state programme digital kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital...

59
APPROVED By a decree of Government of the Republic of Kazakhstan of "12" December 2017 № 827 State programme "Digital Kazakhstan"

Upload: others

Post on 14-Jul-2020

3 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

APPROVED

By a decree of Government

of the Republic of Kazakhstan

of "12" December 2017

№ 827

State programme

"Digital Kazakhstan"

Page 2: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

2

No table of contents entries found.

Page 3: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

3

1. Program passport

Programme Title "Digital Kazakhstan" State Programme

Reason for development Message of the President of the Republic of

Kazakhstan

"Third modernization of Kazakhstan: Global

competitiveness"

of January 31, 2017

State body responsible for the

Programme development

Ministry of Digital Development, Innovations

and Aerospace Industry of the Republic of

Kazakhstan

State bodies responsible for the

Programme implementation

Central and local executive bodies, state bodies

directly subordinate and accountable to the

President of the Republic of Kazakhstan,

entities of the quasi-public sector

Programme Objective To accelerate the pace of the Republic's

economy development and improve quality of

life for population through the use of digital

technologies in medium term, and to enable the

economy of Kazakhstan to move on a

fundamentally new development trajectory ,

ensuring creation of digital economy in a long-

term perspective

Programme objectives 1. Digitalization of industry and electrical

power industry

2. Transport and logistics digitalization

3. Agriculture digitalization

4. Development of e-commerce.

5. Development of financial technologies and

non-cash payments

6. State for citizens.

7. State for business.

8. Digitalization of state bodies internal

activities.

9. Smart Cities

10. Increased coverage of communications and

ICT infrastructure.

Page 4: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

4

11. Provision of information security in the

ICT field

12. Increased digital literacy, in middle,

technical and vocational, higher education.

13. Improving the digital literacy of the

population (training, retraining).

14. Support for innovative development

platforms.

15. Development of technological

entrepreneurship, startup culture and R&D.

16. Attracting venture financing.

17. Generation of demand for innovation.

Implementation deadlines 2018-2022

Target indicators Mining and quarrying section productivity

growth in 2022 - 38.9%;

Transport and warehousing section productivity

growth in 2022 - 21.2%;

Agriculture, forestry and fisheries section

productivity growth in 2022 - 82.0%.

Manufacturing section productivity growth in

2022 - 49.8%.

Share of e-commerce in the total volume of

retail trade in 2022 - 2.6%.

Growth of jobs created by digitalization in

2022 is 300 thousand people.

Share of public services received electronically

from the total volume of public services in

2022- 80%.

Share of Internet users in 2022 - 82%.

Population digital literacy level in 2022 - 83%.

Improvement in the rating of the GEF WEF by

the indicator “Growth of innovative

companies” in 2022 - 104th place.

Amount of investment attracted in start-ups in

2022 - 67 bln tenge.

Information and communication technology

development index in 2022 - 30th place.

Page 5: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

5

Sources and levels of funding A budget of 1421 thousand tenge* shall be

allocated to implement the Programme in

2018-2022, including:

2018 – 20 103 128 thousand tenge*

2019 – 15 791 384 thousand tenge*

2020- 32 691 920 thousand tenge*

2021- 20 923 618 thousand tenge*

2022 – 19 173 092 thousand tenge*,

and funds from other sources of funding not

prohibited under Kazakh legislation.

2. Introduction

2.1. Summary

Objectives of the "Digital Kazakhstan" state programme are: to accelerate the

pace of the Republic's economy development and improve quality of life for

population through the use of digital technologies in medium term, and to enable the

economy of Kazakhstan to move on a fundamentally new development trajectory,

ensuring creation of digital economy in a long-term perspective

Achieving this goal implies moving along two vectors of development:

"Digitalization of the existing economy" - to ensure a pragmatic start,

consisting of concrete projects in the real sector, launching of digitalization projects

and technological rearming of existing economy sectors, public structures and

development of digital infrastructure.

"Building the digital industry of the future" - ensuring long-term

sustainability, launching a digital transformation of the country by raising the level of

human capital development, building institutions for innovative development and, in

general, progressive development of the digital ecosystem.

Programme to be implemented in the period 2018-2022, will provide additional

impetus for the technological upgrading of the country's flagship industries and will

create conditions for a broad and long-term increase in productivity.

Five main areas of programme implementation:

1. "Digitalization of the economy sectors" direction of transforming

traditional economy sectors of the Republic of Kazakhstan, using breakthrough

technologies and opportunities that will enhance productivity and increase

capitalization.

2. "Transition to a digital state" - direction of transforming the state

functions as an infrastructure for delivering services to public and business, in

anticipation of its needs.

3. "Implementation of the digital Silk Road" - direction of developing a

high-speed and secure infrastructure for data transmission, storage and processing.

1 Amounts shall be updated in accordance with the state budget for the relevant financial year.

Page 6: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

6

4. "Human capital development" - direction of change, encompassing the

creation of a so-called creative society to ensure the transition to new realities - the

knowledge economy.

5. "Creating an innovative ecosystem" - direction of creating conditions for

the development of technological entrepreneurship and innovation, with sustainable

horizontal linkages between business, scientific sphere and state. State will act as a

catalyst for an ecosystem capable of generating, adapting and incorporating

innovation into production.

In these five areas, 17 initiatives and more than 100 activities have been

launched, which can be seen in a clear form in the coming years, as well as activities

that form the basis of the digital sector as a new economy sector of the future, main

result of which will be in the next decades.

Implementation of the programme involves funding in the amount of 141 bln

tenge from the Republican budget. It is also expected to attract more than 169 bln

tenge of the quasi-public sector entities funds.

Beneficiaries of the programme will be the entire population, business and

state bodies of the Republic of Kazakhstan, as it affects all spheres of life and aims at

raising the standard of living for every resident of the state. Programme will lead to

significant shifts in the structure of employment - in particular, by 2022, 300

thousand jobs will be created through digitalization.

Current average level of digitalization of Kazakhstan economy today is not a

barrier, but an opportunity to make a qualitative leap in the development that will

enable country to reach the forefront of global stage. This involves the adoption of a

set of measures and systemic work in five areas described in the Programme and in

activities listed in the annex thereto. List of activities will be updated.

2.2. Global digitalization trends and international experience

Today, the Internet economy is growing at a rate of up to 25% a year in

developing countries, and no sector of economy can even move closer to this pace.

90% of all global data were created in just last two years. Already 35 billion devices

are connected to Internet and share data - this number is five times the total

population of the world. But, at the same time, governments and corporations are

spending nearly half a trillion dollars every year to counteract a new, widespread

phenomenon - cyberattacks.

Digitalization efforts are creating a new society where human capital is being

actively developed — knowledge and skills of the future are being nurtured from the

earliest years, increasing the efficiency and speed of business through automation and

other new technologies, and the dialogue of citizens with their states is becoming

simple and open. Digital revolution is happening in front of us.

These changes are due to many technological innovations that have been

introduced in different industries in recent years. The way in which the production

and acquisition of value added has changed dramatically, new requirements for the

education and labour skills of people are emerging. Commercial Internet of things is

Page 7: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

7

shaping the future of production industries by using flexible and intelligent

production capabilities, and it provides a revolutionary growth in productivity.

Artificial intelligence is being introduced, including in conservative industries such

as financial services and medicine. 3D printing technology is already contributing to

the transformation of industries such as aviation, logistics, biomedicine and

automotive industry. Blockchain has all prerequisites for a global transformation of

the monetary system. High level of data and ubiquitous availability of

communication are among the factors underlying the "economy of shared

consumption", which is spreading at an accelerated pace globally. Leaders of the

"mixed consumption without physical assets" segment of capitalization exceed the

value of traditional companies with multi-billion-dollar physical assets on balance.

These changes are radical and occur in a matter of years and even months

rather than decades as it used to be. But this is only the beginning, and the world has

yet to survive the main changes. Pace of change is growing, but it is not too late to be

part of these changes.

Digitalization process today affects virtually every country in the world. At the

same time, each country itself determines priorities of digital development. More

than 15 countries in the world are currently implementing national digitalization

programmes. Advanced countries in the digitalization of national economies are

China, Singapore, New Zealand, South Korea and Denmark. China in its "Internet

Plus" programme integrates digital industries with traditional ones, Canada is

creating an ICT hub in Toronto, Singapore is building a "Smart economy", which is

the driver of ICT, South Korea is focusing on the development of human capital,

entrepreneurship and the diffusion of ICT achievements in its "Creative economy"

programme , and Denmark focuses on public sector digitalization.

In these countries, the state plays a key role in launching and implementing the

programme, and success depends on the involvement of private players - what is

called "digital privatization". Today, we are witnessing more and more examples of

states consciously pushing the economic system into the digital future. State declares

a sort of "tender" for the closure of any "inefficiencies" identified as priorities.

Players present their "bids", pilot concepts, and approaches to possible project

implementation. State qualifies proposals and selects the winner from the pilot

project competition. Winner generally does not receive direct state subsidies but is

entitled to implement its turnkey project (in a particular direction, in an industry, in a

region). State provides regulatory support, synchronization and cooperation with key

stakeholders (regional authorities, etc.), as well as incentives for "digitalized"

industries. It is also possible to select a consortium of winners that reduces risks of

implementation while at the same time supporting competition between 2-3 players.

Singapore is the most striking example of the digital privatization approach.

Thus, in 2014, State has initiated the development of Smart Nation concept and

invited business and the expert community to cooperate in refining and implementing

it. Smart Nation is an initiative of the state to improve quality of life through the

introduction of digitalization into the daily lives of citizens. State has formed a

Page 8: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

8

baseline request for a number of tasks that have been identified as primary challenge

for launching major initiatives within the framework of Smart Nation. Thus, one of

the key initiatives identified initially is the development of a national sensor network

to build a "smart city". Under each task, state organizes a tender to select the

contractor to develop a technical solution. Participation in the tender is open to all

participants meeting the requirements of briefing: thus, state provides a focus not

only on large business but also on the involvement of small and medium-sized

businesses. It is noteworthy that in 2015-2016 more than half of the contracts were

signed with small and medium-sized businesses.

State can provide a "digital leap" in the country through the accelerated

development of specific technologies. In such cases, state assumes the role of an

investor in determining the key, most promising funding lines, based on an

assessment of the long-term return to investment, competitive position, trends, and is

also invested in fundamental conditions of success, such as education and

requalification of staff.

In South Korea, with the active position of the state, backbone companies are

beginning to invest themselves in breakthrough digital technologies. For example,

one of the largest telecom operators in the country - SKT - has indicated its intention

to invest more than 4 billion USD in artificial intelligence and Internet of things.

Operator notes the need for partnerships in the development of new technologies and

also plans to involve local startups in the development of point solutions.

Another global trend is the "state self-digitalization", i.e. the digitalization of

state operations and state-owned companies. Self-digitalization is a challenge that

must be fulfilled by any state aimed at maximizing the value of economy, increasing

welfare, a place in business conduct ratings and a standard of living.

There are two key areas of self-digitalization at the country level:

- Digitalization of public administration: digital-workflow, digital by default

and digital first principles, reconsideration of inefficient processes. In this logic, self-

digitalization covers the entire spectrum of services: internal interaction of state -

G2G, interacting with citizens - G2C, interacting with the business - G2B.

- Digitalization of quasi-public sector entities, which is particularly relevant

for countries such as Kazakhstan, where the state is still responsible, in one form or

another, for the majority of jobs in the economy and hence for the growth of labour

productivity. Since traditional competitive market mechanisms are often not

employed for such companies, measurable KPIs associated with the implementation

of digital transformation are being developed and established (introduction of 4.0

industry technologies and the corresponding creation of value, % of revenue from

new products, training and requalification of staff).

For example, Denmark actively invests in state bodies digitalization. At

present, every citizen and every business has a private account that is used to

communicate with state bodies in real time. Since 2015, all citizens are required to

communicate with state bodies only via the Internet (in Denmark, 95% of households

have access to the Internet), each citizen has a passport (digital ID), and all state

Page 9: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

9

bodies and municipalities are connected to a single network, allowing interaction

with all departments through a single private account. Business, apart from

communication, has the ability to perform all operations over the Internet, to receive

statements, to pay taxes, and to send reports (electronically, sending and receiving

documents takes 5 minutes compared to 5 days when sent in a paper form). This

system saves 10-20% of the budget each year.

All these changes have long-term economic and social consequences. Such

phenomenon as "shared consumption economy", which is spreading at an accelerated

rate globally, not only has a direct impact on each consumer but also has an indirect

impact on the country as a whole. It is a solution for self-employed citizens,

motivates entrepreneurial activity and increases economic activity. This trend will be

further developed as new assets and consumption items are used together to reduce

individual costs.

It is now clear that the structure and form of employment will change

significantly and rapidly. Development of technologies will facilitate cross-border

remote employment, which does not fear migration barriers.

3. Current situation analysis

World's economic crises pose new challenges and lead to greater state

participation in the economy as a result of public policy orientation towards

providing the necessary social protection for population. Unwillingness of people and

businesses to take risks and the need to change their behaviour as economic agents in

the face of contemporary challenges is a by-product of high state activity.

Nevertheless, digital revolution that is before us makes it necessary for Kazakhstan to

include digitalization in its development plans as a public policy.

In the world's key ICT development rating, which is being calculated under the

UN auspices - ICT and Technology Index - Kazakhstan held 52nd place in 2016 out

of 175, without changing its position since 2015. As a result of Programme and other

strategic directions implementation, country would raise its ranking to the 30th place

by 2022, to 25th in 2025 and the 15th place by 2050.

