Public-private partnership in the social sphere

The article describes the prerequisites for the implementation of public-private partnership in Kazakhstan; a modern system of public-private partnership, the activities of JSC "Kazakhstan Public-Private Partnership" form of public-private partnership in Kazakhstan, the form of participation of countries, public-private partnership in the social sphere. Consider: the proposed approach for the social sphere; PPP models used in foreign countries, unresolved legal issues in Kazakhstan; the main obstacles to the development of the concession mechanism in the social sphere; the task of raising the profile of PPPs in the social sphere; the need of  the Republic of Kazakhstan in PPP projects in the social sphere; The program is to provide children with preschool education and training "Balapan" for 2010-2020; implementation of PPP projects in health and education in Kazakhstan and Karaganda region; implementation of the project "Technology transfer and institutional reform in the health sector of the Republic of Kazakhstan"; the use of PPPs in health care in accordance with the "Salamatty Kazakhstan" state program of development of health; the results of the SWOT-analysis  of PPP development in the social sphere of Kazakhstan; the achievement of goals by performing cash problems. It is concluded that the development of PPP in Kazakhstan has all the prerequisites; PPP mechanism is applied in industries related to the field of theory of state responsibility; Kazakhstan's social sector needs to modernize and make it possible only with the participation of big business in close partnership with public authorities; further development of the economy of our state is impossible without a well-developed infrastructure and improve services to the population. The estimation of PPPs in the social sphere, implemented PPP projects in the Karaganda region. Summarizes the results of a public-private partnership in the social sphere. The implementation of public-private partnership in social sphere allows to attract private businesses to improve services in health and education.

In the Republic of Kazakhstan used a mechanism for the development, which has already become a popular and proven in the world, as a public-private partnership (PPP).

The first prerequisite for the implementation of PPPs have been observed in 1991, when the December 23 first Law of the Republic of Kazakhstan "On concessions", but it has lost its force was adopted in 1993. For a long time the legal basis for the development of PPPs did not exist, several projects were implemented on the basis of agreements (contracts). In 2006 alone, the Government of the Republic of Kazakhstan  adopted the Law "On concessions", which allows already with the existing legal framework to implement investment projects with the use of this form of PPPs as concessions [1]. Created Kazakhstan PPP Centre as a specialized organization for the concession, it is also carried out preparatory work for the implementation  of projects. 

To improve the system of PPPs by the Government of the Republic of Kazakhstan June 29, 2011 №  731 approved the program for the development of public-private partnership in the Republic of Kazakhstan for 2011-2015 [2].

JSC "Kazakhstan Public-private partnership established in accordance with the Decree of the Government of the Republic of Kazakhstan dated June 17, 2008 № 693 "About creation on the concession".

The sole shareholder of JSC "Kazakhstan Public-Private Partnership is the Government of the Republic of Kazakhstan represented by the Ministry of National Economy of the Republic of Kazakhstan."

Its activity consists in:

• Planning and managing projects;
• Research in the field of PPP and the budget investments;
• Training of specialists in the field of PPPs;
• Examination of projects;
• Evaluating projects [1].

As a rule, the PPP mechanism is applied in industries related to the field of theory of state responsibility. In Kazakhstan, the implementation of PPP projects carried out in the social sphere: Kazakhstan's industry needs to modernize and make it possible only with the participation of big business in close partnership with public authorities. Further development of the economy of our state is impossible without a well-developed infrastructure and improve services to the population (Fig. 1).

Figure 1. The forms of public-private partnership in Kazakhstan [3] 

The industrial development of Kazakhstan should go is inseparable from the growth of social welfare. The President's message to people of Kazakhstan noted that "the main objective of our programs to strengthen the well-being of the people."

Social modernization going on in the country and encourage the introduction of new economic forms.  In particular, it expands and activates the possibility of using various schemes of public-private partnership  in the social sphere.

Figure 2. Forms of participation of the parties [3] 

Public-private partnership in the social field can be represented as the interaction between state organizations of social sphere and business structures on the basis of mutual interests to achieve common goals. You can also say that this partnership is an alliance between government and business in order to implement the social orientation of the projects on the basis of legislative acts and special agreements.

In many countries, PPP Institute successfully used for the development of socially significant sectors: health and education, which traditionally belong to the sphere of responsibility of the state. One of the major barriers to the expansion of the use of PPPs is the absence in the Kazakhstan legislation other than those concessions, types of PPP contracts.

