National Export and Investment Agency «KAZNEX INVEST» Ministry of Industry and New Technologies of the Republic of Kazakhstan

Creating favourable conditions for your businessinv

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annual report

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CoNTENT

Message from the Minister of Industry and New Technologies of the Republic of Kazakhstan A. Issekeshev ..........................................................................4

Message from the Chairman of the Board Y. Arinov ............................................................ 6

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ABOUT COMPANY ..............................................................................................................................9 Strategy and Mission.........................................................................................................10 Business Model ...................................................................................................................11 Organizational structure of KAZNEX INVEST...........................................................12

EXPORT DEVELOPMENT AND PROMOTION ..........................................................................15Trainings .................................................................................................................................18Printed Publications ...........................................................................................................19Assistance in Domestic Exporters Problem Solving ..............................................20Export Packing Development ........................................................................................21Exporter Costs Reimbursement ....................................................................................23Export Promotion Activities ............................................................................................24Analytical Export Platform ..............................................................................................30Creation of an «Export-Orientation» Ideology .......................................................31

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FDI ATTRACTION ..............................................................................................................................35Investment Image Promotion of the Republic of Kazakhstan...........................37Support for Investors ........................................................................................................40FDI Attraction Results .......................................................................................................42

SPECIAL ECONOMIC ZONE DEVELOPMENT ..........................................................................47

CORPORATE GOVERNANCE .........................................................................................................51Board of Directors ..............................................................................................................52Governing Board .................................................................................................................54Dividend Policy ....................................................................................................................56Information Disclosure .....................................................................................................56Risk Management...............................................................................................................57Personnel Policy ..................................................................................................................58 C

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The implementation of a State Program to stimulate Industrial-Innovative Development will allow us to maintain international competitiveness and ensure effective economy growth.

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Message from the Minister of Industry and New Technologies of the Republic of Kazakhstan A. Issekeshev

Ladies and gentlemen!

A number of government programs have recently been launched to support entrepreneurs nationwide. The «Exporter» program covers more than 1500 companies, and, according to the «Business Rode Map», more than 36,000 entrepreneurs have received state support. The investment support program has helped to attract nearly $13 billion of foreign direct investment (FDI) into the non-raw materials sector. Since 2005 it has accounted for 68 percent of all FDI to the sector.

By the end of 2013 more than 600 Industrialization Map projects had been put into operation across all industries in Kazakhstan, which a further 125 being introduced this year. In total, economic production from companies taking part in the SPFIID program has reached 2.5 trillion tenge, with more than 60 companies having exported goods and services worth 126 billion tenge.

Established projects play a multifaceted role in regional development, the growth of related industries and in the creation of new jobs. Over the past 4 years employment in the economical sector has risen by more than 500,000 with growth of approximately 100, 000 in the industrial sector. 50, 000 permanent jobs have been created as a direct result of the Industrialization Map.

One of the main achievements of the program has been the growth of the non-raw exports, which has expanded to deliver to over 120 countries. Kazakhstan now sells transformers, bearings, metal pipes, fertilizer, flour, noodle and confection any products throughout the world. Cooperation with partners in the Customs Union has also improved.

The Ministry of Industry and New Technologies of the Republic of Kazakhstan explains low rates in certain sectors of industry due to the completion of the largest industrial facilities (chemical, metallurgical and engineering clusters) by 2015-2017. Nevertheless, it should be noted that a considerable number of these projects will be realized in the traditional sectors of the economy and they can be attributed to the industrial and innovative category only to some extent.

The activities of these institutions provide an effective dialogue platform between the government body and the investors, operating in Kazakhstan.

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All KAZNEX INVEST tools are finally formed within SPFIID. In addition, primarily export oriented industries are being established under the state program and there will be no profitability without them.

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Message from the Chairman of the Board Y. Arinov

Dear shareholders and partners!

National Export and Investment Agency «KAZNEX INVEST» under the State Program on Forced Industrial-Innovative Development is realizing large-scale tasks showing tangible growth in prosperity of the country.

In 2013, 61 presentations were made to promote Kazakhstan products abroad for more than 300 domestic companies, which helped to find both potential and accomplished customers of their products.

Over the past year the volume of manufactured goods export amounted to $3.8 billion. By our efforts solely export to $57.3 million was provided.

Summing up the results of activity upon FDI attraction in 2013, it may be noted that KAZNEX INVEST enticed 13 investors who decided to invest in Kazakhstan. In case of successful implementation of planned projects, the total amount will be about $500 million.

In the regional direction interaction with investor service centers and special economic zones (SEZs) was established. Along with promoting investment climate abroad, domestic cooperation mechanism with operating investors is being mapped out in the country. Thus, in 2013, a special service - Investors Support Center was established in KAZNEX INVEST. During the period of six months, 27 requests from investors in Kazakhstan were considered and 8 of them were successfully resolved.

Actions taken will certainly improve the investment competitiveness of our country in achieving the objectives set by the Head of State.

about company

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«National Export and Investment Agency «KAZNEX INVEST» JSC (KAZNEX INVEST) of the Ministry of Industry and New Technologies of the Republic of Kazakhstan is one of the national institutes of development serving to contribute to the diversification of the national economy by creating favorable conditions for development and promotion of Kazakhstan non-raw export and attracting foreign direct investment to the priority sectors.

KAZNEX INVEST operates within the framework of the State Program on Forced Industrial-Innovative Development of the Republic of Kazakhstan for 2010-2014.

Mission is the active assistance to the effective functioning of the national system for development and promotion of the domestic non-raw export and foreign direct investment attraction to the priority sectors of the economy.

Vision is a reputable organization involved in the diversification of the economy, with the established mechanism of work and professional team.

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ABoUT CoMPANY

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Business Model

KAZNEX INVEST business model is formed according to the strategic directions of development and reflects responsibilities distribution within the organization.

*KAZNEX INVEST is financed from the national budget and provides its services free of charge

Business Model of KAZNEX INVEST

Export Development

Export Promotion

Searching for and Accompanying

Foreign Investors

Investment Image Promotion of Kazakhstan

Special Economic Zone

Development (SEZ)

Exporter capacity building in foreign trade; export readiness defining; and assistance in solving problems.

Promoting processed products exporters of Kazakhstan in entering foreign markets by organizing participation of Kazakhstan enterprises in products and services promotion activities.

Search for and attracting investors, accompanying to the regions, as well as providing aftercare(post-investment support).

Presenting favorable investment climate of Kazakhstan.

Ensuring the implementation of the state policy in the SEZ management sphere of the Republic of Kazakhstan.

Tools*:

- consulting and service support;- exporter training;- costs reimbursement;- problem solving trough Export Council.

Tools:

- search for potential foreign buyers;- assistance in export strategies preparation;- matchmaking: missions, foreign exhibitions, trademarks promotion, etc.

Tools:

- search for potential investors;- information support for potential investors;- accompanying foreign investors at the meetings.

Tools:

- business forums and road-shows organization;- support of the National Investment Interactive Internet Resource of the Republic of Kazakhstan; - information and presentation support of investment attraction activity.

Tools:

- SEZ development monitoring;- participation in SEZ managing and developing;- SEZ participants attraction;- attraction of extra budget funding sources for SEZ infrastructure development.

