October 5 in Ukimet Uyi Prime Minister Bakytzhan Sagintayev chaired an extended government meeting with the participation of the Head of the Presidential Administration Asset Issekeshev. The meeting was aimed at consideration of the execution of the Head of State’s instructions voiced in the Address “Growth of Kazakhstan's Welfare: Increasing Income and Living Standards.”
Opening the meeting, Prime Minister Bakytzhan Sagintayev noted that the Head of State’s Address voiced today finds great support among the population. The main task of the Government is to implement these instructions in the near future; allocate sufficient amount of funds to the regions; quickly adopt necessary changes. The people should not wait for the fulfillment of the instructions made today, they should feel the results of the work.
The Head of the Presidential Administration Asset Issekeshev recalled that the Head of State in his Address defined the welfare of Kazakhstanis as the main priority of the Government’s activities, which consists of two components: income growth and quality of life, including quality of social services, comfortable living environment and safety. In addition, the President will keep in check issues of preparation for the winter, harvesting campaigns, unreasonable growth of prices for food, coal and other issues of Kazakhstan's well-being, which affect the socio-political situation.
The government members, in turn, reported on plans to implement the tasks set by the Head of State.
Income increase
First of all, measures will be taken to increase the income level of the population. So, from January 1, 2019, the minimum wage will be increased 1.5 times: from 28,000 to 42,500 tenge. As a result, this will lead to an increase in salaries for 1.3 million citizens. In addition, 275,000 civil servants will receive a salary of an average of 35% more. These are employees of education and health care systems.
The Minister of Labor and Social Protection of the Population Madina Abylkassymova reported that in order to fulfill the instructions of the Head of State to increase the minimum wage from January 1, 2019, by 1.5 times to 42,500 tenge, the relevant amendments will be made to the draft law “On Republican Budget for 2019–2021.”
“The method of determining the minimum wage will be changed with the exception of binding to the size of the subsistence minimum. In accordance with the instructions of the Head of State, from January 1, 2019, wage increases will be provided for 275,000 civil servants working in budgetary organizations. The growth of wages for them will average 35%,” said Abylkassymova.
In addition, with an increase in the minimum wage, the tax burden for the employed population will decrease in proportion to the increase in tax deductions from the incomes of all employees. Reducing the tax burden will affect more than 6 million employees.
In general, the increase in the minimum wage will lead to an increase in wages for 1.3 million people working in low-paying positions in all sectors of the economy.
Improving the Quality of Education
Work will continue to expand state support for education and health care with a focus on improving the efficiency of spending in these areas. The President has set a task to increase spending from all sources on education and health care from 7.4% to 10% of GDP over the course of 5 years. In addition, measures will be taken to raise the status of a teacher, build new schools, as well as gradually increase the salaries of district health workers by 20%, digitize the healthcare sector and build a new scientific oncology center in Astana.
The Minister of Education and Science Yerlan Sagadiyev said that within the framework of a cardinal enhancement of the quality of school and preschool education, the Ministry of Education and Science together with akimats will develop a corresponding Roadmap, which will include measures to improve the skills of preschool educators and introduce uniform qualification requirements.
“At school, this work is already underway. This year, a national qualification test has been introduced. According to the results of certification, more than 34,000 teachers were awarded qualification categories in schools. Surcharge to the specified number of teachers is made from September 1, 2018. In general, the size of the surcharge varies from 30% to 50% depending on the category,” the minister reported.
The transition to international standards is according to the schedule. In 2019–2020 the whole assessment system will be translated into PISA, SAT, AST standards.
In addition, the school will continue to work to reduce the shortage of student places. As part of child safety, measures will be taken to equip schools and kindergartens with video surveillance systems. About 4,000 surveillance cameras will be purchased.
On the instruction of the Head of State, a law “On the Status of Teacher” will be developed, which will provide incentives for raising the social status of teachers, reducing the study load and protecting against unnecessary checks, etc. Sagadiyev also noted that work will be continued to raise the quality requirements teaching in higher education.
Improving the Quality of Medical Services
An important link in the provision of medical services is at the level of polyclinics and dispensaries.
The Minister of Healthcare Yelzhan Birtanov reported that in order to improve the quality of the provision of medical services to the population, a gradual increase in the salaries of all local health workers will be carried out by 20%. The salary increase will affect more than 10,000 district doctors and 30,000 nurses, as they learn new methods of work, bringing to 100% by the end of 2019. For this, 5 billion tenge will be allocated. This will improve the quality of medical care, reduce the number of complications and hospitalizations for major diseases, as well as ensure quality patronage of children and pregnant women.
