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Invest in Kazakhstan

BUSINESS FRIENDLY

ENVIRONMENT SOCIAL AND

ECONOMIC STABILITY ATTRACTIVENESS FOR

INVESTMENTS

SUSTAINED

HIGH GROWTH

INCOME

EQUALITY

FAVORABLE

TAX REGIME

ACCESS TO MAJOR

REGIONAL MARKETS

SKILLED AND EDUCATED

WORKFORCE

GOVERNMENT

SUPPORT

WHY INVEST IN KAZAKHSTAN?

1 2 3

4 5 6

7 8 9

www.invest.gov.kz 2

1

5

18

29

35

40

69

78

New Zealand

South Korea

Ireland

France

Kazakhstan

Russia

Turkey

China

BUSINESS FRIENDLY ENVIRONMENT

Doing Business 2017 provides objective measures of business regulations and their enforcement

Source: World Bank, Doing Business 2017

Rank (out of 138)

Country Score

1 Switzerland 5.81

28 China 5.57

37 Azerbaijan 4.55

43 Russia 4.51

53 Kazakhstan 4.41

55 Turkey 4.39

76 Iran 4.12

111 Kyrgyzstan 3.75

Source: World Economic Forum, GCR 2016 - 2017

Global Competitiveness Index integrates the macroeconomic and the micro/business aspects of competitiveness of countries

Kazakhstan is located on the 53rd position in the ranking of global competitiveness. Among the CIS countries Kazakhstan is in 3rd place after Azerbaijan (37th place) and Russia (43rd place). Kazakhstan showed high results in 13 indicators (top 30), including:

- Transparency of government policymaking; - Strength of investor protection; - Quality of railroad infrastructure; - No. of procedures and time to start a business; - Government debt; - Internet access in schools and etc.

Kazakhstan is ranked 35th among 190 nations in the category “ease of doing business.” Kazakhstan is also marked as the best reformer for the 4th time with the implementation of 7 business reforms in:

- the process of starting a business; - obtaining of construction permits; - getting electricity; - the protection of minority investors; - resolving insolvency; - trading across borders; - contract enforcement.

+16 (compared to 2016)

(out of 190)

www.invest.gov.kz 3

SOCIAL AND ECONOMIC STABILITY

SUSTAINABILITY

Social Stability Development of human capital and equal access to all social services

Economic Stability Dynamic growth of the economy and increasing FDI inflow

International

presence Membership in OSCE, WTO and other international organizations

Harmonious society Ethnic Harmony and Multi-Vector Foreign Policy

Government stability Good governance and the rule of law

Availability of natural

resources Large reserves of natural resources

www.invest.gov.kz 4

FDI inflow Billion USD

22.2 26.5

28.9 24.1 23.7

14.8

20.6

5.4

2010 2011 2012 2013 2014 2015 2016 1Q

2017

ATTRACTIVENESS FOR INVESTMENTS

FDI inflow in 2016, $ mln Breakdown by regions

SOURCE: National Bank of the RK, Committee on Statistics of the MNE RK

0-300

300-1,000

1,000-3,000

over 3,000

Mangystau

region $479.5 mln

Karaganda region $304.2 mln

South Kazakhstan

region $283.5 mln

East Kazakhstan region $2,458.5 mln

Atyrau region $8,512.0 mln

Astana city $197.5 mln

Almaty city $4,675.8 mln

Akmola region $253.4 mln

Kyzylorda region $206.8 mln

West Kazakhstan region $1,356.8 mln

Aktobe region $1,015.0 mln

Almaty region $100.6 mln

Zhambyl region $149.4 mln

Kostanay region $278.1 mln

Pavlodar region $362.8 mln

North Kazakhstan region $2.5 mln

Top 5 investors in Kazakhstan 2016, $ mln

China 960.9

France 1,137.3

Netherlands 7,655.5

Switzerland 2,589.4

USA 3,423.8

FDI inflow, Breakdown by sectors, % of total

26,9%

44,1%

10,1%

6,8%

12,1%

34,3%

23,6%

18,4%

11,1%

12,6% 2016

2010

Mining and Quarrying Professional, scientific and technical activities (including geological exploration and prospecting activities) Manufacturing Wholesale and retail trade Other

