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Why Kazakhstan is attractive for foreign investors?

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Title: Why Kazakhstan is attractive for foreign investors?


1
Why Kazakhstan is attractive for foreign
investors?
National Export Investment Agency KAZNEX
INVEST Ministry of Investment and Development
2
Stable macroeconomic indicators and high growth
GDP per capita (ths.USD)
GDP (bln.USD)
GDP growth ()
GDP from 1999 to 2013 increased by 14 times
GDP per capita from 1999 to 2013 increased by 12
times
Inflation ()
Unemployment rate ()
Birth rate (per 1000 people)
Unemployment rate from 1999 to 2013 decreased by
8
Inflation from 1999 to 2013 decreased by 13
Gross International Reserves and Assets of the
National Fund of RK (bln.USD)
Government External Debt to GDP ()
Average monthly nominal wage (USD)
Government External Debt decreased by 14
Average monthly nominal wage increased by 7.2
times
The total amount of gross FDI from 2005 to 2013
amounted to 184 billion. Herewith, the average
annual growth rate of gross FDI is 17.4.
Free exchange
Exchange rate regime - floating
Source The National Bank of Kazakhstan,
Committee on Statistics of the Ministry of
National Economy of RK, IMF
3
Natural resources
Kazakhstan in the world ranking for reserves
Kazakhstan in the world ranking for mining
4
Political stability and good investment climate
PROTECTION OF FOREIGN INVESTMENTS
Doing Business 2015 Italy - 56 Russia -
62 Kazakhstan 77 rank China - 90
The Global Competitiveness Index 2014-2015 China
28 Italy 49 Kazakhstan 50 rank Russia 53
Platforms for dialogue between public authorities and investor Platforms for dialogue between public authorities and investor
Foreign Investors Council chaired by the President on strategic issues
Council for improvement of investment climate chaired by the Prime Minister on systemic issues
Investment Ombudsman chaired by the Minister on Investments and Development on current problems of investors
Protecting Minority Investors Italy - 21
Kazakhstan 25 rank Russia 100 China 132
Protecting Investors Kazakhstan 22 rank Italy
- 45 China 83 Russia 98
Trust in political institutions index China
26 Kazakhstan 34 rank Russia 74 Italy 139
Taxation Kazakhstan 17 rank Russia
49 China 120 Italy 141
5
Priority sectors
1
2
3
Metallurgical complex
Food processing industry
Oil refining complex
1. Ferrous metallurgy 2. Non-ferrous metallurgy
3. Oil refining 4. Petrochemistry
5. Manufacture of food products
4
5
6
Chemical industry
Industrial production
Production of construction materials
8. Manufacture of motor vehicles 9. Electrical
equipment 10. Agricultural machinery
engineering 11. Railway machinery engineering
12. Mining equipment 13. Oil producing
equipment oil and gas refining equipment
14. Production of construction materials
6. Agrochemistry 7. Production of chemicals for
industry
6
Industrial niches
MMC - 12,7 bln.
Chemical Industry - 1,7 bln.
Machinery Industry - 10,3 bln.
0,6
Domestic production
Domestic production
Import
Domestic production
Import
Import
Construction materials - 1,3 bln.
Foodstuffs - 3,8 bln.
Import
Import
1,2
2,6
Domestic production
Domestic production
Petroleum refining - 1,7 bln.
Petrochemicals - 0,5 bln.
Domestic production
Import
0,6
1,1
Import
Domestic production
7
Support for investors
SPECIAL ECONOMIC ZONES
INVESTMENT PREFERENCES
Tax benefits
Customs privileges
CIT 0 Land tax 0 Property tax 0 VAT 0
(on all goods completely consumed in the
production process)
Exemption from customs duties for  goods imported
into SEZ territory
Tax benefits
  • CIT 0 10 years
  • Land tax 0 10 years
  • Property tax 0 8 years

Investment reimbursement
Up to 30 of construction and installation works
and equipment
Other privileges
Providing the land in the territory of the SEZ
for a period of up to 10 years
Customs privileges
  • Customs duties 0 on the import of
  • equipment and its components,
  • spare parts,
  • raw materials and supplies.

