Dr. Mehmood Ul Hassan Khan : SD ANALYSIS
– Kazakhstan’s Social Modernization

We are living in a globalized world where
unfortunately regional and international economies are shrinking because of so
many complicated reasons not confined to protectionism, trade wars,
geopolitical compulsions and geostrategic end games. Societies, minorities and
humanities have been unfortunately, marginalized in the chase and race of
greater economic gains, profitability and corporate governance. In this
context, President of Kazakhstan, Nursultan Nazarbayev announced new series of
reforms aimed for comprehensive social modernization in his country. 

President of Kazakhstan, Nursultan Nazarbayev
announced “Third Stage of
” during 2018 which has further consolidated its
position in the regional as well as at international level. Now Kazakhstan’s
President of H.E. Nursultan Nazarbayev has announced new social initiatives
aimed at improving the lives of the citizens of Kazakhstan. The new integrated
policy initiatives to boost the life of ordinary people in the country by
providing new mortgage loans, reduction of the tax burden for citizens with low
wages, increasing accessibility and quality of university education, expansion
of micro-credit, further expansion of the country’s gas production.

It has actually started “new chapter” of social
development in the country. Being expert on Kazakhstan and Central Asia I
personally think that the competitiveness of Kazakhstan and its global
authority would also benefit from the newly announced and implemented five
social policy initiatives because it has multiplier effects. 

Kazakhstan, the largest economy of the Central 
Asia has surpassed all the regional economies in terms of high GDPs, GNPs,
exports and the last but not the least, smarter economy.  Now, it is on
the path of immense glory. Social development has been one of the main
priorities of its government since inception. It values human capital.  It
projects comfort of life. It guarantees basic necessities of life.

The five initiatives are part of a long-term project
launched in 2012-13 with the “Kazakhstan 2050 Strategy”, which aims
to making the country one of the top 30 world economies within the next 32
years, through a series of reforms in the political, economic and social
context. 2.6 trillion tenge ($7.9 billion) would be allocated to implement his
social initiatives, which, among other measures, promote access to housing. Now
housing loans will be easily available because of the provision of “mortgage
loan”. Moreover, housing sector will also be developed because all working
Kazakhs have the possibility of securing a mortgage under the new conditions.
Mortgage interest now may not exceed 7 percent (currently 16 percent), and the
life of the loan may be extended up to 25 years. It will benefit millions of
ordinary people especially young people, who will be able to buy homes through
this program. Common people, working class, businessmen, investors,
professionals and manufactures would be biggest beneficiaries of this social
modernization initiative of Kazakhstan. 

According to new policy initiative the implementation
of the program will give a powerful impetus to the construction of housing and,
as a result, access to housing for many Kazakhstanis will increase.

The President stated that extra 20,000 grants should
be offered in the 2018-2019 academic year. Approximately 11,000 of these grants
should be offered to those studying engineering at universities which will
revolutionize engineering education and sector alike in the country. By 2022
new student accommodation will be built that will provide 75,000 new places to
stay for students. It should be done through public-private partnerships.

President Nazarbayev announced the decision to build a
natural gas pipeline from the Kyzylorda region to Astana. It will not only
provide gas to 2.7 million people, but will also help small and medium-sized
businesses. It will also positively impact the ecology, as in Astana alone,
harmful emissions will decrease by six-fold. In this regard, the government
will explore ways to finance this project, including by attracting
international investment.

The foundation for the implementation of the social
modernization has already been laid in Kazakhstan. Starting from January 2019
the tax burden on low-wage citizens will be reduced by 10 times. The
micro-financing for starting own business has increased by KZT 62 billion, and
preparatory works for the construction of the Saryarka gas pipeline nears

The Kazakh government has approved the “Five Social
Initiatives roadmap”. The roadmap, developed by the National Bank and various
ministries, was presented by Minister of National Economy Timur Suleimenov.

The National Bank of Kazakhstan is primarily
responsible for the first initiative to provide new opportunities for families
to purchase accommodations for which a roadmap has been developed jointly with
concerned state agencies. It consists of 35 actions. It provides a roadmap for
the development of drafts of 7 laws, 6 draft Government resolutions, and 3
draft resolutions of the Board of the National Bank, as well as the adoption of
2 ministerial orders and 4 decrees of Akimats.. It will establish a subsidiary
national company as the sole operator of the program. The company will purchase
25-year, 7 percent mortgages provided by second-tier banks to citizens with 20
percent initial payment.

The Ministry of National Economy will be responsible
for the second initiative seeking to reduce the tax burden and increase income
of low-paid workers. Relevant amendments related to income tax to the tax code
have been initiated and investigation of potential implementation of
progressive income tax system by August will also be started. The changes will
enter into force during the next tax period beginning January 1, 2019. At
present, the tax burden is reduced ten times for employees with a salary of up
to 60,125 tenge (US$163.70).