In the world practice in the areas of applied social non-concessional types of contracts. PPP projects in the social sector are typically implemented on the basis of the model of "construction content", and the object can be transferred to the state immediately after the completion of construction and after completion of the PPP contract, with payment being a private party state carries out in the contract period, depending on the operational readiness of the object, that is, depending on the quality of the services of private traders.

For example, in Europe only in the health field is applied to a dozen different types of PPP models. For example, in the UK health projects apply the model of "Content and Management." In France, in the construction of public hospitals (Bail Emphytheotique Hospitalier) worth 6 billion. Euro has been applied the model of "Design-Build-Service", where the private sector has been transferred the right to design, construction and hospital services, as well as on the performance of commercial activities within the project structure. Cases where the PPP-projects on health rights for the provision of certain clinical services are transferred to the private sector, is the exception rather than the rule. Existing examples suggest only a partial provision of such services to the public. In Madrid is nursing, in Romania, where the business is involved in the construction of Elias Hospital in Budapest and the Unirea Medical Center, the private sector provides services of X-ray examination of patients, as well as to attract customers — Organization for medical care (medical insurance).

However, most often in the international practice in PPP projects, provision of medical services traditionally reserved for the state.

Thus, the health projects the state is responsible to the public for the quality of medical services, allowing the private sector the right to object the technical service, as well as the ability to generate revenue from the implementation of certain business activities. For example, the construction of parking on the hospital grounds for its customers, catering, laundry and other activities that are not health care services for the treatment of patients. International practice shows that the business is willing to take the state provided him a niche in the social infrastructure.

However, in Kazakhstan there are a number of outstanding legislative issues that prevent the use of a similar scheme western cooperation between the state and business.

In Kazakhstan PPP Center on economic expertise regularly come to the concession projects of social orientation (rest homes, sports camps, kindergartens, multidisciplinary clinical hospitals, schools). However, the possibility of using PPP mechanisms in this field are limited.

The main obstacle for the development of the concession mechanism in the social sphere is the absence of a mechanism the legislative level, allowing to involve investors in projects that do not generate sufficient revenue derived from service users (eg, kindergartens, hospitals) or no income at all (in prison, school). 

In addition, in accordance with the Presidential Decree in the list of objects that are not subject to concession, including schools and health care organizations that provide primary health care (blood centers for maternal and child health, radiation medicine, facilities for the treatment of cancer, tuberculosis , infectious diseases, skin and venereal disease, mental health, HIV patients and AIDS patients), and is the only state medical institutions in the service territory of the region, city or area [4].

At the same time, the Government of Kazakhstan set the task to strengthen the role and importance of PPPs in the social sphere.

State Education Development Programme is planned to increase the share of financing of educational activities for 2011-2020 civil universities by PPP: in 2015 10%, in 2020 by 50%.

In his Message to the people of Kazakhstan, the President said: "By 2020, all children in both urban and rural areas will be covered by preschool education and training. We have a huge potential of public-private partnerships Private family kindergartens and mini-centers an alternative to state institutions"[5].

On the basis of the data of the Agency on Statistics of the Republic of Kazakhstan the problem of lack of education exists in primary and secondary education (Table 1).

T a b l e   1

The need of the Republic of Kazakhstan in projects PPP in the social field [5] 

Thus, the largest number of schools are in disrepair falls on Kyzylorda, South Kazakhstan, East Kazakhstan and Zhambyl region. In the southern regions of the country (South-Kazakhstan, Almaty, Zhambyl region) the largest number of schools that require major repairs.

Training in three shifts observed in Zhambyl, Kyzylorda, Almaty, West Kazakhstan, South Kazakhstan, Mangistau regions and in Astana, which, in turn, negatively affect the quality of educational services.

High demand in the construction of new schools is also available in Almaty and Astana. If in the previous parts of the need caused due to wear and tear, in the second case this requirement was formed due to population growth due to migration of the population in the city and a high birth rate, which is associated with the level of economic well-being of the cities of Astana and Almaty, exceeding other regions.

It is planned to build 245 school establishments in the cities of Almaty, Astana, South Kazakhstan, Kyzylorda and Mangystau regions.

As of January 1, 2016 in Kazakhstan there were 6,446 kindergartens and pre-school mini-centers, which are visited by 446,465 children. The number of children of preschool age is 1 748 thousand children [Fig. 3]. Thus, to date, only about 25 % of children covered by preschool education and upbringing. This suggests  that the level of pre-school and pre-school education in Kazakhstan is very low.

The lowest coverage of pre-school education was recorded in South Kazakhstan, Kyzylorda and Almaty regions.

