annual report 2012 eng

ANNUAL REPORT2012

CONTENTS

Message from the Deputy Prime Minister – Minister of Industry and New Technologies of the Republic of Kazakhstan Asset Issekeshev 4Message from the Chairman of the Governing Board of "KAZNEX INVEST" JSC Yerlan Arinov 6

1.1. Establishment Background 10

1.2. Strategy, Mission 12

1.3. Organizational structure of "KAZNEX INVEST" JSC 13

2.1. Export development and promotion 18

- Export Related Trainings for Enterprises- Exporters Expenses Reimbursement- Assistance to the domestic exporters in problems resolving - Export packaging promotion and development - Export promotion activities- Analytical platform for export

2.2. Foreign direct investment attraction 34

- Investment image promotion of the Republic of Kazakhstan - Work with investors - FDI attraction results

2.3. Cooperation with mass media 44

- Participation of Kazakhstani mass media representatives in foreign events on export promotion - Press conferences on FDI results - "KAZNEX INVEST" JSC media projects

2.4. International cooperation 50

01 ABOUT COMPANY

OPERATING ACTIVITY02

3.1. Corporate Governance 54

3.2. General Meeting of Shareholders 56

3.3. Board of Directors 57

3.4. Governing Board 60

3.5. InternalAuditOfficeandCorporateSecretary 61

3.6. Information disclosure 62

3.7. Risks Management 63

3.8. Human Resources Policy 64

CORPORATE GOVERNANCE03

"KAZNEX INVEST" JSC annual report 2012 4

Message froM Deputy priMe Minister – Minister of inDustry anD new technologies of the republic of KazaKhstan asset isseKeshev

In 2012 "KAZNEX INVEST" JSC moved onward, implementing an export and investment support state program.


Deputy Prime Minister – Minister of Industry and New Technologies of the Republic of Kazakhstan

Asset Issekeshev

ladies and gentlemen!

2012 became "a golden mean" period of the State Program on Forced Industrial and Innovative Development of the Republic of Kazakhstan for 2010-2014 (SPFIID) implementation. In three years of the program’s implementation 537 enterprises were brought in production, amounted to 1,7 trillion tenge, including around 900 billion tenge for 2012 or 8% from all output of manufacturing industry.

The foreign trade turnover of the Republic of Kazakhstan for 2012 amounted to $136,8 billion that is 9,8% more than an index number of 2011. Thus, export of the Republic of Kazakhstan increased by 5,4% and amounted to $92,3 billion. At year-end 2012 the highest rate, since an independence of Kazakhstan, of the processed goods export of $25,5 billion (27,6% of the total amount of export) was reached.

Regarding investments, according to the National Bank of the Republic of Kazakhstan datain2012theinflowofattractedFDIhasreached a record index of $22,5 billion that is for 14% more than pre-crisis level and 7% or $1,4 billion more than an index number of 2011.

In 2012 the legal framework improvement was continued by the Government. Thus, conditions of exporters’ expenses reimbursementweresimplified,changestothe investment legislation of the Republic of Kazakhstan were made.

In 2012 "KAZNEX INVEST" JSC moved onward, implementing an export and investment support state program.

The clear understanding of the state objectives and knowledge of the private sector needs allows "KAZNEX INVEST" JSC to organize Kazakhstani export promotion and FDI attraction to Kazakhstan.


Message froM the chairMan of the governing boarD of "KazneX invest" Jsc yerlan arinov

I would like to thank team of "KAZNEX INVEST" JSCfor active and fruitful work and partners –for constructive collaboration.


Chairman of the Governing Board of "KAZNEX INVEST" JSC

Yerlan Arinov

Dear friends!

In 2012 all efforts of "KAZNEX INVEST" JSC staff were aimed at implementing and achieving those target indexes which are defined in "The Strategic DevelopmentDirections of "KAZNEX INVEST" National Export and Investment Agency for 2011-2015" approved by the decision of Board of Directors in February, 2011.

Thus, over the past year as a result of the efforts aimed at export promotion, memoranda, protocols of intentions and contracts amounted to $209 million were signed.

Within development of export, expenses to 93 Kazakhstani exporters were reimbursed. With contribution of Council of Exporters the number of issues, hindering export development, was solved.

Moving towards attraction of investments, we carried out a major work on promotion of favorable investment climate of Kazakhstan. For this purpose we have organized 4 road-shows, 14 business forums, where about 200 managers of foreign companies

were invited to. So, with contribution of "KAZNEX INVEST" JSC contracts and protocols of intentions on FDI attraction amounted to $590 million, were signed.

The work on closer international cooperation is continuing. Over the past year 5 similar agencies became our partners, which allows to expand the horizons regarding exchange of experience, search of partners and, as a result, investment attraction and export development.

At the same time during the whole year the company’s Board of Directors aimed at serving the interests of all shareholders, improving company’s quality control and execution of key performance indicators. Thus, in 2012 the core documents regulating corporate governance were accepted in the new edition: Corporate Governance Code, Provision of Board of Directors, of a dividend policy, of information disclosure, etc. Well coordinated and effective efforts of representatives of shareholders and Governing Board provided growth of corporate unity.

ABO

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COM

PAN

Y


about coMpany

establishMent bacKgrounD

CORPORATION

On July 20th, 2009 by the Governmental Decree of the Republic of Kazakhstan no.1100, being as a part of Sovereign Wealth Fund "Samruk-Kazyna" JSC, shares of Corporation were transferred to the state ownership, and the rights of possession and usewerefixedbehindtheMinistry of Industry and Trade of the Republic of Kazakhstan. During this period Corporation began the preparatory stage of the new activity on FDI attraction.

National Export and Investment Agency «KAZNEX INVEST» JSC (hereinafter – KAZNEX INVEST) is one of the NationalInstitutesofDevelopment,servingtopromotediversificationofnationaleconomycreatingoptimumconditions for development and promotion of Kazakhstani processed export and FDI attraction to the priority sectors of the economy.

2003 2006 2009CMAR

The KAZNEX INVEST was established on the basis of the "Centre for Marketing and Analy- tical Researches" JSC (hereinafter – CMAR), founded by the Ministry of Economy and Budget Planning of the Republic of Kazakhstan (in accordance with the Decree of the Government of the Republic of Kazakhstan of August 1st, 2003, no.775).

CMAR→CORPORATION

On April 15th, 2006 by the Decree of the Government of the Republic of Kazakhstan no.286, the state –owned shareholding of CMAR together with other national institutes of development were transferred to the Sustainable Development Fund "Kazyna" JSC (hereinafter – "Kazyna" JSC).

On November 27th, 2006 the Concept of Corporation for export and investment promotion on the basis of CMAR establishment was approved by Specialized Board on Public Administration in the field of Industrial andInnovativeDevelopmentaffiliatedtotheGovernmentofthe Republic of Kazakhstan.

As a result, in pursuance of the Republic of Kazakhstan President’s messages to the people of Kazakhstan of 2006 and 2007 on necessity of an institute for service support of non-resource export establishment on November 14th, 2007 by the decision of the Board of Directors of "Kazyna" JSC on the basis of CMAR Corporation for Export Development and Promotion (hereinafter – Corporation) was established.


about coMpany

2010 2011

Strategic Development Directions of KAZNEX INVEST for 2011-2015 were developed and approved. The document determines mission, vision, the strategic directions, the purposes, tasks, actions and mechanisms of their implementation, and key performance indicators.

2012

According to the decision of KAZNEX INVEST's Board of Directors of December 10, 2012 (the Minutes of proceeding of the Board of Directors no.6/2012), for the purpose of increase the management efficiency of SpecialEconomic Zones (SEZ) new Business Dimension – the block on development of SEZ – was established.

At year-end 2012 a comprehensive team – with the common efforts aimed at achieving the main purposes as development of domestic production by development of export potential, investments and new technologies attraction, and as a result, integration in the world economic architecture – was created.

