Astana Calling #305

ASTANA CALLING

Ministry of Foreign Affairs Republic of Kazakhstan

Central Communications Service for the President of Kazakhstan

A WEEKLY ONLINE PUBLICATION / WWW.MFA.GOV.KZ ISSUE NO 307 / FRIDAY, JUNE 14 2013

President on Official Visit to Uzbekistan Bilateral relations, regional security key topics

President Urges Proper Pension Reform Tells Government to re-think plans

Senate Passes Law on Local Self-Government

Fourth Astana Mining and Metallurgy Congress

Another step on the road to modernization

World’s leading mining companies attend

News from the Government in Brief

Also in the News

President Nazarbayev and President Karimov are discussing a broad range of bilateral cooperation issues

President on Official Visit to Uzbekistan President Nazarbayev yesterday began an official visit to Uzbekistan. The visit is at the personal invitation of the President of Uzbekistan, Islam Karimov, and comes at a time when not only are bilateral relations between the two countries strong, but the question of security in the Central Asian region is very much in focus, ahead of the planned withdrawal of foreign troops from Afghanistan next year.

Kazakhstan and Uzbekistan have much in common. Not only do they share a border stretching over 2,200km, both countries were part of the Soviet Union until the end of 1991. They also share a number of regional security challenges, including water management, environmental issues, drugs trafficking and religious extremism.

President Nazarbayev’s last official visit to Tashkent was in March 2010, and President Karimov made an official visit to Astana last September. In just over 20 years since each country became independent, they have signed 160 bilateral agreements.

The two countries represent important trade partners for each other. In many ways, the foundations for this cooperation were laid by the Agreement on the Establishment of a Single Economic Space between Kazakhstan and Uzbekistan on February 2 1995; and the current Strategy of Economic Cooperation, running from 2007 to 2016. A number of other agreements are in place covering such issues as customs matters and the banking sphere.

The trade statistics show the importance of Kazakhstan and Uzbekistan to each other. From 2010 to 2011 trade increased by 47%, reaching USD 2.8 billion, a figure virtually sustained in 2012. Trade with Uzbekistan represents 9.6% of Kazakhstan’s overall world trade; for Uzbekistan, trade with Kazakhstan is 10.5% of its foreign trade, making it Uzbekistan’s third largest trading partner. The principal exports from Kazakhstan are oil and its by-products; metals; chemicals; and foodstuffs. Uzbekistan sends to Kazakhstan natural gas; cotton fibre; chemicals and plastics; minerals; electrical goods; and fruit and vegetables.

There are 178 enterprises in Uzbekistan which involve investors from Kazakhstan, including 143 joint ventures and 35 whollyowned Kazakhstani companies. There are 120 enterprises in Kazakhstan which involve investors and nationals from Uzbekistan.

Cultural ties between Kazakhstan and Uzbekistan are strong, and it is significant that President Nazarbayev will be opening the new Embassy of Kazakhstan in Tashkent during this visit. The President will also formally unveil the monument to the great Kazakh writer and philosopher, Abay Kunanbayev.

Outside their immediate bilateral relations, the question of regional security looms large on the agenda of both Presidents.

Coalition forces are due to leave Afghanistan in 2014, and both countries have a strong interest in encouraging stability there.

Uzbekistan borders directly on Afghanistan and all of the countries in the Central Asian region are wary of the potential threat which continuing instability in Afghanistan could pose to their own security.

“Relations with Uzbekistan remain a priority issue in the foreign policy of Kazakhstan. The future strategic development of bilateral relations of our two neighbouring states has a direct effect on the geopolitical situation in Central Asia, particularly in the context of the forthcoming withdrawal of NATO and US forces from Afghanistan; and for the strengthening of our trade relationship.”

Ministry of Foreign Affairs of Kazakhstan ASTANA CALLING / ISSUE 308 / 2

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Pension reform is an important issue for all generations in Kazakhstan

President Urges Proper Pension Reform In an address to the people of Kazakhstan on June 7, President Nazarbayev criticized the Government and the National Bank for their handling of plans for pension reform. The President pointed out that because of the global financial crisis and the ageing of the population, measures such as the raising of the pension age and the creation of a single retirement age for men and women are essential. But he described the efforts so far of the Government and the National Bank to bring about the necessary reform as “clumsy”.

There needs to be serious pension reform, the President said. In particular, the Ministry of Labour and Social Security needs to do more. Three days after the President’s address to the nation on the subject of pension reform, the Minister of Labour, Serik Abdenov, was relieved of his post.

The President said that because of the recession and the fact that people are living longer, countries around the world were having to re-think their pension provisions. A single pensionable age for men and women has already become the norm in a number of developed countries. And in many countries in Europe the pension age has already been raised to 67.

