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“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC
Ministry of Industry and New Technologies of the Republic of Kazakhstan
Investing in Kazakhstan
The Second Phase of
Industrialization
KAZAKHSTAN
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
Territory: 2.7 mln. sq. km.
Population (01.02.2014): 17.2 mln.
GDP, 2013: $ 220.3 bln.
GDP per capita, 2012: $ 12 933
Major languages
• Kazakh (state language);
• Russian (official, business
language);
• English, Chinese (young
generation).
Main ethnic groups:
• Kazakhs: 65%
• Russian: 25%
• Other: 10%
Source: The Agency of Statistics of the Republic of Kazakhstan
FDI FLOWS INTO KAZAKHSTAN
Gross FDI inflows - $ 183.9 bln.,
from which 55% were attracted between the
period 2010 – 2013 ($ 101.8 bln.)
Gross FDI inflows and outflows for the period
2005 – 2013, bln. $
Gross FDI inflows by countries for
the period 2010 – 2013, bln. $
7.9 12.1
19.4 21.3 21.4 22.2
26.5 28.9
24.1
0.3 1.3 3.2
5.0 5.4
10.5 8.0
3.0
8.7
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2005 2006 2007 2008 2009 2010 2011 2012 2013
Gross inflow of FDI in Kazakhstan from foreign direct investors Gross outflow of FDI abroad from Kazakhstani direct investors
2.5
4.3
3.0
4.5
5.3
8.0
9.2
7.3
31.5
Italy
Russia
British Virgin Islands
UK
France
China
Switzerland
USA
Netherlands
36.6 36.0%
26.0 25.5%
14.1 13.9%
25.0 24.6%
Professional,scientific andtechnical activities
Mining andquarrying
Manufacturing
Other activities
FDI FLOWS INTO KAZAKHSTAN
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
Structure of FDI by types of economic activities in bln. $ and %
2012, bln. $ 2013, bln. $
FDI in manufacturing for 2010 – 2013 in mln. $
Source: National Bank of the RK
0.0%
17.2%
15.6%
29.9%
8.7
7.3 3.4
9.6
25.1% 11.8%
33.1% 30.0%
7.3
7.3 2.8
6.7
30.4%
30.1%
11.7%
27.8%
11820 83.6%
950 6.7%
642 4.5%
718 5.1%
Manufacture of basic metals andfabricated metal products
Manufacture of food products,beverages and tobacco products
Manufacture of computer,electronic and optical products
Other sectors
MANY FOREIGN COMPANIES HAVE ALREADY INVESTED IN
KAZAKHSTAN
• SLIDE TEXT
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
WHY IS KAZAKHSTAN ATTRACTIVE FOR FOREIGN INVESTORS?
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
4 Bridge to the market of 3
billion potential customers
▪ 3 of the 5 BRICS countries are in 4 hours flight
▪ Customs Union with Russia and Belarus with a population of 170 million and a total GDP of 2 trillion. USD
▪ Open economy (trade 70% of GDP)
▪ Entry into the WTO is expected in the first half of 2014
Political stability and good
investment climate 1 ▪ A high level of trust in political
institutions and strength of investor protection (WEF 2013) in comparison with the countries of the CIS.
▪ Ease of Doing Business (50 on the list of World Bank Doing Business 2013: 22 place in the investor protection and 18 place in the payment of taxes).