At the same time, a pilot project on switching to paperless healthcare is being completed in 2018. It has already been implemented in 92% of pilot organizations. As part of the implementation of the Head of State’s instructions, from January 1, 2019, all clinics and hospitals will fully switch to paperless medical records. In addition, by 2020, 100% of the population will be covered by an electronic passport.
On behalf of the Head of State, a new concept of the National Scientific Oncology Center in Astana has been developed, which implies its construction on the basis of the existing medical facilities in Astana. In future, this will allow integrating it with the Medical School and other scientific centers of Nazarbayev University. The Center will provide all modern technologies for the diagnosis and treatment of cancer, including nuclear medicine, proton therapy, radiosurgery, cellular immunotherapy and more. Construction will be started in 2018.
New Approaches to Industrialization
The implementation of the Head of State’s instructions to improve the welfare of citizens will be carried out not only by direct salary increase. Economic growth due to the multiplicative effect also affects the increase in the nominal income of the population. Thus, the government will provide additional incentives for the development of non-commodity exports as the main component of GDP growth in the long term. The transition will be made to the target support of efficient export-oriented manufacturers of the manufacturing industry.
The Minister for Investments and Development Zhenis Kassymbek reported on measures to further increase the value added in the economy, export-oriented production processes, improve human potential and quality of life, and integrate the economy in the country, regional and global context.
In order to intensify the work on industrialization, new approaches have been developed in both the short and long term. The priority will be the further “complication” of the produced basket of goods and the expansion of presence in foreign markets. As part of industry’s preparation for the “digital era,” the necessary infrastructure and standards, “model factories,” will be created. Digitalization of the industry will become one of the main components of the productivity and competitiveness of our enterprises. The system of comprehensive financial and non-financial support for exporters will also be strengthened. In the next three years, 500 billion tenge will be allocated for these purposes.
Among the expected effects of export support: growth in non-oil exports by 1.5 times by 2022, the annual contribution to GDP growth from non-oil exports will increase to 5 pp by 2022, as well as the overall increase in the number of export-oriented enterprises (up to 450).
Quality and Affordable Housing
The implementation of the President’s instructions voiced in the Address to support the development of housing construction will allow many citizens to improve their living conditions and will give additional impetus to the country's economic growth, and this will create new jobs and promote the spheres of construction, domestic enterprises and related areas (furniture, household appliances and equipment production).
As part of providing high-quality and affordable housing, in the next five years, the Nurly Zher State Program plans to build more than 650,000 dwellings (76.6 million m2), which will provide housing for about 2 million citizens.
As part of the 7–20–25 Program in the next five years, about 103,000 citizens will be able to purchase housing. Under this program, akimats are charged to work out a mechanism for partial subsidization of initial contributions from local budgets. According to the mechanism for young families and public sector employees, social assistance is provided for reimbursement of half the size of the down payment.
In addition, a special mortgage for servicemen and law enforcement officers has been launched through the Housing Construction Savings Bank system, which will provide housing for 71,000 servicemen and employees of special agencies.
According to the Minister Kassymbek, 20,000 rental and 56,000 credit dwellings will be built on state funds. To achieve the goals outlined by the Head of State, the government will increase funding for the construction of rental housing from 25 billion to 35 billion tenge.
The government is also considering the issue of increasing up to 100 billion tenge of financing for the engineering and communications infrastructure for connecting houses under construction to networks. Allocated funds will provide high-quality water supply to 80% of villages and improve the quality of life of their people.
Improving Business and Investment Climate
The government will take measures for the full and timely execution of instructions from the Head of State related to improving the business environment.
The Minister of National Economy Timur Suleimenov at the Government meeting reported that as part of the development of small and medium-sized businesses, an additional 30 billion tenge will be provided annually for the further implementation of the state program Business Roadmap-2020. Today, a new pool of 4,000 projects has already been formed. Subsidies will be provided directly through the operator – Damu Fund.
Support for new projects will create an additional 22,000 jobs and produce products for 3 trillion tenge.
