INVESTMENT OPPORTUNITIES OF SOUTH KAZAKHSTAN REGION

Kazakhstan

Capital: Astana city

Territory : 2,7 mln sq/m2 (9th place in the world)

Population : 17 ,2 million people. (62nd place in the world)

Kazakhstan has borders with Russia, China, Kyrgyzstan and

Uzbekistan

Administrative structure: 14 oblasts, 2 cities of state importance

GDP 2013 : 224,858 billion $ (45th place in the world)

GDP per capital in2013: 12 021 $ (57th place in the world)

Currency: tenge (1 $ – 182 tenge)

Investment climate

Business environment According to - «Doing Business» in 2013 Kazakhstan ranked 50th place among 189 countries.• «Taxation» - 18th place.• «Registry of ownership» - 18th place.• «Registry of enterprise» - 30th place.

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Foreign Direct InvestmentIn 2012 holds 19th place among Top-20 countries on Foreign Direct Investment.

In 2012 Gross Foreign Direct investment in Kazakhstan achieved highest level of 28.8 billion US dollars.

In 2013 Gross Foreign Direct investment amounted 24,1 billion US dollars.

Protection of investors rights

• According to Annual Index of Global Competitiveness for 2013-2014, Kazakhstan is on 10th place investors rights protection. • Kazakhstan signed agreements on mutual protection and stimulation with 47 countries.

Foreign Investors BoardIn the country operates Foreign Investors Board under the President of Kazakhstan. Board develops and offers recommendations for President and Government of Kazakhstan for consideration on issues linked with investment activities in Kazakhstan.

Investment ombudsmanIn order to apply systematic approach in solving issues of investors working in Kazakhstan, Investment ombudsman is created. Its main function – regulation of arguments and prevention of international investigation.

Investment advantages

Volume of the market - over 170 million people with GDP sum of 2 trillion US Dollars.

United trade rules within Customs Union: Single customs territory; Single foreign trade policy; Single customs rule, Single customs codex; Free flow of goods among Customs Union.

Taxation regime

Most attractive taxation regime among CIS and Central Asian countries (Corporate Income Tax – 20%, Value Added Tax – 12%).

When implementing an investment project in the priority sectors or investment project in the textile industry in FEZ “Ontustik” exempt from the following taxes: Corporate income tax; Land tax; Property tax.

Customs Union (Kazakhstan, Russia and Belarus)

Investment preferences

Visa regime

Kazakhstan is led visa requirements for citizens of the states as:Turkey, United States, Netherlands, United Kingdom, France, Germany, Italy, Malaysia, UAE, South Korea and JapanFor more information about the visa regime in Kazakhstan can find on this link: http://southkazinvest.kz/step-by-step/get-visa/?lang=en

Favorable location• Center of the Eurasian continent, through

the territory of Kazakhstan was once the Great Silk Road.

• Main transcontinental routes linking Asia Pacific with the Middle East and Europe pass through Kazakhstan.

• Three countries of the "quartet" of the BRICS are located near Kazakhstan: Russia, China and India.

Government support measures

Taxation preferencesExemptions: corporate income tax for 10 years; land tax for 10 years; property tax for 8 years.

Natural grantsState natural grants: land, buildings, construction, cars and equipment, computing technologies, metrical and regulating instruments and equipment, vehicles, apart from cars, production inventories

Release from Taxation dutiesRelease from taxation duties during importing equipment, accessories, raw materials and spare parts, required for realization of investment projects.

Investment subsidiesCompensation of up to 30% of capital costs of the investor by the state after object input in operation

When concluding an investment contract for more than $ 20 million provides for the following preferences:

Government support measures

Involving the workforceTo investors granted the right to employ foreign labor for the entire period construction of investment project and one year after the object input in operation, beyond the quota without permission

Stability of tax ratesGuaranteed "stability" of tax rates (excluding VAT and excise taxes), environmental fees and charges for a period of 10 years after the conclusion of contracts with investors

Stability of legislation of the Republic Kazakhstan Guaranteed "stability" when changing legislation of Republic of Kazakhstan within the framework of investment contracts concluded with investors

When concluding an investment contract for more than $ 20 million provides for the following preferences:

South Kazakhstan Region

Area: 117 249 km2

Population: 2 752 500 people

(1st place in Kazakhstan)

Urban population: 40%

Administrative Centre: Shymkent

(3rd big city in Kazakhstan)

Oblast structure:

4 cities (Shymkent, Kentau, Turkestan,

Arys)

and 11 districts.