Simplified procedure for recruiting foreign
workers
The "one window" principle for the investor and
service support for investment
State in-kind grants
Land plots, buildings, machinery and equipment
in property.
Assistance in obtaining the required approvals
and permits
Provision of services to foreign investors and
representatives of Kazakhstan business
Migration benefits
The right to employ foreign labor without quotas
and permits Visa-free travel for citizens of 10
countries
Information, consulting, organizational and other
assistance to the investor
Support for investment project till the start of
the production
for priority investment projects
Priority types of activities 1. Metallurgy 2.
Oil refining 3. Food production 4. Chemical
industry 5. Machinery industry 6. Production of
construction materials
8
Industries
2010-2014
2015-2019
Machinery
  • SKD assembly of motor vehicles

Production of car parts and accessories
Automobile production
  • CKD assembly of motor vehicles

Railway machinery engineering
Manufacture of electric motors, increasing
localization
Production of locomotives and wagons
Machinery for mining, quarrying
Production of equipment
Production of equipment
Other industrial machinery
Production of helicopters
Production of combines and tractors
The production of chemical additives, sodium
hexametaphosphate industrial gases, sulphuric
acid, ammonia and ammonium nitrate
The production of ethanol based on the processing
of the industrial gases, the production of
bioethanol from spent grain, mixing special
chemicals for oil extraction and refining
Chemical industry
Professional training, production of generic
products
Professional training, production of generics and
original medicines
Pharmaceutical industry
9
Market of the macro-region
Kazakhstan is a member of Customs Union with
Russia and Belarus - free trading without
customs duties - access to population over 170
mln. people
1st level Border regions of Russia
3d level Western regions of China
  • 2nd level
  • Russia
  • Ukraine
  • Belarus
  • 5th level
  • Iran
  • Azerbaijan and other Caucasian countries
  • 4th level
  • China
  • Uzbekistan
  • Tajikistan
  • Turkmenistan
  • Kyrgyzstan

10
Infrastructure
LOCATION AND INFRASTRUCTURE
St. Petersburg
RUSSIAN FEDERATION 143.5 mln.
BELARUS 9.5 mln.
KAZAKHSTAN 17 mln.
Aktobe
MONGOLIA 2.8 mln.
Shymkent
KYRGYZSTAN 5.7 mln.
UZBEKISTAN 30.2 mln.
TURKEY 74.9 mln.
TURKMENISTAN 5.2 mln.
PEOPLES REPUBLIC OF CHINA 1.4 bln.
Lianyungang
IRAN 77.4 mln.
PAKISTAN 182.1 mln.
INDIA 1.3 bln.
  • The Kazakhstans geographical position makes it a
    natural crossroads for major transit corridors
    from Asia to Europe.
  • The transcontinental automobile road corridor
    Western Europe Western China passes through
    the territory of Kazakhstan. The corridor will
    allow to deliver freights from China to Europe in
    10 days.
  • There is a territory with population of more than
    3.3 bln. people within a radius of 2 thsd. km
    from Kazakhstan
  • The flight time from most European destinations
    is five hours.

Western Europe Western China corridor (8,445
km)
Western Europe Western China corridor on the
territory of Kazakhstan (2,787 km)
11
Infrastructure
CONSTRUCTION OF TRANSPORT AND LOGISTICS
INFRASTRUCTURE
EUROPE, RUSSIAN FEDERATION
CHINA
IRAN
TURKMENISTAN, IRAN
Population
Electrified, high-speed line (1,320 km )
Freight and passenger line
100 000 200 000
500 000 1 000 000
Constructed in 2010-2014
Western Europe Western China corridor (2,787
km)
gt 1 000 000
200 000 500 000
12
METALLURGY
Priority types of activities
Market potential, US mln.
Prerequisites for development
  • Availability of raw material base
  • Explored iron ore reserves of 30 deposits reach
    9.1 bln. tons, previously assessed - 15 bln.
    tons, prospective - 15 bln. tons
  • Copper reserves are estimated at 37 mln. tons
    (5.5 of world reserves)
  • Prospective resources of aluminum (bauxite) in
    Kazakhstan are estimated at 809 mln. tons
  • Nickel reserves are estimated at 1,4 mln. tons.

Level of labor productivity - In 2013 labor
productivity in the iron and steel industry
amounted to US89.9 thousand. - In 2013 labor
productivity in the nonferrous-metals industry
amounted to US107.8 thousand.
Major players JSC ArcelorMittal Temirtau LLP KSP
STEEL Temirtau LLP Casting LLP ALZ LLP
Kazakhmys Corporation JSC Kazakhstan Aluminium
Smelter LLP GRK Kaznickel LLP Kazzinc LLP ENRC

Provision of industrial infrastructure The
projects are fully provided with industrial
infrastructure
  • - Production of cast iron, steel and ferroalloys.
  • - Production of pipes, tubing, profiles, steel
    fittings.
  • - Cold drawing (production of steel rod and whole
    workpiece).
  • - Cold rolling of tapes and narrow strips.
  • Cold forming or seaming.

