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					Kazyna:
Spearheading Kazakhstan's Development
Kairat Kelimbetov
London, November 2006

Content
• •
– – –

Innovative industrial development strategy Fund Kazyna
Structure Instruments Priorities

• •

Financial Institutions under Kazyna Our Sample Projects

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Background on Kazakhstan

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Kazakhstan’s Economy in 2006
• Impressive GDP growth since the Russian crisis in 1998, driving substantial increases in average prosperity

• Increasing dominance of the oil & gas sector in the economy with significant potential for further growth
• Pressure building up from real exchange rate appreciation • Overheating of domestic real estate and asset prices • Significant government efforts to diversify the economy and overcome the challenges of a resource-driven economy

• Identifying the key elements of a long-term competitiveness strategy for Kazakhstan is a critical priority for the country

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Performance Comparison
Annual growth rate of real GDP
30%

Countries sorted by 19982003 annual real GDP growth rate (CAGR)

20%
TURKMENISTAN AZERBAIJAN

10%

KAZAKHSTAN TAJIKISTAN RUSSIAN FEDERATION

0%

LATVIA UKRAINE BELARUS

-10%

LITHUANIA GEORGIA ESTONIA KYRGYZ REPUBLIC MOLDOVA UZBEKISTAN

-20%

-30%

-40% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

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Sensitivity of GDP Growth to Oil Price Change
Comparison of GDP Growth and Oil Price Change
16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% 250% 200%
Change in oil Price

GDP Growth Rate

150% 100% 50% 0% 1 2 3 4 5 6 7 8 -50% -100% Periods

Grow th Rate of GDP

Change in oil Price

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Where is Kazakhstan in its Evolution?
Factor -Driven Factor -Driven Economy Economy Low Cost Inputs (Labor / Natural Resources) Investment Investment Driven Economy Driven Economy Efficiency through Heavy Domestic and Foreign Investment e.g., China Innovation Innovation Driven Economy Driven Economy Unique Value

e.g. Vietnam, Kazakhstan

e.g., US

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Note: From Porter (1990), Authors Estimate

The Centre of Europe and Asia
Kazakhstan - Gateway to Central Asia, Europe, China and South East Asia - Aggressive government initiatives such as  E- government  Almaty as Financial center  Space program - Logistics hub for traffic between Europe and china 5 hr radius CIS & Russia - Upside potential high as still untapped

China - Western Part of China relatively underdeveloped

Dubai/ME - Growth tapering off - High labor costs - High cost of communication (internet/telephone) - Not close to Russian speaking market

India - Relatively poor infrastructure - Minimal incentives from government - Various government taxes 8

Government Initiatives

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Sampling of Key Cross-Cutting Initiatives
• Macroeconomic Reform agenda to improve Competitiveness: Harvard University
– Exchange rate policy, institution building, financial sector enhancing, Managing Dutch Disease etc. – JERP: Joint Economic Program with World Bank

• Kazakhstan Competitiveness Initiative: Harvard University
– Cluster Approach to Diversify Economy – Business Climate Improvement – SME strengthening Almaty as a Regional Financial Center – Work with Boston Consulting Group and various stakeholders to evolve Almaty’s position in the CIS – Evolving strategies to reduce the economic disparities among the oblasts (provinces)

•

• Regional Development Agenda

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Business Environment Upgrading

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Upgrading Institutional Capacity

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Kazyna
Sustainable Development Fund “Kazyna” was created by the Decree of the President of the Republic of Kazakhstan with the purpose to increase and stimulate investment and innovation activities. Mission: Effectively manage state investments to diversify and increase competitiveness of economy of the Republic of Kazakhstan. Strategy: Identification and implementation of investment projects in nonextractive sector through coordination of National Development Institutions

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Kazyna Organization
Kazyna
Total Charter Capital: $1.5 B Project portfolio: Portfolio value: Participation: 149 $4.1 B $1.4 B

Development Institutions
Development Bank of Kazakhstan Investment Fund of Kazakhstan National Innovation Fund State Insurance Corporation Small Business Development Fund CMAR Kazinvest
long-term loans equity financing venture funds, grants for R&D innovation infrastructure insurance of Kazakhstani exporters and investors SME financing market and policy analysis investment promotion
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Kazyna as a Coordinator
Direct funding and loans
DBK, IFK, CMAR, SMEF

DBK, SIC, CMAR+Kazinvest

Entrance to foreign markets
Increased exports

Growth stage
NIF, CMAR NIF, IFK, CMAR, SMEF Sales growth

Risk financing

Start-up business

Business Concept
Sales begin Business Plan

Research, information collection and processing

CMAR, SMEF (regional network) Concept of regional, industry, overall development
•Production expansion funding •Technologies •Market analysis • Export loans •Export insurance •Market analysis •Export promotion 15

•R&D and business plan •Production development development funding funding •Innovational infrastructure •Infrastructure •Market Analysis •Technologies •Market analysis

Contact Information
For more information and discussion of investment projects in Kazakhstan: Sustainable Development Fund “Kazyna” 6 35th Street Kazyna Tower Astana, 010000 Tel: +7 (3172) 79 24 95 Fax: +7 (3172) 79 24 96 E-mail: manataev@kazyna.kz

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Conclusion
We invite companies to invest capital, technology, know-how, and business experience to the economy of Kazakhstan. We provide government support through provision of analytical reports and long-tern financial resources. Kazyna is a gateway for investments into Kazakhstan and Central Asia

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