Раздел 1.01 Program «Productivity 2020» (стр. 1 )

Confirmed by the decree of

the Government of the Republic of Kazakhstan dated March 14th, 2011 № 000

Program «Productivity 2020»

1.  The Program description

Name of the Program	Program «Productivity 2020»
Basis of development	Decree of the President of the Republic of Kazakhstan dated March 19, 2010 № 000 « State Program of accelerated industrial-innovative development of the Republic of Kazakhstan and cancellation of certain decrees of the President of the Republic of Kazakhstan» (hereafter– National Program)
Developer	Ministry of Industry and New Technologies of the Republic of Kazakhstan
Purpose of the Program	To increase competitiveness of industrial enterprises in the priority sectors of the economy by rising labour productivity.
Tasks of the Program	1.  Development of management and industrial technologies used by enterprises 2.  Modernization (technical retooling) of operating manufactures and creation of new competitive ones
Terms of realization	2011 – 2020: 1st stage – 2011 – 2014, 2011 – pilot; 2nd stage – 2015 – 2020
Target codes	For the purpose of realization of the set tasks, the following target codes will be achieved till 2020: Increase in labour productivity for no less than twice in processing enterprises, taking part in the Program
Sources of financing	State budget in 2011 provides 19,9 billions of KZT. Costs on innovative grants and on introduction of modern management technologies are shown in «Program of development of innovations and assistance to technologic modernization in the Republic of Kazakhstan in 2010 – 2014» and in «Intersectoral plan of scientific-technical development of the country till 2020», confirmed by decrees of the Government of the Republic of Kazakhstan according to № 000 of November 30, 2010 and № 000 of November 30, 2010. Financing volumes from republican budget of the following years will be improved when forming respective budgets on planning period.

2.  Introduction

«Productivity 2020» Program (hereafter – Program) is developed within the realization of the President's Message to the people of Kazakhstan «New decade – New economic rise – New opportunities for Kazakhstan», the Strategic plan of development of Kazakhstan till 2020, the National program and the record of the 23rd plenary session of the Foreign Investors’ Council under the President of the Republic of Kazakhstan № 01-8.1 on June 4, 2010.

The Program is developed with the methodological support of the World Bank and is one of the tools of the National program realization.

Overall productivity of economy is the factor that largely identifies its competitiveness. Increase of the share of enterprises in processing sectors, turning out high tech products, significantly improves labour productivity level in the economy. Therefore it is vitally important to the country to stimulate the rise of productivity, introduction of innovative elaborations, introduction of modern management technologies and in general modernization of the main funds of enterprises. The top priority for today is a creation of new competitive manufactures, modernization (technical retooling) of operating productions for improving labour productivity and also introduction of modern management technologies.

Innovative business activity, strong brand, staff qualification, access to attractive sale markets, quality of competitive environment, ability to promote and sell product or service also influence labour efficiency. Besides, the role of management is essential in matters of modern management technologies introduction.

Considering a current situation, it is necessary to take system measures on introduction of modern management and energy saving technologies, modernization of the enterprises and creation of new competitive manufactures by way of working out the corresponding Program.

Within the framework of the Program realization:

through the administrator of the Program (the Ministry of Industry and New Technologies of the Republic of Kazakhstan) and specially defined commissions and councils, the state makes the decision on possibility of provision of measures on the state support

if necessary, the harmonization of documents will be carried out by the operator of the Program with interested central state and local executive powers within the framework of the Program implementation on the “one-stop” principle. 

Within the framework of the Program the complex provision of instruments of the Program concerning one participant is assumed.

The concepts used in the Program are as follows:

interdepartmental commission – the interdepartmental commission on modernization of the enterprises – it is a consultative-advisory body created under the administrator of the Program with participation of representatives of the central public authorities, public associations, institutes for development and international experts;

administrator of the Program – the Ministry of Industry and New Technologies of the Republic of Kazakhstan;

operator of the Program – “Kazakhstan industry development institute” Joint-Stock Company;

operator of the instrument– the legal body with 100-percent participation of the state in its authorized capital stock providing measures on the state support;

applicant – the business entity made an application on participation in the Program and interested in realization of the investment project within the framework of the Program;

participant – the business entity having a positive expert estimation of the operator of the Program about conformity to criteria specified to the participants of the Program;

comprehensive plan of the investment project – a package of necessary economic, technical, administrative and other documentation.