The Ministry of Education and Science will be
accountable for the third initiative meant to increase the accessibility and
quality of higher education and improve living conditions for students. Plans
are underway to provide 20,000 state scholarships for technical majors during
the next academic year, including 16,000 for undergraduate studies, 3,000 for
master’s degrees and 1,000 for PhDs. The regional governors have identified
land slots near universities and colleges for dormitory construction. The
objective is to build housing for 75,000 students by 2022. More emphasis has been
given to technical education/ specialties. An ideal combination of
public-private partnership will also be achieved.

The fourth initiative, increasing business loans, will
be implemented by the Ministry of Labour and Social Protection. It will amend the
productive employment and mass entrepreneurship programme for 2017-2022 by
seeking a bigger objective of boosting microloans and stimulating
entrepreneurship, especially in rural areas. Micro financing has been increased
this year by 20 billion tenge (US$54.46 million), including 6 billion tenge
(US$16.34 million) in cities and 14 billion tenge (US$38.12 million) in
villages. Microcredits totalling 62 billion tenge ($US168.84 million), 45
billion tenge (US$122.55 million) in rural areas and 17 billion tenge (US$46.29
million) for urban areas, are expected to cover 14,000 people.

Moreover, in total, from the beginning of the year,
38.4 billion tenge (US$104.57 million) was spent on microcredit, of which 10.5
billion tenge (US$28.59 million) was in urban areas and 27.9 billion tenge
(US$75.98 million) in rural areas. The best indicators in terms of the regions
are observed in the city of Almaty and the Almaty, West Kazakhstan and Zhambyl

The Ministry of Energy will be responsible for the
last initiative on further gas provisions, namely construction of a gas
pipeline from Kyzylorda to the capital through Zhezkazgan and Karagandy.

“The construction scheme of the Saryarka pipeline and
finance terms will be identified very There are plants to attract investment
from international financing institutions, such as the European Bank for
Reconstruction and Development (EBRD) and Eurasian Development Bank. Regional
governors will earmark land lots for the pipeline in June and the project will
be launched in June to terminate in February 2019.

New social modernization initiatives of Kazakhstan are
aimed at improving the quality of life, which is one of the main components of
the nation’s competitiveness. Better accessibility and quality of higher
education will contribute to the growth of human capital and competitiveness of
the nation that are evaluated under the three “Ts” criterion: talent,
technology, and tolerance. Housing initiative should have a great social

Kazakhstan is the “pioneer” of introducing of
comprehensive reforms in the field of social sector which has already
“revolutionized” its economy, society, banking industry, construction and of
course service sectors. President of Kazakhstan, Nursultan Nazarbayev announced
new reforms of social modernization. Its roadmap has also been approved.
Furthermore, allocation of funds has also been disbursed to different sectors
for achieving the desired goals of this policy initiative 2018. 

It has actually started a “new chapter” of
“socio-economic prosperity” in Kazakhstan since March 2018. It is first giant
step towards social revolution. It is a “paradigm shift” in the whole of CIS
and especially Kazakhstan since 2013. It is a “permanent” and “continuous
process”. It has started “vertical” as well as “horizontal” approach for
implementing social modernization. 

Over the past decade, Kazakhstan has built a record of
strong macroeconomic management and a rules-driven fiscal framework,
strengthened public management and the business climate, shifted resources
toward social services and critical infrastructure, and started addressing
environmental problems. Kazakhstan’s development objective is to join the ranks
of the 30 most developed countries by 2050. Its long-term vision focuses on
economic diversification to move away from natural resource dependence and
toward more balanced growth, and social modernization away from social
disparity and toward more inclusive growth.

Since 2014, President of Kazakhstan, Nursultan
Nazarbayev has promoted a “multi-layered” vision for modernization, impacting
the Kazakh culture, traditions, politics, society and business and which,
ultimately, aims to lead the country toward a sustainable future. This
fundamental shift has been carefully crafted by the country’s political leadership
to have a steady and significant impact on the society. It has introduced a new
model of economic development which will be further consolidated through
initiating comfort of life, providing basic necessities of life, education, and
of course development of human capital.

Kazakhstan’s modernization process is “evolutionary
not revolutionary”. It introduced meaningful reforms in the fields of economy
and politics and resultantly, achieved elements of stability and sustainability
in economy and sense of maturity and development in national politics. Now the
government has initiated rigorous social modernization in the country which
will benefit the whole working class and especially youth.