According to the annual Message of the President of the Republic of Kazakhstan to the people of Kazakhstan 2010 by the decision of the Only Shareholder (Ministry of Industry and New Technologies of the Republic of Kazakhstan) of April 2nd, 2010 the Corporation was transformed to KAZNEX INVEST National Export and Investment Agency. Thereby, institutional formation – of the Kazakhstani organization on development and promotion of non-resource export and FDI attraction to the priority sectors of economy – was realized.

NATIONAL AGENCY


about coMpany

KAZNEX INVEST in its activities is guided by the following program documents, determining the main directions of production capacity development of the country:

- Strategy of development of the Republic of Kazakhstan till 2030;

- The Strategic Development Plan of the Republic of Kazakhstan till 2020;

- State Program on Forced Industrial and Innovative Development of the Republic of Kazakhstan for 2010-2014;

- The program on investments attraction, SEZ development and export stimulation in the Republic of Kazakhstan for 2010-2014;

- The Strategic Plan of Ministry of Industry and New Technologies of the Republic of Kazakhstan for 2011-2015.

strategy. Mission.

Mission is the active assistance to effective functioning of national system for domestic non-resource export development and promotion and FDI attraction to the priority sectors of the economy.

vision is the reputable organization involved in the diversification of the economy, with the establishedmechanism of work and professional team.


about coMpany

organizational structure of KazneX invest

General Meeting of Shareholders

Board of Directors

InternalAuditOffice

Deputy Chairman of the Governing Board (Administrative block)

Managing Director

Managing Director

Corporate Development Department Administrative Department Legal Support and

Procurement Department

ICS Department

Analytical department

OfficeofManagingDirector on Sectors

Deputy Chairman of the Governing Board

(SEZ block)OfficeofManagingDirectoronSEZ

Managing Director

Informational Support Department

Export Development Department

Export Grants Department

Export Analysis Department

Export Strategies Department

OfficeofManagingdirector on Export Promotion

Investment Image Promotion Department

RO for Asia

RO for Europe 2

RO for Europe 1

RO for USA, Australia, UK, Israel, South Africa

Service of Managing director on regional cooperation

OfficeofManagingDirectoronRegional Cooperation RO* for Middle East

Accounting and Reporting Department

OfficeofChairman of the Board

Representativeoffice in Almaty

Representativeoffice in China

Chairman of the Governing Board Corporate Secretary

Deputy Chairman of the GoverningBoard

(Investment block)

Managing Director

Deputy Chairman of the Executive Board (Export block)

*RO–RegionalOffice


about coMpany

To achieve the vision, KAZNEX INVEST realizes its activities in four complementary strategic directions simultaneously, whicharereflectedintheStrategicDevelopmentDirectionsofKAZNEXINVESTfor2011-2015,approvedbythedecision of KAZNEX INVEST's Board of Directors of February 8th, 2011 no.1/2011:

1. Export Development; 2. Export Promotion;3. Searching and Accompanying Foreign Investors;4. Investment Image Promotion of Kazakhstan.

business-model of KazneX invest

eXport DevelopMentIncrease exporters’ level of competence concerning foreign trade, evaluation of the domestic enterprises’ export readiness, and rendering assistance in the solution of areas of concern.

eXport proMotionAssistance to the Kazakhstani exporters of processed goods in entering foreign markets, by organizing participation of Kazakhstani enterprises in goods and services promotion activities.

searching anD accoMpanying foreign

investors

Point work on search and attraction of investors, accompanying them to the regions, and rendering post-investment support.

investMent iMage proMotion of KazaKhstan Carrying out information and presentation activities.


about coMpany

inst

rum

ents

*

· consulting and service support;· training of exporters;· reimbursing of expenses; · the solution of areas of concern through Council of Exporters.

· search of potential foreign buyers;· assistance in preparation of export strategy;· matchmaking: trade missions, foreign exhibitions, promotion of trademarks and so forth.

· search of potential investors;· information support of potential investors;· accompanying foreign investors at meetings.

· carrying out business forums and road-shows;· maintanance of National Investment Interactive Internet Resource of the Republic of Kazakhstan;· information and presentation support for investment attraction.

*KAZNEXINVESTisfinancedfromtheStatebudgetandprovidesitsservicesfreeofcharge.

OPE

RATI

NG

AC

TIVI

TY


operating activity

Export development and promotion

24%

the european countries· ferroalloys · oil products · oil gases · refinedcopper · uranium · silvereXport DevelopMent

anD proMotion

For 2012 the export volume of Kazakhstan in comparison with 2011 increased by 5,3% and amounted to $92,3 billion.

Processed goods export increased by 14% and amounted to $25,5 billion that ran at 28% from the total amount of export. Data on the processed export was added up by deliveries of commercial goods for $20,6 billion, consumer goods for $3,9 billion and means of production export for $977 million.

In the general structure of the processed export traditionally considerable share is occupied by commercial goods. In the foreign markets metals, rolled steel, different oil products and semi-processed mineral resources are in stable demand.In2012therunupofcommercialgoodsexportranat9%.Forexample,flourexportgrewby10%,yellowphosphorus for 21% and polypropylene for 57%.

Thevolumeofconsumergoodssuppliesexceededthesameindexoflastyearfor28,5%,firstofall,bygrowthofexport mineral and agrofood goods. It is worth noting the export growth of pasta goods for 56%, cigarettes for 78%, household chemicals for 56%, chocolate for 26,1%, pharmaceuticals for 23% and confectionery for 8,5%.

export volume for 2011-2012, $ billion

2011 2012 run up 2011-2012Total export of the Republic of Kazakhstan 87,6 92,3 5,3%Primary 65,2 66,8 2,4%Processed 22,4 25,5 14,0%Share of processed export 26% 28%


export geography of the republic of Kazakhstan

The geographical pattern of Kazakhstani goods export did not undergo the considerable changes. Kazakhstani processed goods are delivered to 117 countries.

Export grew virtually in all directions. 24% of all volume of the processed export fell to the share of the European countries(ferroalloys,oilproducts,oilgases,refinedcopper,uranium,silver),20,5%ofprocessedexportwassuppliedtoChina(refinedcopper,ferroalloys,oilproducts,zinc,uranium),16%tothecountriesoftheCustomsUnion(CU)(uranium,refinedcopper,rolledsteel,alumina,computingmachines,ferroalloys),6%totheCentralAsianregion(flour,oilgases,oilproducts,theelectricpower,cigarettes,fertilizers),0,4%tothecountriesoftheCaucasus(rolledsteel, fertilizers, instruments and tools, accumulators).

At the year-end 2012 total exports of Kazakhstan to the CU countries decreased by 3,7% in comparison with 2011 and amounted to $6,8 billion. Total amount fell by reduction of mineral primary goods supplies (coal, ores and concentrates) in cost volume.

However, at the same time, for 2012 export of the processed goods to the CU market grew by $582 million or 16,9% and amounted to $4 billion. One of the positive points of 2012 is a critical moment within the CU when export share of the processed goods (59%) exceeded indexes of raw export (41%).

20,5%

china· refinedcopper · ferroalloys · oil products · zinc · uranium

16%the countries of the custoMs union

· uranium · refinedcopper · rolled steel · alumina · computing machines · ferroalloys

6%the central asian region

· flour · oil gases · oil products · the electric power · cigarettes · fertilizers

KazaKhstani processeD gooDs are DelivereD to 117 countries

0,4%the countries of the caucasus

· rolled steel · fertilizers · instruments and tools · accumulators

Astana


operating activity

eXport DevelopMent

Export development is aimed at motivating of potential and operating exporters to increase export potential, improvetheknowledgeonbasisof theexportsupplies,andassistance in thesolutionof thedifficultsituationshindering export procedures.

