#Kazakhstan – Statement by the head of state at the final meeting of the State Commission on the state of emergency
Dear participants of the meeting! The last two months have not been easy for our country. The crisis has not yet been completely overcome, reports Astana Times
However, the peak of the epidemic is over.
The state emergency commission has carried out extensive work.
Approximately 500 decisions have been made and implemented in order to protect the health of the population, increase their income and support the business.
Now, the emergency commission will be transformed into a state commission for the restoration of economic growth.
The state of emergency ended today throughout the country.
However, in some regions the spread of the epidemic is not slowing.
The epidemic has not completely disappeared. A pandemic is still dangerous to public health.
Therefore, quarantine restrictions will be lifted gradually as the situation in each region improves.
Nevertheless, many areas are beginning to recover.
Today, more than 1.1 million people have already returned to work.
From today, many stores will open across the country, the work of beauty salons, educational centres and other facilities will resume.
Parks will open.
Air transportation will resume for passengers.
Earlier, airports opened in 6 cities. Now 7 more cities will join them.
Many restrictions have been lifted.
However, it is important to take precautions in everyday life.
The government needs to develop and implement new sanitary rules. Small, medium and large companies must operate in accordance with the new rules.
Adhering to social distancing and wearing a mask in public should be the norm.
Restrictions on transportation between regions remain.
Public transport will operate at half load.
Passengers are required to wear a mask.
The number of individuals walking on the street should not exceed 3 people.
50 percent of government employees will continue to work remotely.
The management of private businesses must decide themselves how many employees should go to work.
It would be best if most people stay home. This is, first and foremost, a matter of people’s safety.
Social distancing and strict sanitation must be respected in the workplace.
The second wave of the epidemic may begin. Therefore, our well-being depends on our own responsibility.
If the epidemic recurs, the Government will develop a clear plan of action.
As you know, on my instructions, two packages of anti-crisis measures are being implemented in the country.
More than 4.5 million people have received financial assistance in the amount of 42,500 tenge.
Food and household items are being distributed to more than 1 million people.
Utility rates have been reduced.
Those who are most in need will receive extra help to pay for it.
Loan repayment deadlines of approximately 2 million people have been postponed.
Significant funds have been allocated for affordable lending, spring sowing campaign, and for creation and preservation of jobs.
The tax burden has been reduced for more than 700,000 companies and entrepreneurs.
Therefore, they managed to save around 1 trillion tenge.
We must also acknowledge that there were flaws in this work.
It is true that the epidemic has spread and economic problems have escalated.
Therefore, we took urgent measures in a timely manner.
Many issues have been resolved through the active participation of members of the public.
This was an important step in the implementation of the “listening state” concept.
The coronavirus pandemic has caused a global recession.
This can even lead to a protracted economic crisis.
Protectionism is increasing everywhere.
Entire sectors of the economy are in stagnation.
More than 400 million companies are on the verge of bankruptcy.
Incomes of about half of the world’s working-age population has declined.
Experts predict that the global economy will fall to a level that has not been seen in the last 100 years.
Despite this situation, I want to say that our country has a number of advantages.
We have enough financial reserves, and the size of public debt is in line with our capabilities.
Most importantly, we know where to spend resources to ensure employment and increase economic efficiency in the new environment.
Let me now focus on the development priorities during and after the crisis.
The key is to protect the life and health of all citizens. Increase in citizens’ income.
Support and business development. Improve the system of education and science.
We need to resolve the following issues in the near future.
First. Improving the self-sufficiency of the Kazakh economy.
To achieve this, new redistributions in industry should be developed on the basis of the existing substantial raw material base.
We will have to take a fresh look at the future structure of the Kazakh economy and define the role of each of its main sectors: industry, energy, agriculture, service. In other words, there is an urgent need to build a new economic structure.
Obviously, significant reforms will be required by the energy sector. After the crisis, it will not be the same. In the medium term, a move towards green energy is an urgent need.
Our approach to industrialisation will also require a revision – it is necessary to identify real opportunities in the export and domestic markets, outline achievable goals, instruments and move forward.
The competent use of public procurement and the procurement of the quasi-public sector should be considered as a means of restoring economic activity.
A special public procurement procedure aimed at supporting domestic producers will continue until August of this year.
The maximum use of domestic materials and equipment will be recorded as a priority condition for business development.
According to infrastructure programmes, it is necessary to increase the current level of localisation from 40 to 60-70%.