Provisions of micro-credit in the newly announced
social initiatives will benefit the youth of the country. Micro-credit is the
“engine” for the growth of Small and Medium Enterprises (SMEs) in the world
which has produced “miraculous” results in various countries. The government of
Kazakhstan has also announced new reforms in the fields of micro-credit. It
will also be useful for achieving the “Sustainable Development Goals” in
Kazakhstan because it deals with the social and ecological needs of

Raising minimum wage is a huge step. It will benefit
the entire working population. Minimum wage from 28,000 to 42,000 tenge will be
implemented from January 1, 2019. This step will benefit about 1.3 million
people in Kazakhstan. To this end, 96 billion tenge will be allotted from the
republican budget annually in 2019-2021. The increase will apply to 275
thousand workers of state-funded organisations, whose salaries will grow on
average by 35 percent. The government has allocated 96 billion tenge annually
from the republic’s budget for 2019-2021. From now on, the minimal salary will
not depend on the subsistence level. In general, the amount of the new minimal
salary will boost the labour remuneration covering the whole economy.

Being prominent expert on Kazakhstan and Central Asia,
I personally think that five social initiatives by President H.E. Nursultan
Nazarbayev can be great progress tools for Kazakhstan. The current set of
reforms is a big step towards social development and stabilization in
Kazakhstan. Social development is crucial for achieving elements of stability
and sustainability in its macro-economy.  It is very important that the
population receives such wide support from the state, including benefits on
rent, lower taxes, and education and micro loans. It also indicates that the
overall level of Kazakhstan’s economic development has further developed.

Five social initiatives of Kazakhstan are “inspiring”.
The whole Kazakhstan will benefit from the president’s five social initiatives.
The life of “underprivileged” may be further improved. Five social initiatives
of Kazakhstan is consist of providing basic needs such as housing, education,
better wages and more amenities to the needed.

Being prominent expert on Kazakhstan and Central Asia,
I stress the ideal combination of “quantitative and qualitative” higher
education not only in “engineering” but also to other “disciplines”. Germany is
the prime example of free higher education which must be further studied for
its genuine implementation in the country.

In housing sector/policy initiative provision of
housing per capita should be rationalized which is currently 21 square meters,
and the construction of houses per capita per year. It would give impetus to
the construction industry in terms increased competition, professionalism and
responsibility. The standards shall improve; the geometry of the residential
buildings shall take into account the climatic conditions throughout
Kazakhstan. The cost of housing construction will be further reduced enough to
maintain affordability of the mortgages. The construction industry will emerge
as a driver of the economy affecting the financial sphere and banking industry
in the future.

Furthermore, the allocation of housing certificates
will enhance the affordability of mortgages for highly-skilled teachers,
medical workers, police officers and other experts the region needs. It will
also enhance the construction of rental housing for socially vulnerable
population in big cities. It will help more than 250 thousand families to
improve their housing conditions. The construction of utility infrastructure
for massive housing areas, the state will help 650 thousand families or more
than 2 million of our citizens in five years.

Reduction of the tax would allow 2 million law-paid
people to receive about 150 billion tenge of additional revenue per year. This
would have positive social impact and give significant impulse for the economy
due to increased aggregate demand, consumption of goods and services produced
in Kazakhstan.

In taxation system, progressive taxation must not be
limited to the individual income tax rather it must cover all the important
sector of its national economy and channels of production. Singapore is the
prime example of a progressive taxation system (individual income taxation)
which has enabled to reduce the taxes on business and increase their
collection. I must say all recent initiatives of the Kazak President are aimed
at improving of the well-being of every citizen of Kazakhstan and shall result
in better quality of the human capital and modernization of the society.
Moreover, further gasification of the central and northern regions of
Kazakhstan and the city of Astana will definitely prevent further environmental
degradation. The gas pipeline to be constructed shall attract more investment
into Kazakhstan in the days to come.

President of Kazakhstan, Nursultan Nazarbayev
announced five social policy initiative i.e. mortgage loaning, reduction of tax
burden, quantitate and qualitative higher education, availability of
micro-credit and the last but not the least easy and smooth gasification is
indeed a “investment of the future” owning to which its youth will be great
assets to its economy and society alike in the days to come. There will be
further women empowerment in the different regions of the country especially in
rural areas. The ratios of poverty will be further decreased. Business activity
will be accelerated. Public-Private partnership will be further explored.

Denial of social development usually supports societal
fragmentation and produces spirits of divergence in a country.  A
sustained social development is the custodian of economic prosperity and
political stability. Social development is one of the main sources of job
generation. It actually transforms a nation’s thinking towards social justice,
law, family, nationalism, pragmatism and above all human values. Keeping in
view, the strategic importance of social development a new set of social
modernization has been initiated in Kazakhstan by its visionary President of
Kazakhstan, Nursultan Nazarbayev.

Social development is the “crown” of any economic
system or policy. It is about improving the well-being of every individual in
society so they can reach their full potential. It connects “dynasties with
dynamics. It is pro-development. It is pro-human because success of society is
linked to the well-being of each and every citizen. It is meant to invest in
people. It requires the removal of barriers so that all citizens can journey
towards dreams in lives and President of Kazakhstan, Nursultan Nazarbayev’s
“five social policy initiatives” are the basis of human development in the