Investment policy

of the Republic of Kazakhstan

6.1 bln. USD 20.1 bln. USD

Kazakhstan attracted 222.4 billion USDof foreign direct investments

(2005-2015) 2005-2010 2010 – 2015

24%

76.8%

0

20

40

60

80

100

120

FDI in manufacturing industry Total FDI

The main countries-investors(2005–2015, bln. USD)

Netherlands 64.0

USA 23.8

Switzerland 15.0

China 13.1

France 12.2

UK 11.5

FDI statistics

FDI in manufacturing industry

Before the industrialization During the industrialization

0.3 0.7 1.1 2.1 1.8 2.2

5.73.5 2.5 3.7 2.6

7.9

12.1

19.421.3 21.4 22.2

26.528.9

24 23.9

14.8

0

5

10

15

20

25

30

35

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Manufacturing industry Total

8 3557 288

2 7703 6653 504

2 771

1 4762 565

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

9 000

Mining industry Oil and gas Trade Manufacturing industry

FDI by major activities (million USD)

2014 2015

62%

47%

30%58%

2

DOING BUSINESS 2015

Source: The World Bank, Doing Business 2015

132

130

118

116

109

84

83

67

51

41

15

7

5

1

Таджикистан

Индия

Иран

Бразилия

Индонезия

Китай

Украина

Кыргызстан

Россия

Казахстан

Германия

США

Гонконг

Сингапур

GLOBAL COMPETITIVENESS INDEX

Rank Country Score

1 Switzerland 5.76

2 Singapore 5.68

3 USA 5.61

4 Finland 5.53

5 Germany 5.53

6 Netherlands 5.50

… … …

42 Kazakhstan 4.49

45 Russia 4.44

55 India 4.31

79 Ukraine 4.03

102 Kyrgyzstan 3.83

Source: World Economic Forum, Global Competitiveness Report 2014-2015

Positions in the international rankings

Singapore

Hong Kong

USA

Germany

Kazakhstan

Russia

Kyrgyzstan

Ukraine

China

Indonesia

Brasil

Iran

India

Tajikistan

3

Public agencies, national companies and mayor’s offices’ hearing

395 projects927 investors

670 000 visits from 170 countries

Information on 12 languages

1

2

3

Public agencies, national holdings

and the NCE

Mayor’s offices

Investors’ service center (ISC)

Data base baseinvest.kz

Investment website

www.invest.gov.kz

Support of investors

16ISC

10SEZ

25IZ

New approaches for investment attraction

New incentives

1.Tax benefits

2. Investment subsidies

3. Immigration benefits

4. Stability of legislation

5. Recruitment simplification

Business forums

Road show

Diplomatic representative

offices of Kazakhstan

EXTERNAL LEVEL

CENTRAL LEVEL

REGIONAL LEVEL

Provision of investors with access to land and infrastructure (SEZ, IZ)

Investment advisers at the embassies of the Republic of Kazakhstan in 10 countries

Distribution of investors to the public agencies, national companies and the private sector

4

1

2

1. New directions:- Infrastructure (transport, housing, social, energy) and PPP, mining- M&A- Portfolio investors- Funds

representative offices abroad2

1

2

The detailed plan for improvement ofthe investment climate in accordance with the OECD standards

2. SPIID 2 industries (Greenfield): metallurgy, chemical and petrochemical industry, mechanical engineering, production of construction materials, food industry

Sectoral and regional annual Plans of activities to attract FDI with goals/indicators in coordination with the Ministry for Investments and Development

Control of the implementation

Problem solving (Ombudsman)

5

3

The regional councils under the leadership of governors together with the NCE

1

Review of problem cases

Government Council

One Stop Shop for investors

SPAIID

Investment attraction system

4

Entrance group

• Improvement of the migration control procedures• Improvement of the foreign labor attraction procedures• Extension of visa-free regime

New approaches

• Appointment of special advisers in the foreign offices of Kazakhstan and creation of KAZNEX INVEST front-offices

• Strategic investors and TNCs ’ issues consideration within the Investment Council

• Improvement of the investment preferences package • Sectoral and regional Plans for attracting investments

Fiscal system

• Improvement of the law enforcement practice of tax and customs legislation

• Improvement of transfer pricing• Decriminalization of tax offenses

Other systemic issues

• Strengthening the work of the “One Stop Shop”• Simplification of access to land• Improvement of legislation in the sphere of PPP

THE MAIN APPROACHES

of the detailed plan for improvement of the investment climate in accordance with the OECD standards for 2016-2017

Investment policy

The GOAL is to join the OECD Investment Committee in 2017

Further improvement of the investment climate

through implementation of the standards

The first Kazakhstan’s Investment policy review has been conducted

The second Investment policy review of Kazakhstan has been launched

5

State support measures for investors

Basic package:283 types of activities*

Special package:95 types of activities*

Investment Incentives in SEZs

EXEMPTION FROM CUSTOMS DUTIES UP TO 5 YEARS AND VAT ON IMPORTED:

• major equipment and spare parts to it;• accessories, raw materials and (or) materials. +

(VAT on import will enter into force on 1 January 2017)

+(VAT on import will enter into force on 1 January 2017)

+(VAT on import does not apply to the SEZ incentives)

THE STATE GRANTS IN KINDFree land, buildings, structures, machinery and equipment, computers, measuring and control devices and equipment, vehicles (excluding cars), industrial and household equipment.

