INVESTMENT POTENTIAL OF SOUTH KAZAKHSTAN REGION KAZAKHSTAN Capital

INVESTMENT POTENTIAL OF SOUTH KAZAKHSTAN REGION

KAZAKHSTAN § Capital: Astana § Territory: 2, 7 mln. sq. km. (9 th in the world) § Population: 17 , 8 mln. (63 rd in the world) § Border countries: Russia, China, Uzbekistan, Kyrgyzstan, Turkmenistan, via Caspian Sea Azerbaijan and Iran. § Administrative divisions: 14 regions, 2 cities of republican value (Astana and Almaty) § GDP 2015: $ 184, 36 bln $ (53 st in the world) § GDP per capita 2015: $ 10, 546 $ (72 th in the world) § Currency: tenge ($ 1 – 343 tenge) § Kazakhstan ranks first in the world in explored reserves of zinc, tungsten and barite, second - silver, lead and chromite, third - copper and fluorite, fourth molybdenum, sixth - gold.

EURASIAN ECONOMIC UNION EEU IS: Ø Market: 175, 7 mln. people Ø GDP: 2 411 bln. USD Energy industry Ø Gas: 20, 9% share in the world (1 st place) Ø Oil: 14, 6% share in the world (1 st place) Ø Goal mining: 5, 8 % share in the world (6 th place) Ø Electricity generation: 11, 2 % share in the world (3 rd place) Manufacturing industry Ø Steel production: 4, 5% share in the world (5 th place) Movement of the four freedoms in the Ø Production of mineral fertilizers: 10, 8 % share in the world (2 nd place) framework of the EEU: Free border cross of: Agriculture 1. goods Ø Potatoes: 11% share in the world 2. services Ø Wheat: 9% share in the world 3. capital Ø Milk: 7% share in the world 4. labor Ø Meat: 3, 5% share in the world

TRADE AND LOGISTICS Ø 3. 3 bln. people reside within the territory of radius of 2000 km outside Kazakhstan. Ø Three member countries of BRICS are near Kazakhstan: Russia, China and India. Ø The flight time from most European cities is around five hours.

INFRASTUCTURE Ø The total length of railroad network - 15, 341 km, 6000 of which are double tracks and about 5000 - electrified. Ø More than 68% of the total turnover and more than 57% of the country's passenger traffic accounted for by the railways. Ø Kazakhstan railway borders: with Russia, China, Uzbekistan, Kyrgyzstan and Turkmenistan. 33% (2, 787 km) of the transport corridor "Western Europe. Western China" are in Kazakhstan, which is the shortest route in international trasportation between Europe and China Public roads: 96 thousand km. 5 international road routes go across Kazakhstan with total length of 23 thousand. km. 1. Almaty-Astana -Kostanay exit to Chelyabinsk (Russia); 2. Almaty-Petropavlovsk with access to Omsk (Russia); 3. Almaty -Family -Pavlodar with access to Omsk (Russia); 4. Almaty-Shymkent with access to Tashkent (Uzbekistan); 5. Shymkent-Aktobe-Uralsk with access to Samara (Russia).

Investment Climate GLOBAL COMPITITIVENESS INDEX Kazakhstan took the 42 th place among 144 countries. • "The efficiency of the labor market" - 18 th place • "The degree of investor protection" – 25 th place • "Macroeconomic environment" - 27 th place • «Quality of railway infrastructure» – 28 th place DOING BUSINESS According to the authoritative rating - «Doing Business» in 2016 Kazakhstan took the 41 th place among 189 countries. • «Taxation» - 17 th place • «Property registration» - 18 th place • «Investor protection» - 25 th place Favorable business climate and political stability promoted a considerable FDI inflow into Kazakhstan in 2005. Kazakhstan has attracted FDI in gross more than 220 billion USD.

Investor protection ü According to the annual Global Competitiveness Index for 2015 -2016, Kazakhstan took the 25 th place on the degree of investor protection. ü Kazakhstan signed an agreement on mutual protection of investments with 47 countries. INVESTMENT OMBUDSMAN In order to assist in protecting the rights and legitimate interests of investors, an investment ombudsman has been set up. The main functions of investment Ombudsman are: Ø Examining investor inquiries on issues arising in the course of carrying out investment activities in Kazakhstan and giving advice on solutions; Ø Assisting investors in finding solutions for the issues arising in extrajudicial and pre-judicial procedures; Ø Developing and implementing recommendations on the improvements Ø for the legislation of Government of RK.