www.invest.gov.kz 5

GDP, current prices Billion USD

184.4

133.8 157.9

173.9 188.5

204.6 217.0

232.9

1.2 1.1

2.5

3.4

2.8 3.2

3.9

4.6

-

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

5,0

-

50,0

100,0

150,0

200,0

250,0

2015 2016 2017 2018 2019 2020 2021 2022

GDP per capita, current prices Thousand USD

10.4

7.5 8.7 9.4 10.0 10.7 11.2 11.9

2015 2016 2017 2018 2019 2020 2021 2022

SUSTAINED HIGH GROWTH

Real GDP growth in Kazakhstan is expected to strengthen to 2.5 percent this year, reflecting higher oil production and the effect of substantial fiscal stimulus spending.

Real GDP growth Constant prices,

% change

SOURCE: IMF www.invest.gov.kz 6

SOURCE: Human Development Report 2016; Committee on Statistics of the MNE RK

Gini coefficient (World Bank most recent Gini index estimates)

According to Human Development Report 2016, Kazakhstan’s Human Development Index (HDI) value for 2015 is 0.794 - which put the country in the high human development category - positioning it at 56 out of 188 countries and territories.

0 = income equality 100 = income inequality

63.4

50.5

42.2

41.6

41.1

35.2

32.1

30.1

28

27.8

0 10 20 30 40 50 60 70

South Africa

Chile

China

Russia

USA

India

Japan

Germany

Netherlands

Kazakhstan 1

Updated Committee on Statistics Data 1

INCOME EQUALITY

www.invest.gov.kz 7

17,7

8,8

18,2

13

16,2

6,4

14,3

28,5

36,1

19,9

24,8

11,2

19,5

19

2,5

3

2

1,8

3,1

2,1

0 10 20 30 40 50 60 70

Tajikistan

Russia

Turkey

Azerbaijan

Kazakhstan

Kyrgyzstan

Georgia

Profit taxes Labour taxes Other taxes

According to the joint report by PwC and the World Bank Group «Paying Taxes 2017» Kazakhstan is 18th in terms of favorable tax climate in comparison with tax regimes of 189 economies.

Paying Taxes

SOURCE: PwC. Paying Taxes 2017

18th

FAVORABLE TAX REGIME

Central Asia & Eastern Europe Total Tax Rate (%)

16.4

29.0

29.2

39.8

41.1

47.4

65.2

34.2 Regional average

Astana International Financial

Centre (AIFC)

The AIFC is a financial hub for Central Asia, EAEU, the Caucasus,

Western China, the Middle East, Mongolia, and Europe. Effective

from 2018, the centre provides a special legal regime based on the

principles of English law, independent financial regulation in accordance with international standards, tax preferences for a

period of 50 years, simplified visa and labour conditions, and has English as an official language.

www.invest.gov.kz 8

500 million people within 2,000 km • Central Asian markets of 49 mln • Countries bordering the Caspian Sea 235 mln • Western China with 21 mln

Access to a common market of Eurasian Economic Union with more than 180 mln consumers

ACCESS TO MAJOR REGIONAL MARKETS

Port infrastructure of Kazakhstan in other countries.

The transcontinental auto corridor “Western Europe – Western China” • Cargo transportation time from

Lianyungang in China to St. Petersburg in Russia about 10 days

SOURCE: IMF

2016

Armenia GDP per capita $ 3.5 thousand

Belarus GDP per capita $ 5.1 thousand

Russia GDP per capita $ 8.9 thousand

Kyrgyzstan GDP per capita $ 1.1 thousand

Seaport of Batumi

Port of Lianyungang

10 days

Kazakhstan

www.invest.gov.kz 9

.

