ORDER OF THE GOVERNMENT OF THE REPUBLIC OF KAZAKHSTAN

of August 22, 2017 No. 498

About approval of the Program for investment attraction "National investment strategy" and entering of amendment into the order of the Government of the Republic of Kazakhstan of December 30, 2015 No. 1136 "About approval of the list of government programs and recognition voided some decisions of the Government of the Republic of Kazakhstan"

The government of the Republic of Kazakhstan DECIDES:

1. Approve the enclosed Program for investment attraction "National investment strategy" (further - the Program).

2. To the central and local executive bodies and other organizations to take measures for program implementation.

3. Provide to responsible central and local executive bodies information according to the Actions plan on program implementation according to the Rules of development, realization, carrying out monitoring, assessment and control of the Strategic plan of development of the Republic of Kazakhstan, the state and government programs, strategic plans of state bodies, development programs of the territories, and also developments, realization and control of the Forecast scheme of territorial and space development of the country approved by the Presidential decree of the Republic of Kazakhstan of March 4, 2010 No. 931 "About some questions of further functioning of System of state planning in the Republic of Kazakhstan".

4. To impose control of execution of this resolution on the Ministry for Investments and Development of the Republic of Kazakhstan.

5. Ceased to be valid according to the Order of the Government of the Republic of Kazakhstan of 03.06.2019 No. 361

6. This resolution becomes effective from the date of its signing.

Approved by the Order of the Government of the Republic of Kazakhstan of August 22, 2017 No. 498

Program for investment attraction "National investment strategy"

1. Passport of the Program
2. Introduction
3. Analysis of the current situation
4. Purposes, target indicators, tasks and indicators of results of program implementation
4.1.	Program purposes
4.2.	Target indicators
4.3.	Tasks
	First direction: improvement of the investment climate of the Republic of Kazakhstan
	Second direction: realization of effective operational measures and development of new approaches of investment attraction
	Third direction: Compliance of the plan of privatization and mechanisms of public-private partnership with priorities of attraction of foreign investments
5. Main directions, ways of goal achievement and tasks of the Program, adequate measures
5.1.	First direction: Improvement of the investment climate of the Republic of Kazakhstan
5.1.1.	Creating favorable conditions for investment attraction
	Increase in transparency of regulation of investing activities
	Simplification of procedure for entry into the market of the country and placement of foreign investments
5.1.2.	Increase in level of protection of the rights of investors
	Enhancement of the mechanism of the dispute resolution
	Increase in transparency and predictability of tax administration for investors
5.1.3.	Improvement of trade logistics and development of production and sales communications between foreign investors and the local companies
5.2.	Second direction: realization of effective operational measures and development of new approaches of investment attraction
5.2.1.	Enhancement of institutional mechanisms on attraction, maintenance and support of investors
5.2.2.	Development of system of investment attraction in the Republic of Kazakhstan
5.2.3	Forming of pro-active approaches to attraction and deduction of investments
5.3.	Third direction: compliance of the plan of privatization and mechanisms of public-private partnership with priorities of attraction of foreign investments.
5.3.1.	Attraction of foreign investments to privatization
5.3.2.	Investment attraction in projects of public-private partnership
6. Necessary resources
Appendix to the Program. The actions plan on program implementation on investment attraction "National investment strategy".

