Unofficial translation
Footnote. The heading as amended by the Resolution of the Government of the Republic of Kazakhstan dated 30.12.2021 No. 965.The Government of the Republic of Kazakhstan HEREBY RESOLVES:
Footnote. The preamble as amended by the Resolution of the Government of the Republic of Kazakhstan dated 30.12.2021 No. 965.1. to approve the attached Concept of industrial -innovative development of the Republic of Kazakhstan for 2021 – 2025 (hereinafter referred to as the Концепция).
Footnote. Paragraph 1 as amended by the Resolution of the Government of the Republic of Kazakhstan dated 30.12.2021 No. 965.2. Central state and local executive bodies of the Republic of Kazakhstan and organizations (on agreement), which are responsible for the implementation of the Concept:
1) to take measures to implement the Concept;
2) to provide information on the implementation of the Concept in the manner and terms established by the Decree of the Government of the Republic of Kazakhstan dated November 29, 2017 No. 790 "On approval of the State Planning System in the Republic of Kazakhstan".
Footnote. Paragraph 2 as amended by the Resolution of the Government of the Republic of Kazakhstan dated 30.12.2021 No. 965.2-1. Control over execution of this Resolution shall be entrusted to the Ministry of Industry and Infrastructural Development of the Republic of Kazakhstan.
Footnote. The Resolution was supplemented by paragraph 2-1 in accordance with the Resolution of the Government dated 30.12.2021 No. 965.3. This Resolution shall enter into force from the date of its signing.
| Prime Minister | |
| of the Republic of Kazakhstan | B. Sagintayev |
| APPROVED Government Decree № 846 of the Republic of Kazakhstan of December 20, 2018 |
Concept of industrial-innovative development of the Republic of Kazakhstan for 2021 – 2025
Footnote. The Concept as amended by the Resolution of the Government of the Republic of Kazakhstan dated 30.12.2021 No. 965.
Passport
1. Analysis of the current situation of the industrial-innovative development in the Republic of Kazakhstan
2. Review of international experience of state policy in the field of the industrial-innovative development
3. Vision of the industrial-innovative development
4. Main principles and approaches of development
5. Target indicators and expected results
6. Action Plan for implementation of the Concept of the industrial-innovative development of the Republic of Kazakhstan for 2021 – 2025
Passport
Name | Concept of industrial-innovative development of the Republic of Kazakhstan for 2021 – 2025 |
Grounds for development |
1. Decree of the President of the Republic of Kazakhstan dated February 26, 2021 No. 521 "On Amendments to the Decree of the President of the Republic of Kazakhstan dated February 15, 2018 No. 636" On the approval of the National Development Plan of the Republic of Kazakhstan until 2025 and the invalidation of some decrees of the President of the Republic of Kazakhstan". |
State body, responsible for the development of the Concept | Ministry of Industry and Infrastructural Development of the Republic of Kazakhstan |
State bodies and organizations, responsible for the implementation of the Concept | Ministry of Industry and Infrastructural Development of the Republic of Kazakhstan, Ministry of Digital Development, Innovations and Aerospace Industry of the Republic of Kazakhstan; Ministry of Agriculture of the Republic of Kazakhstan, Ministry of Labor and Social Protection of Population of the Republic of Kazakhstan, Ministry of Education and Science of the Republic of Kazakhstan, Ministry of Finance of the Republic of Kazakhstan, Ministry of Trade and Integration of the Republic of Kazakhstan, Ministry of National Economy of the Republic of Kazakhstan, Ministry of Energy of the Republic of Kazakhstan, Ministry of Ecology, Geology and Natural Resources of the Republic of Kazakhstan, akimats of regions and Nur-Sultan, Almaty and Shymkent cities, Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan, Baiterek National Managing Holding Joint Stock Company, Development Bank of Kazakhstan Joint Stock Company, "Industrial Development Fund" Joint Stock Company, National Chamber of Entrepreneurs of the Republic of Kazakhstan, "Kazakhstan Center of Industry and Export "QazIndustry" Joint Stock Company, autonomous cluster fund "Park of Innovative Technologies", Republican State Enterprise "National Center for Technology Foresight", Republican State Enterprise "National Center on Complex Processing of Mineral Raw Materials of the Republic of Kazakhstan", National Welfare Fund “Samruk-Kazyna” Joint Stock Company, "Kazyna Capital Management" Joint Stock Company, republican state enterprise"Zhezkazganredmet". |
Implementation period | 2021 – 2025 |
The concept has been developed in order to fulfill the tasks set by the National Development Plan of the Republic of Kazakhstan until 2025. Thus, in order to solve the problem of creating specialized factors and market conditions in the industrial sectors, it is planned to expand the tools of state support measures for manufacturers of the manufacturing industry, including package solutions under an agreement to increase competitiveness.
The practical implementation of the task of expanding opportunities for the growth and development of small and medium-sized businesses (hereinafter referred to as SMEs) will be carried out through measures aimed at increasing the availability of business financing through the expansion and better targeting of programs and government support measures.
1. Analysis of the current situation of the industrial-innovative development in the Republic of Kazakhstan
Since 2010, Kazakhstan has been gradually implementing the policy of the industrial-innovative development, aimed at creating a highly productive and export-oriented manufacturing industry.
During the period of its implementation, the manufacturing industry has become the main driver of industrial growth, and the basic conditions have been laid down to launch the process of economic diversification.
The priorities of the industrial-innovative policy were the development and creation of potentially competitive, including export-oriented industries in the manufacturing sector.
The correctness of the decision chosen by the state in increasing the competitiveness of the manufacturing industry is confirmed by the results of the laid course of industrialization. In 2020, the share of manufacturing in industry increased by 17.2 percentage points (from 31.8% in 2010 to 49% in 2020).
During 2010-2020, industrialization enterprises of the manufacturing industry produced products in the total amount of about 84.7 trillion tenge (during the first five-year period of industrialization - 26 trillion tenge, the second five-year plan - 58.6 trillion tenge), having increased by 3.4 fold from 3. 8 Gross value added (hereinafter - GVA) of the manufacturing industry increased by 3.7 fold from 2.5 trillion tenge in 2010 to 9.2 trillion tenge in 2020. The real growth of GVA of the manufacturing industry in 2010-2020 was provided mainly by traditional sectors: metallurgical industry - 40.3%, non-ferrous metallurgy - 69.1%, food production - 25.0%, production of non-metallic mineral products - 71.4% , chemical industry - 72.5%.
The production of new types of products not previously produced in Kazakhstan has been mastered: freight and passenger cars, electric locomotives, trucks, cars and buses, transformers, X-ray equipment, LED lamps, titanium ingots and slabs, pharmaceutical products and others.
The number of goods produced in Kazakhstan and competitive in foreign markets has increased, including: steam turbines, copper products, radiators, batteries, beverages, confectionery, etc.
Tax deductions from manufacturing enterprises have become one of the main sources of significant stable revenues to the budget over the past 10 years.
In 2020, the manufacturing industry increased tax revenues by 16%, while the mining sector, under the influence of falling stock prices, charged 44% less mandatory payments than in the same period in 2019.
The potential of the manufacturing industry is determined by its investment attractiveness. As a result of the annual positive dynamics of investments in fixed capital of the manufacturing industry since the beginning of the implementation of the policy of the industrial-innovative development, the volume of investments in fixed assets amounted to 8.9 trillion tenge, having increased by 2.6 fold from 413.1 billion tenge in 2010 to 1,077.8 billion tenge in 2020, while the real growth of investments in fixed assets by 1.7 fold (168,3 %).
In 2018, the volume of investments in fixed assets of the manufacturing industry was 1,241.9 billion tenge, having increased by 285.7 billion tenge compared to 2017 in nominal terms due to an increase in investments in the metallurgical industry by 1.3 fold, the production of chemical products in 1.3 fold and of food products by 29.9%.
In 2019, investments in fixed assets of the manufacturing industry were 1,017.1 billion tenge, having decreased by 224.8 billion tenge compared to 2018 in nominal terms due to a reduction in investments in the production of coke and refined products by 66.9%, food products by 31% and other non-metallic mineral products by 6.9%.
In 2020, the volume of investments in fixed capital of the manufacturing industry increased by 4.4% compared to 2019 (decreased by 17.3% compared to 2018) and amounted to 1,077.8 billion tenge.
The main flow of investments in 2020 was directed to the development of enterprises: the metallurgical industry (372 billion tenge or 34.5% of the total investment in the sector), the chemical industry (301.3 billion tenge or 28% of the total investment in the sector), food products (109 billion tenge or 10.1%), coke and refined petroleum products (68 billion tenge or 6.3%), other non-metallic mineral products (67.2 billion tenge or 6,2 %) (picture 1).
picture 1. Dynamics of investments to the basic capital for 2010 – 2020, billion tenge
Source: BNS of the ASPR RK
In total, for the period of 10 years (2010-2020), the gross inflow of foreign direct investment in the manufacturing sector amounted to more than 39.4 billion US dollars, having increased by1.4 fold from 2.2 billion US dollars in 2010 to 3.2 billion US dollars in 2020. Most of all, foreign investors invest in the metallurgical industry and the production of finished metal products, except for machinery and equipment ($32.3 billion or 82% of the total amount of foreign investment), in the production of food products, beverages and tobacco products ($1.9 billion) or 4.8% of the total amount of foreign investment), rubber and plastic products, as well as other non-metallic mineral products ($1.4 billion or 3.6%), computers, electronic and optical products ($1.2 billion or 3.1%) and products of the chemical industry (743.1 million dollars or 1,9 %) (picture 2).
picture 2. Gross inflow of direct investments to Kazakhstan from foreign direct investors, billion US dollars
Source: NB RK
The industry of Kazakhstan focuses mainly on the extraction and export of raw materials. Accordingly, the industry index correlates with world prices for resources, which have been unstable in recent years. A significant portion of manufacturing exports still consists of commodities and is also linked to stock prices.
In order to reduce sensitivity to external shocks, the course of diversification of the manufacturing industry was continued with an emphasis on the production of goods of medium and high added value.
The main priority of the industrial development policy is to bring Kazakh goods to foreign markets by increasing the range of exported goods and increasing the "complexity" of the export basket.
At the end of 2018, the volume of exports of the manufacturing industry increased by 0.6% compared to 2017 and amounted to 15.7 thousand US dollars (picture 3).
In 2019, manufacturing exports amounted to $15.8 billion. At the same time, in the structure of exports of the manufacturing industry, 90% is occupied by five sectors: metallurgical production (63.3%), production of coke and refined petroleum products (11.6%), food production (6.6%), production of chemical products (5 .6%), production of other vehicles (3,1 %).
At the end of 2020, the total volume of exports of goods from Kazakhstan amounted to 46.9 billion US dollars, which is 11.2 billion US dollars less than in 2019.
picture 3. Dynamics of the export of goods of the Republic of Kazakhstan, billion US dollars
Source: BNS of the ASPR RK, SRC of the MF RK
Since 2010, there has been a positive trend in the volume of production of manufacturing goods - from 3.8 trillion tenge in 2010 to 13.2 trillion tenge in 2020 (picture 4).
picture 4. Dynamics of the volume of manufacturing of goods of the Republic of Kazakhstan, trillion tenge
Source: BNS of the ASPR RK
At the end of 2018, production volumes in the manufacturing industry increased by 4.5% compared to 2017 due to an increase in metallurgical production by 2.4%, mechanical engineering by 14.4%, production of coke and refined petroleum products by 9,1%.
In 2019, production volumes in the manufacturing industry increased by 5.8% compared to 2018 due to the growth in production volumes of metallurgical production by 5.5%, mechanical engineering by 24.1%, food products by 3,0 %.
In 2020, production volumes in the manufacturing industry showed a steady growth of 4.1%. The largest contribution to the development of the manufacturing industry was made by such industries as the pharmaceutical industry (the quantum index (hereinafter referred to as the QI) 147.3%), mechanical engineering (QI 116.4%), including the automotive industry (QI 158.3% ), food (QI 103.2%) and metallurgy (QI 102,8 %).
In 2020, in the context of a pandemic, new innovative productions were launched, including the production of a medicine for the treatment of multiple sclerosis, a medicinefor dissolving a dissolution of thrombus in myocardial infarction, insulin for the treatment of diabetes mellitus, drugs for the treatment of rare diseases.
In mechanical engineering, the main increase was achieved at the expense of the automotive sector. At the end of 2020, for the first time, a record was broken for the production of vehicles - 77.4 thousand units (an increase of 20 times in 10 years). At the same time, in 2020, about 73% of new cars sold were of domestic assembly. More than 10% (8122 units) of manufactured products were exported.
An industrial assembly of AVL with a level of localization of up to 30% is being carried out with the prospect of increasing it to 50% or more. In 2020, production increased from 717 to 2096 pieces.
In the light industry, significant growth occurred due to an increase in the production of cotton fabrics by 56.9% up to 22.1 million sq.m., synthetic fabric by 46% up to 88.7 million sq.m., leather shoes by 16.7% up to 1.1 million pairs.
In general, the conducted industrial policy made it possible to launch the diversification of the economy. So, according to the results of 2020, for 10 years of implementing the industrial policy, the gross value added of the manufacturing industry (13.1%) exceeded the indicators of the mining industry (12,5 %).
The actual level of development of the manufacturing industry of the Republic of Kazakhstan is determined through the parameters of manufacturability, geographical distribution and export.
The manufacturing industry is the most heterogeneous of all sectors of the economy. It consists of 24 different industries, differing in the level of capital intensity, labor use, manufacturability, choice of location and consumer nature. In the Industrial Development Report 2020 prepared by UNIDO, Kazakhstan is classified as a country with a developing industrial economy. Most of the value added in the manufacturing industry belongs to the low-tech (14.7%) and medium-tech (23.7%) sectors (picture 5).
picture 5. Structure of the manufacturing industry by technological complexity (% to GDP)
Source: United Nations Industrial Development Organization, 2020. Competitive Industrial Performance Report 2020. Vienna, Austria
In the Economic Complexity Index, Kazakhstan has improved its position in 2019 by 15 points compared to 2018, rising from 94th (Economic Complexity Index is -0.59 points) to 78th place (Economic Complexity Index -0.32 points ) in the ranking of 133 countries (picture 6).
picture 6. Place of Kazakhstan in the ranking of the Economic Complexity Index in 2000-2019
Source: https://atlas.cid.harvard.edu/rankings
Kazakhstan is ahead of Uzbekistan by 9 positions (87th place), while behind Armenia by 3 positions (76th place), Kyrgyzstan by 12 positions (66th place), Russia by 26 positions (52nd place), Belarus by 47 positions (31st place).
In 2019, the export volume of Kazakhstan amounted to 54.4 billion US dollars, having increased with the main partner countries: China - 18.61% (16.69% in 2018), Russia - 12.22% (11.01% in 2018 ) and France - 7.61% (a year earlier, Germany was one of the three main partners and had a share of 7,65 %)1.
The non-ferrous metallurgy, ferrous metallurgy and oil refining make up half of the GVA in the manufacturing industry. At the same time, the consumption of products of high-tech industries is predominantly domestic in nature and is not significantly reflected in exports. More than 60% of the projects included in the Industrialization Map have low and medium technological complexity.
At the same time, over the years of industrialization, investment projects were implemented under the Industrialization Map and business support maps in the amount of 1,527 projects for a total of 9.1 trillion tenge, more than 212 thousand permanent jobs were created, the total volume of production since 2010 amounted to 28.8 trillion tenge or 2.6 trillion tenge on average annually. At the end of 2020, map projects produced products worth 4.6 trillion tenge, which accounted for 35% of the total production in the manufacturing industry.
At the same time, more than 20% of the projects implemented within the framework of the maps did not belong to the manufacturing industry projects, which did not allow, respectively, to ensure their effective implementation, as well as a full contribution to the development of the manufacturing industry.
Over the past 10 years, the high growth rates of the manufacturing industry in Kazakhstan have been ensured mainly by expanding the country's participation in the world raw materials markets (base metals and materials). The international community in the form of international institutions, representatives of the business community and experts shares the opinion that the raw material super-cycle is over and the possibilities for economic growth through the sale of low value-added goods have been exhausted.
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1https://atlas.cid.harvard.edu/countries/115/summary
In this connection, the issue of intensive development of the manufacturing industry has become urgent due to the organization of the production of products of the most high-tech complexity, oriented to world trade, not subject to sudden changes in the purchase prices for raw materials.
For example, in Kazakhstan, the share of the metallurgical industry in the volume of the manufacturing industry with a low level of redistribution (production of sheets from steel, refined copper, etc.) in the period from 2014 to 2018 repeats the dynamics of the price jump index for 1 ton of copper, which indicates a direct correlation between these indicators.
On the other hand, in Japan the focus of production is concentrated on high-tech products (steel for shipbuilding, transport, electrical engineering) and as a result, metallurgical production is more stable to global fluctuations in raw material prices (steel) (picture 7).
picture 7. Comparison of the impact of the steel price index on the ferrous metallurgy in Kazakhstan and Japan.
Sources: Bloomberg, Bureau of Statistics of Japan, BNS of the ASPR RK
At present, state support for entire industries is no longer able to bring the significant effect that was required in the early years of industrialization. Support for the basic foundation of the manufacturing industry was a response to the global economic crisis and became a kind of anti-crisis measure for the economy of Kazakhstan.
The economic crisis caused by the spread of the coronavirus infection COVID-19, including the closure of borders between countries due to the pandemic, dealt a serious blow to global logistics and led to the failure of the supply chains of raw materials and finished products. Due to continued restrictions to prevent the spread of the coronavirus and consequently, a resulting decline in consumer demand and the growth of protectionist rhetoric, there is a decrease in trade and foreign direct investment.
As a result, there are tendencies to reduce the competitiveness of the raw material model, accelerate the digitalization of all spheres of society and sectors of the economy, change the technological paradigm and consumption structure.
Due to the above-mentioned, at the stage of economic recovery in the post-COVID period, Kazakhstan needs to diversify its export and consumer basket as soon as possible, move away from the practice of supporting entire industries, form a critical mass of industrial enterprises that produce goods of vital importance.
Currently, Kazakhstan has not formed a critical mass of enterprises in the manufacturing industry. Thus, in 2020, the number of operating enterprises in the manufacturing industry amounted to 16,862 units, while the economically active population amounted to 9,167.9 people. There is a high economic concentration in most manufacturing industries. The process of geographical concentration of enterprises is at an early stage. The absence of a critical mass and geographic concentration of enterprises can lead to problems in the formation of full-fledged industries, the creation of value chains, weak inter-industry ties, the absence of agglomeration effects and the accompanying positive external effects, weak motivation for technological modernization, improvement in the quality of products, and an increase in its technological complexity due to insufficient competition.