Assessment of the work of the Government, governors and heads of quasi-public sector companies will be based mainly on this indicator.
The current situation has clearly confirmed the well-known truth: food security is a key element of the security of the state as a whole.
Therefore, we will continue to provide maximum support to farmers.
In addition to the forward purchases already underway, financing mechanisms will be expanded through the introduction of off-take contracts and debt restructuring of KazAgro loans.
In Kazakhstan, there are approximately 1.7 million personal subsidiary plots.
However, their products are not officially sold through retail outlets and do not go to processing enterprises.
The state does not receive taxes from them; those employed in such farms are essentially not socially protected.
I entrust the Government together with the National Entrepreneurs Chamber “Atameken” to launch a pilot project in several regions on the development of a cooperation chain in the village “from the field to shop shelves”.
Then it is possible to start scaling up the project and by the middle of 2021 develop a full-fledged Programme.
During the implementation of this programme, preferential micro-crediting will be applied at a rate of 6% per annum through the KazAgro line using the guarantee instruments of the “Damu” Fund.
It is also necessary to establish a system of constant procurement and marketing, launch training and increase the agro-competencies of the participants.
All this will increase the income of about 2 million villagers, increase the load of domestic agricultural enterprises from 53% to 70% and reduce the import of socially significant products.
Second. We are allocating around 1 trillion tenge for the implementation of the Employment Roadmap.
This is a significant amount. It can also be used for lending to small businesses.
This should be under the control of the competent authorities and fully used expediently.
In this difficult period, it is necessary to create new jobs through funded projects.
It is necessary to attract as many workers as possible.
Initiatives must be undertaken that continually bring economic benefits or develop human capital.
In this regard, schools, hospitals and other facilities should be built and modernised.
It is increasingly important not to allow the same objects in each region to have exceedingly varying costs. Unfortunately, this situation is very common in our country.
Following the implementation of the projects, the analysis of their socio-economic efficiency will be carried out.
Third. A powerful incentive for economic development, employment growth and social support should be the construction of affordable housing.
The 7-20-25 programme initiated by the Leader of the Nation gave a great impetus to mortgage lending and housing construction.
To solve the waiting list issues, I instruct to launch a new project on providing credit housing in the form of “5-10-20”. For these purposes, we will allocate 390 billion tenge for these purposes, within the framework of the anti-crisis funds.
This year, record volumes of construction are planned in the country – 15 million square meters, or 150,000 apartments and houses.
It is important to continue work to improve the living conditions of our citizens. In fact, this is one of the strategic directions of the Government. To do this, it is necessary to modernise the institutional structure.
By the end of the year, the government should create, on the basis of “Zhilstroysberbank”, a full-fledged development and support institution – Otbasy Bank, which will centrally record, set up and distribute housing.
A continuation of systemic transformations in this area will be the use by our citizens of part of their pension savings for the purpose of improving housing conditions.
I previously gave such an instruction, but in connection with the state of emergency, the discussion dragged on. It’s time to make a decision. The Government must decide on its approach by July 1.
Fourth. I believe that in the name of social justice, the time has come to work out the issue of introducing a progressive scale of individual income tax in respect of wages and other types of income.
The point of the progressive scale is that citizens with low salaries will pay less than today, while for high earners the amount of tax paid will increase.
Our main goal is to remove the most substantial, non-transparent lower wage segment from the “shadow”. If the tax rate for them is reduced, there will be less incentive to pay cash in the envelope.
In the face of declining household incomes, it is important to continue monitoring the state of the consumer lending market in order to prevent an increase in the debt burden of citizens.
The financial market regulatory agency should consider rehabilitating borrowers with problem loans.
Approaches to calculating interest rates on loans depending on the type of borrower and type of product should also be reviewed.
To protect the interests of citizens, control over non-bank credit organisations will be strengthened, and licensing of microfinance activities will be introduced from next year.
I want to focus on another aspect of our social policy.
The condition for receiving a new social payment was the payment of a single aggregate payment. More than 40% of its recipients are people who have paid the single aggregate payment for the first time.
These are precisely the citizens who require genuine state assistance. They need to be involved as much as possible in the economy.
These people must not be allowed to go into the shadow again, and left alone with their problems.
After all, state support, social protection in the event of unfavourable conditions, and a decent pension in the future can be expected primarily by those who work officially and pay taxes.