Kazakhstan is also a catch-up country in the e-intensity rating of International

consulting company The Boston Consulting Group from the point of view of the

current level of digitalization. In order to overcome the catch-up status the

Programme shall need revolutionary, breakthrough actions on all digitalization issues

of global agenda.

These include digital transformation of traditional economy sectors,

development of human capital, digitalization of state bodies' activities, development

of digital infrastructure, as well as breakthrough in the development of digital

entrepreneurship ecosystem and, as a consequence, changing production patterns and

value added in the real sector of the economy.

At the same time, Kazakhstan is not starting from scratch. In the 1990s, state

programme for industrial and innovative development was launched, Bolashak"

International Education programme "was launched, and an "e-government" forming

Page 10: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

10

was initiated in 2005. Also, a number of elements of the innovative ecosystem are

already in place in Kazakhstan, and the Alatau TIP SEZ, "Nazarbaev University"

AEO, Astana hub international technopark is being launched. 3/4 of the adult

population of our country has a basic level of digital literacy, more than 3/4 have

access to the Internet. This is a significant base from which we can build on the

implementation of the Programme.

One of the steps towards creating the conditions for transition to an

information society was "Information Kazakhstan 2020" State Programme, approved

in 2013. As a basis for digital transformation of a country's economy, the Programme

has contributed to the development of the following factors: the transition to the

information society, improvement of public administration, establishment of "open

and mobile government" institutions, increasing accessibility of the information

infrastructure not only to corporate structures but also to the citizens of the country.

As a result of three years of the "Information Kazakhstan-2020" State Programme

70% of activities have been fulfilled and target indicators have been exceeded by

40%. However, the rapid development of IT on a global scale dictates its rules and

requires an adequate and timely response. The next step for Kazakhstan, therefore, is

to initiate the process of transforming the key sectors of the national economy,

education, health, and the state's interaction with society and the business.

Head of State, in a message to people of Kazakhstan on 31 January 2017, has

announced the Third modernization, in which the digitalization is a mainstay, has

noted the need to cultivate new digital industries and that "it is important to promote

communication, universal access to fibre-optic infrastructure. Digital industry will

boost all other industries." In the National Plan to implement the Message of the

President to the Nation of Kazakhstan as of January 31, 2017. The criteria for

achieving the objectives of the Third Modernization - Kazakhstan shall join the 30

developed countries of the world by 2050. To this end, the average annual economy

growth rate should be 4.5-5%. Key drivers in the new growth model should be the

economy sectors that can provide 70% of GDP growth, increase employment, exports

and investment attraction. Accordingly, priority areas in the vanguard of the third

modernization have been approved. The remaining 30% of growth is to be provided

by the social sectors (healthcare, education) and ICT in short-term.

In the fifth priority of the Third Modernization, President of the country has

identified the need to combat cybercrime, religious extremism and terrorism. In the

message of the Head of State, a separate request has been made to the Government

and National Security Committee to develop "Cybershield of Kazakhstan" Concept,,

aimed at ensuring the information and communication security of society and the

state in the field of information and communications, as well as protecting privacy of

citizens in using information and communication technologies.

There is, therefore, a willingness and all necessary prerequisites for achieving

the ambitious goal set out in this Programme and implementing the changes

necessary to achieve it.

Page 11: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

11

3.1. Digital transformations in the economic sectors

New digital revolution is changing today's production modes, supply chains

and value chains. Industry 4.0, one of the drivers for digital transformation of

industry, is a concept of production organization where additional value is provided

through integration of physical facilities, processes and digital technologies, at which

physical processes are monitored in real time, decentralized solutions are made, and

machines interact with each other and people. Full digitalization of all physical assets

and their integration provide the basis for a shift from mass production to mass

individualization, increased flexibility of production, and a reduction in time of new

product development, allowing to introduce new business models and adopt

personalized approach to working with customers. All of this greatly enhances the

efficiency and competitiveness of industrial enterprises.

Mining, manufacturing and electricity

Subsoil use is currently the basis of the real sector of Kazakhstan's economy.

However, the sector of high reprocessing of manufacturing industry is still

underdeveloped. Electricity industry provides for the needs of population and

production, but requires a shift to a more technological and saving level.

Kazakhstan is one of the world's leaders for mineral resources. Country's raw

material base is the world's first largest explored reserve of zinc, tungsten, barite, the

second for uranium, silver, lead and chromite, the sixth for gold, the twelfth for oil,

and the fourteenth for natural gas reserves.

In 2015, as a whole, due to decline in prices for mineral resources there was a

reduction of production in mining by 2.5%, oil production reduction by 1.7%, coal

and lignite by 5% and iron ore by 22%. In 2016, the decline in mining production

was 2.7%. However, in the long term, the oil and mining sector retain important

value for the functioning of Kazakhstan's economy. At the same time, labour

productivity in subsoil use remains low, as is the technological capacity of

production.

In the mining and manufacturing industry, the key trend is to move to a new

technological level in accordance with the concept of Industry 4.0.

At present, Kazakhstan's mining industry insufficient technical capacity, in

comparison with world leaders, which generally leads to low productivity and

competitiveness. Despite the fact that some of deposits in the country are equipped

with modern equipment and developed data networks (21%), a substantial portion of

the deposits are in need of modernization. Thus, 56% of the deposits are

characterized by a lack of networks or insufficient development, and 23% of the

deposits require a complete replacement of equipment.

Among the most important constraints to the development of digital

component of mining industry are limited financial resources, shortage of skilled

personnel with hybrid specialization, both in industry and IT, lack of understanding

of economic benefits of implementing digitalization, as well as limitations on

infrastructure.

Page 12: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

12

Manufacturing industry is the economy sector, development of which is one of

the most important conditions for the sustainable development of Kazakhstan.

Manufacturing sectors generate demand for high-tech services, create engineering

competencies and provide quality jobs. In the process of technological development,

more than 80% of manufacturing enterprises are characterized by a low degree of

automation and penetration of digital technologies. For example, oil refining is

currently using annual planned refinery shutdowns for repairs, which indicates

unoptimised repair and maintenance processes, and consequently increases overall

costs.

The main trend in energy is the introduction of various Smart technologies to

ensure effective information exchange among all elements and network tenants,

protection and recovery from major failures, natural disasters, external threats.

Sphere of environmental protection requires prompt, reliable and complete

information. In this regard, automation issues are of strategic importance, as future

environmental performance will not only be a product of the material base, staff skills

but also the reliability and speed with which all environmental information is

presented.

Transport and Logistics

A quality transport and logistics infrastructure provides a powerful boost to the

economy by increasing the cohesion of territory and reducing the overhead costs of

delivering goods to their destinations.

In order to maximize the impact of communications infrastructure

development, transport linkage of the territory must be developed in parallel, both

through the development of all types of transport and cheapening of its value and

through the development of infrastructure for the forwarding and delivery of goods.

Kazakhstan now has a highly developed network of railways, but an inadequate

network of roads and excessively expensive air transport. Multimodal

transcontinental transport of goods from Europe to Asia is developing, but there is

also a great potential for growth. There is a small amount of sea and river transport

that also has untapped growth potential.

With regard to examples of international practices in addressing the

aforementioned problems of the transport industry, the United States developed the

first standards on the intellectual transport system in the mid 90s. Between 2002 and

2012 the National Intelligent Transport System Program was implemented in the

United States. In Japan, the establishment of an Intelligent Transport System began in

the first half of the 1970s. last century from scientific research, which was later

documented as a social-oriented program to improve national welfare. China's

"Strategy for China's Intellectual Transport System Development" was adopted in

2007. Relevant tasks for the development and implementation of intelligent transport

services are reflected in the China's five-year economic development plans.

Thus, in order to ensure the continued growth of the logistics and transport

industry, it is necessary to envisage introduction of the transport system, that would

enable the increase of transit capacity via vehicle management, enhance transport

Page 13: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

13

security via rapid processing of information and the development of optimal and

rational decisions and managing impacts.

Experience of foreign countries shows that the increase in traffic increase can

be achieved, including through optimizing the paper flow, using the "E-Freight"

International standard, in the process of airfreight, and the development of

multimodal transport.

Problems of the industry lie in several dimensions and relate to internal and

external contours:

- low control of transit and imported cargo;

- lack of capacity to monitor, analyse and forecast all types of transport for

decision-making;

- poor logistics infrastructure.

Problems listed above are both a waste of transit capacity and a barrier to

domestic production.

Agriculture

Agriculture is one of the key branches of Kazakhstan's economy, providing

food and economic security as well as the labour potential of the country, especially

in rural areas. According to the 2016 data for agriculture, forestry and fisheries

amounted to 4.6% of the country's GDP, this industry employs 18% of the country's

working population.

Gross production of agricultural products (services) in 2016 across the country

has amounted to KZT 3 684.4 billion, which is 5.4% above the 2015 level. In 2016,

crop production grew by 7.5% and livestock products - by 2.8%. Nevertheless,

agriculture remains a sector of untapped growth potential.

Despite the positive trend in the gross output of agriculture, production has

generally lagged behind the growth of consumption and incomes of the population,

and continued productivity and competitiveness of products does not enable the

production growth, which causes a high percentage of imports in internal

consumption. With the accession of Kazakhstan to the World Trade Organization,

requirements for increased competitiveness in external markets have also intensified.

Experience of developed countries, such as the US, Canada, Australia, has

shown that digital technology is radically changing this traditional industry. Modern

geoinformation systems and large data from various sources, including IoT,

contribute to big harvest without soil depletion, with rational use of resources.

Commercial Internet of things allows to create automated farms with remote control.

Well-developed system of logistics and e-commerce can reduce the cost of delivering

agricultural products to final consumer, even for small farmers, while maintaining its

quality. This is an important factor in conservation and development of

environmentally friendly products production, both in terms of preservation of

nation's health and in terms of the realization of export potential.

Today, in the agricultural sector of Kazakhstan, the proportion of farmers using

digital technology in agricultural production is negligible, which has a negative

impact on the growth of productivity. In addition, agricultural land is either not used

Page 14: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

14

as intended or used inefficiently, and this is difficult to control because of the large

territory size, low population density and lack of the necessary infrastructure status

monitoring and use of land with analysis and forecasting in short and long term.

Fisheries are important as a source of income, a basis for economic growth,

employment generation, increased exports of fish products, other potential

opportunities, and a renewable source of biological diversity. Uncontrolled illegal

harvesting and illicit trafficking in fish products can lead to disappearance of fishery

resources and food shortages, and there is an emerging need to detect illicit fish

trafficking.

There is a great potential for transformation in agriculture through digital

technology, and in a full-scale programme of digitalization the agriculture is able to

achieve a qualitatively new level of development and become a driver of the

country's economy. Main direction of the agriculture digitalization programme

activities is the improvement of productivity and preservation of country's food

security.

E-commerce

Trade is the most important driver of economic growth in Kazakhstan. Share of

wholesale and retail trade; repair of automobiles and motorcycles in Kazakhstan's

GDP for 2016 has amounted to 16.8%, and its contribution to GDP in some years of

the last two decades was 2 percentage points. However, e-commerce today accounts

for a relatively small proportion of retail turnover, 1% in 2016.

At the same time, in developed and developing countries, e-commerce is

rapidly developing, and its positive impact extends not only to the business sector but

also to the quality of life of the population in the country as a whole. In particular,

through e-commerce population gains access to more goods at lower prices, for

example, by engaging in international trade. From a business impact perspective, it is

worth noting that growing popularity of e-commerce leads to an increase in the

number of people wishing to open their own businesses in this area.

It is expected that in the next 10 years, attractiveness of electronic commerce

will increase through a number of qualitative changes. These include improved

delivery efficiency, including through new delivery modes, extensive use of client

analytics, increased product assortments, and increased popularity of mobile

commerce.

At the same time, it is necessary to take into account a number of barriers to

the development of electronic commerce that are present at all stages of a value

chain.

Thus, in process of attracting clients, limited promotion of electronic

commerce and players is a limiting factor, and electronic commerce is not advertised

on television and outdoor advertising, which also prevents new consumers from

being attracted.

In organizing access to the electronic platform, there are frequent technical

failures of IT systems among players in the e-commerce industry. However, inability

Page 15: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

15

to adapt systems widely to use them on mobile devices remains one of the most

common problems.

In addition, in Kazakhstan there is a lack of specialists with specific

competencies needed to develop the industry, such as internet marketers and content

professionals.

Supply, shipping and delivery of the goods are compounded by inadequate

transport and logistics infrastructure, which is a source of expensive and long

logistics.

Low culture of online consumption, low level of awareness among citizens,

poor availability of debt financing for SME and adverse economic conditions of high

cost of capital are added to above-mentioned difficulties.

There are also key issues in the area of e-commerce legal regulation. These

include complex customs procedures that restrict export of electronic commerce

companies, absence of tax concessions and other effective incentives from the state,

restrictions on development of foreign companies, including cross-border trade and

large shadow trade.

Financial sector

Financial sector is an important element of the economy, and speed and quality

of changes are dependent on its condition. Electronic payments and electronic

commerce have now become an integral part of the financial sector. Financial

industry has traditionally been a leader in the introduction and application of

innovative technologies and digital services to interact with clients. Virtually all

banks provide services through remote channels. 70% of the banks provide services

to individuals through the Internet and mobile banking, 55% of banks provide

services based on mobile solutions. Thus, volume of payments by individuals using

the Internet and mobile banking in 2016 was 2.6 times higher than in 2015. Provision

of electronic services by brokers was simplified for investors, including trading

activities based on the client digital signature and provision of electronic services

through the private account. This has facilitated market access for regional investors

and allowed investors to trade financial instruments on the Kazakhstan stock market

from anywhere in the world.

