invest in-astana-2014-e

Guide to investmentAstana

Prepared by the Astana Administration with EY supportMay 2014

Guide to investmentAstana

1Guide to investment: Astanawww.investinastana.kz

Contents

Investment climate of Kazakhstan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Astana: the city of the future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Astana’s competitive advantages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

International investment forums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

EXPO 2017 international specialized exhibition . . . . . . . . . . . . . . . 16

State support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Special economic zone: Astana – A New City. . . . . . . . . . . . . . . . . . . . . . 19

Investor’s Service Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Investor 2020 program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Business road map 2020. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Export 2020 program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Productivity 2020 program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Strategic sectors of Astana’s economy . . . . . . . . . . . . . . . . . . . . . . . 26

Mechanical engineering and metalworking . . . . . . . . . . . . . . . . . . . . . . . 27

Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Medicine and pharmaceuticals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Tourism and sport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Information technologies and telecommunications . . . . . . . . . . . . . . . . . 29

Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Public–private partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Success stories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Contacts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

2 Guide to investment: Astanawww.investinastana.kz

Imangali Nurgalievich Tasmagambetov

Mayor of Astana

Astana is the most intensively developing city of Eurasia. Its economy demonstrates sustainable growth. Since 2000, the gross regional product (GRP) of Astana has grown more than 24-fold, GRP per capita over 14-fold, reaching USD26.8 thousand, which is on par with some of the European Union nations.

Support of entrepreneurship and attraction of foreign direct investment in innovative and industrial sectors play an important role in the city’s economic development. A favorable business climate in Astana is underpinned by complex and systemic measures, such as sustainable urban development, institutional support for investors, enhancement of infrastructure and development of human capital aligned with the market needs.

Astana offers investors wide opportunities for long-term cooperation. Transport and logistics potential of the city is supported by Eurasian integration and its geographic position. More than 96% of freight traffic passing into Astana is in transit.

Special economic zone Astana — A New City offers a favorable investment climate, tax preferences, land plots and access to engineering infrastructure. During the past several years on the basis of SEZ Astana — A New City, a number of high-technology projects with major transnational companies was successfully implemented in locomotive, passenger car, helicopter and photovoltaic module manufacturing.

Today, Astana is faced with new ambitious goals — further developing of innovative and high-technology sectors of economy, joining the top global 50 intelligent cities and hosting the international exhibition EXPO 2017.

We are open for new projects and welcome investors ready to contribute to the development of Kazakhstan’s capital.


1

Erlan Dosymbekov

Managing Partner, Kazakhstan and Central Asia, EY

Astana is Kazakhstan’s symbol of growth and dynamic development. Foreign investors regard the capital as the most attractive city for investments in Kazakhstan — these are the results of EY Kazakhstan attractiveness survey 2013.

Its strategic position in the heart of Eurasia, developed infrastructure, high human capital potential, growing economy and institutional support of investors and entrepreneurs are factors that help to successfully implement investment projects.

The city aspires to achieve new ambitious objectives. Astana will host EXPO 2017 with the topic Energy of the Future, and this will stimulate its accelerated development. In the next few years, Astana will go through complex transformation to become a city of the future and reach its social and economic potential. This represents an excellent opportunity for investors to make their contribution to the development of Kazakhstan and Astana.


Investment climate of Kazakhstan1

Kazakhstan

Area 2,724,900 km2

Population (as on 1 January 2014) 17.2 million people

GDP volume (by results of 2013) USD220.3b

GDP growth (by results of 2013) 6.0%

GDP per capita USD12,933

National currency Kazakhstani tenge (KZT)

Average monthly exchange rate (March 2014) • KZT/USD — 182.31 • KZT/EUR — 251.95

Source: Agency on Statistics of Kazakhstan, site of the President of Kazakhstan www.akorda.kz, National Bank of Kazakhstan


Kazakhstan has adopted the strategy of being among the world’s 30 most developed countries by 2050. Creating a favorable business climate, developing entrepreneurship and attracting foreign investments will play a vital role in the strategy implementation. Kazakhstan is among the most rapidly growing economies in the world and demonstrates a high level of political and social stability. The country consistently implements reforms to improve its business and investment climate, and its ranking is steadily rising according to the World Bank’s Doing Business index.

Attracting of foreign direct investments (FDI) and their efficient use are among the country’s priorities. During its period of independence, Kazakhstan achieved significant results not only in attracting FDI but also in improving the country’s competitiveness and well-being. Total FDI inflow during 2005–13 reached USD184b.1 Over the past decade, GDP increased sevenfold and GDP per capita — sixfold, reaching USD12,933 in 2013.2

Currently, the Government is working on several measures to improve the institutional environment and provide incentives for investors, such as the stability of legislation and tariffs, guaranteed long-term state procurement, partial reimbursement of infrastructure costs after the project is commissioned. The Government also discusses with investors and entrepreneurs the renewed concept of industrial development for 2015–19.