Therefore, it is precisely such citizens, along with temporarily unemployed, that should become the subject of close attention of the Government and governors.
As part of a market economy, everyone can temporarily lose their jobs, in connection with which the Government should as much as possible simplify registration on the online labour exchange site, shorten procedures and time for obtaining the unemployment status and related benefits.
Fifth. Support for national business.
In the face of falling demand and a decrease in the market value of assets and collaterals, it is extremely important to use the “Damu” Fund loan guarantee tool.
Fund guarantees will be extended to loans issued under the National Bank’s working capital lending programme.
Its volume is 600 billion tenge and will be increased if necessary.
To expand lending to the economy, the Agency for Regulation and Development of the Financial Market took measures to weaken prudential standards and reduce pressure on liquidity.
This enabled the release of approximately 600 billion tenge in the banking sector, which should be directed to the country’s economy.
An additional set of temporary prudential measures should be developed that expand the ability of banks to lend to the economy.
Special attention should be paid to micro and small business. Their ability to fully use standard banking products is very limited.
In this regard, I instruct to provide special measures for small businesses within the framework of the Business Roadmap programme.
The Government and the National Entrepreneurs Chamber “Atameken” should determine the amount of funding for this area.
Another measure of business support will be the expansion of the list of industries to which banks and other financial organisations provide deferred payments on loans.
This should include trade, manufacturing, transportation and warehousing, accommodation and food, information and communications, education and health.
Creating a diversified economy with a focus on manufacturing remains our priority.
To implement long-term projects in this sector, it is necessary to provide additional capitalisation of the Development Bank of Kazakhstan.
In addition, at the expense of funds raised under the extended obligations of manufacturers, the Industrial Development Fund can be created. Its work will be aimed at providing affordable lending to breakthrough manufacturing enterprises at a rate of no more than 3 percent.
Sixth. In terms of increased competition for foreign capital, we should switch to working directly with each capital holder.
It is necessary to develop individual support measures for each investor based on priority and potential effect on the economy as a whole.
As part of this important work, the Government should ensure a stability regime for all investment legislation for strategic investors in priority sectors.
It is necessary to intensify the use of the potential of the Astana International Financial Centre (AIFC) to attract investment and develop the stock market.
This is especially important in light of the upcoming privatisation of state assets.
Access should also be made to Kazakh entrepreneurs to take advantage of the English law and the AIFC arbitration in resolving business disputes.
It is necessary to begin work on the phased transfer of individual structures belonging to national companies from foreign jurisdictions to the AIFC.
We will not be able to achieve the trust of foreign investors if our own companies choose foreign jurisdictions.
The Government, the Ministry of Foreign Affairs and foreign representations should strengthen the promotion of the AIFC investment tax residency programme.
The administration of the AIFC is working on a new Strategy until 2025.
In the current difficult conditions, the confidence of investors and businesses in the national currency and monetary policy is playing a key role.
In this regard, it is extremely important to reduce speculative attacks on the national currency. This is the task of the National Bank and the Agency for Regulation of the Financial Market.
Seventh. Unfortunately, just as in the rest of the world, we will not be able to save all enterprises and all jobs, and ensure the stability of each business.
Therefore, it is important at the normative level to recognise the introduction of the state of emergency as a force majeure circumstance for the sectors of the economy that are most affected by the introduction of the state of emergency.
In this case, when representatives of individual entrepreneurs and small businesses apply to court, a state of emergency should be recognised as a force majeure situation.
It is also important during this difficult period to maintain the economic activity of existing entrepreneurs, to protect private property and competition.
In order to prevent pressure from unscrupulous creditors, I instruct to suspend the initiation of bankruptcy proceedings against legal entities and individual entrepreneurs until October 1 of this year.
Furthermore. As a result of past crises, a significant number of non-performing assets that have been excluded from economic turnover have accumulated on the balance sheets of banks.
Banking structures need to develop substantive plans for the sale of non-performing assets, while strengthening monitoring and evaluation of the responsible bank personnel.
The Agency for Regulation and Development of the Financial Market, as part of a risk-based supervision, needs to strengthen monitoring and control of banks with stressed assets.
The systemic solution is to create a civilised market for non-performing assets. A simple and working mechanism for securitisation and insurance should be created.
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To implement these and other measures to support citizens and develop business, a comprehensive plan for the restoration of economic growth is being developed.
This plan will be approved soon.
State bodies should carefully consider all methods of its implementation.