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oRgANIZATIoNAl STRUCTURE oF KAZNEX INVEST

BoArD oF DIrEcTorS

Internal Audit Office

chairman

Deputy chairman

Coordination Department

Office 1Office of Managing

Director on Regional Cooperation

Center for Investors Protection

Analytical Department

Investment Image Promotion Department

Office 2

Office 3

Office 4

Department 5

Department 6

Sen

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Dire

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Deputy chairman

Representative office in Almaty

Managing Director

Managing Director

Office of Managing Director

on Export Promotion

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Office of Chairman

corporate Secretary

Representative office in China

Deputy chairman Deputy chairman

Export development Department

legal Support and Procurement Department

Corporate Development Department

ICS Department

Accounting and Reporting Department

Administrative Department

Export grants

Department

Export Strategies

Department

Export Analysis Department

Informational Support

Department

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Managing Director

Special Economic Zones

Development Department

Financial and Technical Analysis

of Special Economic Zones

Department

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export development and promotion

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EXPoRT DEVEloPMENT AND PRoMoTIoN

Prices drop of energy resources in 2013 is characterized by decrease in volumes in terms of value for 2% of crude oil. The notional value of one ton of exported Kazakhstan oil has decreased by 2% in comparison with the previous year and amounted to $810 per ton.

In general, the decline in 2013 export in comparison with 2012 was due to the volume decline of crude oil, as it was mentioned above, as well as 48% of gold ($861,5-445,8 million), 35% of silver ($987 - 643.7 million), 24% of coal ($752.3 - 571.1 million), 22% of wheat ($1580.7 - 1235 million), 15% of zinc ($535.2 - 455.6 million), 9% of flat rolled iron ($1273.7 -1162.4 million), 9% of ferroalloys ($1875.2 - 1715.7 million), 4% of wheat flour ($600.6 - 575 million), and 3% of ore and iron concentrate ($1612.9 - 1561.5 million). Products presented in the figure below, occupy 92% of the total export of the Republic of Kazakhstan.

The share of processed products decreased in total Kazakhstan export volume in 2013 and amounted to 23.7%.

The volume of processed export in 2013 in comparison with the previous year decreased by 9%, or $1.8 billion. The decrease happened due to the volume decrease of titanium export by 51%, 48% of gold, 35% of silver, 30% of flat rolled iron, 14% of uranium, 4% of wheat flour, etc.

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In 2013 Kazakhstan export amounted to $82.5 billion, which is 5% less in comparison with the last year. Exports of processed goods decreased by 9% to $19.5 billion and raw export by 3% and amounted to $63 billion.

Dynamics of Export Structure of the republic of Kazakhstan

$BILLIoN 2012 2013 GroWTH SHArEEXPoRT oF THE REPUBlIC oF KAZAKHSTAN

86,4 82,5 -5%

INClUDINg:PRIMARY gooDS 65,1 63,0 -3% 76%PRoCESSED gooDS 21,4 19,5 -9% 24%CoNSUMER gooDS 3,6 3,8 6% 20%INTERMEDIATE gooDS 16,8 14,7 -12% 75%MEANS oF PRoDUCTIoN 0,9 1,0 1% 5%

Source: KAZNEX INVEST on the basis of customs statistics of CCC of the Ministry of Finance of the Republic of Kazakhstan and ARKS

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16,8

3,6 3,8

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Dynamic of Processed Export of the republic of Kazakhstan, $billion

Processed Export Structure of the republic of Kazakhstan, $billion

2013 Geographic Structure of Export of the republic of Kazakhstan

Source: KAZNEX INVEST on the basis of customs statistics of CCC of the Ministry of Finance of the Republic of Kazakhstan and ARKS

Source: KAZNEX INVEST on the basis of customs statistics of CCC of the Ministry of Finance of the Republic of Kazakhstan and ARKS

Source: KAZNEX INVEST on the basis of customs statistics of CCC of the Ministry of Finance of the Republic of Kazakhstan and ARKS

A significant proportion in the structure of processed export is traditionally occupied by intermediate goods. 21,4

Processed

Consumer goodsIntermediate goodsMeans of Production

2012

2012

2013

2013

19,5Volume export of intermediate goods in 2013 comparing with the last year fell by 12% and amounted to $14.7 billion.

Consumer goods export in 2013 amounted to $3.8 billion and made 6% increase over 2012 results. The main export increase was due to rise in export volume of mineral and agricultural and food goods. And it should be noted that a small proportion is occupied by finished goods, which are considered to be re-export.

Means of production in 2013 were exported in volume of $958.1 million and comparing with the previous year increased by 1%, or $8.7 million.

The largest share of Kazakhstan export (53%) is sent for EU countries. China gets 17.4% of total Kazakhstan export. Export share delivered in the Customs Union countries is 7.1%. The rest of the world countries get 16.4% of export share.

In whole, the geographical structure of processed export has slightly changed. In 2013, export of Kazakhstan processed products was carried out for 113 countries.

geographic Structure of Export of the Republic of Kazakhstan

ЕU53,1%

CIS Countries6,0%CU

7,1%

other countries16,4%

China17,4%

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EXPoRT DEVEPolMENTe

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tDevelopment of export capacity of domestic enterprises is aimed at creating a supportive and enabling environment for domestic potential and operating exporters of priority economy sectors, assisting in solving problems related

to the implementation of export activities, competence improving of domestic enterprises in issues of export development and promotion.

Trainings

In the period from September 23 to October 4, 2013 in the cities of Astana and Almaty specialists of export-oriented enterprises were trained at the «Export Step by Step» seminar organized by KAZNEX INVEST. The training was attended by 38 experts of 30 exporting companies.

The structure of the program was based on an analysis of the problems faced by Kazakhstan enterprises in export activities, analysis of the legal and regulatory framework and economic development programs of the Republic of Kazakhstan.

The training was conducted on the basis of experimental learning with a focus on international marketing and international management, i.e. collegial discussion of topical issues of international business development in accordance with international practices.

As a form of results monitoring, training participants were tested. Test results confirmed participant’s knowledge to obtain certificates.

The coach and consultant was Marina Belskich – consultant analyst of Canadian Research Consulting Company of International Business Development Alliance, Candidate of Economic Sciences, a member of the Eurasian Economic Club of Scientists, a member of the American

Marketing Organisation, MBA lecturer on subjects of international business, marketing and management.

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Printed Publications

In the meantime, in addition to the organized trainings series of guidance material «Assistance for Exporter» in 7 subjects was published as teaching aids:

1. The WTo: opportunities for Kazakhstan exporter; 2. Consultant attraction for development of export potential of the enterprise; 3. Procedure of the export event implementation:«Export Step by Step»; 4. Secrets of successful negotiations with potential business partners - industrial

companies of Central Europe; 5. Export of services: tourism; 6. Special aspects of export for China; 7. Trade finance tools of the Republic of Kazakhstanguidance materials are presented in a simple and accessible way and help the reader to

find explanations and answers to questions of different export areas.Total circulation: 7,000 copies. Distribution: among domestic enterprises, local government offices and business

associations of Kazakhstan.guidance materials are distributed for free.

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Assistance in Domestic Exporters Problem Solving

Interacting with enterprises, KAZNEX INVEST supports the dialogue on conducting foreign trade problems.

During 2013, 55 requests of Kazakhstan enterprises related to the solution of different situations to prevent export activity were processed.

Specific issues addressed at the interagency/international level, are submitted to the Exporter Council under the Ministry of Industry and New Technologies of the Republic of Kazakhstan. In 2013 two meetings of the Exporters Council were held.