In Astana, Almaty remains a problem of access to early childhood education, linked to long queues at the improvement in pre-school organizations. Within the framework of the state program "Balapan" 2010 2015 years. extended network of kindergartens and mini-centers in 1,5 times. However, even with the successful implementation of the program "Balapan" will be provided only 74 % of children in pre-school education and training. In addition, in the period from 2015 to 2020 is expected further to build about 405,000 places in preschool. Despite this, there remains a need in the construction of more 2500 preschool each based on 300 seats.

Figure 3. Coverage of children with preschool education and upbringing [5] 

Programme to ensure that children in pre-school education and training "Balapan" for 2010-2020 provides for the possibility of building new kindergartens on a concession basis.

This work has already begun. For example, in Taraz within the framework of the program "Balapan" based on public-private partnership built educational institution "Іnzhu", it includes a kindergarten for 280 places, elementary school, grammar school with 80 seats. Training is conducted in Kazakh, Russian and English, was created 128 new jobs, the cost of the project amounted to 650 mln. tenge [6].

In addition, akimat of Karaganda region were initiated pilot projects, where planned construction of a complex of kindergartens with total capacity of 4760 seats. project investment amount is of the order of 10.3 billion. tenge. According to the feasibility study of projects, it is expected the construction of modern facilities for the care and education of children 3-6 years old with innovative equipment rooms and their subsequent transfer to the operation of the concessionaire for 20 years for a return on investment.

This scheme involves the allocation of investment in the construction is not from the state budget (with the distribution of funds for more than 10 years), and engaging at the same time by private investors. Cost recovery will be at the expense of budget funds for 8 years after the end of construction and transmission facilities in state ownership. Revenue is expected receipt of the investor on the project for 20 years.

One of the mechanisms to improve the financial efficiency of the projects will be the possibility of providing the concessionaire additional education and other public services (eg health services for children, additional children's clubs for creative ways. All the activities on education and training of children will be carried out "under the direct control of the local executive authority on education. "The government will carry out national policy in the field of pre-school education in kindergartens built.

Karaganda region is not a subject of international relations, which led to difficulties in attracting financing for the project. On the basis of unresolved legal issues of the concession contract for the construction and operation of the complex of kindergartens in Karaganda was terminated in connection with the question of this project is still open today.

In health care, the state also is interested in maintaining the pace of construction and reconstruction of medical facilities. This is evidenced  by indicators of  state  programs  in Kazakhstan  "Construction  of  100 schools, 100 hospitals" and "Construction of 350 health facilities." In addition, there is an urgent need to improve the hospital network in terms of infrastructure, equipment and organization of activities to ensure compliance with modern standards.

To date, some aspects of PPPs already implemented. Thus, the republic entered the patient's right of choice, according to which citizens have the right to choose any medical organization for medical treatment, which was one of the advantages of the private sector. Create equal conditions for private and public providers. The effectiveness of the implementation of socially important projects on PPP in health care clearly by the example of a hemodialysis program. The alliance of public and private sectors contributed to the international standard hemodialysis. Partnership with the private sector develops through contracts for maintenance services, maintenance of medical equipment, maintenance of information systems.

In Karaganda region realized 3 projects of PPP in health care: 

• A centralized high-tech laboratory (private investor providing modern laboratory equipment in the amount of 200 million tenge, trained medical personnel for the use of modern medical technology, the works on arrangement room ventilation and low-voltage wiring);
• Hemodialysis centers (5 private companies purchased equipment), project cost is 2.5 billion
• Purchase of a gamma-knife (for the treatment of tumors), treatment is started in 30 patients from the beginning of

Currently, within the framework of strategic partnerships and joint initiatives of the Government of the Republic of Kazakhstan and the World Bank in the framework of the implementation is in the project "Technology transfer and institutional reform in the health sector of the Republic of Kazakhstan."

The purpose of the project implementation of international standards and the formation of long-term institutional capacity in the Ministry of Health and relevant agencies and health care organizations in support of key health sector reforms undertaken by the Government of the Republic of Kazakhstan in the context of the State program of reforming and development of health care system in the Republic of Kazakhstan.

A key mechanism for the implementation of the project is to attract consulting companies for technology transfer on the basis of partnership.

In accordance with the state program of health development "Salamatty Kazakhstan" the use of PPPs in health care is planned in the following directions [7]:

• the introduction of new forms and methods of financing (including the replacement of fixed assets in the fare);
• the development of competition within the Single Payer; attract private investment to the management of public departmental medical facilities;
• development of the private sector;
• transmission facilities, equipment rental;• transfer organizations in the trust to private

Effective health development is possible only through continuous investment and innovation through public-private partnership mechanism. Using the model of public-private partnership in the health system is able to generate positive for society and social and economic effects.

