September 7, 2017, Astana. A panel session “Development of the Digital Economy” was held within the framework of the 9th annual meeting of the International Forum of Sovereign Wealth Funds (IFSWF) in Astana.
In 2016, the global sovereign funds invested in digitalization more than they had invested for 10 years in other industries. This is the statistics of The Boston Consulting Group (BCG) given during the panel session.
- 10 years ago sovereign funds never invested in the digital economy. But a breakthrough occurred last year. We saw how Temasek and other sovereign funds began to make record investments in new digital technologies”, - Christoph Schweizer noted, Chairman of BCG in the Central Europe and Middle East. - It was just the third largest sphere at the level of sovereign funds to be invested although five years before no one had considered this possible. There is a significant acceleration and this completely changes the profile of assets. Now, sovereign funds need not only industrial experts, but also experts in the field of information technology, experts in business models and technical issues who understand the digital possibilities in detail.

The digital revolution observed by the world community is relevant to any industry. Experts are convinced that mankind has reached a point where it is too late to say that it is possible to slow its pace even considering the risks of unemployment which resulted from robotization.

- 95% of those sitting in this hall do not even understand how far the artificial intelligence has progressed in our lives. It surrounds us everywhere. At any time you can order any product through the iPhone, virtually visit any wholesale and retail store. In cyberspace, today all the algorithms and problems that arise in it are not artificial, not digital but problems of real life”, - Christophe Schweizer believes.

The expert stressed that it is impossible to slow this process technically. And politically the question is how to control the secondary effects from transition to new technologies. A competitive state for attracting investment is the state which pays attention to training the workforce and availability of the appropriate regulatory framework.

According to the moderator of the session, Editor of the Emerging Markets program of CNN channel John Defterios, “Such countries as Kazakhstan which are undergoing radical changes, enter a phase of a new energy reality, digitalization and development of alternative energy sources”.

“We are adapting people for a new digital economy, instilling new skills and knowledge, showing which sectors are digitizing and what skills are needed so that whole nations successfully cross this transition period and ensure the availability of a digital economy in their own country”, - Deborah Sherry said, CEO and Commercial Director of General Electric Digital in Europe, Russia/CIS. 

At the basic level, digitalization can optimize operations, reduce costs and improve the decision-making process. Therefore, Samruk-Kazyna Fund supports and promotes ideas and tools of business management which are called to increase efficiency in order to accelerate economic growth and development of the national economy.

“As part of our strategic partnership with GE, we not only attract new technologies to portfolio companies and their industrial facilities, but we also consider the possibility of forecast analytics to increase productivity,” - Yerzhan Tutkushev said, Co-Managing Director for  New Industries Development of Samruk-Kazyna JSC. - The final high result and increase in the value of the Fund member companies in turn contributes to their investment attractiveness. At the same time, internal tasks are being resolved, among them - modernization of the economy.

Akylzhan Baimagambetov, CEO of National Investment Corporation of the National Bank of Kazakhstan JSC noted that the corporation being a sovereign investor of the country is focused on investing in international markets. This will increase the country’s reserves. 

- Previously, the IPO was the most important source of capital for growing companies. Medium-term growth and the average age of companies to enter the IPO was 3-5 years. As for the top bar - if you take “Amazon” for example - the company’s price after the IPO increased more than in 600 times. And it was much easier for a simple investor to turn to the top bar of high-tech growing companies. However, technologies are not only issues of change but also how we carry out business and where we invest,” - Akylzhan Baimagambetov said. - Today private companies live longer. The average age of companies before they step to the IPO is 10, 11 or even 12 years. Now we use completely new words: private capital markets, or, for example, “unicorn”, “unicart” for $1-10 billion of private investments, private companies. Indeed, while remaining private, companies have more opportunities in the market in the future. 

Digitalization affects not only the financial market and economic processes, but also the labor market. Thus, according to the forecasts of the European Commission, in the long term 54% of jobs in Western Europe will disappear completely or partially. This is due to the fact that new specialties will appear and the population does not have sufficient skills in the field of information technology. Accordingly, European governments are working at creation of new options in the field of education and professional development.

“I believe that humanity will over time go through some changes that involve pain and discomfort, but humanity is capable of experiencing change, adapting to new conditions,’ - Deborah Sherry said. – for hundreds of years societies and classes are changing. And now again there comes a time when humanity needs to jump into the train of changes. Should we be afraid of this? The history tells us that we always get out. We are creative, we think creatively and thus we create advanced societies on the planet”.