Further digitalization of financial relationships is barred by the lack of an

effective regulation and harmonized standards for the financial sector electronic

interaction with public information systems and databases, a universal mechanism for

remote identification of clients, and insufficient financial literacy among the

population.

Involvement of the population in formal financial system is an important

element. In order to improve the availability of financial services, particularly

payment services extrabank ecosystems are developed - electronic money systems,

mobile operators are implementing decisions on payment of goods and services from

the billing account. However, these solutions are limited by the service provider's

ecosystem, which limits the mass use by population. One example of the most mobile

Page 16: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

16

payments development is Sweden and Kenya, despite differences in approach -

banking and non-bank platforms.

Experience in such countries as UK, Sweden, Austria, Singapore, Korea,

Australia has demonstrated that creation of technology platforms to ensure the inter-

institutional remote identification of population, introduction of open platforms in the

financial sector, building an integrated digital environment of interaction and

communication between financial institutions, clients and public authorities,

improves the quality of services in financial sector. All of this corresponds to the

global trend of digitalization, transforms the industry and creates prerequisites for the

widespread availability of financial and other services.

Modern technology trends dramatically change the paradigm of financial

service delivery - new areas and directions, business models, lower cost of financial

services, and since risks inherent in the industry.

ICT industry development

Three major sectors should be identified in the IT market structure: hardware,

licensed software, and IT services.

According to IDC agency data, volume of IT market for the Republic of

Kazakhstan has amounted to 1 687 million USD in 2015 against US $2.0 billion USD

in 2014. Share of hardware segment is estimated at 81.2% or 1 369 million USD,

share of licensed software is 7.5% or 126.8 million USD IT services at 11.3% or

190.5 million USD.

In 2016, country's IT market has amounted to 1307.4 million USD, share of

hardware amounted to 84.3% or 1101.8 million USD, licensed software to 4.7% or

62.1 million USDand IT services to 11.0% or 143.5 million USD. For comparison in

countries such as England and France, the share of IT services in 2016 was 46.5%

and 43.7%, respectively. In Eastern European countries, for example Poland and

Czech Republic, the share of IT services in the total IT market has amounted to

32.6% and 34.9%, respectively. In Russia, the share of IT services amounted to

23.8%. At the same time, the amount of local content that is included in the gross

value added of a country is very small, largely generated by IT services and not more

than 30% of the IT services volume.

These data show the low effectiveness of IT investment, low level of

cybersecurity, and need to take action to promote local content.

According to the Kazakh Association for IT companies LEA, 2 560 companies

operating in the field of information technology are registered in the country in 2016.

These companies carry out a variety of activities, and of these, 770 companies are

involved in the development of software. Among these companies there are IT

companies that provide a high percentage of local content (up to 100%) in the

projects they implement.

Global practices has shown that creation of conditions for IT companies

development and formation of a full cycle of startup support are maintained by

technological parks. Country's techno-parks, however, have not been adequately

developed, including because of the poor performance of information technology

Page 17: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

17

development institutions established in the segment. Venture Financing institute in

Kazakhstan has also not been adequately developed.

It should be noted that conditions of technological development and

cybersecurity of countries are the full support of existing domestic IT companies that

are working to increase value added in the information technology sector, and

working with trusted software. At the same time, forming and development of a

start-up direction, with the participation of technological entrepreneurs from all over

the world, are a development prerequisite.

3.2. Digitalization of state bodies activities.

Programme has set ambitious targets for the digitalization of state bodies

activities. To achieve these objectives, a support infrastructure will be established in

the form of adapted legislation, business support measures, education and science,

business facilitation, reduction of transaction costs in conjunction with state.

Moreover, state will anticipate the needs of its citizens to obtain services, making

available as much time as possible for productive work and stimulation of

economically active behaviour.

E-government

In the previous stage of informatization, state had established the "E-

government" of the Republic of Kazakhstan in the form of basic infrastructure and

information systems of state bodies directly or indirectly involved in the provision of

public services.

As of July 2017, more than 740 services have been translated into electronic

form, and 83 mobile services have been implemented. In 2015, the volume of public

services provided in electronic form on Web portal has amounted to over 36 million,

and in 2016 it amounted to about 40 million. As of September 2017, the number of

registered unique users reached over 6.6 million people.

As of October 2017, there are 349 service centres operating in the country. In

2013, a single contact centre was established at the "e-Government" call centre with

toll-free number 1414. A single contact the centre receives at least 14,000 cases per

day from citizens, and the number of cases is projected to increase by an average of

15% of the total cases number annually. This creates a heavy load on operators, leads

to problems with getting through, and reduces the quality of services. A large number

of calls contain similar cases, and they could be converted to auto-processing or self-

service mode.

An open government site has been set up on the e-government web portal. As

of October 2017, the "Open Data" portal contained 2 376 data sets, 17 132 draft

regulatory legal acts and concepts of bills were discussed, and 14 928 budget

documents published.

Despite the results achieved, the problems associated with the lack of

openness, customer orientation and proactiveness. For example, state bodies are

reluctant to disclose information that can be used to generate added value in the form

of up-to-date and demand-open data.

Page 18: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

18

Profile activities of state bodies are automated, however, there are still areas of

activity not sufficiently covered by informatization. Advent of new technologies

makes it possible to provide services of higher quality than those that are currently

being implemented. For example, the use of big data technologies can lead to a

fundamentally new approach to the analysis of population needs and, as a result, to

improved quality of service.

Indispensable conditions for the entry of Kazakhstan into the top 30 developed

countries are not only the growth of GDP to the level of developed countries, but also

bridging of the socio-economic development gap, in particular the progress made in

improving performance of health system, and thus maintain a high level of health,

longevity and quality of life for the population.

Digital technologies in health can help solve major problems: accessibility and

quality of health care, as well as prevention of disease.

Health care has a direct impact on the duration and quality of life of

population, including the maintenance of employment and economic activity age.

Health digitalization reduces the number of medical errors, improves quality and

speed of service, and improves the quality of management decision-making.

Currently, government projects in developed countries are aimed at developing

a coherent national-level architecture that collects, processes and exchanges data on

the health of citizens and health system. Main objectives are to obtain a single

information environment, with the possibility of monitoring health of each individual,

improving health system as a whole, improving quality and accessibility of health

care, reducing the number of errors, build a system where in the centre there is

patient and information about his or her health.

In 2004, Kazakhstan has established a national telemedicine network. By the

end of 2016, it had combined 204 health facilities, with the help of district-level

health workers (144 district and city hospitals) to be consulted by colleagues from

regional and republican hospitals and centres. In 2016, 28 060 Tele-Medical

consultations were held, most of which were in cardiac consultations - 4 674

sessions, pulmonology - 3 666 sessions, neurology - 2 720 sessions. During the

period from 2004 to 2016, medical patients received over 133 thousand Tele-Medical

consultations.

However, health system still has large areas that are not covered by digitization

and that do not use modern opportunities for increased efficiency.

There are also problems in rulemaking process, including lack of a single

information space; lack of transparency and severity of the link between monitoring

and rulemaking, where legal monitoring is done manually; there are no tools for

analysis prior to the development of NLA, and there is a need to further improve

information systems that are transparent and work in a single information space.

Smart Cities

Modern world is placing high demands on urban infrastructure. Large cities

experience problems of transport logistics, technical and social urban infrastructure,

quality of the urban environment, efficient management of urban development,

Page 19: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

19

further development of the city's public, business and residential space, taking into

account the increasing population of the city.

Since 2012, city of Astana has been implementing the "Integrated Life-Support

system" project, which covers development of video surveillance systems,

introduction of photo-video recording of violations, establishment of a data centre,

centre for operational management and intellectual contact centre. Initiatives of

Smart school (19 schools out of 88 connected), Smart street lighting, Smart clinic (2

out of 10 clinics connected) are being implemented. In Almaty, a photo-video

recording system of violations has been introduced, and in 2015 "Onai" electronic

ticket system in public transport was launched.

3.3. Development of digital infrastructure

Information and communication infrastructure

Today, information and telecommunications infrastructure is becoming an

essential element of economic development. Without a modern, accessible

telecommunications infrastructure, Kazakhstan cannot be anchored in the world

economic and information space. Availability of ICT is the foundation for building

the digital economy.

Main part of the developed ICT infrastructure is broadband Internet access.

Broadband access is provided by wired technologies such as FTTx, ADSL and

Wireless technologies 3G, 4G, and satellite communications. Telecommunications

infrastructure has been established to provide people and businesses with broadband

Internet access in cities and regions of Kazakhstan; however, to date it has not met

the needs of rural population. In order to reduce digital inequalities, there is a need

for more quality and coverage of broadband internet access for rural communities.

Governments in many parts of the world see Broadband Internet access as a

key element of their development programmes. European Union is implementing the

digital Agenda initiative of the "EU 2020" strategy, where broadband Internet access

is identified as the basis of the modern European Union economy. United States

funds projects from federal budget to improve the access of rural population to fibre-

optic infrastructure. Canada, as part of "Digital Canada 150" strategy provides

investment for expansion of high-speed Internet services for 280 thousand

households in rural and remote locations.

According to information from the Statistics Committee of the National

Economy Ministry of Kazakhstan, in 2014 the proportion of Internet users (including

mobile) aged 6-74 is 63.9%, in 2015 - 72.9%, and in 2016 - 76.8%. 4G network

coverage in 2015 was 65.5% of the population, and 69% in 2016.

In rural areas, there is a digital divide - a lag in the development of data

transmission network. In 2014 density of urban Internet users was 72.6%, 52.7% in

rural settlements, 76.4% and 68.3% in 2015, 81.3% and 70.9% in 2016 respectively.

Overcoming the information inequality of regions is compounded by the country's

size, presence of more than 6 600 rural settlements, some of which are located in

remote and inaccessible localities. In global experience, this problem is being

Page 20: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

20

addressed by development of satellite communications and broadcasting, which

provide:

- possibility of equal access of the population to information, including public

services, and information resources of the national television broadcasting;

- up-front meeting the growing information needs of people, businesses and

the state.

KazSat 2 and KazSat 3 satellite systems were launched with a total capacity of

2 160 MHz. 16 communication operators provide satellite and cellular services

through 7 000 earth stations. According to the National Satellite Broadcasting

Network "Otau TV" data, the total number of subscribers to the service has exceeded

1 million in 2015. As of July 2017 356 radio-television stations have been

commissioned, providing 77% of the country's population with digital terrestrial

broadcasting.

At the World Radiocommunication Conference (WRC-19) in 2019, ITU is

expected to adopt the new generation of 5G mobile communication standards.

Depending on the standards adopted by ITU, authorized body will undertake relevant

work on the introduction of 5G technologies in the territory of the Republic of

Kazakhstan.

Provision of information security in the ICT field

Integration of Kazakhstan into the World Informatics and telecommunications

system has already resulted in a multiplier of information and communication

infrastructure objects in public administration, business and industrial facilities

management systems, increased the provision of ICT services by operators handling

personal data of citizens.

In recent years, there has been a dramatic increase in threats to information

security, both in public information systems and in the banking and industrial sectors.

For example, according to the EMC's "Global Data Protection Index", the amount of

missing data worldwide has grown by 400% since 2012. Total lost data amounted to

an average of 2,36 TB. Unscheduled downtime and data loss cost to organizations

around the world each year over 1.45 billion US dollars. According to the

International INternational Telecommunication Union's cybersecurity index in 2017,

Kazakhstan had taken 83rd place from 193 countries, i.e. was at a low rating level.

This index takes into account the level of development of legal environment,

technical prerequisites, organizational measures, development of competencies and

cooperation within and outside the country.

In parallel with the development of broadband access networks, transformation

of information and communication infrastructure, transfer of business processes of

economic agents into an online environment and automation of technological

processes in industry, energy, banking and ICT services, there is a need for a

coherent and consistent policy to ensure the security of information space and

communications infrastructure.

Main challenges and threats to security in the use of ICT affecting the

efficiency of processes of Kazakhstan economy digitalization are reflected in the

Page 21: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

21

cybersecurity concept of "Cybershield of Kazakhstan" and provide for using trusted

technologies to ensure integrity, confidentiality, information availability, and user

authentication when processing.

Effective implementation of economy digitalization will be ensured only with

unity, sustainability and security of information and communication infrastructure,

the reservation of data and confidence of citizens in processes based on ICT-based

solutions.

3.4. Development of human capital

Digital economy requires digital skills of population to reap its benefits. At

present, the level of computer (digital) literacy is 76.2% and needs to grow in the

coming years. To date, the Ministry of Education and Science is already introducing

a number of initiatives:

1) in 3-4 grades, the subject of "Information and communication technology"

has been introduced, generating common basic knowledge of modern information

technology for effective use in learning and daily life;

2) there are 372 robotics clubs that are teaching the common basics of robotics

programming.

However, taking into account the new requirements for younger generation,

there is a need to review the content of secondary education through the development

of creative thinking and technical skills.

In technical and professional, higher, postgraduate education, according to data

from the Ministry of Education and Science of the Republic of Kazakhstan:

1) on the basis of 3 (three) specialties, the subject of "Information and

communication technology" has been introduced to ensure that students have a basic

knowledge of the use of ICTs in practice within chosen profession;

2) professional standards are developed which will become the main basis for

technical and vocational education programmes, higher education and postgraduate

studies.