Given the current realities, for the subsequent deepening of industrialization, Kazakhstan faces the concerns of qualitative growth of the manufacturing industry, focused on meeting the priority needs of the population, both in food and non-food products, ensuring uninterrupted operation and development of the domestic production complex, and thereby increasing the self-sufficiency of the country's economy.
These tasks are dictated by both major global challenges and internal processes and problems.
In fact, one of the main problems is the low level of utilization of production capacities of manufacturing enterprises. Thus, in the second quarter of 2021, the capacity utilization of 69.6% of domestic manufacturing enterprises was less than 70%, while 30.5% of enterprises were loaded at a level of more than 70 % 2.
The main reasons for the insufficient workload of domestic manufacturing enterprises are problems with the provision of raw materials, lack of funds for circulating assets and modernization of capacities, lack or insufficient demand for the products of enterprises in the domestic and foreign markets, insufficiency or lack of trained personnel to work on special equipment.
At present, the manufacturing industry uses imported raw materials and components that are not produced in Kazakhstan and have no further prospects for localization. The share of imports of such intermediate goods in processing industries can be up to 50% or more.
For example, the share of imports in the structure of production in the pharmaceutical industry is 63%, in the furniture industry - 55%, electronic products - 40%, food products - 21%, in the production of building materials - 18%.
The absence or lack of raw materials and components is due to the following reasons:
technological underdevelopment of raw material production (lack of production of high-quality raw materials and materials);
economic inexpediency of production of certain types of raw materials (small internal need);
lack of basic raw materials for organizing subsequent processing.
Thus, there is an urgent need to facilitate access to raw materials and components not produced in Kazakhstan in order to increase the competitiveness of domestic products, both in the domestic and foreign markets.
According to the results of 2020, a high degree of depreciation by type of economic activity falls on such industries as electricity supply, gas supply, steam and air conditioning - 73.1%, mining and quarrying - 66.6%, agriculture - 41.9% . In the manufacturing industry, this indicator was 39 %.
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2 Industry Market Review of the National Bank of the Republic of Kazakhstan for the second quarter of 2021
Therefore, the main production assets involved in the economy of the manufacturing sector need to be modernized. To solve this problem, it is necessary to stimulate enterprises for investment and innovation activity, as well as for the modernization of fixed production assets.
At present, the innovativeness of domestic manufacturing products is at a low level. Despite the fact that the costs of technological innovations in the manufacturing industry in 2019 increased by 1.4 fold compared to 2010, amounting to 247.1 billion tenge, against 183.0 billion tenge; the volume of manufactured innovative products decreased by 1.5 fold and reached 818.8 billion tenge in 2019 compared to 2010 (1236.0 billion tenge). Export of innovative products decreased by 1.9 times from 182.3 billion tenge in 2012 to 94.8 billion tenge in 2019. The share of innovative products in the gross domestic product in 2019 remains at an extremely low level - 1,6 % (picture 8).
picture 8. Dynamics of indicators of innovative activity in the manufacturing industry
Source: BNS of the ASPR RK
There are backbone national and private companies that have a certain potential for the development of corporate innovations, invest in research and development (hereinafter referred to as the R&D), which can become a driver of innovative and scientific and technical development.
In Kazakhstan, there are such institutions for the development of innovation support, as "Astana Hub" international technopark of IT startups, the autonomous cluster fund "Park of Innovative Technologies", "QazTechVentures" Joint Stock Company, "Qazinnovations"oint Stock Company. The World Bank project "Stimulation of productive innovations" is being implemented. There are an innovation cluster of Nazarbayev University NURIS, the Fintechhub of the Astana International Financial Center (hereinafter referred to as the AIFC) and the International Center for Green Technologies and Investment Projects.
In 2020, following the experience of the World Bank, the Rules for providing innovative grants for the commercialization of technologies, the technological development of existing enterprises and the technological development of industries were improved.
In general, the innovation indicators in comparison with 2010 show an increase. At the same time, as of 2019, the innovative and technological development of the country is characterized by:
low share of exports of high-tech products in the total exports of the manufacturing industry - 21.8%;
relatively low innovative activity of enterprises in the manufacturing industry - 14.4% and the share of innovative products in GDP – 1,6 %.
The country does not have sufficient internal competencies to develop or transfer modern technologies necessary for the production of medium and high value-added goods, so exports are still dominated by primary commodities, minerals, and the import structure is dominated by machinery, equipment, machine tools, high-precision instruments, special equipment, electronics and other key factors of production, basically, technologies.
In order to form an effective innovation ecosystem, to enter a high-tech economic structure capable of creating science-intensive products and thereby improve the standard of living of citizens, it is necessary to develop innovations on a systematic basis.
In July 2021, an Agreement between the Government of the Republic of Kazakhstan and the World Economic Forum regarding accession and cooperation between the Center for the Fourth Industrial Revolution (hereinafter referred to as the 4IR Center) in Kazakhstan and the World Economic Forum (hereinafter referred to as the Agreement) , approved by the Decree of the Government of the Republic of Kazakhstan dated December 25, 2020 No. 894, was signed. An affiliated 4IR Center was created on the basis of AIFC. Based on the Agreement, the Affiliated 4IR Center was opened.
The main goal of AIFC is to form a new platform for cooperation aimed at developing management principles, policies and protocols that accelerate the application of scientific and technological achievements in accordance with global public goals, as well as for scaling and localizing the achievements of the transformational era, the so-called Fourth Industrial Revolution.
AIFC has a regional dimension and will allow the formation and improvement of mechanisms, policies, procedures and principles for regulating innovation and digital transformation in Central Asia in areas such as the Internet of things, smart cities, artificial intelligence and machine learning, big data management, blockchain, unmanned vehicles and aerospace technology.
To build innovative capacity and improve competitiveness, experts from the Global Innovation Index and the World Economic Forum make the following recommendations for developing countries (including taking into account the new reality associated with the pandemic):
focusing the country's leadership on innovation policy and interdepartmental coordination;
ensuring interaction with all subjects of innovative activity;
coherence of policies in the field of intellectual property and innovation;
carrying out a long-term strategy for the development of science, technology and innovation, with the definition of priorities and the consolidation of most resources on them;
increasing public funding and stimulating private investment;
setting specific KPIs and regular evaluation of the measures taken.
At the same time, according to a study by experts from the World Bank for developing countries, first of all, the ability to produce should appear, and then the stage of adaptation (transfer) of existing technologies follows, and only the third stage appears the ability to create innovations on their own.
Therefore, today the real situation in Kazakhstan (infrastructure, competencies) involves the creation of only incremental innovations.
The introduction of breakthrough technologies requires large investments. At the same time, domestic large and medium-sized enterprises have a high level of debt load, which leads to a restraint in the process of innovative development. In the context of insufficient financial resources, attracting foreign direct investment might become a trigger for building up the innovative potential of domestic enterprises.
The ability to innovate is becoming a central factor in sustainability. Increasing competition between China and the US is intensifying the competition for innovation between them. Separate spheres of technological influence are increasingly emerging in which either Chinese or American standards are applied, and the technological developments of one of these countries dominate. The COVID-19 pandemic has further exacerbated this trend, showing how quickly nations can be cut off from foreign innovation and how valuable their own innovation capacity is in times of crisis. Under the current conditions, the digital sovereignty of countries, industries, enterprises is becoming increasingly important.
Investing in digital technologies will be critical to remain competitive. According to surveys conducted by China's Tencent Institute, most companies plan to increase their digital investment by 10% to 30% and will focus in particular on Big Data, the Internet of things, cloud computing and 5G. As a result, by 2025, China plans to fully build the material base for Industry 4.0, as defined by the World Economic Forum.
Also essential is the development of infrastructure that supports digitalization, such as 5G networks and high-performance computing power. The COVID-19 pandemic places increased demands on digital and online resources.
In this context, the importance of the digital transformation of industrial production chains – Industry 4.0 – is rapidly growing. The importance of related technologies during the crisis became clear when, for example, 3D printing was used to produce visors and parts for mechanical ventilation (LV) machines.
The degree of automation and use of digital technologies for remote control of equipment had an enormous influence on industrial companies during the quarantine period. Companies with a sufficient level of digitalization continued production, while many others completely stopped when operational personnel were unable to go to work. Companies that have implemented elements of Industry 4.0 have been much better prepared for the crisis. According to Fraunhofer Institute for Manufacturing Engineering and Automation, 70% of companies, whose business models have been digitized, are more resistant to the COVID-19 impacts. The COVID-19 pandemic has significantly accelerated the digitalization and automation of industrial production. Due to the automation of the enterprise, they ensured a reduction in costs from 15 to 40%.
Data from the international consulting company McKinsey & Company shows that in 2020 the introduction of new digital technologies is bearing fruit. For example, the digitalization of business processes in industry in the United States on average brings profits from 12% to 14%, compared with 7%-9% for European enterprises and from 5% to 7% for Asian analogues.
At the same time, enterprises in Kazakhstan have also begun to introduce digital technologies into production processes, however in most cases the entire modernization process is characterized by “patchwork digitalization”. In other words, there is a partial digitalization of production, which does not cover the entire value creation chain of products, and does not allow to fully achieve the full effect of digital technologies that cannot be integrated with existing and new equipment.
At the same time, according to the results of an analysis of more than 605 enterprises in the sectors of the manufacturing industry and the mining and metallurgical complex (hereinafter referred to as the MMC) carried out jointly with attracted foreign partners (the Fraunhofer Institute, Business Sweden) in 2017, regarding their readiness for the transition to digital transformation, it was revealed that most enterprises are characterized by the absence of a digital production management system (84% of manufacturing enterprises, 56% in the mining sector). On the other hand, about 3% of manufacturing companies and about 21% of MMC enterprises have sufficient technological, organizational and human resources for digital transformation.
Restraining factors for digital transformation are identified. Firstly, business does not sufficiently understand the economic benefits of digitalization, secondly, domestic developments and competencies in automation and digitalization are poorly developed, thirdly, there is a lack of qualified personnel, limited financial resources, as well as infrastructure limitations.
According to the results of the work carried out within the framework of the State Program "Digital Kazakhstan", a number of systemic measures have been introduced, such as the creation of model digital factories, the implementation of digitalization projects by large companies in the mining and metallurgical complex, the creation of favorable legal conditions for the development of the Industrial Internet of things, the creation of financial, fiscal and other incentives for enterprises to implement Industry 4.0 technologies, regulatory and legal regulation of the use of digital technologies in order to improve safety at work, implementation of the project of innovative interaction in the mining sector "Production 4.0".
Within the framework of the project "Creation of model digital factories", a technological audit was carried out in order to determine the current state of production of “AK ALtynalmas” JSC, "Himfarm" JSC, "Eurasian Foods", JSC, "Kentau Transformer Plant" LLP, "Bal Textil" LLP, "Karlskrona" LLP, "Almaty Fan Plant" LLP, which resulted in the approval of roadmaps for the digitalization of companies.
Parallel with this, work is underway in the regions to digitalize industrial enterprises. In general, at the moment in the regions until 2022 it is planned to introduce digital solutions at 121 enterprises (about 276 digitalization projects, taking into account new enterprises and modernization projects). At the end of 2020, domestic industrial enterprises implemented more than 171 projects, of which 57 projects are in 2020.
However, in order to improve the competencies of employees in 2020, together with the Fraunhofer Institute for Manufacturing Engineering and Automation, training was conducted for specialists from industrial enterprises on Industry 4.0. The training is aimed at transferring competencies and knowledge on key technologies and topics of Industry 4.0 to industrial enterprises of the country.
In order to attract investments, advanced technologies for the production of goods and services, create new jobs, as well as develop competitive production in Kazakhstan, special economic zones (hereinafter referred to as the SEZ) and industrial zones (hereinafter referred to as the IZ) have been created, which make up the infrastructure industrial and innovative system of the country.
Today, 13 SEZ and 24 IZ operate in the country.
During the entire period of their operation (from 2002 to 2021), 307 (108 extraterritorial) projects have been launched in SEZ territories. As a result of the implementation of these projects, more than 21 thousand jobs were created, tax revenues to the budget amounted to 232.9 billion tenge.
The budget costs for the construction of the infrastructure of all SEZs amounted to 377.2 billion tenge, while the volume of attracted investments amounted to about 1,713.5 billion tenge. In other words, 1 budget tenge invested in SEZ infrastructure allowed attracting 4.5 tenge of private investment (the share of foreign participation amounted to 29,3 %).
184 production facilities with an investment of about 423 billion tenge were launched at the IZs. About 15 thousand jobs have been created. 75.8 billion tenge was invested in the infrastructure of industrial zones. Thus, for 1 invested budgetary tenge, 5.5 tenge of investments were attracted. In terms of attracted investments, the leader is the industrial zone of Almaty city.
The difference in investments attracted per 1 tenge is explained by the fact that SEZ projects are capital-intensive with increased requirements for infrastructure.
In general, thanks to the SEZ regime in Kazakhstan, whole groups of enterprises were formed for certain types of economic activity.
For example, on the basis of SEZ "Khorgos - Eastern Gate" a logistics center of the latest generation was created. At the SEZ "Astana - a new city", railway engineering, which was previously absent in Kazakhstan, was developed. SEZ "Ontustik" revives the textile industry. The foundation for petrochemical production was laid at SEZ "National Industrial Petrochemical Technopark" (hereinafter referred to as the "NIPT") and SEZ "Pavlodar". SEZ "Chemical Park Taraz" creates new production facilities of the chemical industry, such as the production of hydrochloric acid (herbicide), sodium cyanide, sodium pyrosulfite, sulfuric acid, etc. By the same principle, it is planned to increase the localization of small and medium-sized industries around the "anchor" industries in all SEZs. Despite the measures taken and the results achieved, the development potential of SEZs and IZs is not fully disclosed, which opens up prospects for their further development.
For further development, promotion and management of SEZ in the Republic of Kazakhstan, it is necessary to eliminate (improve) the following barriers that characterize the low development rates and poor performance of domestic SEZs:
in fact, the infrastructure of a number of SEZs and IZs has not been completed;
insufficient funding and untimely completion of the construction of infrastructure facilities. For example, the critical need in the SEZ "Pavlodar" today is the completion of the construction of treatment facilities, an increase in electricity capacity through the construction of a substation, in the SEZ "Ontustik" a high degree of depreciation of SEZ infrastructure facilities, in the SEZ "Astana - a new city" it is necessary to complete the heat supply complex , for potential investors in the SEZ "Chemical Park Taraz" has not been completed and the construction of infrastructure facilities (2nd stage) is necessary, in particular, public supply facilities (main water supply, treatment facilities, gas pipeline), laying of railways, increasing capacity through construction complex transformer substations;
the mechanism of public-private partnership is practically not used, as well as the potential of private capital in the construction of the basic infrastructure of SEZ and IZ;
there is no possibility of locating small industries (there are no ready-made production facilities, both for small industries and for activities that do not require the construction of their own factories, for example, IT);
short terms of operation of the SEZ and unequal periods of benefits (the SEZ is valid for a maximum of 25 years, of which not the entire period is provided with benefits - depending on the period of obtaining the status of a SEZ member);
gaps and conflicts in the legislation governing the activities of the SEZ, in terms of the functioning of the SEZ, as well as preferential taxation in the territory of the SEZ;
lack of service companies to ensure the safety and maintenance, elimination of accidents or other failures of engineering and communication infrastructure facilities.
To solve these problems, it is required to introduce new approaches to the functioning and development of SEZ and IZ in the territory of the Republic of Kazakhstan, taking into account the world experience of developed countries.
At the same time, clusters are a new effective form of cooperation between industrial and service enterprises, educational and scientific organizations, authorities and development institutions. The cluster athe citypproach as a tool to increase the competitiveness of companies in the regions will become an important direction in the development of the manufacturing industry and the sector of productive services.
Since 2017, a methodological basis for the implementation of cluster policy has been developed, including a methodology for the development of territorial clusters, organization and conduct of competitive procedures for the selection of territorial clusters, a methodology for peer review of competitive applications from cluster initiatives.
As a result of diagnostics of the cluster infrastructure in the regions of Kazakhstan, six pilot territorial clusters were selected on a competitive basis: in the Karaganda region (construction), Shymkent city (for the production of pharmaceutical products), Almaty city (for the production of furniture products), Kostanay region (flour-grinding), Akmola region (for milk processing), Almaty region and Almaty city (for tourism development).
At the present stage of development of these territorial clusters, participants in the pharmaceutical, tourism, and milk processing clusters have united into cluster organizations and formalized their activities to solve common problems to increase the competitiveness of products and enter foreign markets.
Such collaboration directly affects the efficiency of the production activities of cluster members and affects the state of the industry as a whole.
Competence centers ("Himfarm" JSC , "Gormolzavod" LLP) have been created on the basis of enterprises participating in the clusters, each cluster has developed its own development strategy, work has begun on the implementation of cluster projects. The participants of the furniture cluster have developed certificates that provide discounts of up to 20% for developers in order to provide apartment buyers with comprehensive furniture solutions. The participants of the construction cluster signed a memorandum with research centers of Karaganda city to conduct review studies on the prospects for the production of environmentally friendly building materials from domestic raw materials and industrial waste.
The main specificity of the cluster is the receipt by the enterprises included in it of a synergistic effect, which is expressed in an increase in the competitiveness of all cluster members in comparison with individual economic entities. Joint projects of cluster members make it possible to expand the range of product groups produced in accordance with modern global trends in the development of industries, the transition to the production of environmentally friendly building materials and other products.
The development of the manufacturing industry also depends on the development and complexity of the domestic market. To meet the needs of the domestic market, it is necessary, as a matter of priority, to develop industries whose products must correspond to the quality level of products imported by large enterprises, that is, comply with quality and management international standards. Domestic manufacturers cannot compete with foreign factories, they are not ready to occupy a niche in the supply of their own products to the service market. There is a significant technological gap of domestic enterprises that manufacture products in terms of renewal, modernization, expansion of production.
In the modern economy, regulated procurement plays a fundamental strategic role. The period when purchases were considered as the rules for supplying customers is a thing of the past. Now the system-forming potential of procurement has come to the fore, the economic essence of which lies in the transformation of demand into factors of economic development.