In 2012 the number of enterprises, which KAZNEX INVEST has been interacting with within export development activities has increased. The number of enterprises which made use of KAZNEX INVEST services, grew by 181 companies in comparison with 2011 and amounted to 1 638. Where:

– 1 552 manufacturing enterprises;

– 131 transport, logistic and travel agencies.

Clients of KAZNEX INVEST are regularly sent by e-mail information on all events as well as full information and analytical materials regarding development of non-resource export. During 2012 80 newsletters were sent to Kazakhstani companies.


2012

1 683 enterprises· 1 552 - manufacturing enterprises

· 131 - transport logistic travel agencies

2011

1 502 enterprises



operating activity

export related trainings for enterprises

In 2012 KAZNEX INVEST continued training of specialists and managers on export development.

The concept of trainings was developed in consideration of the current trends of international trade development. 42 specialists from 32 domestic export-oriented enterprises of light industry, mechanical engineering, metallurgical, food, pharmaceutical and chemical sectors took a specialized course "Export Activities Management", organized by KAZNEX INVEST.

the training course consisted of 14 subjects on export and marketing:

1. Evaluation of export activity perspectives. Evaluation of the CU and WTO markets development and regional cooperation perspectives. Foreign market selection criteria;

2. Goods customization in a foreign market;

3. Normative and legal basis of activities in the foreign markets;

4. Featuresofexportfinancing;

5. Budgeting of export activities;

6. Packaging for export activities;

7. Features of logistics;

8. Customs procedures and rules;

9. Establishing relations with the international distribution networks;

10. Development of relations with the foreign partner;

11. International fairs and business trips. Brochures and printed advertizing materials;

12. Use of opportunities of the Internet in export activities;

13. Enterprise site as instrument of promotion;

14. Negotiating psychology.


operating activity


printed publications

In addition to the trainings organized, as a guidance manual, a series of the instructive materials on 7 subjects was published according to order of the Ministry of Industry and New Technologies of the Republic of Kazakhstan. Instructive materials are distributed free of charge and represent the publications explained in the simple and availableformwhichhelpsthereadertofindclarificationandresponsestothequestionsinthemostdifferentareasof export.

The total print of a series of instructive materials in 2012 is 7 000 copies.

In 2012 the "Export Guide" reference book was published. Data on 10 countries – potential sales markets of the Kazakhstani goods: Belarus, Germany, China, Kyrgyzstan, Lithuania, Mongolia, Russia, Turkmenistan, Uzbekistan and Ukraine – are submitted in the reference book. In particular, the data on optimally structured information on economic situation, status of foreign trade, access conditions to the market, bilateral cooperation with Kazakhstan as well as the main features and potential problems when exporting to each of the countries studied. Careful attention in "Export Guide" is paid to optimum logistic routes of delivery.

The total print of the guidance manual in 2012 is 1 000 copies.


operating activity

promotion and development of export packaging

The separate direction of work with the enterprises, within development of export, is the matter of export packaging development.Packagingastheessentialelementofcompetitivenessofgoodsinfluencesitsquality,safety,andamarketable style. Development of packaging market in Kazakhstan becomes one more step towards the success of the Kazakhstani export.

Within this initiative together with Association of Packaging Manufacturers of Kazakhstan 2 regional round tables (Almaty and Karaganda) and 2 conferences on discussion of packaging sector development were organized. During the event with participation of business and government bodies’ representatives, the existing problems restricting development of packaging production were sounded and discussed.

At the same time an outdoor seminar to Ukraine was organized for the representatives of the Kazakhstani packaging enterprises with the purpose of Ukrainian packaging industry study in July 2012. The venue of the seminar was chosen by the principle of "the best practices" of packaging sector development among CIS countries. In historical perspectives the packaging market of Ukraine has 15 year history. During the seminar the main stages – of the packaging sector of Ukraine development as well as other matters that would help Kazakhstani participants to envision the development of packaging industry in Kazakhstan and adopt technical and organizational knowledge – were considered.

Besides, in 2012 two Bulletin of packaging sector of the Republic of Kazakhstan were issued and spread to 600 Kazakhstani enterprises. Bulletin includes analytical information on packaging development, the international experience of packaging promotion and other helpful information.

This event will continue in 2013, by means of systematic cooperation establishment with the enterprises of packaging sector for study of problems, implementation of actions against lowering barriers and search for international market.



operating activity

exporters expenses reimbursement

This type of the government support provides reimbursing to the enterprises of 50% of the expenses regarding introduction of processed goods to the foreign markets. Export development by the partial reimbursing of expenses is realized within the "Export-2020" program which is a part of SPFIID. Expenses to exporters are compensated gratuitously.

ThefinancialinstrumentofexporterssupportwasimplementedinKazakhstanforthefirsttimein2010.Followingthe results of the pilot project in 2010 by the decision of the Interdepartmental commission export grants were given to 43 domestic enterprises for a total amount of 141 million tenge, and in 2011 – to 80 exporters to the amount of 100,7 million tenge.

In 2012 New Rules* significantly simplified conditions of exporters’ participation in the program of expensesreimbursing in terns of:

- reduce of requirements to documents;

- extension of the expenses list;

- extension of objects of the state support (service exporters are also included in the program);

- extension of the list of types of goods in case of which export expenses are compensated.

* The Decree of the Government of the Republic of Kazakhstan "On approval of rules for partial reimbursing of expenses for subjects of industrial and innovative activities on promoting of the domestic processed goods and services to foreign markets, the list of the domestic processed goods and services in accordance which the expenses on their promotion to foreign markets and recognizing of becoming invalid some decisions of the Government of the Republic of Kazakhstan" of August 2nd, 2012 no.1017.

As an "Export-2020" program operator, KAZNEX INVEST accepted the requests for expenses reimbursing from August to November, 2012. At year-end 2012 93 exporters were compensated their costs to the amount of 291,2 million tenge.



operating activity

assistance in resolving the problems of domestic exporters

In their daily work the domestic enterprises face a number of the barriers complicating export activities (matters regarding the customs procedures, recognizing of conformity certificates, transit and transportation, currencyconversion, trade with foreign partners and so forth). During interaction with the enterprises KAZNEX INVEST constantly carries on "a dialog" on problems of the enterprises concerning their economic and operational activities.

The certain matters requiring the decision at the interdepartmental / international level are reviewed by the Council of Exporters at the Ministry of Industry and New Technologies of the Republic of Kazakhstan. In 2012 three meetings of the Council of Exporters took place.

The Council of Exporters is the advisory body which serves to assist in the solution of endemic problems related to export, and problems of the certain export companies.

In total within solving the problems of exporters for 2012 60 problem-plagued requests of the Kazakhstani enterprises – related to the solution of different situations hindering export activities – were worked through.



operating activity

eXport proMotion

Export promotion implies rendering assistance to domestic exporters of processed goods in entering the foreignmarkets and presenting the final goods. Result of this activity is theconclusion of export contracts. Presentation activities are organized for this purpose.

trade missions

Participating in the trade missions organized by KAZNEX INVEST, Kazakhstani exporters have an opportunity to meet potential foreign buyers and negotiate cooperation terms. At the same time they can stay tuned on the ways and methods of goods delivery and conditions of compliance with customs procedures prepared by KAZNEX INVEST analysts.

in 2012 6 trade missions were organized and carried out in:

- the Kyrgyz Republic;- the Republic of Tajikistan; - the Republic of Belarus; - the Russian Federation; - the Republic of Poland; - the People's Republic of China.

The Kazakhstan delegation included about 50 enterprises of machine-building, chemical, pharmaceutical, construction and food sectors.

As a result, 22 domestic companies concluded 25 export contracts / protocols of intentions on delivery of the Kazakhstani goods amounted to $117,6 million.



operating activity

Meetings of "sellers and buyers"

Two meetings of "Sellers and Buyers" in 2012 helped to promote goods of domestic producers to the markets of foreign countries as well as to establish direct contacts between Kazakhstani and foreign businessmen:

- on 9th of November (Astana city); - on 16th of November (Almaty city).

