Dear fellow people of Kazakhstan! As we approach the new era, I am addressing the people of Kazakhstan. The country has completed its 25-year development stage with honor. We are proud of our country. As part of the festivities on occasion of the 25th anniversary of Independence, we have highlighted Kazakhstan’s progress and achievements. They are well known and highly appreciated by the world community. Since the beginning of 2017, Kazakhstan has become a non-permanent member of the UN Security Council. EXPO-2017 international exhibition will be held in Astana this year. We are the first among the CIS countries and Central Asia to hold such an important global event. Sports events have started in Almaty within the Universiade-2017 with the participation of more than 2,000 athletes and delegates from 57 countries. All of the above is the result of a correct political path and high authority of Kazakhstan in the international arena. Kazakhstan is to join the world’s top 30 developed countries by 2050. We march confidently towards this goal. The relevance of the Strategy-2050 proposed by me to the people in 2012 is increasing in the context of the growing competition and the lack of stability in the world. We have managed to foresee the forthcoming hardships in advance. Thanks to the Nurly Zhol Economic Policy and the 100 Specific Steps Nation’s Plan we are going through the initial stage of a complex global transformation with dignity. Over the period of 2014-2016 alone, additional KZT 1.7 trillion has been allocated to support the economy. All of the above measures enabled economic growth and business support, as well as created more than 200 thousand new jobs. As a result, we have ensured 1% growth of the gross domestic product in 2016. This is particularly important under the current difficult circumstances. The global situation is changing rapidly. This is a new global reality, and we have to accept it. Dear compatriots! Only those nations that manage to get ahead of the future and decisively meet the challenges, without standing and waiting, will be the winners. The Fourth Industrial Revolution has started in the world. Universal economic digitalization will lead to the disappearance of entire industries and creation of fundamentally new ones. The great changes that we are witnessing are both a historical challenge and an opportunity for the nation. Today I am setting an objective of ensuring the implementation of Kazakhstan’s third modernization. It is necessary to create a new model of economic growth that will provide the country's global competitiveness. Currently, many countries are trying to solve the same problem. I am sure that recipes of transition to the new growth model will be different in various places. We should proceed from our strengths and should not lose our opportunities that we have created together over 25 years of our Independence. All of us remember the 1st Modernization of Kazakhstan. We have a memory of starting our way a quarter century ago on the ruins of the Soviet Union. Back then, our generation created a new state that had not been on the world map before. We have made a transition from a planned economy to the market-based one. It is crucial for me that we have in concert managed to hold the country from the turmoil of internal conflicts and economic collapse. Kazakhstan came out of that period with minimal losses and the largest acquisitions. The 2nd Modernization began with the adopting of the Strategy-2030 and creating a new capital city of Astana. The results are undeniable. The country broke away from the economic lag zone and joined the world’s 50 most competitive economies. Two successful modernization processes have given us an invaluable experience. Now we need to step boldly forward and start the 3rd Modernization. This Modernization is not a plan of combatting the current global challenges, but a reliable bridge to the future, towards accomplishing the objectives set in the Strategy-2050. It will be implemented based on the 100 Specific Steps Nation’s Plan. I see its five key priorities. They are designed to ensure economic growth above the world average, as well as steady progress towards accession the top 30 countries.  The First Priority is the accelerated technological modernization of the economy. We should foster new industries created with the use of digital technologies. This is a far-reaching crosscutting objective. It is critical to foster such promising industries as 3D printing, online commerce, mobile banking, digital services, including health and education services, and others. These sectors have changed the economic structure of the developed countries and have given a new dimension to the legacy industries. In this regard, I charge the Government to prepare and adopt a separate Digital Kazakhstan program. It is necessary to adapt our legislation to the new realities. It is also important to ensure development of communications and provide universal access to the fiber-optic infrastructure. The digital industry development will give impetus to the other sectors. Therefore, the Government should vigorously follow up on IT development. An important condition of developing the new industries is to support innovation and ensure fast-track manufacturing application. I entrust the Government with establishing an international TechnoPark for IT startups based on one of the EXPO-2017 facilities. It is to become a platform for promoting entrepreneurs and investors from around the world to Kazakhstan. This requires appropriate infrastructure and the enabling environment, including tax remissions, simplified visa and labor regimes. We also need to build our research and innovative capacity based on our universities, Nazarbayev University, and Alatau Innovation Park. The 2nd crosscutting objective. In parallel with creating new industries, we should give impetus to the development of key