South Kazakhstan Region § Area: 117 249 sq. km § Population: 2. 8 mln. people § Unemployment rate: 5, 3% § The average monthly earned payment in SKR: 82 288 tenge / 240 USD § Additionally: the average monthly earned payment in Kazakhstan 119 111 tenges / $347 § Administrative center: Shymkent (3 rd large city in Kazakhstan) § Administrative districts: 4 cities (Shymkent, Kentau, Turkestan, Arys) and 14 areas. § 1 st on reserves of uranium and on 3 rd on reserves of phosphorite and ferrous in the KZ § 330 sunny days in a year § Average temperature: January of -2 °C, July of +29 °C.

Investment preferences Tax exemption • Corporate income tax for 10 years • Land tax for 10 years • The property tax for 8 years INVESTMENT SUBSIDY Up to 30% compensation on actual investor expenses for SMR and acquisition of the equipment from the state after input of object in operation RELEASE FROM THE CUSTOMS DUTIES Release from payment of the customs duties when importing the equipment, accessories and spare parts to it, the raw materials and materials necessary for implementation of the investment project. NATURAL GRANTS Free use: the land plots, buildings, constructions, cars and the equipment, computer facilities, the measuring and regulating devices and devices, vehicles.

SIMPLIFICATION OF HIRING OF LABOUR The work permit foreign labor during all term of implementation of the investment project and one year after commissioning of the investment project isn't required. STABILITY OF THE LEGISLATION Stability of the tax law for all tax rates, except the VAT and excises (on condition of the conclusion of the investment contract) Criteria for receiving investment preferences: To correspond to the list of priority kinds of activity: Ø Metallurgy; Ø Chemical branch; Ø Petrochemical branch; Ø Mechanical engineering; Ø Industry of construction materials; Ø Food industry. 2. New created company (less than 12 months before the demand for investment preferences) with investments not less than 2 million MSI (monthly settlement indicator). 1 MSI = 2 121 tenge/6, 3 USD Ø 2 000 MSI = 4 242 000 tenge / 12 476 470 USD

Economics The volume of a gross regional product for 2015 made 2 508 380, 9 million tenges Name GRP, Mln tenge Structure of GRP, % SKR share in structure GRP on RK, % 10 priority branches of economy of SKR 1. Agriculture 2. Food industry In total 2508380, 9 100 6, 1 Agriculture, hunting and forestry 232 810, 4 9, 3 5, 7 Industry 658 204, 2 26, 2 4, 8 Mining industry and development of pits 139 639, 2 5, 6 1, 0 Manufacturing industry 484 481, 2 19, 3 11, 3 Building 156 782, 4 6, 3 6, 4 Wholesale and retail trade 272 804, 1 10, 9 4, 7 Transport and warehousing 237 706, 6 9, 5 6, 6 8. Energy production Other services 950 073, 2 37, 8 6, 6 9. Tourism 3. Light industry 4. Pharmaceutics 5. Machinery 6. Industry of construction materials 7. Petrochemistry 10. Logistics

Industry In 2015 the SKR industrial enterprises have produced 668 bln tg or over 2, 7 billion USD. 45% of the enclosed investments into fixed capital in 2015 in SKR were invested in industrial spheres 17, 7% of credit investments in 2015 in SKR were directed by banks of the second level on industrial spheres SKR share from total production across Kazakhstan following the results of 2015. 100% cotton oil 26, 9% gas oil 99, 2% transformers 24, 5% cement 97, 5% cotton fabrics 21, 9% flour 67, 2% kerosene 21, 4% pasta 57, 0% textile products 21, 2% bread 53, 4% pharm. preparations 17, 4% bricks 44, 9% windows and doors 13, 8% fowl 37, 3% gasoline 12, 3% paper 30, 1% fuel oil 10, 4% lime

Agricultural industry SKR share from total production across Kazakhstan following the results of 2015. 100% of cotton 71% of grapes 66% of melon 51% of carthamus 42% of fruits 25% of vegetables In 2014 the volume of gross output of agriculture made 325 bln. tg or 1, 8 billion USD. 10, 3 million hectares or 87% of the territory of area are occupied with agricultural land 9095, 8 K ha of pastures, 779 K ha cultivated areas, 442, 3 K ha of the irrigated land 91% of greenhouses of the republic are placed in SKR 38% of economically active population of area or more than 500 000 people is occupied in agriculture 2, 3 mln. tons of vegetables, melon cultures and potatoes were collected in 2015. 490 K tons of vegetables and melon cultures are sent for export in the Customs union, including to Russia – 310 K tons 23 billion tg. or 125 million USD a subsidy in 2015 were allocated with the state in SKR for development of the of agriculture 64 706 tg. or 240 USD are made by an average monthly salary in agriculture

