Business opportunities in Kazakhstan · Imports 2014 (USD millions) % 1 Italy 16051.5 20.5 1 Russia 13730.3 33.3 2 China 9815.0 12.5 2 China 7367 17.9 3 Netherlands 8724.4 11.2 3

Business opportunities

in Kazakhstan

Pavel IVANOV

Senior Trade Officer

Embassy of Switzerland in Kazakhstan

1. Basic information

2. Economic overview of Kazakhstan

3. International and Swiss business presence in

Kazakhstan

4. Business opportunities

5. Risks

6. State development programms

7. Activities of the Swiss Embassy

Basic information

• Capital – Astana

• Largest city – Almaty (former Alma-Ata)

• Total area - 2,724,900 km2 (9th in the world)

• Languages: Kazakh (State language), Russian (Official language)

• Population: 17, 458 mln. (01.03.2015)

• Currency: Kazakh Tenge (KZT) – (1 CHF/ 188,76 KZT)

• GDP (PPP) – 2014 estimate; Total – USD 225.6 billion

Per capita – USD 13.060

• Member of CIS, Eurasian Economic Union (RuBeKa + Armenia and Kirgistan/May 2015), SCO (Shanghai Cooperation Organisation), Customs Union (RuBeKa) since January 2010

• Free Trade Agreement EFTA/RuBeKa (Negotiations are on hold)

• Observer status at the WTO (plans to join WTO in 2015)

RUSSIAN FEDERATION

143.5 mln.

KAZAKHSTAN

17 mln.

Western Europe – Western China

corridor on the territory of Kazakhstan

(2,787 km)

PEOPLE’S REPUBLIC

OF CHINA

1.4 bln.

MONGOLIA

2.8 mln.

INDIA

1.3 bln.

BELARUS

9.5 mln.

IRAN

77.4 mln.

PAKISTAN

182.1 mln.

TURKEY

74.9 mln.

Western Europe – Western China

corridor (8,445 km)

Lianyungang

St. Petersburg

Aktobe

Shymkent

LOCATION AND INFRASTRUCTURE

• The Kazakhstan’s geographical position makes it a natural crossroads for major

transit corridors from Asia to Europe.

• The transcontinental automobile road corridor “Western Europe – Western China”

passes through the territory of Kazakhstan. The corridor will allow to deliver

freights from China to Europe in 10 days.

• There is a territory with population of more than 3.3 bln. people within a radius of

2 thsd. km from Kazakhstan

• The flight time from most European destinations is five hours.

Population

100 000 – 200 000

200 000 – 500 000

500 000 – 1 000 000

> 1 000 000

Electrified, high-speed line (1,320 km )

Freight and passenger line

Constructed in 2010-2014

Western Europe – Western China

corridor (2,787 km)

CONSTRUCTION OF TRANSPORT AND LOGISTICS INFRASTRUCTURE

Infrastructure

Temirtau

Oskemen

Taldykorgan

Turkestan

Uralsk

Atyrau

Aktau

Kostanay

Petropavlosk

Kokshetau

Pavlodar

Astana

Karaganda

Almaty

Taraz

Shymkent

Kyzylorda

Aktobe

Semey

Ekibastus Rudniy

New logistics

hub - Khorgos

Logistics

hub in sea

port

TURKMENISTAN, IRAN

EUROPE, RUSSIAN FEDERATION

CHINA

IRAN

Kazakhstan in the world ranking for reserves

11

8

5

2

12

8

1 3

10

5 4

11

19

10 12

1

11 12

3

9

21

10 11 10

Natural resources

Kazakhstan in the world ranking for mining

External trade turnover of Kazakhstan (according to Kazakhstan statistics)

in USD Mio.

January -

December 2014 Coutry's share, %

January -

December 2013 Coutry's share, % Rise rate %

External trade

turnover 119'450.6 100.0 133'506.0 100.0 89.5

Russia 27'234.8 15.8 33'553.6 17.9 81.2

China 17'182.0 14.4 22'738.2 17.0 75.6

EU 53'072.4 44.4 54'719.4 41.0 97.0

Export from

Kazakhstan 78'237.8 100.0 84'700.4 100.0 92.4

Russia 5'178.1 6.6 5'875.3 6.9 88.1

China 9'815.0 12.5 14'373.7 17.0 68.2

EU 44'442.5 56.8 45'662.8 53.9 97.3

Italy 16'051.5 20.5 16'480.6 19.5 97.4

Netherlands 8'724.4 11.2 9'888.2 11.7 88.2

Switzerland 4’539.2 5.8 4’313.5 5.1

Import to Kazakhstan 41'212.8 100.0 48'805.6 100.0 84.4

Russia 13'730.3 33.3 17'971.8 36.8 76.4

China 7'367.0 17.9 8'364.4 17.1 88.0

EU 8'629.8 20.9 9'056.6 18.6 95.2

Source: Agency of Statistics of Kazakhstan

Kasachstan: wichtigste Handelspartner 2014

(aus der Sicht des Residenzlandes, in USD Mio.)