conventional industries. These are the manufacturing industry, agriculture, transport and logistics, construction and other sectors. First, it is important to significantly boost productivity. The widespread implementation of the elements of the 4th Industrial Revolution should be the key factor. These are the automation, robotic application, artificial intelligence, big data exchange and others. I entrust the Government, together with the business sector, with the developing of a package of measures on technological re-equipment of the key industries until 2025. Second, there is a need for further industrialization with an emphasis on the development of competitive export industries in the priority sectors. The Government is already handling the task of doubling the non-oil exports by 2025. The stepping-up of work in this area requires concentration of the export development and promotion tools within one department. Exporters need to provide support for the single window principle, including in the regions. I entrust the Government with the creating of its Export Policy Council. It should include business community representatives. By September 1 of this year, the Government, together with local governors (akims) and businesses, needs to develop the concerted export strategy. Kazakhstan needs to keep its leading position in the promotion of foreign investment. Astana International Financial Center should play an important role in the promotion of financial resources into the national economy. It is critical to fit into the global chains of production and distribution of goods and services. This should be done primarily by attracting multinational companies. It is necessary to implement effectively a joint investment program with China to establish production facilities in Kazakhstan. We have come to terms with our Chinese counterparts. The facilities have been identified already. Now we need to do specific work. These will be modern production facilities creating around 20 thousand new jobs for Kazakhstan. So far, we have started the implementation of six projects, and two more projects have already been launched. One of them is a semi-knocked down assembly plant for JAC hybrid and electric vehicles. I request to study further development of export-oriented electric vehicle manufacturing with a provision for the establishment of the required infrastructure. In general, Kazakhstan should have its own investment strategy. The Government should come up with it by September 1 of this year. We need to ensure protection and promotion of the national economic interests within the framework of international cooperation. First off, this includes activities within the EAEC, SCO, as well as interfacing with the Economic Belt of the Silk Road. This requires realigning and strengthening the economic diplomacy efforts. Third, the country’s mining and metals, and oil and gas sectors shall retain their strategic importance for the sustainability of economic growth. In the context of global demand slowdown, it is critical to enter new markets and expand the sales geography. We should place great emphasis on expansion of the mineral resources base. Intensive geological exploration is necessary. Further development of these industries should be strictly linked to the deepening of integrated processing of raw materials. I entrust the Government with ensuring the adoption of a new Code on Mineral Resources and making necessary amendments to the tax laws by the end of this year.  Fourth, the agricultural sector should become a new driver of the economy. Kazakhstan’s agricultural sector has a promising future. In many respects, we can be one of the world's largest manufacturers of agricultural exports, particularly in the organic food production area. Made in Kazakhstan brand should become the benchmark for such products. At the same time, we have to become a so-called bread basket for grain production for the entire Eurasian continent. We need to ensure the shift from primary production to the production of high-quality and processed products. Only then will we be able to compete in the international markets. In this regard, the Government and akims are instructed to do the following: First, the principles of allocating subsidies need to be reviewed, and we shall move gradually to the product liability insurance; Second, all conditions necessary for the integration of more than 500 thousand households and small farms into cooperatives shall be created in five years; Third, the level of product processing shall be increased, and an efficient system for storage, transportation and distribution of goods shall be created; Fourth, the productivity level shall be improved, and the production costs shall be reduced; Fifth, we must improve land use efficiency. Within five years, the irrigated land area shall increase 40% to reach 2 million hectares; Sixth, we should boost the investment in agricultural research that will be in demand in the industry. I instruct to ensure that the exports of food products increases 40% by 2021 through the diversification of agricultural products. These tasks should be accomplished within the framework of a new state program for the agricultural sector development. Fifth, the new Eurasian logistics infrastructure development is an important priority. Substantial investment has already been made. Now we need to receive economic returns on that investment. I instruct the Government to ensure an increase in the annual transit volume by 2020: – 7 times for goods carried in containers – up to 2 million containers; – 4 times for air passenger transit – up to 1.6 million transit passengers. It is necessary to increase the earnings from transit traffic by 5.5 times – up to USD 4 billion a year. In 2015, I initiated the Nurly Zhol Infrastructure Development Program. The program has paid off completely over the past two years. This year, 4,400 kilometers