Educational attainment

Rank (out of 130) Country

2 Singapore 18 Russia 34 Italy 40 Kazakhstan 69 Turkey 96 China


5 Singapore 16 Russia 37 Kazakhstan 64 Italy 79 Turkey 96 China

Source: World Economic Forum, The Human Capital Report 2016


7 Kazakhstan 14 Russia 28 Italy 39 Singapore 54 China 89 Turkey

High-skilled employment share (25-54 age group)

Tertiary education attainment (25-54 age group)

Secondary education attainment (25-54 age group)

Human Capital Index 2016 Kazakhstan ranked 29th out of 130 world economies for the Human Capital Index.

Population of Kazakhstan – 18 mln people

9 mln

The economically active population aged 15 +

Unemployment rate 4.9%

8.5 mln

Employed population

of the employed population had higher and secondary professional (special) education (6.3 mln)

74.3%

57% Urban

population

Gross enrolment rate in higher

education in 2015

48.4%

NU is the newest university in Kazakhstan that is committed to working according to international academic standards. Each of the University's schools and research centers is being developed in cooperation with the leading universities and research institutions:

- Duke University (USA) - University of Cambridge (UK)

Bolashak International Scholarship is awarded to high-performing students from Kazakhstan. Throughout the whole period of its realization Bolashak Scholarship has been granted to 12,000 Kazakhstan citizens for study in 170 best universities of 35 countries.

SKILLED AND EDUCATED WORKFORCE

Other universities in Kazakhstan also train highly qualified specialists through cooperation with world-leading institutions like the ENA, National School of Administration (France), Wroclaw university (Poland), Università di Bologna (Italy) and etc.

- University of Warwick (UK) - National University of Singapore, etc.

www.invest.gov.kz 10

Priority sectors

12

Agro – industrial-complex of Kazakhstan

www.invest.gov.kz

Vegeculture

Agriculture

Rice-growing

Cotton breeding

Melon-growing

Meat-and-diary

Cattle farming

Pig breeding

Sheep breeding

Camel husbandry

Аstana

Аqtobe

Усть-

Каменогорск

Кaraganda

Pavlodar Кostanay

Аktau

Кokshetay

Taldykorgan

Semey

Аtyrauy

Uralsk

Dzezkazga

n

Saratov

Аstrahan

Bishkek

Chelabinsk

Kurgan

Petropavlovsk Omsk

Тараз

Аlmaty

Shymkent

Kyzylorda

Horse breeding

Over 80% of the land Is areas in Kazakhstan

The 9th largest country in the world

~ 20% of the population Is employed in agriculture of food industry

More than 7% of the Total contribution to the Gross Value Added of the country (2016)

More than 210 mln ha agricultural land

13

Machinery of Kazakhstan

14

Infrastructure of Kazakhstan


Retail sector of Kazakhstan

Grocery retail market bln USD

The volume of Internet commerce bln USD

7.3 8.2 9.3 10.2 11.3 12.4

2016 2017 2018 2019 2020 2021

274.3 355.7 469.8 597.5 748.5 923.7

2016 2017 2018 2019 2020 2021

11.7 12.8 14.3 15.5 16.8 18.1

2016 2017 2018 2019 2020 2021

Non-grocery retail market bln USD

Market size

48,6% 28,6%

22,7%

Paid services

Food products Non-food products

The structure of household spending in Kazakhstan (2016)

Grocery

Convenience Stores

Discounters and hypermarkets

Modern Grocery Retailers

Non-grocery Homewares and Home Furnishing

Stores

Home and Garden Specialist

Retailers

Grocery retail

Vacant market size for foreign investors in modern formats of trade can reach more than 2 bln USD by 2021, of which:

The entering of PCs in Kazakhstan reached 74%, while the entering of mobile devices reached 64% of households.