• Not more than 30% of the volume of investment in fixed assets + + -

TAX PREFERENCES

Rate of 0%:

- Corporate Income Tax- Property Tax- Land Tax

- + +EXEMPTION FROM VAT

Marginal rate of tax depreciation up to 0% • 30% social tax for 5 years in the SEZ "PIT“ - - +INVESTMENT SUBSIDY

Reimbursement of up to 30% of actual costs of construction and installation works and

purchase of equipment - + -STABLE LEGISLATION1. Stability of tax legislation;2. Stability of the legislation on employment of the population in the field of attracting

foreign labor.- + -

FOREIGN LABOR

Without permit - + -OTHER INCENTIVESFree plot of land for the entire period of existence of a SEZ; Simplified procedure for employment of foreign labor. - - +* Matching the List of Priority Activities, approved by the Governmental Decree No. 13 dated January 13, 2016.* A newly established legal entity (the state registration of such legal entity has been completed not earlier than 24 months before filing an application for the investment preferences) with investments not less thantwo-million-fold rate of MCI. 6

Functions:1. Reception and advising on existing public services;2. Assistance in the preparation and presentation of the documents required for obtaining the public services;3. Support of investors in central and local executive bodies in obtaining the public services, in accordance

with the rules on the organization of activity of “One Stop Shop", approved by Governmental Decree No. 1133 dated December 30, 2015;

4. Monitoring of the process of providing investors with the public services.

Contacts:Call-center: +7 (7172) 75-45-40

INVESTOR

Investors Service Center

19 investor service sectors in

The State Corporation "Government for Citizens“, JSC

«One Stop Shop» for Investors

1. Conduct consultation on the issues ofobtaining public services forimplementation of investment projects;2. Check the documents for compliancewith the standards of the public services;

3. Send for consideration to theappropriate public agencies.

The TIME is set by the standards for provision of services + time to deliver by

the courier to the service provider

The possibility of monitoring the provision of public services

www.isc.baseinvest.kz

The result for provision of public services

more than

250investors

Received public services:Sought the advice

more then

80investors

Investor visa

Permits

Provision of land in urban areas for construction

Conclusion of the investment contract

Registration of entities

“One Stop Shop“ specialists for investors:

JANUARY-MARCH 2016 RESULTS

7

Construction of infrastructure objects

Cooperation with International experts

Systemic Measures

Implementation of the unified management model (UMM)

Plan

- In 2017-2018 the infrastructure of all SEZ’s is

expected to be fully finished (including SEZ “NIPT” and SEZ “Pavlodar”)

- On 27th of October 2015 the law “on amendments and additions to some legislative acts of the Republic of Kazakhstan on the improvement of special economic zones” has been passed

- Implementation of the UMM in 4 SEZ’s («Ontustik», «Saryarka», «Pavlodar», «Seaport Aktau»)

Creation of the Unified Coordination Center of SEZ’s

UCC - Unified operator that supports functioning of SEZ’s

- 148 operating projects, out of them 22 with foreign share

- 102 project are under construction

- In 2015-2016 the basic

infrastructure of 8 SEZ’s is expected to be finished

- SEZ “Astana – new city” - SEZ “Seaport Aktau”

Commissioning of the projects: 2016 – 25 (107 bln. KZT)2017 – 7 (64 bln. KZT)2018 – 9 (700 bln. KZT)2019 – 4 (1 279 bln. KZT)

New workplaces- 17 000

Members of SEZ’s

- In 2015 22 project were put into operation, total worth of the project

is 112 bln. KZT.

The development of Special Economic Zones

8

Ombudsman functions:

1. Consideration of investors applications and development of recommendations for their resolution, including the cooperation with public authorities;

2. Assistance to investors in emerging issues in court and pre-trial procedures;

3. Development and submission of recommendations on improvement of legislation of the Republic of Kazakhstan.

Investment Ombudsman

Ministries

The General prosecutor's office of RK

Ministry of Foreign Affairs

Ministry of Justice

Ministry of Energy

At the head of the interdepartmental

working group which includes:

Investment Ombudsman –

Minister of Investment and Development of RK

Ministry of Defence

Ministry of National Economy

Ministry of Finance

Ministry of Culture and Sport

Ministry of Healthcare and Social Development

Ministry of Education and Science

Ministry of Agriculture

Results of 2015

Applications accepted:

11 private issues 51 systemic issues62

Resolved in favor of investors

40

Recommendations on improvement of legislation have been developed

8

Examples

- Providing plant under construction with the infrastructure

- Tax issues

- Issues of the inclusion in the Register of domestic producers

- Trademark registration- Products transportation issues

9

National Investment Internet Resourcewww.invest.gov.kz

Database of investment projects and foreign investorswww.baseinvest.kz

Useful Links

10