Factors of attractiveness of the investment climate

in Kazakhstan

JSC “NATIONAL EXPORT & INVESTMENT AGENCY “KAZNEX INVEST”

Ministry of Industry and New Technologies of the Republic of Kazakhstan

Date:

Place:

KAZAKHSTAN: YOUR GATEWAY TO 3/5 BRICS OR TO 3 BILLION PEOPLE

KAZAKHSTAN

4

7

5 5.

4 5.

4 5.

4

The average minimum duration of flights to major centers of economic activity (in hours)

KAZAKHSTAN

�Territory: 2.7 mln. sq. km.

�Population: 16,9 mln

� GDP, 2012: $ 201 bill

�GDP per capita, 2012: $ 12500

�Major languages

• Kazakh (state language)

• Russian (official, business language)

• English, Chinese (young generation)

� Main ethnic groups:

• Kazakhs: 65%

• Russian: 25%

• Other: 10%

Source: The Agency of Statistics of the

Republic of Kazakhstan

INDUSTRY OF KAZAKHSTANMANY FOREIGN COMPANIESHAVE ALREADY INVESTED IN KAZAKHSTAN

FDI FLOWS INTO KAZAKHSTAN HAVE DEFIED GLOBAL ECONOMIC CRISIS

Source: National Bank of the RK

UNCTAD Stat

FDI Structure, 1993 – IIQ 2012, bill USD

16;

10%

49;

31%

57;

36%

37;

23%

1 1 12 2

1 23

5 4 5

8

7

11

1820

19,0 19,0

20,8

10,9

0

5

10

15

20

25

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 1 пг

2012

FDI inflows into Kazakhstan, bill USD

1.976 1.791

1.198

-

500

1.000

1.500

2.000

2.500

2007 2008 2009

World investment flows, bill USD

II Q

2012

Other sectors

Mining

Exploration

Manufacturing

1,0

1,3

3,2

5,0

6,8

9,1

13,0

16,6

65,2

93,6

457,5

-6%

63%

7%

14%

28%

22%

34%

30%

23%

21%

28%

Tajikistan

Kyrgyzstan

Moldova

Armenia

Uzbekistan

Azerbaijan

Belarus

Turkmenistan

Ukraine

Kazakhstan

Russian

KAZAKHSTAN HAS ATTRACTED GREATEST FDI PER CAPITA IN CIS

*Compound annual growth rate

Source: UNCTAD Stat

CAGR*

Accumulated FDI in the CIS,2000-2011 yy., bln. USD

FDI in the CIS countries per capita,2011 y., USD

142

244

236

892

1359

1443

1628

979

3257

3203

5777

Tajikistan

Uzbekistan

Kyrgyzstan

Moldova

Belarus

Ukraine

Armenia

Azerbaijan

Turkmenistan

Russian

Kazakhstan

INDUSTRY OF KAZAKHSTANWHY IS KAZAKHSTAN ATTRACTIVE FOR FOREIGN INVESTORS?

Political stability and good

investment climate1▪ Higher level of trust in political

institutions and efficient allocation

of public funds (WEF 2012) than in

the CIS region

▪ Easy to do business (ranked 49th on

WB Doing Business indicators 2013;

top 10 reformer in last 2 years)

2Regionally attractive fiscal and

non-fiscal regime and protection of

foreign investment

▪ Attractive corporate tax rate (20%)

and low VAT (12%)

▪ Fiscal and non-fiscal incentives for

investors, including in SEZs

▪ 48 bilateral agreements on mutual

protection of investments (US also)

▪ Main international arbitration

instruments ratified

Stable macroeconomic indicators

and high growth3▪ GDP growth: 5.4% (IMF 2012)

▪ One of the lowest debt/GDP ratios in

the world: 12.4% (WEF 2011)

▪ Budget deficit: -2.2% (WEF 2011)

▪ Inflation rate: 5% (2012 NBK)

▪ Upgrade from stable to positive

offered by major ratings agencies

4Springboard to circa 3 billion

potential customers

▪ 3 out of 5 BRICSs are within 4 hours

plane ride

▪ Customs Union with Russia and

Belarus, with 170 million people

and total GDP of USD 2 trillion

▪ Open Economy (trade 70% of GDP)