An analysis of regulated purchases of goods, works and services (public procurement, procurement of national companies and holdings, procurement of subsoil users) showed that in the republic from 2016 to 2020, with a total increase in purchases by 1.5 fold from 11073.5 to 17632.7 billion tenge, there was a decrease in the share of local content from 54% to 52.3%. At the same time, the largest indicator of local content falls on 2016 (54%) with a sharp decrease in 2018 by 3.4% and further small annual growth (picture 9).
picture 9. Dynamics of indicators of regulated procurement and local content in them for 2016 - 2020
Source: Data of the Ministry of Industry and Infrastructure Development of the Republic of Kazakhstan
Within the framework of Kazakhstan's accession and participation in the World Trade Organization and the Eurasian Economic Union, in accordance with the obligations assumed at the legislative level, the norms providing preferences for domestic suppliers in public procurement were excluded, and the requirements for local content in the procurement of subsoil users were partially retained. At the same time, the possibility of establishing exemptions from the national regime was ensured in order to provide support for domestic suppliers and restrict access to certain purchases of goods, services, works and their suppliers originating from the territory of foreign states. At the same time, after the adoption of certain measures, indicators for local content show a positive trend for the period from 2018 to 2020 (picture 10).
picture 10. Dynamics of indicators of procurement volumes and local content in public procurement for 2015 - 2020
Source: Ministry of Finance of the Republic of Kazakhstan
At present, the requirements for local content are partially provided for only in the procurement of subsoil users.
Large project operators – Tengizchevroil Limited Liability Partnership (hereinafter referred to as the TCO), Karachaganak Petroleum Operating B.V. (hereinafter referred to as the KPO), the North Caspian Operating Company (hereinafter referred to as the NCOC) are working with domestic producers and suppliers of works and services within the framework of memorandums with the Government of the Republic of Kazakhstan on cooperation. Operators seek to cooperate with suppliers who have a strong customer focus, high demands are placed on suppliers. But the difficulty of competing these manufacturers is the absence of import customs duties on foreign products when delivered to customers.
Large companies in Kazakhstan often face the challenge of finding small and medium-sized enterprises (hereinafter referred to as the SMEs) offering relevant products and services, as well as assessing their qualifications, obtaining information that is necessary to reduce the risk when conducting transactions with them.
The share of the SME sector in exports is still insufficient. One of the reasons for the low level of exports of goods of Kazakh SMEs is the high cost of certification for compliance with international standards and norms, quality assurance (API, ASMI, ISO, HACCP, CEN, etc.) used in foreign countries.
It is necessary to strengthen measures to assist enterprises in the development of technical documentation required for the certification of products and services, which will allow SMEs to overcome technical barriers and increase the level of competitiveness of domestic enterprises and goods.
The further implementation of the industrial-innovative policy will be considered in the light of several initiative groups. First, the implementation of existing opportunities using existing strengths. Second, investment in weaknesses to exploit existing opportunities. Third, taking preventive measures using strengths to compensate for risks and threats.
1) Opportunities for the industrial-innovative development of the Republic of Kazakhstan
The location of Kazakhstan between the second (People's Republic of China) and the twelfth (Russian Federation) economies of the world and participation in integration projects with them create opportunities for the manufacturing industry.
Analysis of international trade and global flows of foreign investment shows the predominant role of cross-border trade and investment.
According to the result of the analysis, the categories of countries by priority level as as sales markets for potential exports of the manufacturing industry were identified3. China and Russia became the most priority countries. Uzbekistan and Iran were next in priority. The more remote Japan, South Korea, India, Pakistan, Turkey, Saudi Arabia and the United Arab Emirates are third in priority.
Removing barriers to the export of processed products to the markets of China and Russia can significantly improve the position of domestic companies to achieve the necessary economies of scale and reduce the adverse impact of transport costs.
Kazakhstan, together with the countries of the Eurasian Economic Union (hereinafter referred to as the EAEU), will actively use the opportunities under the Agreement on trade and economic cooperation between the EAEU and China in order to create conditions for improving mutual trade, in particular, focus on simplifying trade procedures and implementing joint investment projects.
Kazakhstan potentially remains an attractive investment platform for companies from China and Russia to create production facilities in order to penetrate each other's markets. In addition, the "sanctions struggle" between Russia and Western countries may create conditions for attracting European companies to serve its market.
Due to the peripheral location of the Republic of Kazakhstan in relation to the countries of the "world center"3 the process of diffusion of innovations is slow. However, the formation of a new technology center in China can significantly accelerate the process of technology transfer, penetration and absorption of technological innovations.
Accelerating urbanization in Kazakhstan creates a concentration of capital, labor, knowledge and consumers in spatial points of growth.
The global trend of migration of people to urban areas, which is changing the landscape of country competition, is also reflected in Kazakhstan. The appearance on the territory of the Republic of Kazakhstan of the second and third million-plus cities begins to create local spatial "centers of gravity" that are attractive for the production of end-use goods, the development of existing and the formation of new innovative systems, specialized production factors necessary to attract investment in the medium and high-tech sectors.
The development of large urban agglomerations generates a constant demand for the products of local clusters of the food industry, the production of clothing and footwear, household goods, building materials, metal products and chemical products.
The regulated procurement market, as the economy grows and the implementation of large infrastructure projects, generates a constant and concentrated demand for industrial goods.
There is still significant potential for regulated procurement to localize the production of goods and services in Kazakhstan.
The development of new production technologies and the digitalization of the manufacturing industry (Industry 4.0) creates opportunities for a leap in productivity and reduce the distance and barriers in trading.
Industry 4.0 is transforming production and business models, opening up opportunities for the formation of high-tech industries in developing countries. The relative availability of the key technologies of Industry 4.0 makes it possible to reduce the technological gap with developed countries.
2) The main threats and risks for the industrial-innovative development are the reverse side of opportunities and are complemented by problems inherent in the manufacturing industry.
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3 USA and Western Europe
Insufficient measures to attract investment in the manufacturing industry pose a threat of "early deindustrialization".
Investments in the traditional sectors of metallurgy and oil refining make up the majority, while investments in other manufacturing industries are quite stable and do not show a tendency to rapid growth. Excluding basic sectors, the indicator is close to simple reproduction.
As a result, Kazakhstan has not formed a critical mass of enterprises in the manufacturing industry. There is a high economic concentration in most manufacturing industries. The indicator of the reduced number of enterprises in the manufacturing industry is lower than in Russia and Belarus. The process of geographical concentration of enterprises is at an early stage.
The lack of investment in fixed assets in the early stages jeopardizes the achievement of all indicators of industrial development. The absence of a critical mass and geographic concentration of enterprises leads to the problems of forming full-fledged industries, creating value chains, weak inter-industry ties, the absence of agglomeration effects and the accompanying positive external effects, weak motivation for technological modernization, improving the quality of products, and increasing its technological complexity due to insufficient competition.
High competition in foreign markets, insufficient capacity of the domestic market and high competition on it from manufacturers in China, Russia and other countries create pressure on domestic producers.
Historically, the capacity of the Kazakhstani market is insufficient to achieve the economies of scale required for the production of a significant part of the nomenclature of the manufacturing industry. Availability of foreign markets is critical to achieving economies of scale with current production models.
The external markets of the two largest neighbors have more developed and sophisticated production systems than Kazakhstan. In addition, these countries create restrictions on the import of Kazakh goods to foreign countries. Despite being in a single economic union with Russia, domestic producers still face conditions of unfair competition based on administrative barriers. The Chinese market has historically had high entry barriers associated with special measures for admission to the domestic market.
The growth in demand for manufacturing products is met mainly by imports, and domestic enterprises face strong competition from manufacturers in Russia and China.
Kazakhstan has a limited export basket and insufficient "complexity", which creates the risk of a permanent technological gap.
The export of the Republic of Kazakhstan is characterized by a limited range of goods with a comparative advantage. Most of the exports are metallurgy and oil products, which belong to the low- and medium-technology sectors. The level of technological complexity of Kazakhstan is significantly lower than that of China, Russia and Belarus.
Kazakhstan has an average level of development of basic digital infrastructure4, low readiness of enterprises for the "digital age" and weak motivation at the level of medium-sized enterprises to implement "digital solutions"5, which creates an obstacle to the digital transformation of industry.
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4 Networked readiness index, World Economic Forum
5 Report of the Fraunhofer
To take full advantage of the technologies of the "digital age" requires a high level of development of digital infrastructure. At the moment, Kazakhstan belongs to the group of countries with an average level of development in this aspect.
Enterprises are characterized by a low level of use of current information and communication technologies, they are poorly informed and do not have human resources for the implementation of digital technological solutions. Lack of understanding of the need and staff reduces incentives for enterprises to invest in digitalization.
The Impact of the Spread of the COVID-19 Pandemic on the Global Economy
In connection with the announcement by the World Health Organization of the COVID-19 pandemic in the world in 2020-2021, the spread of the COVID-19 coronavirus infection had a negative impact on the economy of Kazakhstan. The unfavorable epidemiological situation that began in the fourth quarter of 2019 and led to the closure of state borders and a decrease in economic activity around the world had a negative impact on the implementation of external trade. The closure of borders between countries due to the pandemic dealt a serious blow to global logistics and the supply chain of raw materials and finished products. Chains are becoming shorter and more diversified, and the return of production and outsourcing of business processes in nearby territories is accelerating, with the strengthening of internal supply chains.
As a result, there is a low consumer demand associated with the fact that more and more countries adhere to the policy of export protectionism. This contributes to a decrease in global demand and, consequently, an increase in prices.
3) Strong points of the industrial-innovative development.
The manufacturing industry is in constant priority of the political leadership of the country.
The government consistently implements industrial policy and allocates financial resources to support industrial policy.
The formed system of development institutions makes it possible to cover all aspects of industrial policy regulation.
A system of support subjects for industrial and innovative activities has been created and is functioning, which allows covering all aspects of industrial policy regulation.
The state directly or indirectly controls and regulates the extraction of raw materials, the output of primary processing products and factors of production associated with infrastructure.
Kazakhstan has a high level of provision with basic mineral resources. The state directly or through the National Welfare Fund “Samruk-Kazyna” Joint Stock Company has stakes in a number of mining and first processing companies. This creates an opportunity for preferential provision of new manufacturing projects with raw materials and basic semi-finished products.
4) Reserves for increasing the efficiency of resource use and weak points in the implementation of the industrial-innovative policy that require concentration of attention and additional resources.
Insufficiently effective system of monitoring and feedback mechanisms in the implementation of the industrial-innovative policy.
There are significant difficulties associated with an objective assessment of the implementation of the policy of the industrial-innovative development, including the direct and final results achieved and the effectiveness of support tools. One of the mechanisms to improve the efficiency of the industrial-innovative policy is to ensure high-quality monitoring and, based on it, an analysis of the effectiveness of the support tools used, including through quantitative and qualitative assessment.
Based on the consideration of possible combinations of factors, the following main directions for the continuation of the industrial-innovative policy can be identified.
Conducting a proactive trade policy.
Resources and efforts should be directed along two vectors. First, finding solutions and compromises to remove barriers in foreign trade within the EAEU, access to the Chinese market and promotion in the markets of Central and South Asia. It is necessary to establish an ongoing dialogue with existing manufacturing exporters in order to understand their real needs and barriers to foreign trade.
The anticipated creation of specialized factors of production in spatial "growth points".
Increasing the attractiveness of the manufacturing industry requires reducing costs and increasing the return on invested resources. This can only be achieved through systematic work with a main focus on the interface of industrial and spatial development in order to create, expand and offer specialized factors of production. Efforts will be directed to the development of high-quality industrial and digital infrastructure, human capital, centers of excellence, testing and certification infrastructure.
Creation of new large capital-intensive and knowledge-intensive industries.
Using the state's ability to distribute raw materials and its readiness to provide special conditions for private investors, ensure the implementation of certain large capital-intensive and high-tech projects in the manufacturing industry.
2. Review of international experience of state policy in the field of the industrial-innovative development
Tendencies towards changes and the need to overcome internal barriers to the development of Kazakhstan are interpreted by the world market conditions. The main external factors that determine the further development of the manufacturing industry include global economic competition, trade and economic integration of the Eurasian Economic Union, the emergence of new strong Asian players, and the tightening of standards for industrial products.
World technological progress in the industrial sector has increased the digital divide between countries. The total underfunding of scientific developments in industry, the lack of incentives from the state led to a slowdown in the development of advanced technologies in Kazakhstan.
An assessment by the Institute of Statistics of the United Nations Educational, Scientific and Cultural Organization (UNESCO) showed that Kazakhstan's domestic R&D spending in 2018 amounted to 0.1% of GDP. The leader in this indicator is Japan 3.26% of GDP. In second place is the United States (2.84% of GDP) and in third place is China (2.19% of GDP).
If we evaluate the number of engineers, including technical specialists in R&D, as well as workers whose main tasks require technical knowledge and experience in engineering, physics and biology (technical), the total number of people in R&D in 2018 reached 123.9 people/million people. According to the level of specialist researchers involved in the development and creation of new knowledge, products, processes, methods or systems for managing relevant projects in R&D in Kazakhstan, the number was 666.9 people / million people.6
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6UNESCO Institute for Statistics: Research and Development Expenditure 2019.
Table 2. Results of evaluation of the United Nations Institute for Education Statistics
Country | R&D expenditure (in % of GDP) by years | |||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | |
Kazakhstan | 0,17 | 0,17 | 0,17 | 0,14 | 0,13 | 0,12 |
Russia | 1,03 | 1,07 | 1,10 | 1,10 | 1,11 | 0,99 |
Belarus | 0.65 | 0.51 | 0.50 | 0.50 | 0,58 | 0,61 |
Kyrgyzstan | 0,15 | 0,13 | 0,12 | 0,11 | 0,11 | - |
China | 2 | 2,03 | 2,07 | 2,12 | 2,15 | 2,19 |
Source: UNESCO Institute for Statistics: Research and Development Expenditure 2019.
The indicator of spending on research and development work in Kazakhstan in 2018 was 0.12% of GDP, while in the countries of the European Union it was equal to 2.2%. The highest intensity of R&D in 2018 was recorded in Japan, Sweden, Austria and Germany, where the corresponding figures exceeded 3% of GDP. In Denmark, Belgium and Finland, R&D expenditures amounted to about 3% of GDP. Meanwhile, in eight countries of the European Union, Romania, Slovakia, Bulgaria, Latvia, Lithuania, Ireland, Malta and Cyprus, the intensity of R&D was below 1% of GDP.
The proportion of organizations that carried out innovations at the end of 2019 was 11.3% (for the economy as a whole) against 44%, 46% and 54% in the UK, France and Germany, respectively.
At the same time, according to the indicator of the Global Competitiveness Index of the World Economic Forum on the factor "innovative potential" in 2019, Kazakhstan took 95th place, according to the rating of the Global Innovation Index, Kazakhstan took 79th place (Russia - 46, Ukraine – 47).
According to the Advanced Technology Readiness Index (UNCTAD)7, Kazakhstan ranks 62nd (index 0.50) out of 158 countries. To calculate the Advanced Technology Readiness Index, UNCTAD has formed indicators based on data from international organizations:
by the development of ICT infrastructure, taking into account the Internet of things, big data and the blockchain of Internet technologies - 62nd place (Sources ITU; M-LAB);
by the presence of skills in the use, implementation and adaptation of advanced technologies - 42nd place (Sources UNDP; ILO);
by research and development (R&D), including for the production and implementation of advanced technologies that require customization or modification for local use, as well as research activities, measured taking into account the number of publications and patents - 56th place (Sources SCOPUS; PatSeer);
by the use, implementation and adaptation of advanced technologies in production, including interaction with digitalization in the field of finance and ICT, - 75th place (source UNCTAD);
by assessment of the availability of financing for the private sector, including resources provided by financial corporations such as finance and leasing companies, insurance companies, pension funds and foreign exchange companies, various financial instruments, including loans, purchase of non-equity capital, securities, trade credits and other receivables - 114th place (Sources WB; IMF,OECD).
In the 2021 ranking in terms of innovation development, Kazakhstan ranked 79th out of 132 countries8. In comparison with the EAEU member countries in 2021, in terms of innovation development, Kazakhstan was 19 positions ahead of Kyrgyzstan (98th place), but showed a decrease compared to Russia (45th place), Armenia (69th place) and Belarus (62nd place).
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7https://unctad.org/system/files/official-document/tir2020_en.pdf
8https://www.globalinnovationindex.org/analysis-economy
The Global Innovation Index, calculated on the basis of 80 indicators grouped into two categories: the availability of resources and conditions for innovation and the practical results achieved in the implementation of innovations, dropped from 77th to 79th place in 2021, reaching the level of 2019.
Kazakhstan shows the best results in terms of the level of development of the institutional environment, market, infrastructure and human capital - rising from 64th place in 2019 to 61st place in 2021. However, according to the practical results achieved in 2021, Kazakhstan showed a decrease, dropping from 92 to 101 place. (Table 3)
Table 3. Global Innovation Index Ranking Data
Year |
Place in Index | Index “Availability of resources” | Index "Achieved practical results" |
2021 | 79 | 61 | 101 |
2020 | 77 | 60 | 94 |
2019 | 79 | 64 | 92 |
Source: https://www.globalinnovationindex.org/analysis-economy
In the implementation of the state policy in the field of the industrial-innovative development, the world community as a whole applies practically general principles and approaches.
Industrialized countries have a generally similar organizational structure of state management of industrial development, the main elements of which can be distinguished as follows:
1) clear legislative regulation of industrial policy, which allows for a centralized and balanced industrial policy throughout the country, systematizes and focuses the process and conditions for providing state support to industry;
2) central government bodies responsible for the development policy of industry, related services, as well as their promotion in foreign markets;
3) coordinated system of institutions of the industrial-innovative development;
4) large state or national companies, specially designated by the state, with the authority to attract investments and implement large industrial projects and create industries in new industries;
5) scientific, technological, innovation policy, the implementation of which is directed by plans, programs, concepts of sectoral ministries and departments.
The main differences include the conditions, criteria for supporting enterprises, as well as the ability of the state to provide and, in a certain way, alleviate the level of fiscal and customs burden of enterprises seeking to introduce new technologies and upgrade fixed assets.
