Invest in Kazakhstan 1
Investment attractiveness of Kazakhstan Why Kazakhstan Investors are attracted to Kazakhstan for a variety of reasons Ease of Doing Business According to the 2016 World Bank report Kazakhstan ranks 41 st out of 189 countries in the Doing Business rating Competitive climate According to the World Economic Forum data Kazakhstan ranks 42 nd out of 140 countries in the Global Competitiveness Index (The GCI) Stable economic and political climate in the region - The economy of Kazakhstan is the largest economy in Central Asia. - According to The GCI 2015-2016, Kazakhstan is 25 th by the macroeconomic environment and 30 th by the transparency of government policymaking. Competitive labor market - Young, talented and well-educated workforce - Kazakhstan is the only country in the region to have a high efficiency of the labor market. - Potential investors allocate pay level in Kazakhstan as one of the most attractive factors. Rich natural resources - Kazakhstan is an industrial country with mining operations being one of the main sources of its economic growth. - The country s mineral raw material base consists of more than 5 000 deposits. - 1 st place for reserves of zinc, tungsten and barite, 2 nd - silver, lead and chromites, 3 rd - copper and fluorite, 4 th - molybdenum, 6 th - gold. Investor protection - The government provides various guarantees that minimize risks an investor may incur in carrying out investment activities in Kazakhstan. - Investment Ombudsman is operating in order to protect the rights and legitimate interests of investors. - The country holds one of the top positions in the world for the protection of investors (25 th in the protection of minority investors). 1 Competitive geographic location and transit potential - Strategic location between Europe and China - Membership of the Eurasian Economic Union - New Silk Way large scale infrastructure project will allow Kazakhstan to become a connecting link in the continent and a largest business and transit hub of the region. Favorable tax climate - Kazakhstan stands at 18 in the ranking of 189 economies on the ease of paying taxes. - According to the joint report by PwC and the World Bank Group «Paying Taxes 2016» Kazakhstan is 18th in terms of favorable tax climate in comparison with tax regimes of 189 economies. Development of new technologies - Kazakhstan will be hosting the world EXPO 2017. The theme of the exhibition is the Future Energy and is dedicated to the alternative energy sources and green technologies. - As a part of "Smart Astana" concept various smart projects, including introduction of smart technologies to offer comfort, high quality of life for citizens and increase competitiveness are being implemented in Astana. State support - In Kazakhstan investors are granted a package of investment incentives for the implementation of priority projects in the priority sectors of the economy. This package is unique in the region. - Investors, who have entered into investment contracts for the implementation of priority investment projects, have the right to engage foreign specialists without quotas and permits.
Investment attractiveness of Kazakhstan Why Kazakhstan - Location and infrastructure The Kazakhstan s geographical position makes it a natural crossroads for major transit corridors from East to West, from North to South. Kazakhstan is a member of the Eurasian Economic Union an international association of economic integration, along with Armenia, Belarus, Kyrgyzstan and Russia. (access to the Russian market with more than 140 mln. people and a common market of the Union with more than 180 mln. consumers) The transcontinental automobile road corridor Western Europe Western China passes through the territory of Kazakhstan. The corridor will allow to to reduce cargo transportation time from Lianyungang in China to St. Petersburg in Russia to 10 days. St. Petersburg BELARUS 9.5 mln. TURKEY 74.9 mln. ARMENIA 3 mln. Aktobe IRAN 77.5 mln. Western Europe Western China corridor (8,445 km=5,247 miles) KAZAKHSTAN 17.7 mln. RUSSIAN FEDERATION 143.5 mln. Shymkent AFGHANISTAN 30.6 mln. Western Europe Western China corridor on the territory of Kazakhstan (2,787 km=1,732 miles) PAKISTAN 182.1 mln. INDIA 1.3 bln. MONGOLIA 2.8 mln. PEOPLE S REPUBLIC OF CHINA 1.4 bln. Lianyungang Over the past five years, new railways with a total length of 1,791km have been constructed. The country develops port infrastructure through the ports of other countries: the seaport of Batumi in Georgia, providing access to the Black Sea; Kazakh- Chinese logistics terminal in the Pacific port of Lianyungang. 2
Investment attractiveness of Kazakhstan Why KAZNEX INVEST National Export and Investment Agency «KAZNEX INVEST» JSC is one of the National Development Institutes, serving to diversify national economy by creation of optimum conditions for development and promotion of Kazakhstani processed export and FDI attraction to the priority sectors of economy. Analytical support Analytical support for potential investors (Information about the economy, industry, law, etc.) Project assistance - Search for project partners - Search for the best location, site visits - Possibility of locating production in the Special Economic Zones and Industrial Zones Communication with state authorities Assistance in negotiations with the state authorities for obtaining land, buildings, infrastructure for the project First step to success Assistance in the signing of the investment contract for the implementation of investment project and obtaining investment preferences Investors Support Center and Aftercare - Attracting and accompanying investors in the regions; - Improving investment climate in the region; - Solving issues related to investments (Investment Ombudsman) Service support of exporters - Analytical support - Financial support of exporters (export grants) 3
Priority sectors 1 Metallurgy 2 Chemical Industry 3 Petrochemical Industry 1. Ferrous metallurgy 2. Non-ferrous metallurgy 3. Agricultural chemistry 4. Production of chemicals for industry 5. Petrochemical industry 4 Machinery 5 Food Industry 6. Manufacture of motor vehicles 7. Electrical equipment 8. Food production 4