Time differences between Astana and selected cities during winter, in hours

AstanaAlmaty

AktauAktobeAtyrau

Tashkent

–1

BakuMoscowTbilisi

Yerevan

–2

Kiev

–4

Paris

–5

London

–6

New York

–11

Beijing

+2

Tokyo

+3

1 National Bank of Kazakhstan2 Agency on Statistics of Kazakhstan

Source: National Bank of Kazakhstan, Agency on Statistics of Kazakhstan

FDI and GDP growth dynamics in Kazakhstan

2005

30

25

20

15

10

5

0

12%

10%

8%

6%

4%

2%

0

2006 2007 2008 2009 2010 2011 2012 2013

Total volume of FDI, USDb GDP growth, %


Kazakhstan’s 2014 ranking in the Doing Business report improved by three positions from 53 to 50.

+3

Ranks of some countries of the CIS, the Baltics and Eastern Europe in the Doing Business report

Category Rank in 2013 Rank in 2014 Rank change

Kazakhstan 53 50 +3

Armenia 40 37 +3

Azerbaijan 71 70 +1

Belarus 64 63 +1

Bulgaria 57 58 –1

Croatia 88 89 –1

Estonia 21 22 –1

Georgia 9 8 +1

Hungary 52 54 –2

Kyrgyzstan 70 68 +2

Latvia 24 24 No change

Lithuania 25 17 +8

Russia 111 92 +29

Turkey 72 69 +3

Ukraine 140 112 +28

Uzbekistan 156 146 +10

Source: World Bank


Position of Kazakhstan in the Doing Business ranking by categories

Category Rank in 2013 Rank in 2014 Rank change

Starting a business 27 30 –3

Dealing with construction permits 149 145 +4

Getting electricity 85 87 –2

Registering property 27 18 +9

Getting credit 82 86 –4

Protecting investors 21 22 –1

Paying taxes 18 18 No change

Trading across borders 186 186 No change

Enforcing contracts 26 27 –1

Resolving insolvency 55 54 +1

Source: World Bank


Astana The city of the future2

Astana

Population (as on 1 January 2014) 0.8 million people

Population growth (by results of 2013) 4.7%

GRP volume (by results of 2013) USD17.7b

GRP growth in 2013 (year to year) 4.5% (estimate)

GRP per capita (by results of 2013) USD23,000 (estimate)

Source: Agency on Statistics, speech of akim of Astana (April 2014) astana.gov.kz


General informationThe total area of the city of Astana is more than 700 sq. km. Astana is becoming an international business and cultural hub. The city builds administrative, business, social, cultural, research and educational centers, housing complexes and other infrastructure facilities that conform to the best international standards.

Today, Astana is well established as the economic, educational and spiritual center of Kazakhstan. It has become a center of gravity for international processes, discussion and implementation of measures to reinforce interfaith dialogue, global and regional integration on the platforms of Organization for Security and Co-operation in Europe (OSCE), Organization of the Islamic Conference (OIC), Shanghai Cooperation Organization (SCO) and the Customs Union (CU).

Fast-paced and large-scale transformations undertaken in Astana have not gone unnoticed by the global community. In July 1999, Astana received UNESCO “City for Peace” award. In 2012, a global ratings agency, Moody’s Investors Service, affirmed the city’s credit rating at Baa3 (Stable) with the following outlook upgrade to Positive in August 2013.3

In 2011, Astana won the III international contest of city practices, “The Best City of CIS and EurAsEC.” Furthermore, European Foundation for Quality Management (EFQM) honored the akimat (mayor’s office) of Astana with Excellence Award in December 2011.

3 Moody’s Investors Service www.moodys.com


Astana’s competitive advantages

Favorable transport geographic position

Customs Union of Belarus, Kazakhstan and Russia

Special economic zone Astana — A New City

Dynamically growing economy

Sustainable social dynamics and demographic potential

Infrastructural development

Institutional support of investors

1

2

4

5

6

7

3


Astana’s competitive advantages

1. Favorable transport geographic positionAstana’s geographic position makes it favorable as a logistics node connecting Europe with Asia. The main transport freight routes are determined by the economic ties of South and Central Kazakhstan, Western Siberia and Ural, the Volga region and Central Russia. More than 96% of freight traffic passing into Astana is in transit. Today, Astana is a large transport node linking the main transport arteries, national motorways, railways and airways.

2. Customs Union of Belarus, Kazakhstan and Russia The CU between Belarus, Kazakhstan and Russia has been functioning since 1 January 2010. CU provides free access to 170 million consumers and offers new business opportunities.