More than 50 Kazakhstani producers – working in the spheres of food, chemical, light industry, the construction industry, mechanical engineering, production of consumer goods – and more than 50 businessmen from Belarus and the Kyrgyz Republic participated in the meetings.

Following the results of the meetings 9 memoranda and agreements on cooperation between businessmen of Kazakhstan, Belarus and the Kyrgyz Republic were signed.

organizing Kazakhstani enterprises’ participation in foreign exhibitions

Opportunity to present the goods and services to more than 30 000 customers, to meet potential partners and to discuss cooperation conditions was provided within Kazakhstani enterprises participation in the international specialized exhibitions. Altogether in 2012 the participation of 32 domestic companies (from machine-building, construction, chemical, food, packing, metallurgical, textile, pharmaceutical sectors) in 20 foreign specialized exhibitions was organized.

KAZNEX INVEST undertook the expenditures on rent of 316 sq.m exhibition area.

With assistance of KAZNEX INVEST 7 domestic enterprises concluded 16 export contracts / protocols of intention on delivery of the Kazakhstani goods for total amount of $12 million.


operating activity

Unified National Stand

GoodsandproductionpotentialoftheKazakhstaniproducerswererepresentedattheUnifiedNationalStandduring4specializedexhibitions.Atthesametime,in2012whenorganizingtheUnifiedNationalStand"umbrella"brands,developed in 2011 were used: "ENGINEER Durable" (metallurgy and mechanical engineering), "WEAR Comfortable" (textiles and light industry), "EAT Ecological/Bio" (food industry).

Activities and export potential of machine-building and metallurgical sectors of Kazakhstan under an umbrella brand of "ENGINEER Durable" were presented at two specialized exhibitions:

- in June of 2012 at the 14th Moscow international "NEFTEGAZ-2012" exhibition in Moscow (the Russian Federation) 5 producers of machine-building goods of Kazakhstan were presented at the UnifiedNationalStand;

- in November of 2012 at the 18th International exhibition of "Metal Expo 2012" in Moscow (the RussianFederation)7largestKazakhstanimetallurgicalcomplexeswerepresentedattheUnifiedNational Stand.

As a result of two events export contracts amounted to $33 million were concluded.



operating activity


Within the 19th Moscow international Ski Salon (November, 2012, Moscow, the Russian Federation) the Kazakhstani producer of sportswear of "KazSPO-N" presented its product under a sector brand of "WEAR Comfortable".

As a result of this work, export contracts/protocols of intention amounted to €50 thousand were concluded.

In November of 2012 at the 21st International food exhibition of "Peterfood 2012" in St. Petersburg (the Russian Federation) under a sector brand of "EAT Ecological/Bio" 6 domestic food industry enterprises presentedtheirgoodsattheUnifiedNationalStand.

Following the results of participating in the exhibition, "Rakhat" JSC increased its volume of supplies to the Russian Federation (Barnaul). All further arrangements of "Rakhat" JSC supply were carried within the dealer contract concluded earlier for the approximately $16,6 million.


operating activity

trademarks promotion to the foreign markets

Aiming at promotion of 31 Kazakhstani trademarks to the markets of the Russian Federation, Turkmenistan, Azerbaijan, Uzbekistan, Tajikistan, Mongolia and Portugal, 13 advertisement and presentation activities were organized in 2012. During the presentations all necessary commodity information (technical features, features of production, unique consumer properties and so forth) was provided to potential foreign buyers.

Following the results of the work, 8 Kazakhstani companies concluded 12 export contracts amounted to $47 million on Kazakhstani goods and services supply.

humanitarian purchasing promotion

The market of humanitarian goods is the special market due to the character of its main players, the humanitarian organizations, such as the UN, different international and national NGO, governmental organizations. Supplies and distribution of aid goods are mainly carried out by industrialized countries. However due to the tendencies change and opening or "releasing" of purchases of aid goods (the Recommendation of Committee of Development Assistance of Organization of Economic Cooperation and Development (OECD), July, 2001) this unique market opens the huge opportunities allowing the enterprises of developing countries to become new service providers for aid institutions.

In 2012 activities for creation of conditions for promotion and further implementation of an initiative on establishment of a (sub) regional warehouse in Kazakhstan "Humanitarian supplies from Central Asia to Central Asia" were determined.

Thus analysis – on creation and functioning of a warehouse of the humanitarian organizations in Kazakhstan both independently and with assistance of the international experts – was carried out, the active participation in conferences on the mentioned matters, negotiations with key representatives of the organizations of the UN system, other humanitarian organizations and the appropriate ministries of the Republic of Kazakhstan were held.



operating activity


Besides KAZNEX INVEST organized participation of 10 domestic enterprises in 3 specialized foreign exhibitions:

1. "Dubai International Humanitarian Aid and Development 2012" (DIHAD 2012), April, 2012 Dubai (the United Arab Emirates);

2. "Fair of humanitarian aid goods of Kazakhstan and Kyrgyzstan", October, 2012, Bishkek (the Kyrgyz Republic);

3. "AIDEX-2012", October, 2012, Brussels (the Kingdom of Belgium).

Results:- 10 Kazakhstan enterprises were registered as potential

suppliers of humanitarian purchases; - goods of 18 domestic enterprises of different

three sectors were presented to the humanitarian organizations;

- 14 domestic enterprises concluded export contracts following the results of humanitarian purchases promotion amounted to $21,8 million.


operating activity

reference book "export products of Kazakhstan"


Information on Kazakhstani producers was widespread in 35 countries in the form of the published "Export Products of Kazakhstan" reference book. Information on products of 616 domestic enterprises (from them – 464 goods producers and 152 service providers) on 5 sectors of economy is included in the reference book: the processing and mining industry, power industry and agriculture and sectors of services (geologic exploration, IT, tourism, construction and logistics). The total print is 2 500 copies in printed form and 2 500 on mini-CD discs.

work with the potential buyers

At the same time, careful attention is paid to the foreign buyers contacting to KAZNEX INVEST directly on the matters of Kazakhstani products purchase and/or search of supplier. During 2012 more than 75 foreign buyers from 31 countries received full information on the types of products they are interested in, producers, possible methods of transportation and other issues.


operating activity

analytical platforM for eXport

Forthepurposeofdefiningpotentialmarketsforpromotingofdomesticproducersandtohelptheexporters,briefmarketresearches,includingthemainparametersforthedevelopmentofspecificgoodstradeinforeignmarkets (1 item – 3 countries) and to determine the potential markets for the promotion of domestic producers – a brief-analysis were developed. The information provided to a brief-analysis can be helpful to exporters in developing or optimizing the export strategy. In 2012 brief-analysis were prepared for 16 companies on 19 products of 6 sectors (food, textile, mineral, chemical, mechanical engineering, pulp-and-paper) over 16 countries: Russia, Ukraine, China, Germany, France, Italy, Uzbekistan, Saudi Arabia, Turkmenistan, Kyrgyzstan, Belarus, Iran, Mongolia, Tajikistan, Pakistan and Turkey.

The latest researches, as of December 2011, provided the basis for the second publication of "The analysis of world trade tendencies and foreign trade of the Republic of Kazakhstan". The purpose of this analytical publication is an assessment of the main trends of world trade development and a foreign trade status of KazakhstanwiththehelpoftheTradePerformanceIndex(TPI).TheTPIreflectsastatusofKazakhstaniexportandapositionofthecountryinthesystemoftheworldtrade,thecommodityandgeographicaldiversification,the main indexes of which are: the volume of pure export, export per capita, a share of Kazakhstani export in the world market, a level of concentration of export on goods and sales markets. Publication is intended for state bodies,diplomaticmissionsofKazakhstanabroad,andalsoexpertsinthefieldofforeigneconomicactivity.