Also to date, 14.5 thousand educational grants have been allocated for the

training of ICT specialists over the period 2014-2016, while the output for the same

period was 94 thousand people.

At the present time, there is a shortage specialists in ICT specialties with

professional knowledge and skills in the chosen profession.

Digitalization is far ahead of the existing production requirements system for

occupations in the labour market. Lack of an operational link between labour market

and education system can lead to preparation of untapped staff and release of

personnel in "dying" occupations. Content of all levels of education needs to be fully

reviewed through the development of digital skills of all professionals.

3.5. Innovative ecosystem

Reality today is an endless whirlpool of change, and it is taking place so

rapidly that it is important to adapt to the new conditions in time. Success in the long

Page 22: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

22

run is possible only when fundamental changes in the system itself are taking place,

forcing the system to progress. It is precisely these true engines of progress (along

with human capital) that include the start-ups - instrument of renewal and

development, not so much the economy in its physical dimension (GDP growth), but

the transformation of public consciousness, birth new culture of technical

entrepreneurship.

A layer of technological entrepreneurs will be created to create such a culture.

It is important to understand that every successful entrepreneur is worth a hundred

and a little less successful and thousands more small entrepreneurs seeking to

introduce new products and services, which in itself is a positive effect on the

economy. It is necessary to reach a state in which children will dream of becoming

entrepreneurs and creating companies, with their ideas changing Kazakhstan from

within.

Effectively functioning startups ecosystem is a chance for Kazakhstan to

become a "point of attraction" for the best minds and generator of progressive ideas

in both ICT and other industries. This is not an easy task, but even the smallest delay

in its implementation can delay development of the country for years. That is why it

is now so important to lay the groundwork for launching long-term changes, to which

activities to develop the startups ecosystem are directed.

Key elements of a developed startup environment are: technological

entrepreneurs talents that are the main source of innovative ideas; professional

investors involved in "smart" financing; efficient ecosystem is an infrastructure that

supports development of entrepreneurs.

In implementing the programme for the development of the startup

environment, Kazakhstan cannot fail to take into account some of existing difficulties

that are specific to industry at this stage of development. The most important of these

is the lack of a critical mass of entrepreneurs and venture financing.

Thus, there are very few technological startups in Kazakhstan compared to

other countries. According to the data available, for 2015 Kazakhstan had only about

200 startups, whereas in Russia this number was 3 800 and in Israel 6 000. Low

level of R&D expenditure (0.2% of GDP vs. 4.1% in Israel) demonstrates the risk of

this situation remaining in the future.

One of the specific features of startup environment in Kazakhstan is primarily

the state nature of the startups financing, mainly through the National Agency for

Technological Development and Techgarden autonomous cluster fund, providing

annual grants of 20 thousand USD to 100 thousand USD. At the same time, there is

little or no support for professional venture investors.

Creation of a live startups ecosystem is a task for decades. Global goal is to

create the conditions for a "serial" release of a huge number of startups. At the same

time, state can act as a catalyst for change.

Realizing that the prerequisite is availability of technological entrepreneurs as

a class, many Israeli universities offer a compulsory entrepreneurship course in

technical faculties. There is also a system of "orders" for technology projects where

Page 23: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

23

customers are large local and international companies, and students are the

performers. Regular lectures and master classes are held with invited successful

entrepreneurs.

Since it is not possible to create a critical mass of Kazakh entrepreneurs in the

short term, international experience should be considered. In general, countries with

developed ecosystems see foreign entrepreneurs and technology specialists as a

source of specific know-how needed to develop local ecosystem of startups. Their

experience, as well as technology of research and development, of entrepreneurship,

of management all of the skills that foreign professionals can offer, may help speed

the formation of startups local ecosystem. In addition, they provide a variety of

cultures and knowledge, which in the future can become a competitive advantage for

the ecosystem as well as for each participant.

Example of Singapore, where there are good universities and need for talent

was still higher than the offer. Short-term solution was to create incentives, such as

support for research and funding for foreign scientists, assistance with moving to

Singapore, and introduction of favourable migration rules. In the long run, education

scholarship programmes have been established, a partnership has been established

with Duke University and GlaxoSmithKline to establish a research support fund.

Today, there are about 6,000 scientists from around the world living and working in

Singapore, approximately 52% of those employed in startup industry are foreigners.

Special visa support programmes have also proved to be effective in attracting

technology entrepreneurs. In particular, the United Kingdom's Technical Nation visa

programme, established to reduce shortage of highly qualified technical entrepreneurs

in large companies and startups has considerably simplified the visa issue system for

technical specialists. Thus, in 2014, Tech City UK government organization was

granted the right to issue more than 200 British work visas per year for non-EU

professionals, but with unique experience and competence in priority for the UK - IT

and information security, finance, etc. Technology specialists working together were

allowed to apply for group visa applications. This experience can also be used in the

creation of "Astana hub" technology park to attract foreign technical specialists and

entrepreneurs.

So far, Republic of Kazakhstan has weakly developed venture financing

institute, there are no major startups in the ICT field that have received venture

financing in the territory of the Republic of Kazakhstan, weak entrepreneurial

initiative, weak startups support infrastructure. There are financial and regulatory

constraints, as well as high risks for start-up entrepreneurs. Entrepreneurship and

startups creation are poorly promoted among schoolchildren and students, and the

number of business incubators is very limited, around 20 in total in the country, while

one of the leaders of digitalization, China, has about 400. Majority of the population

prefers to open their own business rather than employment as an employee. From the

point of view of creating a venture industry, experience of Israel is interesting,

showing that state can be a decisive link in establishing a framework for venture

financing. Fund for co-investment (Fund of Funds) has been established and has had

Page 24: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

24

a mandate to invest in established funds up to 40% of total amount of allocated

investment, with the condition of majority investment from foreign fund and

investments of local financial institutions. Each fund management company had a

call option for the state shares to their redemption at original cost (plus a minimum

interest), which added to the motivation and inherently "cheap" money. Result of this

measure was essentially the establishment of Israeli venture industry: 100 million

USD of public investment has turned into 5 bln USD under the administration of

established funds in a decade.

In Australia, in December 2015, National Innovation and Science Agenda

programme was adopted to support innovation and science, aimed at enhancing

scientific capacity to generate knowledge, invest in human capital, transition from

commodity development model to a diversified innovative economy. One of the

measures has been to reduce capital gains tax for startups, as well as 20% tax

incentives for income not exceeding 200 thousand USD per annum for companies

engaged in innovation. A total of 840 million USD were allocated for the

implementation of programme including improvement of computer literacy among

students in higher and secondary education, training of ICT specialists, research

activities at universities, establishment of a support fund for startups and access of

Australian startups to the Silicon Valley and other technological hubs.

Target startups state support can be effective, but the primary focus remains on

system measures: attracting Kazakh and foreign entrepreneurs, supporting investors,

supporting the development of infrastructural facilities, and stimulating and providing

access to demand for small companies.

4. Goals, objectives, target indicators and indicators of Programme

implementation outcomes

Programme Objective: to accelerate the pace of the Republic's economy

development and improve quality of life for population through the use of digital

technologies in medium term, and to enable the economy of Kazakhstan to move on a

fundamentally new development trajectory, ensuring creation of digital economy

in a long-term perspective

Target

Indicator

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Mining and

quarrying

section labour

productivity

growth (by

2016);

MIID, ME Statisti

cal data

% - 8.8 15.5 22.7 30.4 38.9

Page 25: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

25

2. Transport

and

warehousing

section labour

productivity

growth (by

2016);

MIID Statisti

cal data

% - 3.7 6.5 10.7 16 21.2

3. Agriculture,

forestry and

fisheries

section labour

productivity

growth (by

2016)%.

MA Statisti

cal data

% - 9.4 29.4 44.8 62.4 82.0

4.

Manufacturing

section labour

productivity

growth (by

2016).

MIID,

MoE, MA

Statisti

cal data

- 10.5 20.5 30.3 39.8 49.8

5. Share of e-

trade in total

volume of

retail trading

MTI Statisti

cal data

% 1 1.4 1.7 2 2.3 2.6

6. Growth of

jobs created

through

digitalization

MDDIAI,

Zerde

NIH JSC

(as

agreed)

MIC

data

thou.

peopl

e

- - 50 100 200 300

7. Share of

public services

received

electronically

from the total

volume of

public services

MDDIAI MIC

data

% 78 81,6 81,8 82 82,3 78

8. Share of

Internet users

MDDIAI,

communic

ation

providers

«QazTech

Ventures»

Statisti

cal data

% 77 78 79 80 81 82

9. Level of

population

digital literacy

LEA,

MDDIAI,

interested

state

bodies

MNE

SC

statistic

al data

% - 77 78.5 80 81.5 83

10.

Improvement in

MDDIAI

«QazTech

World

Econo

Ranki

ng

- 103 107 106 105 104

Page 26: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

26

the rating of the

GEF WEF by

the indicator

“Growth of

innovative

companies” in

2022

Ventures» mic

Forum

website

positi

on

11. Level of

investment in

start-ups

MDDIAI,

MIID,

MNE

MIC,

MID,

MNE

data

bln

tenge

- - 4.8

15.2

35.9

67.0

12. Information

and

communication

technology

development

index

MDDIAI UN

website

Ranki

ng

positi

on

52 49 44 39 34 30

Direction 1. Digitalization of economic sectors

Task1. Digitalization of industry and electrical power industry

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Share of

design

documents of

subsoil users

in the

information

system of the

authorized

body in the

field of

hydrocarbons

MoE MoE

data

% - - - 25 50 100

2. Share of oil

and gas

companies

using IIoT

solutions

(Industrial

Internet of

Things -

monitoring

devices for

online oil

accounting) -

MoE MoE

data

% - - - 30 95 95

Page 27: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

27

and integrated

with the

information

system of the

authorized

body in the

field of oil and

gas

3. Share of

large and

medium-sized

enterprises

using digital

technologies

MIID MIID

data,

statistic

al data

% - - 3 5 7 11

Excluded in accordance with the Decree of the Government of the Republic of Kazakhstan dated

12.12.19, No. 949

4. Share of

local

automated

systems to

prevent system

disruption

(LASPSD)

sets, connected

to the

Centralized

System of

Emergency

Automation

(SCEA)

MoE,

KEGOC

JSC

Official

data of

KEGO

C JSC

% - - - 25 75 100

Task 2. Transport and logistics digitalization

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Annual

transit traffic

of goods

carried in

containers

MIID MIID

data

ths.

TEU

104 536 1243 1108 1362 1498

2. Share of

republican

importance

roads which

use digital

technologies

MIID MIID

data

% 0.4 0.85 22.8 40 80 100

Page 28: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

28

Task 3. Agriculture digitalization

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Growth in

food exports

(by 2017)

MA MA

data

% - - 27 44 61 69

Task 4. Development of e-commerce

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Increase in

the number of

online retail

orders (by

2016)

MTI Statisti

cal

data,

data of

Kazpos

t JSC

% - 56 95 144 205 281

Task 5 Development of financial technologies and non-cash payments

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Growth of

cashless

payments

through digital

technology (by

2019)

NB (as

agreed)

NB

data

% - - - 18 27 35

Direction 2.Transition to digital state

Task 1. State for citizens

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

Page 29: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

29

1. Level of

satisfaction

with the

quality of e-

services

received by

population

MDDIAI MDDI

AI data

% - 80 81 82 83 84

Task 2. State for business.

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Positions in

the Doing

Business

rating on the

Taxation

indicator

MoF World

Bank

Site

Ranki

ng

positi

on

50

55

45

40

40

35

2. Increasing

the outreach of

private

enterprise to

public support

by automating

their delivery

MNE MNE,

MA,

MIID

data

Thou.

subjec

ts

- 145 150 200 250 300

Task 3. Digitalization of state bodies internal activities.

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. E-

Government

development

index

MDDIAI UN

website

positi

on

33 30 - 28 - 25

Task 4. Smart Cities

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Number of LEA LEA units - 1 2 3 4 5

Page 30: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

30

cities in

Kazakhstan

that have

entered one of

the global

ratings of

smart cities

data

Direction 3.Implementation of Digital Silk Road

Task 1. Increased coverage of communications and ICT infrastructure

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Rate of

broadband

access of in-

home

networks entry

to Internet

MDDIAI,

communic

ation

providers

(upon

agreement

)

Statisti

cal data

% 78 79 84 84.2 84.5 84.8

Task 2. Provision of information security in the ICT field

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Raising the

level of global

cybersecurity

index of

Kazakhstan

MDDIAI "Global

index of

cyberse

curity

and

cyberw

walth

profiles"

report

of the

Internati

onal

Teleco

mmunic

ation

Union,

official

Internet

resource

% 0.352 0.380 0.780 0.790 0.800 0.810

Page 31: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

31

Direction 4. Development of human capital

Task 1. Increased digital literacy, in middle, technical and vocational, higher

education

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Share of

schools that

have

introduced

basic

programming

in primary

education

MES MES

data

% - - 24 48 73 100

2. Increase in

the number of

professionals

with basic ICT

competencies

MES MES

data

thou.

peopl

e

250 260 270 280 290 300

3. Number of

ICT

professionals

graduated

(annually)

MES MES

data

thou.

peopl

e

17 18 20 22 25 30

Task 2. Improving the digital literacy of the population (training, retraining)

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Share of

professional

staff trained in

digital literacy

MDDIAI MDDI

AI data

% - 0.22 0.44 0.66 0.88 1.1

Direction 5.Creating an innovative ecosystem

Task 1. Support for innovative development platforms.