of roads of national importance will be covered by construction and reconstruction. At least 600 kilometers of those roads will be commissioned by the end of the year along with the phased implementation of the toll principle. Coordination with the neighboring countries is crucial for unlocking the country’s transport and transit potential. It is necessary to ensure the freedom of goods transit, creation and modernization of transport corridors. Particular attention should be paid to the transport infrastructure management, service level improvement, as well as elimination of administrative barriers. Given the increasing traffic volume along the Trans-Caspian corridor, it is necessary to proceed with the second phase of the Kuryk port construction focused on the car passageway. Sixth, the urbanization processes necessitate the construction sector development. It should become a fully-fledged driver of the national economy. It is important to keep in mind that, by investing in the construction of roads, buildings and other infrastructure, we define the physical and technological shape of our cities for years to come. It is therefore important to ensure transfer of the latest technologies both to the construction and the manufacturing of construction materials. At present, we have good opportunities to accomplish that. Under my instructions, the implementation of the Nurly Zher Housing Program will start this year. It is focused on accomplishing a crucial goal of providing the housing for 1.5 million households in the 15 years to come. The program includes comprehensive measures of the housing market development. These are the cheapening of bank loans for constructors through the provision of grants through Damu JSC. Mortgage loans issued by banks to the population will be subsidized through the Kazakhstan Mortgage Company JSC. Akimats will continue the construction of credit housing for ZhilstroySberBank depositors. For this purpose, the previously allocated funds will be re-used based on the revolving principle. For the vulnerable social groups, akimats will continue developing the rental housing scheme without an option to buy. Akims will have to allocate appropriate land plots for the mass housing construction. We will strive to ensure that individual houses in the cities are built in line with the same architectural style. The government will assist with the provision of necessary infrastructure. The Government, in cooperation with akims, will take measures to promote transport connectivity between large cities and the nearest communities. The 3rd crosscutting objective is the modernization of the labor market. New technology penetration in the legacy industries will release labor resources. At the same time, creation and development of new industries should become an additional source of employment and real income growth. I instruct the Government and akims to create conditions for the controlled transition of workers into other sectors. Our large-scale enterprises should, jointly with akimats, develop appropriate road maps. They need to provide co-investment in the retraining and further employment of downsized workers. The processes of labor mobility from labor-surplus regions, as well as from rural to urban areas, need to be supported. The Government should reform employment centers and create a single online platform for all vacancies and all settlements.  The Second Priority is the fundamental business environment improvement and expansion. One of our strategic goals is to ensure that the contribution of small and medium-sized businesses in GDP is at least 50% by 2050. It is an ambitious, yet achievable goal. At this stage, the following measures need to be done. First, under my instructions, the Government has launched a program of effective employment and mass enterprise development starting this year. Now, citizens of Kazakhstan, either in rural or urban areas, may obtain up to KZT 16 million in microloans for their businesses. It is important to broaden the micro-lending geography and use intensively such tools as guarantees and service support for entrepreneurs. These measures should be accompanied by the organization of business and financial literacy trainings. It is necessary to keep on improving the mass enterprise support tools. Each region of Kazakhstan has to come up with a package of measures to develop mass enterprise, including family businesses. As before, the number of the newly created jobs is one of the key criteria for assessing the performance of the Government and akims. Second, the Government, in cooperation with the Atameken National Chamber of Entrepreneurs, shall be required to take measures on across-the-board reduction of all kinds of costs for businesses. This is particularly important for the cost of services in the energy, transport and logistics, as well as for the utilities. Public service procedures should be optimized as much as possible. It is necessary to reduce the service delivery time and the list of documents, as well as eliminate the duplicating procedures. In addition, it is necessary to convert all of them into the electronic format, without any need for physical presence. In addition, the existing regulatory burden on business is incompatible with the task of creating a new growth model. I am entrusting the Government and akims with the formulation of the action framework for business deregulation by July 1, this year. It is necessary to implement the best standards and practices of the developed countries. It is especially important to carry out this work at a regional level. Akims and the Government shall develop detailed plans to improve the conditions for doing business across the regions based on the World Bank’s Doing Business rating. The rating of regions and cities based on the ease of doing business needs to be introduced. We will institute a special award for the top-ranking