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KazakhstanBusiness opportunities

KazakhstanBusiness opportunities

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Published by Vitaly Afanasyev

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Published by: Vitaly Afanasyev on Mar 18, 2011
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KAZAKHSTAN: New Opportunities for Business

Did You Know That Kazakhstan… ?
 has some 3% of the world’s raw materials and natural resource base of over $300,000 per capita (among the highest in the world, twice the level of Russia, higher than Australia)


 has oil reserves per capita which are 5  has tripled its oil production since times as high as in Russia and higher than 1990 in Iran

 more than tripled its gas production  mined around 25% of the world’s from 12 bln. m³ in 2000 to 39 bln. m³ in uranium in 2009, making it the world’s 2009 largest producer

 produced 20 mln tones of grain in 2009 which made country the 6th largest producer and the 7th largest exporter of grain worldwide  has 4% of the world’s total chrome reserves accounting 15% of global production

 has 4% of the global iron reserves

 has 8% of the world’s total zinc reserves

 saw $50 bln of FDI over 1998-2008, more than the $43 bln invested in Russia

 according to WB data, has $11,526 per  has made major strides in the last capita GDP and $5,021 per capita FDI (a couple of years in the Transparency level comparable with Central Europe) International ratings, moving 30 places up the ranks  Kazakhstan is 8th for the number of doctors, nurses and hospital beds available per capita, and 97% of the population has access to adequate sanitation systems.

 according to Doing Business 2011,  according to Britain-based Legatum among the world's economies Kazakhstan Institute, Kazakhstan is 42nd in education improved business regulation the most and 16th for the average workers in the past year. As a result, it moved up acquiring secondary education. Literacy 15 places in the rankings on the ease of rate is 99.7%. doing business -to 59 among 183 economies.


353 * sources: National Bank.5 107.313 (F) 7. net ($ mln) 2003 30.9 7.8 9.966 2008 133.3 billion USD • Many economists expected crisis-hit Kazakhstan's economy to shrink.3** 5. on the contrary.279 33.699 7.0 10.8 7. Ministry of Economic Development and Trade ** source: World Bank *** as of January-September 2010 3 .1 96. the country demonstrated seemingly small growth in 2009 (1.9 10.117 2006 81.353 9.783 2009 115.5 8.4 2. focused and forward-looking government policy • Kazakhstan is committing significant effort to diversify its economy • Kazakhstan strives to increase transparency in business practices Macroeconomic indicators* Nominal GDP ($ bn) Real GDP growth (%) GDP per capita (current $ at PPP) ** Consumer price inflation (end-period.4 3.895 18.6 6. %) Recorded unemployment (average.2 11.526 6.501 2010 1H62.321 15.839 8.5 114.3 1.7 2.6 22.7 -4.1 -1. %) Current account balance ($ mln) Trade balance ($ bln) External debt ($ bln) Foreign direct investments.2 10.7 14.7 9.1 9.3 43.6 7.7 8.213 2004 43.3 11.9 8.9 8.808 6.3 -8.2 9.9 4.7 8.Kazakhstan: Economy Overview логотип  Significant achievements due to economic reforms.2 113.4 335 6.436 2005 57.8 -1.663 2007 104.8 5. which is considered as a great success.056 10.2%) and stable 4.2 6.8 -273 3.923 16.7 32.248 15.5 6.7% growth in the 1st half of 2010.0 6. but.  Stable.8 6. political stability and natural resources • GDP in 2009 reached $115.0 11. as most of the CIS countries have experienced a decrease in their GDPs.999 14.8 8.4 7.6 74.6 6.742 6.

the Government promptly developed the Plan of Antirecessionary Measures for 2007-2008 and began its immediate implementation. 4 . agriculture sector and innovation-driven industrial projects. the Government approved Anti-Crisis Program with a focus on five vectors: financial sector. all branches of the economy were affected Government’s response:  In autumn 2007.The Global Financial Crisis and Kazakhstan логотип Impact of the global financial crisis on the Kazakhstan’s economy: In September 2007. mostly in the following sectors of economy:  Financial sector  Small and middle-sized business  Housing construction  Agro-industrial sector …as a consequence. Kazakhstan fully experienced the impact of the world crisis. support to SME.$20 bln (14% of the country’s GDP).  Total value of the stimulus programs . real estate market.  In autumn 2008.