- Production of wire by cold drawing. -
Production of precious metals. - Production of
aluminum products - Production of lead, zinc and
tin products - Production of copper products -
Production of other nonferrous metals products
macro-region Kyrgyzstan, Uzbekistan,
Tajikistan, Turkmenistan, Armenia, Azerbaijan,
Georgia, Iran, Ukraine, the Russian Federation,
Republic of Belarus, China.
13
Priority types of activities
CHEMISTRY
Market potential, US mln.
Paints, varnishes and similar colorings,
typographical paint
Potassium chloride
Dyes and pigments
Other chemical products
MAP/DAP
Prerequisites for development
  • Availability of raw material base
  • Available reserves of phosphate ore (more than 8
    bln. tons), potassium salts (6.5 bln. tons) and
    natural gas (1.8 trln. cubic meters).
  • - Available reserves of common salt (more than
    144 mln. tons), oil (3.9 bln. tons) and natural
    gas (1.8 trln. cubic meters).

Level of labor productivity - In 2013 labor
productivity in agricultural chemistry amounted
to US101 thousand per person. - In 2013 labor
productivity in the production of chemical
products for industries amounted to US45
thousand per person.
Major players LLC Kazphosphate LLP Kazazot JSC
Aktobe chromium compounds plant LLP Ulba
Fluorine Complex.
Provision of industrial infrastructure Aktobe
region - infrastructure to the minefields was
carried out by companies LLP Chilisai Chemicals
and LLP Batys Kali. SEZ Taraz - all the
necessary infrastructure will be carried out. SEZ
Pavlodar - all the necessary infrastructure will
be carried out.
- Production of fertilizers and nitrogen
compounds. - Production of pesticides and other
agrochemical products. - Production of
industrial gases. - Production of dyes and
pigments.
- Production of primary inorganic compounds. -
Production of paints, varnishes and similar
colorings. - Production of soap and washing,
cleaning and polishing agents. - Production of
explosives.
macro-region Kyrgyzstan, Uzbekistan,
Tajikistan, Turkmenistan, Armenia, Azerbaijan,
Georgia, Iran, Ukraine, the Russian Federation,
Republic of Belarus, China.
14
Priority types of activities
OIL REFINING AND PETROCHEMICALS
Market potential, US mln.
Bitumen, propane, butane, refinery coke
Plastics, synthetic rubber in primary forms
Other liquefied petroleum gases and similar
products
Prerequisites for development
Availability of raw material base - Available
reserves of oil - (3.9 bln. tons) - Available
reserves of natural gas (1.8 trln. cubic
meters)
Level of labor productivity - In 2013 labor
productivity in petrochemical industry amounted
to US36 thousand per person.
Major players LLC United Chemical Company LLP
Nephtechim LTD
Provision of industrial infrastructure SEZ
National Industrial Technopark - all the
necessary infrastructure will be carried out.