Working over development of strategy for entering foreign markets, formation of the list of potential buyers of the Kazakhstani products ("Buyers' list") was continued in 2012. As a result, the list consisting of 21 countries like Russia, China, Belarus, Azerbaijan, the United Arab Emirates, Turkey, Germany, Iran, Italy, Uzbekistan, Turkmenistan, Ukraine, Poland, Great Britain, Mongolia, Tajikistan, Georgia, Kyrgyzstan, Latvia, the Netherlands and Lithuania was created.

Point work is carried out with enterprises-customers of the countries which have entered into the "Buyers' List": information on Kazakhstani products breakdown in sectors and direct contacts are forged. The helpful information about the country from "Buyers’ List" is published in "Export Guide".



operating activity

foreign Direct investMent attraction

In2012thetotalinflowofattractedFDIhasreachedarecordindexof$22,5billionthatisfor14% more than pre-crisis level and 7% or $1,4 billion more than an index number of 2011.

WithintheframeworkofFDItotalinflowin2012itisworthnotingthat:

FDI share in manufacturing industry has reduced for 36% from $2,9 billion in 2011 to $1,9 billion in 2012. This is due to a drop for 55% from $2,4 billion to $1 billion in metallurgical industry, which occupies an essential share in manufacturing industry.

As for the manufacturing industry, FDI growth was observed in: food production for 50% from $192 million to $288 million, pharmaceutical products for 553% from $3 million to $20 million, computers and electronic production for 84% from $145 million to $266 million.

There is run up FDI in other sectors: construction for 149% from $423 million to $1 billion in 2012, information and communication for 826% from $228 million in 2011 to $2,1 billion in 2012.

The top 5 countries investors in economy of the Republic of Kazakhstan are: the Netherlands, the USA, the UK, France and China.

Foreign direct investment attraction

years

$ billion


operating activity

Foreign direct investment attraction2011

fDi inflow $21,1 billion

2012fDi inflow $22,5 billion

2011 2012Manufacturing inDustry

$2,9 billion

Manufacturing inDustry

$1,9 billion36%

2011 2012Metallurgical inDustry

$2,4 billion

Metallurgical inDustry

$1,0 billion55%

2011 2012fooD proDuction

$192 million

fooD proDuction

$288 million

50%

2011 2012pharMaceutical proDucts

$3 million

pharMaceutical proDucts

$20 million

553%

2011 2012coMputers anD electronic proDuction

$145 million

coMputers anD electronic proDuction

$266 million84%


operating activity

investMent iMage proMotion of the republic of KazaKhstan

The work on investment attraction is closely related to presentation of investment opportunities of the country. Besides the statistical data it is important for interested investors to know the measures of government support for foreign investment in the country, manufacturing capabilities aswell asdetailedand specificnuancesof theorganizingproductionanddoingbusiness in the territory of the Republic of Kazakhstan .

By planning and implementing activities to promote investment image of the country, KAZNEX INVEST completes two assigned strategic missions – the promotion of favorable investment climate of Kazakhstan and assistance in attracting companies – potential investors.

business forums

Since the beginning of 2012, 14 business forums were organized, 5 business forums were held abroad (Germany, Malaysia, Turkey, the Czech Republic and the USA). In total 2 117 foreign companies participated in business forums activities. As a result of this work, 108 memoranda of investment projects implementation in the territory of the Republic of Kazakhstan were signed with 102 foreign companies amounted to $7 billion.



operating activity

At the same time, during 2012 KAZNEX INVEST acted as a co-organizer of 21 activities aimed at attracting FDI to the Republic of Kazakhstan. Among them 3 bilateral business forums were held in May 2012 within V Astana Economic Forum with participation of business representatives from Germany, Turkey, and Indonesia, as well as business forums within the visits by the Republic ofKazakhstanofficials abroadand foreignofficialdelegations to theRepublicofKazakhstanwere held as well.

During bilateral business activities potential investors familiarized themselves with Kazakhstani legislation regulating investment attraction, with the mechanisms of effective cooperation with the national institutes of development as well as promising investment projects of Kazakhstani companies. In its turn, more than 1 000 Kazakhstani companies’ representatives participated in the forum,anddiscussedthewaysofmutuallybeneficialcooperationwithinterestedstakeholders.

road-show

Road-show is a series of outdoor meetings with investors aimed at promoting investment opportunities of Kazakhstan and individual investment projects for potential investors. In 2012, 4 road-shows were organized in the USA, Canada, European countries (Sweden, Norway, the Netherlands, Belgium, the UK) and the Malaysia. Within the road-show for 45 Kazakhstani companies bilateral meetings with 550 foreign companies were organized.


operating activity

national interactive investment internet resource


During 2012 the National Investment Interactive Internet Resource www.invest.gov.kz was maintained. At year-end 2012 more than 92,5 thousand visits of the Internet Resource from out of 156 countries werefixed.Morethan100inquiriesreceivedandhandledthroughthisInternet Resource.

In 2012 following the recommendations of the World Bank within the project of "Global Investment Promotion Best Practices" the Internet Resource was improved.


operating activity

analytics

Aiming at enhancing the growth to international standards and global best practices with assistance of KAZNEX INVEST analytical studies on 12 recommendations of OECD experts, implementation of which is necessary for harmonizing the investment climate in the Republic of Kazakhstan with the OECD standards, were conducted. This work was carried out in consideration of the plans of Kazakhstan to join the OECD Investment Committee.

"OECD is a club of developed countries, therefore Kazakhstan’s joining the Investment Committee will open the way for many investors. This implies that the standards of investment climate in Kazakhstan are very high".

Deputy Prime Minister – Minister of Industry and New Technologies of the Republic of Kazakhstan asset issekeshev

4 sectoral articles were published in the international sectoral periodical publications in 2012:

– in two issues of "Metal Bulletin" magazine (October, November, 2012): "Metals investment opportunities in Kazakhstan" article;

– "Machinery Market" magazine (November, 2012): "Kazakhstan-open for business and seeking manufacturing investors" article;

– "Inside Industry" magazine (November, 2012): "Investing in the Future" article.

ApartfromabovementionedactivitiesmodificationoftheinvestmentlegislationoftheRepublicofKazakhstanwascarried out. In 2012 KAZNEX INVEST took part in implementation of the preferences within the Law of the Republic of Kazakhstan "On Government Support of Industrial and Innovative Activity", as well as in development of Rules for industrial privileges provision for strategic projects and in the Order of including investment projects into the List of investment strategic projects.



operating activity

worK with investors

With the assistance of KAZNEX INVEST meetings for potential investors with representatives of ministries, agencies, development institutions, business associations and business circles of Kazakhstan were organized and held. During themeetingbenefitsofinvestingwerereleasedandinitialconsultationswereprovided.

87 potential foreign investors’ inquires on the issues of investment climate of Kazakhstan, government support of business, agricultural machinery markets were worked through.

In 2012, in order to establish close cooperation with local agencies on FDI attraction memoranda of understanding and cooperation were signed with 9 Investor Services Centers (ISC): Pavlodar, Almaty, West Kazakhstan, Karaganda, Zhambyl, Akmola, Kostanai, South Kazakhstan and North Kazakhstan regions.

In 2012 the investors’ data of KAZNEX INVEST were updated and expanded. At year-end 2012 the list of interested investors was completed by 455 companies. Updated information on investment legislation, on planned activities abroad and on investment projects as well as all necessary information requested by foreign investors regarding doing business in the Republic of Kazakhstan sent to each company individually. Investment project data includes information about 298 projects that require investments totaling more than $100 billion.



operating activity

accompanying investors in the regions

Investors accompanying system is the key to successful external economic activity of the region. In 2012, 12 foreign investors were accompanied in 7 regions of the country (Karaganda, Kyzylorda, Taraz, West-Kazakhstan, Pavlodar and Almaty regions). Interested investors had the opportunity to see the production potential and the adjacent infrastructure of a region. During visits, full information about the investment opportunities of the project was presented to the investors. They had meetings with senior representatives of the akimats, as well as with local companies – potential partners, contractors and others.

