eGov Witnesses
Financial analyst Andrey Chebotaryov believes that the projects aimed at digitalization have transformed our lives.
“Digitalization in terms of eGov has allowed companies to open accounts remotely, provide services, spawned a number of startups like Kaspi and Freedom, and developed online brokerage and online banking. These are really cool products. I also consider the projects ‘Khorgos’ and the launch of the ‘Western Europe – Western China’ corridor to be progressive. Other than that, I don’t see anything groundbreaking that could be called the project of the decade,” the interlocutor stated.
Financier Murat Temirkhanov also noted the digitalization and the development it has brought not only to the public services market but also to the private sector.
“The government and second-tier banks have created really advanced things through eGov and database integration. The other day I was checking out of a hotel, and next to me at the reception was a foreigner. He lamented that through his banking app on his mobile phone, he couldn’t see whether money had been withdrawn from his account and how much. For us, this is yesterday’s news. From the perspective of informatization, there are still problems, but we have already accomplished a great deal,” the financier believes.
In addition, he considers the shift of Kazakhstan's interests from Russia towards China to be a necessary process.
“I have always been concerned about our heavy dependence on the Russian Federation, but now we are diversifying the economy, and this dependence is decreasing. The war in Ukraine has shown that there are many risks associated with the Russian Federation – geopolitical, economic. These events have helped us see certain problems, and if earlier Russia was the main trading partner, now it is becoming China. Although, if we look at it comprehensively, it is Europe,” Temirkhanov clarified.
He also listed a number of aspects in the ‘new’ Kazakhstan that he considers to be positive processes.
Murat Temirkhanov - financier, advisor to the chairman of the board of JSC 'Halyk Finance'
“This is the strengthening of multi-vectorism in foreign policy, which reduces geopolitical risks for Kazakhstan. Increased attention to the development of the country's transit potential (railways, roads, aviation, pipelines). More attention is being paid to state funding for education, healthcare, and science,” the expert said.
Financial consultant Rasul Rysmambetov, in turn, noted: the best projects in Kazakhstan can be divided into two parts - structural and proprietary, related to income.
“Among structural projects, the launch of e-government and the network of Public Service Centers (PSC) is undoubtedly the main one, which has significantly facilitated the work not only for individuals but also for the corporate sector. In second place, we can note the transit from Western China to Western Europe, which has allowed us to practically implement our plans. Thousands of trains pass this route annually, allowing us to learn how to service them. Among proprietary projects, we should mention the launch of Knauf construction materials production and the launch of several cement plants,” Rysmambetov shared.
Fintech and 4G
The head of Kursiv Research, economic observer Sergey Domnin grouped the initiatives and projects that can be recognized as successful into two directions.
“The first direction is technological, and here the success is most evident. The first project is the development of fintech by private players. Over the past 10 years, the Kazakh financial sector has mainly completed its transformation from an industry filled with conservative credit, deposit, insurance, and other institutions into a fintech sector. Today, a comprehensive set of financial services has been digitized, and we see how seriously this stimulates growth not only in traditional banking but also, for example, in retail investing, where the number of clients of brokerage firms has been growing at double-digit rates,” the interlocutor emphasized to TAJ.report.
The second project is the implementation of the e-government function. eGov has significantly simplified life for millions of Kazakhs by transferring essential services to a digital format, and with the advent of Digital ID, the relationships between citizens and not only the government but also financial institutions, companies, and even utility providers have become easier, Domnin continued. The third is the coverage of the country with 4G mobile communication. Without this infrastructure, the successes of Kazakhstan's fintech and govtech would not be as impressive. The value of fourth-generation communication became evident during the quarantine restrictions during the coronavirus pandemic, the expert is convinced. The fourth breakthrough topic he named is the launch of the industrial phase of the Kashagan development.
Sergey Domnin - head of Kursiv Research
“The most technologically complex and capital-intensive project of the century on the shelf of the Northern Caspian was launched for the second time precisely in the last decade. This project will be a crucial factor for the sustainability of the economy of the Republic of Kazakhstan for the coming decades,” Sergey Domnin believes.
The fifth is the completion of the modernization of key oil refineries. The main result of this project is the end of the series of traditional annual fuel crises and greater self-sufficiency of the domestic fuel market. However, problems in the fuel sector persist, the interlocutor added.
“The sixth is new developments in the nuclear industry. In 2021, production was launched at the subsidiary of Kazatomprom and Chinese CGNPC ‘Ulba-TVS’, which produces fuel assemblies and their components for nuclear power plants in China. This is indeed a technological breakthrough for the Republic of Kazakhstan, allowing us to accumulate competencies for the final completion of the nuclear fuel cycle on the territory of the country,” Domnin said.
