National Export and Investment Agency TOP REASONS TO INVEST IN KAZAKHSTAN National Export and Investment Agency Gaukhar Zainullina Regional Director

Country overview 2 Area of land: 2.7 mln. sq. km Capital city: Astana Political status: Republic Area of land: 2.7 mln. sq. km Capital city: Astana Population: 16,5 million Key Economy Information, 2009 GDP/GDP per capita: USD 134 bln/USD 8,547 Industry Production: 85 bln. USD Trade turnover: 109 bln. USD Export: 71.2 bln. USD Import: 37.9 bln. USD Main religions: Islam, Russian Orthodox Main languages Kazakh (state language) Russian (official/business language) Key ethnic groups Kazakh: 65% Russian: 25% Ukrainian: 2.9% Uzbek: 2.8% German: 1.5% Korean:0.7% Currency: Tenge (KZT, USD 1 = ~ KZT 150) 2 Source: KazStat

Preferable Geographic Location: Gateway between Europe and Asia Strategic location between European and Asian business centers Main transit area in region Surrounded by attractive markets – China and Russia 3 out of 4 Eurasian rail corridors go through Kazakhstan Location features Gate to Russian and European market Russia Europe Kazakhstan China Middle East India Gate to China, India and South-East Asia

Stable Macroeconomic Environment Source: KazStat

Inward FDI Performance Gross inflow of FDI to Kazakhstan from 1993 – 102,9 bln. USD Investor Protection Country Strength of investor protection index (0-10) New Zealand 9.7 Kazakhstan 5.7 Russia 5.3 Tajikistan Ukraine 4.7 Moldova Main investors by gross inflow of FDI in 1993 – 2009 Source: Doing Business 2010

World’s Leading Reformer Doing business 2010 Global competitive Index 2009-2010 Economy Ease of doing business Singapore 1 Finland 14 Georgia 15 Korea 23 Austria 27 UAE 46 Mongolia 58 Kazakhstan 63 Czech Republic 75 China 83 Russia 120 Ukraine 145 Economy Global competitiveness Index ranking USA 2 Finland 6 Austria 15 Korea 19 UAE 23 China 29 Czech Republic 31 Russia 63 Kazakhstan 67 Ukraine 82 Georgia 90 Kyrgyzstan 123

State Forced Industrial and Innovative Development Program: Priority sectors State Forced Industrial and Innovative Development Program Agriculture complex and agricultural production Construction industry and production of construction materials Oil refining industry and oil and gas infrastructure Chemical, pharmaceutical industries Metallurgy development and production of final metallic products Uranium industry Light industry Purpose: To diversify and enhance the competiveness of Kazakhstan economy and increase GDP by the year of 2015 by 7 trillion tenge or approximately 50% of 2008 GDP. Energy Transportation and telecommunication infrastructure Space industry Tourism Objectives: Concentration country’s resources on development of economy’s priority sectors; Creation of favorable macro and investment climate; Enhance of national economy production; Support of export oriented industries and innovative manufacturing. Machinery and equipment building

Access to New Markets: Kazakhstan, Russia and Belarus Customs Union from January 1, 2010 Advantages for potential investors: SIMILAR TRADE RULES 1. Single custom’s territory; 2. Single foreign trade policy; 3. Single custom’s legislation, single custom code; 4. Free goods mobility inside single custom’s union Russia Kazakhstan Market capacity – around 170 million people Total GDP of almost 2 trillion USD Belarus INCENTIVES FOR THE INVESTORS Exemption from import customs duties on import of non-produced technological equipment and raw materials in Kazakhstan in the implementation of investment projects. Kazakhstan has more liberal taxation for opening and doing business comparing with Russia and Belarus.

Developing Infrastructure: “Western Europe – Western China” International Transit Corridor Russia ASTANA Martuk Russia Karabutak Khromtau Aralsk Saryozek Kyzylorda Khorgos Baykonyr Korday China Almaty Taraz Communicator Base station of trunking communication LEGEND Operator International Transport Logistic Centre Communication centre ALMATY Korday Uzbekistan Shymkent Turkmenistan Kyrgyzstan 9 9 9

Strong Partners to Cooperate: Development Institutes National welfare fund “Samruk-Kazyna” (national companies and development institutions in railway, energy, oil and gas, telecommunications sectors) National holding "KazAgro" Investment Fund of Kazakhstan Development Bank of Kazakhstan Entrepreneurship Development Fund Kazyna Capital Management State Insurance Corporation National Innovation Fund

Strong Partners to Cooperate: Special Economic Zones SEZ «Burabay» SEZ «Astana - New city» SEZ «Ontystik» SEZ «Marine Port Aqtau» SEZ «Petrochemical park» SEZ «IT Park» LEGEND: construction high-tech industries IT, software textile petrochemicals tourism 11 11

Incentives Given in Special Economic Zones Operating Incentives Proposed Incentives guaranteeing SEZ participants tax regime stability during project implementation; introduction of a special regime for foreign labor imports to SEZ; introduction of “one-stop shop” service for SEZ participants. Exemption from VAT for selling Kazakhstani goods on SEZ territory for consumption when performing SEZ-specific activity Increasing marginal rate of depreciation for taxing software Exemption from land rent on SEZ territory for terms determined by agreement but no longer than 10 years since receiving right of temporary use Tax Code of RK: exemption from corporate tax exemption from land tax exemption from property tax Customs Code of RK: Exemption from custom duties on SEZ territory

Additional Incentives Proposed in Special Economic Zones For SEZ “Astana – New City”: Decrease of existing 20 per cent corporate tax for “construction and putting into operation infrastructural objects, administrative and residential complexes in accordance with construction documents”. Use 0 rate of land tax. Decrease property tax rate from 0.5 per cent for individuals, 1.5 per cent for legal entities up to 0 per cent Decrease of VAT when selling goods and equipment fully consumed for building and putting into operation infrastructural objects, administrative and residential complexes. For SEZ “IT Park Alatau”: Increase marginal rate of depreciation charges.

Investment Preferences Machinery Equipment Waiving of import duties Corporate tax rate is down to 20% Land Favorable tax regime State grants in kind VAT tax rate is down to 12% Buildings INVESTOR Machinery Reduction of taxable income for corporate income tax Equipment Minimal long-term purchase contract from state and national companies Special order for entrance visa issue for foreign experts and for foreign labor Support measures under the «Business – 2020» Road Map: Subsidizing interest rates on loans Partial loan guarantees Development of industrial infrastructure

National Agency for Export and Investments «KAZNEX INVEST» – your partner in Kazakhstan Creation of favorable climate Promotion of investment opportunities Ministry of Industry and New Technologies one-stop shop KAZNEX INVEST Support of foreign investors and providing services INVESTOR Investor protection Export promotion Our contacts: www.kaznex.kz Tel.: +7 (7172) 791-718 Fax: +7 (7172) 791-719 E-mail: info@kaznex.kz

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