For example, the Republic of Turkey is promoting private entrepreneurship through an organization for the development of small and medium-sized enterprises (hereinafter referred to as the KOSGEB) through the implementation of a program for the modernization of SMEs. Investment projects are supported to increase the production of high value-added products in the medium and high-tech sectors of Turkey, as well as products that are critical for the development of these sectors, as part of a technology-oriented industrial movement.
If machinery, equipment and software are domestic goods, 15% is added to the non-reimbursable support rate and the reimbursable support rate is reduced at the same rate.
The program to support investments in technology products for small and medium-sized businesses has 2 directions:
production and commercialization of products resulting from R&D/innovation activities. For an entrepreneur producing goods of low technological complexity, support will amount to no more than one million Turkish liras. For an entrepreneur producing products of medium and high technological complexity, the amount is 6 times the amount of support for an entrepreneur producing products of low value added, and amounts to six million Turkish liras. A prerequisite is the repayment of 70% of the support amount;
production and commercialization of products in the field of medium, high technologies, which will make a significant contribution to the country's economy. The repayment share will be 30% of the above support amount.
As part of the investment attraction program, Turkey provides foreign investors with the same rights in full as national capital. The main provisions are laid down in the Law of the Republic of Turkey "On Foreign Investments". The main criteria in evaluating foreign investment projects are their technological level, competitiveness, export potential, and the possibility of attracting local resources for their implementation. The geographical aspect, as already mentioned, is equally important.
The territorial location of the projected facility and the amount of invested capital are the main indicators for the investor to receive the so-called "Incentive Certificate", that is, special approval from the General Directorate for Foreign Investments, which gives the right to enjoy benefits in the implementation of the project, namely: partial or full exemption from payment of customs duties and other taxes, access to soft loans, government subsidies and other.
When issuing an "Incentive Certificate", it is taken into account to what extent the project is expected to use attracted funding sources. The ratio between equity and borrowed capital is the self-financing rate; it can be no more than 40% for investment projects in "priority areas", 50% in "normal areas" and 60% in "developed areas". An exception, not taking into account the regional aspect, are investments in the organization of aviation (Air-Kargo) and maritime (Ro-Ro) transport services - 25%, as well as the construction and repair of yachts and ships, where the self-financing rate is set at 15%. A preferential self-financing rate (15%) is also allowed for those projects, the implementation of which is expected to be fully financed from foreign sources.
The system of incentives for foreign investment marked with an "Incentive Certificate" includes customs privileges for the import of machinery and equipment not older than 5 years, raw materials and semi-finished products, and spare parts.
Imported machinery and equipment imported for the purpose of implementing investment projects are exempted from customs duties in full, according to the approved list of priority sectors of the economy.
The ongoing state policy provides for support for enterprises setting up new production by exempting imports of raw materials and semi-finished products from customs duties in a limited amount and for a limited period.
Thus, for the implementation of new production facilities, subject to a deposit (10% of the capital), duty-free import of raw materials and semi-finished products is allowed for an amount not exceeding 20% of the total cost of imported or locally purchased machinery and equipment for a period of up to 3 months.
For the implementation of investment projects in priority areas, subject to a deposit (10% of capital), duty-free import of raw materials and semi-finished products in an amount not exceeding 30% of the total cost of imported or locally purchased machinery and equipment is allowed for up to 4 months.
For the implementation of large projects, duty-free import of raw materials and semi-finished products is possible for an amount not exceeding 40% of the total cost of machinery and equipment imported or purchased locally for a period of up to 6 months.
Provision is also made for exemption from customs duties for machinery and capital equipment imported for the purpose of implementing investment projects in the electronics industry, agriculture and the agro-industrial complex, tourism, natural gas transportation, ship repair, education, construction and equipment of hospitals, etc.
In cluster support programs, according to the Law of the Republic of Turkey "On Research Centers", benefits are provided to clusters or groups of enterprises in competitive sectors. On the basis of this project, the Ministry of Economy launched a cluster support mechanism to provide assistance to industrial and / or commercial enterprises, classified according to needs, scale, availability of equipment.
There are 36 technology development zones in Turkey, uniting 3,000 technology development companies exporting services and products worth about 900 million US dollars. The Law of the Republic of Turkey "On Technology Development Zones" defines technology development zones for companies using advanced technologies, producing and developing technologies or software. The advantages of technology development zones are the provision of offices for rent with infrastructure; exemption from corporate income tax received from software development and R&D activities, exemption from value added tax (hereinafter referred to as the VAT) is provided for the supply of application software produced exclusively in technology development zones.
The industrial policy of the Russian Federation is regulated by the Federal Law of the Russian Federation "On Industrial Policy in the Russian Federation", adopted in 2014. In addition, strategic approaches to the implementation of state policy in the field of industrial development are reflected in the State Program "Industrial Development and Increasing its Competitiveness". The goals of industrial policy are:
1) formation of a high-tech, competitive industry that ensures the transition of the state economy from an export-raw material type of development to an innovative type of development;
2) ensuring the defense of the country and the security of the state;
3) ensuring employment of the population and improving the living standards of citizens of the Russian Federation.
The law regulates the country's industrial activities and covers economic activities related to mining, manufacturing, electricity, gas and steam supply, air conditioning, water supply, sanitation, waste collection and disposal, as well as pollution elimination.
In the field of industry for business entities, the Law provides for measures of financial, information and consulting support. Support is provided to entities engaged in scientific and technical, innovative, foreign economic activities in the field of industry, as well as within the framework of the development of human resources.
Stimulation of scientific, technical and innovative activities in the industry is carried out within the framework of the state defense order, in the course of the implementation of investment projects and in economic companies with state participation.
Stimulation of demand for innovative products is carried out, in particular, through regulation in the field of procurement of goods, works, services for state and municipal needs.
Financial support is provided to organizations engaged in innovative activities in the provision of engineering services.
The government creates conditions for coordinating the activities of industrial entities in the implementation of scientific, scientific, technical and innovative activities.
Support is provided to manufacturers of industrial products that introduce into production the results of intellectual activity related to the priority areas of development of science, engineering and technology or critical technologies.
Providing support to business entities in the field of human resources development is carried out in the form of:
support for organizations engaged in educational activities on additional professional programs for employees by providing financial, informational and consulting support;
providing educational and methodological and scientific and pedagogical support to business entities;
financial support for business entities involved in the creation of organizations that carry out educational activities on additional professional programs for employees of these entities and ensure the coordination of theoretical knowledge with practical skills and abilities;
other activities related to the provision of support to business entities in their educational activities under additional professional programs.
Business entities carrying out export of industrial products manufactured in the Russian Federation may be supported in the form of:
assistance in promoting industrial products to the markets of foreign countries and creating favorable conditions for business entities exporting industrial products produced in the country;
providing financial and property support to business entities exporting industrial products, organizations that are part of the infrastructure to support activities in the industrial sector and insuring export credits and investments against entrepreneurial and (or) political risks, as well as providing state guarantees for the obligations of business entities in the field of industry.
In the Russian Federation, in the context of permanent sanctions, Russian industrial companies have created an ecosystem of products that allows them to ensure technological independence from foreign manufacturers. The approved Plan of Priority Measures to Ensure Sustainable Economic Development in the Context of a Deteriorating Situation Due to the Spread of a New Coronavirus Infection (approved by the Prime Minister of the Russian Federation on March 17, 2020) contains actions aimed at providing essential goods and supporting the population; support for sectors of the economy that are at risk (air transportation, tourism, construction, recreation, entertainment, etc.); measures to support small and medium-sized businesses (administrative and financial) and system-wide measures.
Measures of a system-wide nature provide for a financial package: the formation of a financial reserve in the amount of up to 300 billion rubles; creation of a guarantee fund for the restructuring of loans to companies affected by the deterioration of the situation due to the spread of a new coronavirus infection. The established special commission provides operational support in terms of restructuring loans, debts, or even with direct subsidies; granting the Government of the Russian Federation the authority to establish procedures for obtaining a deferral (installments) for the payment of taxes, fees and contributions, as well as to determine the grounds and procedure for granting such deferrals (installments), to prolong the deadlines for submitting tax returns and tax reporting; expand the list of measures to support the budgets of the constituent entities of the Russian Federation, faced with a drop in tax revenues.
The service package includes measures to accelerate state capital investments by simplifying the procedures for adjusting the federal targeted investment program; informing residents about the necessary actions in case of non-fulfillment or threat of non-fulfillment of the terms of delivery and (or) payment for goods by foreign counterparties in the framework of foreign economic transactions and non-return of funds previously paid by residents; formation of a list of backbone enterprises (previously, the mechanism was already used during the crisis of 2008-2009 and in 2014), which will be under special control.
As part of the measures to support backbone enterprises, the Rules for the selection of organizations included in the industry lists of backbone organizations of the Russian economy that apply for the provision of state support measures in 2020 in order to maintain their financial stability and uninterrupted functioning in the context of a deteriorating situation due to the spread of coronavirus infection (Resolution Government of the Russian Federation dated May 10, 2020) were approved.
The Entrepreneurship Development Fund of the Russian Federation implements programs of financial support for enterprises:
aimed at the introduction of modern technologies included in the list approved by the Government of the Russian Federation for the production of industrial products that are competitive on the world market (Special Investment Contract)10. It also provides for counter obligations to achieve a certain volume of production and sales of products, pay taxes in a certain amount, create a certain number of jobs.
for enterprises that carry out R&D, introduce new technologies or develop high-tech products, as well as those that need to modernize production to produce competitive products, subsidies are provided to compensate for part of the costs of conducting R&D on modern technologies as part of the implementation of innovative projects11. The main counter-obligations relate to the achievement of the limit value of the target indicator (indicator) established by the interdepartmental commission for the corresponding modern technology.
- in order to create conditions for increasing the productivity of manufacturing enterprises, a targeted loan is provided with an interest rate of 1% per annum12. The loan covers the costs of enterprises for the development or transfer of technology, including development and development work, control and certification activities necessary for the implementation of the project; purchase of consumables, including raw materials and resources for testing equipment and technology; for engineering, including ensuring the necessary adaptation of technological equipment, computer, server, network equipment and engineering utilitiy lines, software and hardware systems, adaptation and (or) processing (modification) of software; acquisition of ownership for the purposes of technological re-equipment and modernization of the production of Russian and (or) imported industrial equipment, both new and used (including accessories, technological equipment, repair kits), as well as its installation, adjustment; for general business expenses of the project, including the costs of performing management and maintenance functions.
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10 Resolution of the Government of the Russian Federation dated July 16, 2015 No. 708, Order of the Government of the Russian Federation of November 28, 2020 No. 3143-р; https://frprf.ru/download/prezentatsiya-spik.pdf, https://frprf.ru/navigator-gospodderzhky/spik_main/
11 Resolution of the Government of the Russian Federation dated December 12, 2019 No. 1649
12 Fund standard conditions and procedure for selecting projects for financing under the program "Increase in labor productivity" dated September 21, 2018; https://frprf.ru/zaymy/proizvoditelnost-truda/
The Ministry of Industry and Trade of Russia together with the Entrepreneurship Development Fund in order to support backbone organizations (anti-crisis measures)13 offers:
- subsidies provided in accordance with Part 1 of Article 78 of the Budget Code of the Russian Federation for the purpose of financial security (reimbursement) of costs (part of costs) in connection with the production (sale) of goods, performance of work, provision of services in the manner established by the rules for granting subsidies to systemically important organizations in 2020 to ensure (reimburse) such costs (part of the costs) approved by the Government of the Russian Federation;
- deferral (installments) for the payment of taxes, advance payments of taxes in accordance with the Rules for granting a deferral (installment plan) for the payment of taxes, advance payments of taxes and insurance premiums, approved by Decree of the Government of the Russian Federation of April 2, 2020 No. 409 "On measures to ensure the sustainable development of the economy";
- state guarantees of the Russian Federation for loans or bonded loans attracted by backbone organizations for the purposes established by the Government of the Russian Federation as part of measures aimed at solving urgent tasks to ensure the sustainability of economic development, in the manner and under the conditions provided for by the Decree of the Government of the Russian Federation dated May 10, 2017 No. 549 "On State Guarantees of the Russian Federation for Credits or Bonded Loans Raised by Legal Entities for the Purposes Established by the Government of the Russian Federation as part of Measures Aimed at Solving Urgent Tasks of Ensuring Sustainability of Economic Development".
The experience of creating and operating free (special) economic zones of various types in the world economy is enormous. Today, there are about 5,400 free (special) economic zones of various types in the world. At the same time, more than 1,000 have been created over the past 5 years and more than 500 are planned for the coming years. With a total number of employees of at least 4 million and an export volume of over $30 billion through such zones, we can talk about their 15-20% share of world trade. It is difficult to name a country that, at one stage or another of its development, would not turn to this tool to solve economic problems.
The number of SEZs around the world continues to grow, which intensifies competition for investors between them.
Of the total number of economic zones in the world, 30% of them remained unrealized, and out of 70% of those implemented, only 1% achieved significant success, these are the famous SEZs: Jebel Ali in Dubai, SEZ Shenzhen and Shanghai in China, SEZ Katowice in Poland, Jurong in Singapore, Shanon in Ireland, etc., while the experience of developing advanced SEZs shows that a critical mass of projects in the zone is filled 6-8 years after the completion of the construction of the necessary infrastructure.
Nearly half of the world's SEZs is located in Asia, with China, Vietnam, the Philippines, India and Indonesia holding the record. For example, the number of SEZs in China reaches 187, and in Vietnam and Indonesia - 185 and 115, respectively. At the same time, only 2 SEZs were created in Ireland.
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13https://gisp.gov.ru/support-measures/list/11478749/
The distribution of SEZ by regions of the world is as follows: Asia accounts for 43%, America - 23%, Europe - 19%, the Middle East - 9% and Africa - 5%.
In international practice, five main motives for the creation of SEZ stand out most clearly: 1) "oasis"; 2) "employment" 3) export; 4) attraction of investments; and 5) development of depressed areas.
Global trends in the development of SEZ
All global trends in the development of SEZ are united by the desire to strengthen the competitiveness of the zones. The following trends in the development of SEZ can be distinguished.
Growth in the number of private management companies
In recent years, the share of private management companies has been growing all the time. More than 70% of SEZs created are managed by private companies.
Development of new types of SEZ
The number of possible SEZ types is growing all the time. Countries are experimenting with zones, trying to find the most optimal ones.
Growth and diversification of services in SEZ
The growing competition between SEZs in different countries and globalization force us to constantly increase the number of services provided, their quality and develop new types of services that may be of interest to investors, replacing the traditional concept of focusing on tax and customs preferences.
Using SEZ for testing of reforms
More and more countries are following the successful example of foreign countries (such as China) and using SEZ to test new models of governance and regulation, then extending the SEZ regime to the entire territory.
Models for the development of free economic zones in Asian countries and, in particular, in China, are notable for their diversity.
The institutional structure can be seen on the example of SEZ "Tianjin". The management company is responsible for budgeting for the construction of infrastructure facilities, for attracting investments in SEZ, and also selects and registers new participants. The subsidiaries and departments of the management company consist of bodies that are responsible for construction work, marketing activities, provision of utility services, etc. Other subsidiary bodies provide additional services such as architectural design and technical support.
The choice of a model for the administrative and economic management of a special economic zone depends on its type and size of territory, the features of the state structure of the country, and the development of the private sector. A generalization of the experience of functioning of free economic zones in the world shows that the establishment of special regimes and mechanisms for customs taxation, taxation, subsidies, pricing, a special currency regime attracts significant financial, material, technological and labor resources. As a result, the economic potential develops rapidly, foreign exchange earnings increase, the domestic market is saturated with competitive goods and services, and exports increase significantly.
The UAE's annual economic development reports note the active development of special economic zones. The first one appeared in Jebel Ali Free Zone in 1985. Now there are more than 20 of them and several more are in the process of creation. There are economic zones in each of the seven Arab Emirates. More than half of the zones are located in the emirate of Dubai. The largest and most famous continues to be the Jebel Ali zone, located in Dubai - about 5500-6000 companies from more than 120 countries work in it. It is the largest and fastest growing economic zone in the world.
The economic zones existing in the UAE can be divided into four types: free trade zones, industrial zones, technology development zones, and service zones. This classification is rather conditional. The UAE is characterized by the presence of complex zones that cover different aspects of export-import, production and innovation activities that is why their internal structure is the most sophhisticated.
Each of the Arab Emirates is an absolute monarchy, and the state, represented by the government and emirs, is the main initiator of the creation of a special economic zone (hereinafter referred to as the SEZ) in the country. Zones are usually managed by state-owned companies (eg Dubai Holding). The conditions for attracting residents and the successful operation of business in economic zones are almost the same for all zones of the UAE. To a greater extent, they differ in their geographical location and the opportunities provided to companies in each specific zone.
For residents of economic zones, the UAE government legislates various tax and customs benefits.
In addition to benefits, a number of different services are provided to residents of economic zones in the UAE, for example, subsidies for water and energy supply. The developed transport infrastructure is one of the main reasons for the attractiveness of the economic zones of the Arab Emirates for residents: the proximity of ports, international airports of the most modern level, a developed network of roads, etc. The UAE Government is investing heavily in the development of the infrastructure of the SEZ, using the state-of-the-art technologies in the design. In addition, the UAE has a high availability of the most modern communications - wireless communications, fiber optic networks, etc.
The most common types of activities of companies-residents of industrial zones are: petrochemistry, textile and light industry, jewelry production, pharmaceutical industry.
In Poland, SEZ represent one of the classic examples of successful interaction between the state and business.
The state fully ensures the formation of all the necessary infrastructure. At the same time, land plots are sold to SEZ participants, taking into account the funds invested by the state.
At the same time, in Poland, SEZ has a slightly different approach to business promotion. If world practice involves exemption from paying any taxes, then in Poland SEZ participants are presented with a certain invoice, which is formed in the amount of 25-55% of the capital costs incurred by the SEZ participant.
Calculation of the amounts of taxes, fees and payments to the budget occurs in the usual mode, however, payment is made by "writing off" from such an account.
The management company - SEZ administrator has a wide range of functions.
In the Russian Federation, the SEZ is understood in the same way as in Kazakhstan - a part of the territory of the Russian Federation, which is determined by the Government of the Russian Federation and which has a special regime for doing business, and the customs procedure of a free customs zone can also be applied.
However, there are a number of differences from the Kazakh SEZ. So in Russian SEZs they do not establish a list of priority (permitted) activities, but divide them into types as follows:
1) industrial and production special economic zones;
2) technical and innovative special economic zones;
3) tourist and recreational special economic zones;
4) port special economic zones.