Privatization, industrialization, human capital, and EAEU
The second direction he highlighted in his comments is the rules of the game.
“The second wave of privatization. It is important not only that over these years about 1000 enterprises from the state and quasi-state sectors have been transferred to the private sector, but also the very fact of recognition by officials and managers of state companies of the importance of the boundaries of participation in sectoral markets that they should not cross. The next point is state industrial programs. These programs have allowed us to systematize and unite the efforts of the state, quasi-state, and private sectors of the economy of Kazakhstan around the task of modernizing the economy. The effectiveness of such policies is evidenced by the leading dynamics of labor productivity in the manufacturing industry compared to other industrial sectors and the steady growth of the level of economic complexity of the Kazakh economy,” the economic observer emphasized.
The ninth breakthrough project he named is the increase in state investments in human capital.
“Recent reforms in the education and healthcare sectors have been quite controversial, however, an important result of them has been the increase in spending on sectors that make a decisive contribution to the formation of human capital. The effect of additional spending on raising teachers' salaries, building new schools, and financing the social health insurance system is not obvious in the short term, but will manifest itself over the next 10–20 years,” the expert believes.
And finally, the tenth project he named is the EAEU.
“The Eurasian Economic Union was initially a Kazakh initiative, however, its implementation has dragged on for almost 20 years, as it was not immediately supported by the political leadership of the other two important participants – the Russian Federation and Belarus. Economic integration in the post-Soviet space has developed over the last 10 years not without problems, and in recent years has faced serious external pressure. However, the creation of a common market for goods, services, capital, and labor in 2014 has eased the conditions for doing business for thousands of domestic companies and simplified life for millions of citizens of the Republic of Kazakhstan,” the interlocutor said.
Simplification and quiet revolution at customs
The head of the NGO ‘DESHT’ Kuanish Zhaikov agrees with his colleagues.
“Among successful projects, I can highlight Kazakh FinTech. I single it out separately because it has affected the lives of almost all Kazakhs, including ordinary rural residents. The economic consequences of this phenomenon are still being studied, but it has propelled us to a new level of development, despite institutional inertia,” noted the economist.
Kuanish Zhaikov - economist, head of the NGO 'DESHT'
The second is the digitalization of urban services. It ranks second because it has less penetration.
“We are talking about the taxi, courier, C2C sales industries, GIS platforms, and much more. This is a tangible improvement in the quality of life, as well as civilized work for hundreds of thousands of citizens. The third is eGov and the digitalization of the state as a whole. It is clear that many government services were already free or cost minimal before. But the savings in time and nerves, translated into money, are colossal. The state has not only ensured equal access to services but has also increased trust in itself. Those who remember the process of obtaining basic documents 20 years ago understand what I mean,” Zhaikov said.
The fourth process he pointed out is simplified business operation regimes.
“Initially, we implemented a very complex fiscal system based on ‘the best international practices’. Unsurprisingly, neither people nor bureaucracy were ready for this. However, the introduction of simplified regimes later led to a colossal growth of micro and small businesses. Yes, there was fragmentation, but this allowed many small entrepreneurs to legalize themselves and bring them out of the ‘shadows’. It is clear that at some point this system will need to be changed, but it was a good intermediate institution,” the economist believes.
The fifth breakthrough project, in the expert's opinion, is the quiet revolution at customs, when a few years ago the authorities took on the task of clearing these Augean stables.
“One reform in customs – the elimination of barriers, corruption, and crime – brought in a net of 300 billion tenge to the budget, just from VAT on imports and only in one year. To understand the scale: thanks to this reform, in just one year, it is possible to finance schools for 100 thousand children or the entire national project “Modernization of Rural Healthcare” with 655 facilities or the modernization of CHPP-2 in Almaty. By the end of 2025, this reform alone will cover half of the budget for the national project “Comfortable Schools”,” - wrote analysts from DESHT in 2022.
In total, in the mentioned year, customs officers collected 3.3 trillion tenge, which is equivalent to the entire budget of the education sector, from kindergartens to universities.
“It is also noteworthy that foreign trade has become more competitive and accessible. The number of participants doubled in a year – from 28.8 to 44.5 thousand. The ways to achieve these indicators clearly illustrate the importance of institutional decisions: remote control has been introduced without contact with participants. Customs officers are separated from decision-making, the system independently distributes declarations and determines risks,” DESHT noted two years ago.