Nor should they allow their inappropriate actions to undermine the importance of these measures.
How we overcome the difficult period of the crisis, and how we adapt the country and the economy to further development depends on this.
We clearly see that the crisis has fundamentally changed the situation in the world and in the national economy.
The current situation and the factors of upcoming changes should be taken into account in the new version of the Strategic Development Plan until 2025.
The plan should include institutional and structural reforms that enhance economic and public administration.
The current crisis has shown the world how important the issues of the social sphere are: medicine, education, social protection.
We need fundamental transformations aimed at improving the quality of the health care system, full-fledged technological re-equipment of medical facilities, and increasing the competencies of medical personnel.
The system needs to be adapted to quickly respond to emergencies of any nature.
Approaches should be developed for infection control of the population, introduction of telemedicine and remote diagnostics.
It is necessary to radically strengthen the national sanitary and epidemiological service.
It looks like COVID-19 and similar viruses are not a one-time occurrence. Therefore, we should be constantly prepared not only from a practical, but also from a scientific perspective.
The Government should formulate a Biosafety Council with the involvement of reputable scientists and experts.
Education should be made much more flexible, protocols and methods for teaching children and students remotely should be developed, and the real digitisation of all educational institutions in the country should be completed.
It is necessary to spearhead the introduction of modern remote technologies. It is necessary to revise the content of educational programs, make them accessible and interactive.
The training of teachers themselves should be subject to new requirements.
The most important area of the country’s Strategic Plan will be the transformation of the public administration system.
New approaches will be introduced, including in accordance with the post-pandemic rethinking of the situation.
The successfully implemented remote work format has shown the relevance and adequacy of the use of modern technologies in making important government decisions.
As a currently well-established innovation, I propose to conduct meetings and sessions of the Government, ministries, and governors’ offices in this remote format as much as possible.
Unnecessary procedures, approvals, meetings, waste of time and money should be eliminated. This practice has become obsolete. Decisions need to be made quickly, and, most importantly, implemented.
It is important to maintain a certain degree of initiative, taking responsibility on yourself, including in the post-virus period.
We need an updated, efficient and compact state apparatus that quickly and efficiently makes decisions in response to a changing situation.
The reform of state development institutions will continue.
As part of the implementation of my Address to the people, the reform of their structure, the clarification of goals and objectives, has begun. We must fully resolve issues of duplication of a number of functions, issues of further privatisation, access of domestic entrepreneurs to the procurement of the quasi-public sector.
It is necessary to rethink the essence of the concept of e-government, fully crate an online system for obtaining consultations, certificates, submitting applications, and make the “egov” language simple and understandable for the population.
Communication between businesses and the state will completely switch to the digital format and become contactless.
To achieve this, the digitisation of the entire process of obtaining public services and support measures will be completed.
It is important to give a new impetus to all the processes of digitisation of the economy and society.
On May 1, the Turkestan region was flooded due to the breaking of the dam of the Sardoba reservoir in the Republic of Uzbekistan.
This is a man-made emergency.
More than 5,000 houses in 5 villages of the Maktaaral district were flooded.
There was also a risk of flooding in 9 settlements.
Thanks to urgent measures, we prevented the further spread of the flood.
Currently, work is underway to eliminate the effects of the flooding.
The main attention is paid to maintaining public order and property of the population.
We will take the necessary measures to restore the daily life of the area.
Overall, new homes will be built by the autumn.
Each resident affected by the flood will be paid compensation in the amount of 100,000 tenge.
Livestock losses and flood damage to farmland will be compensated.
Overall, not a single affected resident will be left without help. We will help them.
I am grateful to all the people who have provided help in the affected area.
The mayor’s office, Ministry of Defence, the National Guard, the emergency committee departments and the police are carrying out work in the affected area.
It should be noted that representatives of large domestic and foreign businesses have also provided significant assistance to the affected population.
Such citizens can be called true patriots of our people.
Thank you all!
And this time, our citizens managed to show an example of unity.
When we are together, we can endure all difficulties.
We can complete any task.
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We are going through a difficult period.
The unity of our people gives us strength to move forward.
The weight lifted by common efforts is light.
We had gone through many tests before. I hope that we will overcome this difficulty as well.
This is the translation of the official statement delivered by Kazakh President Kassym-Jomart Tokayev on 11 May at the government commission meeting. The statement is available on Akorda.kz website.