1. Passport of the Program  

Name	Program for investment attraction "National investment strategy"
Basis for development	The presidential decree of the Republic of Kazakhstan of February 1, 2010 No. 922 "About the Strategic plan of development of the Republic of Kazakhstan till 2020"; The president's letter of the Republic of Kazakhstan of the Leader Nation of N. A. Nazarbayev to the people of Kazakhstan of December 14, 2012 "Strategy Kazakhstan-2050: new political policy of the taken place state"; The presidential decree of the Republic of Kazakhstan of August 1, 2014 No. 874 "About approval of the State program of industrial and innovative development of the Republic of Kazakhstan for 2015-2019 and entering of amendment into the Presidential decree of the Republic of Kazakhstan of March 19, 2010 No. 957 "About approval of the List of state programs"; The presidential decree of the Republic of Kazakhstan of April 6, 2015 No. 1030 "About approval of the State program of infrastructure development "Nurla zhol" for 2015-2019 and entering of amendment into the Presidential decree of the Republic of Kazakhstan of March 19, 2010 No. 957 "About approval of the List of state programs" The program of the President of the Republic of Kazakhstan of May 20, 2015 "The plan of the nation - 100 specific steps"; The president's letter of the Republic of Kazakhstan of the Leader Nation of N. A. Nazarbayev to the people of Kazakhstan of January 31, 2017 "The third upgrade of Kazakhstan: global competitiveness"; The presidential decree of the Republic of Kazakhstan of February 14, 2017 No. 420, "About approval of the State program of development of agro-industrial complex of the Republic of Kazakhstan for 2017-2021 and modification and amendments in the Presidential decree of the Republic of Kazakhstan of March 19, 2010 No. 957 "About approval of the List of state programs"
Instruction of the state body responsible for development and implementation of the government program	Ministry for Investments and Development of the Republic of Kazakhstan
Purpose	The creation of the favorable investment climate and investment attraction oriented to increase in efficiency
Tasks	First direction. Improvement of the investment climate of Kazakhstan: 1. Creating favorable conditions for investment attraction  2. Increase in level of protection of the rights of investors 3. Improvement of trade logistics and development of production and sales communications between foreign investors and the local companies Second direction. Realization of effective operational measures and development of new approaches of investment attraction: 4. Enhancement of institutional mechanisms on attraction, maintenance and support of investors 5. Forming of pro-active approaches to attraction and deduction of investments Third direction. Compliance of the plan of privatization and mechanisms of public-private partnership to priorities of attraction of foreign investments:  6. Ensuring participation of foreign investors in the course of privatization 7. Investment attraction in projects of public-private partnership
Realization terms	2018 - 2022
Target indicators	By 2022 the following target indicators will be reached: 1. Gross inflow of direct foreign investments (further – PII) will increase in time 1,26 (to the level of 2016). 2. Ratio of amount of gross PII to gross domestic product. 3. Inflow of PII to processing industry to time 1,5 (to the level of 2016). 4. The volume of investment into fixed capital of the non-oil sector of economy (except for the government budget) will increase in time 1,46 (to the level of 2016). 5. The amount of external investments into fixed capital of the non-oil sector of economy will increase in time 1,5 (to the level of 2016).
Sources and amounts of financing	For the account and within the means provided to the Ministry for Investments and Development of the Republic of Kazakhstan according to the budget legislation of the Republic of Kazakhstan, and also by the extrabudgetary funds which are not contradicting the budget legislation of the Republic of Kazakhstan

 

2. Introduction

The program for investment attraction "National investment strategy" (further - the Program) is developed according to the assignment of the President of the Republic of Kazakhstan given in the Message to the people of Kazakhstan of January 31, 2017 "The third upgrade of Kazakhstan: global konkurentosposobnost1".

The program designed to promote goal achievement of development and upgrade of economy of the Republic of Kazakhstan creates the investment vision of the country directed to increase and investment diversification. The increase in investment competitiveness of the country providing investment attraction, oriented to increase in efficiency in large volumes is the cornerstone of this Program.

This Program is started when the world economy still recovers from global financial crisis. Fall of the world prices in the goods markets complicated situation both for financial and economic condition of the separate companies, and for aggregative macroindicators.

At the same time, the Republic of Kazakhstan continues to be the attractive place for the investments oriented to receipt of access to rich natural resources of the country. In addition, the country continues to attract the investors interested in the growing domestic market of the Republic of Kazakhstan.

Importance of investments in goal achievement of development of the Republic of Kazakhstan, increase in level of diversification of economy, gain in productivity, export and creation of workplaces is noted in a number of documents of System of state planning (Kazakhstan 2050, the Strategic plan of development of the Republic of Kazakhstan till 2020, the State program of infrastructure development "Nurla zhol" for 2015-2019, the Plan of the nation of "100 specific steps", the State program of industrial and innovative development of the Republic of Kazakhstan for 2015-2019, the State program of development of agro-industrial complex, "Upgrade 3.0.").