10.2% 01. and the three problematic banks have successfully finished their restructuring.1% Volume of banks’ assets in NB Banking system gross external debt 22.5 USD bln 17 USD bln 9. the banking system of Kazakhstan has showed its solvency.7% логотип Banks’ liquidity (% of total assets) 14.1 USD bln 41.2010 6.2008 18. 5 .6 USD bln In addition.Results of the restructuring from macro-point of view Indicator Inflation (y-o-y) 01.10.6% 10.

9 % 5.0 % 5.5% 0.8 % 4.0% 19.4 % 1.9 % 13.Key Outcomes of the Anti-Crisis Package логотип Significant growth of economic indicators was realized during the 1st half of 2010 in several industries: Industrial production Crude oil production Natural gas production Coal production Iron production Processing industry Agriculture Mining 11.1% 72.4% 10.3 % 5.1% 6 .0 % 25.2% 10.1 % 6.3% 13.8% Foreign trade turnover Export Cargo turnover Passenger traffic Communication services Retail sales Wholesale turnover Construction works 40.

000 temporary and 90.000 permanent jobs are expected to be created        7 .Diversification of Economy логотип Kazakhstan aims to achieve sustainable and balanced development of its economy in the next 10 years through :  diversification and enhancing its competitiveness  advancing social effectiveness of priority sectors  implementing investment projects which create a favorable environment for industrialization  building up centers of economic growth on the basis of rational territorial organization  ensuring effective interaction between government and business Primary Goals of the Program of Accelerated Industrial-Innovative Development (AIID) for 2010-2014: GDP growth by 50% from the level of 2008 Labor productivity increase in manufacturing industry by 50 % and in separate sectors by 100 % Increase proportion of non-oil and gas exports by 40% Reduction of energy intensity of GDP no less than 10% from the level of 2008 Increase of active enterprises up to 10 % from number of operating enterprises The key mechanism of the AIID is the Map of Industrialization Envisages 101 industrial projects worth 6.8 trillion tenge More than 130.

($47.6 bln.Boosted Industrial-Innovative Development Program 2010-2014 Agriculture 2015 – 8% export share of agricultural products Gross Value Added+16% 10000 new jobs логотип Construction and Construction Materials 2015 – 80% of demand by domestic production Gross Value Added+76% Chemical and pharmaceutical Industry 2014 – 50% of demand by domestic production Refining and O&G Infrastructure Development 2014 – 100% of demand by domestic oil products Gross Value Added+30% Energy including renewables 2015 – 10% decrease of economy’s energy intensity Metallurgy 2015 – twofold production and export Gross Value Added+107% Transport and Telecommunications boost for new production across all sectors Gross Value Added+63% Total Gross Value Added+over KZT 7 trn.) 134 projects are scheduled for 2010-2011 2011-2014 are still ahead 8 .

construction. Land tax up to 5 years. Maximum volume of state grants in kind should not exceed more than 30% of investments in fixed assets.State support of investment логотип Investment tax preferences a) b) c) Corporate income tax up to 10 years. 9 . machines and equipment and so on. building. Investment preferences Custom duty exemption Can be granted when investor imports equipment or parts to implement the investment project State grants in kind Can be granted as a plot of land. Property tax up to 5 years.

marine freight) Ontustyk (textile industry. software) Company established in Free economic zone is exempted not only from paying corporate. business) Atyrau Burabay (tourism cluster) Petrochemical Park (petrochemical industry) Marine port Aktau (naval transportation. agriculture) IT-Park ‘Alatau’ (hi-tech. 10 . land and property taxes but also from value-added tax.Special economic zones operating in Kazakhstan логотип Burabay Astana – New City (construction materials.

made. Exemption for up to 10 years from payment of land tenure in SEZ territory. Customs-free policy.Special Economic Zones логотип Members of SEZ enjoy the following privileges: Corporate income tax exemption. warehouses) intended for activities related to SEZ creation. an additional benefit will be introduced: 100% exemption from corporate income tax. For the SEZ “Astana – New City”. From 2011. Application of the 0% rate to the mid-year cost of taxable objects when calculating property tax. VAT exemption on goods and services given on SEZ territories. for the SEZ “Information Technology Park”: 5-year Social Security tax exemption. VAT exemption on building and civil works for administrative and industrial facilities (offices. Taxation rate of less than 0% when calculating ground tax. or consumed in activities related to SEZ creation. Increase from 15% to 40% in the marginal rate of depreciation used for IT software. industrial buildings. “One-stop shop” service to SEZ members. Introduction of a special process for importing foreign labor to SEZ territory. SEZ members enjoy extra benefits under the new law “On SEZ”: VAT at a rate of 0% for goods consumed in activities to be determined by the government. 11 .