In Kazakhstan, the number of Internet users per 100 people

73

more than 1 bln USD vacant market size in hypermarkets

2016 2018

2021

597.0

mln USD 918.6

1,633.2

Non-grocery retail

Vacant market size for foreign investors in the retail sales of goods for home and garden can reach more than 800 mln USD by 2021. At the same time, the size of the home goods retail market will reach 727.2 mln USD.

E-commerce

The development of the trade sector in Kazakhstan is characterized by the displacement of traditional formats of trade with modern ones, the dominance of large retail chains, the restructuring of the supply system towards vertical integration, the use of modern

sales, marketing and merchandising technologies, and the emergence of new forms of trade such as electronic and mobile commerce.

Potential directions of development in Kazakhstan

GOVERNMENT SUPPORT

Tax preferences

Preferences under investment priority projects

Corporate income tax (up to 10 years)

Land tax (up to 10 years)

Property tax (up to 8 years)

0%

Employment of foreign labour out of quota and without permits

Exemption from customs duties

Preferences under investment projects

Customs duties 0% up to 5 years on imported: – major equipment and spare parts to it; – accessories, raw materials.

The state in kind grants

Free land, buildings, structures, machinery and equipment, etc.

How to get preferences

Free foreign labour employment

GOVERNMENT SUPPORT FOR INVESTMENT PROJECTS

Investment Incentives

* Determined by the Decree of the Government of the Republic of Kazakhstan No. 13 "On some issues of implementation of the state

support of investments“ dated January 14, 2016

** In 2017 1 MCI = 2,269 KZT. According to the exchange rate of the National Bank of Kazakhstan as of 25.08.2017: $1 = 331.22 KZT,

€1 = 390.48 KZT

Conformity to activities included in

the list of priority activities for investment

projects *

Investments volume not less than

two-million-fold rate of MCI**

Conformity to activities included in

the list of priority activities for investment

priority projects

Newly established legal entity

(the state registration is carried out no earlier than 24 calendar months before the

application)


Investment Ombudsman

Visa-free entrance

Investors Service Centre (One Stop Shop)

The purpose of the Investment Ombudsman is to protect the rights and legitimate interests of foreign investors in Kazakhstan.

• Provision of 363 public services for investors (investment contract, land, visa support, etc.)

• Investment law consultations

From January 1, 2017, a 30-day visa-free regime is introduced for citizens of more than 60 countries, including all 35 OECD member-countries.

Investment Incentives



FISCAL INCENTIVES

• Corporate income tax • Land tax • Property tax • Social Tax (for 5 years) • Exemption from the VAT

0%

Free plot of land for the entire period of existence of a SEZ

Simplified procedure for employment of foreign labor

NON-FISCAL INCENTIVES EXEMPTION FROM CUSTOMS DUTIES

For goods • imported into the SEZ

territory • exported* from the SEZ

territory to the Customs Union

In addition, foreign investors may invest in Special Economic Zones of Kazakhstan. Within 10 special economic zones the following preferences are

provided:



KAZAKH INVEST – "ONE STOP SHOP"

IMPLEMENTATION OF INVESTMENT PROJECTS

SUPPORT FOR FOREIGN INVESTORS

MONITORING OF THE IMPLEMENTATION OF

INVESTMENT PROJECTS

SOLVING EMERGING ISSUES

FOREIGN REPRESENTATIVES

REGIONAL SUPPORT FOR FOREIGN INVESTORS

EXPORT PROMOTION

SYSTEMIC FEEDBACK FROM GOVERNMENT BODIES AND CLOSE INTERACTION WITH INTERNATIONAL ORGANIZATIONS ARE ALSO INCLUDED IN THE FUNCTIONAL OF THE COMPANY

UNIFIED NEGOTIATOR ON BEHALF OF THE

GOVERNMENT TO ELIMINATE BUREAUCRACY


INTERNATIONAL NETWORK OF KAZAKH INVEST


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