This common marketplace of the three countries constitutes a key advantage for effective trade and economic relations. Elimination of customs borders facilitates freight traffic and correspondingly increases its volume. Furthermore, Astana’s proximity to Russia’s largest cities presents an opportunity to produce in Astana for larger market of consumers.

Kazakhstan, with its CU partners, has a great potential for cooperation not only in the traditional economic sectors, but also in such promising industries as outer space, biotechnology, nanotechnology, machine engineering and nuclear power. The member states of Common Economic Space (CES) started working on the ways of implementing an agreed-on industrial policy in the automotive industry, which sets forth effective conditions for developing industrial automotive assembly plants in CES. Kazakhstan is implementing, jointly with Russia, two projects for manufacturing motor cars. Currently, favorable conditions are being created for the mutual transfer of capital and manpower within CES, whereby economic and social development will be strongly promoted. Competition will also substantially grow, and this will ultimately have a favorable impact on economic development.

3. Special economic zone Astana — A New City The special economic zone (SEZ) “Astana — A New City” ensures economic benefits both for the nation as a whole and for potential investors. Main advantages for investors in this zone include provision of land for building facilities together with engineering support, tax and customs concessions, state support for direct investment in construction of infrastructure facilities, including housing complexes, hospitals, schools, kindergartens in the business center of the city, and opening of new industrial enterprises located at the Industrial Park.

34.9%

27.4%

9%

5.3%

5.3%

4.1%

3.0%2.6%

2.2%

6.2%

Transport and warehousingPublic administration and defense; mandatory social securityConstructionIndustryReal estate operationsProcessing industryFinances and insuranceInformation and communicationsProfessional, research and technical activitiesOther


4. Dynamically growing economy Since 2000, the gross regional product (GRP) of Astana has grown 24.1-fold, while GRP per capita has grown 14.5-fold. Astana’s GRP per capita reached about USD26,800, which is on a par with some European Union nations. The GRP in 2013 amounted to KZT2.7t; the city’s GRP share in national volume was 9.4%. Besides that, the share of small and medium enterprises in the city’s total volume of GRP is about 60%.4

Investments in fixed assets in the first quarter of 2014 amounted more than KZT70b, with a growth rate of 8.2% compared with the corresponding period in 2013. Fixed assets investment was mainly directed toward enterprises in transport and warehousing (34.9%), public administration and defense, mandatory social security (27.4%) and construction (9.0%) sectors.5

Retail sales volume for three months ended 31 March 2014 amounted to KZT133.2b, up 17.8% compared with the first quarter of 2013. Total volume of freight traffic (including freight volume of non-transport organizations and entities involved in commercial transportation) over January–March 2014 amounted to 28.3 million tons of cargo, showing an 8.7% increase compared with the corresponding period in 2013.6

5. Sustainable social dynamics and demographic potential In 2013, the average per capita nominal income reached more than KZT1.2m, an 8.7% increase compared with 2012.

The monthly average nominal salary in January–February 2014 amounted to KZT146,055, a 7.1% increase compared with the corresponding period in 2013. In real terms, this represented a 2.2% growth.7

Workforce availability in Astana for technical specialists:

• 6 out of 13 higher education institutions in Astana produce graduates in technical majors (2,890 people annually).

• More than 700 technical major graduates from leading international universities arrive into Astana annually.

• 2,780 people graduate every year from technical vocational schools.

Source: Department of Statistics of the city of Astana

4 Speech of akim of Astana (April 2014) astana.gov.kz5 Department of Statistics of the city of Astana

Investments in fixed assets, January–March 2014

6 Department of Statistics of the city of Astana7 Department of Statistics of the city of Astana


6. Infrastructural developmentAstana, a city with rapid economic growth, is attractive for businessmen, investors, residents and visitors. The city has a developed transport and logistics infrastructure (for details, see the Transport section).

The concept of development of the Kazakhstan capital includes the creation of an information community. One of the key tasks is to create a digital transport environment in order to support the processes of providing information, developing a modern telecommunications infrastructure and integrating it with the infrastructure of other countries.

The municipal telecommunications center Astanatelecom offers the capital’s residents a wide range of services, such as telephony, iD Phone, internet access and the iD TV digital interactive TV. Astana Innovations has, in line with the Smart Astana concept, implemented the Open Wi-Fi project, which is designed to provide the capital’s visitors and residents with free wireless internet at public places.

7. Institutional support of investors The Government of Kazakhstan and the capital’s leadership are open to a constructive dialogue and provide comprehensive support to investors and entrepreneurs. Kazakhstan developed a set of stimulating measures, including state programs, SEZs and investor support centers (for details, see the State Support section).


International investment forums3


Astana Economic Forum21–23 May 2014

The Astana Economic Forum (AEF) is one of the largest international forums in the world. Held annually since 2008, AEF brings together world leaders, academic experts and high-level business representatives to find solutions to the greatest economic and social challenges of our time. More than 10,000 participants from 150 countries are taking part in this event.

