Why the SPFIID Is Stalling: The Problem of Interagency Coordination

State Program for Forced Industrial and Innovative Development (SPFIID)

I have never been a big supporter of the SPFIID in the form in which it existed and still exists. I have written about this more than once. The second program, incidentally, is much better structured and written than the first. But I tend to favor more or less liberal approaches. That is not the point, though.

Many people are asking why the SPFIID is not being implemented the way we would like.

The viability of the enterprises built under the SPFIID deserves a separate post, since that is a question for the program itself.

The question now is about the program's implementation.

The ministry currently responsible for implementing the SPFIID is the Ministry of Investment and Development (MID). In essence, this ministry designs the program and oversees its implementation.

The problem is that the key implementation mechanisms fall under the authority of various agencies that are, for the most part, autonomous from the MID.

For example, building infrastructure for special economic zones (SEZs) and industrial zones is the responsibility of the akimats. I have written a separate post about SEZs and will not go into them here. (https://www.facebook.com/Gaztok/posts/815450361853450)

Financing is handled by the Baiterek holding, which channels funds through second-tier banks, the Development Bank of Kazakhstan, and the Damu Fund. This is the key body, and the success of the SPFIID depends mainly on how effectively funds are delivered to economic actors. I hope this is a temporary phenomenon and that we only need to wait until everything is set up. Time will tell.

The SPFIID includes related programs that depend not on the MID but on other ministries. Food production is one example. To develop food production, you first have to develop the agricultural sector, which is overseen by the Ministry of Agriculture. The Ministry of Agriculture has its own development programs. But as a rule, food producers are first and foremost agricultural enterprises. As a result, many farmers do not understand which program they should apply to. They go to a second-tier bank and are told, for instance, that growing cucumbers is not processing, so they should go to KazAgro. KazAgro has not yet introduced financing through second-tier banks to support domestic agricultural enterprises, and financing through KazAgro itself is super-bureaucratic. So many agricultural producers are left in a state of some confusion. Incidentally, food production and agricultural production cannot be separated at all. It is more logical, for example, to build a dairy plant together with a dairy farm.

Oil refineries are regulated by the Ministry of Energy, while oil refining is a priority industry. Accordingly, the MID cannot influence the Ministry of Energy. Refineries are a separate topic: we keep reconstructing them, and reconstructing them, and still never finish the job.

There is also competition between programs, which I have written about as well: SEZs now compete with investment preferences.

Then there is the question of staffing the entire SPFIID, which should supposedly be the responsibility of the Ministry of Education. I also do not understand how the SPFIID and education programs are connected. Yet staffing is the key to the SPFIID's success. Foreigners will build us anything for our money, but how all of this will be run is completely unclear.

Quotas for attracting foreign labor are administered by the akimats. Obtaining a quota for a foreign national takes a great deal of effort and ingenuity, as I know from my own experience of once working under a quota.

There are many such collisions. All of this points to the poor quality of public administration and of interagency cooperation.

Therefore, for the SPFIID, personal responsibility should be assigned to each unit so that it is clear where this or that bottleneck arises.

In short, implementing any program requires not only the program itself but also mechanisms for its execution and adequate oversight, and that cannot be the responsibility of the MID alone.