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INVESTMENT OPPORTUNITIES OF SOUTH KAZAKHSTAN REGION

INVESTMENT OPPORTUNITIES OF SOUTH KAZAKHSTAN REGION. Kazakhstan. Capital : Astana city Territory : 2,7 mln sq /m2 (9 th place in the world ) Population : 17 ,2 million people . (62 nd place in the world ) Kazakhstan has borders with Russia , China , Kyrgyzstan and Uzbekistan

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INVESTMENT OPPORTUNITIES OF SOUTH KAZAKHSTAN REGION

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  1. INVESTMENT OPPORTUNITIES OF SOUTH KAZAKHSTAN REGION

  2. Kazakhstan • Capital: Astana city • Territory : 2,7 mlnsq/m2 (9th place in the world) • Population : 17 ,2 million people. (62nd place in the world) • Kazakhstan has borders with Russia, China, Kyrgyzstanand Uzbekistan • Administrative structure: 14 oblasts, 2 cities of state importance • GDP 2013 : 224,858 billion$(45thplace in the world) • GDP per capital in 2013: 12 021$ (57thplace in the world) • Currency:tenge (1 $ – 182 tenge)

  3. Investment Climate Business environment • According to - «DoingBusiness» in 2013 Kazakhstan ranked 50th place among 189 countries. • «Taxation» - 18thplace. • «Registry of ownership» - 18th place. • «Registry of enterprise» - 30thplace. • Foreign Direct Investment • In 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. 111

  4. Protection of Investor Rights • According to Annual Index of Global Competitiveness for 2013-2014, Kazakhstan is on the 10thplace by protection of investor rights. • Kazakhstan signed agreements on mutual protection and stimulation with 47 countries. Foreign Investors Board • Foreign Investors Board under the President of Kazakhstan operates in the country. Board develops and offers recommendations for President and Government of Kazakhstan for consideration on issues concerning investment activities in Kazakhstan. Investment ombudsman • In 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.

  5. Investment Advantages • Customs Union (Kazakhstan, Russia and Belarus) • Volume of the market - over170 millionpeoplewith 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 members. 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.

  6. Investment Preferences • 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 BRICSare located near Kazakhstan: Russia, China and India. Visa regime • Visa-free regime has been implemented for the countries with highest investment activities, in order to improve the investment climate in Kazakhstan, amongst them: • Turkey, United States, Netherlands, United Kingdom, France, Germany, Italy, Malaysia, UAE, South Korea and Japan • For more information about the visa regime in Kazakhstan can find on this link: http://southkazinvest.kz/step-by-step/get-visa/?lang=en

  7. Government Support Measures In case of signing an investment contract for more than $ 20 million the government provides the following preferences: • Taxation preferences • Exemptions: • corporate income tax for 10 years; • land tax for 10 years; • property tax for 8 years. Full-scale grants Land, buildings, construction, cars and equipment, computing technologies, metrical and regulatinginstruments and equipment, vehicles, apart from cars, production inventories Release from Customs duties Release from customs duties in the process of importing equipment, accessories, raw materials andspare parts, required for realization of investment projects. Investment subsidies Compensation of up to 30% of capital costs of the investor by the state after object input in operation

  8. Government Support Measures In case of signing an investment contract for more than $ 20 million the government provides the following preferences: Involving the workforce To investors granted the right to employ foreign labor for the entire construction period of investment project and one year after the enterprise will start to operate, beyond the quota without permission Stability of tax rates Guaranteed "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 of Kazakhstan Guaranteed "stability" when changing legislation of the Republic of Kazakhstan within the framework of investment contract signed with investors

  9. 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) and11 districts. • Higher Education Establishments:12 Universities, 77,7 thousand students • Ethnic groups: over100nationalities 100% cotton-yarn 99,2%transformators 48,0% pharmaceutical products 46,1% petrol 22,9% heating oil 16,8% cement 15,0%flour Proportion of South Kazakhstan in Kazakhstani production

  10. Prioritized Fields of Economy Agro-industrial complex Light industry Pharmaceuticals Machinery manufacturing Construction industry Energy Tourism Logistics

  11. SKO share in volume of production RK Agribusiness and Food Industry • 38 % of economically active population of SKO occupied in agriculture, or more than 500thousand people. • For the period of 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%. • 75.6% of greenhouse complexes are located in the SKO • More than 50 large and medium-sized enterprises work in the food industry of SKO. • 100% cotton; • 71% grapes; • 66% melons; • 51% Safflower oil; • 42% fruits; • 25% vegetables. • In 2013, the food produced for $ 721 million 27.2% of total industrial production and 12.7% of the national production of food and beverages. 1 2 3 4 5 6 7 8

  12. Agro-industrial Zones Agro-industrial zone «Garden» Location: Kazygurt district Allocated land: 1 000 ha Government investment cost ( construction of infrastructure): 100 million tenge Private investment cost (expecting): 4,6 billion tenge Agro-industrial zone «Greenhouse» Location: Shymkent city Allocated land: 62 ha Government investment cost ( construction of infrastructure): 555 million tenge Private 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 loan in «KazAgro» JSC; - Support in obtaining government subsidy. 1 2 3 4 5 6 7 8

