The Asian Financial Forum

Transcription

1 Ministry of Economic Development and Trade, The Republic of Kazakhstan The Asian Financial Forum Common Economic Space and Investment Opportunities in Kazakhstan Hong Kong Astana, January 2012

2 A quick recovery of Kazakhstan s economy from the global economic crisis Kazakhstan recovered well from the crisis with growth up to 7.3 percent in both 2010 and In fact, the country s growth returned to its pre-crisis growth rates. Economic growth was accompanied with income level increase Real GDP growth (%) 10,7 9,8 9,3 9,6 9,7 8,9 3, ,3 7,3 1, (estimate) 12 GDP per capita (US $ thousands) 11,3 200 Nominal GDP (US $ bln.) ,7 2,1 2,9 3,8 5,3 6,8 8,5 7,2 9, (estimate) (estimate) 2

3 Kazakhstan is among top 5 rapid growth markets in the world (Ernst and Young ratings) Kazakhstan identified as a significant rapid-growth market (RGM) with economy and population of a certain size that display strong growth potential and that is strategically important for business. The chart shows the GDP growth of 25 RGMs over the last 10 years, comparing these with the advanced economies, where Kazakhstan is placed on the 3 rd position.

4 Prospects for Kazakhstan s sustained economic growth By all accounts, our economic stance today is strong and sustained. The sustained economic growth rate at the level of 7%will be the main goal for economic politics in the intermediate term period. Kazakhstan s forecasted growth is well above the level of European and Central Asian countries.

5 Openness to trade is one of the defining characteristics of Kazakhstan Exports as the factor of growth accounted for 50% of GDP in the year 2010.

6 Macroeconomic environment of Kazakhstan is assessed at the high level. Kazakhstan is on the 18th place among 142 economies in The WorldEconomic Forum on macroeconomic environment indicators Macroeconomic stability, WEF ratings United States Japan China India Russia Kazakhstan Korea Singapore Malaysia Hong Kong 6

7 National Fund s assets and National Bank s international reserves show an upward trend. It indicates the country s quick recovery from the crisis. During the post-crisis period Kazakhstan accumulated a substantial share of international reserves, which reached 40 percent of GDP in This indicates not only the economy s fast rebound from the crisis, but also high financial potential for future sustained growth Country's International reserves as a whole (US $ bln.) 43,7 31,0 27,5 24,4 20,0 23,1 28,3 29, Gross international reserves National Fund's assets International reserves as a share of GDP in 2011 Q3 (in %) 120,0 110,9 100,0 80,0 75,9 87,4 60,0 40,0 20,0 0,0 0,3 23,8 26,2 40,0 44,0 44,2 Source: Global Inight 7

8 Positive dynamics on labor market and slowing down of inflationary processes are observed Prudent macroeconomic policies of the National Bank and the Government resulted in fall in inflation from 9.5 in 2008 to 7.4 percent in ,5 Inflation rate (% e.o.p.) 6,2 7,8 7, ,0 10,0 8,0 6,0 4,0 2,0 1,9 Unemployment in 2011 (%) 6,5 6,8 5,4 5,5 3,1 3,3 3,4 9,0 9,8 10,0 Active anti-crisis measures of Kazakhstan s government allowed to keep unemployment under control. In 2011 the unemployment rate was equal to 5.4 percent. 0,0 Source: Economist Intelligence 8

9 ,9 Keeping Government Debt at low level General Government Gross Debt in 2011 as % of GDP (IMF estimate, Fiscal monitor, September, 2011) 233,1 165,6 43,0 40,3 39,3 121,1 106,0 100,0 93,5 84,1 86,9 82,6 80,8 72,3 65,5 67,4 65,0 64,9 37,8 41,1 50,2 55,1 43,3 42,9 32,0 35,3 26,9 25,2 12,9 11,7 7,1 Thailand Turkey Ukraine Advanced Emerging Austria Canada Czech Republic Finland France Germany Greece Italy Japan Korea Netherlands New Zealand Portugal Singapore Spain UK United States Argentina Brazil China India Indonesia Kazakhstan Malaysia Mexico Russia Saudi Arabia 9