The throughput capacity at border crossing points with China has increased fourfold; online exchange of export declarations with China has been established: previously we tracked only 17% of imports, now we track an additional 80% transported by rail.
“Shadow schemes have been eliminated not only with China but also with Turkey. For example, the efficiency of collecting payments from consumer goods has increased almost fourfold. Three times more violations have been identified than in 2021. Collections to the state budget have increased from 51 to 182 billion tenge. What the status of the ‘revolution’ is now, we do not know, but at its start, we were surprised, as customs was one of the most corruption-prone and criminal spheres, where many reforms failed. The rest is debatable, time will tell. A lot is being done well, but so far it does not reach the level of a large successful case at the national level,” Kuanish Zhaikov summarized.
Kashagan and Astana Hub
Economist Askar Kysykov considers the development of the largest Kashagan field, launched in 2016, to be a significant successful project.
The Kashagan Field
“This was preceded by large-scale investment, technological, and production work. About 55 billion dollars have been invested in the project. The production volume last year was about 19 million tons. Now Kashagan plays a serious role in oil production and replenishing budget revenues. The Ministry of Energy of the Republic of Kazakhstan has filed a lawsuit against the developers – the main investors of the field – demanding compensation for lost profits of more than 150 billion dollars. Even if we abstract from this dispute (there may be a real reason for the disputes), the field is large and has a significant impact on the economy of the country,” Kysykov noted.
In addition, among successful projects in the oil industry, he mentioned the modernization of all three oil refineries – Atyrau, Pavlodar, and Shymkent, which “allowed Kazakhstan to fully provide itself with gasoline and diesel fuel and produce fuel according to Euro-5 standards.
“The list continues with the creation of the ‘Astana Hub’ technopark, where a special preferential tax regime operates for IT companies and their startups. A whole ecosystem has been implemented here; in essence, this is a new industry for the republic. Currently, 1,400 companies operate in the ‘Astana Hub’, and service exports exceed half a billion dollars. In the medium term, we will increasingly hear that innovative companies in Kazakhstan will emerge precisely from the Astana Hub,” the economist shared his opinion.
Another successful initiative he named is ‘One Belt - One Road’. The initiative, as we remember, is Chinese, supported by Kazakhstan.
Dry port ‘Khorgos’, railway station Altynkol
“Over 15 years, more than 35 billion dollars have been invested in the development of transit transportation from China to Europe, the dry port ‘Khorgos’ has been launched, the ‘Western Europe - Western China’ highway has been established, a corridor from China to Iran has been built, and a logistics center of the Republic of Kazakhstan has been constructed in China. Accordingly, the effect of transit transportation in Kazakhstan will increase. KTZ earns significant amounts from transit, and I believe this is one of the most promising directions for the country's economic development,” the expert said.
NIS, mortgage, and NPP
He also mentioned social initiatives, such as the creation of ‘Nazarbayev Intellectual Schools’. Currently, 21 schools operate in each region of the country.
“The high quality of education in NIS has created a serious social lift for talented children. Recent graduates of these schools are already entering the labor market. This project not only directly prepares children but also serves as a conduit for updated educational methodologies to other schools. Such a good center of competencies,” the economist noted.
He also highlighted another initiative of the first president – the mortgage program ‘7-20-25’.
“The mortgage here was very simple, understandable to citizens; many families in need of their first housing received it through this program. And it is still operational. More than 70,000 loans have been issued – that is, about 70,000 families have acquired a roof over their heads. In this aspect, we can note Otbasy Bank, the overall system of JSSB, which I evaluate as successful. I myself received my first apartment thanks to a mortgage through JSSB. This is a good tool for working citizens or those who cannot afford to buy square meters at market prices, those who belong to socially vulnerable categories, in queues,” the interlocutor said.
In conclusion, he also named the creation of the National Chamber of Entrepreneurs ‘Atameken’ as a successful project.
“This is a unique institution created on a continental model, with mandatory membership for all entrepreneurs in the organization. At the beginning of its journey, the NPP served as an important institution balancing the government. In those political conditions, it was a good initiative that allowed business to have a voice on many issues, including improving the investment climate and tax environment. At that time, the EAEU was being organized, and the NPP actively participated in the negotiation process. Many colleagues from the Russian Federation and Belarus envied our entrepreneurs who had direct influence on government decisions. The interests of business were genuinely taken into account then, many reforms were initiated by the NPP. On a number of contentious issues, the chamber constructively opposed the government. And many poor decisions were not adopted thanks to the NPP. Now the chamber is in a serious crisis. A transformation has been announced, but it has not yet happened. In any case, a decision must be made regarding the further work of the NPP. But it was during the formation period that the organization played an important role in the economic development and business growth of the country,” Askar Kysykov believes.