3.  Analysis of the current situation

The State Program provides accelerated development of non-resource sectors of economy that asserts its diversification and competitiveness growth.

In 2010 industry of Kazakhstan shows stable expansion rates. In the first half of 2010 the volume of gross domestic product (hereafter - GDP) made 8 733 001,3 millions of KZT and increased in real terms by 8,0% compared to the same period of last year. Shares of production of goods and production of services in GDP in the first half of 2010 made 40,5 % and 56,8 % respectively. The main share in the production of GDP belongs to industry – 32,0 %.

For the period January-August, 2010, the volume of industrial production comprised 7 467,6 billions of KZT in current prices, that is 10,9 % more, than in January-August, 2009. In mining industry production increased to 5,8 %, manufacturing – to 19,1 %, electricity, gas, steam and air conditioning supply – to 7,6 %. The production of food products, oil refining, textiles, construction materials, products of metallurgical and chemical industry and machine building increased. The growth of production was observed in 15 regions of Republic.

From 2005 to 2009 the Republic’s export in value terms increased 55,1 % from 27,9 to 43,2 billion dollars, moreover, compared to 2008, in 2009 export volume declined by 39,3 % from 71,2 to 43,2 billion dollars, respectively. Export volume decline in value terms, primarily, was connected with consumer demand slowdown in the global markets and the main energy carriers and raw material resources price drop, which are the key export articles of the state. Today about 1 000 Kazakhstani companies perform export operations, almost 750 of which export processed products. China (15,7% of total exports of Republic), Italy (15,7%), France (9,2%) and Russia (9,1%) are the main buyers of Kazakhstani product.

Export share of manufacturing is about 26,8%, metal product account for the largest portion 14,9%. The main export commodity groups are: minerals and mineral products, metals and metal products, products of chemical industry, cattle breeding and crop production. During the main articles of processed high value added export – machinery and equipment, finished food – is only 2,6-3,5% or 0,7-2,5 billion dollars. Export of crude oil and natural gas (64,8%) takes a large share in total exports of the export trade structure of industry product.

In the modern world, high labour productivity is a competitive advantage and it is confirmed by statistics. For example, industrialized states as the USA, France and Germany remain leaders due to a high productivity. Ireland, Belgium, Luxembourg, Norway and other countries compete with them in productivity.

Nowadays labour productivity in Kazakhstan remains low. At an average it is 30-40 thousand dollars per head, whereas in developed countries this figure is 200 thousand dollars. For instance, the lowest labour productivity is in Kazakhstan’s agricultural industry – about 3 thousand dollars per worker annually, whereas in developed countries – 50-70 thousand dollars. In machine building in Kazakhstan this figure is 10-17 thousand dollars, foreign competitor’s – 90 thousand dollars. This lag is due to a number of factors such as: partial load of actual working efficiency, high depreciation of the main funds and inability of management to implement and use modern management technologies.

Physically and morally, outdated manufacturing equipment and high costs don’t allow the majority of domestic enterprises to solve the problem of output product’s competitiveness rise. The problem for enterprises is not only improvement, but also upholding of production potential at the previous rate. In such a situation the current production potential can’t ensure a move to accelerated expanded reproduction in full measure.

Thus, an intensive accumulation process of physically and morally outdated funds in industrial enterprises has a negative impact on efficiency of their using and affirms the necessity of taking measures for upgrading. Besides, it is necessary to implement modern management technologies actively, that allow achieving a maximal effect. Otherwise upgrading will become a really costly affair, that won’t enable to create steady competitive enterprises.

Development of medium and big business by modernization, restructure of operating enterprises or creation of modern manufactures with prospects for further development of export orientation is the priority of State program. Medium and big business have a serious impact on development of national economy, social problems solving and growth of employed workers number.

Technology audit of 187 industrial enterprises, representing 16 regions and 10 industrial sectors was performed by Program operator in partnership with Atameken alliance in order to formulate upgrading system measures of industrial enterprises of the Republic of Kazakhstan.