Among the processed issues, following «barriers» of foreign markets entry can be marked out: requirements for packaging; conformity assessment of Kazakhstan goods in certain countries; product certification and companies registration in foreign countries; mutual recognition of registration goods certificates; revision of possible export duty, etc.

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On April 18, 2013 the VIII Exporter Council meeting was held to discuss the following topical issues:

- export within Customs Union; - repeal of ban on the export of certain types of wood; - simplifying the requirements for free warehouses; - tariff setting informing during rail transporting in the export

direction; - reduction of the 70% threshold in the total taxable turnover on realization in export VAT

refund;- exclusion of the Republic of Kazakhstan from the list of countries receiving preferential

tariff under the generalized System of Preferences of the EU; - pharmaceutical products export problems: the lack of a legislative framework in the

Republic of Kazakhstan for the issuance of a pharmaceutical product certificate.

Issues discussed during the IX Exporters Council meeting on July 30, 2013: - Kazakhstan’s position on the usage of «mirror measures» issue concerning production

import from Turkmenistan and Uzbekistan;

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- technical barriers for Kazakhstan goods export in Russia. Unequal conditions of explosives access to the Russian market;

- barriers for Kazakhstan beer export in Russia; - competitiveness of domestic motor carriers on international market of

road transport services; - privileges cancellation for holders of free warehouses registered after

01.01.2012; - loss of fat and oil products exporters due to the ban on oil imports.

Export Packing Development

In 2013, the work on the development of Kazakhstan packaging industry was continued. KAZNEX INVEST activities of this direction were carried out in two ways: domestic packagers training (the study of international experience) and discussion of administrative barriers attracting the involved state bodies.

Training

In 2013, two study tours, training for Kazakhstan packaging industry specialists and packaging consumer abroad were organized to study packaging technology:

– Beijing (People’s Republic of China), from August 27 to August 31, 2013. Kazakhstan delegation included directors and engineers of 9 Kazakhstan packaging companies. Delegation of Kazakhstan specialists visited a number of plants located in Beijing and their surrounding areas: paper production (corrugated card goods), plastic (PET bottles and Polypropylene film) and metal packaging (can) enterprises. Basing on the results of the visit, Kazakhstan packaging manufacturers (tour participants) managed to establish contacts for purchasing of equipment and raw materials.

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– Istanbul (Turkish Republic), from October 29 to November 3, 2013. Kazakhstan delegation included representatives of seven Kazakhstan producers and consumers of packaging companies and visited enterprises engaged in the production of aluminum packaging (foil products), plastic packaging (polyethylene bags), flexible packaging (labels and labeling) as well as enterprise on flexo-and-rotography printing.

Domestic experts studied almost all stages of production, including plant section equipment, production processes, quality control laboratories, design laboratories, testing centers, coloring departments and other industrial facilities.

Activities to study the international experience in the field of packaging were organized for Kazakhstan specialists of packaging industry also in the Republic of Kazakhstan.

Thus, on October 11, 2013 workshop for producers and consumers of packaging on the topic «Which package guarantees leaving Kazakhstan goods for export?» was held in Almaty.

Within the seminar the invited expert shared information on the best packing ways for exporting goods and the preferable goods package in Europe, the U.S., Japan, China and the method to create the desired design (color and size of packaging), the nuances of branding, the affect of packaging on the export price of the goods, transportation and warehousing.

The seminar was led by international expert Jim Krigbaum (USA). There are many years of his organization experience of various export goods, including food, packed

in various types of packaging (for example, «export of horse meat in the form of canned food from Mongolia to Japan», «export of bottled wine from Georgia to the U.S.», «export of canned corn from the U.S. to Japan», «export of canned honey

from Ethiopia to Italy», etc.

Solving Packagers Problems

August 9, 2013 an Astana round table on the topic: «Packing Industry in Kazakhstan: Problems and Prospects» was attended by domestic packaging manufacturers, representatives of business associations and government agencies, as well as a guest speaker from Moscow

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(Vice President of the National Confederation of Russian Packagers / Chief Editor of «Tare and Packaging» magazine) I. Smirennyi.

Roundtable participants were informed on the entry into force the Technical Regulations of the Customs Union «On the Package Security» and the changes made to it, in terms of the requirements for disposal of package, packaging materials and closures.

November 22, 2013 a conference «Kazakhstan Packaging Industry: Present and Future. Customs Union - New Rules for Packaging Manufacturers in Kazakhstan» was held in Astana with participation of domestic manufacturers of packaging products, certification bodies and testing laboratories, government agencies, as well as invited experts from the Ukraine and Russia - the Vice-President of the Club Packers Ukraine / Director of the «Package» magazine - V. Halaydzhy, General Director of National Packaging Confederation of Russia - A. Boyko, Chairman of the Technical Committee of the «Package» of the Russian Federal Agency for Technical Regulation and Metrology of the Russian Federation / Vice-President of the National Association of Russian Container - P. Bobrovskoy.

Topics: «Recent Developments in Technical Regulations of the Customs Union», «On the Security Package» - Solving Recycling Problems through Manufacturers or a Desire to Build a Civilized market?»; «When the Packaging Industry will be Recognized legally?»; «Recommendations to the Government of Kazakhstan to Improve the Operation of Laboratories, Centers of Expertise, Tara Testing and Packaging in the Customs Union»; «Packaging Industry in Ukraine: towards a European level»; «Problems of Staff Training for the Packaging Industry and Packaging Science»; «Manufacturers on up-to-date: Polypropylene film and PET - Competitors or Partners?».

At the same time, as a part of packaging industry development in 2013 recommendations and proposals for improving the operation of laboratories, centers for examination, boxing and packaging testing to create favorable conditions for improving the competitiveness of domestic goods in foreign markets were developed.

Exporter costs reimbursement

This kind of state support provides compensation for enterprises 50% of their costs associated with the withdrawal of the processed products to foreign markets. Export development through partial reimbursement is implemented within «Export 2020» program, which is a part of the state program of forced industrialization.

In 2013, the costs of 51 exporters are reimbursed in the amount of 181 097 360 tenge.

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EXPoRT PRoMoTIoN ACTIVITIES

Trading Missions

Export promotion means helping domestic exporters of processed products to enter foreign markets and present finished products. The result of this activity is export contracts. For this purpose presentation events are organized.

In 2013 6 trade missions were organized and conducted in:

- the Kyrgyz Republic;

- the Russian Federation;

- the Republic of Belarus;

- Ukraine;

- georgia;

- the People’s Republic of China.

Kazakhstan delegations included 82 representatives of machine building, chemical, pharmaceutical, construction, food and textile industries.

This is an opportunity to establish direct contacts with potential foreign buyers by personal visiting and exploring potential import country. Trade Missions are bilateral meetings with potential buyers and specialized ministries of foreign countries.

As a result of 6 trade missions in 2013, the total export contracts / intention protocols amount is $57.3 million.

Also on the results of 6 trade missions in 2012 export contracts worth $35.7 million were additionally signed.

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organizing Kazakhstan Enterprises Participation in overseas Exhibitions

In 2013, participation of 37 Kazakhstan companies was organized (chemical, construction, food processing, metallurgy, textile, engineering, power and pharmaceutical industry) at 25 international exhibitions of 4 countries (Russia, Uzbekistan, Kyrgyzstan, Turkmenistan).