For the development of competition and antimonopoly work, as noted by Suleimenov, the proposals in the housing and utilities sector will be implemented under the housing and utilities bill, which is in Parliament (the draft law of the Ministry for Investments and Development). Regarding the elimination of the shadow turnover, the Ministry of National Economy has prepared a number of amendments on unaccounted cashless payments, the use of ERP systems and “cashbacks.” Under the “tax amnesty” for small and medium-sized businesses, the necessary changes will be taken into account in the framework of the draft law on the development of the business environment and regulation of trading activities until the end of 2018.
Development of the Agro-Industrial Complex
The government has begun work on the implementation of Head of State’s instructions to increase labor productivity and export of processed products by 2.5 times. Thus, within the framework of the updated State Program for the Development of the Agro-Industrial Complex, measures will be taken to increase the competitiveness of the industry and its technological re-equipment. At least 100 billion tenge will be additionally allocated for these purposes annually, which will allow to fully implement the tasks assigned to the agro-industrial complex.
Deputy Prime Minister, Minister of Agriculture Umirzak Shukeyev noted that the initiatives in the Head of State’s Address are bringing to the new qualitative level the stimulating role of the state in the agricultural sector.
“Today the state support of the agricultural sector practically consists of those budget allocations — 240 billion tenge, and 60 billion tenge — loans for spring field work. The Head of State instructed the government to allocate annually up to 100 billion tenge from the republican budget and out of 600 billion allocated from the National Bank, 200 billion tenge — an agricultural quota. That is, state support for agriculture is almost doubled,” said Shukeyev.
Now the task of the Ministry of Agriculture, as Shukeyev noted, is to use this money efficiently and make it so that they act as a catalyst for the mobilization of other resources to the sector, that is, these 300 billion tenge should attract much more money to the complex. For this, together with the Majilis deputies, amendments to legislative acts have been developed, which provide for new financial instruments. This is the introduction of agrarian receipts, the improvement of agricultural insurance, as well as the development of a system of credit partnerships. For their implementation, a package of amendments to the legislative acts, which are currently under consideration in the Mazhilis of the Parliament, has been formed. By order of the Head of State, the bill is planned to be adopted by the end of 2018.
Work will be done to change the subsidy system. Ineffective subsidies will be reduced. The rest will be maximally simplified and fully automated by the end of 2018. According to the results of the reform, out of 54 types of subsidies, 34 will remain.
The reform of agrarian science and education has begun, their adjustment to the needs of business and technology transfer. The work is conducted in three directions: education, science and the system of dissemination of knowledge. In order to improve the quality of agricultural education, a concentration of three agricultural universities is held to provide the industry with specialists of the required quality.
The standards of the world's leading universities will be introduced here, following the example of Nazarbayev University, and franchises of foreign universities will be attracted. As a result, it is planned to increase the cover of the agro-industrial subjects from 1.5-2% to 20-25%.
Sustainable Development of the Regions
The Head of State instructed to ensure the introduction of new approaches to the country's territorial development.
As the Minister of National Economy Timur Suleimenov noted, currently the ministry, together with the Economic Research Institute, as well as a group of well-known scientists, are already conducting analytical studies on improving the spatial organization of the country with the study of world experience.
This study will serve as the basis for the development of a new Forecast Scheme of Spatial Development until 2030, which will be submitted to the Presidential Administration before September 1, 2019. For the qualitative implementation of the Forecast Scheme, by November 1, 2019, a new Program for the development of regions until 2025 will be developed.
Taking into account the instructions of the Head of State, the priority will be the development of local infrastructure: energy supply, water supply and sanitation, local roads. In 2018, 332 billion tenge was already allocated for these purposes from the republican budget. As a result of the implementation of the Regional Development Program, access to centralized water supply in cities will be 100%, access to centralized water supply in villages — up to 80%.
A new approach to territorial development will raise the quality of life in cities and in remote areas, and will also stimulate the development of the regional economy.
Financial Support for President’s Orders
The Minister of National Economy Timur Suleimenov stressed that the Ministry of National Economy has a clear vision of the mechanisms for practical implementation, financial support and legislative measures to fulfill the objectives of the Address. In this connection, work has begun on the development of a national plan for the implementation of the Address of the Head of State.