During the technology audit problems hampering the development of manufactures were identified, especially:

high borrowing cost;

underdevelopment of industrial infrastructure;

underdevelopment of business support infrastructure;

big debt load of enterprises, formed in previous years, which limits its investment activity;

depreciation (more than 60%) of the main funds of the majority of manufacturing sector enterprises, mainly caused by the low level of investments in renewal and modernization of technological equipment, including 58,4% at enterprises of metallurgical industry, and in certain of them a depreciation amounts to 70%. At machine building enterprises a depreciation is – 56,7%, at chemistry and pharmacy – 45,3%, at construction industry – 39% and others;

resource intensity and primarily power intensity of products, and therefore, an objective need for implementation of resource and energy saving technologies, “green” technologies and others;

domination of raw material sectors in the structure of industry, flow of direct investments, mainly foreign, in mining industry;

strengthening of dependence of Kazakhstani enterprises and the economy overall on import of high-technology products, which considerably deteriorates figures of national security;

shortage of highly professional management frames of a technical profile, capable of implementing and realizing high-technology investment projects;

low level of operating personnel qualification, handling facilities and transportation in the course of production processes modernization.

Preliminary results of the technology audit show that for starting modernization it is necessary to concentrate on “pilot” projects, which have facilities for early demonstrational success. As experience of developed countries shows, “pilot” projects development is a demonstration work ground.

The state partially supports a non-resource sector, as world experience analysis of modernization of major world leaders enterprises shows, the process of modernization was characterized by a widespread interference of the state into economy and support of its producer.

During modernization in Japan long-term plans of innovative development of economy and their realization by means of various measures of state support were developed, which included the following measures:

state financing of priority scientific and technological projects;

realization of long-term plans of industry development;

establishment of special-purpose banks, performing an export crediting of enterprises;

rapid procedure of examination of application for the grant of a patent, effective protection of intellectual property rights;

applying a policy directed towards protection of competition from import;

assistance in licensing of foreign technologies;

assistance in sphere of business fusion.

Technological world leadership is a result of application of the given measures.

The primary objective of modernization in Germany – is mobilization of resources and their integration in capital intensive projects. For that purpose investment banks were integrated with manufacturing enterprises into financial-industrial groups. National banks Deutsche Bank and Dresden Bank AG are in charge of three largest groups. Productive activity of such industrial concerns mainly covers one huge sector or subsector of economy, where large-scale and mass production on basis of using high technologies is developed.

Selection of sectors for modernization was in such directions:

export potential, competitive advantages;

growth prospects;

job security.

At enterprises modernization state support measures with minimum investments included the following measures:

formation of a favourable tax treatment;

exchange rate upholding;

supporting medium-sized and small enterprises.

However, without interfering with private sector, the state established strict antimonopoly laws and stringent technical state standards.

Thus, industrial modernization based on an individual approach with the support of the state, is one of the most important directions of industrial-innovative development of the economy of the Republic of Kazakhstan.

For successful realization of the Program and increase of industrial enterprises productivity, review of financial and nonfinancial support policy of industrial enterprises is needed.

4.  Purpose, tasks, target codes and realization results indicators of the Program

1.  Purpose of the Program

To increase competitiveness of industrial enterprises in the priority sectors of the economy by rising labour productivity.

2.  Tasks

Tasks of the Program are:

development of management and industrial technologies used by enterprises

modernization (technical retooling) of operating manufactures and creation of new competitive ones

3.  Target codes of the Program

Target codes up to 2020:

increase in labour productivity for no less than twice in processing enterprises, taking part in the Program;

increase of average capacity utilization of the Program participants up to 80 %.

Target codes up to 2015:

increase in labour productivity for no less than 1,5 times in processing enterprises, taking part in the Program;

increase of average capacity utilization of the Program participants up to 70 %;

introduction of management technologies at 15 enterprises per year.

4.  Realization results indicators of the Program

Due to the Program realization there will be:

increasing financial resources availability for private sector enterprises at realization of new investment projects, directed towards industrial-innovative development;

raising funds of private sector, first of all, financial organizations for investment projects realization in non-resource sectors of economy;

increasing of financial and economic stability of industrial enterprises, primarily of medium-sized and big business.

The main quantitative and qualitative results of the Program:

increase in labour productivity for no less than twice in processing enterprises, taking part in the Program;

increase of average capacity utilization of the Program participants up to 80 %.