By the results, export contracts to supply processed goods (engineering, paints, electrical, metallurgical, construction equipment, food, etc.) were concluded for more than $27.8 million in the markets of Russia, Uzbekistan, Mongolia, Azerbaijan and Kyrgyzstan.

Unified National Exhibition Stand

In 2013, participation of the 27 domestic manufacturers at 5 foreign international specialized exhibitions was provided in the format of the Unified national exhibition stand.

As a part of realization this export support tool some contracts, agreements on signing long-term contracts, intentions, memoranda for a total amount of more than $7.4 million were concluded.

Besides that, the results of Kazakhstan companies’ participation in the format of the Unified national exhibition stand in 2012 export contracts worth $6.5 million were additionally signed.

Participation in the specialized exhibition is an effective channel of enterprise promotion in a foreign market to present its company and goods / services, to get new customers and strengthen ties with operating ones, to conduct research of competing goods, to expand the business and public relations

It is a collective presentation of goods/services of competitive Kazakhstan producers of special industry at major international trade exhibitions.

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Trademarks Promotion to the foreign markets

Activities to promote Kazakhstan trademarks to the foreign markets include organization and conducting presentation events of trademarks abroad and organizing negotiations between domestic producers with potential foreign buyers.

Thus, in 2013, 14 events to promote the trademark of 48 domestic enterprises in foreign markets were held.

As a result of advertising and presentation activities, export contracts in the amount of $49.2 million were conducted.

on the results of Kazakhstan enterprises participation in 2012 export contracts worth $15.9 million were additionally signed.

Humanitarian Purchasing promotion

«Humanitarian Supplies from Central Asia to Central Asia and Afghanistan» regional conference/ exhibition was held on August 19, 2013.

Active participation of about 40 representatives of international humanitarian organizations in the conference (UNDP, UNICEF, WFP, the International Red Cross and Red Crescent Societies, etc.) confirms their interest in cooperation with Kazakhstan companies.

15 domestic companies presented their products having the purchase potential at humanitarian aid formation during the exhibition organized within the conference.

Humanitarian organizations acquire wide range of products ranging from food to engineering goods, depending on their purpose. Annual turnover of humanitarian supplies is estimated at tens of $billions, thus providing great opportunities for Kazakhstan enterprises.

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Ways to promote in this market differ from traditional promotion methods. It is due to the principles of doing business with the UN and other humanitarian

organizations, where negotiating with potential suppliers before passing tender is excluded to avoid conflicts of interest. Consequently, the aim of the conference

was preparing for tenders but not contracting.

In the period of 04-07 November, 2013 pre-qualification inspection on 10 domestic light industry enterprises was conducted in Almaty, Karaganda and Shymkent. Goods samples of these companies were sent to the UNHCR office in Afghanistan: baby clothes, blankets, mattresses, bed sets, sewn products and knitwear, hosiery, plastic products, as well as tents and hangars.

On November 4, 2013, a training seminar on «Doing Business with UNHCR (Central Asia and Afghanistan)» was organized for 30 experts of the light and the chemical industry of Kazakhstan, with participation of leading specialist of UNHCR supply department Mr. Prosper Mumaniya Duniya.

On November 13-14, 2013 participation of 5 Kazakhstan enterprises at the annual international goods exhibition of humanitarian aid «AIDEX-2013» was organized in Brussels (Kingdom of Belgium) to promote domestic products in the market of humanitarian aid.

On October 8, 2013 business forum took place in Almaty to discuss ways for further cooperation enhancement of domestic enterprises with project operators for reconstruction and development of Afghanistan after the withdrawal of NATo peacekeeping forces and allies. The event was attended by representatives of Defense logistics Agency of the U.S. Department of Defense, KAZNEX INVEST, enterprises and other stakeholders.

Information on other potential suppliers of Kazakhstan humanitarian aid was provided by distributing specially prepared promotional brochure «Humanitarian Aid from Kazakhstan» in 100 copies in Russian and English, containing information on more than 60 domestic enterprises.

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As a result of Kazakhstan enterprises promotion activities in humanitarian aid market:

- 10 domestic companies as potential suppliers of humanitarian aid were registered;

- 27 Kazakhstan enterprises goods of 7 industries were presented to humanitarian organizations

- 28 types of goods were presented to organizations purchasing humanitarian aid.

By the end of 2013, 10 domestic enterprises had signed export contracts for a total amount of $4.5 million under humanitarian aid promotion in the market.

Simultaneously, the work at the request of potential buyers was carried out. During 2013, 45 requests of foreign buyers from 25 countries were received and processed. Foreign buyers were interested in partners supplying wheat, electrical equipment, leather products, ferrochrome, cement, fish fillets, ice cream, etc.

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«Kazakhstan Export Products» Reference Book

Information on 644 enterprises having actual export experience as well as the potential for export is included into «Kazakhstan Export Products 2013» reference book. In total there are 820 kinds of goods, representing 5 sectors: manufacturing, mining, power industry, agriculture and service sector.

Total circulation of the reference book: 2500 copies (in Russian and English), 2500 E-copies (on mini-CD disks).

Distribution: among potential customers of Kazakhstan goods (business circles of foreign countries and Kazakhstan).

«Export Guide» Reference Book

The content of the «Export guide» reference book 2013 includes foreign countries description - major trade partners of Kazakhstan: Azerbaijan, Armenia, Georgia, Moldova, Poland, Tajikistan and Turkey.

Country overview includes information on competitive positions and changes in consumer trend for trade positions of Kazakhstan expo, supplemented with practical materials on conducting foreign economic activity in these countries. There is also information material on the best routes of Kazakhstan goods delivery to foreign markets in the reference book.

Total circulation: 1 000 copies.Distribution: among business associations and domestic enterprises. Electronic

reference book version is free available at http://www.kaznexinvest.kz.

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ANAlYTICAl EXPoRT PlATFoRMe

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tIn 2013, analytical export platform was presented in the form of short

overviews.

Brief Analysis/industry overviews of commodity groups – brief marketing research include basic parameters for trade development by specific products in foreign markets and identify potential markets for promotion of domestic producers. Presented information may be useful for exporters in developing or optimizing their export strategies.

In 2013, 4 industry overviews of four sectors were prepared (food, chemical, metallurgical and machine-building), in the context of 16 goods: boned meat, wheat starch, rape oil, other mineral and sparkling waters, cosmetics, lubricants, polypropylene, polyvinyl chloride, gear wheels, static converters, control panels, distribution panels, parts and accessories of bodies, coil springs, screws and bolts of iron, nuts of ferrous materials and wires of refined copper.

Service Sphere overviews – are potential markets researches for specific types of services export. Presented information may be useful for operating services exporters in developing or optimizing their export strategies and potential exporters in choosing a niche to promote services in foreign markets.

In 2013 five overviews of potential export markets were prepared for the following services: tourism, construction, services for the development and / or implementation of software, logistics and geological.

The results of the overviews are posted on www.kaznexinvest.kz in the «Analysis» union in the public domain.

