Plan of the Nation – the Path to the Kazakhstan Dream

Plan of the Nation – the Path to the Kazakhstan Dream

JANUARY 2016

On Jan. 1, the practical phase of the implementation of the Plan of the Nation “100 concrete steps on the implementation of the five institutional reforms” was launched. Fifty-nine laws entered into force and created completely new legal conditions for the development of the state, economy and society. It is important for us to evaluate this historically unprecedented scale of change of our national legislation, particularly because they open a path towards reaching our Kazakhstan dream – to be among the top 30 countries of the 21st century.

Each generation has its own dreams, which always reflect aspirations not only for personal but also family well-being.

They always include love for the homeland and thoughts about the happiness of its people and motherland.

Independent Kazakhstan was a cherished dream for many generations of our ancestors.

We made these centuries-long dreams about a free and independent homeland come true.

For us modern Kazakhs, independence is real and the highest value for our multiethnic society.

We also managed to implement many ideas, which had been in our minds and hearts just a quarter-century ago.

We have ensured that the sovereignty of the Republic of Kazakhstan is based on the firm foundation of the Constitution and laws and the professional and reasonable actions of the state apparatus for the benefit of the people.

We have strengthened it by the real success of Kazakhstan’s economy, the growth of national wealth and people’s well-being and have ensured robust protection of our independence by both high international standing and an effective system of national security.

We have learned to be sound stewards of our land and its subsoil, obtain new technologies and introduce industrial capacities and entire economic industries unseen in our history.

Most importantly, we have learned how to dream in a new way and set and achieve concrete goals for the development of the country and society despite the challenges of the global world, which include our independent Kazakhstan.

 

New Kazakhstan Dream

We enter the 25th year of independence with a new Kazakhstan dream, which reflects the main goal of the Kazakhstan 2050 Strategy being implemented by us.

By the mid-21st century, we plan to place Kazakhstan among the 30 most-developed states of the world. This became a nationwide dream, which was supported by the absolute majority of the people of Kazakhstan during the early presidential elections in April 2015.

In fact, this nationwide vote of confidence was the historic birth of our Nation of the Common Future.

We started our path to our new dream with the development of the Plan of the Nation – 100 concrete steps on the implementation of the five institutional reforms.

These reforms are designed to play a decisive role. They lay the main foundation to achieve a number of historic goals, which will change Kazakhstan, its economy, state and society.

They will create new conditions for the country’s development, economic growth and life improvement for all Kazakhs. They will be in line with the standards of the Organisation for Economic Co-operation and Development (OECD), which unites the most developed states of the planet.

Our Kazakhstan will be more dynamic, dignified, confident and richer.

Within the few months of 2015, a great job was done to create a legislative and organisational framework for the launch of the five institutional reforms.

It has been implemented under the supervision of the National Commission for Modernisation established by my decree.

I conducted a number of meetings, talked to experts, politicians, business leaders and heads of financial organisations.

During my international visits and meetings, I consulted often with my colleagues – heads of state and government of other countries.

Generally, all sides provided broad support to my ideas for the deep modernisation of Kazakhstan.

Opinion polls also show stable high support for all five reforms of the Plan of the Nation. The people of Kazakhstan are unanimous in their opinion that the reforms are timely and relevant.

All necessary laws have been adopted and entered into force.

I would like to emphasise the coordination between the Parliament and the government. Kazakhstan has never seen such a speed and quality of legislative work in such a short time.

It proves the high effectiveness of our parliamentary model and system of relations between the representative and executive branches of state power.

It is important to see that the practical work on implementation of the Plan of the Nation is being carried out in full compliance with the changing global situation, taking into account both new opportunities and the possible risks of international development. This is described in detail in my state-of-the-nation address to people of Kazakhstan on Nov. 30, 2015.

The five institutional reforms are especially important at this stage when the Kazakh economy is strongly influenced by global economic challenges.

We consider them the main component of the large-scale anti-crisis measures of the state aimed at returning robust economic growth rates and ensuring strong social guarantees to the whole population.

The new legislation helping Kazakhstan achieve high international development standards have already proven effective.

Thus, it is essential that the people of Kazakhstan not only know it but also apply the new opportunities therein in real life, economic activities and social relations.

Everyone should have the most comprehensive understanding of how the public administration and law enforcement system will be changed based on the reforms and how to develop business in the new conditions or what are the prospective areas to intensify activity in the non-governmental sector.