Astana Invest21 May 2014

Astana Invest is a forum aimed to represent the investment potential and the attractiveness of the city of Astana. The purpose of the forum is to promote the brand of the capital as a forward-looking, high-tech and intensively developing city of the world.

Astana Invest annually draws many Kazakhstani and foreign companies, state bodies, development institutions and experts.

21–23 May

21May

The forum participants have a unique opportunity to become acquainted with investment projects at the unified industrial and innovation exhibition and during a visit to Astana’s Industrial Park.


EXPO 2017 international specialized exhibition4


By 2017, Astana will be a city with a diversified competitive economy and a favorable business climate, a city with a high level of innovation development which will be the center for the country’s integration with regional and global markets. Astana will be attractive for tourists and comfortable to live in for its residents and visitors. Such large-scale objectives can be achieved through cooperation with investors and entrepreneurs.

The EXPO 2017 international specialized exhibition will be held in Astana at a cost of about EUR1.2b, of which EUR250m will be financed from the state budget to prepare the place for the exhibition. About EUR1b will be used to build pavilions, hotels and the supporting infrastructure. Attention will largely be paid to the construction and modernization of social and cultural facilities. EXPO 2017 will give a chance to transform Astana into a city that meets the high-quality standards of living and environmental sustainability. Two to three million visitors are expected to visit Astana during the EXPO 2017 international exhibition.

To this end, the Astana akimat founded the office to prepare for and host EXPO 2017, which is charged with fulfilling objectives in three prioritized programs:

• Astana Green City — solutions in the fields of energy efficiency and renewable energy sources

• Astana Mobility — to renovate and improve transport infrastructure and logistics systems within the frameworks of EXPO 2017

• Welcome to Astana! — to upgrade the hotel and other services of the city to international standards

The above programs’ successful implementation will result in the following outcomes for Astana:

• Reduction in the city’s power and heat losses

• Improvement of ecological situation

• Rise in the popularity of public transport

• Greater attractiveness of Astana as a tourist destination

• Creation of additional jobs

EXPO 2017

Astana Green City

Astana Mobility

Welcome to Astana!

1

2

3


State support5

Kazakhstan developed a wide range of state support measures, which include:

• Developing favorable climate for attracting investments in non-extractive sector — Investor 2020 program

• Developing entrepreneurship in country’s regions — Business road map 2020

• Promoting products of local producers abroad — Export 2020

• Enhancing productivity of operating companies and establishing new manufacturing enterprises — Productivity 2020

Besides that, a number of SEZs and investor’s service centers (ISCs) were established.


Area

7634.71ha

• Industrial — 1031.2ha

• Administrative and business — 6603.51ha

Projects*

• 49 projects for KZT180b of investments

• 20 projects in operation

• 4 projects to be commissioned by the end of 2014

• 25 projects are under design and construction

Expected results*

• Annual volume of production for about KZT300b

• More than 7500 new working places

Foreign investors

• Airbus Helicopters (France): helicopters

• GE (US): locomotives

• Talgo (Spain): passenger cars

• Alstom (France): electric locomotives

• Astana Solar (France): photovoltaic modules

* Source: speech of akim of Astana (April 2014) astana.gov.kz

8 SEZ Astana — A New City www.sez.astana.kz

Special economic zone Astana — A New CityToday’s Astana is a symbol of the advanced development of modern Kazakhstan, its success, its prosperity and its bright future. In 2001, Kazakhstan President Nursultan Nazarbayev signed the Decree on the creation of a SEZ named “Astana — A New City,” which is based on the State program of city development (Prosperity of Astana is prosperity of Kazakhstan) and the general plan for the development of the capital city’s left blank, on the free lands along the Esil River.

The new SEZ covers 7634.71ha and has a new administrative and business center, Industrial Park 1 and Industrial Park 2. The new administrative and business center is situated mainly on the left bank of the Esil River, covering 6603.51ha of land. Industrial Park 1 occupies 598.1ha and Industrial Park 2 covers 433.1ha.

