Speech of Bakytzhan Sagintayev
at the investment forum "Kazakhstan Global Investment Roundtable"
Dear Ladies and Gentlemen!
I welcome you at the first international round table dedicated to the issues of investing into Kazakhstan’s economy.
We are grateful that representatives of more than 100 international companies, financial organizations, embassies, NGOs and foreign mass media accepted our invitation.
We are open to your proposals and new ideas. Therefore, my colleagues, ministers, representatives of public and private sectors as well as the country’s leading businessmen, will be working with you for the whole day.
Such a dialogue will foster exchange of opinions on your investment proposals and business prospects in Kazakhstan. We are hopeful that the suggested format of Kazakhstan International Business and Investment Dialog will become regular.
We will expand this format and the next year, continue the work in a warmer time.
The main goal of the Government is to form large-scale and sustainable strategy of fostering the process of attracting “new generation” investments to Kazakhstan.
We view our today’s meeting as a crucial step in this direction.
Probably, you will ask the question:
Why is Kazakhstan inviting investors today?
What has happened, when you hear about Kazakhstan, why is it necessary to invest in Kazakhstan?
What can you gain from investments in our country?
Firstly, the country’s economy stabilized after the difficult period of global changes in 2014-2016.
Thanks to the adopted measures, the GDP growth in the 10 months of 2017 reached 4%. Private investments in fixed assets are recovering, and, what’s gratifying, for the first time in many years, the amount private investments exceeded the state.This is a very good signal.
Thus, the country as a whole has adjusted itself to new global realities. We are starting the path to economic growth.
Secondly, our country has entered a new stage of its development.
In the beginning of 2017, the President of the country announced the course to the Third Modernization of Kazakhstan. Its objective is to support implementation of the Strategy “Kazakhstan – 2050” and the five institutional reforms of the President Nursultan Nazarbayev, as well as the country’s further movement towards the top 30 most developed nations of the world in the new environment.
Extensive work is launched in three areas: political democratization (constitutional reform has been implemented), the powers are divided between the branches: President, Parliament and Government.
The work on modernization of public consciousness and improvement of the quality of human capital is in progress.
The third is the creation of the new model of economic growth, reduced government’s role in the economy through privatization and deregulation, incentives to private sector, technological upgrade and digitalization, improvement of global competitiveness.
The Government adopted a Strategic Action Plan-2025 that includes detailed road maps for all key areas of socio-economic policy. It is currently being reviewed by the Head of State.
For effective management of changes and arising risks, a system of project–based management was introduced.
The priority is given to 8 basic sectors of the economy as well as to the following cross-cutting measures:
- Creation of new jobs in promising fields of economy;
- Development of widespread entrepreneurship;
- Technological upgrade and digitalization.
Currently, project-based management is being introduced at the regional level.
Thus, we have done extensive preparatory work; we know what to do and how to do it.
Thirdly, great opportunities to investors are offered by our policy of developing state-of-the-art knowledge-intensive manufacturing and upgrading basic sectors of economy and agro-industrial complex, which will all become recipients of large-scale investments within the Third Modernization of Kazakhstan.
We continue diversifying the economy and invite investors in the sectors of metallurgy, oil processing, chemicals and machine building.
There are a lot of projects in Kazakhstan in the field of design and development of production of copper, gold, rare metals and rare-earth elements, including lithium and vanadium, phosphate raw material, and many others.
For the further development of manufacturing industry, we are interested in investments in geological exploration, new technologies for enrichment and processing of raw materials.
We have started a large-scale modernization of the AIC. Kazakhstan is one of the global leaders in the production of wheat flour. We are strengthening this advantage, but we are also carrying out structural reform of the agrarian sector, diversifying the crop acreage in accordance with market demand.
The scientific, technical and technological re-equipment of the entire industry has begun, which include the introduction of the latest advances in the field of fertilizers, bioadditives, and selection.
All of these unleash great opportunities for investment in the food industry.
Along with the works carried out by the Government to renounce trade restrictions with China and other neighboring markets, this will make the sector of intensive and export-oriented agribusiness particularly attractive.
Great job has been done specifically for China. Practically, all the barriers for trade between our countries have been regulated. Last week, a meeting was held with the Premier of the State Council of China, Li Keqiang in Sochi, and we also agreed that the last remaining trade barriers will be regulated and removed as early as 2018. This opens a very large market and today products that are produced in Kazakhstan — agricultural, organic products are demanded in China.
Fourth, Kazakhstan today is becoming investment-attractive for the development of infrastructure, logistics, transport and related services.
Over the past three years, we have carried out large-scale construction of infrastructure and created a short and economically feasible transport and logistics "leg" to enter the key world markets.
The construction of almost 3 thousand kilometers of the Kazakhstan section of the "Western Europe - Western China" International Transit Corridor has been completed, which will shorten the time of cargo transportation from the port of Lianyungang in China to St. Petersburg in Russia to 10 days.
A new "Kazakhstan - Turkmenistan - Iran" railroad corridor with a total length of about 900 km has been constructed to connect the Central Asian countries with the Persian Gulf and the Bandar Abbas port in the south of Iran.