There has to be a proper system in Kazakhstan whereby people regularly pay into the pension fund. The country cannot allow itself to slip back into the situation it was in in the 1990s, when at times pensioners went for months without receiving any pension at all; and in any case the pension itself was tiny.

Forecasts make it clear that if the pension system is not reformed, there will simply be insufficient funds in the state budget to pay for pensions. This is what makes it necessary to raise the pensionable age for women and bring it in line with that for men. People are living longer, especially women; soon, women will represent 70% of all those of pensionable age. If the pensionable age for women were not raised, then between 2014 and 2024 an extra KZT 3 billion would be needed to pay pensions.

President Nazarbayev noted that the government had already suggested that there should be a smooth transition period to raise the pensionable age for women. But he criticized the government and the National Bank, which is also involved with drawing up the plans, for putting huge efforts into trying to convince deputies in parliament that this was necessary, while ignoring those who would be directly affected by it.

Both houses of parliament have understood how important pension reform is to the population and have passed the set of laws needed to implement the reform. But, as the President pointed out, they have not considered every aspect of the reform. For this reason, President Nazarbayev has returned the bills to parliament unsigned, as he believes they require further work. As a start, he suggests that the process of raising the pensionable age should start not on January 1 2014, as originally planned, but only on January 1 2018.

Hand in hand with the new laws there should be new measures introduced to ensure that citizens’ social needs are looked after, especially those of women coming up to pension age. The President suggests the following measures be introduced: firstly, the state should make extra pension provision for working women while they are on maternity or child-care leave; secondly, obligatory pension contributions from the working population should be raised from the current 10% to 15%; thirdly, obligatory professional pension contributions should gradually rise by a further 5%.

Together, these measures will underline the joint responsibility of the state, employers and the workers themselves for the social welfare of all citizens. This is a crucial part of the plan, “The Social Modernization of Kazakhstan: 20 Steps to a Society of Universal Labour”.

“First of all, this important draft social law was promoted as if it were just an “ordinary” bill, and not as the essential measure it is for guaranteeing the well-being of the people and the long-term effectiveness of the national pension system. Secondly, the government, and particularly the Ministry of Labour and Social Security, failed to develop a debate in society about the bill.

As a result, a large portion of the population are very wary of pension reform and do not appreciate its significance.”

President Nazarbayev ASTANA CALLING / ISSUE 308 / 3

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Mayors will be elected as part of plans to increase the accountability of local government

Senate Passes Law on Local Self-Government The upper house of the parliament of Kazakhstan, the Senate, has passed in a second reading a bill that will introduce changes in local self-government, including the election of mayors. The measure will give local mayors more independence over their budgets; both in the way in which money is collected and where it is spent. And local people will have greater participation in the way in which budgets are allocated and spent.

Mayors will control the collection of local taxes, such as property tax, as well as donations; charitable and sponsorship funds; various fines; advertising revenues and other sources of income. Mayors in rural communities will be responsible for the upkeep and use of local facilities.

The way in which local mayors are elected will also change. Until now, the leaders of local councils were appointed by the mayors above them. Now they will be elected by secret ballot by the members of the local council.

Passing control of local facilities down to a lower level of government is a key point of the plan, “The Social Modernization of Kazakhstan: 20 Steps to a Society of Universal Labour”, which President Nazarbayev announced in July 2012. This far-reaching plan covered every aspect of transforming society in Kazakhstan from the current model, which still shows too strong a dependence on the state – a legacy of the Soviet period – to a society where the individual not only has a greater say in his life, but also greater responsibility.

The “20 Steps” cover education, healthcare, work, pensions and culture, as well as local government. The central idea behind the plan is that citizens will have greater choice and responsibility for their actions and choices; but the state will be there to give support if and when necessary.

Each of the areas of the plan is governed by five principles for its development. Firstly, this should develop over a period of time, not as a short, sharp shock. It is about evolution, not revolution. Secondly, “responsibility” is a key word, both the continuing responsibility of the state to the individual, and the individual’s responsibility to himself, to those around him and to the state for his actions.

The third point as outlined by the President is that this should be a partnership: a partnership between the state and the individual citizen, and a partnership between citizens at all levels. The fourth point underlines that there has to be a stimulus for the whole process: the state needs to explain developments to the people, and each citizen needs to understand their place in the greater scheme of society. And last but not least, everything must be carried out in a professional manner.

When he introduced the “20 Steps” last year, President Nazarbayev stressed, too, that government at all levels must be more accessible via the internet through “e-government” and that “local authorities must be under society’s closest scrutiny!”

“Social modernization demands concrete steps aimed at bringing about genuine, positive changes in the life of society as a whole, of every family and every citizen of Kazakhstan. Social modernization is not being carried out simply to benefit “the state in general”; it must serve and bring benefit to each and every citizen of our country.”