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

Page 32: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

32

1 2 3 4 5 6 7 8 9 10

1. Number of

startup

companies

supported by

parks

incubators and

accelerators

MDDIAI,

JSC

"NIH"

Zerde "(as

agreed),

ITP ACF

"(as

agreed)

MDDI

AI data

Units - 200 300 500 800 1000

Task 2. Development of technological entrepreneurship, startup culture and R&D.

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Number of

international

applications

for patents

from

companies/indi

viduals

resident in the

RK

MDDIAI Official

Internet

resourc

e of

"Nation

al

Institut

e of

Intellec

tual

Propert

y" RSE

of MJ

RK

Units - - 33 53 73 93

2. Growth in

the number of

startups which

have passed

the

acceleration

programme, in

"Astana Hub"

technopark

MDDIAI,

Zerde

NIH JSC

(as

agreed)

MDDI

AIdata

Units - 33

90

150

220

298

Task 3. Attracting venture financing.

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. MDDIAI World positi 102 100 95 90 85 80

Page 33: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

33

Improvement

in the GCI

WEF rating on

the "Ability to

innovate"

indicator

Economi

c Forum

website

on

Task 4. Generation of demand for innovation.

Results

indicators

Responsi

ble

executor

Source

of

inform

ation

Units

of

meas

urem

ent

including by years

2016/

2017 2018 2019 2020 2021 2022

1 2 3 4 5 6 7 8 9 10

1. Share of IT

services in

total IT market

(in numbers

comparable

with

developed

countries)

MDDIAI Official

IDC

Data

% - 15.6 19.7 23.8 27.9 32.4

2. Percentage

of IT services

local content

MDDIAI,

Zerde

NIH JSC

(as

agreed),

CGO

MID

data

% - 26.8 37.6 48.4 59.2 70

5. Main areas of focus, ways to achieve the objectives of the Programme

and related measures

Programme involves implementation of a set of interrelated measures that must

be implemented to achieve key ambitious goal of creating an innovative economy,

listing in 30 developed countries by 2050 and transforming society and production so

that we are not left out of the modern technological world. Achievement of this goal

requires consolidation and mobilization of society as a whole and a breakthrough in a

short period of time.

Given the emergence of new technologies, innovative methods and tools in the

ICT field, additional new initiatives will be implemented as required under the

Programme.

5.1. Digitalization of economic sectors

Successful implementation of this direction by 2022 will mean the following

achievements:

1. Increasing productivity level to the level of top 30 countries of the world in

each of priority industries.

Page 34: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

34

2. Competitive export production in priority industries.

3. Capitalization of the largest companies in the Republic of Kazakhstan has

come to a fundamentally new level.

4. Developed local e-commerce.

5. Reducing the share of underground economy to a level comparable to the

top 30 countries in the world.

Widespread adoption of digital technologies will give impetus to the

development of traditional basic industries by increasing productivity, enhancing

their competitiveness, including on the international market. Thus, digitalization will

result in growth of domestic exports to external markets, both in the primary and

agro-industrial sectors, which, in turn, will increase capitalization of the largest

production companies. Also to increase productivity, Programme is implementing a

set of measures for technological rearmament of basic industries, where 4.0 industry

elements will be applied.

A network of internet-connected objects, including sensors capable of

collecting and exchanging data from the embedded systems will be implemented as

part of the "Implementation of digitalization projects by large mining complex

companies".

Specific hardware requirements in the implementation of 4.0 industry projects

will be synchronized with requirements of the State programme for industrial and

innovative development.

In the long term, successful implementation of measures will lead to a gradual

change in the economy structure, with an increasing role for electronic commerce,

ICT and financial sectors, as well as for the industries of new economy.

Digitalization of industry and electrical power industry

Digitalization provides ample opportunities for a leap in the development of

key economic sector for Kazakhstan.

Mining industry

Vision of mining industry in Kazakhstan by 2022 involves establishment of a

high-performance industry with a wide application of autonomous technology and a

decision-making system, mainly based on large data analysis. Entire value chain will

introduce sensors and advanced analytical tools that enable visualization, running,

and making a scenario-based simulation of data. In addition, introduction of

autonomous machinery, regulation of basic production processes in automatic mode

will minimize human participation and increase the safety of production.

Main project in the field of mining digitalization is the introduction of a digital

mine. Digital solutions will improve the performance and security and maintenance

of hardware and equipment used.

Creating conditions for stimulating digitalization industry will enhance its

competitiveness by improving control of production processes, reducing losses,

reducing production costs, increasing productivity, efficiency and safety of

production and other.

Oil and gas industry

Page 35: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

35

Programme includes introduction of intellectual deposit technology in large

mining companies of Kazakhstan. Emergence of new data analysis tools and speed

with which they are transmitted will significantly increase the flexibility of decision-

making and productivity. In addition, new technologies will reduce the cost of

exploration and exploitation by providing better and more comprehensive

information, which in turn would improve management of stocks, mining and

processing.

Also, a system for accounting for production of commodity oil using control

instruments will be introduced to ensure transparency and reduce the level of shadow

turnover.

To improve and ensure transparency in distribution of social gas for

population, the Programme plans an event to create information system designed to

collect information on supply, tracking and turnover of liquified petroleum gas, for

statistical analysis of data based on mandatory reporting and forecasting of balances,

as well as integration with automated on-line auction site for the purchase of social

gas.

In order to ensure the effectiveness and transparency of the subsoil use rights

granting processes on hydrocarbons, an exercise will be carried out to finalize the

existing integrated information system for online auction to grant subsoil use rights

and online amendments to contracts and their supplements.

In order to ensure continued supply of fuel within the country, Programme will

upgrade its repair activities and move to an increased interrepair period in the

refinery, by equipping control, replacement equipment and implementing automated

maintenance and repair management system.

Extractive and manufacturing sectors

Backbone enterprises in mining and metallurgical industries will implement

projects to introduce production process management systems, enterprise resource

planning, positioning of personnel and equipment, implementation of "smart mines",

an example of implemented uranium mining project, a large data analysis, and other.

Restructuring and modernization of production will continue with a view to

improve productivity and environmental performance. This direction assumes

creating conditions for stimulating digitalization industry (introduction of Industry

4.0 elements) to enhance its competitiveness by improving control of production

processes, reducing losses, reducing production costs, increasing productivity,

efficiency and safety of production and other. Main elements of Industry 4.0 include

additive technologies, collaborative robots, hardware-optimized equipment,

unmanned vehicles, predictive maintenance, machine training and artificial

intelligence, cloud technologies, digital and virtual engineering, intelligent planning

and production control, integration of production process management information

systems, industrial Internet, monitoring of systems status, complementary and virtual

reality, etc.

Digitalization industry will focus on developing its own technologies and

competencies, ensuring coordination among participants in industrial and innovation

Page 36: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

36

ecosystem, removing barriers, popularizing digital technologies and developing

appropriate enabling measures.

Pilot projects are planned for creation of model digital factories in

manufacturing and mining industries, where technology of 4.0 industry will be

introduced to demonstrate the effectiveness of digital technologies in production.

In order to improve safety of personnel working in hazardous areas, questions

will be developed on regulatory changes, introduction of surveillance systems,

accident alerts, positioning and search of staff, and other solutions using digital

technologies.

Electric power industry

Target state of electricity industry is characterized by further intellectualization

of energy systems (Smart Grid). Intelligent Energy system will be able to manage the

behaviour of all its stakeholders to ensure sustainable, adaptive, cost-effective,

reliable and secure electricity supply.

Task of constructing and effectively functioning of intelligent energy system

affects all participants of the electricity industry: generation, transfer, distribution,

marketing, consumption, and systemic operating. In this regard, in accordance with a

common technical policy, a comprehensive modernization is required, with new

equipment permitting integration of distribution networks and electrical stations into

the intellectual grid. Introduction of full accounting for energy consumed and

produced, so-called Smart metering system, and subsequent automatic processing of

big data will allow to systematize the management of load (demand response),

including improving tariff policies for end-users.

Introduction of intelligent energy management systems and energy

conservation technologies within industry will be stimulated to improve efficiency

and reduce the loss of power. This will allow consumers to interact with the grid, in

particular to be able to choose tariffs, manage own electricity consumption, and

develop own renewable energy supply and sell electricity.

In particular, National electricity network is planning to implement initiatives

to improve efficiency and reliability of Kazakhstan's unified energy system, thus

increasing the transmission of electricity through the network, reduce power

imbalances when working with adjacent grids, reduce the number of consumer

blackouts in network-related technology violations.

Planned adaptive management technologies that are based on synchronized

vector measurements will provide real-time visualization and real-time control. This

will allow monitoring energy system sustainability, efficient use of power system

equipment by maximizing transmission capacity, and establishment of new electrical

power network management algorithms by current system state settings, assess the

state of system in online mode.

Transport and logistics digitalization

Main challenge facing digitalization sector is to increase the volume of transit

freight. It is expected that the reduction in transit time will significantly increase the

volume of transit traffic in rail sector across all destinations from China through

Page 37: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

37

Kazakhstan to Europe, Turkey and Iran. Main effect will be achieved both through

introduction of e-flow, including in the area of air operations, and through the

implementation of an intelligent transport system that will increase the volume of

freight traffic by providing quality and safe road infrastructure between Kazakhstan's

regions and international traffic. Intelligent transport system combines the functions

of video surveillance, traffic management, driver warnings about weather conditions

and e-payment of transport services.

For systemic integration of vehicles, infrastructure, users and information

technology, a IDs will be developed consisting of subcomponents with their phased

introduction, including a set of technical means to automate collection of funds for

use of roads, system of dynamic weighing of vehicles installed on major road

transport corridors, traffic management systems. This provides an opportunity to

inform drivers of the situation on the road, to establish systems for analysis and

prediction of climatic conditions, to use video monitoring systems and to detect

violations of TSR, including the unimpeded transit through the territory of

Kazakhstan.

Experience with the introduction of ITS in a number of other countries shows a

30% decline in the number of road casualties and a 15% decrease in maintenance

costs. In addition, introduction of ITS will reduce the burden on Republican budget in

terms of road maintenance through fee-based plots, increase the road interrepair

periods by 1 year and increase the transit flow.

In the multimodal transport segment, basic condition for improving the quality

of services will be development of technical and operational interoperability of

freight rail corridors, based on the implementation of digital technologies creating a

barrier-free transport environment.

Programme also includes a number of measures to improve the efficiency of

the roads operation, increase efficiency in transport and improve the forecasting of

passenger and freight traffic.

Agriculture digitalization

In order to further develop country's agricultural sector, a number of activities

are planned for the automation of agricultural products traceability with inclusion of

all the involved authorized organizations in the process, which will enable to quantify

and trace the entire life cycle of agro-industrial products. Implementation of

traceability system will have a direct impact on the attraction of investment to the

industry and expansion, both in the export line and in the geographical distribution of

agricultural and deep-processing products. Introduction of full monitoring under

traceability system will also improve agricultural quality standards, which

multiplicatively influences the attractiveness and competitiveness of Kazakh products

in external markets.

In order to implement "precision farming", a pilot project will be carried out in

a number of farms using "precision farming" elements, including the use of

meteorological stations. As a result of the pilot project, economic viability of the

widespread use of "accurate farming" will be determined.

Page 38: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

38

Development and introduction of precision farming elements for all regions of

the Republic of Kazakhstan is intended to simplify activities, increase yields and

productivity in the sector. Manufacturer will be able to make a decision based on an

array of real-time data on the condition of crops, moisture, nutrients, nitrogen,

potassium, phosphorus, pests, and precipitation. In doing so, introduction of precision

farming will be carried out in conjunction with the acquisition of new machinery,

implementation of technologies and as farmers become ready.

Also included are activities to automate the monitoring of natural resources,

including the turnover of fish and fish products, protection, reproduction and use of

animals, monitoring of specially protected natural areas, and use and protection of

water fund, water use and oversight of waterworks. This activity will reduce and

subsequently eradicate poaching and illicit trafficking of fish products, illegal logging

of forest resources, collection and timely processing of information on the activities

of organizations and enterprises involved in natural resource-related business

activities. Water monitoring is particularly important in view of the particular

importance of water resources and provision of energy for all sectors of Kazakhstan's

economy.

In addition to creation of new and evolving state information systems in

Kazakhstan's AIC, condition for the creation and implementation of automated

systems in agricultural formations is mandatory and important. Experience of all

world's leading agrarian countries is an undeniable example of such an approach. A

multitude of IT solutions for all the many processes in agricultural production and

processing directly and primarily affect the efficiency of business, productivity,

profitability and ultimately - competitiveness, from small-scale farming to large

agricultural formations.

Therefore, MA will build transparent and calculated principle for the IT

community and agricultural formations on the scaleed implementation of the required

and efficient automation systems for agribusiness, as well as mechanisms to promote

best practices of automated systems in agricultural production.

Improving the competitiveness of domestic agricultural products and their

processing products is closely linked to the need to promote and position domestic

products in both domestic market and export markets.

As part of solving these challenges to develop agro-based products promotion,

the platform for electronic commerce among farmers, distribution centres, trade

networks, markets and stabilization food funds will be implemented.

Development of e-commerce

Programme involves a wide range of measures aimed at removing the country's

existing barriers for development of Internet commerce in general, as well as

increasing the competitiveness of local players. Proposed measures are in the area of

regulating electronic commerce, increasing the acceptance of electronic payments,

increasing digital and financial literacy among people and businesses, promoting e-

commerce, developing infrastructure and logistics and so on.