Urgent challenge for the Republic of Kazakhstan is attraction in large volumes of the investments oriented to increase in efficiency. This type of investments raises competitiveness of the financed production in the international markets and in global chains of value added by use of competitive advantages of the investment climate of the Republic of Kazakhstan, offers set of the capital, know-how and technologies which promote upgrade of industries and expansion of production capabilities for achievement of economic diversification for the country receiver.

This type of investments does not "arrive" to the country the same as investments oriented to the domestic market. Attraction and deduction will demand them increase in the international competitiveness of the Republic of Kazakhstan, and also improvement of the investment climate.

The program assumes carrying out the active state and investment policy directed to stimulation of the investments oriented to increase in efficiency. In program implementation the Government of the Republic of Kazakhstan will continue to improve competitiveness and attractiveness of the investment climate of the country to the conforming standards of Organization for Economic Cooperation and Development (further - OESR)2

Successful implementation of this Program shall promote sustained economic growth of the country. For reasons for separate offers and actions it is carried out country and the regional analysis, and also experiment of foreign countries on realization of investment policy, and also factors which will promote achievement of benefits of the country is analyzed.

The program and actions constituting it are based on detailed assessment of the institutional and normative and regulatory circle for investment attraction. Assessment is implemented by the Ministry for Investments and Development of the Republic of Kazakhstan in case of technical support of world bank group. Besides, in case of development of the Program the analytical conclusions of OECD stated in the detailed overview of the investment climate of the Republic of Kazakhstan for 2016 and 2017 and also research and analytical works of other international and national organizations, analytical centers were considered.

__________________________

1 The president's letter of the Republic of Kazakhstan of the Leader Nation of N. A. Nazarbayev to the people of Kazakhstan of January 31, 2017 "The third upgrade of Kazakhstan: global competitiveness"

2 Organization for Economic Cooperation and Development (abbr. OECD, English Organisation for Economic Cooperation and Development, OECD) - the international economic organization of the developed countries recognizing the principles of representative democracy and free market economy

Main terms and determinations

In this Program the following new terms and determinations are used:

1) the investments oriented to increase in efficiency - type of the investments directed to production organization in certain country for the purpose of use of its factors of competitiveness which will provide possibility of export to other countries or regions. Such factors of competitiveness can include effective labor power in respect of cost, educations or specializations, easy access to the foreign markets, high-quality infrastructure, etc. The motivating factors in attraction of this type of investments are the competitiveness level in the international markets offered by this or that country to the investor, and in particular capability of integration into global chains of value creation;

2) the investments oriented to the domestic market - type of the investments aimed at the development of the domestic market of the country receiver. Thus, the main factors of this kind of investments are the size and growth rates of the domestic market.

3) the information and monitoring IRM (follow-up) system - the single information platform for the Kazakhstan, foreign investors and entrepreneurs which contains complete, reliable and up-to-date information about investors, investment projects, production sites and queries of potential investors;

4) non-staff advisers are the area directors to combining jobs by non-staff advisers to akims of areas and cities of Astana, Almaty performing monitoring and complete maintenance of implementation of investment projects, address work with investors on the solution of problematic issues by interaction with the central and local executive bodies, other organizations;

5) investment preferences - the benefits of address nature provided according to the legislation of the Republic of Kazakhstan to the legal entities of the Republic of Kazakhstan enabling the realization of the investment project and the leasing companies importing within implementation of the investment project processing equipment based on the agreement of financial leasing for the legal entity of the Republic of Kazakhstan realizing the investment project;

6) the investment ombudsman - the official designated (determined) by the Government of the Republic of Kazakhstan to which functions on assistance in protection of the rights and legitimate interests of investors are assigned;

7) "one window" ("single window") - the centralized form of assistance to investors from authorized body on investments in provision of the state services providing minimization of participation of investors in collection and preparation of documents and restriction of their direct contact with state bodies.

3. Analysis of the current situation

Improvement of global economic conditions

The task of ensuring strong and balanced economic rise of the Republic of Kazakhstan on the basis of diversification of economy and increase in its competitiveness in the conditions of limitation of internal financial resources cannot be performed without realization of the stimulating policy of investment attraction.