5.  Realization stages of the Program

The Program realization will be performed in two stages:

1st stage – from 2011 to 2014, 2011 – pilot year.

In 2011 the Program realization will consist in supporting of new business ventures, upgrading of operating enterprises and strengthening of industrial enterprises workforce capacity. According to the results of pilot phase realization changes, additions and additional measures of state support can be introduced into the Program.

In 2012 – 2014 the Program realization will consist in supporting of new business ventures, upgrading of operating enterprises and strengthening of industrial enterprises workforce capacity.

2nd stage – .

In 2015 – 2020 the Program realization will consist in supporting of new business ventures and upgrading of operating enterprises.

1.  Criteria for participants of the Program

Participants of the Program can be business entities that match the following criteria:

realizing and (or) planning to realize investment projects in the priority sectors of the economy within the framework of the Program according to annex 1 of the present Program and planning the output of production introduced in annex 2 of the present Program;

financially stable (positive credit history, no debts fir tax and others);

having a comprehensive plan of investment project (a comprehensive plan of an investment project can be developed by an applicant on his own or in coordination with a consulting company from the list confirmed by the Program administrator).

A comprehensive plan of an investment project should provide a realization of the following indicators:

financial recoupment of an investment project;

increase in labour productivity twofold, but no less than one-half times of the average industrial level of modernization projects of operating enterprises or three-fold of the average industrial level of new investment projects;

competitiveness of production (that is in-demand on domestic and outer markets).

2.  Procedure of participation in the Program

Participation in the Program is declarative and measures of state support are provided as follows:

1.  An applicant applies to the Program operator and provides required package of documents (including a comprehensive plan of an investment project developed in coordination with a consulting company from the list or with an examination proceeding of a consulting company from the list in accordance with established requirements).

2.  The Program operator prepares an expert estimation of a given package of documents. An expert estimation should contain a conclusion about suitability to the state program priorities, sectorial programs and comparison of labour productivity and energy efficiency indices, and also on the basis of an expert estimation of a comprehensive plan of consulting company’s investment project or a comprehensive plan of an investment project developed by a consulting company, information about the necessity of modernization and provision of the state support measures.

3.  The Program operator directs an expert estimation to an applicant and implement operator.

4.  If an expert estimation is positive, the Program operator repays to an applicant a portion of costs, incurred in development or expert operation of a comprehensive plan of an investment project in accordance with paragraph 4 «The Program instruments» of the present section of the Program.

5.  Further if it is necessary to get the other instruments an applicant applies to the implement operator.

6.  The implement operator examines an investment project in accordance with established requirements. The implement operator informs an applicant and the Program operator about a decision.

7.  If the decision of the implement operator is positive, the Program operator, the implement operator and a participant set up respective contracts that call for:

rights and obligations of the parties;

result indicators of an instrument introduction;

responsibility of the implement operator, a participant and others.

8.  Realization monitoring of investments projects of the Program participants is conducted by the Program operator and implement operators for the entire period of an investment project realization.

The results of realization monitoring of the Program participants’ investment projects are submitted for review of an interagency committee.

9.  The Program realization order, application forms, list of an applicant’s submitted documents, terms for consideration of application forms, standard agreement form, forms and terms of realization monitoring of the Program overall and instruments particularly, requirements to the development of an investment project’s comprehensive plan are confirmed by the Program administrator after the interagency committee review.

3.  Criteria for a consulting company

Consulting companies engaged for development or examination of investment project’s comprehensive plan should match the following criteria:

occurrence of qualification and professional experience of a company for no less than 3 (three) years in the range of conducting investigations on infrastructure projects and projects in manufacturing;

occurrence in company’s assets of no less than 3 large-size works in the range of conducting investigations on infrastructure projects and projects in manufacturing;

lack of losses within 3 (three) recent years.

The list of consulting companies is prepared by the Program operator on basis of consulting companies’ applications and confirmed by the Program administrator after the interagency committee review.

4.  The Program instruments

The state support within the framework of the Program is:

payment for development or expert operation of a comprehensive plan of an investment project;

extension of a long-term lease financing;

involvement of qualified project and engineering organizations (providing with qualified project monitoring at selection, obtaining, fitting and actuation of a manufacturing equipment);

extension of innovative grants;

involvement of highly qualified foreign specialists;

introduction of modern management and industrial technologies (technologies increasing the economic enterprise efficiency, including automated control systems, international management standards, Lean, Kaizen and others).

