JSC “Sustainable Development Fund “Kazyna” Best-practices in the formulation and implementation

1. The Gateway to Investing in Central Asia JSC “Sustainable Development Fund “Kazyna” Best-practices in the formulation and implementation of investment policies in LLDCs 1 October 2008

2. Kazynaprofile A state owned-entity of high strategic importance for the country’s economic development, hence, enjoys stable sovereign support • Created in May 2006 under Decree of the President of the Republic of Kazakhstan • Kazyna is the state owned investment holding company established to develop an investment and innovation activity through effective corporate governance in government owned development institutions • Mission – To cooperate in diversification of the economy through a partnership of state and private sectors • Goal – To increase and stimulate investment and financial activity in priority economy sectors.

3. Organization Structure Well diversified business structure Charter capital of Kazyna:$ 4247180 000 Assets: $ 6045719 000 Development Bank of Kazakhstan Investment Fund of Kazakhstan 100% 100% 100% DBK-Leasing National Innovation Fund 100% 100% Kazyna Capital Management Fund for Small Business Development 100% 100% State Insurance Corporation Corporation for Export Development 100% 100% KazInvest Participationof Kazyna: $ 4 046 925 000 Approved investments projects: $ 10 252 058 330

4. Investment Priorities of Kazyna • Infrastructure: • 1. Transport and logistics • 2. Power Industry • Metallurgy • Chemistry, petrochemistry • Business

5. Strategy Direction JSC “Kazyna” Diversification of the Economy Stabilization of the Economy • “30 Corporate Leaders of Kazakhstan” program • Investments: • Infrastructure • Metallurgy • Chemistry (Petro-chemistry) • Power Industry • Second Tier Banks Development • Instruments: • Loan • Participation in Charter Capital • Real Estate(Astana, Almaty) • SMEs support • Agricultural Industry Support

6. Stabilization of the Economy Funding allocated from the Republican Budget through JSC “Kazyna” • Construction (Astana, Almaty) $792 million • SMEs (small and medium enterprises) support $1057 million • Agricultural industry support $200 million

7. Corporate Governance: Achievements World Practice Corporate management in Kazyna • Regulation on corporate procedures • Creation of Institute of Independent Directors • 3. Strategic Planning System • 4. Internal Audit • 5. Risk Management • 2. Independent directors of Board of Directors In every subsidiary Fund. • 3. Concept and Strategy of Kazyna have been developed for the years 2008-2012 • 4. Service of Independent Internal Audit is functioning. • (Both Internal Audit and Corporate Governance are being managed by KPMG.) • 5. Universal model of risk management structure has been introduced. Corporate Management Code Corporate Ethics Code

8. Financing of industrial projects: current activity as of September 2008. • The cumulative loan/investment portfolio has made $10.3 billion. Growth by $3,6 billion or 54 %. • including 2008: • 217 projects for a total sum of $10.3 billion (share of participation of institutes of development $4 billion) have been approved • 11 projects under the program of refinancing of investment projects have been approvedfor the total sum of $331 million, the sum of refinancing $276 million. • The loan/investment portfolio in 2008 has increased in comparison with 2007 by 211 % and has made $2.7 billion (growth of portfolio in 2007 has made 94 % in comparison with 2006)

9. Innovation Development Strategy

10. Government initiatives: 30 corporate leaders Realization of the most important initiatives via Kazyna, is a sign of the Government’s limitless trust and reliance • The Program of “30 Corporate Leaders of Kazakhstan” – Co-finance of large breakthrough export oriented projects with prior approval by Kazyna and the Government • Program objective – consolidation of government and business efforts in creating new and modernizing existing production processes allowing to diversify the economy and develop export-oriented production in non-mineral resource economy sectors • The program covers interaction and collaboration of Government bodies and 100% state owned companies with business community in realizing break-through macro-projects to diversify and modernize the economy

11. Kazakhstan Image • Positive factors: • The weighed taxation and budgetary policy owing to whom the system of public finances constantly becomes stronger. • Rich in natural resources, great demand on the basic export goods. • Significant volumes of budgetary, gold and exchange currency reserves. • Negative factors: • The increased risk of that the conditional obligations of the state connected with loans of commercial banks, are realized. • Kazakhstan faces risks in the near term as an unsustainable credit boom unwinds, in a toughglobal environment.

12. Kazakhstan Image • For many years Kazakhstan financial system was considered the most advanced in the CIS, which proved to be true with high ratings from the international agencies. Because of a high sovereign rating of Kazakhstan (ВВВ + from Standard*Poor's) banks had an opportunity to borrow money in international capital markets under comprehensible prices. • External loans have provided growth of commercial banks assets. Total external duty of bank sector in the period of 2002-2007 has grown from 1,4 billion dollars, almost up to 46 billion. Due to external loans banks have increased their volumes of crediting significantly.

13. Strategic investor PROJECT Financial Investor Kazyna Cooperation with Investors • Role of Kazyna: • Identifying Investment Opportunities (Industries, Master-Plans, Projects) • Local Partner • Administrative Support (Legislation, government relations) • Long Term Financial instruments (loan and participation in charter • capital)

14. Kazakhstan: Investment opportunities and privileges • Favorable investment climate and statutory acts • Proximity to Large markets (Russia, China, CIS) • Rich in natural resources • Low cost of production (raw materials, power supply, land) • Taxprivilegesforpriorityindustries • Infrastructure (Industrial Zones, Technological Parks)