Republic of Kazakhstan “Ontustyk” SEZ

1. Republic of Kazakhstan“Ontustyk” SEZ A Competitive Base for Textile Investment

2. Content • Republic of Kazakhstan • Stable business conditions • Banking sector • Textile industry • Resource base • Logistics • Cotton-textile cluster • “Ontustyk” Special Economic Zone • Comparative analysis • Requirements for the investors • To sum up

3. Turkey Pakistan India A strategic location in Central Asia

4. Stable business conditions • Political and Social Stability • GDP growth - 9% • Inflation level below 8% • Unemployment level below 7% • Increasing foreign investment • Increasing export • Long-Term State support - Regulatory basis - Safety - Infrastructure • Global support: EBRD, ADB, World bank, others.

5. Banking sector Developed banking sector Local Banks have operating agreements with International banks Accounts in Foreign currency Local currency fully convertible Computer banking is available

6. Textile industry • Joint Stock Company “UTEKS” is a cotton processing plant : 6 thousand tons of OE.Product range: Combed and cotton yarn.Machinery: Rieter. • Joint Stock Company “MELANGE” : cotton plant producing 5 thousand tons of yarn annually. Product range: Cotton yarn and fabrics. Machinery: Dornier, Thies, Benninger. • “Kazakh Russian Textile Alliance” LLP : joint venture with Russian holding. Production capacity is 45 million m2 of fabrics. Product range: Gray cotton cloth. Machinery:Rieter, Picanol, Benninger. • Nimex Corporation – 2 ginning plants, the total annual production capacity of both plants is 120 thousand tons.Product range: Yarn and fabrics.Machinery:Rieter, Trutzschler.

7. Resource base • Availabilityof local cotton • Proximity to regional cotton producers • Low energy costs • Availability of water supplies • Attractive labor cost

8. Resource base Technical characteristics of cotton

9. Logistics • South • Kazakhstan • - a strategic location in Central Asia • easy access to regional raw material • availability of auto and train networks • international airports • - reputable national carrier • Established logistics • - Russia, Turkey, ЕU and USA

10. Cotton-Textile cluster Made up goods Fabric finishing and dyeing Fabric production Yarn production Cotton- fiber Raw- cotton

11. Cotton-Textile cluster • The law of RK “On Cotton Industry Development” • Cotton research institute • Highest quality seeds production plant • Cotton quality rating laboratories • Ginning plants • Transportation-logistic centers, cargo-warehouses • State subsidies: -40% cost of original and highest quality seeds - 40% cost on water delivery services - 40% cost of mineral fertilizers, seed disinfectors, herbicides - part of the cost of combustive-lubricating materials - part of the costs on irrigation and drainage of the irrigated area - 100% cost on combating agricultural pests • Development of new areas under crop for cotton growing • “Ontustyk” Special Economic Zone

12. “Ontustyk” Special Economic Zone • 200 Hectares near Shymkent (South Kazakhstan) reserved for textiles • Advantageous tax laws • Free Customs Zone • Infrastructure • State support

13. “Ontustyk” SEZPreferential conditions for 10 years Corporate Income Tax 0% 0% VAT 0% Property Tax Land Value Tax 0% Exemption Customs Duties Administrative support Managerial Board SEZ Tax Authority SEZ Customs Authority Infrastructure Budget Taxation and Customs Support Infrastucture

14. “Ontustyk” SEZMain manufactures

15. “Ontustyk” SEZ Additional manufactures

16. “Ontustyk” SEZ Service Facility • Temporary storages • Certification centers • Bank departments • Service companies (repair and maintenance of textile • equipment, spare parts delivery, training centers) • Service companies (deliveryof dyes, chemicals, • accessories, etc.) • Alternative energy and industrial water suppliers • Aid posts • Fire station

17. “Ontustyk” SEZ Main indexes • NUMBER OF MANUFACTURING PLANTS : • > 15 textile enterprises • INVESTMENT VOLUME: • > $ 500 millions • USE OF LOCAL COTTON : • > 100,000 tons/year

18. Requirements for the investors • 100% cotton products • Use not less than 30% of local cotton • Vertically organized companies • High quality products • Modern technology • new machinery • Strong Market plan • Input of technical know-how and people

19. ComparativeanalysisIndustrial costs

20. ComparativeanalysisIndustrial costs ELECTRICITY $ /kW TURKEY 0,089 INDIA 0,0 86 PAKISTAN 0,065 CHINA 0,06 0 KAZAKHSTAN 0, 0 47 UZBEKISTAN 0,02 5 GAS $ /m3 TURKEY 0,24 0 INDIA 0,181 CHINA 0,122 KAZAKHSTAN 0,075 UZBEKISTAN 0,02 5 LABOR COST $ /h TURKEY 2,88 KAZAKHSTAN 0,95 CHINA 0, 76 INDIA 0,67 UZBEKISTAN 0,40 PAKISTAN 0,37

21. Comparativeanalysis Terms offered to investors TURKEY CHINA PAKISTAN INDIA KAZAKHSTAN UZBEKISTAN INCOME 0% 33% 39% 36,6% 0% 18% TAX VAT 0% 17% 15% 12,5% 0% 20% FINANCIAL B - A - B+ BB+ BBB+ RATING MEMBERSHIP 1995 2001 1995 1995 NO NO IN WTO

22. To sum up • Favorable business conditions • Political and social stability • Long-term tax preferences • Free customs zone • Regional hub with low cost raw material • Competitive production costs

23. Republic of Kazakhstan President of the Republic of Kazakhstan Nursultan Nazarbaev «We stand for the mutually beneficial two-way relationship with the Eastern and Western countries…Kazakhstan considers them to beimportant trade and economic partners and we continue to adopt their advanced experience of creation high-technology productions with high value added cost».

24. State Authority «Ontustyk» Special Economic Zone Directorate Kazakhstan, South Kazakhstan Region, Shymkent city, Lengerskoye highway, 7km. Tel./fax: +7 (3252) 51-11-93 www.textilezone.kz E-mail: info@textilezone.kz