President Nazarbayev

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Kazakhstan leads Central Asia on technological progress in the mining sector

Fourth Astana Mining and Metallurgy Congress Kazakhstan’s importance in the mining world was underlined again this week by the holding of the Fourth Astana Mining and Metallurgy Congress, AMM 2013. More than 700 delegates came to the capital for the annual event which positions Kazakhstan as the leading country in Central Asia at the cutting edge of technological progress in the mining sector.

The theme which set the tone for the two days of the Congress was, “Prospects for Technology Growth in the Mining Sector in an Unstable World Economy”. The Minister for Industry and New Technologies, Asset Issekeshev, opened the Congress on Wednesday morning, and the day’s proceedings then divided into a plenary meeting and three main sessions, devoted to Geology, Mining and Metallurgy.

Minister Issekeshev noted that the mining and metallurgy sector is experiencing a difficult period because of slow growth in the world economy and a fall in growth rates in developing countries that has led to reduced demand and price volatility. He also pointed to other long-term challenges facing the sector, including the appearance of new materials, greater ecological requirements and strong competition for investment.

The Minister outlined a number of steps that the Government is taking to create a favourable investment climate for subsoil use, including the transition to international mineral resource classification, providing free access to geological data and simplification of procedures for investors.

The plenary session was on the topic, “Provision of sustainable development of the global mining and metallurgical sector”, and was chaired by Rodrick Cave, the Regional Director of CRU, a company that provides market research on the Mining, Metals and Fertilizer sectors. Mr Cave was joined by an impressive panel of speakers: Nevzat Kavakli, Deputy Minister of Energy and Natural Resources of Turkey; Felix Vulis, Chief Executive Officer ENRC Plc; and Hans-Joachim Kümpel, President of Germany’s Federal Institute of Geosciences and Natural Resources.

Deputy Prime Minister and Minister for Industry and New Technologies, Asset Issekeshev

This international panel set the tone for the rest of the Congress. As well as speakers from Kazakhstan, there were presentations by delegates from Australia, China, France, Germany, Russia, Turkey and the United Kingdom. The Exhibition that accompanied the Forum hosted stands from 33 companies from six different countries.

The mining and metallurgy complex is one of the fundamental sectors of Kazakhstan’s industry. It accounts for 9% of GDP and 18% of industrial production. It employs over 300,000 people and makes up 35% of Kazakhstan’s exports. Its products go to over 30 countries around the world.

“Kazakhstan’s mining and metallurgy complex is faced by a number of important tasks in expanding the geological research base; recycling industrial waste; raising energy efficiency; and technology transfer. AMM has become a unified working platform for professionals and leaders in the sector.”

Prime Minister Serik Akhmetov ASTANA CALLING / ISSUE 308 / 5

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News from the Government in Brief GDP Up 5% in first five months of 2013 The Minister of Economy and Budget Planning, Yerbolat Dossayev, reported to the government this week that Kazakhstan’s GDP rose by 5% in the five months from January to May 2013. This represents a small but significant increase on the same period in 2012, of 0.1%. But taking into account the poor performance of agriculture in 2012 and the meeting of planned production targets in the natural resources sector, the Ministry is forecasting 6% GDP growth for the year.

There have been rises this year in the performance of many sectors of the economy. Industry is up to 101.8% of the figure for the comparable period in 2012 ; agriculture to 101.1%; trade, 112.8%; transport, 107% and communications, 115%. One area which has fallen compared to 2012 is construction, showing only 99% of last year’s figure. Capital investment is at 108.3%; and the consumer price index 102.3% compared to last year.

More grants go to studying technical subjects Approximately one-third of the 35,053 state grants awarded to students in Kazakhstan this year will go to those studying technical subjects, the Ministry of Education and Science has announced. This is in line with the government’s policy of encouraging industrial-innovative development.

There will be some 6,000 grants for those wishing to train as teachers; and around 2,000 for students going into agricultural specializations. In all, 738 more grants will be issued this year than last year. Subjects which will receive more places are education (130 more places); art (15 more); technical sciences and technology (475); science (120); humanities (70); veterinary and social sciences (20 each). As part of this redistribution there will be fewer grants made available for studying law.

Big plans for mining and metallurgy complex Kazakhstan has serious plans for the development of its mining and metallurgy complex, delegates to AMM 2013 (see main story) heard this week. Anuar Buranbayev, the Chairman of the Board of the Kazakhstan Institute for the Development of Industry, said that as part of development plans to the year 2030 the complex has set itself a target to issue 40 new products.

This will create new jobs and a turnover of KZT 7.5 trillion.