We had built a "Khorgos - Eastern Gate" dry port on the border with China. This is the first land port in Kazakhstan and the largest logistics park in Central Asia.
The Aktau port of the Caspian Sea, west Kazakhstan,was expanded and modernized. A new Kuryk portwith a system of new ferry complexes was built. Such measures will increase the loading capacity of Kazakhstan's ports to 25 million tons a year.
These steps remove infrastructure constraints, shorten cargo transportation time from north to south and from east to west and are profitable for business!
Our strategic goal is to make Kazakhstan a major transport and logistics hub in Central Asia.
In the nearest two or three years (by 2020), the Government plans to increase its traffic in transit to 2 million containers and receive revenues from transit up to $5 billion.
All transport and logistics infrastructure of Kazakhstan and our Nurly Zhol state program are associated with the Chinese mega-projects on creating the "Silk Road Economic Belt" and "One Belt — One Road", covering the greater part of Eurasia.
We invite investors to contribute in transport and logistics, to grow and earn with us!
Fifth, the second five-year plan of Innovative-Industrial Development Program is being implemented in the country. Industrial enterprises of Kazakhstan have the opportunity to introduce advanced technologies, elements of Industry 4.0, automation and robotic production.
This year, together with the German partners — the Fraunhofer Institute for Applied Research, we assessed the readiness of 500 enterprises of the processing and mining sectors for such modernization and prepared a roadmap for technological upgrade and digitization of the basic sectors of the economy.
Before adopting the Third Modernization Program, we somehow restrained technological processes at the large enterprises. But today we see that if we want to grow at the pace which allows reaching the world’s 30 most developed countries, we need to increase the competitiveness of our enterprises, increase the labor productivity.
Of course, when we talk about this program, in no case we give up the advantages of the oil and gas sector given us by the God. We are also conducting a large work. When the prices for the basic raw material fell, anyway, it was necessary to invest in the fields, in any case, it is necessary to extract and sell the production. But here, the renovation, modernization plays a significant role. Therefore, we have done a huge job with all the our backbone enterprises, with all the enterprises of our oil and gas sector. And today, each of them has its own program with the aim to complete this modernization by 2025.
Just yesterday, during the meeting of the Government we had adopted the “Digital Kazakhstan” state program which is submitted for consideration to the Head of State. A large presentation with the participation of experts from all over the country took place in September.
Sixth, when we talk about Kazakhstan, we always keep in mind what kind of market you will receive if you invest in Kazakhstan. Firstly, it is the Eurasian Economic Union, of course. We are the founder and member of the Eurasian Economic Union, the volume of which is almost $4 billion with the population of 180 million people. Also, China with its huge market is near. In addition, there are India, Iran, Pakistan, which also have a great potential.
Seventh, we offer investors a completely new mechanism — the Astana International Finance Center.
Today we made a separate panel session for it.
Its main goal is to stimulate innovative activities and create conditions for attracting investments.
We created the finance center as a modern financial tool for integration with international exchanges. For its participants we offer concessional tax, visa and labor regimes.
The AIFC will operate in accordance with principles and norms of British law and with the court procedures carried out in English. The International Arbitration Center will operate on its territory in order to settle disputes.
It is of fundamental importance that from January 1, 2018, this Arbitration Center will operate under the extraterritoriality principle. Any investor can apply there regardless of the place of implementation of a project in the territory of the country.
Only few countries in the world can offer such financial services!
Eighth, the second large-scale "wave" of privatization, which is being conducted in Kazakhstan, gives great opportunities for investors.
The Government is implementing a policy of denationalizing the economy. About 900 companies (902) will move to a competitive environment.
The most attractive ones are 65 top companies of state property and quasi-public sector (57 companies of national holding companies).
I invite you to take part in the privatization.
I believe this is the most advantageous time for investors.
We also made a separate session for this topic.
Dear Ladies Gentlemen!
A while later you are going to have specialized “round tables” and briefings where you can have detailed talks with members of the Kazakh Government about issues of your concern.
I am convinced that the measures and projects we propose could be of interest and advantage for international business.
In order to successfully implement our plans we needto attract new investments.
We already have a foundation to fulfill this task.
Today, according to the reports of PriceWaterhouseCoopers and the World Bank Kazakhstan takes 18th place among 189 countries on the tax climate level.
In addition, Kazakhstan takes 36th place on a strong note among 190 countries in the World Bank’s Doing Business. We have progressed on all 10 indicators of the rating. We are the first on “Protection of minority investors” indicator and sixth place on “Enforcing contracts”. We have set a goal to join the 20 best countries of Doing Business ranking in the near future.
To this end, in 2018 we will prepare a new, 7th package of legislative amendments to improve conditions for businesses at the national and subnational levels.
At the same time, we understand that in the conditions of increased global competition for investment, our country has no choice but toactively fight for each investor.
And we are ready for this!
Today the Government of Kazakhstan declares its commitment to the policy of creating the most favorable conditions for investors!
If you ask me what the Government has done to improve the investment climate, I can say with certainty that there are concrete solutions and you can rely on them!
I will focus on the main ones.