Tourism q One of the most visited tourist objects in Average of Asia is Hodge Ahmet's mausoleum of Yassavi which is included in the List of the world heritage of UNESCO. In 2015 Hodge Ahmet's mausoleum of Yasavi was visited by more than million tourists. q In the territory of the resort "Saryagash" is 19 improving complexes. Annually visit more than 284 000 people. q In the region 2 reserves ("Aksu-Zhabagly" and "Karatausky") and 1 national park ("Sairam Ugamsky") are located For development of tourism 4 tourist zones are created: q “Kaskasu” tourist recreation center q "Saryagash“ SPA and resort q "Shardara“ beach q “Badam“ beach

Tourist zones Name «Kaskasu» ski resort Improving and resort zone «Saryagash» Beach zone «Shardara» Beach zone «Badam» Allocated area 56 hectares 40 hectares 106 hectares 64 hectares Required investments 230 million $ 154 million $ 192 million $ 184 million $ State support: - Ready infrastructure (water, electricity, gas, highway); - Maintenance when obtaining allowing documents; - Providing market research from international consulting the companies; - Possibility of repayment or rent of the land plot below market value.

r. Resources Name of the area or № Name of resources city 1 ARYS Clays bentonite, limestones, сlay-plasters, sand for concrete and silicate products 2 KENTAU Barite, limestones, copper, molding 3 TURKESTAN Barite, limestones, plaster, clay-plasters, molding and molding clays, clays bentonite 4 BAYDIBEK d. Mineral paints, marble, facing stones 5 KAZYGURT d. Plaster, clays bentonite, clays refractory, carbonate raw materials, perlite, obsidian 6 MAKTAARAL d. Plaster 7 ORDABASY d. Mineral paints, clays bentonite 8 OTYRAR d. Loams, dolomite and, dolomitted limestone, construction sand 9 SAYRAM d. Clays bentonite and sand quartz 10 SARYAGASH d. Molding and molding clays, clays bentonite, limestones, carbonate raw materials and sand quartz 11 SOZAK d. Clays bentonite, talc, hrizotit asbestos, loams, sand quartz and field spars 12 TOLEBI d. Mineral paints, limestones, clays refractory, clays forming, vollastonit, marble and fluorspar fluorite

Site and logistics SKR borders with: Republic of Uzbekistan Zhambyl region Karaganda region Kyzylorda region. SKR is "the southern gate" of EEU in international trade, to that promote: transport corridor "Western the Europewestern China" which is in the shortest way in the international transportation between Europe and China; the highway "Shymkent-Tashkent", opening to Kazakhstan the southern countries; Trans-Asiatic railway line. Ø From Shymkent live 10 million in radius of 200 km persons. Ø In a radius of 500 km – 25 million persons. Ø In a radius of 700 km – 50 million persons. In Shymkent international airport which carries out regular flights to the following cities functions: Istanbul (Turkey), Moscow (Russia), Dubai (United Arab Emirates), Sharjah (United Arab Emirates), Urumqi (China), Astana, Almaty, Aktau.

Industrial zones of SKR Total area : 937 hectares The number of existing IZ : 7 (592 ha) The amount of the IZ under construction: 4 (345 ha) The number of industrial zones 11 6 1 2 3 2010 2013 2014 2015 2016 The total area of industrial 937 zones (hectares) 337 377 427 2010 2013 2014 525 2016

THE ATTRACTIVENESS OF INDUSTRIAL ZONES § Ready Infrastructure: Electricity, gas, water and other engineering and communication networks. § Fares are cheaper by 30% § Possibility to lease or purchase land, on a cost below than market value * § Convenient logistic location § Maintenance of projects on the principle of “single-window system (one-stop shop)” § Promoting the goods and services of the participants of industrial zones * If the project complies with priority activity, the land is available for free How to become the resident of industrial zone Submit the necessary documents to the Managing Company Get the result of the Regional Coordinating Council PROJECT Protect project in the Regional Coordinating Council Sign an agreement with the Managing Company

Kazakh-Turkish Industrial Zone Established in 2015 The site is 203 hectares. Possibility of increase up to 500 hectares.

Special Economic Zone «Ontustik» Ø At the present time are implemented 10 projects worth 24 billion. tenge, created 2145 work places. Ø At the stage of implementation of 13 projects worth 154 billion. tenge, 6256 work places will be created until 2018 year. Ø The total area 200 hectares, 35 hectares are available for new investors. Ø Maintenance of projects according to principle “One-stop shop“ Completed infrastructure Ø Special customs and tax regimes The gas pipeline - 8000 m 3/h. Ø Public utilities are cheaper by 35% Substations - 160 MW / h. Ø The simplified procedure for attracting foreign labor Water - 50 000 m 3 / day. Sewer - 35 000 m 3 / day. Ø Providing of free land 0% Ø Ø VAT on goods, realized in the SEZ corporate income tax property tax land tax Railways - 4 lines installation of telephones – 250 num. Fire station the customs post Security checkpoints - road and railroad;