Page 39: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

39

Regulation will regulate the promotion of consumer protection in electronic

commerce, including effective remote referral tools to relevant authorities, possibility

of returning goods at the expense of trader, Introduction of a single register of e-

commerce players and others aimed at raising the level of public and stakeholder

confidence, as well as facilitating business transition into online commerce.

Establishment of a support infrastructure that includes direct and indirect

measures, including the establishment of e-commerce and fulfillment service support

centres, will also be a priority.

Issues will be elaborated on the expansion of list of own products (work,

services) according to activities corresponding to the objectives of the Special

Economic Zone "Park of Innovative Technologies" aimed at accelerated development

and dissemination of electronic commerce.

Facilitating access to concessional financing, reducing or excluding certain

types of taxes for e-commerce players will also increase the competitiveness of

entrepreneurs and encourage the conduct of business online.

As part of the increased acceptance of electronic payments, issues will be

developed to encourage the introduction of a simplified mobile payment mechanism,

taking into account international experience, developing a system of incentives for

entrepreneurs to conduct cashless payments, full conversion to the use of electronic

invoice.

Development of financial technologies and non-cash payments

Vision of digital finance industry in Kazakhstan by 2022 presupposes a

proactive financial community, which plays a key role in a well-functioning financial

sector with a well-developed market infrastructure for payment services.

Financial sector will be transformed using technologies such as distributed

registries, supply of new financial instruments, simplification and acceleration of

procedures through integration with public information systems. Thus, financial

community's proactiveness involves the implementation of open-source technologies

(open API) and, in general, active cooperation of banks, infrastructure companies and

financial technology companies with each other, supported by a regulator (NB) to

reduce level of online fraud, introducing new services and products, improving client

experience, and improving sustainability of the financial system. To achieve the

objectives of proactive financial sector development, measures will be taken to

promote and develop innovative organizations focused on developing customer

products and services, building ecosystems as part of financial and non-financial

services (retail, financial consulting, etc.).

To ensure security, facilitation and development of digital services, including

public, social and commercial, it is intended to construct a model of remote

identification, including based on different biometric indicators, based on principles

of the risk-oriented approach. Model involves identification of clients using the

database of state and commercial companies, as well as service of public authorities,

commercial companies and the social sphere (education, health, population census

and others).

Page 40: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

40

Introduction of a digital identification mechanism will be a fundamental

infrastructure. This will create a universal digital environment for communication

and communication between financial institutions, clients, state bodies and

organizations. This will qualitatively improve the level and effectiveness of financial,

public and other services.

Conditions will be created for online services to be provided by insurance

organizations with the option to conclude insurance contracts in electronic form,

electronic information exchange between the insured (beneficiary) and the insurer in

the event of an insurance case, damage assessment, necessity to change the terms of

the contract (after-sales service), and storage of the electronic contract in a single

insurance database and round-the-clock access to the insurance contract by customer.

Introduction of mechanisms and standards for electronic interaction of

financial organizations, state bodies, citizens and entrepreneurs will lead to a

"paperless", open and highly competitive financial sector by 2022, providing security

of transactions and reduced transaction costs.

Financial sector will provide tools for development of e-commerce and

initiatives to create an innovative ecosystem so that payments can be made quickly,

easily and reliably, inspect counterparties, gain access to financial instruments of

business development and state support.

Together with building paperless invoicing infrastructure, as well as other

contractual documents, it is necessary to modernize the interbank payments system

and possibility of interbank transfers in real time, which would reduce the transaction

costs of SME, increase confidence of B2B market participants in the instruments of

non-cash settlement, and develop direct payments between enities (legal and

individuals).

Particular importance will be given to the development and implementation of

a set of measures to promote non-cash turnover. Financial and non-financial

measures will be implemented for representatives of SME, joint activities with major

international payments systems, banks and other market participants to improve

financial literacy of population.

ICT industry development

Development of ICT industry is a key component of digitalization of all

economy sectors. To ensure successful implementation of digital agenda, the

Programme includes a number of activities aimed at supporting the industry's ICT.

International experts estimated that during the world economic crisis from

2007 to 2011, when other industries stagnated, the number of jobs in the ICT

technology in the ICT industry in the countries of the Organization for Economic

Development and Cooperation, contributing to the world economy.

The feature of industry is that IT is an essential part of modern business,

contributing to achieving results and positive economic indicators for other sectors of

the national economy.

On the other hand, introduction of information technology requires the

adoption of effective measures to ensure cybersecurity.

Page 41: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

41

Key to the development of ICT industry is the growth of share of information

technology services, as it is this source that can increase share of local content in ICT

industry and support domestic small and medium-sized ICT enterprises.

One of the measures for cybersecurity is the establishment of National Registry

of trusted software and products of electronics industry of the Republic of

Kazakhstan, use of which will be a priority in formation and development of the

country's information infrastructure.

In order to create a competitive ICT industry, state efforts will be directed

towards the creation of a favourable enterprise ecosystem in this sector.

It is the stimulation of demand for IT in priority and other sectors of economy,

removal of barriers to the export of goods and information technology services, and

formation and development of a number of qualified domestic ICT companies. A

roadmap for IT development of the industry will be developed and approved.

Ecosystem also includes promoting the access of domestic IT companies to

venture financing, providing development grants and commercializing promising

domestic innovation technologies, tax and other preferences.

5.2. Transition to digital state

Digital State

Digital transformation creates new business models, including the so-called

proactive data-based service. The more service providers are aware of their

customers, the more personalized offers they can create by providing services that

will meet the needs of customers and even anticipate the needs that customers

themselves may not yet know of. This will provide services to citizens and

entrepreneurs, anticipating the need for a service based on a transaction analysis.

Key to transforming the service delivery and interaction of state with citizens

and business will be to move towards open-architecture principles (open API), in

which a qualitatively new level of cooperation with commercial sector will be built.

This will make efficient use of resources by concentrating on the digital

infrastructure, giving the last mile to provide public services to the non-governmental

and business community. In doing so, non-state information resources will be front-

end, integrating public services into their own ecosystems, where citizens and

entrepreneurs can initiate and receive public services.

State for citizens.

Management model will be implemented when it is not a citizen applying for

public services, but government understanding the needs of citizens, contacts them to

provide public services without the need for physical visits to institutions.

It is planned to integrate information systems and communication channels

currently scattered to implement omnichannel service model by creating a single

"front office" aimed at making information and services accessible at any time,

anywhere, and on any device (contact center, web portal, intelligent messengers,

mobile applications, SMS messages).

Page 42: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

42

Moving to this model will allow citizens to start a service from one channel (a

portal, a mobile application or a contact center) and end up in another channel (for

example, signing in a service center).

The first key principle for improvement of all processes (G2C, G2B, G2G) will

be the paper-free interface - elimination of the document flow, move to "one

application" principle. Accordingly, systemic work on process analysis, life

descriptions and integration of information systems will be carried out to exclude

processes in which information is presented on paper media.

If, according to the Gartner methodology, in the early stages of e-Government

development, key performance indicator was the number of e-services rendered, new

performance indicator will be a reduction in the number of public services and

growing number of life situations that are rendered "seamlessly" online. For example,

on the primary count, implementation of these measures will in the near future allow

for the total elimination of more than 20 million certificates.

In modern society, digital information on spatial data has become an

important strategic resource for public administration and has become key to its

sustainable socio-economic development. Country has accumulated a large volume of

data generated by the production of various enterprises. However, the large volume

and non-structuring of data accumulation create an information barrier and

sometimes impede information sharing and management processes based on this

information. New market requirements for information on the locality and

development of information technology necessitate new solutions. The way out of

this situation is to create an environment that enables users to have access to spatial

data electronically and to use them effectively.

In order to harmonize, develop and maintain spatial data, state geodetic

support system will be modernized, a single coordinate system established, open-

source maps established in a single data formats and structures.

Work will be done to integrate scattered inventories into one information

space, to automate procedures so that every new site, whether a home or a road, will

appear on the map updating it when introduced in public service procedures.

Implementation will improve the accessibility and quality of services provided to

population in the areas of land, architecture, construction, environmental

management and environmental protection, geology, housing and agriculture.

A key activity will be the implementation of the "Digital by default" principle,

which provides for the planning and subsequent delivery of public services

exclusively in electronic form, with increased self-service capacity.

A single platform visiting analytical and statistical information on the labour

market will be created to effectively manage processes of people-centred

employment. In addition, in order to improve transparency of the enforcement of

labour laws and prevent their violation in a preventive manner and to formalize

labour relations, conditions and a digital platform will be created for conclusion of

labour relations with recording social benefits and pension payments, and so on.

Page 43: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

43

Further development of "open government" and "an open parliament"

principles will be implemented to promote active citizenship and feedback from the

public. Accordingly, "open budgets", a public monitoring mechanism for budget

expenditure, will be developed; "Open NLA" - published drafts of normative legal

acts and concepts of bills for further public discussion; "Public data" -data in public

access for commercial use, not relating to state secrets, personal data and others

specified in the laws of the Republic of Kazakhstan.

Establishment of electronic maintenance systems will provide a better

legislative process, a transparent and accessible mechanism to enable the public and,

in particular, the business community to be able to participate directly in norm-

making process. These measures will help to raise the level of confidence in the

authorities and create a favourable climate for the conduct of business through the

openness of legislative initiatives taken.

Within the Programme it is planned to establish a network of virtual museums

and to electronically convert all museum funds, recordings of concerts, performances,

significant elements of material and intangible historical and cultural heritage. Access

to information can be achieved through setting-up a new unified electronic portal,

that will focus the cultural life of the country on one popular resource. It is the most

accessible format for the promotion of culture and art of Kazakhstan into the global

space and ability to make it widely recognizable.

State for business.

Digitalization of interaction between the state and business is aimed at

reducing the transaction costs for entrepreneurs, increasing the transparency of

decisions taken by state bodies and organizations.

Activities will focus on providing entrepreneurs with "seamless" services and

building infrastructure to implement a single window for business, similar to the

experience of establishing population service centres.

This initiative will be a key one and involves the provision of transparency and

simplification of financial and non-financial support for small medium-sized

businesses as well as other public services for legal entities. In addition, taking global

experience into account, in particular the Singapore's "SMEs Go Digital" programme,

a single platform for small and medium-sized businesses will offer entrepreneurs

access to various IT services such as accounting, human management resources,

financial analysis and others.

The next significant area is the implementation of a set of measures that will

improve the quality of tax and customs administration.

It should be noted that measures to reduce the costs of import and export

operations and to improve quality control of imported goods will be implemented

through "National export strategy of the Republic of Kazakhstan" for 2018-2022,

approved by a decision of the Government of the Republic of Kazakhstan of 26

August 2017, No. 511.

Introduction of a common information environment and marking of

manufactured and imported goods, together with the construction of an electronic

Page 44: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

44

invoicing platform, will create an ecosystem to provide a warning, limitation and

suppression of unfair competition; guarantees of quality and price of goods

purchased, confirmation of authenticity of goods, and opposition to illegal import,

production and trafficking of goods, including counterfeit products.

Digitalization of state bodies internal activities.

Effectiveness of public administration depends on the level of automation of

processes involved in daily routine operations such as personnel, accounting, budget

planning, planning and execution of public procurement, correspondence with other

public authorities, and so on. For the purpose of effective interaction between state

bodies and paper free principles, it is envisaged to develop a business process

management system built on cloud-based computing with further development into

digital storage. Work will continue on automating such typical tasks, primarily in the

service model of informatization.

In order to improve decision-making processes at state level, a series of works

will be undertaken to develop a large data-based analysis and prediction system.

Global experience shows that more than 40 governments worldwide and 60%

of the Fortune 500 companies are using an architectural approach for innovation.

Architecture of the state body will aim at establishing a long-term (five-year) strategy

for transforming and automating the state bodies activities. Design of the architecture

will identify priorities for automating and financing IT projects. It is intended to

involve non-governmental organizations and citizens through public discussion in

order to develop the most desirable scenarios for interaction between the state and

society.

In order to comply with the Yellow Pages principle, key principle of

automating state bodies activities will be to implement a microservice architecture

when existing and newly created information systems provide API for different

services and applications implemented by private companies.

Establishment of a "single state system for environment and natural resources

monitoring" will provide a political and legal dimension to: contribute to the

implementation of National Strategy for sustainable development and prevention of

environmental disaster; promote processes of transparency and democratization of

society in the field of environmental protection and natural resources; create the

necessary conditions for access by the general public to environmental information

resources; monitor public opinion on environmental issues. In the economic aspect -

to improve the efficiency of the use of natural resources, social production and

improvement of the population socio-economic conditions. In the social sphere, to

improve health and life expectancy of the population; create conditions for improving

the environmental culture and environmental education of population.

Digitalization of health implies both further informatization of the industry

with introduction of the interoperability platform and development of mobile

healthcare, as well as introduction of breakthrough technologies in augmented reality,

machine learning and artificial intelligence in the processes of student learning,

diagnosis, and management of treatment plans.

Page 45: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

45

Integrational healthcare platform implies that health systems can interact

flexibly with each other and with external systems, ability to create an ecosystem of

end-user applications with device integration, mobile applications created by

commercial companies, and introduction of an electronic passport of health for every

citizen of the country.

A single data storage with "live data" will be created in stages through the

introduction of regional health information systems. Data collected will then be used

for medical statistics, analysis, and appropriate solutions using the big data

technology. This will make it possible to move towards paperless health care,

optimize and improve aid effectiveness, and ensure continuity of assistance between

different levels and health-care providers. Secure access to key health information

will be provided to all participants in the care process, including the patient itself.