cities and regions. It shall be awarded once a year, on the Industrialization Day. Third, reduction in the share of the government in the economy to 15% of GDP (the levels of the OECD countries) should give a new impetus to the economic growth. Nearly 800 enterprises have been selected for the privatization until 2020. The work is in progress in this area. I entrust the Government with the speeding up and completing the privatization of companies from this list until the end of 2018. There is also a need for accelerating the preparation and initial public offering of our largest companies. Introduction of THE Yellow Pages principles has helped reducing the number of economic activities available for the state by 47% (from 652 to 346). The next stage is the necessary privatization or elimination of all state-owned enterprises and organizations that do not conform to these principles by 2020. These are several thousand enterprises. The practice of creating legal entities for each program or task has to be discontinued. It is critical to ensure transparency and efficiency of the privatization. There is also a need for reconsidering the role of state holdings. I request that the Government ensures effective transformation of the Samruk-Kazyna holding. It is necessary to ensure thorough audit and optimization of both managerial and production business processes. As a result, it shall become highly efficient, compact and professional. The quality of management and corporate governance needs to be improved up to the international level. It is necessary to clearly define the assets that need to be retained by the state, identify relevant sectors of importance, and assess degree of involvement. The state shall retain natural monopolies and strategic projects, including those implemented with the involvement of transnational corporations. These projects should give a multiplier effect. Baiterek and KazAgro holdings have to be restructured. They must be the operators for the implementation of government development programs. At the same time, it is necessary to optimize their functions. All of the functions that can be implemented by businesses must be transferred to the private sector. They should also deal with the involvement of funding from non-state sources for the implementation of programs. Fourth, expansion of the public-private partnership provides a strong potential for the promotion of enterprise. This refers to the transfer of a number of government services to the private sector. We already have good results of their involvement in preschool education. Over the previous three years the state has built 189 kindergartens with 40 thousand beds, the private sector has opened more than 1,300 kindergartens for 100 thousand children. The largest numbers of private kindergartens have been opened in South Kazakhstan (397), Almaty (221), and Kyzylorda (181) regions. The PPP example in this sector is of fundamental importance to me. It shows the concerted efforts of the government and businesses to solve one of the most important national problems together: to reach the complete coverage of the 3-6-years-old children with pre-school education by 2020. The PPP development depends on the particular and professional performance of akims. All possible PPP kinds and forms need to be used for the promotion of private funds: trust management of state property, service contracts and others. In doing this, it is necessary to simplify and speed up all of the clearance procedures, particularly in respect of smaller projects. The PPP should become the primary infrastructure development mechanism, including the social aspect. In order to modernize the housing and utility assets, they need to be transferred in trust or as a concession with a possibility of further privatization. The government should stop running in place. We need to become active in this respect. Fifth, it is important to prevent price and tariff-fixing arrangements. I entrust the Government, in cooperation with Atameken, with the audit of the entire body of laws for the identification of regulations that hinder competition.  The Third Priority is the macroeconomic stability. The key objective is the restoration of the facilitating role of the monetary policy, as well as involvement of the private capital in the financing of the economy. First, the National Bank has an important task of developing the inflation targeting regime. It is necessary to achieve phased reduction of inflation to 3-4% in the medium term. Second, the financial sector’s reset is necessary. I entrust the National Bank with the formulation of a set of measures for the banking sector recovery. It is necessary to step up activities for the clearing banks’ balance sheets from sub-prime loans and, if needed, make provision for their follow-on capitalization by shareholders. The National Bank needs to be entitled more to the operational control over the condition of banks. It must move from a formalized approach to a risk-based one to take actions towards banks without waiting for technical infringement on their part. It is also necessary to strengthen the responsibility of audit companies, to ensure transparency of shareholders, and generally improve corporate governance. All of that should be reflected in the body of laws. In order to address the problems of money stringency in the economy and high interest rates on loans, the National Bank and the Government are assigned to take measures for ensuring availability of the medium- and long-term funding in the national currency. The National Bank shall be responsible not only for inflation, but also, together with the Government, for the economic growth. Third, further development of the stock market. The privatization should give impetus to its development. As I have said before, it is necessary to IPO stock of the Samruk-Kazyna Fund. It is necessary to further increase opportunities