President Nazarbayev's State of the Nation Address Is chock full of initiatives

24 января 2014, 16:31

Kazakhstan needs to privatize many of its government-owned companies and create a blueprint for the long-term development of its battered financial sector, President Nursultan Nazarbayev said in his recent State of the Nation Address.

The speech, whose theme was the steps Kazakhstan needs to take to become one of the world's 30 most developed countries, included dozens of initiatives. Some were controversial, and a few were sweeping.

In the “controversial” category was the President's call for Kazakhstan to use genetically modified crops to increase its agricultural production. In the “sweeping” category was that the country consider introducing universal health-care insurance.

I've been listening to or reading President Nazarbayev's State of the Nation addresses seven years, and I don't remember any with so many specific proposals. If you'd like to read his full address in English, here is the link.

Kazakhstan's President Nursultan Nazarbayev. Photo courtesy of

Kazakhstan's President Nursultan Nazarbayev. Photo courtesy of

Here are some of his proposals, by category:

Agriculture – Kazakhstan needs to introduce crops that have been genetically modified to thrive in drought, the President said.

The country has a growing water shortage, partly because China is using more and more of the water in rivers that flow to Kazakhstan. China is developing its less populated western provinces. This requires water for its growing western population and for increased agricultural and manufacturing in the area.  

Kazakhstan's leaders are so concerned about water that the government has formed an agency to address the issue.

In addition to introducing genetically modified crops, President Nazarbayev called for a shift to crops that require less water. Kazakhstan is one of the world's biggest wheat growers, but crops such as vegetables, oil seeds and forage require less water, the President noted.

Photo courtesy of

Photo courtesy of

He also said priority in leasing government land to farmers should go to those who “introduce new technologies, continually improve productivity and perform on the basis of the best international standards.”

The President also said that “we need a set of measures to drive the efficient use of agrochemicals.” Visiting agricultural experts have noticed that most of Kazakhstan's farmers are so averse to herbicides, for example, that the majority of the vegetation in many wheat fields is not wheat but weeds.

Banking – President Nazarbayev ordered government agencies that deal with financial matters and the National Bank of Kazakhstan to develop “a comprehensive financial-sector development program” through 2030. He wants to see the plan by June 1 of this year.

Kazakhstan's banking system nearly collapsed during the global financial crisis of 2008 and 2009. The government had to take over BTA, Alliance Bank and Temirbank to prevent them from going under. It also had to take stakes in other big banks, such as Kazkommertsbank and Halyk Bank, to prevent them from teetering on insolvency.

Photo courtesy of

Photo courtesy of

A high percentage of bad loans continues to limit the ability of some banks – BTA in particular – to issue new loans to rev up the economy.

President Nazarbayev has on many occasions expressed impatience with the slow progress of the financial sector's rebound.

Rare-earth metals – The President called for a major effort to develop this sector, which he noted is important “for knowledge-based industries – electronics, laser technology, telecommunications and medical equipment.”

Kazakhstan is one of the top 10 countries in rare-earth-mineral deposits.

China has begun limiting exports of its rare-earth metals to countries such as the United States and Japan, which means Kazakhstan would have ready-made markets for exports in the sector.

Transportation – Kazakhstan needs to develop overseas logistics centers in countries with seaports to help move its products faster and more efficiently to end markets, President Nazarbayev said.

One of Kazakhstan's first overseas-logistics initiatives was building a grain storage and export terminal in Iran.

Presumably, the President's call for overseas logistics centers involves storage and transshipment facilities for natural resources and manufactured goods as well as agricultural products.

Photo courtesy of

Photo courtesy of

Energy – Kazakhstan should become an international oil-and-gas exploration and development power, locating and developing fields not only in this country but abroad, the President said.

This would require a major increase in the country's home-grown exploration and development expertise. International companies have done much of the petroleum exploration and development here.

Kazakhstan needs to begin introducing electric cars and the infrastructure – such as charging stations – to make them a viable alternative to gasoline-powered cars, President Nazarbayev said.

It also needs to begin converting its buses and other public transportation to cleaner-burning fuels, he said.

Photo courtesy of

Photo courtesy of

Expo 2017 in Astana should be a catalyst for creating a national center for studying and generating  practical applications for “future energy,” the President said. 

He said Nazarbayev University, which already has an energy institute, should lead the center.

The Expo's theme is sustainable energy of the future.