SEZ residents are provided with tax preferences for VAT, excises, taxes on profits and property of organizations (from 5 to 10 years), as well as land (for 5 years) and transport taxes (from 5 to 10 years).
At the same time, the preferential rates are not reduced to 0 and operate progressively.
In 2016, for a number of reasons, the Russian Federation decided to abolish 10 SEZs, 8 of which are tourism (part of the SEZs remained on paper, in some residents do not operate, in some there are no residents at all). A similar experience of the life of tourist SEZs is quite expected in Kazakhstan (the SEZ "Burabai" functioned earlier, and also proposals to create a tourist SEZ periodically occurIn 2016, for a number of reasons, the Russian Federation decided to abolish 10 SEZs, 8 of which are tourism (part of the SEZs remained on paper, in some residents do not operate, in some there are no residents at all). A similar experience of the life of tourist SEZs is quite expected in Kazakhstan (the SEZ "Burabai" functioned earlier, and also proposals to create a tourist SEZ periodically occur).
Thus, the experience of creating and developing free economic zones in the world indicates that benefits are necessary for the successful development of SEZ, the duration depends on each country, the strategy for developing the existing economic potential, material resources, and labor force. The choice of management in the SEZ also determines the effectiveness of the operation and development of the SEZ.
For example, in many countries, in order to stimulate the development of SEZ, tax and customs preferences are provided, expressed in benefits for income tax, property tax, customs payments, value added tax, land taxes.
The problem of creating free (special) economic zones was not ignored in the former USSR, where since the late 80s, under the influence of the rapid development of SEZ in China, Taiwan and South Korea, the study of this issue began to pay close attention. However, this process coincided with a difficult crisis transition of the country's economy to market relations, due to which its development underwent significant adjustments at different stages.
In the context of the pandemic and against the backdrop of unstable and low oil prices, a struggle on the world stage is unfolding not only for new investments, but also for saving our own industrial industry.
Governments of different countries are doing a lot of work to improve and create new conditions for the development of their industry.
Kazakhstan, which has huge potential, needs to use every opportunity to create a strong and competitive economy.
In order to develop the economy, it will be necessary to carry out work to improve the mechanisms for the development of the industrial sector.
One of the tools is special economic zones.
All over the world, SEZs are used as an effective infrastructure tool for industrialization and are an important link in the implementation of the principles of an open economy. Their functioning is associated with the activation of the country's foreign economic activity.
Currently, different approaches to management and financing have affected the uniformity of development of each SEZ.
Thus, in world practice, the average construction period for a complete SEZ infrastructure takes 2-3 years (UAE, Poland, China). In Kazakhstan, the basic infrastructure is being built for at least 5 years.
The experience of developing advanced SEZs shows that a critical mass of projects in the zone are filled 6-8 years after the completion of the necessary infrastructure.
Despite the measures taken and the results achieved, the development potential of SEZ and IZ is not fully disclosed, which opens up prospects for their further development.
2.1. Global trends of industrial development
There are certain vectors for the development of the global economy, which are followed by all developed and developing countries. Today 7 global megatrends have been identified that will have the greatest impact on the manufacturing industry in Kazakhstan. These trends must be taken into account when implementing industrial policy.
2.1.1 Technological development on the basis of digitalization
Digital technologies are actively introduced into all spheres of human life and production processes. In addition to such basic digital technologies as the industrial Internet of things, cloud services, 3D printing, Big Data, 5G, augmented and virtual reality, which have already become a reality of today, quantum services, smart spaces, biochips, neural processors, edge computing are becoming important trends. (Edge), augmented analytics, visual and voice product search services, mixed reality.
According to the data of Accenture, in 2030 virtual factory technologies will spread: self-organizing and self-supporting factories, smart services. Whereas Gartner predicts that in ten years, artificial intelligence (AI) technologies will become ubiquitous.
Digital technologies affect not only the industry, but also change the characteristics of the "typical" city. So, new technologies will expand the possibilities of spaces where a person happens to be, and will allow "smarter" living and working. Such technologies include 4D printing, self-healing systems, smart dust, silicon anode batteries (which have a much higher capacity than usual), stereo displays, flying autonomous vehicles.
The active introduction of digital technologies allows enterprises to strengthen competitiveness through the offer of a customized (individualized) product, a significant reduction in the introduction of new products to the market, the creation of self-optimizing, adaptive and autonomous industries, the provision of related advanced "smart" services.
2.1.2. Shift of economic power towards Asian countries
Tendencies of development of the world economy change the direction of demand from emerging Asian markets. Rising living standards in Asian countries contribute to the formation of the middle class, the demand from which is directed to the consumption of inexpensive, but high-quality end-use goods. This tendency contributes to the development of the economy of simple things.
2.1.3. Regionalization versus globalization
Support for globalization is gradually shifting to the Asian region, while Western countries are increasingly resorting to restrictive measures and protectionist policies. The world is moving from global competition between countries to competition between regional blocs. In the context of the emergence and continuation of "trade wars" against partner countries in economic communities (the Eurasian Economic Union, Shanghai Cooperation Organization, etc.), Kazakhstan has the opportunity to create and develop "offshore production".
2.1.4. Green economy
The issues of transition to a "green economy" are becoming increasingly important, as the growth of environmental problems - air, land, water pollution - has been already adversely affecting the climate and human health. Everywhere decisions are made to abandon industries that cause great harm to the environment, and penalties for non-use of treatment facilities and equipment grow.
The EU's transboundary carbon tax is on the global agenda. This will affect domestic producers of ferrous and non-ferrous metals, cement, fertilizers and other goods.
2.1.5. Cloced production cycles (loop economy)
Closed-loop economy is becoming increasingly relevant in the face of depletion of natural resources and environmental pollution dangerous for humanity. Such an economy implies a constant circulation of materials in production and consumption, excluding the formation of waste that accumulates in the environment. Such a business model provides for the need for preliminary planning of measures for the disposal of manufactured goods and the return of materials to the production cycle. In addition, a closed production cycle makes it possible to reduce production costs.
2.1.6. Strengthening the role of cooperation (coop economy)
The coop economy recognizes the right to personal gain in a structure that supports each of its members. In the coop economy, much of industry, trade, and commerce is managed through cooperative organizations.
In the coop economy, the activity of state enterprises will be directed to the supply of materials and services to producers at a reduced price. The cooperative business will produce all kinds of goods and services, from essential goods to luxury goods, including health care, legal services and agriculture. All of these businesses will operate as for-profit businesses, but profits will be shared among members rather than executives.
2.1.7. Strengthening the role of the state in industrial and innovative development
Under the current conditions, the role of the state in the implementation of the industrial-innovative policy is being strengthened by further improving institutional, infrastructural, financial, fiscal and other types of support, as well as initiating target vectors of scientific and technological development in order to stimulate innovative and technological development of the manufacturing industry.
3. Vision of the industrial-innovative development
The main directions of the state policy of industrialization, as a catalyst and the basis for the diversification of the entire economy, are the creation of a technologically advanced industry, the modernization of fixed assets, the digital transformation of enterprises focused on the creation of products of medium and upper processing, with a focus on inclusion in global supply chains.
In accordance with the main directions of the National Development Plan of the Republic of Kazakhstan until 2025, the emphasis in the state industrial policy will be placed on the creation of an export-oriented economy with high added value.
Export orientation is dictated by the need to expand markets for the growing volume of goods and services and to integrate them into global value chains. Export-oriented industrialization will allow bringing new Kazakhstani goods to foreign markets, including high value-added goods.
Based on these tendencies in the medium term, a number of strategic industries can be identified.
In metallurgy
Taking into account the issues of national security in the light of an unstable geopolitical situation, one of the strategic materials in metallurgy is rolled metal, which is one of the most important structural materials. It is used in almost all branches of modern industry, including engineering and construction industry.
Ferrous and non-ferrous rolled products play an important role in modern life, contributing to the development of production and accelerating construction processes.
Taking into account the task set to increase the volume of construction, the shortage of domestic rolled metal can lead to higher housing prices and, as a result, to social tension among the population.
Over the past 10 years, metallurgical enterprises of Kazakhstan have been actively integrating domestic production of metals with world manufacturers of finished products with high added value (together with Aubert & Duval (France) - "UKAD" (forged and stamped titanium products, landing gear for aircraft); together with POSCO (Korea ) - "POSUK Titanium" LLP (titanium slabs and ingots); a joint venture in France "EcoTitanium" (supply of sponge titanium for further processing by UKTMP, with the "Evraz" group (Russia) production of cable and wire products).
A special breakthrough in the transition to deep processing was achieved in the aluminum industry. Produced primary aluminum became the foundation for the further development of aluminum processing:
- aluminum profiles;
- aluminum radiators;
- aluminum alloys, powders, wire and more.
For example, the project of the 5th processing unit for the production of automobile aluminum wheels, with a capacity of up to 1 million wheels per year from domestic alloyed aluminum.
This project has been successfully integrated into the production chain of the domestic automobile industry.
In the next 5 years, the development priorities in ferrous metallurgy will be the production of new types of composite alloys using magnesium-chromium steel alloys for heavy engineering, in non-ferrous metallurgy - aluminum alloys with the addition of titanium and silicon for use in the automotive industry and the aviation industry.
At the same time, constant technological progress is increasing the global demand for products made from rare earth metals. Moreover, it should be noted that high value-added production and the corresponding technological complexity are also products of the upper redistribution.
Currently, the world demand for rare earth elements is about 120 thousand tons per year. However, the world market for rare earth metals is practically monopolized by production from China. There are already various kinds of restrictions on the supply of rare-earth metal products, which has an extremely negative impact on the industry of other states. In this regard, the largest economies in the world that actively use rare earth metals in their industry (USA, Russia, Japan, Germany) have various plans to reduce their high dependence on the supply of rare earth metals from China. One example of this shift away from Chinese dependency can be seen in the agreement between the United States of America and Australia for the joint mining and processing of minerals, including rare earth and rare metals (neodymium and tantalum).
Kazakhstan has significant reserves and prospects for expanding the mineral resource base of rare and rare earth metals.
Considering that it is the production of rare and rare earth metals specifically will play an important role in the development of the global economy in the future, it is necessary to develop joint projects involving global players in such priority areas as mining, breeding, obtaining pure rare and rare earth metals and their compounds, with further development of semiconductor, electronic, instrument-making and other advanced branches of science and technology.
Based on world practice, the further development of the rare earth metals industry should provide for an increase in state support in stimulating the production of high value-added products.
Kazakhstan is implementing a new industrial policy aimed at creating a highly productive and export-oriented manufacturing industry.
The latest developments in high-tech sectors of the economy (aviation, nuclear power, rocket science, automotive industry, microelectronics, mechanical engineering) require guaranteed supply and the creation of new special materials that can meet the growing requirements of manufacturers of science-intensive products. The basic elements for the successful development of these areas are rare metals, including rare earth metals. The use of rare and rare earth metals and their compounds is associated with their unique properties, such as refractoriness, polyvalence, hardness, plasticity, creep, etc.
Currently, four key areas: additive technologies, polymeric and composite materials, rare and rare earth metals, new structural and functional materials and substances, are global trends.
Modern composite materials have sufficiently high strength, low thermal conductivity, and high electrical insulating properties. Subsequent development is associated with improving the quality and expanding the functionality.
The development of the manufacturing industry, along with other areas, requires the implementation of research and development work aimed at creating technologies for the production and synthesis of new composite materials using domestic rare metal raw materials, contributing to the development of high-tech production of the manufacturing industry in the Republic of Kazakhstan and allowing to ensure competitiveness Kazakh producers, as well as reduce the import dependence of enterprises.
Today, in the republic, the production of rare earth metals is carried out at specialized enterprises, the production assets of which do not correspond to the modern level of technology, and also completely work on raw materials supplied by the customer (tolling).
In order to avoid commodity dependence, increase the production of rare and rare earth metals, as well as increase the range of products, it is necessary to develop the processing of imported raw materials in the form of waste from the metallurgical production of rhenium sulfide and heat-resistant nickel alloys with the production of rhenium and other rare metals through technical re-equipment and modernization of production of RSE "Zhezkazganredmet".
Mechanical engineering
In the engineering industry, the strategic direction in general is localization, as it contributes to the achievement of economic and technological security, the country's independence from geopolitical and macroeconomic changes.
High dependence on imported raw materials and components is still a significant problem in the industry. More than 81% of the needs of the domestic market in engineering products are provided by foreign supplies (up to 60% of imports from Russia, China and Korea). On the territory of the Republic of Kazakhstan, mainly assembly plants are organized with a minimum level of localization.
In the automotive sector, the production of automotive components (auto glass, stamping, bodies, gearboxes, axles, gearboxes, wheels, interior and exterior plastic products), the production of electric vehicles and, in particular, the production of batteries for electric vehicles, are strategic.
In the railway engineering sector, it is necessary to master foundry, forging and stamping for enterprises.
In the sector of agricultural engineering, it is necessary to establish the production of components (cabins, glass, wheels, plastic products for interior and exterior, etc.).
In the mining engineering sector, it is necessary to create foundries (workshops) for the production of blanks for the engineering industry.
In the sector of oil and gas engineering, it is necessary to improve the quality of manufactured products in order to comply with the requirements for certification according to international standards for purchased products (API, ASME). The main products are customized machines and equipment for the needs of each customer and oil and gas field. These are mainly shut-off valves, pumps, heat exchangers, oilfield equipment.
In the electrical engineering sector, a strategically important direction is the adjustment of the production of transformer steel. In addition, an extremely important area is the production of electrical distribution equipment and products aimed at interacting with electricity. The issues of development of electrical infrastructure and the functional use of electricity will further increase as a result of population growth and the industrial potential of the country.
In the electronic industry sector, strategically important areas are sectors related to the localization of the production of communication and computing equipment, instruments and sensors for automation and digitalization of technological processes and industries in all sectors of the real economy, including Smart City projects, as well as electronic devices and devices for aerospace and defense industry.
Given the human and scientific potential, as well as the cost of labor and basic utilities, the most favorable conditions are needed to attract global electronics companies to organize assembly plants with the simultaneous creation of relevant scientific laboratories and institutes. These conditions should include economic incentives, simplification of all processes for importing components and exporting finished products, as well as for training and R&D.
Chemical industry
The agricultural chemistry sector is of great importance in the world. The most competitive market in the world is the market for nitrogen fertilizers, it accounts for 60% of the total market, 25% for phosphorus and 15% for potash fertilizers. For Kazakhstan, the agricultural chemistry sector is the most promising, because it has a constantly growing domestic market and export potential.
One of the most popular chemical products are polymers. At this stage, the production of polymers is the most dynamically developing sector in the world economy. Polymers are widely used in many industries, displacing the traditional markets of paper, cotton, wool, leather, wood, etc. The volume of their consumption is growing annually by 5-6%. There is a wide range of polymers, the base ones include polyethylene (PE), polypropylene (PP), polyvinyl chloride (PVC), polyethylene terephthalate (PET), polystyrene (PS), polyurethane (PU), synthetic rubbers (SR) and many other polymers, and copolymers.
Building materials production
For the building materials industry, it is strategically important to develop goods for the development of complex industries with a higher added value. These products include finishing materials: sanitary ware, ceramic tiles, wallpaper, linoleum, sheet glass, etc. This segment of the industry remains import-dependent. At the moment, one of the possible directions of development is the production of ceramic tiles. So, based on the available reserves of kaolin clay deposits (more than 50 deposits), it is possible to develop the production of this product. However, the limiting factor is the lack of mining and processing plants for the production of the necessary raw materials for ceramic tiles. The opportunity to organize the production of sanitary ware (bathroom ceramics) is also promising. This product is characterized by great demand both in the domestic market of the country and in the external markets of the macroregion. There are extensive explored reserves of raw materials for the production of bathroom ceramics on the territory of the country, but their extraction and enrichment are also not organized. Consolidation of the production of coarse ceramics on the basis of existing ceramic tile enterprises can reduce the cost of organizing infrastructure, buying out a land plot, and building household and administrative facilities. Increasing the capacity of thermal insulation materials will also help reduce the dependence of the domestic market on imports. The use of polymer raw materials in thermal insulation and the development of a gas chemical complex with the production of polypropylene and polyethylene will have a positive impact on the provision of manufacturers with raw materials.
At the same time, it should be noted that the preservation of the production of basic goods such as cement, ready-mixed concrete, wall materials (ceramic, silicate bricks) is important due to their primary use in the construction industry.
The promotion of goods produced in Kazakhstan with unique characteristics that are in demand on the world market (for example, the production of chrysotile and chrysotile cement products), protection of the interests of such industries on international trading floors will continue.
Light industry
Despite the annual growth in the production of light industry products, the security of the domestic market is only 10%. With the available raw materials, the light industry of Kazakhstan is poorly developed in the production of semi-finished products and accessories, which hinders the competitiveness of the finished products segment.
In general, in terms of production volumes, the industry is represented mainly by large and medium-sized enterprises, which in most cases are focused on government orders (special clothing, uniforms, etc.).
At the same time, the prospect of development of the domestic industry is the basis for the development of the commercial segment.
In this industry, the main strategic guideline should be the development of high-margin areas through the formation of their own commercial brands.
In this aspect, it is necessary to focus on the development of marketing, design, distribution, as well as the production of finished products, national brands in the field of clothing and footwear, which will increase the added value of products, expand the geography of exports, and also multiply the industry's share in the manufacturing industry.
Furniture manufacture
The country's furniture companies are almost completely dependent on the supply of imported raw materials (chipboard, fiberboard, MDF), which mainly come from Russia and Belarus. So, in 2020, the Republic of Kazakhstan imported board products worth over 200 million US dollars.
In order to reduce the dependence of domestic furniture enterprises on imported raw materials, the production of chipboard and fiberboard should be classified as a strategic production.
For the implementation of strategic production of goods of medium and upper processing, oriented to domestic and foreign markets, a set of incentive measures is provided.
Innovations in industrial development are the reformatting of support for industries and the transition to stimulating the development of the production of specific types of processed products of high and medium added value. Thus, on the basis of international experience, a list of priority goods with high added value and product complexity will be formed. This list will consist of priority goods that form the spheres and industries of the manufacturing industry, which determine the long-term competitiveness of the national economy and the concentration of support measures, with the exception of commodity items related to the "commodities" segment (raw materials, near-commodity items, the production and trade volumes of which are greatly influenced by external conjuncture, namely the prices of raw materials on world exchanges).
