I nvest in South

Kazakhstan

Republic of Kazakhstan“Ontustyk” SEZ

A Competitive Base

for Textile Investment

I nvest in South

Kazakhstan

Content

• Republic of Kazakhstan

• Stable business conditions

• Banking sector

• Textile industry

• Resource base

• Logistics

• Cotton-textile cluster

• “Ontustyk” Special Economic Zone

• Comparative analysis

• Requirements for the investors

• To sum up

I nvest in South

Kazakhstan

A strategic location in Central Asia A strategic location in Central Asia

IndiaPak

ista

n

Turkey

I nvest in South

Kazakhstan

• Political and Social Stability• GDP growth - 9% • Inflation level below 8%• Unemployment level below 7%• Increasing foreign investment• Increasing export • Long-Term State support

- Regulatory basis- Safety

- Infrastructure• Global support: EBRD, ADB, World bank, others.

Stable business conditions

I nvest in South

Kazakhstan

Banking sector

• Developed banking sector

• Local Banks have operating agreements with International

banks

• Accounts in Foreign currency

• Local currency fully convertible

• Computer banking is available

I nvest in South

Kazakhstan

Textile industry

• Joint Stock Company “UTEKS” is a cotton processing plant : 6 thousand tons of OE. Product range: Combed and cotton yarn. Machinery: Rieter.

• Joint Stock Company “MELANGE” : cotton plant producing 5 thousand tons of yarn annually. Product range: Cotton yarn and fabrics. Machinery: Dornier, Thies, Benninger.

• “Kazakh Russian Textile Alliance” LLP : joint venture with Russian holding. Production capacity is 45 million m2 of fabrics. Product range: Gray cotton cloth. Machinery:Rieter, Picanol, Benninger.

• Nimex Corporation – 2 ginning plants, the total annual production capacity of both plants is 120 thousand tons. Product range: Yarn and fabrics. Machinery:Rieter, Trutzschler.

I nvest in South

Kazakhstan

Resource base

• Availability of local cotton

• Proximity to regional cotton producers

• Low energy costs

• Availability of water supplies

• Attractive labor cost

I nvest in South

Kazakhstan

Resource base Technical characteristics of cotton

TypeStaple

length, mm, not less

Titer, mtex, not more

Strength gf/tex, not less than

First grade (I)

Second grade (II)

4 33,2 180 26,0 25,5

5 31,2 190 24,5 24,0

6 30,2 200 24,0 23,5

7 29,2More than

20023,5 23,0

Note: Kazakhstan cotton is considered to be medium-staple length and according to the above mentioned characteristics fits Ne 8 –30 yarn.

I nvest in South

Kazakhstan

• South Kazakhstan - a strategic location in Central Asia- easy access to regional raw material - availability of auto and train networks - international airports - reputable national carrier • Established logistics - Russia, Turkey, ЕU and USA

Logistics

I nvest in South

Kazakhstan

Cotton-Textile cluster

Cotton-fiber

Yarn production

Fabric production

Fabricfinishing

and dyeing

Made up goods

Raw-cotton

I nvest in South

Kazakhstan

Cotton-Textile cluster

• The law of RK “On Cotton Industry Development”• Cotton research institute • Highest quality seeds production plant• Cotton quality rating laboratories • Ginning plants • Transportation-logistic centers, cargo-warehouses• State subsidies:

- 40% cost of original and highest quality seeds- 40% cost on water delivery services - 40% cost of mineral fertilizers, seed disinfectors, herbicides

- part of the cost of combustive-lubricating materials - part of the costs on irrigation and drainage of the irrigated area - 100% cost on combating agricultural pests

• Development of new areas under crop for cotton growing• “Ontustyk” Special Economic Zone