Through personalized notifications and warnings, including through mobile

technology, people will be involved in the process of protecting their own health and

shaping a healthy lifestyle.

As a central hub of health information, e-passports will provide timely and

reliable information to both patients and health professionals, as well as to

government and health financing.

Integration of the information systems of social health Insurance Fund with an

e-passport will improve the soundness and efficiency of expenditure, introduce new

financial incentive mechanisms to improve quality of care.

In order to enhance the transparency of electoral system, the Programme

includes digitalization activities that will ensure establishment of an effective system

for creation and updating of electoral rolls, to be integrated with central state bodies,

public accounting, electoral commissions and local executive bodies. Architecture of

the system will serve as basis for electronic voter registration during the electoral

period, development of public services and further modernization of electronic

electoral system as a whole.

In order to monitor the socio-economic situation rapidly, a single analytical

platform will be introduced to reflect information for presentation at the central

government level as well as in local executive bodies.

A holistic, global digitalization of this direction is required to ensure a secure

legal environment and strict protection of the rights and freedoms of citizens,

interests of legal entities and the state. As part of this work, an "e-business"

consisting of 5 related components will be implemented: Electronic communications

from citizens, a single register of entities and inspection sites, a single registry of

administrative proceedings, an electronic criminal case, an analysis centre.

In addition, further digitalization of law enforcement will continue the

transition to paperless documents, as well as the introduction of information and

analysis systems to enhance their effectiveness.

The next area of focus is the establishment of a geoinformation platform of

special purpose, which will provide a geographic basis for management systems of

military organizations and public security of the state.

Page 46: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

46

Smart Cities

Smart City Initiative is the realization of conditions for creating cities that are

convenient for citizens by improving their infrastructure.

Strategic direction - creation of urbanized territory in which the resources of

urban services and private initiatives interact and cooperate to ensure sustainable

development of the city and to create an enabling environment for residents and

tourists through the technologies introduced and contextual information analysis in

real time.

To increase efficiency in initiatives and optimize costs, the service integrator

will develop a typical LEB architecture that presents a list of projects using IoT

technologies, Open API, artificial intelligence and other. The approach places centres

on inhabitants and their daily needs in areas of transport infrastructure, security,

social, health and others. Document will define mandatory solutions required to

implement the Smart city across all cities in Kazakhstan, and projects are proposed

for localization according to various factors.

Implementation of these projects will be carried out using benchmarking, i.e.

both best practices of the global community and implemented in the Republic of

Kazakhstan. The main will be the implementation of "collaborative innovation" - a

format for interaction of state bodies with private organizations, which will iteratively

develop new, improved solutions, approaches and necessary changes in LNA.

Smart city concept will include activities for automation of the infrastructure

for housing and utilities and for heating, water and wastewater systems.

5.3. Implementation of Digital Silk Road

Implementation of the direction will be considered successful if the following

development milestones are achieved by 2022:

1. Quality, continuous coverage of the population of Kazakhstan by 4G-

mobile communication.

2. Widespread and high-speed access by individuals and companies to global

data transmission networks.

3. Working and developing cybersecurity system at the country level as a

whole and for each user in particular, provided with competent personnel and modern

equipment.

Implementation of digital silk road in the short term implies two initiatives,

consisting of a number of activities: expansion of network coverage and increased

cybersecurity.

Increased coverage of communications and ICT infrastructure

Expansion of network coverage covers the development of broadband

infrastructure for global data transmission networks with contour protection and

prevention of information security incidents. Availability, stability and security of

data transfer is a necessary technological basis for all initiatives of this Programme

and other programmes related to information technology and digitalization.

Page 47: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

47

Initiative includes the upgrading of satellite communications system,

development of fibre-optic communications links up to rural settlements,

improvement of transit capacity and digital broadcasting network.

Immediate priority is to ensure broadband and accessible Internet access in

rural settlements of Kazakhstan, based on fiber, as well as satellite technologies. For

this purpose, one of the priority projects is the construction of fibre-optic

communication lines in more than 1 200 rural settlements under the public-private

partnership scheme. Coverage of rural settlements of the Republic of Kazakhstan

with fibre-optic will provide modern high-speed telecommunications services to state

bodies and budget institutions, more than 2.1 million people will have technical

capability to connect to a high-speed Internet network.

Programme also plans to develop a new generation of mobile infrastructure

(4G networks and 5G in the future) in all district centres of the Republic of

Kazakhstan. 4G standard implies broadband access to mobile Internet and a

corresponding increase in the speed of transmission.

Increased access to Internet may be more attractive to communication

operators as the technology of big data evolves. Collecting and analyzing data sets

from connected users will, among other things, provide a detailed understanding of

the preferences and capabilities of users (both private and corporate) as well as

market dynamics, subscriber life cycle, and external conditions impact.

However, in the development of big data technology, coordination,

convergence and a unified focus are critical. Therefore, the state, which has the

largest volume of data on both individuals and the corporate sector, plays an

important role in the development of big data. Consolidation and development of

state's efforts will be facilitated by the establishment of a technology centre for big

data analysis, a single "data muster point" and provision of reliable functioning,

storage, preservation of national and public Information resources, including through

existing initiatives.

Operation of the basic mobile communication stations, satellite

communications for public authorities, national companies and private organizations,

as well as television broadcasting throughout the country, is provided by KazSat

space communications system, consisting of two communications satellites, KazSat-2

and KazSat-3. As the lifespan of the KazSat-2 apparatus expires in 2023,

commissioning of KazSat-2R space system will be completed by that date.

In order to increase country's transit potential, multilateral partnership will be

developed with communication operators of neighboring states within Program

implementation to create modern, more productive and scalable transport

infrastructure capable to provide telecommunication traffic towards Russia, China

and Central Asia.

Provision of information security in the ICT field

Increased cybersecurity in the framework of this Programme involves

increasing the fault tolerance of the Republic of Kazakhstan's information systems,

protection of the ICT contour and general improvement of information security, from

Page 48: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

48

the technical means and completing with a culture of safe behaviour of citizens and

companies in shared networks.

Initiative includes the establishment of operational centres for information

security and response services to information security incidents, as well as

establishment of research laboratories and a data processing centre. Legislative

changes and standards of cybersecurity will be introduced as institutional support.

State's infrastructural efforts in this area will be in the form of establishment of

a national focal point for information security in the Republic of Kazakhstan. Main

functions of the Centre are to provide and improve information security for

informatization, as well as to create a common platform for management decisions

based on integrated monitoring of the informatization objects information security

state.

Special attention will be given to the coordination of response to information

security incidents in the Kazakhstan segment of Internet, which would enhance

position of the Republic of Kazakhstan in the cybersecurity index of the International

Telecommunication Union.

In order to cooperate in a fundamental and applied investigation on

cybersecurity issues, the state will provide material and organizational support for the

establishment of malicious code research laboratories, information security means

and test laboratory for information security compliance tests.

Programme involves implementation of a set of interrelated measures that must

be implemented to achieve key ambitious goal of creating an innovative economy,

listing in 30 developed countries by 2050 and transforming society and production so

that we are not left out of the modern technological world. Achievement of this goal

requires consolidation and mobilization of society as a whole and a breakthrough in a

short period of time.

As part of executing the activities plan to implement the concept of

cybersecurity ("Cybeshield of Kazakhstan"), information security issues will also be

developed.

Given the emergence of new technologies, innovative methods and tools in the

ICT field, additional new initiatives will be implemented as required under the

Programme.

5.4. Development of human capital

In order to achieve the set Programme goals for staff qualification, the

education system will be fully updated in accordance with the best world practice.

New education will respond to the needs of digital economy, focusing primarily on

skills in analysing information and developing creative thinking rather than

memorization facts and formulas.

Increased digital literacy, in middle, technical and vocational, higher education

In secondary education, in order to develop creativity and critical thinking of a

young generation, the subject of "Programming basics", beginning with 2nd grade,

will be introduced in stages. Curricula (5-11 grades) will also be updated, primarily

Page 49: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

49

in the revision of programming languages to include STEM elements (robotics,

virtual reality, 3d printing and others).

In order to develop and support talented youth, regular hackathons,

competitions and contests, as well as various robotics and programming clubs will be

held.

At the same time, teachers' skills in new digital technologies will be

continually upgraded to improve and absorb new knowledge.

In the area of technical and vocational education, the same activities will be

carried out to increase the access of students to resources and knowledge as for

secondary education (including hackathons, olympiads, competitions and their

training infrastructure).

In addition, model curricula and programmes will be updated on the basis of

professional standards and labour market requirements. New model curricula and

programmes will focus on the training of specialists in the area of design,

administration and testing, taking into account the development of coding skills.

However, the subject of "Informatics" will be introduced to provide basic

digital skills to technical and vocational education professionals.

Further training will be provided to teachers on educational programmes that

have competence in the use of ICT.

In higher, postgraduate education, model curricula and programmes will also

be updated on the basis of professional standards and requirements of the labour

market, taking into account the introduction of "Information and communication

technology" discipline in all occupations.

In order to ensure the graduation of required specialists, the content of

education programmes in ICT fields will be reviewed.

In order to bring the industry and education closer to the educational process of

the country, representatives of enterprises will be recruited from extrabudgetary

funds through opening of centres of competence at the university level. In addition,

ICTs will be opened by chairs of universities in enterprises where courses for

students in ICT-based projects in the economic sectors would be conducted.

Improving the digital literacy of the population (training, retraining)

In the area of retraining, local executive bodies will continuously provide

education and retraining in digital skills to the population, including unemployed.

This event would also involve representatives of small and medium-sized businesses.

In order to increase educational opportunities for all those who wish to acquire

the necessary skills, a national open education platform will be established to provide

online courses, primarily providing basic training in engineering and technical areas

involved, with the involvement of large groups of the best professors from Kazakh

universities and representatives of production.

With that, by applying the concept of lifelong learning, enterprises will conduct

corporate training for professionals, reinforcing the communicative and technical

skills of the profession.

Page 50: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

50

In general, the Programme will open up opportunities for increased interaction

between educational institutions and entrepreneurs to train competitive professionals.

5.5. Creating an innovative ecosystem

Successful implementation of this direction by 2022 will mean:

1. Increase in the number of technological startup projects initiated in

Kazakhstan and their total capitalization.

2. Existence in Kazakhstan of a private professional venture capital industry

that provides for the needs of the fast-growing ecosystem.

3. "Success stories" of Kazakhstan startups on the international scene,

including "Exits".

In the longer term, objectives are to create all conditions for the emergence of

"unicorns" and smaller, highly capitalized companies in Kazakhstan, as well as to

develop a culture of technological entrepreneurship. This will create both the

necessary institutional environment and incentives for innovation, venture financing,

and the creation and development of technological entrepreneurship.

Innovative ecosystem will be built on the basis of existing techno-parks,

venture funds, research institutes and universities, as well as on the basis of Astana

hub. This environment is designed to create conditions for the attraction of ideas,

technologies, digital solutions and talented professionals from around the world, as

well as the active involvement of citizens of the Republic of Kazakhstan who are

involved in IT projects abroad.

An important consequence of the creation of an innovative ecosystem in the

country will be an increase in the share of technologies of Kazakh origin.

Support for innovative development platforms.

The main breakthrough for this initiative will be the launching of the

International IT Startups techno-park (Astana hub), which will implement measures

to support and develop the digital economy. To this end, the regulatory environment

will be organized, needed to transform the Astana hub into a point of innovation

attraction, both from Kazakhstan and the CIS in general, and from other countries.

Astana hub will be built into the international IT cluster system, such as Israel,

California, Singapore, and Berlin, and will become a bridge for its residents to reach

international markets.

In addition, the initiative involves upgrading the existing infrastructure of

innovative development - incubators and accelerators of the Republic of Kazakhstan -

as well as adapting legislation, including creation of financial and tax preferences to

startups and improve intellectual property protection issues.

Development of technological entrepreneurship, startup culture and R&D.

All successful innovative ecosystems are open to the world and compete for

human capital. Programme will create an enabling environment for attracting

technological entrepreneurs, scientists and other qualified professionals into

Kazakhstan.

Page 51: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

51

Foreign entrepreneurs and technology specialists are the source of specific

know-how needed to develop the local ecosystem of startups. Their experience, as

well as technology of research and development, of entrepreneurship, of management

all of the skills that foreign spacialists can offer, may help speed the formation of

startups local ecosystem. In addition, they provide a variety of cultures and

knowledge, which in the future can become a competitive advantage for the

ecosystem as well as for each participant.

The task of attracting foreign professionals and scientists requires, first and

foremost, the most favourable conditions for their work and residence, for safety and

for competitive remuneration. In the longer term, such professionals will be provided

with evidence of real use of their development, impact of their participation in the

development of country's digital economy.

In this context, the possibility of introducing e-residence concept will be

developed, an opportunity for foreigners to conduct business in the territory of

Kazakhstan which, for one reason or another, have refused to acquire a residence in

the Republic of Kazakhstan.

In parallel with the attraction of foreign intellectual capital, a qualitatively

different level of research will be achieved in Kazakhstan. To this end, it is proposed

to develop mechanisms to stimulate research activities of organizations in the

Republic of Kazakhstan, to open business schools, and to involve major international

IT companies in opening their research centres. Innovation is not possible without

basic and applied science.