Country Exports

2014 (USD millions)

% Country Imports

2014 (USD millions)

%

1 Italy 16051.5 20.5 1 Russia 13730.3 33.3

2 China 9815.0 12.5 2 China 7367 17.9

3 Netherlands 8724.4 11.2 3 Germany 2316.6 5.6

4 Russia 5178.0 6.6 4 USA 1990.1 4.8 5 France 4689.7 6 5 Ukraine 1209.1 2.9

6 Switzerland 4539.1 5.8 6 France 1086.2 2.6

7 Rumania 3152.9 4 7 Republic of Korea

1067.7 2.6

8 Austria 2855.0 3.6 8 Italy 1039.6 2.5 9 Spain 2363.1 3 9 Turkey 1023.5 2.5

10 Turkey 2272.4 2.9 10 Uzbekistan 1017.9 2.5

27 Switzerland 182.2 0.4

EU countries 44442.5 56.8 EU countries 8629.8 20.9

Total

78237.8 100 Total 41212.8 100

Quelle: Statistical Agency of the Republic of Kazakhstan

Bilateral trade Kazakhstan – Switzerland

Trade turnover (2014) Total: CHF 964,62 million

Export to Switzerland: CHF 748,85 million(- 35%) Import from Switzerland: CHF 215,77 million (+ 11%)

Exports to CH (2014): • Energy res.: CHF 703,0 million (94,0%), - 36,9% • Jewelry: CHF 33,6 million (4,5%), -15,5

Imports to KAZ (2014): • Pharma: CHF 78,8 million (36,5%) , + 44,3% • Watches: CHF 25,9 million (12%), +8,5% • Agriculture products : 23,1 (10,7%), +1% • Jewelry: CHF 22,9 million (10,6%), +121% • Machinery: CHF 16,2 million (7,5%), -14% • Electr. equip.: CHF 10,5 million (4,9%), -27% • Fertilizers: CHF 9 million (4,2%), +53% • Optical instr.: CHF 8,4 million (3,9%), -25%

Source: Swiss-Impex

Kasachstan: wichtigste Investitionsländer Quelle: Kasachische Nationalbank

Rang

Land

Investitionen Kumuliert

2005-2014 (USD Mio.) Anteil (%) am Total

1 Niederlande 58'465.1 28.15

2 USA 21'007.5 10.11

3 Schweiz 13'107.1 6.3

4 China 12'740.8 6.1

5 Frankreich 11'252.2 5.4

6 UK 11'021.6 5.3

7 British Virgin Islands 9'686.0 4.6

8 Russland 9'081.1 4.3

9 Italien 5'646.5 2.7

10 Canada 4'241.9 2.0

Total 207'635 100

•SKD assembly of motor vehicles

•CKD assembly of motor vehicles

Production of car parts and accessories :

Manufacture of electric motors, increasing localization: Production of locomotives and wagons:

Production of equipment:

Production of helicopters: Production of combines and tractors:

Production of equipment:

Railway machinery engineering

Automobile production

Machinery for mining, quarrying

Other industrial machinery

Machinery

Chemical industry The production of chemical additives, sodium

hexametaphosphate industrial gases, sulphuric acid, ammonia

and ammonium nitrate:

The production of ethanol based on the processing of the

industrial gases, the production of bioethanol from spent grain,

mixing special chemicals for oil extraction and refining:

Professional training, production of generic products: Professional training, production of generics and original

medicines: Pharmaceutical industry

International business presence in Kazakhstan 2010-2014 2015-2019

Swiss companies in Kazakhstan

13

SEZ

SEZ

SEZ

SEZ

SEZ

SEZ

SEZ

SEZ

SEZ

SEZ Customs privileges

Customs duties 0% on the import of:

• equipment and its components,

• spare parts,

• raw materials and supplies.

State in-kind grants

Land plots, buildings, machinery and

equipment in property.

Tax benefits •CIT – 0 % 10 years

•Land tax – 0% 10 years

•Property tax– 0% 8 years

Investment reimbursement

Up to 30% of construction and installation works and equipment

Providing the land in the territory

of the SEZ for a period of up to

10 years

Tax benefits

CIT – 0%

Land tax– 0%

Property tax– 0%

VAT – 0% (on all goods

completely consumed in the

production process)

Exemption from customs duties

for goods imported into SEZ

territory

Customs privileges

Simplified procedure

for recruiting foreign workers

Other privileges

The "one window" principle for the investor and

service support for investment

Information, consulting,

organizational and other

assistance to the investor

Assistance in obtaining the

required approvals and

permits

Support for investment

project till the start of the

production

Provision of services to

foreign investors and

representatives of

Kazakhstan business Migration benefits

The right to employ foreign labor without

quotas and permits

Visa-free travel for citizens of 10 countries

INVESTMENT PREFERENCES*

Support for investors SPECIAL ECONOMIC ZONES

*for priority investment projects

Priority types of activities:

1. Metallurgy

2. Oil refining

3. Food production

4. Chemical industry

5. Machinery industry

6. Production of construction materials

Geschäftsmöglichkeiten

• Maschinen und Ausrüstungen

• Chemische Industrie

• Automobilindustrie

• Bauwirtschaft

• Elektrotechnik- und Industrie

• ITK-Branche

• Umwelttechnik

• Medizintechnik

• Erzbergbau und Metallurgie

• Agrarsektor

• Infrastruktur/ Flughäfen

Risiken in 2015

• Schwacher Rubel (RUR)

• Starke Konkurrenz auf KAZ-Produzenten durch die Waren aus Russland (Eurasische Wirtschaftsunion)

• Erwartung einer neuer Abwertung vom Tenge (KZT)

• Tiefe Ölpreise (Hauptexportgut Kasachstans)

• Finanzsektor – grosser Anteil von «faulen» Krediten NPL’s (30%) und starke Dollarisierung des Bankensektors

«Nurly Zhol» – the Path to the Future

New economic policy of Kazakhstan

Program passport

Program: «Nurly Zhol» – the Path to the Future

Duration: 2015-2017

Budget: 9 bln USD

Nature: A new countercyclical large-scale

development program

Goal: Continue the structural reforms

in the economy of the country

7 covering sectors (1)

• Formation of hub-like macro regions;

• Logistic hub in eat and marine infrastructure in the west;

• Creation of 200’000 new jobs.

1. Transport and logistics

• Finalizing existing Special Economic Zones;

• Construction of new industrial zones in the regions;

• Tourism infrastructure development.

2. Industrial infrastructure

• Construction of two high voltage lines:

• Ekibastuz – Semey – Oskemen;

• Semey – Aktogay – Taldykorgan – Almaty.

3. Energy infrastructure

7 covering sectors (2) • Modernization of housing and utilities

infrastructure and water and heat supply networks.

4. Housing and utilities / water and

heat supply

• Construction of social housing to rent with right to buy them for low mortgage interest.

5. Housing infrastructure

• Construction of schools, kindergartens and 10 higher education institutions.

6. Social infrastructure

7. Support of SMEs and business

activities

• Support of SMEs and business activities by

means of low crediting and business facilities.

Budget allocation

National Fund:

• In 2015 : 686 bln KZT (4.3 bln USD)

• In 2016: 379 bln KZT (2 bln USD)

• In 2017: 555 bln KZT (3 bln USD)

Co-financing by International Financial Institutes:

• 9 bln USD

National companies and institutes:

• 240 bln KZT (1.2 bn USD)

1. Transport and logistics

• Highway sector : 962 mln USD;

• Railway and logistics : 107 mln USD;

• Machine manufacturing : 189 mln USD

• Automobile : 108 mln USD;

• Helicopter production: 54 mln USD;

• Passenger wagons: 27 mln USD;

• Pre-export and export promotion: 108 mln USD

2. Industrial infrastructure • Industrial infrastructure: 437 mn USD;

• National Petrochemical Technology SEZ (Atyrau): 370 mn USD;

• Khorgos – Eastern Gate SEZ: 67 mn USD.

4. Housing and utilities / water and

heat supply

• Housing and utilities / water and heat supply modernisation: 324 mn USD;

• Housing infrastructure: 594 mln USD;

Other sectors’ financing

• Agro-industry: 108 mn USD;

• Food quality improvement: 27 mn USD;

• Education: 178 mn USD;

• Road Map-2020: 54 mn USD;

• Geological study: 32 mn USD;

• Reconstruction of runway and Astana airport terminal: 156 mn USD;

• Economy support: 594 mn USD.

Astana EXPO 2017

Status: in construction Theme: Future Energy Area: 174 hectares Opening Ceremony: June 10, 2017 Closure Ceremony: September 10, 2017 Participating countries: 100+More countries and 10+ organizations Attendance: 5+ million visits Switzerland will participate

EXPO site

Expogelände (in Jan. 2015)

Activities of the Swiss Embassy 2015

• Swiss National Day on 20.07.2015 in Astana (planned as networking and promotion event)

• Support of the Presence Switzerland Delegation (EXPO 2017)

• Swiss Business Mission to Astana and Almaty organized by SGE (September 2015)

• 9th Meeting of the Mixte Economic Commission in Astana (on hold)

Contacts in Kazakhstan:

Embassy of Switzerland 62 Kosmonavtov Street, 8F Microdistrict Chubary 010000 Astana Kazakhstan Tel. +7 717 297 98 92 +7 717 297 98 93 Fax +7 717 297 98 94 +7 717 297 98 96 [email protected]

Honorary Consulate of Switzerland EATC LLP Swiss-Centre Tabachno-Zavodskaya Street 20 050050 Almaty Kazakhstan Tel. +7 727 298 08 41 +7 727 298 08 81 +7 727 250 39 53 Fax +7 727 250 39 57 [email protected] Honorary Consul Mr. Roland Hörler

Ihr Ansprechpartner in der Schweiz

Michael Kühn

Senior Consultant Russia & CIS

Switzerland Global Enterprise

Zürich

Telefon +41 44 365 54 49

[email protected]

www.s-ge.com/russia

Nächste Termine:

Beratung Russland 8.6. – 12.6.2015, 31.8.-4.9.2015

Unternehmerreise nach Kasachstan 7.-10.9. 2015