Factors of attractiveness of the investment climate in Kazakhstan JSC NATIONAL AGENCY FOR EXPORT & INVESTMENTS KAZNEX INVEST Ministry of Industry and New Technologies of the Republic of Kazakhs tan Date: Location:

COUNTRY REVIEW Political structure : Republic Territory: 2.7 mln. sq. m. Capital: Astana Population: 16,5 mln Key macroeconomic indicators, 2010: GDP/GDP per capita: $ 147 bill./ $ 8,979 Industrial output : $ 80 bill. Turnover: $ 90.6 bill. Export: $ 59.8 bill. Import: $ 30.8 bill. Religion: Islam, Russian Orthodoxy Major languages Kazakh (state language) Russian (official, business language) The main ethnic groups: Kazakhs: 65% Russian: 25% Ukrainians: 2.9% Uzbeks: 2.8% Germans: 1.5% Koreans: 0.7% Currency: Tenge (KZT, USD 1~ KZT 146)

GDP PER CAPITA OF COUNTRIES-COMPETITORS OF KAZAKHSTAN FOR FDI 0% 2% 4% 6% 8% 10% 12% 14% 16% 20%

INDUSTRY OF KAZAKHSTAN Source: Agency of the RK on Statistics Source: National Bank of the RK

COMPARISON OF ACCUMULATED FDI IN THE CIS

FOREIGN DIRECT INVESTMENT IN KAZAKHSTAN Source: National Bank of the RK FDI in Kazakhstan, million USD 3Q 2011

THE VOLUME AND STRUCTURE OF FDI IN KAZAKHSTAN BY INDUSTRY FOR M2010 YEARS

STATISTICS OF THE DOING BUSINESS-2011 RATING, THE SHARE OF FDI IN GDP AND THE LEVEL OF FDI PER CAPITA Source: World Bank, CIA Factbook, Doing Business 2012

CONFIDENCE IN POLITICAL INSTITUTIONS AND EFFECTIVE MANAGEMENT OF PUBLIC FUNDS

BUDGET BALANCE AND THE SHARE OF PUBLIC DEBT TO GDP

TRANSPORT INFRASTRUCTURE

FEATURES OF THE LOCATION

THE LEGAL FRAMEWORK IN KAZAKHSTAN THE LAW OF THE RK AS OF JULY 21, "ON SPECIAL ECONOMIC ZONES IN THE REPUBLIC OF KAZAKHSTAN" THE LAW OF THE RK AS OF JANUARY 8, "ON INVESTMENTS"

BILATERAL INVESTMENT PROTECTION AGREE MENTS AustriaGeorgiaSouth KoreaTajikistan AzerbaijanEgyptLatviaTurkey ArmeniaIsraelLithuaniaRussia Belgium- Luxembourg Union IndiaMalaysiaUzbekistan JordanMongoliaUkraine IranNetherlandsFinland BulgariaSpainPakistanFrance Great BritainItalyPolandCroatia HungaryQatarRomaniaCzech VietnamChinaSerbiaSwitzerland GermanyKuwaitSlovakiaSweden GreeceKyrgyzstanUSAEstonia Countries with which Kazakhstan has signed bilateral agreements on mutual investment protection

GOVERNMENTAL PROGRAM OF FORCED INNOVATIVE INDUSTRIAL DEVELOPMENT INDICATORS - GDP grown up to 50% than in Increasing of labor productivity in manufacturing industry up to 50% and in some sectors up to 100% - Increasing the share of non resource export up to 40% - Decreasing energy intensity of GDP no less than 10% - Increasing the share of innovative enterprises up to10% of active enterprises GOAL: Ensure sustainable and balanced economic growth through diversification and competitive recovery.

PRIORITY SECTORS Modernization of existing enterprises Metallurgy and production of metal products Oil refining and Infrastructure of Oil and gas sector Chemical and pharmaceutical industries Аgro-industrial sector Defense industry Construction industry and Production of building materials Transport and Info communications Machine construction Uranium industry Light industry Tourism Space industry Creation of new efficient enterprises Selective support of enterprises of future economy NEW APPROACHES ( ) 1. High productivity level. 2. High added cost 3. Export oriented 4. Competitiveness on domestic market 1. Innovativeness 2. Improving of telecommunications infrastructure 3. Influence on production increasing in traditional sectors CRITERION 2. Creation and improving of infrastructure power industry, pipelines, roads

THE BASIC PACKAGE OF PREFERENCES FOR INVEST ORS THE LAW OF THE RK AS OF JANUARY 8, "ON INVESTMENTS" 1.Tax preferences according to Tax code of the Republic of Kazakhstan 2.Exemption from payment of import duties 3.State in-kind grants 4.Special regime for strategic investment projects: -Tax preferences (corporate income tax, land, property); -Providing state order; -Industrial subsidies (for social important regions) Preferences Compliance to list of high technology products (within the framework of law «On Investments») The volume of investments more than $ 50 million and compliance to priority activities approved by Government Resolution on May 8, 2003, 436 (within the framework of the law «On Investments») Strategic investment projects or

THE INSTITUTIONAL FRAMEWORK OF KAZAKHSTAN

INDUSTRIAL INFRASTRUCTURE SEZ Park of industrial (IT-industry) SEZ Ontystik (textile industry) SEZ Khorgos eastern gate (Trade, logistics) SEZ Saryarka (metallurgy) SEZ Astana new city (construction industry) SEZ Burabai (Tourism) SEZ Pavlodar (chemical industry) SEZ Petrochemical park (Oil and gas industry, petrochemical machinery) SEZ Marine Port Aktau (logistics, transport) Aktau Atyrau Shymkent Astana Karaganda Almaty Pavlodar

MEASURES OF INVESTMENT SUPPORT IN SEZ Reduction of the corporate income tax 100%; application of the 0 coefficient in the calculation of land tax; application of the 0 coefficient in the calculation of property tax; Application of zero-rated VAT on use of products on the territory of SEZ that are fully consumed in carrying out activities, meeting the objectives of special economic zone creation, according to the list of goods specified by the Government of RK; Tax preferences: Other preferences: The simplified procedure of hiring foreign labor; Provision of free land on the territory of SEZ for a period of up to 10 years; THE LAW OF THE RK AS OF JULY 21, «ON SPECIAL ECONOMIC ZONES IN THE REPUBLIC OF KAZAKHSTAN»

RATE OF TAX INCENTIVES

COMPARISON OF THE SEVERITY OF THE TAX BURDEN ON THE DOING BUSINESS RATING Taxes/countryUAEKazakhstanLithuaniaAzerbaijanRussiaCzechUkraineBelarus Tax on profits 14%30%39%41%47%49%56%43% VAT 0%12%19%18% 19%20%18% Income tax 0%20% 22%20% 25%24% UST 13%11%31%22%26%22%1%34% Property tax 0%2%1% 2% 0,3 $/sq.m 1% Land tax 0%20 $/ha2% 1200 $/ha 1% 59 $/ha $/sqm 1% Other The tax rate varies between Emirates Transport tax Road tax, Energy tax Transport tax

23 Site objectives: Processing of requests and inquiries of investors and initiators of the projects online Promotion of investment image of Kazakhstan Provision of quality and daily updated information on all aspects of investing in Kazakhstan, including : -investment legislation of the Republic of Kazakhstan; -business conditions in Kazakhstan; -infrastructure conditions; -government programs; -government support for investors and others. Website will be available in 12 languages: English, German, French, Italian, Spanish, Arabic, Korean, Japanese, Turkish, Chinese, Kazakh and Russian. National investment interactive website

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