During negotiations with government agencies, national companies, Kazakhstani project initiators and other interested 119 foreign investors were accompanied in 2012 (at the central level – 107, at the regional level – 12). In total 347 meetings were held for the foreign business representatives.



operating activity

printed publications

In 2012 KAZNEX INVEST released specialized publications for investors, containing updated information on government support measures for foreign investment and investment opportunities in the Republic of Kazakhstan.

"investor's guide" reference book

Total print of the reference book is 2 000 copies in printed form in Russian and English languages (with mini-CD discs);

To be distributed on investment activities (road-show and business forums).

Contents: the reference book contains basic information on investment opportunities of the Republic of Kazakhstan, basic laws and regulatory legal acts in investment, information on doing business, as well as general information about the priority sectors of the Republic of Kazakhstan.

"overview of industrial niches of regions of the republic of Kazakhstan" brochure

Total print of the reference book is 3 500 copies in printed form in Russian, English, German and Turkish languages.

To be distributed on investment activities (road-show and business forums).

Contents: brochure contains information on 109 niche projects in priority sectors totaling $5,7 billion, which will make up for the various stages of the complete production cycle.

The proposed projects include the niche application of advanced technologies with high levels of labor capacity (foreign analogs level), and high value-added.



operating activity

fDi attraction results

Following the results of 2012, KAZNEX INVEST rendered assistance to 16 foreign investors (investors made a positive decision on investing in Kazakhstan) for the implementation of investment projects in the Republic of Kazakhstan amounted to approx. $590 million, with creation of 2 500 workplaces: 5 – Germany, 3 – Turkey, 2 – the USA, 2 – Poland, 1 – France, 1 – Austria, 1 – Korea, 1 – Switzerland.

Germany

AustriaSwitzerland

France

Turkey Korea

Poland

USA

Kazakhstan



operating activity

cooperation with Mass MeDia

Abilitytoestablishaneffectivecooperationwithmassmediaisakeytosuccessofanycompany’smediaprofile.

KAZNEX INVEST pays a careful attention to media relations and follows the principles of openness and promptness in information providing.

One of the main sources of information about KAZNEX INVEST is press-releases – messages for mass media, containing important and meaningful news of the company, for example, conclusion of export contract, decisions made by potential investor, results of analytical research. Considering that press-release is one of main PR documents, it is issued not less than once a week in KAZNEX INVEST. So, in 2012 49 press-releases – about activities of company both as of export development and promotion and investment attraction – were issued. All press-releases are publishedinthreelanguagesattheofficialinternetresourceoftheKAZNEXINVESTinseparatetopic,andalsointhe section "News" on the main page, where at the same time other news of the company that have not become a topic for press-release but also containing main events happening within KAZNEX INVEST, are published.

Other instruments of cooperation with mass media used by KAZNEX INVEST:- responding to journalists’ requests;- publications of analytical works; - initiating of materials and comments to them;- interview of experts in print publications and TV, radio programmes;- inviting mass media to the company’s events;- Press Conferences.

With the use of all instruments KAZNEX INVEST actively cooperates with all leading republican mass media, in particular, with news agencies "Interfax Kazakhstan", "News Kazakhstan", "Kazinform", "KAZTAG", "Bnews", "Kazakh Zerno" as well as foreign "ITAR-TASS", "Reuters", "Bloomberg", "Trend Azerbaijan", information portals of "Tengrinews", "Zakon.kz", "Zona.kz", "Pm.kz", TV channels "Khabar", "24.kz", "Kazakhstan", "KazakhTV", "Sedmoy kanal", "Pervyi kanal Evraziya" newspapers "Kazakhstanskaya Pravda", "Kursiv", "Capital", "Karavan", "Panorama", "Biznes i vlast’", "Liter", magazines "Expert Kazakhstan", "Delovoy mir", "Kazakhstan", radio station "Kazakh radio".

In general, following the results of KAZNEX INVEST’s cooperation with mass media in 2012 about 700 materials were released in a press (more than 400 – on export development and promotion, more than 300 – on investment attraction).

Cooperation with mass media


operating activity

participation of Kazakhstan mass media representatives in foreign events on export promotion

Forthefirsttimein2012withinKAZNEXINVEST’scooperationwithmassmedia,theparticipationofjournalistsinevents for export promotion abroad was organized. In 2012 16 representatives of domestic mass media took part in coverage of foreign export promotion events:

- trade missions in Tajikistan (Dushanbe), in Belarus (Minsk), in Russia (Novosibirsk), in Poland (Warsaw), in the People's Republic of China (Urumqi);

- organization of the Unified national stand at the international "Piterfood-2012" exhibition inRussia (St. Petersburg), and also in events with participation of pharmaceutical companies in the "Zdravookhranenie-2012" and "Apteka-2012" exhibitions in Russia (Moscow).

Following the results of these trips the news plots were shown on "Sedmoy kanal", "Khabar" and "24.kz" TV channels as well as stories on republican newspapers "Kazakhstanskaya Pravda" and "Biznes i vlast’" were published and news items were placed on a crawl line of the leading news agency "Interfax Kazakhstan".

press conference following the results of activity on investment attraction

In 2012 KAZNEX INVEST organized 2 press conferences, with participation of management, on KAZNEX INVEST’s assistance in investment attraction.

In June, 2012 the press conference on the results of road-show in North America (the USA and Canada) and Europe (Sweden, Norway, the Netherlands, Belgium and the UK) took place in Almaty. Following the results of event, 20 materials were published and released.

Half a year later, on December 14th a press conference on the results of investment attraction was organized in Astana in 2012. 23 materials became the result of the press event.



operating activity

Media projects of KazneX invest

In 2012 KAZNEX INVEST continued its work on the television project aimed at promoting a state policy of national export development and support. The program "The direction is export!" in the third season of2012wentonairofrepublicanTVchannel"Khabar"inRussianandKazakhlanguages(thefirstseasonwas issued in 2010 and the second in 2011) respectively.

The successful examples of both foreign markets introduction and the problems faced by domestic exporters not only in the country, but also abroad were covered in the project. The main objective of the program is to show, what instruments of the state support domestic producers can use to break barriers and to occupy the niches in the foreign markets. Releases of the program contain the analysis of the positive and negative factors in development of the Kazakhstani export of processed goods. Representatives of the state structures, business associations, public associations, the enterprises took part in tapings.

In total, within the period from August to December 2012, 12 releases of the program were on air in Kazakh and Russian languages, twenty minutes each.


5 billboards were placed in the cities of Astana and Almaty from 20th July to 20th December 2012. Billboards are oriented on Kazakhstani business community and potential foreign investors.


operating activity

Current exporters and those who are already ready to start the capturing the foreign markets, need more detailed information on the state tools. For this purpose KAZNEX INVEST issues the specialized magazine "Exporter". In 2012 forthefirsttimethepublicationwasissuedinKazakhandRussianlanguages,whereasearlieritwaspublishedinEnglish and Russian languages. Total print is 2 000 copies.

Themagazine contains helpful and necessary information on changes in the legislation, clarification on tools,solution of exporters’ problems, data on exhibitions, trade missions and so forth. "Exporter" magazine is distributed only through mailing all over the Republic to the enterprises, business associations, the public institutions involved in export development, and also the international organizations and the diplomatic missions in the Republic of Kazakhstan. Those who do not receive the printed version, have opportunity to read the magazine in the PDF format on the KAZNEX INVEST Internet Resource www.kaznexinvest.kz.

In 2012 4 publications of the magazine "Exporter" were issued.



operating activity

Videos for airplay released by KAZNEX INVEST in 2012 were devoted to separate activities of the company as export promotion and investments attraction.

The video oriented on the export potential development of the country, was broadcasted on air of republican TV channels "Khabar", "El Arna" and "Astana" from October to November, 2012. As a rule, at this time TV channels launch new teleprojects, and advertisers – new advertizing campaigns that is the reason why video rotation during this period is the most effective.