State incentive measures will be provided to manufacturing enterprises that produce products from this list. This will ensure the transition of enterprises to the model of export-oriented development by increasing the level of labor productivity and product quality.
The basic criteria for the inclusion of goods in the list will be the following: technological complexity of products, export potential and consumption potential in the domestic market.
The list will include more than 4,000 items on 6 FEASN signs and cover all branches of the manufacturing industry.
Also, in order to ensure the competitiveness of the industry, according to the list of priority goods, work will be carried out to attract investment.
A mechanism to provide processing industries with raw materials will become a means of increasing the efficiency of the functioning of enterprises, creating conditions for development and diversification. The mechanism is aimed at creating favorable pricing for raw materials, including those that are not produced and do not have prospects for production within the country, but are used in the creation of export-oriented products.
Industrial policy is focused on creating conditions for stimulating the competitiveness of manufacturing enterprises that are able to adapt to changes in geopolitical and economic processes.
In order to ensure the sustainable development of the manufacturing industry by increasing the production of competitive, high-tech, export-oriented products and moving away from the raw material development model, a draft Law of the Republic of Kazakhstan "On Industrial Policy" was developed.
The main objectives of the draft law are:
improving the welfare of the population of the country;
creation and development of modern industrial infrastructure;
development of new high-tech industries;
increasing the competitiveness of production by increasing labor productivity;
increasing the self-sufficiency of the national economy.
The adoption of the Law of the Republic of Kazakhstan "On Industrial Policy" will lay the foundation for the formation of an effective industrial policy.
4. Main principles and approaches of development
The principles and approaches of the industrial-innovative development will be implemented within the framework of the Law of the Republic of Kazakhstan "On the Industrial Policy of the Republic of Kazakhstan", as well as taking into account the obligations of the Republic of Kazakhstan within the framework of membership in international economic organizations.
4.1. Principles for conducting the industrial-innovative policy
The Concept of industrial-innovative development will maintain continuity and be based on the following principles:
1) focus on the production of processed products with high added value;
All horizontal policies to improve the industrial and business climate, hard, soft, innovative infrastructure and digital transformation will be taken into account.
In order to stimulate the production of goods with high added value and product complexity, priority goods of medium and upper value added (hereinafter referred to as the priority goods) will be identified.
2) conjugation of industrial-innovative and territorial development;
Efforts will be focused on the development of specialized factors, mainly at points of spatial growth, to achieve agglomeration effects that stimulate competition, increase the complexity of local markets, reduce transaction costs, stimulate the development of competitive territorial clusters.
In order to solve systemic problems in the manufacturing industry, the industrial specialization of the regions, as well as the potential for balanced (spatial) development and the provision of appropriate government incentives, will be taken into account.
In addition, in order to accelerate the development of cross-border cooperation, as well as a common market for goods, works and services, attention will be paid to uncovering the industrial potential of neighboring regions.
3) Focus on foreign markets, taking into account internal opportunities;
The creation of domestic added value is one of the most important factors in developing export potential and increasing competitiveness in foreign markets.
The consistency of the policy of export-oriented industrialization, based on the creation, maintenance and development of industries focused on the world market and viable in the conditions of global competition, which must be combined with reasonable protection and development of the domestic market, will be preserved.
4) balance of strategic interests of the state, society and business;
The planning, implementation and monitoring tools of the industrial-innovative development provided by the state planning system, the Law of the Republic of Kazakhstan "On Industrial Policy of the Republic of Kazakhstan", the Entrepreneurial Code of the Republic of Kazakhstan and the existing ecosystem of development institutions will be used.
Flexibility in the implementation of the policy will be carried out through constant feedback from the public and business, ensuring high susceptibility to changing conditions.
5) efficiency and targeting of incentive measures.
The implementation of the policy will be focused on achieving concrete results consistent with the long-term strategic goals of the country's development.
As part of the new approach to the implementation of incentive measures, a shift in focus is envisaged to efficient manufacturing enterprises that are aimed at technological modernization and digitalization of production, with a focus on the export of their products, as well as saturation of the domestic market.
When providing state incentive measures to manufacturing enterprises, operators will focus on priority goods.
4.2. Development approaches
The policy of the industrial-innovative development will be balanced between direct and systemic support, taking into account the obligations of the Republic of Kazakhstan within the framework of membership in international economic organizations.
1) Direct incentive measures for enterprises
The practice of applying direct state incentive measures provided for by the legislation of the Republic of Kazakhstan, which will be provided at all stages of the development of an enterprise, will continue, which will lead to increased competition through the formation of a critical mass of existing enterprises.
In order to stimulate enterprises to switch to an export-oriented development model, existing incentive measures will be improved and new incentive measures will be introduced on a regular basis, eliminating unclaimed and ineffective measures.
To assess the effectiveness of the implementation of state incentive measures for industry, the authorized body in the field of state incentives of industry shall develop and approve the forms intended for the collection of administrative data in the field of industry, on agreement with the authorized body in the field of state statistics.
Within the framework of increasing the competitiveness of domestic enterprises through effective state incentives, the mechanism for their provision will be improved and revised. The essence of the new approach should be to conduct a preliminary analysis of business entities, which includes an analysis of financial stability, technical equipment of the entity, business processes, strategy, its capabilities, results, etc.
When providing state incentive measures, the readiness of enterprises to produce the most promising goods in terms of international competitiveness will be taken into account.
In order to increase the effectiveness of state incentive measures for the industry, counter-obligations of enterprises will be introduced, which provides for a set of obligations of an enterprise to fulfill economic indicators of production, including socially significant ones.
The authorized body in the field of development of state incentives of the industry will approve the rules for determining and applying the mutual obligations of enterprises, which will provide for the mechanisms for applying obligations and basic obligations applicable to all enterprises. A set of counter-obligations will be interconnected with the strategic goals of the state policy of industrialization and improving the welfare of the state.
At the same time, taking into account the different purposefulness of state incentive measures, operators, when providing measures, will determine additional obligations that correspond to the goals of the measures provided.
It also provides for the introduction of liability for poor-quality and / or untimely fulfillment of obligations by enterprises (refunds, compensation, fines, penalties). This will avoid the unfair use of public resources, increase the effectiveness of state incentives and subsequent monitoring.
In addition, in order to ensure transparency when receiving state incentive measures, it is necessary to open access of the state audit bodies to information constituting banking secrecy by including in the rules, model contracts the relevant norms providing for the consent of the recipient of state incentives to disclose bank secrecy to the state audit bodies. At the same time, this condition must be ensured at all levels of the state and quasi-public sector.
Operators of the state incentive measures should take comprehensive measures to increase the transparency of financial transactions of state incentive measures for the provision of funds in terms of developing and approving standard conditions for the disclosure of information on recipients of state incentive measures.
National development institutions, the national managing holding company will provide information on the included counter obligations within the framework of state incentive measures issued to manufacturing enterprises, including within the framework of the Agreement on Increasing Competitiveness (hereinafter referred to as the Agreement) to the national development institution in the field of industrial development.
The agreement is a package solution for obtaining a set of state incentive measures concluded between the state and the subject of industrial and innovative activity on the terms of mutual obligations. The conclusion of the Agreement will give the subject of industrial and innovative activity the right to receive:
1. Guaranteed set of state incentive measures.
2. Co-financing of industrial and innovative projects.
3. Preferential conditions for the provision of state incentive measures.
The operator under the Agreement will be the national development institute in the field of industrial development, which will carry out the selection, support and subsequent monitoring of the implementation of the Agreement.
Agreements will be concluded on the principles of public-private partnership on the terms of interaction between the parties for the implementation of mutual obligations and guarantees.
The Agreement will enshrine:
an individual combined package of direct state incentive measures to be provided to the enterprise by national development institutions and the national managing holding;
the volume of annually allocated within the framework of an individual combined package of direct state incentive measures (at the same time, the allocated funds will not be subject to sequestration by analogy with public-private partnership projects);
counter-obligations of the enterprise to increase labor productivity, increase the range and increase the "complexity" of manufactured goods, including those in demand in foreign markets, as well as the development of new sales markets (at the same time, counter obligations will be commensurate with the volume of state financial incentives provided and take into account possible risks that do not depend on the activities of enterprises);
responsibility of the enterprise for poor-quality or untimely fulfillment of the accepted counter-obligations.
For enterprises that are ready to receive state incentive measures under the Agreement, a competitive selection principle will be applied.
The system of direct state incentives will promote the emergence of new enterprises producing and exporting medium and high-tech products, and thereby will promote the qualitative development and competition of domestic enterprises in the domestic and foreign markets.
State incentive measures for enterprises in the production of medium and high-tech products, increasing labor productivity, industrial grant and development of the domestic market will be provided by the National Institute for Industrial Development.
State incentive measures for the subjects of industrial and innovative activities to increase labor productivity will be provided by reimbursement of historical costs.
The industrial grant will be aimed at modernization of the production capacities of manufacturing enterprises. This measure involves the provision of financial resources on a gratuitous basis on the terms of co-financing for the purchase of equipment and its implementation in production and / or for expanding the range and production of high value-added products, which in the future will effectively promote it both in the domestic and foreign markets.
Support measures within the framework of the National Project can be used by all subjects of industrial and innovative activity, except for entities, fifty or more percent of the shares (stakes in the authorized capital) of which are directly or indirectly owned by the state, the national managing holding, the national holding, the national company (with the exception of social - an entrepreneurial corporation, as well as entrepreneurs established under a public-private partnership agreement).
2) Systemic support
Systemic support will be focused on creating specialized factors and demand conditions for the development of the manufacturing industry in addition to other horizontal concepts to improve the industrial and business climate, support exports, attract foreign investment, and solve problems with the released labor force.
Development of specialized factors
As part of the development of specialized factors, measures will be taken to expand the access of enterprises to:
- industrial and digital infrastructure, including cluster development;
- raw materials and accessories;
- renewal of fixed assets of enterprises, incl. with the introduction of industry 4.0 elements by industry;
- provision of fiscal measures;
- development of the internal market;
- high-quality human capital;
- centers of innovation and competence;
- testing and certification infrastructure;
- joint sales systems, industrial consulting and engineering.
The modern regional cross-section of the development of the manufacturing industry demonstrates a multi-level concentration of production, inter-regional and intra-regional differentiation of the quality of the production infrastructure has a negative impact on the formation of the gross regional product in general.
In order to solve systemic problems in the manufacturing industry, the competitiveness of regions should be based on specialization in industries in which these regions have the strongest competitive advantages, as well as on the potential for balanced (spatial) development and the provision of incentive measures of state support.
The disclosure of the industrial potential and specialization of the regions will be carried out taking into account the centers of high-tech and science-intensive industries in the north-eastern regions of the country, "new redistribution" in the western regions, advanced technologies in the development of the agro-industrial complex in the northern regions, as well as through the development of new energy sources and related industries in the south.
In addition, in order to accelerate the development of cross-border cooperation, as well as a common market for goods, works and services with the Russian side, attention will be paid to unlocking the industrial potential of neighboring regions; as well as the development of "points of growth" (agglomerations), which will ensure the "overflow" of economic activity and prosperity to other territories through integration.
In order to achieve the goals of these programs and to eliminate conflicting actions, interregional and intersectoral coordination of the development of manufacturing industries is necessary.
Industrial policy, which has investment and innovation components, is an integral element of the overall regional policy, and the role of local executive bodies is significant. Local executive bodies participate in the formation and implementation of the industrial policy of the region.
Regional development in the manufacturing industry until 2025 will be determined mainly by the already formed zones of advanced economic growth (implementation tools), which include: free economic zones, the implementation of projects of the Industrialization Map, as well as territorial clusters.
At the same time, the determination of industrial and regional policy will be based on the results of a study of the competitive advantages of the sectors of the economy of Kazakhstan according to the Economic complexity index methodology, a study by the World Bank and other international development institutions.
As part of the Concept of the industrial-innovative development, efforts will be focused on continuing the cluster approach for the development of regional production systems, taking into account the associated industrial-innovative and spatial development.
Cluster policy is one of the tools to increase the competitiveness of the manufacturing industry in the regional context, and in the future, work to support the development of territorial clusters will continue. Further deployment of the cluster policy in the regions is due to the progressiveness of the previously carried out and forthcoming activities carried out within the framework of component 2.2. World Bank project "Improving the competitiveness of SMEs in Kazakhstan".
A key role in the development of territorial clusters is given to regional business associations and local executive bodies.
To provide an analysis of the current state of cluster groups that demonstrate a steady trend towards localization, a register of cluster initiatives by regions will be formed (identification or identification of clusters in the regions and subsequent ranking). The formation of the register will be carried out on a declarative basis by the authorized body in the field of state stimulation of industry in the presence of development plans for the territorial clusters of the program, approved by the participants of the clusters.
Development plans for territorial clusters with a focus on clear priorities based on calculated progressive actions should demonstrate economic efficiency, taking into account competition and public-private partnerships, with a gradual transition to self-financing of the program by the cluster members themselves, with a focus on optimizing and deepening technological chains, their localization, development of collaboration processes.
Development plans for territorial clusters will contain activities aimed at:
1) support and development of cooperation and cooperation of cluster members;
2) development of human resources of the cluster (trainings, advanced training, etc.);
3) promotion of the cluster and cluster products in the domestic and foreign markets (organization of missions to target markets, joint participation in exhibitions, etc.);
4) innovative and technological development of the cluster (conducting joint industrial, marketing research or other research required by the cluster, etc.);
5) creation of a business climate and infrastructure for collective use (laboratories, competence centers, service centers, showrooms, etc.) by cluster members;
6) organization of measures to improve the quality of products or services provided by cluster enterprises (development and implementation of standards, quality assessment, etc.).
The state is the main investor at the initial stage of cluster development. In the future, the possibility of mixed (private and public) financing will be considered. Thus, in the regions, on the basis of territorial clusters, concentrated groups of industrial enterprises will be formed, focused on the production of competitive products or services.
In order to further develop SEZ and IZ, new approaches to the functioning and development of SEZ and IZ on the territory of the Republic of Kazakhstan will be introduced, taking into account the world experience of developed countries:
1) the issue of forming a list of priority activities within the manufacturing industry that fall into a low redistribution, while there are no production in Kazakhstan, and also where product imports are more than 65% (the average level of imports in the manufacturing industry is 68.6%), and/ or goods falling into the middle and upper redistribution. The list will be updated once a year. At the same time, the current priority activities will remain the priority for each SEZ separately. Fair competition in the domestic market will be maintained when compiling the list of priority activities.
2) the issue of increasing the duration of the special legal regime of existing SEZs, such as SEZ "Pavlodar", "Saryarka", "NIPT", "Seaport Aktau", "Ontustik" will be worked out.
Current SEZ participants perform their activities until the end of the terms of the contracts, but no more than the initial term of the SEZ.
Each investor will be provided with different periods of validity of the preferential package, depending on the compliance with the criterion for the volume of investments - from 5 to 12 years. For example, up to 100 thousand MCI - 5 years, from 100 thousand MCI to 500 thousand MCI - 7 years (323 thousand - 3.23 million US dollars); 500 thousand - 2 million MCI - 10 years, (3.23 million - 13 million US dollars; over 2 million MCI - 12 years.
3in the SEZ territories, ready-made production premises will be provided for the implementation of projects of small and medium-sized businesses. The construction of these premises will be implemented both through a public-private partnership and by defining as a priority activity.
In addition, as part of the development of SEZ and IZ, the following systemic measures will be applied:
1) allocation of budgetary funds for the construction of infrastructure with critical needs for 3–5 years. For example, the critical need in SEZ "Pavlodar" for today is the completion of the construction of treatment facilities, an increase in electricity capacity through the construction of a substation, in SEZ "Ontustik" a high degree of depreciation of SEZ infrastructure, in SEZ "Astana - a new city" it is necessary to complete the heat supply complex.
2) transfer of infrastructure facilities to the balance of management companies to ensure the operation and maintenance of engineering and communication infrastructure (hereinafter referred to as ICI). The current situation has shown the absence of service companies to ensure the safety and maintenance, elimination of accidents or other failures of IKI facilities.
3) optimization of the headcount of some SEZ management companies up to 30%. For example, in the SEZ "Khorgos-Eastern Gates" the staff number is 73 - units, in SEZ "PIT" - 70 units, in SEZ "ICBC "Khorgos" - 49 units, also the corporate structure of the management company is represented by 4 subsidiaries;
4) withdrawal of undeveloped land plots in SEZ territory.
For the development of the manufacturing industry, technical regulation and metrology tools will be actively used, including in terms of expanding testing capabilities in the manufacturing industry and creating conditions for the recognition of conformity assessment test results at the international level.
Work will be organized to provide the subjects of the industrial-innovative development of the Republic of Kazakhstan with intersectoral information on foreign achievements in science and technology, advanced technologies and industries based on special materials, as well as assistance in the implementation of at least 4 projects for the commercialization of the results of scientific and technical activities, technology transfer, attraction of investments and export of products and technologies.
Evaluation of industrial development
One of the tools for the formation and implementation of industrial policy is the evaluation of industrial development, which provides for the analysis of legal, economic, financial and other factors affecting the development of industry. In the course of the analysis, work will be carried out to identify key factors of production, improve the conditions for the operation of industrial (industrial) enterprises, reduce administrative barriers and solve systemic problems that hinder the implementation of industrial policy. The evaluation of industrial development will allow systematizing and solving problematic issues related to industrial development, taking into account current state priorities.
Project financing and lease financing
Baiterek National Managing Holding Joint Stock Company and its subsidiaries as financial operators will provide the following support measures for enterprises under the Concept, subject to the receipt of the necessary amount of funds, taking into account international obligations of the Republic of Kazakhstan.
1) Lending through financial institutions (operators - Development Bank of Kazakhstan Joint Stock Company, Damu Entrepreneurship Development Fund joint-stock company) will continue through interbank lending through the Development Bank of Kazakhstan joint-stock company and Damu Entrepreneurship Development Fund joint-stock company.
Stimulation of projects to provide engineering products: cars (preferential car loans). Financing will be provided through the Baiterek National Managing Holding Joint Stock Company at an interest rate of 0.1% per annum, followed by a loan from the Development Bank of Kazakhstan JSC at a rate of 0.15% per annum, followed by a loan from STB at a rate of 1% per annum. Basic conditions for lending to individuals: loan amount - no more than 10 million tenge, loan term - no more than 7 years, annual nominal interest rate - no more than 4%, while the annual effective interest rate for the borrower should not exceed 7.5% per annum taking into account the costs of the borrower for insurance and registration of vehicles as collateral.