Also on the energy front, the President repeated his longtime calls for Kazakhstan to build a fourth oil refinery and begin building nuclear power plants, which can be fueled by the country's abundant supply of uranium.

The refinery is necessary because Kazakhstan, with huge oil and gas resources, often faces shortages of gasoline and diesel fuel.

Super Cities – The President called for Almaty, Astana, Shyment and Aktobe to become even larger so they can become even more important engines of Kazakhstan's economic growth.

The president said these “agglomerations” would become “the foundation of the knowledge-based economy of Kazakhstan.”

“They should become centers of science and investment, attract talent and provide high-quality education, health care, social and cultural services,” he said.    

Astana city. Photo courtesy of

Astana city. Photo courtesy of 

Privatization – President Nazarbayev said he wants government-owned companies to be privatized where possible.

The first step would be for the government and the Samruk Kazyna national wealth fund to identify companies that could become private. The President said he wants officials to develop a comprehensive privatization program for 2014 to 2016 before the end of this year.

An example of a government-owned corporation that could be privatized is KazBeef, which is charged with developing a world-class cattle industry in Kazakhstan.

An intriguing question is whether Samruk Kazyna, which owns all or part of more than 400 companies, would sell its stakes in powerful non-government enterprises under the privatization program. For example, Samruk Kazyna owns about a fifth of the copper giant Kazakhmys. 

Health care – President Nazarbayev hedged his call for universal health-care insurance by saying that the government should “consider” implementing it rather than saying it “must” implement it.

But the fact that he included it in his speech indicates he believes it needs to be done.

He said government, employers and employees should all shoulder some of the cost of health insurance.

His use of the term “compulsory health insurance” in his address underscored his notion that everyone should help pay for it – except perhaps the very poorest segment of the population.

Other countries' experience indicates that universal health care takes a long time to implement, so this proposal may be some years from becoming a reality.

Photo courtesy of

Photo courtesy of

The President also said he wants health-care workers to get a 28 percent salary increase by July 1, 2015.

He said he wants to see life expectancy in Kazakhstan increase to 80 in the near future from today's figure of 75 years.

And he wants Kazakhstan's medical care developed to the point that the country becomes a medical-tourism destination.

Kazakhstan has been spending an increasing amount of government revenue in recent years on building hospitals and other care facilities, buying cutting-edge medical equipment and training health-care professionals.

Science – Kazakhstan needs to become a science powerhouse to develop a knowledge-based economy, President Nazarbayev said.

This would start with a blueprint for increasing science-research spending, he said.

The effort also needs to include new legislation on “venture financing, intellectual-property protection, research and innovation support, as well as commercialization of research,” the President said. He wants the government to submit the legislation to Parliament before September 1.

Education – The President called for the quality of education in Kazakhstan's schools to reach the level of that in the country's Nazarbayev Intellectual Schools.

He gave no time frame, but it will be a daunting challenge. The intellectual schools are a handful of magnet schools that attract the best teachers and best students in the country.

Another of the President's education mandates was that all high school graduates be able to speak Kazakh, Russian and English.

Within three years Kazkahstan needs to begin introducing a dual-track educational system, the President said. One track would be professional education, the other technical.

Photo courtesy of

Photo courtesy of

Kazakhstan has been trying to revive the vocational training system that was a mainstay of Soviet times, but has had limited success so far.

The President said Kazakhstan needs to continue moving toward giving its universities academic and administrative autonomy, rather than having the Ministry of Education determine programs, curriculum and other standards. Currently, only Nazarbayev University has autonomy – under a special act of Parliament.

President Nazarbayev also asked the government to provide for a 25 percent increase in scholarships for university students by January 1, 2016. It wasn't immediately clear whether he was talking about a 25 percent increase in the number of scholarships or the total amount of money devoted to scholarships.

The President said the country needs to continue developing Kazakh so it becomes “the language of science, knowledge and the Internet.” He noted there was a 10 percent surge between 2012 and 2013 in the number of non-Kazakhs in the country who can speak Kazakh.

Helping the Disabled – Kazakhstan “must become a barrier-free zone” for the disabled, the President said. He was referring to the elimination of all physical barriers to the movement of the disabled.

The President also called on businesses to hire more disabled people. In fact, he said, a “special quota” of disabled employees should be considered. It wasn't immediately clear whether he was suggesting that businesses introduce a quota voluntarily or that the government come up with one.  

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