Since 2002, more than KZT1.7t has been invested in SEZs, 40% of which is the enterprises’ own funds, 35% is foreign investments and 25% is state budget funds.8

Contacts

Public enterprise “Administration of SEZ Astana — A New City” Dostyk Str., 13Astana, Republic of KazakhstanTel.: + 7 7172 703 303Fax: + 7 7172 703 248www.sez.astana.kz


Business center’s preferential regime

Type of activity Tax and customs dutiesOn the territory

of the Republic of Kazakhstan (RK)

On the territory of SEZ

Construction and commis-sioning of infrastructure objects, hospitals, polyclinics, schools, kindergartens, museums, theaters, higher and secondary education institutions, libraries, school children centers, sports complexes, administrative and residential complexes pursuant to the design and cost estimate documentation

Corporate income tax 20% 0%9

Value-added tax 12% 0%10

Land taxKZT19/m2 0%11

Fee for land plot use for up to 10 years

Property tax 1.5% 0%

Import value-added tax on goods, materials and equipment fully consumed in the process of construction 12% 0%

Customs duties for import of goods, materials and equipment fully consumed in the process of construction 5%–20% 0%

Preferences for the Industrial Park

Type of activity Tax and customs duties On the territory of the RK

On the territory of the RK

Production of chemical industry goods, rubber and plastic goods, other non-metallic mineral goods, household electrical devices, machines and equipment, metallurgical industry, electrical equipment, including electric-lightning equipment, glass components for lightning equipment, foodstuff, wood pulp and cellulose, paper and carton, furniture, vehicles, trailers and semitrailers, railroad locomotives and rolling equipment, air and space aircrafts, main pharmaceutical products, electric parts

Corporate income tax 20% 0%12

Property tax 1.5% 0%

Land taxKZT19/m2 0%13

Fee for land plot use for up to 10 years

Customs duties 5%–20%0%14

Import value-added tax 12%

A favorable investment climate has been created in the SEZs.

9 Decrease of corporate income tax to 100% (to income on certain type of activity)

10 Sale of goods fully consumed in the construction and commissioning — 0%. Refund of excess value-added tax to suppliers of goods with respect to imported goods actually consumed in the construction

12 Decrease of corporate income tax to 100%13 Coefficient 0 to the tax rate

11 Coefficient 0 to the tax rate

14 Provided the following conditions are met: 1) processed products acquire status of goods of the Customs Union; 2) goods were imported by a person registered as a SEZ participant prior to 1 January 2012


Investor’s Service Center

The following are the primary functions of the ISC:

• Investor support (pre-investment, investment and post-investment stages (one-stop principles)

• Service support (consulting, technical and economic feasibility studies, business plans)

• Astana brand promotion abroad

• Prospecting of potential investors

• Organization of investment events

• Integration of state support mechanisms

• Informational and analytical support

ISC operational scheme

ISC

Investors

Do you want to make a profitable investment?

Do you already have a tentative project for implementation?

ProjectsAttracting investments to city economy

Astana brand promotion

• Prospect of investment

• Information support

• Consulting

• Protection of rights

• Selection of projects

• ISC will advise you on all issues regarding investment activities on the territory of the city (investment support, priority sectors for investments, legal matters, tax and migration law, etc.).

• ISC will help prepare your projects (assistance in developing/revising business plans, feasibility studies, etc.).

• ISC will assist in acquiring state support and in resolving possible administrative issues.

• Prospect of potential investors

• Project analysis

• Project tender

• Inclusion of projects in database for investors

Contacts

Dostyk St., 13Astana, Republic of KazakhstanTel.: + 7 7172 57 8985+ 7 7172 578 986+ 7 7172 578 987www.ain.kz


Investor 2020 program

The Investor 2020 program aims to foster favorable conditions for direct investment in non-raw, export-oriented and high-technology enterprises.

Pursuant to the Law of the Republic of Kazakhstan, “On investments,” the following are in place to support investors:

• Customs duty exemption for imports of equipment, accessories, raw materials and assembly parts necessary to complete an investment project

• State grants: plots of land, buildings, facilities, vehicles and equipment, computer equipment, measurement and control appliances, transport vehicles except passenger cars, operational and household inventories

• Tax exemptions for up to seven years for strategic investment projects (0% land tax, 0% property tax)

• Industrial preferences for strategic investment projects in regions with lower levels of socioeconomic development (reimbursement of a portion of gas, energy, land acquisition and facility construction costs)

To benefit from these preferences, investments must be made in the prioritized economy sectors in accordance with the list approved by the Resolution of the Government of the Republic of Kazakhstan dated 8 May 2003, No. 436 (agriculture, processing/manufacturing industry, transport, tourism, production and distribution of electric power and other sectors).

Also, to benefit from these preferences, investors should submit applications to the Committee for Investments at the Ministry of Industry and New Technologies of the Republic of Kazakhstan and conclude an agreement.

Contacts

Kabanbay Batyr Ave., 47Transport Tower buildingAstana, Republic of KazakhstanTel.: + 7 7172 242 124+ 7 7172 242 456www.mint.gov.kz


Business road map 2020

This program aims to provide sustainable and balanced growth of regional entrepreneurship in non-extractive sectors of the economy, and preserve existing jobs and create new ones.