for the population to invest their savings primarily into various types of securities. At the end of 2016, we completed the legalization process. More than 140 thousand citizens of our country have been covered. A total of KZT 5.7 trillion have been legalized, including KZT 4.1 trillion in cash. The task of the Government is to make sure that these funds work for the economy, including through its participation in the privatization. At the same time, there is also a need for thorough elaboration of the issues of subsidizing private bond issues by Kazakh enterprises. I entrust the Government, together with the National Bank, with taking measures aimed at enhancing the domestic stock market. Another key challenge is to bring the fiscal policy in line with the new economic realities. First, it is necessary to improve dramatically the efficiency of the budget spending. In 2017, we have fully supported our national programs with the necessary resources. We need to check efficiency of the use of these funds by Ministries and departments. We need to start with the Ministries of Labor and Social Protection, Health, Education and Science as they account for more than 40% of the national budget. The outcomes are to be reported to me. It is critical to reallocate funds from inefficient programs to the programs that ensure accomplishment of the 3rd Modernization objectives. In addition, the existing budgetary procedures must be simplified in order to facilitate and improve efficiency of bringing the funds to the real economy. We need to continue the fiscal decentralization policy. In previous years, a large number of functions and powers have been delegated from the central to the local level. Now they need to be supported through the provision of sufficient financial autonomy. At the same time, it is important to avoid concentration of the spending authority at a regional level. It is necessary to pass them on to the district and village levels. Akims must deal with the tasks of regional and local importance, and the Government has to focus on the issues of national importance. Second, it is essential to improve efficiency of the use of resources from the National Fund. By 2020, the size of the guaranteed transfer from the National Fund must be gradually reduced to KZT 2 trillion. The tax policy should focus on encouraging businesses to come out of the shadow  economy and expanding the tax base in the non-primary sector. There is a need for the optimization of the existing tax incentives. At the forefront of the universal declaration, we need to get a new angle on special tax regimes. The tax administration arrangements need to be improved. First of all, it concerns the value added tax. Third, the Government needs to build a monitoring and control system for the external and internal loans in the quasi-public sector, and bring it to order.  The 4th Priority is the improvement of the quality of human capital. First, the role of the education system needs to be changed. Our task is to make education central to a new model of economic growth. Training programs should focus on the development of critical thinking abilities and skills of independent search for information. At the same time, we need to focus more on the generation of IT-knowledge, financial literacy and fostering patriotism in the youth. We have to reduce the gap in quality of education between urban and rural schools. I request that the Government submits relevant proposals. On the matter of gradual transition to trilingual education. The Kazakh language will retain its dominant position. Much attention shall be paid to its further development. Today, however, English is the language of new technologies, new industries, and new economy. Currently, 90% of the world information is in English. Its volume doubles every two years. Kazakhstan cannot achieve national progress without mastery of the English language. Starting from 2019, some subjects for the tenth- and eleventh-graders will be taught in English. It is necessary to carefully consider this issue and take reasonable solution. The levels of schools and teachers in urban and rural areas differ significantly. The problem of shortage of competent teachers is also relevant. Therefore, in view of all of these aspects, it is necessary to introduce English language instruction gradually. I request that relevant proposals to be submitted. On my initiative, implementation of the Free Vocational Education for All Project starts this year. First of all, free education should cover the unemployed and self-employed young people, as well as working-age people without professional education. It is necessary to give impetus to the development of the vocational education system to train specialists for new production facilities in this economy. For this purpose, professional standards’ need to be updated in accordance with the labor market requirements and best international experience of in-service training. At the same time, special attention shall be paid to the quality of the higher education system. It is necessary to enhance the monitoring and toughen the requirements for the staff of higher education institutions, their level of business logistics, and educational programs. Second, the health care system must change along with the educational system. Starting from July 1, this year, a system of compulsory social health insurance will start to be implemented, based on the joint and several liability of the state, employers and citizens. This system’s effectiveness has been proven by the world’s practice. Participants of the health insurance system will be provided with a wide range of medical services. The government will support participation of socially vulnerable groups in it. The Government needs to provide for the necessary IT penetration in the public health sector. Equal conditions should be provided in the mandatory social health insurance (MSHI) system for the promotion of competition among private healthcare providers. I entrust the Government and akims with the conducting of broad awareness-raising activities. It is also necessary to introduce, statutorily, the state regulation of prices on all medicaments. Third, measures in the social security area. Under my instruction, pensions for 2.1 million pensioners will be increased 20% as compared to 2016, effective from July 1, 2017. In addition, base pension will be awarded in accordance with a new methodology starting from July 1, 2018. Its size will depend on the length of participation in the pension system. In 2018, all of these measures will provide for a 1.8-fold increase in the new base pension size, as compared to 2017. Approximately 400 thousand children are born in the country a year, which is almost two times as high as back in 1999. This good trend needs to be maintained. Upon my instructions, the lump sum birth benefit will increase 20% from July 1, 2017. The minimum national living wage needs to be reviewed. It has to match the actual consumer spending of the population of Kazakhstan. Starting from January 1, 2018, this will allow increasing, for 3 million of our citizens, the size of the base pension benefits for people with disabilities, families without supporters, as well as the size of targeted assistance and benefits for disabled children. Starting from January 1, 2018, we have to raise the threshold for the targeted social assistance from 40 to 50% of the minimum national living wage, as well as implement new format of the targeted social assistance. At the same time, all those who can work should be supported only on a condition of participation in the employment program.  The Firth Priority is the institutional transformation, security and anticorruption. First, within the framework of the 3rd Modernization, the Government needs to ensure work on implementing the best practices and the OECD recommendations. Second, we are carrying out reforms aimed at private property protection, rule of law, as well as equality of all before the law. This work needs to be continued. I instruct the Government, together with the Atameken National Chamber of Entrepreneurs and the civil society, to review the entire body of laws for the strengthening of the property rights protection. The administrative and criminal laws also need to be humanized. Administrative fines should be fair and proportionate to the offense committed. It is necessary to keep on working to reduce penalties for business offenses. It is necessary to decriminalize economic components in crimes with low menace to the society. It is necessary to achieve greater confidence in the judicial system. It is important to avoid any undue influence on the work of judges. Third, security situation becomes a measure of a strong and capable state. In the modern conditions, the humankind faces growth of terrorism. The key issue is the fight against the financing of negative forces and the links with foreign terrorist organizations. It is critical to prevent religious extremism propaganda, including on the Internet and in social networks. It is necessary to form in the society zero tolerance for any action related to radical manifestations, especially in the areas related to religions. Prisons should arrange for the purposeful work of theological rehabilitation services with convicted individuals. It is necessary to take additional steps towards spiritual and moral education of the younger generation. The non-governmental sector and religious associations should be actively involved in these efforts. All of these measures must be taken into account in the State Program for the combating of religious extremism and terrorism for 2017-2020, which is now prepared under my instructions. The fight against cybercrime emerges full-blown. I instruct the Government and the National Security Committee to take actions to create a system of Cyber Shield of Kazakhstan. Fourth, we have made significant steps to reduce the level of corruption in our country. At the same time, the main emphasis is on combating the implications of corruption. It is necessary to intensify efforts to identify and eliminate the causes and prerequisites of corruption. One of the key issues is the improvement of the procurement sector. I instruct the Government to introduce the unified public procurement system based on the centralized service principle. We also need to revise fundamentally the existing approaches to procurement in the quasi-public sector, the sector of natural monopolies, and subsoil sector. The success of our anticorruption will depend, to a great extent, on active involvement of the entire society. With the development of social networks and other media resources, unanimous resentment must become a powerful tool in combating corruption.  Dear fellow people of Kazakhstan! By this Address I would like to convey my view of the development trends in the new realities to every citizen. I instruct the Government to develop Strategic Development Plan until 2025 for the country’s 3rd Modernization titled Kazakhstan’s National Technology Initiative. We have no other choice but to accept the challenge of the time with dignity and accomplish the country’s further modernization objectives. I believe that our great nation will fully take this unique historical opportunity.  Dear friends! Kazakhstan is a young multiethnic country that is confident in its future and dynamically developing! We have passed the 25-year-long development path. Even greater achievements are awaiting us in the next 25 years. By accumulating this unique wealth of experience in establishing a new state, we have entered a new stage. I am confident that no matter what difficulties are ahead of us, we will overcome all of them. Our main strength is unity. We will turn Kazakhstan into an even more prosperous country for our descendants!