Extension of the state support measures is as follows.

Payment for development or expert operation of a comprehensive plan by a consulting company:

Payment of expenses amounting to 50% but no more than 7,5 millions of KZT for a development and expert operation of a comprehensive plan of an investment project by a consulting company is provided within the framework of the Program.

Payment vehicle for development or expert operation of a comprehensive plan by a consulting company:

1.  An applicant determines a consulting company from the established list for development or expert operation of a comprehensive plan of an investment project on his own.

2.  An applicant and a consulting company set up a contract for development or expert operation of a comprehensive plan of an investment project.

3.  An applicant provides a complete package of documents to the Program operator. If an expert estimation is positive, the Program operator repays to an applicant a portion of costs, incurred in development or expert operation of a comprehensive plan of an investment project.

Extension of a long-term lease financing:

A long-term lease financing is provided to a participant by the implement operator. The implement operator – is a “DBK – Leasing” joint stock company – branch organization of the “Development Bank of Kazakhstan” joint stock company.

An applicant should secure the participation by cash resources for project realization in no less than 15% of leasing objects’ total value at using a long-term lease financing instrument.

A value of a leasing object should be no less than 150 million of KZT.

A long-term lease financing is provided by a maximum of 10 years. A fee rate under financial lease contract for a participant should be no more than 7,5 %.

Mechanism of a long-term lease financing extension:

1. Tendering on a long-term lease financing to the implement operator is provided by a participant according to the set form after getting a positive expert report of the Program operator.

2. The implement operator considers an application in due order and takes a decision about extension (failure to provide) of a long-term lease financing.

3. If a decision of the implement operator is positive, the implement operator and a participant set up a financial lease contract.

Involvement of qualified project and engineering organizations:

Involvement of qualified project and engineering organizations is provided for qualified project monitoring at selection, obtaining, fitting and actuation of a manufacturing equipment).

The implement operator – is a legal entity with 100% participation of the state in its nominal capital, the main nature of business of which is assistance in providing coordination of innovative development processes and extension of the state support measures.

Within the framework of the Program a co-financing from the republican expense budget in the amount of 30 %, but no more than 30 million of KZT on 1 (one) investment project, for involvement of qualified and engineering organizations is provided. Co-financing is provided according to results of services rendered to a participant by project and engineering companies.

Mechanism of qualified project and engineering organizations involvement:

1.  Tendering on qualified and engineering organizations involvement to the implement operator is provided by a participant according to the set form after getting a positive expert report of the Program operator.

2.  The implement operator considers an application in due order and takes a decision about extension (failure to provide) of an instrument.

3.  If a decision of the implement operator is positive, the implement operator and a participant set up a contract about extension of an instrument.

Extension of innovative grants:

Innovative grants are provided for realization of new projects, and also on realizable projects, aimed at modernization and expansion of production.

The implement operator – is a legal entity with 100% participation of the state in its nominal capital, the main nature of business of which is assistance in providing coordination of innovative development processes and extension of the state support measures.

Extension of innovative grants is carried out according to the Rules of innovative grants extension, established by the Government of the Republic of Kazakhstan.

Involvement of highly qualified foreign specialists:

Involvement of highly qualified foreign engineering and technical specialists is provided for development of engineering procedures and increase of equipment using effectiveness.

The implement operator – is a legal entity with 100% participation of the state in its nominal capital, the main nature of business of which is assistance in providing coordination of innovative development processes and extension of the state support measures.

Within the framework of the Program a co-financing from the republican expense budget for extension of highly qualified foreign engineering and technical specialists in the amount of 50 %, but no more than 9 million of KZT on 1 (one) specialist per annum and no more than 3 (three) specialists on one investment project is provided. Instrument is provided for no more than 1 (one) year. Co-financing is provided according to results of services rendered to a participant by foreign engineering and technical specialists.

Mechanism of highly qualified foreign specialists involvement:

1.  Tendering on involvement of highly qualified foreign specialists to the implement operator is provided by a participant according to the set form after getting a positive expert report of the Program operator.

2.  The implement operator considers an application in due order and takes a decision about extension (failure to provide) of an instrument.