- Production of refined petroleum products -
Production of other basic organic chemicals.
- Production of plastics in primary forms -
Production of synthetic rubber in primary form
macro-region Kyrgyzstan, Uzbekistan,
Tajikistan, Turkmenistan, Armenia, Azerbaijan,
Georgia, Iran, Ukraine, the Russian Federation,
Republic of Belarus, China.
15
Priority types of activities
MACHINERY INDUSTRY
Market potential, US mln.
Motor vehicles, their parts, accessories and
engines
Machinery and equipment for oil refining and
petroleum industry
Machinery and equipment for mining industry
Electrical equipment
Agricultural machinery
Railway machinery
Prerequisites for development
Availability of raw materials base - The
components for production are available.
Provision of industrial infrastructure - The
required industrial infrastructure is available.
Level of labor productivity In 2013 labor
productivity was (USthousand/per person) -in
production of motor vehicles 170.5 -in
production of electric equipment 34.6 -in
production of agricultural machinery 60.8 -in
production of railway machinery 70.3 -in
production of machinery and equipment for mining
industry 17.2 -in production of machinery and
equipment for oil refining and petroleum industry
- 20.1
Major players JSC AZIA AVTO
JSC Agromash Holding LLP SaryarkaAutoProm LLP
 Hyundai Auto Trans JSC Kentau Transformer
Plant LLP KAZCENTRELECTROPROVOD JSC
Kazenergokabel LLP Almaty Ventilation
Plant LLP RIG LLP Kainar AKB LLP Zhersu
Power JSC KEMONT LLP SemAZ LLP
Agrotechmash
JSC Semipalatinsk Machine Building
Plant LLP Dormash JSC Lokomotiv Kurastyru
Zauyty LLP Electric Kurastyru Zauyty LLP
Tulpar Talgo LLP Kazakhstan Wagon Company JSC
ZIKSTO JSC Stepnogorsk Bearing
Plant Karaganda Machine Building Plant after
Parkhomenko Almaty Heavy Machine Building
Plant JSC Vostokmashzavod JSC Munaimash LLP
Byelkamit JSC Petropavlovsk Heavy Machine
Building Plant
  • - Production of motor vehicles
  • - Production of autobodies for vehicles, trailers
    and semi-trailers
  • - Production of electrical and electronic
    equipment for vehicles
  • - Production of other parts and supplies of
    vehicles and their engines
  • - Production of electric motors, generators and
    transformers
  • - Production of electric distributing and
    regulative apparatus
  • - Production of electrical appliance
  • - Production of other types of electrical wire
    and cable
  • - Production of electric lighting equipment
  • - Production of engines and turbines, except
    aircraft, automobile and motorcycle engines
  • - Production of agricultural and forestry
    machinery
  • - Production of railway locomotives and mobile
    train, as well as components for railway
    engineering
  • - Production of machinery and equipment for
    metallurgy
  • - Production of machinery for mineral resource
    industry, underground operation and construction
  • - Production of other machines and equipment for
    special purpose, not included into other groups
  • - Production of hydraulic equipment
  • - Production of pumps, compressors, plugs and
    valves
  • - Production of taps and valves
  • - Production of other machines and equipment for
    general and special purpose, not included into
    other groups

macro-region Kyrgyzstan, Uzbekistan,
Tajikistan, Turkmenistan, Armenia, Azerbaijan,
Georgia, Iran, Ukraine, the Russian Federation,
Republic of Belarus, China.
16
Priority types of activities
PRODUCTION OF CONSTRUCTION MATERIALS
Market potential, US mln.
Formation and processing of flat glass
Fiberglass
Prerequisites for development
Availability of raw material base The raw
materials for flat glass such as quartz sand and
soda ash arent available. Fiberglass is made of
molten glass. Raw materials - sand, dolomite,
soda ash, cullet.
Level of labor productivity In 2013 labor
productivity in the production of construction
materials amounted to US39.0 thousand.
Major players LLP KazStroySteklo.
Provision of industrial infrastructure Deposit of
quartz sand Aysarinskoe in the North Kazakhstan
Region (the preparation plant is available),
Mugojarskoe in Aktobe, Aral field in Kyzylorda
and Pavlodar region.
- Production of veneer, plywood, slabs and
panels. - Production of plastic construction
materials. - Production of other non-metallic
mineral products.
macro-region Kyrgyzstan, Uzbekistan,
Tajikistan, Turkmenistan, Armenia, Azerbaijan,
Georgia, Iran, Ukraine, the Russian Federation,
Republic of Belarus, China.
17
Priority types of activities
FOOD PRODUCTION
Market potential, US mln.
Meat products
Milk products
Pasta, flour products, confectionery
Baby food
Vegetables and fruits
Priority Sectors in the frame of Law on
Investments
Priority Sectors in the frame development program
Agribusiness 2020
  • - Processing and preserving of meat
  • - Milk processing and cheese production
  • - Production of  flour-and-cereals industry
  • - Production of bread production of fresh flour
    confectionery goods and cakes
  • - Production of cocoa, chocolate and sugar
    confectionery goods
  • - Processing and preserving of fish
  • - Production of edible oils
  • - Products of milling industry starch products

- Meat processing sausages and preserved meat -
Milk processing (milk powder, butter, cheese and
quark) - Sugar production - Production of
edible oils - Production of processed vegetables
and fruits - Processing of wool and leather
  • Agribusiness 2020 development program also
    include state support measures as Investment
    subsidies, interest rate subsidies on loans and
    leasing, financial recovery program, subsidies to
    purchase the raw materials (milk and sugar beat)
  • Meat, milk, fish, grain and oilseeds production
    also included to priority sectors of Agribusiness
    2020.

macro-region Kyrgyzstan, Uzbekistan,
Tajikistan, Turkmenistan, Armenia, Azerbaijan,
Georgia, Iran, Ukraine, the Russian Federation,
Republic of Belarus, China.
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