Areas of focus

1. Supporting new business initiatives — rendering state support for implementing projects in non-extractive sectors of the economy

2. Revitalizing the entrepreneurship sector — taking measures toward revitalizing enterprises within the framework of the financial-economic revitalization plan

3. Supporting export-oriented enterprises — focused on supporting entrepreneurs who export goods to external markets

Contacts

Regional branch of “DAMU Entrepreneurship Development Fund” in AstanaKunayev Ave., 12/1, office 401Astana, 010000, Republic of KazakhstanTel.: + 7 7172 559 199+ 7 7172 559 214 + 7 7172 559 434+ 7 7172 559 435+ 7 7172 559 436Fax: + 7 7172 559 213+ 7 7172 500 628Email: [email protected]

The program is expected to have the following outcomes:

• Greater access to financial resources by private enterprises when implementing new investment projects of industrial and innovation development

• Attraction of private resources to implement investment projects in the economic sectors which do not relate to raw materials

• Greater financial and economic stability of private sector, especially small and medium enterprises


Export 2020 program

The Export 2020 program provides state financial support to exporters in the form of reimbursement of 50% of their expenses related to the introduction of products to external markets.

The following expenses of exporters are reimbursed under the program:

• Registration of products and trademarks abroad

• Certification of products abroad

• Maintenance of branches (office, warehouse, retail outlet) abroad, including rent and utilities

• Advertising domestic products abroad

• Participation in foreign exhibitions (rent of exhibition spaces, manufacturing of display booths, registration fees, hand-out materials)

• Training of specialists abroad or attracting foreign experts to Kazakhstani companies

Apart from the reimbursement, exporters are provided with service support in the following areas:

• Marketing and analytical support regarding export markets

• Trade information support on market conditions of importer nations

• Training entrepreneurs in export activity

• Raising awareness of foreign buyers about Kazakhstani products

• Facilitation of presentation events for promotion of trademarks of Kazakhstani manufacturers

• Formation of trade-economic missions and forums, both in Kazakhstan and abroad

• Prospects for potential buyers of Kazakhstani products

Financing of trade and export operations:

• Providing post-export financing

• Insuring against commercial and political risks related to parties’ performance of foreign trade contract obligations

Contacts

Program operator: National Export & Investment Agency “KAZNEX INVEST”Syganak Str., 25 Ansar Business Centre, 2nd floorAstana, 010000, Republic of KazakhstanTel.: + 7 7172 799 393Fax: + 7 7172 799 392Email: [email protected]


Productivity 2020 program

The Productivity 2020 program is designed to improve competitiveness of industrial enterprises in prioritized sectors of economy by raising productivity.

Some of the state-run measures under this program are given below.

Long-term financial leases to implement projects:

• Applicants participate with not less than 15% from total leased amount

• Cost of lease is not less than USD150m

• Long-term lease period is 10 years

• Interest rate is not more than 7.5% in accordance with the agreement of long-term lease

Reimbursement of consultants’ costs for development and expertise of investment projects’ comprehensive plan:

The program renders reimbursement of 50%, but not more than KZT7.5m, of consultants’ costs for comprehensive plan development and expertise, involving:

• Attracting qualified project and engineering companies

• Providing innovation grant

• Co-financing from the Kazakhstani state budget of 30%, but not more than KZT30m, for each investment project to attract qualified design and engineering companies

For reimbursements, the program participants should meet the following criteria:

• They should be implementing or planning to implement investment projects in priority sector of the economy within the framework of the state program.

• They should possess a complex plan for the investment program, envisaging achievement of the following indicators: financial payback of the investment project; two-times productivity increase for new investment project; and product competitiveness (demand both locally and abroad).

Contacts

Program operator: Kazakhstan Institute of Industry Development, Sagynak Str., 25Ansar Business Centre, 13th floorAstana, 010000, Republic of KazakhstanTel.: + 7 7172 796 460+ 7 7172 796 472Fax: + 7 7172 796 451+ 7 7172 796 497Email: [email protected]


Strategic sectors of Astana’s economy6


Mechanical engineering and metalworking Mechanical engineering forms the largest share of the city’s manufacturing industry, at 48.9%. This has been underpinned by the commissioning of a number of manufacturing facilities at the ISC:

• At the end of 2009, Lokomotiv kurystyru zauyty, a locomotive manufacturing plant started operations with a production capacity of 100 locomotives per year.

• Year 2011 marked the launch of a facility intended for the assembly of Tulpar-Talgo passenger cars, with production capacity of 150 cars a year.

• In 2012, Elektrovoz kurastyru zauyty, with a production capacity of 50 electromotives per year, launched its operations.

In 2010, Lokomotiv kurystyru zauyty produced 30 locomotives; rising to 74 in 2013. The plant intends to reach a production capacity of 100 locomotives by 2015, when the locomotive internal market will be fully serviced.

ConstructionFor a number of years, the construction sector has been an engine of economic growth ensuring investment flow, developing related industries and creating numerous jobs.