2) Long-term financing through the Development Bank of Kazakhstan joint-stock company is carried out by mixing 50/50 budget funds and commercial funds for a period of 7-10 years at a rate of not more than 11% for the final borrower with the enterprise's own participation of at least 20% of the project amount.
Budgetary funds are allocated by increasing the authorized capital of the joint-stock company "National Managing Holding "Baiterek" to finance projects in the manufacturing industry at a remuneration rate of not more than 11% per annum for end borrowers by mixing budgetary funds with commercial ones in the proportion of 50/50 for a period of 20 years (financing will be carried out by lending to subsidiaries of the Baiterek National Managing Holding Joint-Stock Company (Development Bank of Kazakhstan joint-stock company) at a rate of 0.15% per annum).
Export financing of domestic producers will be provided by DBK JSC at a rate of no more than 6% for end borrowers by mixing budget funds with commercial funds in the proportion of 70/30 for a period of 20 years.
3) Financing of projects in the manufacturing industry is provided by the Joint-Stock Company "Industry Development Fund" to subjects of industrial and innovative activity, including projects to improve working and living conditions for workers; leasing financing of projects included in the program of joint actions in the field of Kazakh-Russian industrial cooperation. The subject of industrial innovative activity fifty or more percent of the shares (stakes in the authorized capital) of which are directly or indirectly owned by the state, the national managing holding, the national holding, the national company shall not be subject to the financing of manufacturing industry projects.
Budgetary funds are allocated by increasing the authorized capital and / or budgetary lending to the Industrial Development Fund Joint-Stock Company to finance projects in the manufacturing industry at a remuneration rate of not more than 3% per annum for end borrowers.
The subject of industrial and innovative activity ensures the participation of funds in the implementation of the project in the amount of at least 15% of the total amount of financing (for projects aimed at increasing the localization of production, it is allowed to participate in cash in the implementation of the project in the amount of less than 15%). The amount of financing must be at least 80 million tenge (for light industry enterprises, at least 50 million tenge). Financing shall be provided for a period not exceeding 20 years. The remuneration rate for the applicant should be no more than 3%.
In order to receive financing, the subject of industrial and innovative activity submits to the "Industrial Development Fund" Joint Stock Company a package of documents, the list of which is approved by the internal documents "Industrial Development Fund" Joint Stock Company. The procedure and terms for providing financing are determined by internal acts of the "Industrial Development Fund" Joint Stock Company.
4) As part of leasing financing, support will be provided in the following areas:
renewal/modernization of vehicles and special equipment (fire fighting (fire-technical weapons and equipment), rescue, sanitary fleet (ambulances, mobile laboratory complexes and special equipment for providing medical care/services), communal parks, emergency vehicles, patrol cars, special vehicles of authorized bodies) through the leasing financing mechanism of the "Industrial Development Fund" Joint Stock Company. Leasing financing is provided in tenge for cars and special equipment for a period of up to 7 years, the interest rate for applicants should be 7% per annum, while the ratio of budgetary funds and other funding means "Industrial Development Fund" Joint Stock Company should be 70/30. The advance payment is at least 15% at the expense of the local budget or the lessee's own funds (in case of repayment of lease payments at the expense of the republican or local budgets, financing without an advance payment shall be allowed).
renewal of the agricultural machinery fleet. Leasing financing of agricultural machinery is provided in tenge through the "Industrial Development Fund" Joint Stock Company for a period of up to 7 years, the interest rate for applicants should be 7% per annum, while the ratio of budget funds and other funding of the "Industrial Development Fund" Joint Stock Company should be 70/30. The advance payment is at least 15% at the expense of the local budget or the lessee's own funds (in case of repayment of lease payments at the expense of the republican or local budgets, financing without an advance payment shall be allowed).
renewal of the bus fleet. Leasing financing of buses is provided in tenge through the "Industrial Development Fund" Joint Stock Company for a period of up to 7 years, the interest rate for applicants should be 7% per annum, while the ratio of budget funds and other funding of the "Industrial Development Fund" Joint Stock Company should be 70/30. The advance payment is at least 15% at the expense of the local budget or the lessee's own funds (in case of repayment of lease payments at the expense of the republican or local budgets and / or the provision of a bank guarantee and / or an insurance contract concluded with an insurance organization that satisfies the requirements of " Industrial Development Fund" Joint Stock Company, financing without advance payment is allowed). At the same time, for models of buses produced by a method that includes welding and painting operations, the advance payment is at least 5%;
renewal of the fleet of vehicles involved in freight traffic. Leasing financing of vehicles involved in freight traffic is provided in tenge through the "Industrial Development Fund" Joint Stock Company for a period of up to 7 years, the interest rate for applicants should be 6% per annum, while the ratio of budgetary funds and other funding means of "Industrial Development Fund" Joint Stock Company should be 70/30. The advance payment is from 0% at the expense of the local budget or the lessee's own funds (in case of repayment of lease payments at the expense of the republican or local budgets, financing without an advance payment shall be allowed);
leasing financing for applicants leasing vehicles, special-purpose vehicles, with the exception of agricultural machinery (hereinafter referred to as the vehicles), is provided in tenge through the Industrial Development Fund Joint Stock Company for a period of 3 to 5 years with an interest rate for applicants 3% per annum. The advance payment must be 30%. Leasing financing shall be allowed on the basis of the public-private partnership mechanism. Sources of leasing financing will be the means of the republican budget;
leasing financing for projects in the construction industry (production of building materials) and the woodworking industry is provided in tenge through the "Industrial Development Fund" Joint Stock Company for a period of 10 years with a remuneration rate for applicants of no more than 3% per annum. Budgetary funds are allocated by increasing the authorized capital of the "Industrial Development Fund" Joint Stock Company.
Leasing financing can be used by subjects of industrial and innovative activity, state institutions, local, central and state executive bodies, institutions, state utilities on the right of economic management and state municipal management companies of the Republic of Kazakhstan.
5) investment in authorized capital, as well as the provision of mezzanine financing (operator - "Kazyna Capital Management" JSC).
Equity and mezzanine financing will be provided to manufacturing enterprises through a private equity fund/funds under preferential conditions: financing term up to 10 years, participation of the Fund of the Kazyna Capital Management Joint Stock Company up to 49% in the authorized/share capital, the final interest rate is 8% , the amount of investment in one project is from 1 billion tenge to 5 billion tenge.
To invest in the capital of manufacturing enterprises, budgetary funds will be allocated to replenish the authorized capital of Baiterek NMH JSC, followed by replenishment of the authorized capital of "Kazyna Capital Management" JSC to fund private equity funds.
Development of the domestic market
The development of the manufacturing industry will depend on the development and complexity of the domestic market. It is necessary to develop a horizontal trade policy aimed at developing an internal trading ecosystem, which will formulate principles, approaches and measures for developing access to sales channels, promoting and improving trade activities. This policy should include solving the tasks of facilitating the access of domestic manufacturers to retail sales channels, increasing confidence in the results of Kazakhstani testing laboratories and certification centers.
Ensuring systematic access of enterprises to domestic and foreign markets will be carried out in accordance with the concept and the national project aimed at developing trade.
As part of the systemic of state incentive measures for the development of the domestic market, work will be intensified to increase domestic value, including:
1) within the framework of regulated procurement, mechanisms, aimed at developing new high-tech industries, attracting investments and new technologies, supporting the effective implementation of innovations, as well as developing the research base of the Republic of Kazakhstan and integrating it with the production process will be elaborated;
2) creation of a reliable measurement system based on technically advanced and modernized state standards;
3) work will continue on the introduction of new comprehensive measures aimed at increasing the competitiveness of domestic enterprises and manufacturing sectors in the domestic and foreign markets.
The accumulated knowledge and experience, formed through the development of services in the research and engineering sector, must be implemented in the localization of imported products. To do this, it is planned to attract global "anchor" companies to invest in the created productions, which have strong programs for the development of suppliers and have a natural interest in purchasing locally in order to reduce logistics and other operating costs. A promising direction for the development of domestic production should be the attraction of foreign capital through:
1) creation of contract productions;
2) creation of joint ventures;
3) product localization.
In order to load idle enterprises and reach the production capacity of existing manufacturing enterprises, regulated purchases will include mechanisms allowed by international agreements and designed to stimulate customers to purchase manufactured products (for example: a mandatory requirement to refer to a national standard in a technical specification, etc.).
For the purposes of additional loading of domestic manufacturing enterprises, regulatory mechanisms will be developed to provide domestic raw materials and incentive measures, including tax and customs incentives, to facilitate access to imported raw materials that are not produced and do not have production prospects in the territory of the Republic of Kazakhstan.
Thus, the following systemic measures will be worked out for the development of the domestic market of the manufacturing industry:
- implementation of measures permitted within the framework of the Eurasian Economic Union and the World Trade Organization, aimed at ensuring the stability of strategically important sectors of the economy (withdrawal from the national regime, measures of tariff and non-tariff regulation, etc.);
- when implementing large projects by foreign investors, provide for conditions for attracting Kazakh companies as partners;
- stimulating the localization of production by creating small and medium-sized companies around large manufacturing enterprises to provide technologically related and service services, produce component materials and process and (or) dispose of production and consumption waste;
- continuing the work on the development of subcontracting centers together with large private and state enterprises in the industry;
- participation in international systems of industrial cooperation and subcontracting in order to develop industrial cooperation and cooperation within the EAEU;
- creation of a supplier development service on the basis of the national development institute in the field of industrial development, aimed at increasing the competitiveness of domestic manufacturers of processed products, which will allow them to become potential suppliers for large customers in the raw materials and manufacturing sectors of the economy of the Republic of Kazakhstan;
- development of incentive measures for the development of cooperation between manufacturing enterprises and industries within the framework of the execution of contracts (including EPC) on regulated procurement.
Participation in international systems of industrial cooperation and subcontracting within the framework of the EAEU will be carried out within the framework of the project "Eurasian Network for Industrial Cooperation, Subcontracting and Technology Transfers", implemented by all EAEU member states. The project involves the creation of a digital ecosystem that provides economic entities of the Member States with mechanisms for promptly selecting the most effective partners for industrial cooperation and subcontracting, involving small and medium-sized enterprises in the production chains of large manufacturers, and stimulating innovation processes through technology transfer. The national operator for the "Eurasian Network for Industrial Cooperation, Subcontracting and Technology Transfers" will be the national development institute in the field of industrial development, and the overall coordination will be with the authorized body in the field of state support for industrial activities.
The Supplier Development Service will work closely with small and medium-sized businesses to improve their competence, meet the requirements of large buyers in terms of quality and reliability of the goods and services offered, while helping to develop their production and trade relations with relevant large buyers. The activity of the service will help in improving the export opportunities of small-medium businesses:
1) support in the transition to international quality standards, quality management systems and promotion of their use;
2) providing special knowledge and skills necessary for the successful operation of exporting enterprises in specific markets;
3) assistance in technological improvement and the creation of value-added products, which will create the potential for further development and growth of exports.
In order to increase competitiveness and maximize the potential of domestic manufacturing enterprises, it is necessary to conduct analytical work on a regular basis to identify goods for the application of the permitted norm within the framework of the World Trade Organization and the Eurasian Economic Union for exemption from the national regime. Based on the results of the analysis and implementation of the withdrawal procedure, we will be able to maximize the capacity utilization of domestic manufacturers of goods included in the list of exemptions through regulated purchases.
In order to prevent regulated purchases of imported goods from entering the market, it is necessary to conduct regular monitoring and analysis (with the participation of relevant state bodies, NCE "Atameken" and industry associations) of the movement of goods from the list of exemptions from the national regime, including imports.
The next step to further developing the potential for localization of production in Kazakhstan will be the process of attracting multinational companies to cooperate with local manufacturers, replenishing their own supplier base without resorting to "forced localization", encouraging social responsibility and developing competitive enterprises that are able to adapt to international standards and enter foreign markets.
Work will be intensified to coordinate joint actions in the development of existing and creation of new industries in the engineering industry, in the field of service companies, to develop the base of research and development work, human resources, to unify tender procedures in the procurement of operators, as well as to create a unified databases of domestic producers.
Working with large customers will become the basis for coordinated actions of participants in the development of the domestic market and an effective tool for negotiations between domestic producers and customers.
For the retraining and reorientation of the released workforce at manufacturing enterprises, cooperation will be initiated between educational organizations in higher and secondary specialties with manufacturing enterprises.
These measures will help to solve the problems of the lack of high-tech products in the domestic market, the low volume of purchases of goods, works and services from domestic suppliers and manufacturers.
Comprehensive measures to increase competitiveness will be carried out in relation to goods where the main criterion is the ability to implement high quality standards within the framework of international standards.
On a regular basis, an analysis of the market and purchase volumes of subsoil users, backbone enterprises and national companies will be carried out to identify potential demand for goods, works and services, followed by an analysis to identify products in demand in order to determine the possibility of its development by domestic producers, where the result of this work is a cooperative communication between enterprises and signed off-take contracts.
Providing assistance in signing off-take contracts between large customers and manufacturers makes it possible to:
- development of new types of production for the development of added value within the market and export;
- technological development and digitalization of industries.
In addition to state assistance to existing industries, recommendations and directions in the development of new industries of competitive and high-tech products will be presented. One of such directions in achieving the set goals is the formation of a list of the most demanded imported products.
Development of innovation / technological development
In the manufacturing industry, state support for innovation will be aimed at creating favorable conditions for the introduction of a new or significantly improved product (good, work or service), technology or process, a new marketing method or a new organizational method in business practices, workplaces or external ties, to improve the competitiveness of the national economy.
State support for innovative activities of manufacturing enterprises will be aimed at developing high-tech industries, increasing the technological complexity of products, corporate innovations and technology transfer through tools for providing innovative grants, business incubation grants, industrial grants and other tools aimed at promoting the introduction of innovations in production, including process innovations.
So, one of the conditions for the provision of state incentive measures will be the criterion of innovation, aimed at increasing the economic efficiency of activities by creating new or improved goods, works and services, as well as industries, processes and technologies, taking into account their further implementation and ensuring environmental safety.
In general, the innovative development of industry will be ensured in accordance with the general technological policy of the country, which provides for a mechanism and tools, including the definition of technological benchmarks and priority areas for innovative development of industry using the expert potential of industry centers of technological competence. This work will be carried out in close collaboration of the business community, industry, science and the IT sector on the site of the technological platforms being created.
The effective interaction of industrial enterprises with IT companies is very relevant in the context of increasing their competitiveness and labor productivity by automating production, digital process control using the technologies of the Internet of things, artificial intelligence and big data.
The level of automation of Kazakh enterprises remains low. So more than 80% of manufacturing enterprises and 60% of mining enterprises are only at the stage of transition to automated production.
Such a level of automation and digitalization of the industry, along with the lack of incentives and motivation for enterprises to digitalize, is also associated with a lack of sufficient competencies, resources and insufficient information about Industry 4.0 technologies and their capabilities. At the same time, domestic IT companies have limited access to high-quality data from industrial enterprises, which, in turn, does not allow for the development of mature IT solutions.
In this regard, a knowledge base in the field of Industry 4.0 will be formed based on the experience and expertise of industry leaders - industrial enterprises (ERG, Kazakhmys, Kaz Minerals, Kazzinc, Altynalmas, Alageum electric, etc.), international suppliers (vendors) of digital solutions (Fraunhofer, Siemens, Kuka, SAP, Kaspersky, etc.), reputable expert organizations (World Bank, KPMG, Strategy Partners, etc.) and domestic research institutes (Nazarbayev University, Satpayev University, Astana IT University, Kunaev Institute of Mining Affairs, etc..).
Industry 4.0. knowledge base will consolidate expertise adapted to the needs of domestic industrial enterprises to improve the efficiency of enterprise processes through the introduction of digital technologies and information about implemented projects, which will be made publicly available to all interested organizations.
Industry 4.0. knowledge base will allow to show the benefits and risks of introducing digital technologies into production using practical examples; consolidate the accumulated and disparate expertise from different areas of Industry 4.0 and present it as a coherent knowledge base; increase the competence of industrial enterprises and stakeholders in the field of Industry 4.0; increase the share of industrial enterprises using digital technologies; increase the efficiency of industrial enterprises through the introduction of digital technologies and reduce errors in the transition to digital production thanks to the cases presented in the knowledge base; popularize Industry 4.0 by demonstrating systemic approaches and increasing successful cases based on them.
In addition, a platform will be formed that unites IT companies and industrial enterprises into a digital technology platform, the Smart Industry Management Platform (hereinafter referred to as the SIMP) based on a microservice architecture that allows you to constantly increase and develop functionality by adding separate modules for each industry and integration with existing information systems.
Using the SIMP platform should have the following main effects and benefits for both enterprises and IT companies (innovators):
- reduction of capital costs of enterprises due to PaaS / SaaS scaling, as well as lower costs for the full maintenance and maintenance of systems, the introduction of domestic IT solutions;
- optimization of technological processes at industrial enterprises through the introduction of digital solutions;
- obtaining state support measures and services through a "one-stop solution";
- automation of the process of collecting, processing and analyzing large amounts of digital data to obtain detailed information on the development of industries;
- industrial enterprises will have access to high-quality domestic IT solutions, will be able to conclude agreements with IT companies on the platform;
- on the platform it will be possible to hold online conferences, webinars, retraining courses for employees of industrial enterprises and specialists in the field of "Industry 4.0";
- the platform contains an interactive Map of the Industry, which contains information about industrial enterprises and the level of their digitalization;
- in addition, it will be possible to integrate the SIMP platform with other information systems;
- creation of highly qualified jobs in the field of "Industry 4.0".
The SIMP digital technology platform will allow building mutually beneficial cooperation between industry and the IT industry by providing an infrastructure for accommodating the technological tasks of industrial enterprises and domestic IT developments, as well as processing large amounts of data, and improving the competence of Industry 4.0 specialists.
Taking into account the fact that the SIMP digital technology platform is being developed on a microservice architecture, this will allow it to be supplemented with new modules in other industries and to integrate existing information systems without developing digital technology platforms.
In addition, within the framework of the affiliated 4IR Center of the World Economic Forum and the Government of the Republic of Kazakhstan on the basis of AIFC, in order to increase the pace of digitalization in all sectors of the economy within Industry 4.0, it is necessary to build up and consolidate a high-quality knowledge base with successful international cases in the digitalization of similar industries and engage in this process of competencies of international experts.