10 ,5 General Government Balance in 2010 as % of GDP (IMF, Fiscal monitor, September, 2011) 6,7 5,2 1,7 1,5-1,2-1,6-2,8-2,9-2,3-2,7-2,9-3,3-3,7-3,5-4,6-4,7-4,5-5,6-5,3-5,1-4,3-6,0-7,1-9,2-9,1-8,8-9,2-10,4-10,2-10,3-5,7 Advanced Emerging Austria Canada Czech Republic Finland France Germany Greece Italy Japan Korea Netherlands New Zealand Portugal Singapore Spain UK United States Argentina Brazil China India Indonesia Kazakhstan Malaysia Mexico Russia Saudi Arabia Thailand Turkey Ukraine Positive fiscal balance including receipts from oil sector 10

11 Foreign direct investment is the engine of Kazakhstan s rapidly growing economy Kazakhstan is well recognized as The Most Attractive Economy in the FSU region among foreign investors. Even though FDI inflows were below their pre-crisis level, they still remained high. In fact, investors readiness to invest in the country even during the crisis played an essential role in such a fast recovery from the global economic crisis. FDI inflows (US $ bln.) 18,5 19,8 19,1 18,1 15,7 1,3 0,7 1,0 1,7 2,1 1,2 1,9 2,8 4,6 4,1 4,6 8,3 6,6 10, (9 m.) 11

12 Foreign Direct Investments Kazakhstan has been very successful in attracting FDI and significantly stands out in this regard among other RGMs. Gross direct foreign investments to the independent Kazakhstan equaled to 140 billion US dollars.

13 Kazakhstan has achieved remarkable progress in improving business environment Kazakhstan is considered as most attractive economy for foreign investors in the CIS region. Kazakhstan s position in Doing BusinessRating improved from 58 (among 183 countries) in 2010 to 47 in 2011 World Bank s «Doing Business» rating India Russia China Kazakhstan Malaysia Japan Korea USA Hong Kong Singapore 13

14 Tax ratings of PriceWaterhouseCoopers and WB General rating of tax burden Rating of the amount of tax payments Argentina USA Austria Azerbaijan Belorussia Brazil Canada China Czech Republic Finland France Georgia Germany India Japan Kazakhstan Korea Malaysia Russia Singapore Thailand Turkey Ukraine UAE UK USA Argentina Austria Azerbaijan Belorussia Brazil Canada China Czech Republic Finland France Georgia Germany India Japan Kazakhstan Korea Malaysia Russia Singapore Thailand Turkey Ukraine UAE UK Tax burden in Kazakhstan is one of the lowest and favorable for attraction of investors and development of businesses compared to other countries Rating of the general tax rate Rating of the time for the tax execution Argentina USA Austria Azerbaijan Belorussia Brazil Canada China Czech Republic Finland France Georgia Germany India Japan Kazakhstan Korea Malaysia Russia Singapore Thailand Turkey Ukraine UAE UK USA Argentina Austria Azerbaijan Belorussia Brazil Canada China Czech Republic Finland France Georgia Germany India Japan Kazakhstan Korea Malaysia Russia Singapore Thailand Turkey Ukraine UAE UK 14

15 Common Economic Space (CES) and Customs Union CES and Customs Union open up new opportunities, including market increase, lifting of trade, technical and customs barriers and access to infrastructure. This will significantly improve business climate in Kazakhstan including increase of the amount of customers to 170 million people and increase ofincome with free circulation of goods to 2 trillion US dollars. Internal market of Kazakhstan will increase by 10 times. This will give an opportunity to develop and start new productions. Customs Union gives an opportunity to implement huge transit projects. Turnover of trade East-West is expected to be 1 trillion US dollars by Creation of the Customs Union lays foundation for establishing the Common Economic Space; this is the next step of the integration process, which includes free movement of the capital, goods, services and labor force. 15