Transport and logistic center General indicators: The site area – 92 hectares 7 investment projects The area of warehouses – 242, 5 k sq. m Container terminal, wholesale trade Customs, HUNDRED, hotel Office rooms

Expansion of city airport Shymkent Expansion and integration with train and bus stations of the airport of Shymkent Functioning term: 2017 -2021 Realization place: Shymkent Type of the investment project: on the basis of the operating enterprise Period of implementation of the project: 2017 – 2021 y. Direction of use of investments: expansion The existing terminal is calculated on: 400 K passengers a year The new terminal is calculated on: 1 mln. passengers a year Site Plan Project cost: 143, 0 mln. dollars. The demanded volume of investment: 143, 0 mln. dollars. The planned output: The planned annual volume of production (services) in terms of money (one thousand tenges): Sales market: Regional, International Current state: Seizure of land Creation of workplaces during construction: Creation of workplaces during operation: 1000 Payback period, month: 180 months. The discounted payback period, month: - New multimodal transport center The new terminal of the airport will be integrated with railway and bus stations, and also the transport and logistic center which prepares for commissioning now. Such concept of development of the airport will be used for the first time in Kazakhstan Airport Train station Bus station

Project on construction of SHPP in SKR Electricity consumption of SKR - 438, 6 (MW) Quantity of SHPP Power SHPP (MW) 43 119, 84 16 % 84 % Purchase from other regions - 367, 9 (MW) Productions of the electric power of SKR - 70, 7 (MW) On 20 rivers it is required to construct 43 SHPP from 0, 65 mvt to 8, 54 MW.

Agrozone "Apple-tree Gardens" Project purpose: Creation of an agro-zone on cultivation of an intensive apple-tree garden. The investment project provides a laying of an intensive apple-tree garden (winter, transportable, highcommodity grades) on a support with use of the drop irrigation equipped with the modern equipment. Realization place: Altyntobe, the Kazygurt area Territory of an agro-zone: 300 hectares Information of area Conditions of implementation of projects in the agrozone "Appletree Gardens" Land plot: it is provided at cadastral cost. Infrastructure providing: "The road map of business-2020" is brought free of charge on a state program. Subsidizing: the laying of intensive apple-tree gardens provides receiving the state subsidizing of 40% of investment expenses (trallis system, system of a drop irrigation, a hail - a protective grid, saplings) on a state program "Agrobusiness-2020".

Agro-industrial zone “Greenhouse Paradise" Project cost – 164, 7 million USD Total area - 136 hectares of convenient logistic system Infrastructure: Gas-turbine power plant – 120 MW Heat supply on 250 MW (on 1 hectare 2, 5 MW/hour of heat) – Gas-piston installations (GPU) / Gas-turbine installations (GTU) Water supply on 10 000 m 3 Power supply on 115 MW – general use 15 MBA and GPU/GTU 100 of MVA Supplementary lighting on 100 hectares 100 MW (on 1 hectare 1 MW/hour lighted) – for increase of productivity during the winter period (for 100 -150%) Carbon dioxide (CO 2) on 100 7000 kg/h hectares (on 1 hectare 70 kg/h) – for productivity increase (for 30%) Implementation site of the project 1

The Cottage Town “Bozaryk” Project name : The Cottage Town “Bozaryk” (construction of individual houses) Branch: Construction Objective of the project: (solving social and economic problems of the region) Type of project (in the direction of): social, commercial Type of project (deadline for implementation): shortterm Project implementation period: 2016 -2018 Term of operation: 35 -40 years Project location: Shymkent city, district "Bozaryk" Funding scheme: direct investment Areas of investment: infrastructure support Current status: During the development stage, need to change the DMA of Bozaryk area, Shymkent city from high-rise buildings to the cottage. Creation of job places during the operation: 400 people Creation of job places during construction: 2, 000 people Sales market: South Kazakhstan region, Shymkent city The amount of investment: 100 -150 mln. USD Payback period: 5 years Additional information will be provided upon your request

«House-Building Plant» Project name: «House-Building Plant "(house construction development) Branch: Construction Objective of the project: (solving social and economic problems of the region) Type of project (in the direction of): social, commercial Type of project (deadline for implementation): short-term Project implementation period: 2016 -2017 Term of operation: 35 -40 years Project location: Shymkent city, administrative and business center Funding scheme: direct investment Areas of investment: infrastructure support The planned annual volume of products (services): 14776. 6 sq m Creation of job places during the construction: 200 people Sales market: Kazakhstan Amount of investment: 1. 988 billion tenge Payback period: 2 years Additional information will be provided upon your request

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