The plan has three stages of development: modernizing current production; creating new projects; and building vital new infrastructure for the mining and metallurgy complex. It is essential also to adapt the transport and logistical infrastructure to fit the demands of the mining and metallurgy complex. In those areas where mining takes place, construction of transport infrastructure must be carried out to accommodate the needs of the sector. Mr Buranbayev called on the government to introduce tax breaks and cut administrative barriers in order to stimulate investment in mining.

New conditions for employment plans The acting Minister of Labour and Social Security, Tamara Duissenova, has outlined the latest plans for the “Work RoadMap 2020” program. The key ideas are the need for education and for those involved to be prepared to move to where the jobs are. The focus of the new direction of the “Road-Map” is to assist the self-employed; those from poor families; and the unemployed to find work, either in existing vacancies, or in new jobs created under the scheme. Only companies that agree to help train their workforce will be included in the scheme.

The period for workers to be taken on for social reasons will be extended from one year to 18 months; and the apprenticeship program for young people will be extended from six months to one year. The government will subsidize wages for such work for the first six months. It will then be up to the employer to pay the wages for the remaining six months. Where jobs are created in new locations, the government will provide accommodation for those who are prepared to move. This could affect 90,000 people.

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Also in The News…

• President Nazarbayev congratulates Nawaz Sharif President Nazarbayev has sent a telegram to Nawaz Sharif, congratulating him on his election as Prime Minister of Pakistan.

The President said that Mr Sharif’s victory was the start of a new era in the development of his country, and added that he was sure that it would signal continuing friendship and mutually beneficial relations between Pakistan and Kazakhstan. (akorda.kz) • President Nazarbayev holds meeting with VTB Head Andrei Kostin On Tuesday June 11, President Nazarbayev met the Chairman of the Board of VTB Bank, Andrei Kostin. VTB, a Russian bank, opened a subsidiary in Kazakhstan in 2008. President Nazarbayev noted the important role which VTB plays in providing credit for both the private and corporate sectors in Kazakhstan. Mr Kostin said that VTB plans to extend its cooperation with Kazakhstan. (akorda.kz) • Kazakhstan-Slovenia government commission meets in Astana The second session of the Kazakhstan-Slovenia government commission on trade and economic cooperation met in Astana on 13 June. The meeting was followed by a conference involving business people from the two countries. (mfa.gov.kz) • Foreign Ministry holds Eurasia round table The Ministry of Foreign Affairs of Kazakhstan held a round table on June 10 to assess the meeting of the Higher Eurasian Economic Council, which met in Astana on May 29. It was noted that the work of the Customs Union, the formation of the Single Economic Space and the planned creation of the Eurasian Economic Union represent a major priority for the country’s foreign policy. (mfa.gov.kz) • Foreign Minister meets Spanish Defence Minister Foreign Minister Erlan Idrissov met the Spanish Minister of Defence, Pedro Morenes, who was on his first official visit to Astana this week. The two ministers discussed their bilateral strategic partnership, including military-technical cooperation, questions of regional security and working together in international organizations. They also discussed the forthcoming visit to Astana later this year of the Spanish Prime Minister, Mariano Rajoy Brey. (mfa.gov.kz) • Kazakhstan’s young entrepreneurs learn about “Success” Young entrepreneurs from Kazakhstan took part this week in the business conference, “The Formula for Success” in Almaty, organized by the Nur Otan Party. They attended workshops run by businessmen who have already achieved success in their field. According to the Party, 30% of young people in Kazakhstan would like to start their own business, and this percentage is increasing. In 2012 the Party received 90,000 enquiries from young people about starting a business; in the past three months alone they have had 50,000 enquiries. (bnews.kz)

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• Nearly all schoolchildren will take part in summer activities More than two million schoolchildren – some 92% of the total number – will take part in organized activity during the summer holidays, according to the Ministry of Education and Science. Nearly 60% of children will be able to go to almost 11,000 health camps; and special activities will be organized for gifted children. The Education Ministry has set aside KZT 300m for this. (bnews.kz) • Eurasia Forum for higher education in Astana The Second Eurasia Forum for leaders of higher education took place in Astana this week. Senior higher education staff from 30 countries took part in discussions around the central theme of, “Global trends in the sphere of higher education and its effect on the regions”. Under this title, were included questions of leadership, guidance and the responsibility of universities; global trends in education; and controls over the quality of education and research. (ortcom.kz) • Literary book launch A significant cultural event took place on Wednesday at the Gumilev Eurasian National University in Astana, with the presentation of a new anthology of Kazakh literature. “The Stories of the Great Steppe. The Anthology of Modern Kazakh Literature”, has been published in the US, and brings new works of Kazakh literature to an English-speaking audience. (mfa.gov.kz)

ASTANA CALLING A WEEKLY ONLINE PUBLICATION / WWW.MFA.GOV.KZ Please send comments and questions to pressa@mfa.kz

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