Main investors of the Republic of Kazakhstan (inflow of FDI in 1993 – 1H2010) логотип Yes. the US is one of the top investors to Kazakhstan 12 .

again. focus is on extractive sector 13 .Structure of gross inflow of FDI (inflow of FDI in 1993 – 1H2010) логотип …but .

14 . effective from January 1st 2010  Customs Code of the Customs Union. Russia and Belarus signed final agreements on the trilateral Customs Union. 2009 leaders of Kazakhstan. effective as of July 2011. effective from January 1st 2010  Common external tariff between members of Customs Union. effective from July 2010.  Further economic integration process assumes that CU memberstates will reach unified customs territory that will include free movement of labor and capital.Customs Union with Russia and Belarus логотип  On November 27.

5% . 2014 15 . 2009  17. Type of tax Corporate income tax Value added tax Republic of Kazakhstan 20% 12% Russian Federation 20% 18% Republic of Belarus 24% 20%  Corporate tax will be gradually reduced:  20% . 2013  15% .since January 1st .since January 1st .Favorable Tax Legislation логотип  Kazakhstan has the most liberal tax regime among the countries of the Customs Union.since January 1st .

WTO accession remains to be a priority логотип Entering WTO Creation of Customs Union Kazakhstan began the process of accession to the WTO in January 1996 since the official application for the accession WTO and CU negotiations moved in parallel. Negotiations with the US on goods market access have been finalized. 16 . Negotiations with the United States and European Union are at the final stage. The pace for creating the CU showed more flexibility from the Governments of Russia and Belarus. Establishment of CU doesn’t “close WTO doors”. Kazakhstan has continued its individual track.

ifk.kz) ‘KazAgro’ National Holding (www.samruk-kazyna.damu.kz National Export and Investment Agency ‘KAZNEX INVEST’ www.kz www.kz SME Development Fund ‘DAMU’ www.mit.Official Points of Contact логотип Ministry of Industry and New Technologies (www.kaznex.kz) Development Bank of Kazakhstan www.kz www.kecic.kazinvest.nif.kz www.kz Export credit Investment Portal Investment Fund National Insurance Corporation of Kazakhstan Innovation Fund ‘Kazinvest’ ‘KazExportGarant’ www.kz 17 .kz) ‘Samruk-Kazyna’ National Welfare Fund (www. nhkazagro.kdb.

Kazyna is aimed to sustain the development of national economy and stabilization of financial system Samruk-Kazyna defines strategy for state owned assets and is the main instrument for implementation of government policies  Key player of the industrial and innovation development program  Promotion and implementation of large-scale investment projects in the framework of the diversification of the economy  Implementation of effective corporate governance according to the best international practices in corporate management and financial control  Effective tool in implementation of the Anti-crisis program: – primary role in stabilization of financial sector by means of direct participation in 4 largest commercial banks of the country – primary role in stabilization of the real estate market – direct support of the small and medium size businesses – manages mortgage refinance program 18 .Samruk-Kazyna National Welfare Fund логотип Established in the midst of the global economic crisis Samruk.

Foreign Investors Council chaired by the President of Kazakhstan логотип 19 .

3 BASIC REASONS TO INVEST. Markets  Hub Europe <-> Asia  Large & fast growing neighbor markets (up to 500 million consumers) 20 . Favorable Investment Climate Natural resources  Political & social stability  State support and guarantee of investments (Kazakhstan has signed agreements on mutual investment protection)  Large mineral & renewable reserves (#1 Uranium Producer in the world) 3. TRADE AND PRODUCE IN KAZAKHSTAN логотип 1. 2.

EMBASSY OF THE REPUBLIC OF KAZAKHSTAN TO THE UNITED STATES OF AMERICA Thank you for your attention! www.com .kazakhembus.

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