  13. Light Industry • SKO is the center for the sale of cotton and textile cluster • Over 50 cotton processing, weaving and sewing companies • SKO is the only regoionin Kazakhstan where cotton is grown and annual gross harvest of cotton is 350 thousand tons. • 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 • FEZ "Ontustik“ operates for the development of the textile industry. The territory of FEZ "Ontustyk" is 200 hectares, the infrastructure of FEZ is 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" 1 2 3 4 5 6 7 8

  14. Advantages of FEZ "Ontustik" On FEZ On the territory of the Republic of Kazakhstan Corporate tax 0% 20% Property tax 0% 1,5% Land tax 0% From11,2$/ha Customs Release From5 - 20% Administrative body FEZ tax authority The customs authority FEZ Budget for infrastructure Administrative support Tax and customs support Infrastructure 1 2 3 4 5 6 7 8

  15. Pharmaceutics Kazakhstan'spharmaceuticals market: FASTEST GROWING INDUSTRIES AT THE REGIONAL LEVEL Human resources:South Kazakhstan State Pharmaceutical Academy The volume of production of pharmaceutical products by SKR – $ 71 million U.S. dollars Share of SKO in the volume of pharmaceutical products – 48% Level of productivity – $ 36.6 thousand U.S. dollars Large manufacturers of the pharmaceutical industry:    JSC "Chimpharm"    LLP "Zerde-Fito" LLP SPC "Rauan"    LLP «Eco Pharm International» 1 2 3 4 5 6 7 8

  16. Machinery Manufacturing • Machinery manufacturing demonstrates the dynamic development for the period of 2010-2013. Production volume in 2013 totaled $ 172 million, which is more than 2 times in comparison with 2010. • Prospects for development in this sector are characterized by high rates of domestic and foreign trade. Total cost of $ 417 million machinery products has been imported to the region in 2012. 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 1 2 3 4 5 6 7 8

  17. 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. • More than 50 kinds of basic building materials and structures are produced in the area • There are 30 large and medium enterprises and over 125 construction shops • Production of building bricks baked in the total volume of the republic occupies 14.9%, cement - 16.1%, lime - 9.8% 1 2 3 4 5 6 7 8

  18. Energetics Support in renewable energy infrastructure facilities and transmission networks • 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. Planned to implement 23 projects in the field of renewable energy for U.S. $ 939 million with total capacity of 577.3 MW, including: Support for renewable energy in electricity sales • 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 • 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. 1 2 3 4 5 6 7 8

  19. 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». These resort complexes are visited by more than 30,000 people every year. • The region has two reserve : «AksuZhabagly» and «Karatau». • 4 tourist zones are created in order to develop tourism : • 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

  20. Tourism Zones Government assistance: - Free land; - Ready infrastructure (ropeway, water, electricity, gas, highway); - Support in receiving licensing documents. - Marketing research from international consulting company. 1 2 3 4 5 6 7 8

  21. Logistics CUSTOMS UNION • «Southern Gateway» of Kazakhstanin 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. • International airport of Shymkent city has favorable geographical position: (1) 100 kmfrom Tashkent; (2) 450 kmfrom Kyzylorda; (3) 500 kmfrom Bishkek ; (4) 700 kmfrom Almaty. ASTANA ALMATY SHYMKENT Russia • Large enterprises: • LLP«KazakhstanLogisticGroup» - warehouse logistics 7 tons • LLP «NGOs «Zerde» - storage of pharmaceutical products • LLP «Sanjar Trade» - a logistics center • LLP «Keremet center» - Growers capacity 4 tons. China Azerbaijan Kirgizstan Uzbekistan Turkmenistan 1 2 3 4 5 6 7 8

  22. Trade Logistic Zones Government assistance: - Free land; - Ready infrastructure (water, electricity, gas, highway, dead-end tracks, airport access); - Support in receiving licensing documents. 1 2 3 4 5 6 7 8

  23. Industrial zones of districts and cities of South Kazakhstan Region • 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. • Construction of infrastructure has planned in 7 districts of the region (Kazygurt, Saryagash, Suzak, Shardara, Tyulkubas, Baidibek and Maktaaral) in 2014. • 65 projects amounting 46 billion 789 million tenge with the creation of 6407 workplaces are planned to realize in districts and cities of the region . Working Industrial zones Planned construction in 2014, documentations are designed Allocated lands, documentation are designing Total area of lands, ha 1173

  24. International Investment Forum«New investment opportunities within the EEU» Event venue of the Forum: «RixosShymkent» hotel, Shymkent city Date of the Forum: 3-4October2014 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 oblast; • Organization of a dialogue platform for local and foreign companies to discuss opportunities for joint investment projects on the territory of South Kazakhstan region; • Stimulation of inter-regional and inter-sectoral cooperation.

  25. Thank you for attention info@shymin.kz +7 7252 36 73 38 www.southkazinvest.kz

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