Consider the results of the analysis SWOTPPP development in the  social sphere  of Kazakhstan  (Table 2).

T a b l e   2

SWOTanalysis of PPP development in the social sphere of Kazakhstan 

As follows from the presented analysis SWOT, the main challenges to the effective implementation of PPPs in the social sphere of Kazakhstan the following [8]:

• Is a great need to upgrade infrastructure social services;
• Limitation of the investment fund;
• The lack of a unified approach to the allocation of investment for the construction of facilities; 
• Imperfection of the legislation for the implementation of PPP projects;
• Lack of experience in the implementation of PPP projects in health care. Thus, the social sector is experiencing significant demand financial resources, implementation of modern management, advanced services and technology services. State budget funds do not allow to fully meet these needs. It becomes necessary to direct involvement Enterprise Institute

As the analysis shows that in Kazakhstan there is an acute shortage of pre-school education facilities (only a quarter of preschool children of the country covered by training and education); There is a need to improve the health of hospital network.

Infrastructure, equipment and organization of activities in order to ensure modern standards.

The broad scope of services of the social sphere is potentially interesting for the business as a sphere of marketing services, has a steady, though not always vysokoplatezhesposobny demand. This situation can be called a real prerequisite for the development of PPP in health and education, preserving its value at any  stage of economic development.

Successful PPP development in Kazakhstan depends on a systematic approach to coordinated and balanced use of the PPP mechanism. In Kazakhstan, the further improvement of the methodology of training and examination of concession projects. In addition, it is necessary to study the prospects of application in addition to the forms of PPP concession mechanism. It is necessary to develop specific mechanisms coordinating the interests of government and business with a view to optimal and sustainable involvement of various resources and their sources, as well as the relevant legal framework adjustments.

In general, Kazakhstan is guided by the best world experience in PPPs, the flagship of which are countries such as South Korea, Singapore, Japan and European countries to Kazakhstan's model of PPP has become the optimal efficient and comfortable for our country, the Kazakh society, and investors who come to Kazakhstan [9].

Despite the existence of experience in implementing of concession projects in Kazakhstan as a whole at the strategic level goals such PPPs as risk allocation when investing in capital-intensive facilities, unloading of the state budget and moving perspective of fiscal policy on the implementation of the social value of projects (health, education, etc.), the establishment of effective methods of state property management by engaging in this work of private capital is not currently developed.

To achieve these goals requires the following tasks [10]:

• Improvement in the field of PPP legislation;
• Ensure the development of measures for the effective planning and management of the processes of preparation and implementation of PPP projects;

Establishing criteria for evaluating the effectiveness of implementation of the project through the submission of quality public services;

Provide training and advanced training of specialists in the field of PPP.

References

1. The law of the Republic Kazakhstang of June 7, 2006 No. 164-ІІІ "About the concessions" (with changes and additions as of 09.2014), http://online.zakon.kz/Document/?doc_id=30062571#pos=0;0.
2. Resolution of the Government of the Republic of Kazakhstan on June 29, 2011 № 731 "program for the development of public-private partnership in the Republic of Kazakhstan for 2011-2015", http://online.zakon.kz/Document/?doc_id=31026146#pos=0;0.
3. The law on  PPP  of the  Republic  of Kazakhstan  of October  31,  2015    379-V3  PK, http://online.zakon.kz/Document/?doc_id=37704720#pos=90;-207.
4. Resolution of the government of the Republic of Kazakhstan of 28 November 2006 No. 1127 "On approval of list of objects offered for concession in the medium term", http://online.zakon.kz/document/?doc_id=30079080#pos=1;-177.
5. The state program of education development for 2011-2020, approved by decree of the President RK of December 7, 2010 No. 1118, akorda.kz.
6. http: // akorda.kz.
7. The State Program of healthcare development of the Republic of Kazakhstan «Salamatty Kazakhstan» for 2011-2015, approved by decree of the President of the Republic of Kazakhstan dated 29 November 2010 № 1113, http://online.zakon.kz/document/?doc_id=30861087#pos=1;-169.
8. articiekz com/article/10547.
9. Shoterchenkova Kazakh weekly newspaper "Panorama", 2012, 17 August, No. 32, http://panoramakz.com/.
10. KazzeKZ / userfiles / ufi / es / presentation / 3 Kamaliev_dulat.paf.