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crEATIoN oF AN «EXPorT-orIENTATIoN» IDEoLoGy

KAZNEX INVEST simultaneously raises awareness and understanding of the export importance and the methods of its support through «export orientation» ideology format. The main activities carried out in 2013 were aimed to promote national idea and turning Kazakhstan into a country exporting processed products:

- Information and analytical materials. KAZNEX INVEST activities, events and services are lighted in 225 materials of Kazakhstan print media, television, news agencies and online publications;

- TV program. The fourth season television program «occupation – Exporter» aimed at wide coverage of public support measures and export development was realized. In total during the period from September to December 2013, 24 program releases in the Kazakh and the Russian languages were made on «24.KZ» TV channel;

- Video (30 seconds) oriented on export potential development of the country was aired in the state and the Russian languages on the national television channels «Khabar», «Astana» and «Channel 7» in the period from October 1 to November 30, more than 500 times;

- Specialized magazine «EXPORTER». In 2013, specialized magazine «EXPORTER» in the Kazakh and the Russian languages was published and distributed in 8000 copies;

- Participation of Kazakhstan media representatives in foreign activities to promote export. Through interaction with the media Kazakhstan journalist participation in foreign export promotion activities was organized. As a result of the participation of 16 representatives of local media in foreign events, publication and on air demonstration of 15 journalistic pieces written and photographed from the scene appeared;

- Publication of Promotional Materials. KAZNEX INVEST Advertising Information Module on the state assistance to promote exports was made and placed on pages of national air carrier logbooks – «Air Astana» («Tengri» magazine) and «SKAT» («Aspan» magazine).

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Searching for and accompanying foreign investors

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SEARCHINg FoR AND ACCoMPANYINg FoREIgN INVESToRSin

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SIn 2012, FDI inflows reached a record high of $28.9 billion, which was 49% more than the

pre-crisis level and to 9%, or $2.4 billion more than in 2011.There was gross of FDI inflows amounted to $101.8 billion from 2010 to 2013, which equal

to 55% of gross FDI inflows since 2005. Gross FDI inflows in the manufacturing industry for three years and nine months of the

SPFIID realization (2010 – 2013) amounted to $14.1 billion, which corresponds to 70% of total FDI inflows in the manufacturing industry since 2005.

Within the manufacturing industry for three years and nine months compared with the period 2005-2009 there was an increase of FDI in manufacturing: food, beverages and tobacco from $513 to 950 million (1.8%), metal products from $4 200 to 11 820 million (2.8%),

computers, electronic and optical products from $96 to 642 million (6.7%).

The main investors in the economy of the Republic of Kazakhstan: the Netherlands, Switzerland, China, USA, France, UK.

35,0

30,0

25,0

20,0

15,0

10,0

5,0

0

7,9

0,3 1,3 3,2 5,0 5,4

10,58,0

3,0

8,712,1

19,421,3 21,4 22,2

26,528,9

24,1

2005 2006 2007 2008 2009 2010 2011 2012 2013Gross FDI inflows into Kazakhstan from foreign direct investors Gross outflows abroad from Kazakh direct investors

181,4%

85,3%

566,4%

31,7%

48,1%

Manufacture of fabricated metal products, except machinery and equipment Manufacture of computer, electronic and optical products Manufacture of machinery and equipment not elsewhere classified Manufacture of food products, beverages and tobacco others

2005-2013mln. US$

2005-2009mln. US$

2010-2013mln. US$

11 820

440278642

950

513

96407

849

4 20016 020

1 289

1 463

739685

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INVESTMENT IMAgE PRoMoTIoN ACTIVITIES IN THE REPUBlIC oF KAZAKHSTAN

Activity on investment attraction is closely linked with the presentation of investment opportunities of the country itself. In addition to statistical data it is important to know the measures of state support for foreign investment in the country, manufacturing capabilities, as well as detailed and specific nuances of production and business organization in the Republic of Kazakhstan for interested investors.

While planning and implementing activities to promote country’s investment image, KAZNEX INVEST solves simultaneously two strategic objectives - promotion of a favorable investment climate in Kazakhstan and assistance in attracting companies - potential investors.

National Interactive Investment Internet resource

During 2013 the information on National Interactive Investment Internet Resource was regularly updated in 12 languages, as well as interactive modules on Support Center and activities of special economic zones in the Republic of Kazakhstan were created for investors.

During 2013 more than 130 thousand visits from more than 165 countries were registered and more than 130 requests were proposed.

Since the website creation over 283 thousand visits were registered.

http://www.invest.gov.kz

Printed Publication

In 2013 four advertising and informational articles on investment opportunities in Kazakhstan were published in international periodicals:

– The Wall Street Journal (E-edition) from October 1-31, 2013;

– Bloomberg Business Week iPad (E-edition), from October 3-10,2013;

– FDI Magazine (printed), October 2013;

– Machinery Market Magazine (printed), November 2013.

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road-Show

Roadshow - is a series of outreach meetings with investors to promote investment opportunities in Kazakhstan and certain investment projects for potential investors.

In 2012 four road-shows were organized to present the investment climate of Kazakhstan in Japan, the USA, Brazil and Germany, which were attended by more than 381 companies (including 114 Kazakhstan companies).

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The Video about Kazakhstan Investment opportunities

Video (30-sec.) on investment opportunities in Kazakhstan were produced, which were broadcasting in the amount of 1 578 times on international television channels of CNN International, Euronews and Bloomberg TV from September 15 to November 22, 2013.

Specially prepared 7 minutes video presentation on investment opportunities in Kazakhstan was broadcasting during investment activities.

Video (30-sec.) informing on measures of state investments support was broadcasting by TV stations of Kazakhstan «Khabar» and «Kazakhstan» in the amount of 60 times in october 2013.

Special Purpose Publication

In 2013, «Special Economic Zone of the Republic of Kazakhstan» brochure on 3 500 copies in the Russian and the English languages was issued. Brochures were distributed to diplomatic Kazakhstan missions abroad and SEZ controls bodies of the Republic of Kazakhstan and during the events with the participation of foreign investors (road-shows, exhibitions, investment activities). The reference book contains information on 10 special economic zones of the Republic of Kazakhstan (the list of legal acts regulating SEZ activity, the list of privileges and preferences, operating SEZ territory and SEZ participation conditions).

Billboards

In 2013, on the way to / from the airport of Astana and Almaty 5 billboards oriented to Kazakhstan business community and potential foreign investors were placed.

Press conferences

Press conference on the results of KAZNEX INVEST activities for the first half of 2013 was held on June 26, 2013 in Almaty.

On November 29, 2013 press conference, on the results of efforts to attract investment, in particular, on the work carried out in the regions of Kazakhstan was held in Astana.

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INVESToRS SUPPoRT

With the assistance of KAZNEX INVEST 264 meetings were organized for potential investors with representatives of ministries, agencies, development institutions, business associations and business circles of Kazakhstan, during which the advantages of investing were disclosed and initial consultations were held.

In the period of 2013, 221 potential foreign investors received information and consulting support on Kazakhstan investment climate, measures of state business support and business conditions in Kazakhstan.

Database of investment projects and foreign investors

By the end of 2013 the database contains information on 647 foreign companies and 977 investment projects.

In 2013 particular attention was paid to training on the use and completion of the database for all involved parties. During the workshop, participants learned the functionality of the resource and also received clarification on all matters of mutual interest

So, training workshops were organized and conducted for: - representatives of national companies and development institutions in

June 26, 2013;- national companies in the mining and metallurgical complex in

November 7, 2013;- representatives of «United Chemical Company» JSC in November 14,

2013.

Database of investment projects and foreign investors are structured resource mapping investment projects on the territory of the Republic of Kazakhstan, which are also used to provide access to potential and existing investors’ information on the territory of the Republic of Kazakhstan on the basis of advanced information technology.