All these, in general, will give a strong impetus to increase the economic and civil activity of the public.

It will help us make a leap to our Kazakhstan dream, to come closer to the cherished goal of the mid-21st century.

Each of the five reforms is supported by roadmaps, and we will consistently implement them.

 

Professional Development of the State

Our first reform is aimed at increasing the effectiveness of the state apparatus based on the new law on civil service.

It should be noted that in December 1995 this document was an innovation not only for Kazakhstan but for the entire Commonwealth of Independent States area.

We were the first among post-Soviet countries to start the establishment of a new civil servants corps through competition and on principles of meritocracy.

Now, a new development stage of the Kazakh civil service has been launched.

By decree, I have established the Ministry of Civil Service Affairs and the National Anti-Corruption Bureau therein.

Thus, the modernisation includes not only the civil service system but also the anti-corruption system, which will be fully oriented toward preventing corruption.

At the same time, the fight against corruption itself will be more consistent and systemic.

It is this approach that is the basis of the new law on combating corruption, which corresponds with international standards and entered into force in the new year.

The new law on civil service adopted simultaneously and interrelated with the new anticorruption legislation, defines the main framework of the updated civil service model and the algorithm of further actions on strengthening the effectiveness of the entire public administration system.

First, the career of an administrative civil servant will be built on his/her competence and obtained experience.

At each step of the career ladder, he/she will prove his/her professional aptitude.

The new law includes a number of core principles.

Recruitment into the civil service will be possible only after the results of an integrated selection process and only into junior positions.

Experience will be the main criteria for the promotion of civil servants and again only through competition.

There is also an opportunity for horizontal and vertical rotation of separate civil servants with housing paid for them.

Second, an open competition and the decision of the National Commission on Personnel Policy may allow recruiting non-governmental and foreign managers into the civil service on a contractual basis.

Third, the legislation establishes a new salary payment system for civil servants based on their competences and the results of their activities depending on the character, load and results of their work. For the most fruitful work, they will receive bonuses.

It is planned to introduce such a system on Jan. 1, 2017.

At the same time, salaries of civil servants, now comprising the corps B have been increased beginning in 2016.

Fourth, the law clearly defines the principle of autonomy and stability of the state apparatus when political civil servants are changed.

The powers of ministers and executive secretaries of the central executive bodies are distinguished in detail.

Fifth, there are strict measures on preventing conditions leading to a breach of ethical norms and causing corruption among officials.

There is a new Code of Ethicsfor civil service, which includes standards of occupational and domestic conduct for civil servants.

It is also planned to build a new institution – ombudsmen on ethics. They will consult with citizens and civil servants and ensure the protection of their rights.

Sixth, an important aspect of the new law on civil service is related to the fact that its basic norms will cover law enforcement bodies.

At the same time, the specific nature of law enforcement activities is taken into account in the existing law on law enforcement.

Seventh, with regards to the new law and after the introduction of the new salary payment system, it is planned to conduct a comprehensive attestation of administrative civil servants of corps B within the new qualification requirements.

During the attestation, there will be a moratorium on competition for admission to civil service.

The legislation stipulates mandatory professional development courses for servants at least once in three years.

In general, these are the main aspects for the modernisation of the civil service.

I consider it a key mechanism for the success of the whole idea of modernisation in Kazakhstan.

 

Law and Order and Rule of Law

The idea of the second reform is to ensure that independent justice and the entire law enforcement system of Kazakhstan are aimed only at respecting the rights and freedoms of citizens, strictly implementing laws and strengthening law and order.

First and foremost, the updated legislation will help increase the confidence of the people in the judicial system. It is the court that ensures justice.

The main issue in reforming Kazakhstan’s courts is the establishment of a high-quality judicial corps.

The legislation enshrines strict selection mechanisms for candidates on judge positions and high qualification requirements for them.

The most dignified and trained professionals with great life experience and high moral principles must and will ensure justice.

The selection process and appointment of judges will be transparent and open for society.

In this regard, the Supreme Judicial Council has been dramatically reformed. It becomes an autonomous state body with its own personnel, and its membership and authority have been increased.

The highest aspect of the judicial reform is the transition from a five-stage to a three-stage judicial system.

Only first, appeal and cassation instances are left. At the same time, the role of the first instance court and the court of appeal are considerably enhanced. They will hear most cases. Such measure will prevent trial bureaucracy and reduce the time for reaching judicial verdicts.