Housing construction is developing rapidly. Annually, the volume of commissioned housing exceeds 1 million sq. m. In 2013, the volume of investment directed to housing construction was KZT91.3b, 43.5% higher than in 2012.15

Transport Astana is located in the center of the country, serving as a well-positioned transport node for rail and automotive networks. M-36 Chelyabinsk–Almaty and A-343 Astana–Petropavlovsk highways are routed through the city. The Astana train station is a major railway hub, offering a multitude of direct routes to Kazakhstan’s major cities. With its high transport potential, Astana as a transport node is able to accommodate freight traffic together with other types of transport, ensuring a world-class service. The strategic location of Astana allows it to serve as a transport and reload center for cargos formed at adjacent stations in the area.

15 Department of Statistics of the city of Astana

Astana’s international airport, located 16km away from the city, is one of the most technologically sophisticated modern airports in Eurasia. The airport hosts 13 airlines operating regular passenger flights inside the country as well as internationally. The airport is well equipped and has the capacity for all types of aircraft.

Short-term plans related to transport in the city include construction of a new railway station in the industrial district, and a new terminal will be built for freight cars. There is a plan to construct a new international airport to be located 30km–35km outside of Astana. The existing international airport will remain operational for domestic flights, whereas the new one will operate international flights. The new train station and airport are expected to open before 2020.

Currently, on the order of the President and the Government of the Republic of Kazakhstan, the akimat of the city is implementing a project titled “New transport system of the city of Astana.” The project activities include establishing a high-speed light rail transport (LRT) system, which is to become the primary transport system of the city and will consolidate all types of public transportation.


Medicine and pharmaceuticalsThe city’s medical organizations are able to provide a full range of high-technology services in priority fields, including interventional cardiology, arhythmology and cardiosurgery, uninvasive endovideosurgery, checkup programs, safe maternity and neonatal technologies. Furthermore, the city-based cardiology specialists have built significant health care capacity in Astana.

Within the framework of the republican medical cluster, Astana has commissioned a number of new medical facilities:

• National Maternity Center

• Republican Children’s Rehabilitation Center

• Diagnostics Center, Emergency Medical Care Institute, Research Center for Surgery

• Cardiosurgery Center — Kazakhstani PET center

Astana’s advantage in this field lies in its relatively low cost of medical services coupled with technological sophistication and highly qualified doctors and medical specialists.

Experts estimate the country’s medical equipment market at approximately USD200m per year. However, the market

is still heavily dependent on imported equipment, which constitute 90% of total market volume. As reported by experts, the highest priority sectors of the medical equipment market are electromedical equipment, diagnostics equipment, medical lasers, endoscopes and dental equipment.

Tourism and sportDevelopment of tourism is a high priority for the economic development of Astana. The city possesses all the competitive advantages necessary to establish a tourism cluster and contribute to the development of a business and tourism center. There are already more than 30 exhibitions — both local and international — being held in Astana. Development of Astana’s tourism cluster requires a network of parks, hotels, recreation areas, trade and entertainment centers and other tourism facilities.

In January–June 2013, the number of city visitors serviced reached almost 300,000. People visited the city mainly on business trips (45.0%) and for recreation (42.5%). The number of visitors compared with the corresponding period in 2012 grew by 9.6%.16

Another point of interest is the development of ecotourism. Landscapes and proximity to natural landmarks, such as Borovoye, Zerendy, Sary-Oba and Korgalzhino contribute greatly to the growth of tourism.

In 2011, Astana, together with Almaty, became the host city of the VII Asian Winter Games. The city had a unique opportunity to showcase its national achievements in winter sports to the global community. The games event gave Astana an opportunity to demonstrate that it is well equipped to manage a large influx of tourists. In total, Astana built or renovated three sports facilities for the VII Asian Winter Games. These facilities included a multifunctional sports complex, Astana Arena; a cycle track; and an ice-skating stadium, Alau.

16 Department of Statistics of the city of Astana


Information technologies and telecommunicationsThe development of Astana relies on an information-oriented society. A distinctive feature of such a society is the establishment of a technologically sound environment, ensuring effective information sharing among people and their access to world information resources, and meeting demands for information products and services. Information and communication technologies play an important role in growing the national economy and improving its competitiveness.

One of the telecommunication sector’s main objectives is creation of digital transport framework to support informatization processes, development of a modern telecommunication infrastructure and its integration into other countries’ infrastructures.

Astanatelecom (branch of Kazakhtelecom JSC) offers a full range of services, including:

• Telephony: local, intercity, international, public, iD Phone

• Internet access

• iD TV digital interactive television

• Tarlan prepaid cards

• Telegraphy

• Help desk service

To provide Astana’s people with modern services and free access to information, wireless internet access is available in public places for its citizens and visitors.