Investors Support center (Investment ombudsman)

In 2013 Investors support center was founded in KAZNEX INVEST, which is a working body of the working group to develop proposals for the rights protection of foreign investors on the basis of foreign Ombudsman. During its activity in 2013, 27 requests from investors in Kazakhstan were considered in Investors support center and 8 of them have been resolved by the end of 2013. Most often, investors during the implementation of their projects are facing problems related to land issues, taxation, visas and work permit as well as the customs legislation.

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Along with this, assistance in organization of region investment was provided in Aktobe, Pavlodar, South Kazakhstan, Zhambyl, Kyzylorda, West Kazakhstan, East Kazakhstan and Atyrau regions.

Assistance in Attracting Investment to the regions

In 2013, cooperation with the Investor Service Centers (ISC) was set.

- Assistance was provided in developing ISC working plans to attract FDI for 2013;

- on February 25, 2013 a meeting with representatives of Business and Industry Office from 9 regions and 10 regional ISC was organized to attract investments to the regions of Kazakhstan. As a part of the seminar training, the courses to complete database of foreign investors and investment projects were organized;

- on February 26, 2013 a seminar for ISC representatives was organized to improve their work;

- common format of investment climate was developed in the region and its benefits, so-called investment passport of the region (complex informative newsletter, which will be designed for a specific audience - potential investors). In 2013, the investment passport was developed in Atyrau, East Kazakhstan, Kyzylorda and Zhambyl regions;

- the activity analysis of all ISCs was performed. Basing on the obtained information from local government region offices of Astana and Almaty cities, all centers inquiry reports were performed to indicate detailed information as follows: amount of attracted investments; implemented investment projects involving foreign capital; general issues of organizing activities to attract investment to the region (statue, employee information, funding sources, planned investment activities).

In November 2013 KAZNEX INVEST was a co-host of the II Investment Forum «Baikonur».

The international investment forum «Baikonur» was attended by the Minister of Environmental Protection of the Republic of Kazakhstan, representatives of ministries and departments, international and national development institutions, heads of foreign diplomatic missions and business structures. During the event, an exhibition of industrial and infrastructure projects was implemented under the program of forced industrial-innovative development.

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ACTIVITY RESUlTS oF INVESTMENT ATTRACTIoN

By the activity results of 2013 «KAZNEX INVEST» JSC assisted in attracting 13 foreign investors totaling $524.5 million (1 - UK, 3 - China, 1 – USA, 2 – Turkey, 1 – Finland, 1 – France, 1 - Germany, South Korea 1, Switzerland 1, 1 - Japan) to implement investment projects in Kazakhstan industries, such as automotive, chemical industry, machinery, light industry, etc.

FDI attraction results

Bartholet Maschinenbau AG (Switzerland)Project: ropeway construction and manufacturing of concomitant equipment

Pfizer (USA)Project: development of clinical research centers in the Republic of Kazakhstan

rekacables (Finland)Project: production of medium and high voltage cables in the Republic of Kazakhstan

rTI Manufacturing Group Ltd (great Britain)Project: production of manufacturing equipment in the Republic of Kazakhstan(bearing conveyor belts, hoses rubber, hydraulic and PVC gaskets and rings)

PSA Peugeot Citroеn (France)Project: industrial car and commercial vehicle assembly, using DKD technology (Disassembled Knock Down)in

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NTS Energie-und Transportsysteme GmbH (germany)Project: development of alternative energy in the Republic of Kazakhstan (financing together with «NATD» JSC)

Toyota Motor corporation (Japan)Project: Toyota Fortuner vehicles assembly in the Republic of Kazakhstan

Bosfor Motors (Turkey)Project: Mitsubishi Fuso Canter light-weight truck assembly

Ipek Kagit (Turkey)Project: expansion of existing sanitary paper hygienic products production in the Republic of Kazakhstan

china KingHo Energy Group (China)Project: complex processing of coal with capacity of up 6 million tons per year in the Republic of Kazakhstan

yuanda Enterprises Group (China)Project: production of lifts and elevator equipment in the Republic of Kazakhstan

Foton Lovol International Heavy Industry (China)Project: special equipment assembly in the Republic of Kazakhstan

SIENco KorEA co.Ltd (South Korea)Project: construction of hippodrome

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July 2nd, 2013

Mr. Yerlan Arinov Chairman of the Board “National Export and Promotion Agency KAZNEX INVEST” Astana, 010000, Syganak Str., 25, “Ansar” Business Center Republic of Kazakhstan I would like to express my deep gratitute for the opportunity to meet and co-work with KAZNEX INVEST in designing a pioneering partnership project regarding the improvement of pharmaceutical research and development in Kazakhstan by supportıng clinical research environment.

First major milestone of the project, which is a source of our pride, is already achieved in Astana Economic Forum in May 2013 with the Memorandum of Understanding signed between Kazakhstan Ministry of Health, KAZNEX and Pfizer.

We appreciate the full support of KAZNEX collegues for their valuable support throughout this period. We sincerely beleive that this collaborative and partnering approach will boost the business environment for us to implement the Project successfully and create further additional values for Republic of Kazakhstan and Pfizer.

Best Regards

Haluk Karabatak Caucasus and Central Asia Region Business Unit Director Pfizer

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TOO «RSP International (РСП Интернэшнл)» Бизнес-центр «Kulan» пр. Достык 188, офис 703 050051 г. Алматы Тел.: +7 (727) 259 91 66 Факс: +7 (727) 259 91 64 eMail: almaty@rsp-i.com Web: www.rsp-i.com

РНН: 600900661108 БИН: 121240006353 Свидетельство о гос. регистрации: № 1936-1910-06-TOO (ИУ) от 11 декабря 2012 г. Банковские реквизиты: IBAN (KZT) KZ26826A1KZTD2018424 IBAN (EUR) KZ95826A1EURD2002912 IBAN (USD) KZ78826A1USDD2005889 в филиале АО «АТФБанк» в г. Алматы SWIFT: ALMNKZKA

RSP International - ВАШ партнёр в странах: Казахстан – Кыргызстан – Таджикистан – Узбекистан – Австрия – Монголия – Польша

АО «Национальное агентство по экспорту и инвестициям «KAZNEX INVEST» ул. Сыганак, 25, б\ц «Ансар» г. Астана, 010000 КАЗАХСТАН БЛАГОДАРСТВЕННОЕ ПИСЬМО Настоящим, ТОО «RSP International (РСП Интернэшнл)» выражает свою благодарность АО «Национальное агентство по экспорту и инвестициям «KAZNEX INVEST» за оказанную помощь в реализации проекта нашего партнера Funke Kunststoffe GmbH, а так же за содействие в организации необходимых встреч и переговоров. Результатом сотрудничества стал инвестиционный проект, который в скором времени будет запущен и внесет вклад в развитие Казахстана. Надеемся на дальнейшее плодотворное сотрудничество! С уважением, Кнорр Николай Глава офиса Адвокат (ФРГ)

г. Алматы, 20.11.2013

Исх. № 067 от 20.11.2013 г.