The system of justice in Kazakhstan will be as open as possible with due account for the respect of citizens’ rights to privacy.

Courtrooms are being equipped with audio and video systems for legal proceedings without any possibility to stop or edit records.

This disciplines judges and other participants of court sessions, ensuring the fairness of the judicial process and sentences.

A number of institutional decisions will become effective within the judiciary reform.

First, the Court Jury under the Supreme Court will be significantly restructured.

It will consider citizens’ complaints against judges and the judiciary’s violations of the Code of Ethics, which will be adopted as well.

Second, a specialised panel for the consideration of disputes will be established under the Supreme Court, involving the participation of large investors.

Within its framework, the right of foreign investors to high-quality and fair resolutions of legal disputes will be exercised.

Third, a balance between prosecution and defence should be achieved in criminal proceedings, including the pre-trial stage.

This will be done through further extension of the investigating judge’s mandate to authorise all investigations with regard to the limitations of human constitutional rights and freedoms.

Fourth, it is important to remember that the heads of Kazakh courts are first among equals.

Therefore, their possibilities to influence the decisions of other judges will be excluded.

Fifth, the institution of private court bailiffs is further developed with the gradual reduction of state court bailiffs.

Of particular importance, are measures strengthening the independence of the judiciary system.

It is known that in accordance with my instructions, the law to address all issues of pensions for honorary retired judges has already been adopted. This will allow judges to focus solely on the fair administration of justice.

Additionally, we need to ensure that all law enforcement bodies, and especially police, protect the people’s interests and improve law and order.

This requires the creation of a local police service accountable to local authorities and local communities. Similar services have demonstrated efficiency in several OECD member countries.

The issues of the preservation of public order, the fight against domestic crime, road safety and zero tolerance to minor offences were defined as competences of local police services.

These innovations are reflected in the new legislation. It also includes the creation of a system of public councils and other consultative and advisory bodies to consider citizens’ complaints against police, violations of ethical rules, as well as information about their status and powers.

Moreover, a Map of Criminal Offences website will be created. This mechanism has proven successful in numerous countries around the world. All criminal offences in the country will be immediately reflected in this web resource. This will help the public control the efficiency of law enforcement bodies.

The improvement of the penitentiary system is also one of the topical issues. This work must be done within public-private partnership development.

The successful experience of foreign countries should be the basis for the implementation of measures to engage the private sector in the construction and operation of penitentiary facilities.

It is also important to assist persons who violated the law and completed serving their sentences.

To this end, comprehensive social rehabilitation will be put into practice, as well as standards for special social services for citizens who served their sentences will be introduced.

In broad terms, the establishment of the rule of law in Kazakhstan is our constitutional goal, which can be addressed within the integrated modernisation process. The implementation of the identified measures and approaches will increase the confidence of citizens in the national judicial and law enforcement system, as well as of foreign investors and will generally improve the business climate in our country.

 

Towards a Red Tape-Free Economy

A great amount of work is related to the third reformatory direction – a complex of transformations ensuring industrialisation and economic growth.

The scale of the transformations mainly depends on the work of state institutions.

Efforts towards the improvement of the tax and customs administration will be highly important.

First, this includes the integration of the tax and customs systems.

The control over shipping waybills with their gradual conversion to an electronic format is being introduced. Procedures of tax and customs audits are also being optimised on the basis of unified forms of documents.

There will be a uniform audits complaint procedure.

Second, a step-by-step transition to a general declaration of incomes and property is now stipulated.

Workers of state enterprises, institutions and national companies, which represent about 1.7 million people, will provide declarations in 2017. Starting in 2020, the general declaration will cover all individuals.

Third, in order to simplify the tax administration, the issue of introducing a sales tax instead of a VAT will be worked out.

Fourth, it is planned to improve existing tax regimes through the compulsory introduction of the tax audit of incomes and expenditures starting in 2017.

The OECD countries’ experience shows that a major principle of an effective economy is state support for small and medium-sized business, ensuring a suitable level of its protection. These aspects are embodied in the Entrepreneurial Code, containing modernised legal aspects of the rehabilitation and bankruptcy of businesses.

The strengthened institution of the business ombudsman should become a central mechanism providing business protection and legal assistance to entrepreneurs. The legal framework of its activities is equally reflected in the Entrepreneurial Code.