In order to stimulate investment inflow, we have developed a new national investment strategy and started to implement it. World bank specialists and other international experts took part in its development.
A national company destined to attract investments called Kazakh Invest, with a network of foreign and regional structures, has been established. It will act as a "single negotiator" for foreign investors on behalf of the Government.
In addition, we will appoint special advisors of Ambassadors on investments in the key embassies of Kazakhstan. All of them will be available to you!
A special export strategy has been developed, aimed at removing barriers, developing external and internal infrastructure to support export producers. Your partner in this regard is the new national company "Kazakh Export".
We have radically changed the legislation in the field of entrepreneurship and investment in two important areas.
The first is a frontal cost reduction for business and the deregulation reform, primarily in energy, transport, logistics and housing and communal services. We reduced the requirements for the inspections of small and medium businesses almost by 60%. The number of licenses and permits has been reduced by more than 3 times. Planned inspections of tax authorities have been reduced by 40%
The second direction is the reduction of red-tape and the increase of electronic public services through the E-government web portal.
The Government has drafted and submitted to the Parliament a draft of the new Tax Code, philosophy of which is aimed at protecting the interests of a conscientious taxpayer and encouraging subsoil users. All ambiguities and inaccuracies will be interpreted in favor of taxpayers.
In addition, a new code on subsoil and subsoil use, based on the principle of "first come, first served", was developed. It will introduce an international system for calculating reserves and provide free access to geological information. The measures taken will shorten the time for granting subsoil use rights from 18 months to 10 days for solid minerals.
A new Customs Code has been prepared, designed to provide a significant impetus to business development. The priority is placed on the electronic form of filing declarations. As a result, the time of release of goods will be reduced by six times, to 4 hours.
A draft law has been developed that improves the regulation of free economic and industrial zones.
All these important for investment laws have already been discussed in the Majilis, and after consideration in the Senate will soon be submitted for signature to the Head of State. We plan that all of them will come into effect starting from 2018.
The Government recognizes that in many respects the investment climate depends on the actions of local authorities. Therefore, from this year we have introduced a new rating on assessing the regions for ease of doing business. Tomorrow the Head of State will award the akim who won the first place.
We have liberalized our approaches to attract foreign labor. This is an important issue. All of you, who have worked in Kazakhstan, that this issue have been under discussions with the Government for a long time. We have said that it s necessary to contain the share of Kazakhstani participation when employing for a job. But today we can say that during the years of Independence, Kazakhstan prepared workers who can satisfy your needs. In this regard, we give the full right, we ourselves are interested in the fact that highly qualified specialists come to us, and they also train our citizens, instill skills of work on the most complicated technologies that will come with your investments. That is, we need cadres for the professions of a new generation.
A big issue of concern for all investors is public-private partnership. We have simplified all procedures for project planning.
We have approved standard bidding documents in the fields of education, health, sports, housing, agriculture, environmental protection, energy and transport. You can get acquainted with all the projects, choose one and start the work.
We have also optimized the examination of draft contracts.
By the way, today, our investment forum will be marked by signing of a memorandum on the Big Almaty Ring Road project.
I want to congratulate our Turkish and Korean partners. The process has started! This is the "first fruit" within the framework of the updated PPP mechanism and a good signal for all investors.
Dear Ladies and Gentlemen!
The government of Kazakhstan has always followed and will follow international principles and standards for working with investors.
The key points of our work are ensuring the inviolability of private property, the rule of law.
Kazakhstan was and remains an open country. We joined the Investment Committee of the OECD.
Today I would like to emphasize the Government's determination to create not just good, but the best conditions for business.
First, we will strengthen consulting services for investors. The response for each of your requests to the state and local executive bodies will be provided within ten working days in English.
Second, we will gradually start providing public services to foreign investors in English starting in 2020.
Public service centers, state clinics, schools, pre-school education organizations, migration and tax authorities will specially recruit employees with knowledge of English.
Third, all key regulatory and legal acts for investors will also be published in English on the websites of the ministries of justice, foreign affairs and the website of the national company "Kazakh Invest".
Fourth, we will continue improving the conditions for entry into the country for foreign investors, primarily the processes of introducing an electronic visa, crossing borders, migration accounting and security issues.
Each authorized body will conduct the necessary works on all these four areas.
I hope that today's event will promote close cooperation and highlight new opportunities and prospects for business partnerships.
We are ready to promptly resolve problems through continuous dialogue with investors. The Council of Foreign Investors, chaired by the President Nursultan Nazarbayev, is operating to face strategic issues at the highest level.
At the level of the Government, we are ready for a constant dialogue through the Council on improving the investment climate and the work of the European Business Association of Kazakhstan.
The Investment Ombudsman for the protection of the rights of foreign investors is also available to you.
The Republic of Kazakhstan has already proved its reputation among investors as a reliable business partner.
Over the past 10 years alone, about $ 250 billion of foreign direct investment in various sectors of the economy has been attracted.
We are grateful to every investor who came to Kazakhstan to implement projects. We hope that their example and our conversation today will inspire you to reach new business heights in Kazakhstan!
Thank you for your attention.