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Special economic zone development

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Se

ZSPECIAl ECoNoMIC ZoNE DEVEloPMENT

SEZ “Burabay” Tourism

BorovoyePavlodar

Astana

Atyrau

Aktau

Shymkent

Karaganda

Taraz AlmatyKhorgos

SEZ “Saryarka” Metallurgy, metalwork

SEZ “Khorgos – Eastern Gates” Trade, logistics

SEZ “Innovation Technologies Park” IT-innovation, instrumentation

SEZ “National Industrial Petrochemical Technology Park” Petrochemistry

SEZ “Seaport Aktau” Metalwork, instrumentation

SEZ “Ontustik” Textile

SEZ “Astana-new city” Construction, industry

SEZ “Pavlodar” Chemistry, petrochemistry

SEZ “Chemical park Taraz” Chemistry

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Jurong Consultants – is a division of the state company JTC, specialized agency of the Ministry of Trade and Industry of Singapore. It operates in the field of financial, architectural consulting, special economic zones management, logistics and ports. JTC created and manages the following parks in Singapore: Jurong Island (global hub of petrochemical industry), Biopolis (biomedical cluster), One-north (ICT cluster) and others. The most famous projects are creation of industrial parks in China (Suzhou, Shanghai), India (Bangalore) and UAE (Abu Dhabi, Dubai).Jurong has successful experience in various industries such as: textile industry, logistics, electronics and IT, petrochemicals, pharmaceuticals, engineering, tourism and many others.

There are 10 special economic zones in Kazakhstan: SEZ “Burabay”, SEZ “Pavlodar”, SEZ “Astana-new city”, SEZ “Saryarka”, SEZ “National Industrial Petrochemical Technology Park”, SEZ “ Chemical park Taraz”, SEZ “Khorgos – Eastern Gates”, SEZ “Innovation Technologies Park”, SEZ “Ontustik”, SEZ “Seaport Aktau”.

As for December 2013, 498 participants were registered in all SEZs. The number of current investment projects in all areas of SEZ is 83 and 68 projects are underway. At projects cost of 4.0 trillion tenge, the amount of investments is only 186.9 billion tenge. More than 6,000 jobs are created.

KAZNEX INVEST together with international experts, Singapore company «Jurong Consultants», in 2013 finalized:

- the overview of the current situation in SEZs of Kazakhstan;

- the comparative analysis of existing models, comparison SEZs management in Kazakhstan and other countries;

- the gap analysis and a proposal better script SEZs development in Kazakhstan.

During the implementation of these measures there were prepared: analysis of strategic industrial orientation of SEZs, procedures and functioning of SEZs, a review of investment attraction, management structure of the SEZs, financing and business planning and also revision of the current legislation of Kazakhstan.

For purposes of further SEZ development and legislation stability provision, recommendations are developed to insert amendments to the tax, customs, land, labor legislation, licensing legislation and SEZ, as well as to the Presidential Decrees on SEZ establishment.

Corporate GovernanCe

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CoRPoRATE goVERNANCE

KAZNEX INVEST Shareholders:

Industry Committee of the Ministry of Industry and

New Technologies50% 50%

Investment Committee of the Ministry of Industry and

New Technologies

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In 2013, there were 3 meetings of the General Meeting of Shareholders and in the course of them KAZNEX INVEST Board member was elected and KAZNEX INVEST annual financial statements on the basis of 2012 results was approved.

Board of Directors

As for December 31, 2012 there were three independent directors out of seven members of the Board of Directors.

Irina Fisher Appointed by the decision of the Board of Directors member of the sole shareholder dated 09.11.2009.

Yerzhan KaribaevAppointed by the decision of the Board of Directors member of the general meeting of shareholders dated 14.03.2011.

In 2013 five Board of Directors meetings were held to discuss issues and make decisions on various KAZNEX INVEST activities.

Yerlan Arinov Appointed by the decision of the Board of Directors member of the sole shareholder dated 09.11.2009.

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Yerlan Khairov Chairman of the Board of DirectorsAppointed by the decision of the Board of Directors member of the general meeting of shareholders dated 27.04.2013.

Anatoliy Popelyushko Independent DirectorAppointed by the decision of the Board of Directors member of the sole shareholder dated 09.11.2009.

Oshakbaev Rachim Independent DirectorAppointed by the decision of the Board of Directors member of the general meeting of shareholders dated 05.07.2013.

Serik Sultanov Independent DirectorAppointed by the decision of the Board of Directors member of the sole shareholder dated 04.05.2010.

The Board of Directors is a key element of Corporate governance at KAZNEX INVEST.

In addition to the current legislation and its activities are regulated by KAZNEX INVEST’s Charter and Provisions on, approved in a new version of the general Meeting of Shareholders KAZNEX INVEST on January 12, 2012 no.1.

Board of Directors has overall management on KAZNEX INVEST activities on behalf of all its shareholders within its Competence as defined by KAZNEX INVEST’s legislation and Charter.

Moreover, the Board of Directors ensures the functioning of the control system on KAZNEX INVEST’s Regulatory Bodies overall activities, good cooperation between the Company’s management, as well as adherence and protection of the Shareholders’ rights and legitimate interests.

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In total for the period of 2013, 70 Board meetings were held during which decisions were made on the current operational KAZNEX INVEST activity

Botagoz Alimbayeva,Deputy Chairman of the Governing Board on Administrative Unit ActivityAppointed for the Governing Board by the resolution of the sole shareholder («Kazyna» Sustainable Development Fund» JSC) dated 20.10.2008.

Yerlan Arinov, Chairman of the Governing BoardAppointed by the decision of the sole shareholder («Kazyna» Sustainable Development Fund» JSC) dated 26.09.2006.

Nurlan Sydykov, Deputy Chairman of the Governing Board on Special Economic Zones ActivityAppointed for the Governing Board by the Board of Directors decision dated 05.06.2013.

Kairat Karmanov, Deputy Chairman of the Governing Board on Investment Unit Activity Appointed for the Governing Board by the Board of Directors decision dated 09.12.2011.

Meyerzhan Maikenov,Deputy Chairman of the Governing Board on Export Unit Activity Appointed for the Governing Board by the Board of Directors decision dated 20.11.2009.

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The management of KAZNEX INVEST’s current activities is regulated by the governing Board reporting to the Board of Directors and the general Meeting of Shareholders. governing Board is formed by the Board of Directors in accordance with the KAZNEX INVEST’s Charter.

The Governing Board operates within the competences defined by the Charter and the resolutions of the general Meeting of Shareholders and the Board of Directors.

However, the competence of the Board is enshrined in the «Provision on Governing Board of KAZNEX INVEST (approved by the Board of Directors dated 23.12.2011).

Among the issues related to the competence of the governing Board there are following questions:

- Implementation of the financial and economic activities plan (development plan) KAZNEX INVEST, including the implementation of key performance indicators;

- Decisions concerning operational activities of KAZNEX INVEST, including:

• transactions, which are not recognized as major transactions and conducted by the KAZNEX INVEST in accordance with the laws of the Republic of Kazakhstan,

• increasing in liabilities of KAZNEX INVEST amount equal to ten percent of the equity capital of the company;

- Definition the functions of labor and labor workers, definition of motivational conditions;

- organization of accounting and reporting system to ensure the integrity of accounting and financial reporting;

- Ensuring the effective functioning of the system of risk management and internal control systems, etc.

Competencies of the Board of Directors members are clearly determined and reflected in the internal regulatory document «The division of responsibilities between the Chairman of the Governing Board, Deputy Chairman and Managing Directors of KAZNEX INVEST, delegation of authority and interchangeability».