Investment attractiveness of Kazakhstan Government support - Investment incentives Visa-free entrance For nationals of 19 countries visa-free regime has been established for up to 15 calendar days from the date of crossing the state border for the period from July 16, 2015 till December 31, 2017 Criteria for preferences 1 Investors Service Centre (One Stop Shop) Provides 363 public services for investors, associated with obtaining an investment contract, land, visa support, etc. In addition, investors can get advice on any question arising at any stage of planning or implementation of investment projects. Implement a project in any of the business sectors contained in the List of Priority Business Activities for investment projects (approved by the Government) Preferences under investment projects (including investment priority projects) Exemption from customs duties Customs duties 0% up to 5 years on imported: major equipment and spare parts to it; accessories, raw materials and (or) materials. The state grants in kind Free land, buildings, structures, machinery and equipment, etc. 2 3 4 Implement a project in any of the business sectors contained in the List of Priority Business Activities for investment priority projects (approved by the Government) A newly established legal entity The state registration of such legal entity has been completed not earlier than 24 months before filing an application for the investment preferences Investments volume not less than twomillion-fold rate of MCI Preferences under investment priority projects Tax preferences Corporate income tax (up to 10 years depends on the contract) Land tax (up to 10 years, depends on the contract) Property tax (up to 8 years, depends on the contract) 0% Investment subsidy Reimbursement up to 30 % of actual costs of construction and installation works and purchase of equipment Stability of Investment Contracts Special conditions for attraction of foreign labour force Investment Ombudsman The purpose of the Investment Ombudsman is to protect the rights and legitimate interests of foreign investors in Kazakhstan. 5
Investment attractiveness of Kazakhstan Government support - Investment incentives in Special Economic Zones Kazakhstan has created 10 special economic zones with specific industry focus: 1. «Astana - new city» SEZ - Mixed 2. «Saryarka» SEZ - Metallurgy 3. «Burabai» SEZ - Tourism 4. «NIPT» SEZ - Petrochemical industry 5. «Seaport Aktau» SEZ - Mixed 6. «Pavlodar» SEZ - Petrochemical industry 7. «Khorgos Eastern Gate» SEZ - Logistics 8. «Chemical Park Taraz» SEZ - Chemical industry 9. «Ontystik» SEZ - Textile industry 10. «Park of Innovative Technologies» SEZ- IT and Innovations «NIPT» SEZ «Seaport Aktau» SEZ «Ontystik» SEZ «Burabai» SEZ «Astana - new city» SEZ «Saryarka» SEZ «Chemical Park Taraz» SEZ «Pavlodar» SEZ «Khorgos Eastern Gate» SEZ «Park of Innovative Technologies» SEZ Investment incentives in SEZs Criteria: 1. Registration as a SEZ member and as a taxpayer in the SEZ; 2. Absence of structural subdivisions outside the SEZ; 3. Income from the sale of own-produced goods under the SEZ priority activities will be at least 90% of the total annual income (for the "Part of Innovative Technologies" SEZ 70%). 4. For Social tax, payroll expenses will be at least 50% of annual revenue and 90% of payroll expenses will be expended on Kazakhstan residents participants of the "Park of Innovative Technologies" SEZ. FISCAL INCENTIVES EXEMPTION FROM THE CUSTOMS DUTIES NON-FISCAL INCENTIVES 6 Corporate income tax Land tax Property tax 0 % Social Tax (for 5 years) Exemption from the VAT (for products consumed in SEZ) Exemption from customs duties for goods imported into the SEZ territory and exported* from the SEZ territory to the rest of the customs territory of the Customs Union (CU). *CU commodities produced (processed) by SEZ residents registered before January 1, 2012 with the use of imported components, but recognized as EAEU products, are not subject to customs duties until January 1, 2017 Free plot of land for the entire period of existence of a SEZ Simplified procedure for employment of foreign labor
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Useful Links Ministry of Investment and Development of the RK www.mid.gov.kz Electronic Government www.egov.kz National Export and Investment Agency «KAZNEX INVEST» www.kaznexinvest.kz www.facebook.com/kaznexinvest National Investment Internet Resource www.invest.gov.kz 8
National Export & Investment Agency KAZNEX INVEST Ministry of Investment and Development Thank you for your attention 9
Disclaimer This presentation (the "Presentation") and the information contained herein (the "Information") are being delivered by KAZNEX INVEST, for the sole purpose of providing certain summary information about investment climate and government support provided for investors. The Information has been compiled by KAZNEX INVEST as from sources believed by KAZNEX INVEST to be reliable, but has not been independently verified or audited. Under no circumstances should a recipient of this Presentation assume that the Information is correct. This Presentation is not, and under no circumstances is it to be construed as, a prospectus or an advertisement and no offer or solicitation of an offer for an interest is being made by the communication of this Presentation and the Information. This Presentation is being provided on an "information only" basis and no reliance should be placed upon the Information by any person. The Information is not to be relied on in any manner as legal, tax or investment advice. This Presentation may not be accepted or used by any person in any jurisdiction where receipt or use thereof would be contrary to law or would subject KAZNEX INVEST to any licensing or registration requirements. It is the responsibility of each recipient of this Presentation to satisfy itself as to full compliance with the applicable laws and regulations of any relevant jurisdiction. No person has been authorized to make any statement concerning KAZNEX INVEST other than as set forth in this Presentation and any such statements, if made, may not be relied upon. No representation, warranty or undertaking (express or implied) is given, and no responsibility is accepted as to the adequacy, accuracy, completeness, currency or reasonableness of the Information, or any oral or other communication in connection with the Information, by KAZNEX INVEST and accordingly KAZNEX INVEST will not be liable (except in the case of fraud) for the consequences of reliance upon the Information or for any omissions from this Presentation. KAZNEX INVEST shall be under no obligation to update or correct any inaccuracy in this Presentation. 10 11