For the sustainable development of these initiatives, there is a need for the unification of international norms and standards, which can be achieved through the gradual harmonization of standards and legislation. For the purpose of an integrated approach, the 4IR Center included a number of activities in the National Project "Digital El".
The resource base of the Center is currently expanding and supported by the database of the World Economic Forum (international experts, benchmark, etc.).
Industry digitalization
Taking into account the emerging trends, stable growth and competitiveness of the industry of Kazakhstan and other sectors of the economy supervised by the authorized body in the field of state stimulation of industry are possible by creating a technologically advanced industry, transforming and digitalizing the fixed assets of existing enterprises focused on the creation of high-tech and / or competitive products, followed by access to global markets.
It is therefore necessary to provide a set of incentive measures for manufacturers of the manufacturing industry. In particular, taking into account the process of formation of the industry of the "digital age", accentuated stimulation of enterprises producing high-tech products for the introduction of modern digital technologies will be carried out.
Measures will focus on the following areas:
1) improving the legal environment and regulation to stimulate the process of industrial automation;
2) creating a digital infrastructure for industry, including providing enterprises with broadband Internet access to stimulate the process of industrial automation;
3) updating existing and developing new government incentive tools for the introduction of digital solutions and elements of Industry 4.0 in industry;
4) increasing awareness and interest of enterprises in digitalization (training, methodological and expert support, advanced training of specialists of enterprises and organizations, formation of a knowledge base to increase labor productivity, including Industry 4.0);
5) creating a platform for interaction between IT companies, research institutes, industrial enterprises, government agencies, etc.
6) further implementing and monitoring of digitalization and automation projects by backbone companies.
In the process of forming this system of support measures, much attention will be paid to the focus of development institutions on the field of digital technologies to improve the production efficiency of industrial enterprises of the Republic of Kazakhstan through digital transformation based on the use of new generation machinery and equipment, the issuance of innovative grants for digital and technological modernization production, reimbursement of part of the costs of increasing labor productivity, providing leasing financing, etc..
Along with the activities aimed at the digitalization of industry and provided for by the national project "Sustainable economic growth aimed at improving the welfare of Kazakhstan citizens", within the framework of the national project "Technological breakthrough through the development of digitalization, science and innovation", telecom operators will provide a digital infrastructure with high-speed broadband access to the Internet in places of concentration of industrial enterprises, special economic and industrial zones in cities of republican and regional significance.
Unified Industrialization Map
In order to ensure full monitoring of manufacturing projects, as well as their effective implementation, a uniform industrialization map will be adopted, which will include manufacturing projects that have received or are planning to receive state incentive measures, with the adoption of counter obligations.
On a regular basis, work will be carried out to monitor the projects of a single map of industrialization, its updating and maintenance, to identify current and systemic implementation problems and their causes, with the further development of appropriate proposals for their resolution.
Monitoring of the unified map of industrialization, as well as support of its projects, provides for determining the effectiveness of project implementation based on data provided by the responsible sectoral state bodies, national holdings and local executive bodies, as well as primary statistical data on the project applicant from the authorized body in the field of state statistics on the basis of a written consent of the applicant.
Thus, a uniform map of industrialization will be a tool for the implementation of the industrial-innovative system and represent a set of projects implemented by business entities in the manufacturing industry.
The industrialization policy will be focused on solving the problems of the manufacturing industry. It will be associated with the adopted national projects to develop the investment climate, attract and retain foreign investment, promote exports, ensure mass employment, develop entrepreneurship, develop common and digital infrastructure, as well as regions.
The outcome of the industrialization policy shall be the international competitiveness of manufacturing enterprises. The achievement of such a result will be confirmed by the growth of exports of Kazakhstani goods, the expansion and "complication" of the range, as well as successful competition with foreign suppliers in the domestic market.
5. Target indicators and expected results (spcial-economic effect)
Achievement of the goal of the Concept will be measured by the following target indicators (Table 4):
growth in labor productivity in the manufacturing industry by 38.9% compared to 2019;
GVA of the manufacturing industry up to 15 trillion tenge;
real growth of investments in fixed assets in the manufacturing industry by 79.5% compared to 2019;
an increase in the place in the Index of Economic Complexity (Harvard) from 74 to 69 (level from -0.26 points to -0.16 points).
Table 4. Target indicators in the manufacturing industry
Item №. | Target indicators | Measuring units | Information source |
2019 year | 2020 year (fact) | Forecase | Responsible for execution | ||||
2021 year | 2022 year | 2023 year | 2024 year | 2025 year | |||||||
1. | Growth in labor productivity in the manufacturing industry | % by the level of 2019 | BNS of the ASPaR | 100,0 | 104,2 | 116,4 | 121,4 | 127,9 | 133,3 | 138,9 | MIID, MA, ME, MF, MDDIaAI, MH, МКС, MEGNR, akimats of regions, Nur-Sultan, Almaty and Shymkent cities, NCE "Atameken" (on agreement), Baiterek NMH JSC (on agreement) |
2. | 2Gross value added of the manufacturing industry | trillion tenge | BNS of the ASPaR | 8,0 | 9,3 | 9,9 | 11,2 | 12,4 | 13,7 | 15,0 | MIID, MA, MDDIaAI, akimats of regions, Nur-Sultan, Almaty and Shymkent cities, NCE "Atameken" (on agreement), Baiterek NMH JSC (on agreement) |
3. | Manufacturing QI of the manufacturing industry | % to the previous year | BNS of the ASPaR | 105,8 | 104,1 | 105,2 | 103,5 | 103,6 | 104,3 | 104,3 | MIID, MA, MDDIaAI, akimats of regions, Nur-Sultan, Almaty and Shymkent cities, NCE "Atameken" (on agreement), Baiterek NMH JSC (on agreement) |
4. | Real growth in fixed investment in manufacturing industry | % by the level of 2019 | BNS of the ASPaR | 100,0 | 104,4 | 107,8 | 124,2 | 144,5 | 166,5 | 179,5 | MIID, akimats of regions, Nur-Sultan, Almaty and Shymkent cities, NCE "Atameken" (on agreement), Baiterek NMH JSC (on agreement) |
5. | Increasing place in the Index of Economic Complexity (Harvard) | Place (point) | Harvard University Rate |
78 |
74 |
75 |
73 |
72 |
74 |
69 |
MIID, MTI, MNE, MFA, MA, ME, MF, MDDIaAI, akimats of regions, Nur-Sultan, Almaty and Shymkent cities, NCE "Atameken" (on agreement) |
The target indicators of the Concept correspond to the National Development Plan of the Republic of Kazakhstan until 2025.
The approaches and mechanisms laid down in the Concept will increase the growth of the competitiveness of the manufacturing industry and will achieve the following expected results by 2025:
an increase in the number of operating manufacturing enterprises providing a critical mass to 21,000 units;
increase in income from the sale of goods and services of large and medium-sized companies up to 17.7 trillion tenge;
increase in the volume of exports of medium and high technological complexity to 8.6 billion US dollars.
The achievement of the specified objectives of the Concept within the specified period will be ensured through the implementation of the Action Plan for the implementation of the Concept in accordance with the annex to this Concept.
| Appendix Concept of industrial-innovative Development of the Republic of Kazakhstan for 2021 – 2025 |
Action Plan for implementation of the Concept of the industrial-innovative development of the Republic of Kazakhstan for 2021 – 2025
Item No. | Name | Form of completion | Deadlines | Responsible officers |
1 | 2 | 3 | 4 | 5 |
Direction 1. Labor productivity in the manufacturing industry | ||||
Target indicator 1. Growth in labor productivity in the manufacturing industry by 38.9% of the increase from the level of 2019 | ||||
Target indicator 2. Gross value added by the manufacturing industry up to 15 trillion tenge | ||||
1. | Approval at the legislative level of approaches to the introduction of counter obligations, the Agreement on Increasing Competitiveness, new state incentive measures for the provision of an industrial grant | Law of the Republic of Kazakhstan | 2022 | MIID, interested state bodies and organizations |
2. | Implementation of projects aimed at modernizing the equipment of subjects of industrial and innovative activity (industrial grant) | Agreements on providing industrial grants | 2022 – 2025 |
MIID, JSC "KCIE "QazIndustry" |
3. | Implementation of projects in the manufacturing industry with the participation of "Industry Development Fund" JSC (by increasing the authorized capital of "Industry Development Fund" JSC and / or budget lending). | SIP, FEE, report | 2022 – 2025 |
MIID, Baiterek NMH JSC |
4. | Implementation of projects in the manufacturing industry with the participation of "Development Bank of Kazakhstan" JSC through the implementation of budget investments / budget lending at a remuneration rate of not more than 11% per annum for end borrowers by mixing budget funds with commercial ones | SIP, FEE, report | 2022 – 2025 |
MIID, Baiterek NMH JSC |
5. | Investing in manufacturing enterprises through equity and mezzanine financing instruments | SIP, FEE, report | 2022 – 2025 |
MIID, Baiterek NMH JSC |
6. | Implementation of projects in the construction industry (production of building materials) and the woodworking industry as part of import substitution (through an increase in the authorized capital of the Industry Development Fund JSC) | SIP, FEE, report | 2022 – 2025 |
MIID, Baiterek NMH JSC |
7. | Development of recommendations for technological processes of the manufacturing enterprises | Annually. At least 20 recommendations | 2021 – 2025 |
MIID, MDDIaAI, MA, ME, NCE "Atameken" (on agreement), |
8. | Creation and promotion of a register of solutions for the manufacturing enterprises | Register of IT solutions | 2021 – 2025 |
MIID, MDDIaAI, JSC "KCIE "QazIndustry" (on agreement), ACF "PIT" (on agreement), NCE "Atameken" (on agreement), |
9. | Creation and implementation of the state system of intersectoral scientific and technical information in the Republic of Kazakhstan based on special materials | progress report | 2021 – 2025 |
MIID, RSE "NCTF" |
10. | Organization of a system of retraining and reorientation of the released workforce at manufacturing enterprises | memorandum between the akimats of the regions, the cities of Nur-Sultan, Almaty and Shymkent and employers awaiting the release of workforce | 2023 | akimats of regions, Nur-Sultan, Almaty and Shymkent cities, MLSPP, MES, MIID, MA, ME, NCE "Atameken" (on agreement) |
11. | Implementation of monitoring on the controlled flow of workers in large enterprises | Information to MIID | 2022 – 2025 | MLSPP, MNE, MES, MIID, MA, MH, ME, MDDIaAI, MEGNR, akimats of regions, Nur-Sultan, Almaty and Shymkent cities, JSC SWF Samruk-Kazyna (on agreement), NCE "Atameken" (on agreement) |
Direction 2. Investments in fixed assets in the manufacturing industry | ||||
Target indicator 1. Real growth of investment in fixed assets in the manufacturing industry by 79.5% by the level of 2019 | ||||
12. |
Consideration of the possibility of making changes to the Tax Code of the Republic of Kazakhstan on: | proposals to MNE | 2022 | MIID, MF, ME, MA, JSC "KCIE "QazIndustry" (on agreement) |
13. | Elaboration of the issue of regulation of procedures for the acquisition of goods, works and services in regulated procurement | information to КПМ | 2022 | MIID, MF, ME, MTI |
14. |
Elaboration of the issue of introducing amendments to the order of the Acting Minister of the National Economy of the Republic of Kazakhstan dated February 21, 2018a | proposals to MNE | 2022 |
MIID, MF, NCE "Atameken" |
15. | Amendments to the Decree of the Government of the Republic of Kazakhstan dated June 8, 2020a No. 356 "On the establishment of an exemption from the national regime" on the issue of expanding the list of goods withdrawn from the national regime | Resolution of the Government of the Republic of Kazakhstan | 2022 | MF, MTI, MIID |
16. | Generation of proposals for the mechanism of regulation and monitoring of in-country value in the procurement of backbone enterprises | making proposals to MF | 2022 |
MIID, MF, akimats of regions, Nur-Sultan, Almaty and Shymkent cities, NCE "Atameken" |
17. | Development and implementation of new approaches to the functioning of SEZ and IZ activities | draft Law of the Republic of Kazakhstan | 2022 | MIID, MTI, MNE, MF, ME, akimats of regions, Nur-Sultan, Almaty and Shymkent cities |
18. | Construction of SEZ and IZ infrastructure | information to MIID | 2022 – 2025 | akimats of regions, Nur-Sultan, Almaty and Shymkent cities, MTI, MNE, MF, ME, |
19. | Implementation of a project to provide engineering products: agricultural machinery | SIP, FEE | 2022 – 2025 |
MIID, MA, Baiterek NMH JSC (on agreement), IDP JSC |
20. | Implementation of a project to provide engineering products: buses | SIP, FEE | 2023 – 2025 |
MIID, Baiterek NMH JSC |
21. | Implementation of a project to provide mechanical engineering products: fire, rescue, sanitary, municipal equipment, emergency vehicles, patrol cars | SIP, FEE | 2022 – 2025 |
MIID, Baiterek NMH JSC |
22. | Implementation of a project to provide engineering products: vehicles involved in freight traffic | SIP, FEE | 2022 – 2025 |
MIID, Baiterek NMH JSC |
23. | Implementation of a project to provide engineering products: passenger cars | SIP, FEE | 2022 – 2025 |
MIID, Baiterek NMH JSC |
24. | Implementation of a project to provide mechanical engineering products: motor vehicles and special-purpose vehicles, except for agricultural machinery produced in Kazakhstan | information to КПМ | 2022 – 2025 |
MIID, Baiterek NMH JSC |
Target 2: Increase in the Economic Complexity Index (Harvard) from 74 to 69 (from -0.26 to -0.16) | ||||
25. | Development and approval of the Uniform Industrialization Map | Order of MIID | 2022 |
MIID, MH, MF, MNE, MA, ME, akimats of regions, Nur-Sultan, Almaty and Shymkent cities, JSC "KCIE "QazIndustry" |
26. | Launch of new projects within territorial clusters | information to MIID | 2022 – 2025 |
Akimats of Karaganda, Akmola, Kostanay, Almaty, Turkestan regions and Almaty, Shymkent cities, |
27. | Organization of centers for the exchange of experience, advanced training with the participation of educational institutions in the regions where 6 selected territorial clusters are located (Karaganda, Akmola, Kostanay, Almaty, Turkestan regions and Almaty, Shymkent cities) | Regulations on the Cluster Improvement Center approved by cluster members | 2025 | Akimats of Karaganda, Akmola, Kostanay, Almaty, Turkestan regions and Almaty, Shymkent cities, MDDIaAI, MES, JSC "KCIE "QazIndustry" (on agreement) |
28. | Implementation of projects aimed at promoting goods, works and services in the domestic market of subjects of industrial and innovative activity | Agreements on funding | 2022 – 2025 |
MIID, JSC "KCIE "QazIndustry" |
29. | Creation of new composite materials with high performance properties based on rare and rare earth elements | Patents for composite materials | 2021 – 2025 |
MIID, RSE "NC CPMRM RK" |
30. | Stimulation of export financing of domestic producers at a rate not exceeding 6 %. | Agreements on funding | 2021 – 2025 |
MTI, Baiterek NMH JSC |
31. | Development of processing of imported raw materials in the form of waste from the metallurgical production of rhenium sulfide and heat-resistant nickel alloys with the production of rhenium and other rare metals | SIP, FEE | 2022 – 2023 |
MIID, RSE "Zhezkazganredmet" |
32. | Establishment of a production facility for the production of high-quality ferrosilicon with a capacity of 240 thousand tons in Pavlodar region | Commissioning act | 2021 – 2023 |
MIID, Baiterek NMH JSC |
When implementing the Concept, on a priority basis, at the expense of the state budget, funds shall be allocated to achieve the indicators / indexes, reflected in the national projects of the relevant industry.
Funds will be allocated for other activities taking into account the development of the economy and the potential for increasing the budget revenue base.
Note: the transcript of abbreviations:
JSC | – Joint Stock Company |
NCE "Atameken" | – National Chamber of Entrepreneurs of the Republic of Kazakhstan |
MA | – Ministry of Agriculture of the Republic of Kazakhstan |
SEZ | – special economic zone |
Baiterek NMH JSC | – "Baiterek" National Managing Holding" Joint Stock Company |
MES | – Ministry of Education and Science of the Republic of Kazakhstan |
ACF | – autonomous cluster fund |
MH | – Ministry of Healthcare of the Republic of Kazakhstan |
EAEU | – Eurasian Economic Union |
MLSPP | – Ministry of Labor and Social Protection of Population of the Republic of Kazakhstan |
GVA | – gross value added |
SIP | – state investment project |
FEE | – financial and economic evaluation |
MIID | – Ministry of Industry and Infrastructural Development of the Republic of Kazakhstan |
IZ | – industrial zone |
PIT | – park of innovative technologies |
CIT | – corporate income tax |
VAT | – value added tax |
RLA | – regulatory legal act |
MF | – Ministry of Finance of the Republic of Kazakhstan |
DBK JSC | – Development Bank of Kazakhstan" Joint Stock Company |
RSE "NC CPMRM RK" | – Republican State Enterprise "National Center on Complex Processing of Mineral Raw Materials of the Republic of Kazakhstan" |
RB | – republican budget |
IDP JSC | – "Industry Development Fund" Joint Stock Company |
JSC SWF Samruk-Kazyna | – Joint Stock Company "NationalWelfare Fund “Samruk-Kazyna" |
JSC KCM | - Joint Stock Company "Kazyna Capital Management" |
BNS of the ASPaR | Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan |
MTI | – Ministry of Trade and Integration of the Republic of Kazakhstan |
MFA | – Ministry of Foreign Affairs of the Republic of Kazakhstan |
SEZ "NIPT" | – special economic zone "National Industrial Petrochemical Technopark" |
RSE "NCTF" | – Republican State Enterprise "National Center for Technology Foresight" |
MNE | – Ministry of National Economy of the Republic of Kazakhstan |
MDDIaAI | – Ministry of Digital Development, Innovations and Aerospace Industry of the Republic of Kazakhstan |
MEGNR | – Ministry of Ecology, Geology and Natural Resources of the Republic of Kazakhstan |
ME | – Ministry of Energy of the Republic of Kazakhstan |
JSC "KCIE "QazIndustry" | – Joint Stock Company "Kazakhstan Center of Industry and Export "QazIndustry" |