Higher Education Establishments:

12 Universities, 77,7 thousand students

Ethnic groups: over 100 nationalities

100% cotton-yarn

99,2% transformators

48,0% pharmaceutical

products

46,1% petrol

22,9% heating oil

16,8% cement

15,0% flourProportion of South Kazakhstan in Kazakhstani production

Prioritized fields of economy

1. Agro-industrial complex

2. Light industry

3. Pharmacy

4. Machinery manufacturing

5. Construction industry

6. Energy

7. Tourism

8. Logistics

Agribusiness and Food Industry

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• 100% cotton;• 71% of the grapes;• 66% melons;• 51% Safflower oil;• 42% of the fruit;• 25% vegetables.

In agriculture of the SKO 38 % occupied economically active population, or more than 500 thousand people.

For the period 2010-2012. production of meat and meat products - grew by 14.8%, dairy products - 13.9%, bread and bakery products - 13.4%, beverages - 26.8%.

In 2013, the food produced on the $ 721 million 27.2% of total industrial production and 12.7% of the national production of food and beverages.

75.6% of greenhouse complexes are located in the SKR

SKO share in volume of production RK In SKO work more than 50

large and medium-sized enterprises in the food industry.

Agro-industrial zones

Agro-industrial zone «Garden»

Location: Kazygurt districtAllocated land: 1 000 haGovernment investment cost ( construction of infrastructure): 100 million tengePrivate investment cost (expecting): 4,6 billion tenge

Agro-industrial zone «Greenhouse»

Location: Shymkent cityAllocated land: 62 haGovernment investment cost ( construction of infrastructure): 555 million tengePrivate investment cost (expecting): 9,2 billion tenge

Government assistance:

- Free land;- Ready infrastructure (heating, electricity, fruit storage, domestic placement);- Consultation of technology election;- Agro support;- Support in obtaining credit in «KazAgro» JSC;- Support in obtaining government subsidy.

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Light industry SKR is a center for the sale of cotton and textile cluster Over 50 cotton processing, weaving and sewing companies Is the only area in Kazakhstan where cotton is grown and annual gross harvest

of 350 thousand tons of cotton. Cotton processing plants annually produce more than 100 tons of fiber. The volume of exports of cotton fiber in Russia is more than $ 30 million For the development of the textile industry operates FEZ "Ontustik". The

territory of FEZ "Ontustyk" 200 hectares, the SEZ infrastructure 100% complete.

Large textile company:    JSC "Utex"

  JSC "Melange"

   LLP «SOUTH TEXTILINE KZ»

   LLP "ginneries"

   LLP «Oxi Textile»

   LLP "Garment factory" Gauhar "

   LLP "Hlopkoprom cellulose"

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On SEZ

Release

Administrative body

FEZ tax authority

The customs authority FEZ

Budget for infrastructure

Property tax

Land tax

Customs

Administrative support

Tax and customs support

Corporate tax

Infrastructure

On the territory of the Republic of Kazakhstan

0%

0%

From 11,2$/ha

1,5%

20%

From 5 - 20%

0%

Advantages of SEZ "Ontustik"

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Pharmaceutics

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90%

48%

Import

Production in RK

SKO

52 %

FASTEST GROWING INDUSTRIES AT THE REGIONAL LEVEL

Cadres: South Kazakhstan State Pharmaceutical Academy

The volume of production of pharmaceutical products by SKR – $ 71 million U.S. dollars

SKO share in the volume of pharmaceutical products – 48%

Level of productivity – $ 36.6 thousand U.S. dollars

Kazakhstan's pharmaceuticals market:

Large manufacturers of the pharmaceutical industry:    JSC "Chimpharm"    LLP "Zerde-Fito"    LLP SPC "Rauan"    LLP «Eco Pharm International»

Machinery manufacturing Industry during for 2010-2013. demonstrates

the dynamic development. Production volume in 2013 totaled $ 172 million, which is more than 2 times in comparison with 2010.

Prospects for development in this sector is characterized by high rates of domestic and foreign trade. So, in 2012, to the area imported machinery products for $ 417 million. Engineering companies made only 10.8% of the imported products.

A capacious market of agricultural machinery projected a perspective growth in demand for it. As of January 1, 2013 depreciation of agricultural machinery is estimated at 85%

Manufacturers Machinery Sector in SKO: 35 companies

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Construction Industry• The region has a huge amount of raw material (talc, mica, marble, feldspar, bentonite clays, tefritobazalt, vermiculite, zeolite, wollastonite, refractory and refractory clay, quartzite, mineral paint additives), required for the production of various kinds of building materials in the area.

In the area produces more than 50 kinds of basic building materials and structures

There are 30 large and medium enterprises and over 125 shops

Production of building bricks baked in the total volume of the republic occupies 14.9%, cement - 16.1%, lime - 9.8%

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Energetics

Mandatory connection objects to the nearest point of RES electricity and heating networks;

Reserve areas and priority in the allocation of land plots;

Investment incentives and preferences for theconstruction and operation of facilities for the use of renewable energy (according to the legislation);

Release objects from RES connection fees and transportation network.