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Dividend Policy

The basis of dividend policy is the provision of simple and transparent mechanism for determining the amount of dividends and conditions of payment. Dividend policy regulates the procedure for net income allocation and determines its part directed towards the payment of dividends, the procedure for calculating the amount of dividends, dividend payment procedure, including the terms, place and form of payment.

According to the results of 2012, in accordance with the approved KAZNEX INVEST dividend policy, KAZNEX INVEST General Meeting of Shareholders developed decision to pay dividends on 100% of KAZNEX INVEST state-owned shares in the amount of 70 543 985,60 tenge (per share amounted to 249, 38 tenge).

Information Disclosure

In the information disclosure KAZNEX INVEST is governed by law of the Republic of Kazakhstan «On Securities Market», the law of the Republic of Kazakhstan «On Joint Stock Companies» and the following internal documents:

- Regulations on Information Policy, approved by the Board of Directors dated April 8, 2011 № 2;

- Regulation on information disclosure, approved by the decision of General Meeting of Shareholders dated January 12, 2012 № 1;

The main channel of information disclosure is KAZNEX INVEST internet-resource, which contains information about the company activity, services rendered, significant facts, events, etc. There is the statue, other internal documents, annual reports, reference books, presentations and press releases in the Internet website. Corporate KAZNEXINVEST internet-resource is regularly updated.

KAZNEXINVEST also replaces informational materials and publications in the media in accordance with the laws of the Republic of Kazakhstan and the Board of Directors.

Furthermore, KAZNEX INVEST provides information in the form of brochures and booklets and also conducts regular meetings, telephone and press conferences with the parties concerned.

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risk Management

KAZNEX INVEST risk management system is designed to identify, control and reduce risk degree on failure of realizing strategic KAZNEX INVEST objectives. As a result of conducted work on the implementation of the risk management system formalized model is implemented in KAZNEX INVEST to provide a clear division of functions and responsibilities and the procedure for information exchange for all subjects of the risk management system.

In the course of its activities, KAZNEX INVEST faces a number of risks, such as:

- strategic risk is the risk of adverse events as a result of strategic decisions that led to negative consequences for the company;

- operational risk is the risk of adverse events as a result of operational activities that resulted in negative consequences for the company;

- reputation risk is the risk of significant skids in the company or loss as a result of adverse events;

- financial risk is the risk associated with the probability of financial resources loss;

- conjuncture risk is the risk of adverse changes in general economic situation or position in certain markets;

- systemic risk is the risk at which the failure to meet its obligations of one of the participants in the system, causing the failure of other parties to fulfill their obligations;

- legal risk is the risk of loss arising from non-compliance with domestic and international laws, regulations and internal procedures.

In accordance with the Risk Management provision (approved by the Board of Directors № 6/2012 from 10.12.2012) KAZNEX INVEST Risk Register was developed. The risk register is a systematic list of all risks, the occurrence of which is possible with the implementation of activities. This paper is applicable for all identified risks and includes description, category, causes, probability of occurrence and the impact on the goal.

Risk Map is developed on the basis of the risk register, reflecting the importance of KAZNEX INVEST risks, expressing the ratio of the probability and frequency of risk occurrence. Risk Map helps identify critical risks, mitigate and ensure their management.

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Personnel policy goal is building an effective model of governance and development of human resources and professional team formation with modern approaches to implement strategic directions of the society development.

In 2013, the following activities to improve the skills of KAZNEX INVEST employees were organized:

1) in the period from June 18 and July 01 an export activities training as part of USAID project on regional cooperation in Kazakhstan was held with international experts for KAZNEX INVEST employees;

2) in June at the invitation of Commerce and Investment Agency of South Korea (KoTRA) Managing Director for KAZNEX INVEST Regional Cooperation visited South Korea, where he held negotiations with Ombudsman on foreign investment of the country. The meeting was aimed at studying the experience of South Korea on foreign investor’s protection in the country for further use in Kazakhstan.

During the meeting some issues were discussed on Ombudsman activity, the structure of its office, a system of interaction with public authorities and investors, the nature of problematic issues depending on ombudsman decision;

3) in September 2013 seminar with representatives of the World Trade Center as part of the UN methodological assistance for the development of the National Export Strategy was held. Together with KAZNEX INVEST employees this event was attended by representatives of government agencies, development institutions, NEСK «Atameken» and national experts;

4) in June under the assistance of the World Association of Investment Promotion Agencies (WAIPA) investment and development units employees of SEZ visited Polish Information and Foreign Investment Agency (PAIiIZ) in Warsaw. During the short internship KAZNEX INVEST employees got acquainted with the activity, agency structure and organization of activities to attract investment. At the same time, the Polish side presented organizational activities of one of the Polish economic zone;

5) in September in Ankara (Turkey) the employee of the departmental services on the Information and Communication Technologies and Pharmaceutics participated in educational training «Turkish Experience in Attracting FDI» organized for representatives of member countries of the Islamic Development Bank. The training program included familiarization with Turkey experience, successful strategies and experience to attract investment, reforms in

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the investment climate, private sector role in improving the investment climate and other issues;

6) in September, Managing Director and Director of Corporate Development Department were trained at a workshop on «Integrated Risk Management in the Real Sector» to deepen the theoretical knowledge and improve practical skills of risk management. Knowledge gained during the seminar on risk management allowed to revise the vision and ways to improve the implemented system for KAZNEX INVEST risk management, in particular, amendments and additions to existing documents on the risks were planned for 2014;

7) in November the employee of the departmental services on the automotive, railway engineering and the tourist industry was delegated to participate in a training program on the topic «Investment Strategies and Competitiveness Improvement Sector for the Country Development», organized within the framework of investment promotion for member countries of the Islamic Development Bank (hereinafter - IDB) with the support and technical assistance on investment promotion of IDB group (ITAP) together with the Malaysian Investment Development Authority (MIDA) in Kuala lumpur (Malaysia). The program aim appeared exchange and discussion of strategies and tools to promote investments aimed at stimulating investment and improve the competitiveness of the IDB member countries.

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Head Office2nd floor, “Ansar” business center,25 Syganak str., Astana,010000, Republic of KazakhstanTel.: + 7 (7172) 91 90 40,Fax: + 7 (7172) 91 90 50 info@kaznexinvest.kz (reception)

Representative office in AlmatyOffices 502, 505, 5th floor,111 Gogol str., Almaty,050004, Republic of Kazakhstan Tel.: +7 (727) 259 06 90,Fax: +7 (727) 258 21 51narbayev@kaznexinvest.kz

Representative office in ChinaOffice 2104, Full Tower, #9Dong San Huan Zhong Lu Street, Mid-road Eastern Third Ring Road, Chaoyang District, Beijing, ChinaCode: 100037Tel./Fax: +86 (10) 8591 06 77,Mob.: +86 150 1133 28 23msaken8@gmail.com

On investment enquires:Tel.: +7 (7172) 91 90 40,ext. 1070, 1042 request@kaznexinvest.kz

On export development enquires:Tel.: + 7 (7172) 91 90 40, ext. 1010, 1016 export@kaznexinvest.kz

On export promotion enquires:Tel.: + 7 (7172) 91 90 40,ext.1030, 1017

www.kaznexinvest.kzwww.invest.gov.kz

«NATIONAl ExPOrT ANd INvESTmENT AGENCy «KAZNEx INvEST» JSC

ministry of Industry and New Technologies of the republic of Kazakhstan

Contacts