▪ Numerous trade agreements signed

2,3

2,4

2,5

2,5

2,8

2,8

2,9

2,9

3

3,1

3,6

3,6

3,8

4

4,7

5,1

5,2

5,5

5,7

127

126

117

115

99

91

87

86

79

74

55

54

47

44

30

24

22

17

11

Czech

Russian

Ukraine

Romania

Croatia

India

Bulgaria

Azerbaijan

Lithuania

Kazakhstan

Turkey

Macedonia

Jordan

Poland

Georgia

Saudi Arabia

Chile

Australia

UAE

HIGH CONFIDENCE IN POLITICAL INSTITUTIONS AND EFFECTIVE MANAGEMENT OF PUBLIC FUNDS

1,6

1,8

2

2,1

2,1

2,2

2,4

2,5

2,5

2,9

3

3,3

3,4

3,4

3,7

4

4

5,6

5,8

139

133

120

115

113

106

90

86

85

65

63

47

45

43

37

29

27

5

3

Czech

Romania

Ukraine

Croatia

Lithuania

India

Poland

Russian

Bulgaria

Macedonia

Georgia

Azerbaijan

Jordan

Turkey

Kazakhstan

Chile

Australia

Saudi Arabia

UAE

The index of trust political institutions Place in the

ranking

Place in the

rankingEfficiency of the allocation of public funds

144

Extremely low Very high Irrational Highly1 1

Source: The Global Competitiveness Report 2012-2013

144

185

168

154

141

137

130

112

73

67

58

49

32

15

9

1

0 20 40 60 80 100 120 140 160 180 200

Central African Republic

Afghanistan

Uzbekistan

Tajikistan

Ukraine

Brazil

Russian Federation

Italy

Azerbaijan

Belarus

Kazakhstan

Armenia

Ireland

Georgia

Singapore

DOING BUSINESS IN KAZAKHSTAN IS MUCH EASIER THAN IN MOST EMERGING MARKETS

Source: World Bank Doing Business 2013

Doing Business 2013

Country rank

10

LAW OF THE RK DATED AS 21.07.11 № 469 “ON INVESTMENTS»

Exemption from customs duties on equipment,

components, raw materials and spare parts imported for a

project

In-kind

state

grants

Tax allowances as per Tax code of the RK (deductions of the

value of the preference objects, and (or) further costs to

modernization up to 3 years)

Preferences for projects in priority sectors

Preferences for strategic investment projects *

Land , property tax 0% for

up to 7 yearsGuaranteed state order

Industrial subsidies for areas with low socio-economic development

Corresponds to the List of high-technology

products

The volume of investment exceeds 50

million USDOR

10

CRITERIA for investment projects:

�Corresponds to the List of priority activities

Corresponds to the List of priority activities

INVESTMENT PREFERENCES

SECTOR-SPECIFIC INCENTIVES IN 9 DEDICATED SEZS ACROSS COUNTRY

SEZ “Innovation

TechnoPark” (IT-industry, innovations)

SEZ “Ontystik” (textile industry)

SEZ “Khorgos

Eastern Gate”(Trade, logistics)

SEZ “Saryarka”(metallurgy)

SEZ “Astana new city”(construction industry)

SEZ “Burabai”(Tourism)

SEZ “Pavlodar”(chemical industry)

SEZ “Petrochemical park”(Oil and gas industry, petrochemicals)

SEZ “Marine Port

Aktau”(logistics, transport)

Aktau

Atyrau

Shymkent

Astana

Karaganda

Almaty

Pavlodar

SEZ “Chemical park

Taraz” (chemical)

Taraz

FISCAL INCENTIVES in SEZs

• 0%Corporate Income Tax until 2020-2025 with possibility for extension

• 0% for land and property tax until 2020-2025 with possibility for extension

• VAT– 0% (for products consumed in SEZ) until 2020-2025 with possibility for extension

• Increase of marginal rate of depreciation for tax on the production of software to 40%

• For SEZ “Innovation technopark” – social tax is 0% for 5 years, under certain conditions

• For SEZ“Innovation technopark”– depreciation rate for software increased to 40 %

NON-FISCAL INCENTIVES

• Provision of free land in SEZ for a period of up to 10 years from registration time as SEZ resident

ATTRACTIVE INVESTMENT INCENTIVES IN SEZS

KAZNEX INVEST:YOUR ONE-STOP-SHOP FOR INVESTING

Providing information about

business / invest

projects and analytical information

Assist in the selection of

projects of AIIDHelp in choosing a partner

Assistance in administrative

mattersOrganization of meetings

with officials

COMPREHENSIVE ASSISTANCE

TO FOREIGN INVESTORS

Assistance in obtaining

state support for investors

THANK YOU FOR YOUR ATTENTION!

www.invest.gov.kz