The timing of video as in Kazakh and Russian is 35 seconds. Video shot with involvement of professional actors, with humor succinctly transfers the primary targets of the State within export promotion – to createconditionsforKazakhstanigoodstofindtheforeignbuyer.

Time of the video translation: from 6 pm to 12 am. This time of the day on TV channels is the most watchable, consequently video showed in this time provides the maximum spectator audience in the Republic of Kazakhstan. The total broadcasting is 400.



operating activity

The video about investment opportunities of Kazakhstan "We invest in Kazakhstan!" lasting 30 seconds was shot by known director Timur Bekmambetov’s creative team. The video aimed at informing the potential investors on investment opportunities of the country. In advertizing video Kazakhstan is shown as the country with a stable macroeconomic situation and favorable investment climate.

Airplay of the video proceeded from October 1st to November 15th, 2012. During this time 30 second video about Kazakhstan was seen by the TV viewers of CNN TV channel living in Europe, the Middle East, Africa and Asia; the Euronews TV channel showed the video in a world broadcasting, and Bloomberg TV channel in the territory of the USA and Europe. The total broadcasting is 1,1 thousand. In case of such reach of the video the potential number of its audience is more than 350 million worldwide.

Moreover the 7 minute version of this video for translation on investment events was adopted. Both versions of the video are available on the National Investment Interactive Internet Resource www.invest.gov.kz.

One more video, but oriented on local airplay was created and shown on the Kazakhstan TV channels "Khabar" and "Kazakhstan" during November, 2012. Video informs on measures of the government support of investment.



operating activity

international cooperation

For KAZNEX INVEST establishing cooperation with similar organizations allows the exchange of experiences in the export development and investment attraction, exchange of information about buyers for our sellers, upcoming events, seminars, and other information.

international experience

KAZNEX INVEST is a member of such reputable international organizations, such as:

- World Association of Investment Promotion Agencies (WAIPA). Currently WAIPA combines 244 investment promotion agencies of 162 countries;

- World Trade Centre TPO Network (UNCTAD / WTO). Network of TPOs includes trade promotion organizations from 115 countries.

Membership in WAIPA and Network of TPOs provides KAZNEX INVEST with unique access to the world's best practice in investment and export promotion, allows establishing business contacts with foreign partners, sharing relevant information about trends in attracting foreign investments and international trade.

In addition, partnership with similar agencies in Hungary, Portugal, China and Indonesia was established in 2012. Concluded Agreements allows KAZNEX INVEST to exchange information with partners on doing business in the country of a partner, the legislation and measures of support particularly in international trade and investment regulating.

International cooperation


operating activity

International cooperation

world experience

world bank launched a two-year project "Enhancing productivity and competitiveness through enterprise modernization support mechanisms" under the Joint Economic Research Program between the Government of the Republic of Kazakhstan and the World Bank 2012.

The Project aims to develop recommendations to improve services of KAZNEX INVEST related to FDI attraction and non-recourse exports support as well as institutional capacity building of KAZNEX INVEST.

As a result World Bank experts made recommendations for improving KAZNEX INVEST’s activities.

usaiD REI’s project on regional economic integration with the Chemonics International Inc. company (the main contractor of the Project) for receiving technical assistance on export strategy development, recommendations on development and support of export services and Internet resource for exporters was implemented. The project on regional economic integration in Central Asia develops an export potential of businessmen in Central Asia and Afghanistan and establishes trade partnership and effective business models.

waipa and iDb group experts organized training on the topic of "The international experience in foreign investment attraction" with participation of representatives of similar agencies from Kyrgyzstan, Tatarstan, Moldova, Tajikistan and Uzbekistan. In total about 30 people participated in the training.

itcimplementedthejointprojectonestimatingtheefficiencyandcomparativeanalysisactivitiesofKAZNEXINVEST.ExpertsmadethecomplexanalysisofKAZNEXINVEST’sefficiency.Asaresult,theActionplanonenhancementofKAZNEX INVEST’s activities was developed.

CORP

ORA

TE

GO

VERN

ANCE


corporate governance


KAZNEXINVESTviewsCorporateGovernanceasatooltoimprovetheefficiencyofitsactivitiesandstrengthenthetrust of clients and shareholders.

Corporate Governance system of KAZNEX INVEST includes a General Meeting of Shareholders, Board of Directors and Governing Board.

Corporate Governance principles enshrined in the Corporate Governance Code at KAZNEX INVEST are developed in accordance with the Law of the Republic of Kazakhstan "On Joint Stock Companies" and the OECD principles.

the fundamental principles of corporate governance at KazneX invest are following:

1) principle of protection of the rights and interests of shareholders;

2) the principle of good Governance at KAZNEX INVEST’s Board of Directors and Governing Board;

3) the principle of self-employment at KAZNEX INVEST;

4) the principle of transparency, objectivity and timeliness of information disclosure at KAZNEX INVEST;

5) the principle of Legitimacy and Ethics;

6) the principle of effective Dividend Policies;

7) the principle of effective Human Resources Policies;

8) the principle of environment protection;

9) theprincipleoffairregulationofCorporateConflictsandConflictsofInterest;

10) the principle of responsibility.



corporate governance at KazneX invest regulates the following internal documents:

• TheCodeofCorporateGovernance;• BoardofDirectorsProvision;• CorporateSecretaryProvision;• InternalAuditServiceProvision;• InternalAuditPolicy;• GoverningBoardProvision;• DividendPolicy;• CorporateDevelopmentPolicy;• CorporateConflictsandConflictsofInterestPolicies;• TheAccountingPolicy;• TaxAccountingPolicy;• TheRemunerationPolicyfortheBoardofDirectors;• TheRemunerationandCompensationofexpensesfortheIndependentDirectors;• ProvisiononInformationPolicy;• Provisionondisclosureofinformation;• Provisionondefinitionandprotectionofconfidentialinformation;• Provisiononsalary,bonusesandestablishmentofallowancesforfixedofficialsalaryandthesocial

support provision for employees;• Provisionsonsalary,bonusesandestablishmentofallowancesforfixedofficialsalaryandthesocial

supportprovisionforTopManagementemployees,InternalAuditOfficeemployeesandCorporateSecretary;

• HumanResourcesPolicy;• RiskManagementPolicy;• RegulationsonRiskManagement.

The Corporate Governance of KAZNEX INVEST is constantly being improved by amending internal documents.



governing boarD

general Meeting of shareholders:

General Meeting of shareholders is the supreme regulatory body which controls the Company.

The general meeting of shareholders has several important functions:

1) Approving the fundamental documents, regulating Corporate Governance at the Company (Corporate Governance Charter and Code). Should the case be the General Meeting of Shareholders they decide upon whether to make amendments to these documents or not;

2) Approving the annual reports submitted by the Board of Directors, Governing Board;

3)ApprovingCompany’sannualfinancialstatementsasreflectofthefinancialresultsofitsactivities,aswellasontheprofitallocation;

4) Making decision on the reorganization and liquidation of the Company.

3 General Meeting of Shareholders meetings of KAZNEX INVEST were held In 2012, where KAZNEX INVEST’s annual financial statementswereapproved, toexistingandapprovednew internalCorporateDocuments amendmentswere made.

shareholders are:

Committee for Industry of the Ministry of Industry and New Technologies of the Republic of Kazakhstan 50%

Committee for Investments of the Ministry of Industry and New Technologies of the Republic of Kazakhstan 50%



the board of Directors

The Board of Directors is a key element of Corporate Governance at KAZNEX INVEST.

In addition to the current legislation and its activities are regulated by KAZNEX INVEST’s Charter and Provisions on, approved in a new version of the General Meeting of Shareholders KAZNEX INVEST on January 12, 2012 no.1.