In his turn, the Minister of Finance Alikhan Smailov reported that work would continue to expand state support for education and health care with a focus on improving the efficiency of spending in these areas. Within five years, the task has been set to increase spending from all sources on education and health care from 7.4% to 10% of GDP. 96.3 billion tenge annually will be allocated for implementation to raise the minimum wage. Including 85.8 billion tenge directly for salary increases of 275,000 civil servants. 10.4 billion tenge — to compensate for the loss of the revenue part of the regions due to an increase in tax deduction. They will be given to the local executive bodies in the form of targeted transfers. As a result, in the economy as a whole, the wage increase will cover about 1.3 million people. Additional financing of the manufacturing industry and exports will be in the amount of 500 billion tenge. The total amount of state financial support for SME development will be 206.4 billion tenge for 2019–2021.
“Within the framework of the three-year budget, an increase in expenditures on education is expected from 456.3 billion tenge in 2018 to 752.1 billion tenge in 2021, or by 65%. Over the same period, spending on health care is planned to increase by 24% from 1,076.2 billion tenge to 1,339.1 billion tenge,” reported Smailov.
In pursuance of the instructions of the Head of State to decriminalize tax violations, changes will be made to Art. 3 of the Criminal Code to increase the threshold level of damage from tax evasion and / or other mandatory payments to the budget from legal entities from 20,000 MCI (48.1 million tenge) to 50,000 MCI (120.2 million tg). According to the Minister of Finance, under the tax amnesty, the Head of State has been instructed to begin the “tax amnesty” for small and medium businesses from January 1, 2019.
Thus, on the financial support of the implementation of the instructions, the budget possibilities have been calculated. Optimization of other areas of expenditure and previously accepted obligations of the state is not required. A total of 1.226 trillion tenge will be channeled over the next three years.
The Chairman of the National Bank Daniyar Akishev in his speech assured that the National Bank will fulfill all the instructions that were issued today in the President’s Address.
“The National Bank will fulfill all the instructions of the Head of State and will make every effort to ensure stability of prices and in the financial market. Reducing inflation is a key factor in lowering interest rates on loans, increasing real incomes of the population and reducing all costs in the economy. We believe that the joint work of the Government, the National Bank and local executive bodies will allow to contain inflation in the established target corridor this year,” said Akishev.
The chairman of the National Bank reported on the planned measures to prevent price increases. Akishev also reported that the National Bank is increasing the activity of the implementation of the 7–20–25 Program. Within two months from the start of the program, banks approved loans worth 25 billion tenge. As reported to the President, more than 2,000 applications have already been approved.
During the meeting, Minister of Internal Affairs Kalmukhanbet Kassymov reported on plans to reform the system of the Ministry of Internal Affairs. Work on the simplifying the organizational structure, the reduction of redundant managerial units and certain positions has already begun.
“The staffing level will be revised, we plan to reduce it by 10%, which is about 9,000 police officers and 1,600 units of the penal system. We use the resulting budget savings to increase the salaries of employees,” said Kassymov.
According to the minister, it is also necessary to provide housing rental compensations for employees of the road patrol police units, local police inspectors and local police inspectors for juvenile matters.
In addition, within the framework of the reform, it is planned to implement measures to: free the Ministry of Internal Affairs from irrelevant functions, modernize the penitentiary system, and improve the structure of civil protection bodies. Here it is planned to optimize the number of state institutions — from 54 to 20. It is also planned to reform the departmental education and revise the personnel selection system in order to improve the quality of staff.
Chairman of the Board of Atameken National Chamber of Entrepreneurs Ablay Myrzakhmetov spoke about the plans and systemic measures necessary for the development of domestic entrepreneurship, improving the competitiveness and export orientation of Kazakhstani producers in the new message of the President.
Following the consideration of the issue, Prime Minister Bakytzhan Sagintayev gave a number of specific instructions. Therefore, a national plan of activities will be prepared in all directions of the Address. The Ministry of National Economy has been entrusted with submitting to the Government a draft of a relevant resolution approving a national plan of activities for the implementation of the Address. Each order of the President should be assigned a specific leader, a clear deadline for its implementation and strict control established.
Now work will begin in the regions to explain the Address. In addition, until October 20, in order to provide information support for its implementation, it is planned to have republican information groups consisting of representatives of state bodies and various organizations under the guidance of government members. Akims need to ensure the preparation and conduct of community meetings with information groups. The Ministry of Information and Communications, together with local executive bodies, has been instructed to provide coverage in central and regional media.
“People should understand the importance of each task set by the Head of State and the stages of its implementation,” said Bakytzhan Sagintayev.