3.  If a decision of the implement operator is positive, the implement operator and a participant set up a contract about extension of an instrument.

Introduction of modern management and industrial technologies:

Encouraging the growth of management level of domestic enterprises and realization of their undisclosed effectiveness potential is provided through introduction of modern management technologies.

The implement operator – is a legal entity with 100% participation of the state in its nominal capital, the main nature of business of which is assistance in providing coordination of innovative development processes and extension of the state support measures.

The result of management technologies introduction at enterprises is the increase of production organization effectiveness and labour productivity without extra investments, in other words provision is made for introduction of technologies increasing the economic enterprise efficiency, including automated control systems, international management standards, Lean, Kaizen and others.

Within the framework of the Program a co-financing from the republican expense budget in the amount of 70%, but no more than 5 million of KZT on service payment of analysts involved for development of management technologies introduction plan, and also a co-financing from the republican budget in the amount of 30 %, but no more than 10 million of KZT on the costs incurred for realization of management technologies introduction plan on one project.

A co-financing is provided according to results of services rendered by analysts to a participant.

Mechanism of management technologies introduction:

1.  Tendering on management technologies introduction to the implement operator is provided by a participant according to the set form after getting a positive expert report of the Program operator.

2.  The implement operator considers an application in due order and takes a decision about extension (failure to provide) of an instrument.

3.  If a decision of the implement operator is positive, the implement operator and a participant set up a contract about extension of an instrument.

6.  Necessary resources and sources of their financing

19,9 billion of KZT is provided for the Program realization from the republican budget in 2011.

Further financing of the Program will be provided in the conduct of assets that are in the republican budget for appropriate financial years, and also engaged external borrowings on separate instruments of the state support.

7.  Plan of measures on realization of the Program “Productivity 2020” (I stage)

No. in sequence	Measure	Conclusion form	Responsible for performance	Time for performance	Estimated expenditures (millions of KZT)													Sources of finance	No. of a budget-funded program (if exists)
1st year	2nd year	3rd year	4th year	5th year	Total
1	2	3	4	5	6	7	8	9	10	11	12	13
1.	Establishment of an interagency committee on modernization of enterprises	order of MINT	MINT, MEDT, concerned state bodies, LEB	March 2011	not required
2.	Development and confirmation of document forms, that are necessary for the Program realization	order of MINT	MINT, MEDT, “KIDI” JSC (on agreement), the implements operators (on agreement)	March 2011	not required
3.	Confirmation of the list of consulting companies	order of MINT	MINT, “KIDI” JSC (on agreement), an interagency committee	April 2011	not required
4.	Development of a long-term lease financing procedure	a decision of the implement operator	the implement operator (on agreement), “KIDI” JSC (on agreement)	March 2011	not required
5.	Introduction of changes into Rules of innovative grants extension, confirmed by the decree No. 1202 of the Government of the Republic of Kazakhstan dated August 6, 2009	Draft regulations of GRK	MINT, MEDT, “KIDI” JSC (on agreement), the implements operators (on agreement)	April 2011	not required
6.	Reception of applications on participation in the Program	information in MINT	“KIDI” JSC (on agreement)	on a rolling basis	not required
1	2	3	4	5	6	7	8	9	10	11	12	13
7.	Carrying out expert examination on conformity to criteria for the Program participants	expert report	“KIDI” JSC (on agreement), an applicant	on a rolling basis	not required
8.	Consideration of participant’s applications by implement operators	a decision of the implement operator	implements operators (on agreement), “KIDI” JSC (on agreement)	on a rolling basis	not required
9.	Execution of agreements on instruments extension	agreements	“KIDI” JSC (on agreement), implements operators (on agreement)	as necessary	not required
10.	Extension of the state support measures	contracts	MINT, “KIDI” JSC (on agreement), implements operators (on agreement)	as necessary	4900,8 15000						RB RB	011 «Support for creation of new manufactures, modernization and rehabilitation of operating ones within the framework of direction “Productivity 2020” 051 “Crediting of “Samruk-Kazyna” JSC for support of competitiveness and national economy stability”
1	2	3	4	5	6	7	8	9	10	11	12	13
11.	Monitoring of the progress of the project implementation	information in MINT	“KIDI” JSC (on agreement), implements operators (on agreement)	permanently	not required

Note: abbreviation expansion: