th January, at the President’s residence in Almaty, Nursultan Nazarbayev awarded Presidential and State scholarships to literary and art figures. The ceremony was attended by State prize winners, writers, poets, artists, musicians and honored figures of Kazakh culture. The President made a speech in which he emphasised the importance of culture as part of Kazakhstan’s current phase of redevelopment, particularly within the context of Kazakhstan 2050. Artists and writers thanked the President for his interest and commitment to developing opportunities for Kazakh culture to flourish, particularly the construction of the State opera theatre in Astana and the University of the Arts. (akorda.kz) • The Head of State opened a new school with a capacity of 1200 places in the Alatau region of Almaty. Nazarbayev met with pupils, teachers and head teacher. He went on to inspect the classrooms, noting the school’s position in an ecological region. The school is equipped with an interactive whiteboard, six classrooms with multimedia capabilities, 4 language laboratories and 4 computer suites. In total there are 60 classrooms. Zharas Sandybaev, the Deputy Head of the City’s Department for Education, said that to try and ease the demand in the region of 3500 places, another school will be opened next year which will have another 1200 places available. (tengrinews.kz) • Astana is to be provided with fully equipped hospitals and outpatient clinics by 2017. In 2012 the management body responsible for construction in Astana finished designing 18 new health facilities of which 10 have been developed and received the approval of experts. The remaining 8 projects are in the process of development and are expected to be completed in 2013. (nur.kz) • Kazakhstani gymnasts won a prestigious circus award at the international festival held in Holland. The judges awarded them a higher score than competitors from Italy, France and Germany, nations that are renowned for the quality of their circus schools. After the gymnast’s acceptance speech, the award will travel from Holland to Astana. Having now made a strong impression in Europe, they are not stopping there and will take part in several international competitions this spring. (nur.kz)

Things to Watch… • On 14th January the Ministry of Foreign Affairs will host the first conference of the Working Group on Human Development.

ASTANA CALLING is a weekly online publication of the Ministry of Foreign Affairs of the Republic of Kazakhstan Please send your requests and questions to pressa@mfa.kz

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