Investments have significant effect on social and economic development of the country:

at the macrolevel are basis for implementation of policy of expanded reproduction, structural adjustment of occupational sector and the balanced development of all industries of economy, implementation of innovations, providing competitiveness of national economy;

at the microlevel decrease in moral and physical wear of fixed assets, improvement of quality and product competitiveness, and also reduction of harmful ecological effects on the environment are necessary for expansion and development of production, increase in its technical and technology levels.

The Republic of Kazakhstan starts the new Program for investment attraction when the world economy continues recovery after global financial crisis. It is expected that in 2017 and 2018 economic activity will increase, despite reducing world flows of PII in 2016 for 13% in connection with the weak world economic growth and low dynamics of amounts of world trade 3, especially in developing countries and the countries with transitional ekonomikoy.4

It should be noted especially that by consideration of external investment into national economy PII on the attracted amount on which judge efficiency of work with foreign investors traditionally are considered.

Despite global geopolitical and economic uncertainty, PII are in preliminary stage of recovery after crisis. According to data of UNCTAD (UNCTAD - the Conference of the United Nations on trade and development) (further - UNCTAD) the highest level of world investment flows was noted in pre-crisis 2007, having constituted 1, 9 trillion US dollars. At the same time, the general entering flows of PII in 2015 and 2016 increased to 1, 8 trillion US dollars (the drawing 1) that is the greatest indicator since 2008.

Increase in PII in the last two years was caused by condition of the world macroeconomic circle in which reducing growth rates of emerging markets and sharp reduction of prices of primary goods prevailed. Also process of merges and absorption (further - the VULTURE) the companies at the transnational level exerted impact on this growth.

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3 Monitoring of global investment tendencies, UNCTAD, February, 2017

4 Report on condition and perspectives of world economy, IMF, January, 2017

Figure 1

Indicators of inflow of PII at the global level and over separate groups of the countries

(bln. dollars of the USA)

Source: UNCTAD

According to UNCTAD growth of the gross measure of the fixed capital investments in developing countries, including countries with economies in transition is expected. At the same time, it is expected that I will eat around world trade by goods and services in 2017 will increase by % 3,8 that it is more than in 2016 (% 2,3).

It should be noted that the flow of PII changes under the influence of world economic tendencies and factor influence of domestic economic policy of global players.

Depending on classification of the countries by the level of development the most part of flows of PII goes to developed countries in comparison with other groups of the countries. Besides, this segment differs in relative volatility that prevents to determine specific trends for certain periods of time.

So, inflow of PII to developed countries in 2016 showed positive dynamics again, though slower rates, having reached 1, 03 trillion US dollars (in 2015 - 0, 98 trillion US dollars).

In the medium term global flows of PII according to forecasts will resume growth in 2017 and will exceed 1, 8 trillion US dollars in 2018 that reflects the expected growth in world economy.

In the same time, inflow of PII to the developing economies shows the ascending tendency which renewed after crisis of 2008 and decreased by 2016 a little.

In comparison with other groups of the countries of the country with economies in transition which also the Republic of Kazakhstan treats differ in small amounts of PII. In 2016 inflow of PII to this group constituted 68 bln. dollars of the USA, having increased by 81% in comparison with indicator of 2015 that also confirms availability of some volatility.

Countries with economies in transition have small positive indicator of net PII, however huge outflow from Russia can affect it. The share, and also amount of PII in these countries (as tendency) decrease since 2008. So, inflow of PII to these countries was reduced more than half from 2013 to 2015 from 85 bln. dollars of the USA to 35 bln. dollars of the USA, having decreased from nearly 6% of world outflow of PII to only 2%.

Despite positive perspectives of improvement of world economy, new geopolitical realities and the growing intensity can have potential effects. Inflow of PII in countries with economies in transition decreased to levels of almost 10-year. It happened because of such factors as the low prices of primary goods, weakening of the domestic markets and influence of rationing arrangements in view of geopolitical tension.

Bystry drop in oil prices which took place in 2014 strongly influenced inflow of PII to exporting countries of oil in Africa, South America and countries with economies in transition. Outflow of PII from the region was also reduced because of reducing access to the international markets of the capital.

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