In addition, it sets out the detailed legal framework of the state antimonopoly policy in line with OECD standards.

The updated antimonopoly service should be focused on the comprehensive development of free competition.

Starting Jan. 1, the register of dominants will be kept only with regard to regulated markets and starting 2017, it will be fully abolished.

An increase in the share of entities on the relevant commodity markets is only allowed if such activities show no signs of restrictions on competition.

Starting Jan. 1, 2017, price regulation will be cancelled, instead of which instruments of antimonopoly regulation and control will be exclusively used.

A new institution, the Conciliation Commission, will be established under the antimonopoly service, ensuring the fairness and transparency of decisions taken following investigations regarding violations of antimonopoly legislation.

New principles of cooperation and partnership between the state and entrepreneurship will be enshrined in a revised version of the law on public procurement.

They open new possibilities for attracting direct investments through the conclusion of long-term product sales contracts. This will also serve to create high-tech industries in Kazakhstan.

Amendments to the Land Code have proven to be effective catalysers for the development of farming and the whole agricultural sector.

New legal regulations give an opportunity for more than 224,000 existing agricultural entities to privatise 97.4 million hectares of leased lands. It is also possible to pay only 50 percent of its cadastral value by instalments for up to 10 years.

Moreover, 85.3 million hectares out of 102 million hectares of reserve lands, dedicated to agricultural production, are also available for privatisation through auctions by individuals and legal entities of the Republic of Kazakhstan.

Property legalisation terms are extended up to Dec. 31, 2016. Additional incentives to return property and money to legal circulation have been adopted. Privacy and protection from criminal and administrative prosecution are guaranteed.

This will increase the influx of capital and significantly decrease the level of the shadow economy.

A clear and straightforward procedure for the rehabilitation and bankruptcy of legal entities has been approved at the legislative level.

According to world practice, the bankruptcy of companies should not lead to the shutdown of enterprises and dismissal of employees.

A new mechanism for the pre-trial settlement of insolvency was developed to preserve sustainable productions and secure workplaces. It enables debtor and creditor to address issues of restructuring for the purposes of financial rehabilitation of the enterprise. Investors will obtain a possibility to minimise and prevent losses.

Legislative changes were adopted to encourage denationalisation and privatisation, allowing restrictions to be lifted on privatisation, assets to be sold at fair market value, as well as conditions to be created for the maximum participation of Kazakh and foreign investors in privatisation.

Public offerings of shares on the stock exchange and through open auctions will be a key mechanism of privatisation.

In the first quarter of 2016, lists of objects, which are not subject to sales, will be reduced, and a draft law providing the abolition of pre-emptive rights of all shareholders on acquisition of sold assets of the quasi-public sector will be developed.

The implementation of the comprehensive plan of privatisation for 2016-2020 has started taking into account new mechanisms.

Sixty-five of the largest government companies, the Samruk Kazyna Sovereign Wealth Fund, the Baiterek and KazAgro companies, 173 subsidiaries and affiliates that are part of Samruk Kazyna will be transferred to the competitive market within this instrument.

The current list of privatised objects, consisting of 545 organisations will also be updated.

Following the transfer to the competitive market of a share of assets of Samruk Kazyna during 2016-2018, National Management Holding Baiterek and National Management Holding KazAgro will be transformed to compact holdings.

The privatisation of state property and transfer of assets of the quasi-public sector are organised for the further strengthening and development of domestic entrepreneurship and private business.

The implementation of the comprehensive plan of privatisation will give a new impetus to the promotion of small and medium-sized businesses.

The private sector, interested in an increase of benefits, will expand the spectrum of services and increase their quality. Competition will grow, which will result in the decrease in costs of services.

Administrative barriers will be reduced in the agricultural sector.

The procedure for granting subsoil use rights has been already simplified through the introduction of the auctions’ mechanism.

In the long term, Kazakhstan will switch to the Australian model of subsurface use, which stipulates a facilitated methodology of all types of geological works, including exploration, evaluation and the development of deposits.

Today, the programme National Champions is becoming an essential tool ensuring a new source of economic growth and increasing the competitiveness of Kazakh businesses.

Its participants are the most promising companies of the producing sector, aimed at import substitution.

Thirty-two companies – “national champions” – will ensure the growth of internal direct investments of approximately $750 million by 2019-2020, the creation of about 15,000 workplaces and a 30-50 percent increase in labour productivity and the growth of non-resource exports by up to $260 million.