Mandatory and guaranteed purchase of generated renewable energy;

Single rate for each type of RES;

Contracts for the purchase of electricity from renewable energy sources should be for the whole period of the project payback period RES.

5 WP for U.S. $ 750 million, 300 MW power

7 FES U.S. 533 million, 242 MW power 11 HPS U.S. 56 million, 35.3 MW power

Support for connecting renewable energy infrastructure facilities and transmission networks

Support for renewable energy in electricity sales

Planned to implement 23 projects in the field of renewable energy for U.S. $ 939 million with total capacity of 577.3 MW, including:

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Tourism One of the most visited tourist object in

Central Asia is the Mausoleum of Khoja Ahmed Yassawi, which is included in the UNESCO World Heritage List.

There are 18 recreation centers in the famous resort «Saryagash». Every year, these resort complexes visited by more than 30,000 people

The region has two reserve : «Aksu Zhabagly» and «Karatausky».

In order to develop tourism are created 4 tourist zones:

Touristic and recreation center «Kaskasu» Health-resort zone «Saryagash» Beach zone on reservoir storage «Shardara» Beach zone on reservoir storage «Badam»

For more information about tourism of SKO can learn on this link: http://tourismuko.gov.kz/eng/1 2 3 4 5 6 7 8

Tourism zones

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Name

Touristic and recreation

center «Kaskasu»

Health-resort zone

«Saryagash»

Beach zone on reservoir storage

«Shardara»

Beach zone on reservoir storage

«Badam»

Allocated land:

56 hа 12 000 ha 245 ha 900 ha

Required investments 230 mln. $ 120 mln. $ 192 mln, $ 384 mln. $

Government assistance:

- Free land;- Ready infrastructure (ropeway, water, electricity, gas, highway);- Support in receiving licensing documents.- Marketing research from international consulting company.

Logistics

«Southern Gateway» of Kazakhstan in international trade:

• Transport corridor «Western Europe – Western China», which is the shortest path in international traffic between Europe and China;

• motorway «Tashkent - Shymkent», opening Kazakhstan southern countries;• Trans-Asian Railway.

In Shymkent city operates an internatioanl airport, which has favorable geographical position: (1) 100 km from Tashkent; (2) 450 km from Kyzylorda; (3) 500 km from Bishkek ; (4) 700 km from Almaty.

Large enterprises:  LLP «Kazakhstan Logistic Group» -

warehouse logistics 7 tons LLP «NGOs «Zerde» - storage of

pharmaceutical products LLP «Sanjar Trade» - a logistics center LLP «Keremet center» - Growers

capacity 4 tons.

ASTANA

SHYMKENT

ALMATY

CUSTOMS UNION

Uzbekistan

Kirgizstan

Russia

China

Turkmenistan

Azer

baija

n

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Trade logistic zones

Location: ShymkentSaryagash

district Turkestan

Allocated land: 92 ha 40 ha 30 ha

Government investment cost (construction of

infrastructure):

9,3 mln $4,7 mln $

4,1 mln $

Private investment cost (expecting): 181 mln $ 30 mln $ 25 mln $

Government assistance:- Free land;- Ready infrastructure (water, electricity, gas, highway, dead-end tracks, airport access);- Support in receiving licensing documents.

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Industrial zones of districts and cities of South Kazakhstan region

1173

Working Industrial zones

Planned construction in 2014, documentations are designed

Allocated lands, documentation are designing

Total area of lands, ha

The land was allocated for Industrial zones with total area of 835,5 ha, with IZ of the Shymkent city total area is 1 172,5 ha.In 2014 planned construction of infrastructure in 7 districts of the region (Kazygurt, Saryagash, Suzak, Shardara, Tyulkubas, Baidibek and Maktaaral) In districts and cities of the region are realizing 65 projects amounting 46 billion 789 million tenge with the creation of 6407 workplaces.

International Investment Forum

«New investment opportunities within the EAEC»

Event venue of the Forum:«Rixos Shymkent» hotel, Shymkent city

Date of the Forum: 3 October 2014

Organizer of the Forum: Akimat of South-Kazakhstan region

The purpose and objectives of the Forum: Presentation of new investment opportunities of Kazakhstan with the

enhancements and additions to the legislative acts of RK on improving the investment climate, and with the creation of the Eurasian Economic Union;

Results of development in the first five-year plan of SP FIID and presentation of the second five-year plan of SP FIID;

Demonstration of investment opportunities of South Kazakhstan; Organization of a dialogue platform for local and foreign companies to discuss

opportunities for joint investment projects on the territory of South Kazakhstan; Stimulation of inter-regional and inter-sectoral cooperation.

info@shymin.kz+7 7252 36 73 38

www.southkazinvest.kz

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