I nvest in South

Kazakhstan

“Ontustyk” Special Economic Zone

• 200 Hectares near Shymkent (South Kazakhstan) reserved for textiles

• Advantageous tax laws

• Free Customs Zone

• Infrastructure

• State support

I nvest in South

Kazakhstan

Corporate Income Tax

“Ontustyk” SEZPreferential conditions for 10 years

VAT

Property Tax

Land Value Tax

0%

0%

0%

0%

Customs Duties Exemption

Administrative support Managerial Board

SEZ Tax Authority

SEZ Customs Authority

Infrastructure Budget

Taxation and Customs Support

Infrastucture

I nvest in South

Kazakhstan

“Ontustyk” SEZMain manufactures

MAIN MANUFACTURE

TYPES

COTTON CONSUMPTION

ANNUALPEOPLE No INVESTMENT $

Denim Jeans production

19 500 2 100 105 000 000

Terry Towel Plant

17 400 2 700 90 000 000

Knitted products Plant

7 800 1 650 75 000 000

Work Wear, military & other

fabrics21 600 1 920 120 000 000

Bedsheets and home textiles

13 500 2 340 144 000 000

I nvest in South

Kazakhstan

“Ontustyk” SEZ Additional manufactures

ADDITIONAL MANUFACTURESCOTTON CONSUMPTION

ANNUAL

Non-woven fabric production 2 000

Medical and cosmetic cotton products 7 000

High quality paper production 1 000

I nvest in South

Kazakhstan

“Ontustyk” SEZ Service Facility

• Temporary storages

• Certification centers

• Bank departments

• Service companies (repair and maintenance of textile

equipment, spare parts delivery, training centers)

• Service companies (delivery of dyes, chemicals,

accessories, etc.)

• Alternative energy and industrial water suppliers

• Aid posts

• Fire station

I nvest in South

Kazakhstan

• NUMBER OF MANUFACTURING PLANTS :

– > 15 textile enterprises

• INVESTMENT VOLUME:

– > $ 500 millions

• USE OF LOCAL COTTON :

– > 100,000 tons/year

“Ontustyk” SEZMain indexes

I nvest in South

Kazakhstan

Requirements for the investors

• 100% cotton products

• Use not less than 30% of local cotton

• Vertically organized companies

• High quality products

• Modern technology

– new machinery

• Strong Market plan

• Input of technical know-how and people

I nvest in South

Kazakhstan

Comparative analysis Industrial costs

I nvest in South

Kazakhstan

Comparative analysis Industrial costs

GAS $/m3

TURKEY 0,24 0 INDIA 0,181 CHINA 0,122

KAZAKHSTAN 0,075

UZBEKISTAN 0,02 5

ELECTRICITY $/kW

TURKEY 0,089 INDIA 0,0 86

PAKISTAN 0,065 CHINA 0,06 0

KAZAKHSTAN 0, 047 UZBEKISTAN 0,02 5

LABOR COST $/h

TURKEY 2,88

KAZAKHSTAN 0,95 CHINA 0, 76 INDIA 0,67

UZBEKISTAN 0,40 PAKISTAN 0,37

I nvest in South

Kazakhstan

Comparative analysisTerms offered to investors

TURKEY

CHINA

PAKISTAN

INDIA

KAZAKHSTAN

UZBEKISTAN

INCOME TAX 0% 33% 39% 36,6% 0% 18%

VAT 0% 17% 15% 12,5% 0% 20%

FINANCIAL RATING B- A- B+ BB+ BBB+

MEMBERSHIP IN WTO 1995 2001 1995 1995 NO NO

I nvest in South

Kazakhstan

To sum up

• Favorable business conditions

• Political and social stability

• Long-term tax preferences

• Free customs zone

• Regional hub with low cost raw material

• Competitive production costs

I nvest in South

Kazakhstan

Republic of Kazakhstan

President of the Republic of Kazakhstan Nursultan Nazarbaev

«We stand for the mutually beneficial two-way relationship with the Eastern and Western countries… Kazakhstan considers them to be important trade and economic partners and we continue to adopt their advanced experience of creation high-technology productions with high value added cost».

I nvest in South

Kazakhstan

State Authority

«Ontustyk» Special Economic Zone Directorate

Kazakhstan, South Kazakhstan Region,

Shymkent city, Lengerskoye highway, 7km.

Tel./fax: +7 (3252) 51-11-93

www.textilezone.kz

E-mail: info@textilezone.kz