Board of Directors has overall management on KAZNEX INVEST activities on behalf of all its shareholders within its competenceasdefinedbyKAZNEXINVEST’slegislationandCharter.

Moreover, the Board of Directors ensures the functioning of the control system on KAZNEX INVEST’s Regulatory Bodies overall activities, good cooperation between the Company’s management, as well as adherence and protection of the Shareholders’ rights and legitimate interests.

As of December 31, 2012 KAZNEX INVEST Board of Directors consists of six members including two independent directors.

In 2012, 7 meetings, of the Board of Directors (5 – full-time, 2 – absent voting) which viewed the issues and decisions on different KAZNEX INVEST activities, were held.

governing board

The management of KAZNEX INVEST’s current activities is regulated by the Governing Board reporting to the Board of Directors and the General Meeting of Shareholders. Governing Board is formed by the Board of Directors in accordance withtheKAZNEXINVEST’sCharter.TheGoverningBoardoperateswithinthecompetencesdefinedbytheCharterandthe resolutions of the General Meeting of Shareholders and the Board of Directors.

Competencies of the Board of Directors members are clearly determined and reflected in the internal regulatorydocument "The division of responsibilities between the Chairman of the Governing Board, Deputy Chairman and Managing Directors of KAZNEX INVEST, delegation of authority and interchangeability".

76 Governing Board meetings were convened and held and decisions on KAZNEX INVEST current activities were made in 2012.



Members of the board of Directors:

asylkhan seriKov

yerzhan Karibayev

irina fisher

Chairman of the Committee for Investments, Ministry of Industry and New Technologies of the Republic of Kazakhstan

Deputy Chairman of the Committee for Industry, Ministry of Industry and New Technologies of the Republic of Kazakhstan

Head of the Department to work with non-state entities with state participation, the Committee of State Property and Privatization, Ministry of Finance of the Republic of Kazakhstan



yerlan arinov

serik sultanov

anatoliy popelyushKo

Chairman of the Governing Board of KAZNEX INVEST

President of the Association "PharmMedIndustry of Kazakhstan"

President of the Union of Commodity Producers of Food and Processing Industry of Kazakhstan



governing board:

Deputy Chairman Administrative block

Chairman of the Governing Board

Deputy Chairman Export block

Deputy Chairman Investment block

yerlan arinov

Meyerzhan MaiKenov

Kairat KarManov

botagoz aliMbayeva



Internal Audit Office and Corporate Secretary

Corporate Secretary shall be appointed by and reports to the Board of Directors. KAZNEX INVEST Corporate Secretary is in charge of maintenance of order in placing a question on consideration of the General Meeting of Shareholders, Governing Board meetings and disclosure and provision of information about KAZNEX INVEST. Failure to comply with these procedures will entail the most abuse of rights and interests of Shareholders.

During 2012 the meetings were organized and conducted for the Board of Directors by Corporate Secretary: control of the preparation of all materials for decision making, preparation of feedbacks to requests from the members of the Board of Directors, cooperation with Governing Board, sending copies of documents of the Board of Directors on time, and ensuring storage of original minutes of the Board of Directors with materials attached.

TheInternalAuditOffice(hereinafter–IAO)providesindependentverificationofthestructuralunitsandtheinternalcontrol system aimed at determining the actual state of affairs and making recommendations on improvement of KAZNEX INVEST activities.

During the 2012 IAO conducted inspections of structural units monthly. Following the results of the inspections, reports to the Board of Directors as well as recommendations to the Governing Board.

Dividend policy

The basis of dividend policy is to provide a simple and transparent mechanism for determining the amount of dividendsandpaymentterms.Dividendpolicyregulatestheallocationofnetprofitandthedeterminationofitspartsfor the payment of dividends, the procedure for calculating the amount of dividends, dividend payment procedure, includingthetime,placeandformofpayment.Receiptofdividendsshouldnotbedifficultandburdensomefortheshareholders.DividendpolicyestablishestheprocedurefordeterminingtheminimumnetprofitofKAZNEXINVEST.

Dividend policy of KAZNEX INVEST was approved by the General Meetings of Shareholders on January 12, 2012.



information Disclousure

Information Disclosure is essential for assessing the performance of KAZNEX INVEST shareholders and stakeholders to create a favorable image of the company, as well as to maintain its credibility.

The purpose of disclosure is to bring this information to the attention of all stakeholders. The company promptly disclosesinformationonallfactsofitsactivities,inparticular,itsfinancialposition,performanceresultsandplans,information on its Corporate Governance practices and other information.

KAZNEX INVEST is guided in terms of information disclosure by the Law of the Republic of Kazakhstan "On the Securities Market", the Law of the Republic of Kazakhstan "On Joint Stock Companies" and the following internal documents:

- Provision on Information Policy, approved by the Board of Directors on April 8, 2011, no.2;

- Provision on Information Disclosure, approved by the General Meetings of Shareholders on January 12, 2012, no.1.

The main channel of information disclosure is the corporate Internet Resource of KAZNEX INVEST, which contains information about the company, the services provided, the facts, events etc. The Charter and other internal documents, annual reports, manuals, presentations and press releases are presented in the Internet Resource. Corporate Internet Resource of KAZNEX INVEST is updated on a regular basis.

KAZNEX INVEST places the information materials and publications in mass media in accordance with the Laws of the Republic of Kazakhstan and the Board of Directors.

Furthermore, KAZNEX INVEST provides information in the form of brochures and booklets, as well as regular meetings, telephone and press conferences with stakeholders.



risks managementIn the course of its activities, KAZNEX INVEST faces a number of risks, such as:

strategic risk is the risk of adverse events as a result of strategic decisions that led to negative consequences for the company;

operational risk is the risk of adverse events as a result of operational activities that resulted in negative consequences for the company;

reputation riskistheriskofsignificantskidsinthecompanyorlossasaresultofadverseevents;

financial riskistheriskassociatedwiththeprobabilityoffinancialresourcesloss;

conjuncture risk is the risk of adverse changes in general economic situation or position in certain markets;

systemic risk is the risk at which the failure to meet its obligations of one of the participants in the system,causingthefailureofotherpartiestofulfilltheirobligations;

legal risk is the risk of loss arising from non-compliance with domestic and international laws, regulations and internal procedures.

In December 2012 to avoid the risk events and their consequences, KAZNEX INVEST launched work on risk management.Firstofall,activitiesofthecompanyandtheriskswereidentified,developed,andapproved:

- Provision on Risk Management (approved by the Board of Directors on 10.12.2012, no. 6/2012). The Provisiondeterminestheorderofprocedure,howtoconductriskidentificationandassessment,selectan option to respond to the risks, risk control, information exchange and monitoring the effectiveness of the risk management system;

- Risk Management Policy (approved by the Board of Directors on 10.12.2012, no. 6/2012) is a set of recommendations for the establishment of an effective risk management system in the company by consideringthespecificsofitsactivities.



human recourses policy

The purpose of the HR policy is building an effective model of management and development of human resources and the formation of a professional team with innovative approaches to the implementation of strategic development direction at KAZNEX INVEST.

human resources policies are:

1) KAZNEX INVEST staff as the main long-term corporate capital;

2) unity of HR policy in the organization of work with the staff, the openness and accessibility of understanding of HR Policy by all KAZNEX INVEST employees;

3) the selection and placement of KAZNEX INVEST employees according to professional and personal qualities, using innovative approaches to recruitment, including using a competency model;

4) high-quality professional development of staff;

5) the continuity of the knowledge gained by KAZNEX INVEST employees as well as experience and skills;

6) facilitating career development of employees according to achievement based professional, business, personal and psychological qualities;

7) practices of work rotation with ensuring continuity and career development according to achievement based professional and personal qualities;

8) anintelligentcombinationofinternalHRandexternalresourcesinthefillingofvacancies;

9) development of partnerships and mutual work of employees and KAZNEX INVEST for the implementation of its commitments and performance.