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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 about 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"

(as amended on 05-05-2018)

I DECIDE:

1. Approve the State program of industrial and innovative development of the Republic of Kazakhstan for 2015-2019 (further - the Program).

2. To the government of the Republic of Kazakhstan:

1) to develop and approve the Actions plan of the Government of the Republic of Kazakhstan on program implementation in a month;

To represent 2) to Administration of the President of the Republic of Kazakhstan results of monitoring and assessment of the Program in the terms and procedure established 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".

3. To the central and local executive bodies, and also state bodies, directly subordinate and accountable to the President of the Republic of Kazakhstan to take measures for program implementation.

4. Ceased to be valid according to the Presidential decree of the Republic of Kazakhstan of 05.05.2018 No. 681

5. To impose control of execution of this Decree on Administration of the President of the Republic of Kazakhstan.

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

President of the Republic of Kazakhstan

N. Nazarbayev

Approved by the Presidential decree of the Republic of Kazakhstan of August 1, 2014 No. 874

The state program of industrial and innovative development of the Republic of Kazakhstan for 2015-2019 Astana, 2016

Content

1. Passport of the Program

2. Introduction

3. Analysis of the current situation

4. Purposes, tasks, target indicators and indicators of results of program implementation

5. Main directions, ways of achievement of effective objectives of the Program and adequate measures

6. Necessary resources

1. Passport of the Program

Name

The state program of industrial and innovative development of the Republic of Kazakhstan for 2015-2019.

Basis for development

1. The message of the Head of state to the people of Kazakhstan of December 14, 2012 "Strategy Kazakhstan-2050: new political policy of the taken place state".
2. The message of the Head of state to the people of Kazakhstan of January 17, 2014 "The Kazakhstan way - 2050: single purpose, single interests, single future".
3. The assignment of the Head of state given at the XXVI plenary session of Council of foreign investors in case of the President of the Republic of Kazakhstan.

Responsible for development

Ministry for Investments and Development of the Republic of Kazakhstan.

Purpose

The accented stimulation of competitiveness of processing industry directed to performance improvement of work and growth in volumes of export of the processed goods.

Tasks

1) completion of creation of the effective basic industry due to upgrade of the companies in traditional sectors;
2) creation of new points of industrial growth through implementation of large otrasleobrazuyushchy projects;
3) providing conditions for emergence of the highly effective industrial entrepreneurship oriented to export and (or) permanent performance improvement of the work;
4) creation of prerequisites for emergence of critical mass of innovation-active business.

Realization term

2015-2019.

Target indicators

Achievement by 2019 of the following economic indicators:
1) growth of cost export volume of products of processing industry by 19% to the level of 2015;
2) increase in labor productivity in processing industry for 22% in real terms to the level of 2015;
3) the volume of investment into fixed capital of processing industry in the amount 4, 5 trillion tenges;
4) decrease in power consumption in processing industry for 7% at least to the level of 2014.

Sources and amounts of financing

The total expenses provided in the republican budget on program implementation in 2015-2019 will constitute 878, 3 billion tenges, including:
2015 - 134, 98 billion tenges;
2016 - 177, 42 billion tenges *;
2017 - 359, 31 billion tenges *;
2018 - 178, 73 billion tenges *;
2019 - one billion 27,86 tenge*.

Note: * - the amounts will be specified according to the government budget for the corresponding financial year.

2. Introduction

The state program of industrial and innovative development of the Republic of Kazakhstan for 2015-2019 (further - the Program) is developed according to long-term priorities of Strategy Kazakhstan-2050, the Concept on inclusion of Kazakhstan into number of thirty developed states of the world, and also in execution of the order of the Head of state, the Advice of foreign investors given at the XXVI plenary meeting in case of the President of the Republic of Kazakhstan, and within implementation of the President's letter of the Republic of Kazakhstan to the people of Kazakhstan of January 17, 2014 "The Kazakhstan way - 2050: single purpose, single interests, single future".

Vision of policy of industrialization is achievement of the average level of competitiveness of the most developed countries of Organization for Economic Cooperation and Development (further - OECD) in processing industry by 2035 by increase in share of the Republic of Kazakhstan in world export of processing industry and reducing gap from developed countries in performance of all factors. In 2010-2014 the first stage within the State program on the development of the Republic of Kazakhstan forced industrial innovatively (further - GPFIIR) was realized where the legal, infrastructure and institutional framework for industrial development was laid.

The current Program is logical continuation of GPFIIR and considers experience of its realization. The program is part of economic policy of Kazakhstan and is focused on creation of conditions for effective development of processing industry.

Within program implementation enhancement of the Entrepreneurial code of the Republic of Kazakhstan will be provided, amendments to the Code of the Republic of Kazakhstan "About customs affairs in the Republic of Kazakhstan", the Tax code of the Republic of Kazakhstan, the laws of the Republic of Kazakhstan "About commercialization of scientific and (or) scientific and technical activities" will be made, "About modification and amendments in some legal acts concerning enhancement of special economic zones" with which are provided stability and guarantees of safety of preferences and tax benefits for participants of special economic zones (further - SEZ) for the entire period of action of SEZ, and also legislative restrictions and standard rates on energy saving are enhanced.