Without breakthroughs, without failures
Political scientist, author of the encyclopedia ‘Who is Who in Kazakhstan’ Daniyar Ashimbaev, unlike the previous speakers, could not name 10 successful projects of the country due to what he believes is their absence.
“The history of eGov and PSCs began more than 10 years ago. In the economy, no new breakthrough productions have been created, the slow diversification has been ongoing for many years. Logistics is developing, but we have eternal problems with roads. The railway is currently being reconstructed, but these are not new routes, but the expansion of existing highways. No new oil, gas, or uranium fields have been discovered, and there are no new promising interesting construction projects – this is generally a gray area,” the political scientist commented on his opinion.
The fact that we thwarted the attempt of a coup in January 2022 is good, Ashimbaev continued, but on the other hand, we allowed it to happen.
“We coped with those events, but with external help. And the involvement of the security forces in the coup, which acted as organizers, has left a black mark on the political history of Kazakhstan,” the political scientist emphasized.
Daniyar Ashimbaev - political scientist, author of the encyclopedia ‘Who is Who in Kazakhstan’
The country is developing quite steadily, there are no interethnic conflicts, he stated.
“We have no obvious breakthroughs when looking at the dynamics over the past 10 years. Although there are no obvious failures either. New banks, new quasi-state holdings – this is not interesting to the majority of Kazakhs. There are no new productions, no scientific discoveries. Many citizens tried to avoid vaccination with QazVac. The Constitution was amended, but this is a reaction to previous constitutional changes. New models of informing parliament have been introduced, but this has been done based on previous forms,” the political scientist continued.
In terms of political development, there has been a change of power - a precedent for Kazakhstan after 30 years of the first president's rule, Ashimbaev continued.
“The process ended after 3 years, and very painfully. The absence of interethnic conflicts internally and external military conflicts against the backdrop of today is already good. Our multi-vector foreign policy was initially in place. Essentially, these are the three main values from which Kazakhstan began to build Independence, and so far they are being upheld. In some points, we are standing still, but perhaps that is for the best,” the author of the encyclopedia ‘Who is Who in Kazakhstan’ shared his view.
Last year, he reminds, national projects were canceled. Even earlier – national programs.
“But no one has reported even on achievements. New regions were created - in place of those previously abolished, new ministries were opened, but the same Ministry of Emergency Situations, for example, existed until 2014. In terms of management, something has been updated, but much of the new is well-forgotten old,” Daniyar Ashimbaev noted.
He also reminded that 10 years ago there was a devaluation of the tenge.
“In terms of the domestic market, we are not closing food supplies; the wear and tear of communal infrastructure in the country is significant. The UNT is far from an achievement, but rather a dead-end branch of evolution: instead of developing creative thinking, we have switched to rote learning. The state procurement system changes every quarter. Recently, there was a report that a new investor is entering the phosphorus industry. But this industry had already successfully developed in the 60s. We are still building the fourth oil refinery, the fourth rework - where is it? We have increased oil exports, but under the OPEC+ quota, we must reduce production to prevent prices from falling further,” the political scientist noted.
Return of capital and personal assessment
Our last interviewed speaker is political scientist, head of the Central Asian Democracy Development Fund Tolganay Umbetaliev. The expert personally felt the advantages of digitalization, which she named among the successful processes.
“For example, obtaining places in kindergartens. Now it is very convenient; you can decide for yourself when to send your child to kindergarten. For this, if you have already put your child in line, you can track available spots. As soon as you choose a kindergarten, you immediately receive a referral from the akimat. You don’t waste time visiting the akimat and arguing with employees. Everything is immediate. It was very convenient for me personally. Therefore, this is project number one. Second - obtaining a driver's license when the term is approaching expiration. This can now be done in a very short time. Previously, it took a whole day, sometimes two. Now it is very convenient,” Tolganay shared.
Third - improvements in service at children's clinics.
“The state pays very close attention to the child. If you call a pediatrician to your home, then several times from different agencies they call back and ask if the pediatrician visited you and whether you are satisfied with the medical service. As for political projects, I cannot highlight any, only note - the return of capital. The project is not completed, so I cannot speak of its success. The recruitment system in government agencies is still opaque. In the field of science, we can note the allocation of funds for long-term scientific projects, as a result, we now see a large number of new scientific literature prepared by Kazakhstani scientists,” the political scientist said.
What top 10 projects do you consider breakthrough for the country and its residents? And what new products do we need? Write to us, and we will discuss.