InnovationMore than 16 years have passed since Astana became the capital city of Kazakhstan. Over this time, the city has been completely transformed. Within the preparation of Astana to EXPO 2017, a number of large-scale city projects is underway.

Since 2012, Astana has been implementing the project Smart Astana, the purpose of which is to modernize the capital’s infrastructure by improving the quality of public utilities and housing services, renovating utility networks, improving public safety and introducing new social programs.

Smart Astana project’s model is based on the European Initiative on Smart Cities, which includes an interaction between six characteristics: Smart Economy, Smart Governance, Smart Living, Smart Mobility, Smart People and Smart Environment. The synergy of these characteristics forms the concept of Smart City.

As a part of Smart Astana, key projects include improving the city’s public safety — “System for complex life sustainment of the city of Astana,” and modernizing transportation system — “Intellectual transportation system.”

The project System for complex life sustainment of the city of Astana is aimed at improving urban security. The project’s main purpose is to create a modern framework to coordinate activities of public bodies involved in protecting public order, developing faster response to changes in the operating environment of Astana, and taking actions in response to various emergency situations.

The main goals of Intellectual transportation system project are forming an adaptive traffic control system, public transport priority, urban traffic safety, reducing toxic pollution, increasing traffic speed and liquidation of traffic jams.

Furthermore, a number of smart city solutions are being implemented to boost socioeconomic development of Astana in terms of health care, education and public utilities: School of the Future — Today; e-ambulance; smart LED; smart water networks and 3D center.


Public–private partnership7

Kazakhstan aims to meet the growing demand for quality and high-tech facilities of social, utility and transport infrastructures. The success of these socially significant projects is possible only through mutually beneficial partnership between the state and the investors.

Astana recognizes the following projects as high-priority targets for implementation within the framework of public–private partnership:

• Construction and operation of new railway stations

• Construction and operation of car parks

• Construction and operation of preschool institutions

• Construction and operation of ambulatory clinics in suburban areas

For Astana, execution of the above-mentioned projects will help increase capacity of preschool institutions, improve quality of medical services in suburban areas, greatly increase the number of parking spaces in the city and substantially relieve the existing bus station.


Success stories8

Locomotive kurystau zauyty — Evolution locomotive assembly plant, using technology of General Electric

• Project cost: KZT16.7b

• Production capacity: 100 locomotives per year

Tulpar-Talgo — passenger car manufacturing plant, using Spanish technology Talgo


• Production capacity: 150 cars per year

Elektrovoz kurystyru zauyty — Alstom technology electric locomotive manufacturing plant

• Project participant: Kazakhstan Temir Zholy, Alstom (France), TransMashHolding (Russia)


• Project capacity: 100 sections a year

Eurocopter Kazakhstan Engineering — EC 145 helicopters assembly and service plant


• Project capacity: up to 12 helicopters a year

Astana Solar — Photovoltaic modules plant


• Project capacity: up to 100MWt

METRO Wholesale Trade Center

• Project cost: KZT3b

• Assortment: about 30,000 products

Khan-Shatyr Shopping and Entertainment Center

• Project cost: USD140m

• Total area: 127,000 sq. m.

Creation of the Kazakhstan Earth Remote Sensing System

• Project participant: Kazakhstan Garysh Sapary, EADS Astrium (France)

• Project cost: KZT68b

• Project capacity: high resolution satellite images — 220,000 sq. km a day, medium resolution satellite images — 1,000,000 sq. km a day


Contacts

Astana akimat

Beibitshilik St., 11Astana, Republic of KazakhstanAstana akimat contact center: Tel.: + 7 7172 556 655www.astana.gov.kz

Public enterprise Administration of SEZ “Astana — A New City”

Dostyk St., 13Astana, Republic of KazakhstanTel.: + 7 7172 703 303Fax.: + 7 7172 703 248www.sez.astana.kz

Investor’s Service Centre of “Astana Innovations” JSCDostyk St., 13Astana, Republic of KazakhstanTel.: + 7 7172 57 8985+ 7 7172 578 986+ 7 7172 578 987www.ain.kz

“The Directorate For the Preparation and Organization of the International Specialized Exhibition EXPO-2017” LLPKabanbay Batyr Ave., 33Astana, Republic of KazakhstanTel.: + 7 7172 277 807 + 7 7172 277 816

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Akimat of Astana holds all rights for this publication and its use.

This publication was prepared by akimat of Astana in collaboration with EY. The information herein is for general guidance only and should not be used as the basis for exercising professional judgment. The information and facts used in this publication were provided by Investor’s Service Centre of “Astana Innovations” JSC. The photographs of the City of Astana were provided by EY for this publication. Other photographic materials were provided by Investor’s Service Centre of “Astana Innovations” JSC. EY disclaims all responsibility for loss occasioned to any person acting on, or refraining from acting in reliance on, information contained in this publication.

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