Stable macroeconomic
indicators and high growth 3 ▪ GDP growth: 5.0% (IMF, forecast 2013)
▪ Low debt / GDP ratio: 13.2% (IMF, forecast 2013)
▪ Budget deficit: -2.5% (IMF 2012)
▪ Inflation rate: 6.0% (IMF, forecast 2013)
▪ Recovery of the rating to positive from stable according to the rating agency
2 Regionally attractive fiscal and
non-fiscal regime and protection
of foreign investment
▪ Attractive corporate tax rate (20%) and low VAT (12%)
▪ Fiscal and non-fiscal incentives for investors, including in SEZs
DOING BUSINESS IN KAZAKHSTAN IS MUCH EASIER THAN IN
MOST EMERGING MARKETS
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
Doing Business 2014
Country rank
Source: World Bank Doing Business 2014
146
143
134
116
112
96
92
68
65
63
50
21
4
1
Uzbekistan
Tajikistan
India
Brazil
Ukraine
China
Russian Federation
Kyrgyz Republic
Italy
Belarus
Kazakhstan
Germany
United States
Singapore
HIGH CONFIDENCE IN POLITICAL INSTITUTIONS AND
STRENGTH OF INVESTOR PROTECTION
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
35
36
37
40
41
43
50
75
84
98
100
114
115
117
128
136
146
10
10
13
19
25
41
41
41
57
57
69
69
84
84
100
100
134
The index of public trust in politicians Place in the
ranking Strength of investor protection Place in the
ranking
Source: The Global Competitiveness Report 2013-2014
1.5
1.9
2
2.2
2.2
2.2
2.4
2.4
2.7
2.9
3.3
3.4
3.5
3.6
3.6
3.8
3.8
Czech Republic
Brazil
Kyrgyz Republic
Ukraine
India
Croatia
Poland
South Africa
Russian Federation
Georgia
United States
Azerbaijan
Jordan
France
Turkey
Australia
Kazakhstan
3.0
4.7
4.7
5.0
5.0
5.3
5.3
5.7
5.7
6.0
6.0
6.0
6.7
7.0
7.7
8.0
8.0
Switzerland
Russian Federation
Ukraine
Czech Republic
Germany
Brazil
France
Australia
Turkey
India
Italy
Poland
Azerbaijan
Georgia
Kyrgyz Republic
United Kingdom
Kazakhstan
INVESTMENT INCENTIVES
• SLIDE TEXT
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
LAW OF THE RK DATED AS 08.01.2003 № 373-II «ON INVESTMENTS»
Preferences for investment projects in priority sectors
Exemption from customs duties on equipment,
components, raw materials and spare parts imported
for a project
In-kind
state
grants
CRITERIA for investment projects:
Corresponds to the List of priority activities
Tax allowances as per Tax code of the RK (deductions of
the value of the preference objects, and (or) further costs
to modernization up to 3 years)
Preferences for strategic investment projects *
Land , property tax 0% for up to 7 years Industrial subsidies for areas with low socio-
economic development
Corresponds to the List of priority activities
The volume of investment exceeds
50 million USD OR
Corresponds to the List of high-
technology products
SECTOR-SPECIFIC INCENTIVES IN 10 DEDICATED SEZS ACROSS
COUNTRY
• SLIDE TEXT
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
“National Industrial Petrochemical Technopark” SEZ
(Oil and gas industry, petrochemicals)
“Burabai” SEZ (Tourism)
“Astana new city” SEZ (mixed)
“Pavlodar” SEZ (petrochemical
industry)
“Saryarka” SEZ (metallurgy)
“Khorgos Eastern Gate” SEZ (logistics)
“Park of innovative technologies” SEZ
(IT-industry, innovations) “Chemical park Taraz”
SEZ (chemical industry)
“Ontystik” SEZ (textile industry)
“Sea Port Aktau” SEZ
(mixed)
Aktau
Atyrau
Astana Pavlodar
Karaganda
Shymkent
Taraz Almaty
ATTRACTIVE INVESTMENT INCENTIVES IN SEZS
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
FISCAL INCENTIVES in SEZs
• 0%Corporate Income Tax until 2020-2025 with possibility for extension
• 0% for land and property tax until 2020-2025 with possibility for extension
• VAT– 0% (for products consumed in SEZ) until 2020-2025 with possibility for extension
• Increase of marginal rate of depreciation for tax on the production of software to 40%
• For “Park of innovative technologies” SEZ – social tax is 0% for 5 years, under certain conditions
• For “Park of innovative technologies” SEZ – depreciation rate for software increased to 40 %
NON-FISCAL INCENTIVES
• Provision of free land in SEZ for a period of up to 10 years from registration time as SEZ tenant
• Simplified procedure for the recruitment of foreign labor
Industrialization concept 2015 – 2019
State Program of Forced Industrial and Innovative Development (SPFIID) 2015-2019 is the interdepartmental program focused on industrial development
Comments Hierarchy of Strategic Documents