The program is sensitive to aspects of the state policy influencing business climate. Success of the Program is connected with achievement of objectives by the Republic of Kazakhstan on improvement of conditions of business (Doing business), increase in competitiveness of the country (Global Competitiveness Index), decrease in share of the state participation in economy through carrying out the planned privatization taking into account "the principle of yellow pages" (Yellow Pages), to inclusion of Kazakhstan in trust Index to direct foreign investments (further - PII) (FDI Confidence Index by of A.T. Kearney) and Committee on investments of OECD, improvement of indicators of human capital. Efficiency of program implementation depends on model of financing, completeness and timeliness of allocation of budgetary funds for its realization, and also on interdepartmental interaction.

In general it is necessary for successful program implementation that the state policy (operating and which is again accepted) in the field of development of agricultural industry, subsurface use, infocommunication, space, transport and other infrastructure, services, including education, did not contradict its key principles and measures of macroeconomic stability were provided.

3. Analysis of the current situation

3.1. The analysis of the current situation of industrial development in the Republic of Kazakhstan

Under the term "industrialization" the classical understanding connected with transition to development of processing industry, complex of the legal, economic, organizational and other measures directed to increase in its competitiveness is applied.

Considering that the mining sector is subject to high volatility, it is necessary to develop other sectors of economy in an expedited manner - agricultural industry, services, processing industry.

The processing industry exerts the increasing impact on forming of middle class. So, according to Fund of information technologies and innovations (SShA)(1), creation of 1 workplace in processing industry leads to creation from 2 to 5 additional workplaces in other sectors, development of technologies leads to increase in knowledge and skills of workers; in the USA the salary level in processing industry is on average 9% more, than in other sectors of economy; sectors of processing industry - the most innovative in economy, in the USA 70% of research and development works are the share of this sector (further - research and development); the condition of processing industry and service sector is interdependent (for example, the services which are based on information and communication technologies (further - ICT), strongly depend on goods of processing industry).

___________________

(1) http://www2.itif.org/201l-national-manufacturing-strategy.pdf.

In 2015 in structure of economy of Kazakhstan the industry will occupy about 25%, and its share systematically decreases owing to the advancing service sector growth: in 2012 - % 29,2, in 2013 - 27%, in 2014 - 26, %. Similar processes are observed in many countries as developed, and developing. At the same time the share of services in export is insignificant and therefore will not be able to exert great influence on general export growth in the near future. Therefore building-up of not oil export in today's conditions perhaps generally at the expense of goods of the processing sector. In 2015 the share of processing industry in the total amount of export will constitute about 30%.

The mining sector provides employment % 3,5 (in 2012 - % 2,6, in 2013 - % 2,9) and 14, % of gross value added in economy (in 2012 - % 16,5, in 2013 - % 14,7), and processing - 6, % (in 2012 and 2013 - on % 6,4) and 10% (in 2012 - % 10,8, in 2013 - % 10,4), respectively. Investments into fixed capital in mining industry constitute 30% of total amount (in 2012 and 2013 - on 29%), and in processing industry - only 11% (in 2012-2013 also on 11%").

For years of realization of GPFIIR the processing industry received considerable boost to development. The index of physical production volume in relation to 2008 grew on 24, %, having outstripped the mining sector (20%). The labor productivity in real terms increased in time 1,9, and the gap from the average level of the countries of OECD was reduced from 69% to 55%. It is attracted in processing industry of nearly 3 times more PII, than for the last 5 years, and their share in total amount grew in time 1,5 - from 10% to % 15,5 (in 2012 - 12%, in 2013 - % 10,6). There were more than 20 new significant sectors, and in addition 50 goods began to be exported with comparative advantage (RCA index).

Kazakhstan is at transition stage from the economy movable by factors, to the economy movable by investments. At the same time in the developed macroeconomic situation Kazakhstan faced objective restrictions in processes of industrialization and investment attraction. According to the country report of the International Monetary Fund (further - the IMF) for September, 2013 (2) in economy signs of "the Dutch disease", in particular, forming of adverse trading conditions, growth of the cost level in economy and institutional problems were observed. Besides, Kazakhstan faces problem of "trap of average earnings" - inability to compete as with developed economies with high qualification and innovations, and with economies with the low income, the low salary level and cheap production of manufactured goods.

___________________

(2) Country report of the IMF No. 13/291, September, 2013.

As a result the level of investments into fixed capital of gross domestic product (further - GDP) fell from record 32% in 2005 to 16% in 2014. Similarly the level of money supply in economy - with peak % 40,5 in 2009 decreases to 32% in 2014, and, on this indicator Kazakhstan considerably lags behind the majority of the countries. Urban saturation is extremely low that disperses demand on the extensive territory and influences quality of human capital, increases business costs.

There is weak private initiative which several factors influence: high presence of the state at economy, high monopolization of number of industries, high share of dormant mortgage assets, limited access to financing, backwardness of the stock market and high currency risks.

Infrastructure restrictions and difficult customs procedures reduce export opportunities. The lack of transport channels, inefficiency of logistics, depreciation transport and backwardness of trade infrastructure, high transportation costs significantly limit competitive advantages of the Kazakhstan business.

The limiting factors for carrying out industrialization and business development are low quality of manpower and complexity of hiring of foreign employees.

In such industries as metallurgy and the chemical industry, the need for specialties for the Program matches the expected release of higher educational institutions for 96% and 89% respectively. At the same time in such industries as the food industry and mechanical engineering, plans for release is 1,5-2 times more, than requirements of industries of the Program.

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