1. Kazakhstan Economic Policy 1

2. Contents 1Country overview 2Diversification policy of Kazakhstan 3Initiatives in Kazakhstan 4Anti crisis initiatives 5New economic policy of Kazakhstan: forced industrial- innovation development plan 2

3. Country overview Consistent growth since 2000 due to economic reforms, political stability and vast natural resources Kazakhstan is the ninth largest country in the world by area Kazakhstan has one of the fastest GDP growth rates in the world Macroeconomic indicators2003200420052006200720082009F2010F Population (mil)1515.115.215.415.615.81616.1 Nominal GDP ($ bn)30.843.257.181.0104.9128.689.9108.3 Real GDP growth (%)9.89.69.710.68.53.20.33.0 GDP per capita ($ at PPP)2,0537,7218,6609,77310,77111,10011,06911,313 Consumer price inflation (end-period, %)6.86.77.58.418.89.56.6 Recorded unemployment (average, %)8.88.48.17.87.36.67.67.2 Current account balance ($ mil)-273335-1,056-1,999-7,3336,401-1,156-1,111 Trade balance ($ mil)3,6796,78510,32214,64215,09133,18516,21520,561 External debt ($ bn, approx. 85% corporate)22.732.843.474.196.4104.797.796.3 FDI inflow ($ mil)4,6248,3176,61910,43711,5809,23010,240n/a FDI outflow ($ mil)3084253071,2651,2301,0891,150n/a Kazakhstan Country Report, Economist Intelligence Unit, March 2009 3

4. 4 Factor-driven economy Efficiency- driven economy Innovation- driven economy Factor costsProductivityUniqueness Transition stage Armenia Azerbaijan Bangladesh Georgia India Kyrgyzstan China Tadjikistan Ukraine Jordan Kenia Moldova Ethiopia Egypt Kazakhstan Algeria Albania Colombia Ecuador Peru Thailand Tunis Macedonia Guatemala Argentina Bulgaria Brasil Mexico Russia Turkey Poland Chile Croatia Estonia Malaysia Latvia Lithuania South Africa Hungary Southern Korea Czechia Bahrain Portugal Slovenia Taiwan Trinidad and T. Austria Great Britain Germany Denmark Israel Italy Canada Singapore USA Finland France Sweden Japan Cyprus At the present moment Kazakhstan is at a transitive stage between factor-driven and efficiency-driven economies.

5. 6 Index07-08 Rank Global competitiveness index61 Basic requirements66 Efficiency enhancers58 Innovation & sophistication84 Business Competitiveness index 72 Quality of business environment72 Company operations and strategy78

6. Diversification policy of Kazakhstan 5 Strategy 2030 Strategy 2020 Strategy 2010 Industrial Innovation Strategy Continuity Sequence On going Sustainable development

7. Initiatives in Kazakhstan: examples 1.Cluster initiatives (JEA Austin, Porter’s team, Harvard) priority industries –Oil and gas cluster –Minerals and ores cluster –Agriculture and food processing –Cotton based textile cluster –Tourism cluster –Transportation and logistics –Construction materials cluster 2. Petrochemical industry master plan (Nexant company) 3. Creation of Regional Finance Center in Almaty (Boston Consulting Group) 4. Government holding creation (McKinsey company) 7

8. Anti crisis initiatives Anti crisis activities amount equal 14% of GDP Maintenance of macroeconomic and financial stability – 4 billion dollars Problem solving in real state market – 3 billion dollars SME support – 1 billion dollars Agriculture development - 1 billion dollars Realization of innovational, industrial and infrastructural projects - 1 billion dollars 8

9. 9 New economic policy of Kazakhstan

10. Industrialization map of Kazakhstan for 2010-2020 year Industrialization map of Kazakhstan will be developed for 2010-2020, which included: Scheme of production capabilities rational distribution in connection with region resource base and infrastructure development; Worked investment projects with real investments and investment suggestions package, which will be available for potential partners, including foreign and internal investors. 10

11. Post crisis development: 5-year forced innovational industrialization Kazakhstan 11 1.Agriculture Goal – increase gross value added not less than 16% 2. Construction industry and production of construction materials Goal – increase gross value added not less than 76% 3. Oil processing and oil and gas infrastructure Goal – increase gross value added not less than 30% 4. Metallurgy and production of metallurgy products Goal – increase gross value added not less than 107% than 107% 5. Chemical and pharmaceuticalIndustry Goal – increase internal consumption more than 50% through local production 6. Energy Goal –decrease energy consumption in 2015 year by 10% 7. Transportation and telecommunicationinfrastructure 8. Other industries Realization of all plans directed on development of infrastructural industries will allow to increase gross value added in total by 63%