In view of new external risks for the development of our economy, we need new initiatives to stimulate business activity and employment. The Infrastructure Development Plan, which I want to make public today, will become the core of the New Economic Policy. It is intended to last for five years and is to run in parallel with the Second Five Year term of the Programme of Accelerated Industrial and Innovative Development. More than 100 foreign companies intend to participate in its implementation. The total investment portfolio will make 6 trillion tenge, with the state contributing 15 per cent of the total.
Kazakhstan owns a territory so vast it would tire the wings of a bird to fly over it. Thus, this plan requires huge funds and hard work. There is a saying: “If you want to know a nation’s prosperity look at its paths.” Road connections are of high importance, not only for travel, but also for the transportation of goods. In ancient times our big cities were located along the Great Silk Road.
Nowadays, all essential life depends on access to the main highways. Roads are the essence of life, the source of a modern existence. All the regions of Kazakhstan need to be closely connected by railroads, highways, and air services. The nine roads, connecting with each other in Astana are like the roots of life, spread our capital’s creative spirit. Improving interconnectivity between the regions will eventually lead to a greater domestic well-being. It will strengthen trade and economic ties between the regions. There will be new markets emerging from inside the country. Therefore bringing together distant parts is the main focus of today’s address.
First, the development of transport and logistics infrastructure will be formed around regional hubs, connected through Astana as the central hub and backbone by highways, railways and airlines. But first, we need to implement the main road projects. They are Western China to Western Europe; Astana to Almaty; Astana to Ust-Kamenogorsk; Astana to Aktobe to Atyrau; Almay to Ust-Kamenogorsk; Karaganda to Zhezkazgan to Kyzylorda; Atyrau to Astrakhan.
It is also necessary to continue the creation of a logistical hub in the east and marine infrastructure in the west of the country. The large-scale ferry site from Kuryk and the railway line from Borzhakty to Yersai will contribute to the growth of exports to the west through ports in the Caspian Sea. I have ordered the Government to work on the construction or rental of terminals at dry and sea ports in China, Iran, Russia and the EU.
Second, development of industrial infrastructure. The implementation of infrastructure projects will produce big demand for construction materials, products and services for transport, communication, energy, housing and utility areas.
So, firstly, we need to complete our work on the formation of infrastructure in existing special economic zones. The Government and the akims (governors) need to work in a timely manner to fill those zones with concrete projects. Secondly, they need to explore the possibility of constructing new industrial zones in regions aimed at the development of production facilities of SMEs and raising extra investments. Tourism infrastructure is a separate line. Its main advantage is the opportunity to create jobs. The creation of one job here costs 10 times less than in industry.
Third, the development of energy infrastructure. Extensive work has been carried out within the framework of the industrialisation programme in energy in the past five years. Nevertheless, limited transmission systems create a deficit of electric energy in the southern regions of the country and of natural gas in central and eastern regions. We need to focus on two projects. To construct high voltage lines Ekibastuz – Semey – Ust-Kamenogorsk and Semey – Aktogai – Taldykorgan – Almaty. This will create a balanced energy supply from Kazakh power plants to all regions of the country.
Fourth, the modernisation of housing and utilities infrastructure and water and heat supply networks. The total demand for investments makes no less than 2 trillion tenge with annual allocation till 2020 from all sources of founding of no less than 200 billion tenge.
Today we see significant interest in investing in the modernisation of housing and utilities from the European Bank for Reconstruction and Development, the Asian Development Bank, the Islamic Development Bank and private investors. We need to ensure their maximum involvement through the provision of long-term investment rates. Such projects should be co-funded by the state to prevent significant increases in rates. We should allocate up to 100 billion tenge each year to accelerate the level of modernisation in our heat and water supply systems, in addition to the funds already envisaged in the budget.
Fifth, the strengthening of housing infrastructure. The formation of urban centres is accompanied by a significant cross-flow of the population. This creates pressure on the labour market and city infrastructure, including on the housing fund. Therefore, our approach to construction of rental housing should be revised. The state will construct social housing to rent out and provide to the population for long term rent with the right to buy it. The provision of housing directly, without mediators, with low-interest loans will allow us to reduce the cost of acquisition. No first instalment and low mortgage interest will make housing more affordable for various strata of the people of Kazakhstan. Therefore, we will additionally increase funding of construction of rental housing for the amount of 180 billion tenge during 2015-2016.
Sixth, development of social infrastructure. We must resolve the issues of unfit schools and three-shift education, as we set out in our election platform. The funds envisaged in the 3 year budget do not let us to resolve this problem by 2017. Therefore, I have ordered the Government to allocate another 70 billion tenge. Another matter is the lack of kindergartens. I instruct to allocate an additional 20 billion tenge to reduce the deficit of places in preschools within 3 years. Akims must deal will this as much as possible and attract the private sector.
Ten higher education institutions were defined within the framework of the industrialisation programme based on which the link between science, economic sectors and personnel training will be ensured. I have ordered the Government to create the material and technical framework of these education institutions, allocating up to 10 billion tenge by 2017.
Seventh, we need to continue the work to support small and medium businesses and business activities. As of today, the 100 billion tenge from the National Fund aimed at supporting and crediting small and medium enterprises has been fully used. This allowed us to create more than 4,500 jobs. The demand for these funds exceeded the supply by 23 billion tenge. The unprecedented conditions providing credit for businesses at 6 per cent for 10 years were created. There were no such conditions in our country before. We should continue our work to develop small and medium businesses as a driver of economic growth and increase their share to 50 per cent of GDP by 2050. Therefore, we need to use credit facilities for small and medium businesses more effectively at the account of the ADB, EBRD, and the World Bank for the total amount of 155 billion tenge in 2015-2017.