16 Customs Union Benefits Common foreign trade policy in regards to third countries (from January 1, 2010) Common customs tariff Unified system of non-tariff regulation to commodities from third countries Common customs territory between Kazakhstan, Belarus and Russia (from July 6, 2010) Abolishment of customs issuance on internal borders of member-states of the Customs Union Loosening as a 50 day delay on import VAT payment and excide duties on commodities imported from Russia and Belarus Cancellation of Customs Freight Declaration and customs fee in the amount of 50 Euro Simplified procedures of mutually exchanged articles conformity confirmation, common veterinary, sanitary and phytosanitary requirements, common issuance Abolishment of all kinds of state control (except border control) on the internal borders of the Customs Union (from July 1,2011) Decrease of business costs and free flow of goods and commodities 16

17 Common Economic Space Benefits Coordinated macroeconomic policy Coordinated macroeconomic policy (budget deficit not higher than3% of GDP, state deficit not higher than 50% of GDP) Common rules and principles of competition protection, regulation of natural monopolies, and also in the area of industrial and agricultural subsidizing Free flow of services Provision of full access to the services market in CES Coordinated policy on the access of third countries to the services market of CES Free flow of labor force Free flow of individuals of member-states in CES Coordinated migration policy in regards to the third countries with consideration of principles of the International Law and WTO rules Free capital flow Gradual removal of all limitations on capital flow from member-states in CES on the basis of a coordinated macroeconomic, monetary and financial, investment, taxation and money and credit policy Sustained growth and access to infrastructure which is crucial for Kazakhstan as a country with remote access to markets and almost without access to sea ports 17

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19 Евроазиатские транспортные ЕВРОАЗИАТСКИЕ ТРАНСПОРТНЫЕ КОРИДОРЫ коридоры Транссиб км 14 суток Западная Европа -Западный Китай км 10 суток Морской путь через Суэцкий канал км до 45 суток

20 The Khorgos International Centre of Cross-Boundary Cooperation The Khorgos International Centre of Boundary Cooperation JSCis a public company established under the Agreements between the Government of the Republic of Kazakhstan and Government of the People's Republic of China for the purpose of creation of the Khorgos International Center for Transfrontier Cooperation at the Kazakhstan and China border in the Panfilov district of Almaty region. Major goals: Сreation ofanefficient transport and logistics and industrial center, inthe interest oftrade and export activities and the implementation ofthe transit potential ofkazakhstan, aswell aspromoting the development ofeconomic and cultural exchanges with neighboring countries; Integration ofkazakh products inthe global system ofproduction and marketing, creating aninnovative and competitive domestic products inaccordance with international standards; Creation ofthe favorable investment climate and attraction of domestic and foreign investments for the implementation of investment projects.

21 Main components of Khorgos Eastern Gate SEZ: The Khorgos International Centre ofboundary Cooperation (ICBC) JSC isanetwork oftrading-expo centers and abusiness cooperation area (319 hectares, including administrative-business (185 hectares) and reserve (134 hectares) areas); «Holosteric port» as a transportation-logistical complex (570 hectares); Industrial zone as an industrial complex (690 hectares); Residential zone as, а settlement (city) territory (1010 hectares); Supplementary infrastructure and perspective development territory (3151 hectares) Additional advantages for the SEZ participants: Availability of the «Western Europe Western China» international highway; Availability of railway infrastructure (Altynkol station and railway line Zhetygen Korghas); Connectedness to«aktau» seaport.

22 Trading and Logistics Facilities of Khorgos Transloading terminals area will be located at the southern part of the center. This area will consist of 5 large sections such as 2 terminals with special temperature conditions, 6 temporary storage terminals, 4 terminals of goods processing and completing, information and logistics center and special laboratory. The transloading terminal area will also include Northern and Southern personnel and maintenance centers and water intake facilities. Trade and exhibition area will be located at the south of administrative and business center and will be intended to arranging of exhibitions and trading of goods and services. Functionally, trade and exhibition area will be the most important point of the whole center with the highest level of activity where all stages of trading process will be carried out from receipt of information and selection of goods to execution of supply agreements.