Vision and strategies:
National vision – 2050
National strategic development
Plan
Concepts reflecting some aspects
of the vision
Strategic development directions
(examples):
Industrial innovation development
Infrastructure
«Green economy»
Foreign policy
Security
Social development
Authorities’ strategic plans:
Authorities’ strategic plans:
Strategic plans
Action plans
Operational plans
Long-term vision Strategy “Kazakhstan’s way – 2050: common
aim, common interests, common future”
1
Strategic Development Plan of the Republic of Kazakhstan - 2020
2
SP
FII
D 2
01
5-2
019
Infr
astr
uctu
re
Agri
culture
Serv
ices a
nd
tou
rism
Education a
nd
scie
nce
3
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
Key results and lessons from SPFIID 2010 – 2014
The process of diversification of the economy was
successfully launched through accelerated development of
the manufacturing industry, the increase of non-commodity
exports and FDI inflow in non-natural resource sectors
Employment in manufacturing hasn’t decreased despite the
negative influence of global financial crisis
Various tools and new policies to support industrial
development were successfully piloted
An effective system of institutes for industrial development
was created
Major projects, which are significant for the development of
national economy, were supported
A more narrow focus and concentration on the limited set of
industrial sectors are needed to achieve sustainable results
There is a need to organize adequate financial support for
the Program
It is necessary to simplify and improve the efficiency of
Program architecture
SPFIID 2010 – 2014 has enabled to start the industrial diversification and overcome the consequences of the global crisis in Kazakhstan
Key lessons from SPFIID 2010-2014 Positive strategic changes in the economy and the
system of governance
Due to the implementation of the SPFIID 2010-2014
Kazakhstan has already made a significant
progress in the industrial development
Within the next five-year program of industrial
development main focus will be made on improving
efficiency
1 1
2
3
4
5
2
3
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
Goals, tasks and expected results of SPFIID 2015 – 2019
The Second Five-Year Plan is aimed at forced industrial development considering new opportunities created by SPFIID 2010-2014 and lessons learned
Promote diversification and increase industry competitiveness
Program Goal
1. Increase added value and effectiveness in natural resources processing industries;
2. Accelerate manufacturing development;
3. Improve business climate for industrial development;
4. Establish the basis for the “sectors of the future” development through innovation
clusters creation and the development of innovation infrastructure;
5. Support entrepreneurship and SMEs development.
Program Objectives
Conditions:
Investment agreement with TNCs
Non-financial incentives: Financial incentives:
Investments > $20 bln. Personnel development
The cancellation of visas for citizens of OECD countries
Cancellation of registration
Attracting foreign labor under a simplified procedure for the required period
The favorable conditions for investors’ arrival on a “persona grata” principle
Stability of legislation for 10 years – guarantees of non changing
tax sphere
migration sphere
tariff sphere
New incentives
Preferential treatment
Infrastructure
Special Economic Zones
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
Improving of the investment climate. The ongoing work.
environmental sphere
Effect
Reimbursement of expenses after commissioning
(30%)
Guaranteed order
Implementation of “One-stop shop” principle for investors
Exemption from CIT for 10 years
• Advancement in the world rankings of competitiveness
• Improving the country's position on key parameters of doing business
• Stable economical growth of Kazakhstan • Stimulation of further economical
development
• Further stimulation of FDI inflows in country’s economy – creation of comfortable and conducive environment for it
• Increasing the investment attractiveness of country
www.invest.gov.kz
“NATIONAL EXPORT AND INVESTMENT AGENCY “KAZNEX INVEST” JSC | Ministry of Industry and New Technologies of the Republic of Kazakhstan
THANK YOU FOR YOUR
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