In order to develop R&D, there will be interaction between the startups and the

leading universities countries. To this end, the government will identify assignments

for targeted scientific grants that can be received by startup teams in conjunction with

leading universities.

In addition, the state will provide all facilities to encourage transnational

companies to localize the development of their products, as well as to test the

breakthrough technologies in the territory of Kazakhstan. To this end, a short list of

technological development directions will be identified and a legislative capacity

shall be provided to any company in the world to test them in a controlled

environment, without risk of breaking the existing legislation in their countries. This

mechanism is mainly used in financial technologies, but it can be extended to other

industries.

In addition, the main objective of this initiative is the widespread promotion of

innovation in the Republic of Kazakhstan. In addition to mass-media support, more

targeted mechanisms will be used, such as mentoring programmes for startups from

successful technology entrepreneurs and training of university students in business

basics ( Israeli example). Such practices could also be extended to an earlier stage -

schools.

Attracting venture financing

Development of innovation requires the creation of another necessary

condition - non-state professional venture capital industry. Development of the

Page 52: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

52

venture industry will require the adaptation of legislative framework for the financing

of startup companies, including development of a draft law on venture investment,

regulating, inter alia, the activities of individual investors.

In parallel with the development and regulation of individual venture

investment, it will be necessary to develop and implement measures to attract

professional venture capital funds to Kazakhstan. To coordinate and support venture

funds based on Astana Hub, the issue of a co-investment fund will be elaborated,

which at an early stage will reduce the risks for private investors. Subsequently,

according to Israel's experience, the role of Fund would be reduced to the private

sector.

However, public investment is made on a return and a fee-based basis, since

venture industry is a high-risk industry, implying an average success in 1-2 projects

from 10 invested. Therefore, the co-investment fund will be created by means of

quasi-public and private sectors as a non-profit organization. Non-profit organization

status allows tracking of the target use of funds invested in the organization without

the need for any specific investment, but only for investment portfolio indicators as a

whole.

In addition to professional financial organizations, venture financing can be

handled by large corporations in Kazakhstan, organizing their own corporate venture

funds. This practice is common to many global telecom operators, technology

companies and second-level banks. The state can facilitate the establishment of such

funds through investment or other incentive measures.

Generation of demand for innovation.

The planned innovation ecosystem will be the driver of economic sector

transformation. In turn, SME, industry, quazi-public sector and state will create

demand for the innovation that is being created to generate a full cycle of generation

and support for innovation.

Innovative development will create the conditions for joint entrepreneurship

(corporate innovations and superclasters), which will identify priority technologies to

enable the creation of new industries. A favourable regulatory environment will be

created and corporations attracted, including transnational ones, for priority

technologies. Partnerships will also be implemented with other international

innovative clusters, including the EAEP/SCO countries and others. Kazakhstan shall

work with countries involved in EUREKA to implement joint R&D activities.

In order to develop corporate innovation, a corporate priority list will be

established to support the introduction of corporate innovation through training and

workshops. These corporations will discuss the various possibilities of bringing their

innovation processes to a new level, including through corporate venture funds,

cooperation with startups (collaborative innovation), etc.

Emphasis will also be placed on supporting and popularizing the innovation

activities of large companies. To this end, the state will involve large private and

national companies in the process of innovation through:

Page 53: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

53

1. Facilitating linkages with startups to implement innovative projects

("collaborative innovation") to create innovative ecosystems around large companies.

2. Create incentives for the introduction of digital technology in the profile.

Implementation of the above activities will make a contribution to the goal of

the Programme to improve the country's population quality of life .

5.6. Control system

Implementation of the Digital Kazakhstan Programme implies adherence to

five basic principles.

Principle 1 - "digitalization of flagship Industries". The main and fastest

macroeconomic effect of the programme will be the digital transformation of existing

economic sectors. In this context, the main objective of industries digitalization is to

increase productivity, which is achievable both through the introduction of new

technologies and through the concomitant adaptation of existing business processes.

Principle 2 - "overtaking pace". The Republic of Kazakhstan will adopt the

most advanced technologies, without fear of ignoring proven solutions in favour of

after-tomorrow innovation.

Principle 3 - "be flexible". When changes are made to the Programme, an agile

approach may be applied in the cases provided for in the current state planning

system.

Principle 4 - "partnership with business". Effective implementation of the

Programme is not possible without an active private sector role. The state will

involve both large business and SME to address specific problems (areas of

inefficiency) that are logically addressed by private sector efforts. Effective

interaction requires that the instruments of engagement and motivation for economic

agents be refined so that they can cooperate fruitfully with the state. In this context,

special conditions will be created to attract investment in digital projects, that is, to

minimize the costs to the digital transformation of enterprises.

Principle 5 - "adaptation of regulations". Implementation of the Programme

will result in various issues that would require regulatory changes and standards (e.g.

"Big data" or IoT standards). State will show its own initiative to adopt the most

progressive legislation in order to create conditions for a leap, including in

comparison with countries at a similar stage of digital development.

To guarantee continuity of change, the President of the Republic of Kazakhstan

will establish a commission for the implementation of digitalization, which is

designed to monitor, evaluate and adjust activities to achieve the objective of the

Programme. Activities will be synchronized with similar initiatives of the Customs

Union countries - Russian Federation and Republic of Belarus. In addition, the

necessary structure for management of digital transformations will be established to

ensure Programme implementation, initiatives and objectives.

At the Government level, a CDO position has been created, as well as

digitalization offices under the CDO leadership in state bodies, responsible for

digitalization in the industry they supervise, have been established in government

Page 54: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

54

agencies. A digitalization project office to provide the necessary methodological and

advisory support to the offices of digitalization state bodies and to provide

harmonization of initiatives in the direction of digitalization, both between state

bodies and between branches and state bodies and business community, IT

companies, techno-parks, universities and scientific sphere.

In order to implement the Programme and achieve global objectives of the

transition to 4.0 industry, a change in mindset, management and organization is

needed. The modern rapidly changing world makes outdated management processes

that are charateristic to excessively bureaucratic command-and-control systems, with

tight management hierarchies, strict control and accountability in action. It becomes

critical not to be able to execute a statement, but to see real goals and achieve them

within a specified time and quality criteria in a rapidly changing world. This requires

a conscious introduction of a variety of management tools, including flexible ones, to

implement projects and initiatives with achievable goals in the short term. Flexible,

otherwise adaptive, management methods enable you to plan for short-term goals

with rapid delivery of results and rapid adaptation to changing conditions. They

require the ability to build network non-hierarchical structures of interaction

(collaboration) of temporary teams working towards a specific goal. Such structures

make it possible not to create an excessive bureaucracy and to involve people with

required competencies to perform the necessary work, allowing them to carry out

interesting and ambitious tasks in return for their accumulated experience and

knowledge.

Accordingly, the Digitalization Project Office, based on the Zerde NICH JSC,

will be a driver for introducing flexible adaptive management techniques and to relay

them to the state bodies' offices of digitalization , with the further involvement of

other state bodies.

In order to achieve the medium- and long-term objectives, management styles

based on the future modelling will be tested and introduced. In particular, foresight

sessions on strategic planning, forecasting changes and developing road maps to

implement these changes will be used on a continuing basis.

6. Necessary resources

Implementation of digital initiatives will be an important link in a number of

activities for the country's further economic growth. Programme has a significant

potential for value added and cost reduction in the economy, which will allow the

country to achieve a GDP growth rate of 4.5-5% per annum on the horizon from

2025, with 1.6% to 2.2%, about a third, to be exclusively on the digitalization. This

scenario provides for a holistic approach to change, maximum involvement and

additional investment, both at the state level and at the level of individual industries

and companies. In so doing, coordinating and guiding participation of state in the

Programme stems from its emphasis not only on direct return on investment but also

on the long-term effects of digitalization on improving the quality of education,

quality of life, investment and business environment.

Page 55: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

55

Direct effect of investment

Implementation of the programme assumes 141 billion tenge from the

Republican budget, it is also expected to attract 169 billion tenge of the funds of

quasi-public sector entities. According to the preliminary calculation of the direct

effect of the economy digitalization by 2025, it will be possible to create an

additional cost of 1.7-2.2 trillion tenge, thus ensuring an investment return of 4.8-6.4

times by the year 2025 to the total investment, taking private investment into account.

Digitalization has an impact on all sectors and will alter the structure of

economy of the Republic of Kazakhstan as a whole by diversifying and uncovering

the potential of non-primary industries, stimulating startup activity and opening up

"new industries". At the same time, the degree of digital technologies influence in

different industries is heterogeneous - the greatest potential for value creation is

assumed within the traditional branches of Kazakhstan's economy, including the

commodity sector, but it also opens up fundamentally new cost-creation opportunities

in e-commerce, IT sector and financial industry.

The most significant effects in terms of GDP will come from 12 key projects:

1) creation of international technology park of IT startups (Astana hub)

2) introduction of 4.0 industry technologies, including the implementation of

"smart deposit" projects, creation of model factories;

3) introduction of the paper-free principle;

4) establishment of an intelligent transport system;

5) development of e-commerce;

6) creating a digital platform for SME (single window)

7) development of an information system for marking the goods to reduce

shadow turnover;

8) implementation of a set of measures to promote cashless payments;

9) development of open-platform (open API), big data and artificial

intelligence;

10) development of telecommunications infrastructure, including broadband

access;

11) improvement of customs and tax administration and transition to electronic

declaration

12) implementation of Smart City projects.

Quality effect

In addition to achieving economic and competitiveness gains, digitalization

will have a positive impact on social sectors aimed at improving the population

quality of life, one of the key objectives of the Programme. Such initiatives do not

imply a direct return on investment in the short term, but they are important for the

long-term success of the Programme and development of the country (for example,

education) and are necessary as a quintessence of the state role State (development of

health, e-government, smart cities).

Cumulative effect of such initiatives is deferred and will be fully apparent only

after years. The impact of qualitative development of education, health and

Page 56: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

56

investment environment is expected to begin by 2022. This effect is negligible on the

Programme implementation horizon, but in the long run will significantly reduce the

socio-economic development gap with the top 30 developed countries of the world.

An important result of the programme will also be the acceleration of

Kazakhstan's entry into the Top 30 of the UN ICT development index.

On an even longer horizon, the successful implementation of the digitalization

programme will prepare country for the next challenges to science, technology and

social development, which are still in their first insight.

Page 57: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

57

Glossary:

ITP ACF "Innovative Technology Park" Autonomous Cluster

Foundation;

AIC agro-industrial complex;

Blockchain - electronic accounting in chronological order of a single

public record of any data and (or) the acts committed by

all participants in a business network;

Bid price of demand, the highest price the buyer agrees upon to

buy currency, securities, assets;

GDP - gross domestic product;

FOCL fibre optic communications lines;

GCI WEF Global Competitiveness Index of the World Economic

Forum;

SB - state bodies

RTA road traffic accident;

ICT - information and communication technologies;

IT - information technologies;

ITS Intelligent Transport System;

PTL power transmission line;

MDDIAI - Ministry of Digital Development, Innovations and

Aerospace Industry of the Republic of Kazakhstan

MES - The Ministry of Education of the Republic of Kazakhstan;

MIID - Ministry of Investment and Infrastructural Development of

the Republic of Kazakhstan

MNE - Republic of Kazakhstan Ministry of National Economy

МТI Ministry of Trade and Integration of the Republic of

Kazakhstan

SME small and medium enterprises;

ITU International Telecommunication Union;

Page 58: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

58

MA The Ministry of Agriculture of the Republic of

Kazakhstan;

LEA - local executive authorities;

MoE - Ministry of Energy of the Republic of Kazakhstan;

NB The National Bank of the Republic of Kazakhstan;

R&D Research and development work;

RLA regulatory legal acts;

OR oil refinery;

UN The United Nations;

LEA legal entities association;

RTR road traffic regulations;

RK - Republic of Kazakhstan;

USA - United States of America;

Economic agents - economic relationships subjects involved in the

production, distribution, exchange and consumption of

economic benefits;

CSB central state bodies;

Digitalization - use of digital technology to create and/or modify a

business model and to generate new incomes and

opportunities that generate value

Digital

transformation of

economy

- change in the economy management model comprised of

individual digital transformations, as well as a change in

the structure of economy through the development of

efficient digital infrastructures that make the transition to a

new technological and economic patterns, as well as the

creation of new economy branches;

Digital economy - set of public relations arising in the use of electronic

technology, e-infrastructure and services, large data

analysis and forecasting technologies to optimize

production, distribution, exchange, and social-economic

development of states.

Digital Platform - a platform that provides a range of digital interactions

between two or more different digital interaction subjects;

Page 59: State programme Digital Kazakhstan“П ЦК... · 2020-06-04 · ensuring creation of digital economy in a long-term perspective Programme objectives 1. Digitalization of industry

59

Digital ecosystem - an interdependent group of digital ecosystem entities and

objects that use standardized digital platforms to achieve

mutually beneficial objectives (such as commercial profit,

innovation or common interest).

Digital technologies technologies that use computer hardware to capture code

impulses in a certain sequence and with a certain

frequency;

3D printers - a peripheral device that uses the method of layered

creation of a physical object based on a digital 3D model;

ADSL asymmetric Digital subscriber line;

API application programming Interface;

В2В Business to Business;

CDO chief digital officer;

G2B Government-to-Business;

G2C Government-to-Citizen;

G2G Government-to-Government;

Fulfillment - a set of operations from the time the customer places the

order to the time of purchase;

FTTх fiber to the x;

IDC - International Data Corporation;

ICT Information and communications technology;

IoT Internet of Things;

_________________________________