23 Meeting and Recreational Facilities: International Business Cooperation Center intended to held International meetings, conferences, symposium, meetings of major International financial and industrial organizations of the Republic of Kazakhstan, CPR, Russia and other bordering countries. Entertainment and exhibition area will cover 6.5 hectares of the center and will be in the form of multifunctional complex consisting of exhibition halls covering over 40 thousand square meters, art shows and folk-crafts workshops, information center and other exhibition and recreational facilities. Hospitality area will be formed of the group of buildings consisting of 7 high-rise hotels of 5-star level. These 14- to 25-store hotels will be providing the whole range of hospitality services. The hospitality complex one-time capacity will be 5 thousand people. Sports and recreational area with football stadium, parking lots, viewing stands, small parkland, swimming pool, large sports complex and hotels sportsmen and guests of sports events will be built at this area.

24 Government Program of Accelerated Industrial-Innovative Development (GPAIID) as a tool for sustained economic growth 12 priority sectors New approaches(years ) Oil and gas sector Petrochemistry Mining and Metallurgical Industry Chemical industry Atomic industry Machinery Pharmaceutical industry Construction industry Agro-industrial complex Light industry FES Ontustik Tourism FES Burabai Space industry Modernization of existing enterprises Creation of new highly efficient enterprises Selective support for enterprises of future economy CRITERIA 1. High efficiency level (50% of the world leaders average) 2. Creation and upgrade of infrastructure (electricity, pipelines, roads) 1. High efficiency level (80-100% of the world leaders average) 2. High value-added 3. Export-oriented 4. Competitiveness in the regional market 1. Innovation 2. Improvement of telecommunications infrastructure 3. Spillover effect on improving efficiency in main sectors 24

25 Industrialization Map Industrialization mapis the key mechanism of the implementation of the State Program of Accelerated Program of Industrial & Innovational Development of Kazakhstan. Currently there are 609 projects included to the map in such priority sectors of Kazakhstan s economy as agro-industrial complex, metallurgy, oil refinery, energy, chemicals and pharmaceuticals, construction industry, transportation, machinery, tourism and space industry. In Industrialization map s projects amounting to 12.2 billion US dollars with creation of jobs were launched Projects included in the Industrialization map are provided withabout 100 instruments of Government support including preferential financing, grants, subsidizing interest rates and resource support of the projects. 25

26 Program on Investment Attraction, Development of Special Zones and Export Stimulation In the frames of Industrial and Innovational Program there is sector Program on the Investment Attraction, Development of Special Zones and Export Stimulation in the Republic of Kazakhstan for The Program foresees three possible packages for incentives for the attraction of investors: 1. Basic package of incentives for investors implementing activity in the priority types of economic activity; 2. Special economic zones; 3. Special regime for the most important investment projects. These incentives will function for all residents of Kazakhstan, including foreign citizens implementing investment activity on the territory of Kazakhstan excepting special economic zones with its own regimes. 26

27 Special economic zones (SEZ) Following tax benefits are provided: exemption from the corporate income tax and social tax; exemption from the land tax and property tax; increasing marginal rate of amortization applied for taxation with respect to the program provision from 15% to 40% (analogically to software) applying 0% VAT tax rate for products fully manufactured and consumed in SEZ exemption from customs fees 27

28 Europe - Technology transfer - Brands - Management - Trade financing - Knowledge transfer Map of potential sources of funding for projects USA - Technology transfer - Brands -Management The Middle East - Islamic financing - Private Equity Funds China, Malaysia, Singapore, South Korea, Japan -FDI and loan financing -Technology transfer -Knowledge transfer -Management 28