Assistance to the Integration of Kazakhstani SMEs into International E conomic A ctivity: The Experience of Fund «

1. Assistance to the Integration of Kazakhstani SMEs into International Economic Activity: The Experience of Fund «Damu» Astana, 2013

2. Contents Foreign economic indicators of Kazakhstani enterprises • Programs of Fund «Damu» on financial support of enterprises 1 • Programs of Fund «Damu» on improving competence of entrepreneurs 2 • Attraction of foreign capital by Fund «Damu» 3 4

3. The Economy of Kazakhstan is growing at steady pace Dynamics of GDP Industrial structure of GDP Agriculture Mining Manufacturing Construction Wholesale & Retail Transport & Communication Real Estate Activities Education & Healthcare Other • Within the last decade the GDP of Kazakhstan has increased by 6,5 times • GDP growth of 5,5-5,6% is projected for 2013-2014 • In GDP structure: Production of goods – 40,9%, Production of services – 53,0%, Net taxes on products and imports – 6%

4. Favorable business climate promotes the growth in number of enterprises Dynamics of SMEs with foreign capital Dynamics of SMEs • Within the last 4 years the position of Kazakhstan in «Doing Business» rating improved from 80th to 49th place • Kazakhstan has high positions in the following parameters: «Enterprise registration», «Property registration», and «Taxation»

5. Kazakhstan is the Gate between Europe and Asia Gate to Russian and European markets Europe Russia Middle East Kazakhstan China India Gate to China, India, and Southeast Asia • Strategic location between European and Asian business-centers • The main transit zone in the region • Situated between rapidly growing emerging markets of Russia and China • 3 out of 4 Eurasian railroad corridors pass through Kazakhstan

6. Exports of goods plays the key role in ensuring economic growth of Kazakhstan Commodity structure of exports Exports dynamics (USD, million) Mineral products Metals and products made of them Products of chemical industry Food products Machinery & Equipment Other goods • Major part of exports – mineral products • In some regions there is a high share of non-raw-material exports

7. Needs of exporting enterprises • According to the results of the survey conducted among entrepreneurs operating in non-raw-material sectors, that participate in the programs of Fund «Damu»: • 90% of the respondents use land types of transportation (railroad, automobile) for the exports of production; • In the geography of exports the countries of CIS prevail – 60% of the respondents deliver their products to these countries; 15% - to the countries of European Union; 11% - to Asian countries; • 65% of the respondents deliver the end-use products, 20% - semi manufactured products, 15% - raw materials. • Opinions of exporting entrepreneurs on additional measures of support: • Information support (on export duties, procedures, etc.) • Assistance in finding partners • Subsidizing / compensation of costs, including the ones resulted by currency conversion, transport costs • Tax benefits, reduction of customs tariffs • Provision with rail cars, other types of transportation • Certifying organizations, functioning according to «one-stop» principle • Initiation of conclusion and compliance of interstate agreements, diplomatic support

8. Contents Foreign economic indicators of Kazakhstani enterprises • Programs of Fund «Damu» on financial support of enterprises 1 • Programs of Fund «Damu» on improving competence of entrepreneurs 2 • Attraction of foreign capital by Fund «Damu» 3 4

9. Subsidizingexpenses on interest rate «Business Road Map 2020» Program Entrepreneurs Banks / leasing companies Financing Repayment of a debt Repayment of interest Fund «Damu» Repayment of interest Results as of May 20, 2013:

10. Credit Guarantee «Business Road Map 2020» Program Entrepreneurs Banks / leasing companies Loan agreement and financing Guarantee agreement on loan Fund «Damu» Results as of May 20, 2013:

11. Financing of entrepreneurs through second tier banks Banks / leasing companies Fund «Damu» Funding Entrepreneurs Financing Repayment of a debt Results as of April 1, 2013:

12. Contents Foreign economic indicators of Kazakhstani enterprises • Programs of Fund «Damu» on financial support of enterprises 1 • Programs of Fund «Damu» on improving competence of entrepreneurs 2 • Attraction of foreign capital by Fund «Damu» 3 4

13. “Business Connections” Project «Business Road Map 2020» Program 1 stage: Training organization Fund «Damu» Approval of training program Training Entrepreneurs Submission of business plans for contest 2 stage: Selection from participants of 1 stage International and foreign organizations Foreign partner enterprises Entrepre-neurs Intern-ship Fund «Damu» • Participants of internship by sectors of economy: • Agriculture – 23% • Food industry – 20% • Education, healthcare – 17% • Information technologies – 14% • Other – 26% • In 2011-2012 123 entrepreneurs passed internship: • Germany – 65 entrepreneurs • USA – 58 entrepreneurs

14. Centers for entrepreneurial competence

15. Establishment of the Centre for industrial entrepreneurship development • Partner: The United Nations Industrial Development Organization (UNIDO) • Goal: providing consulting services to entrepreneurs engaged in in the industrial sector Services of the Centre for entrepreneurs: • Training and consulting services, • Diagnosis of companies and benchmarking, • Improving the competitiveness of enterprises and modernization, • Cluster development and creation of export and quality consortiums, • Support for the acquisition of high-tech equipment from abroad. The opportunity to use UNIDO methodology for expert assessment of strategic directions of socio-economic and innovation development of regions, and technologies to identify promising niches, etc.

16. Contents Foreign economic indicators of Kazakhstani enterprises • Programs of Fund «Damu» on financial support of enterprises 1 • Programs of Fund «Damu» on improving competence of entrepreneurs 2 • Attraction of foreign capital by Fund «Damu» 3 4

17. Attraction of foreign capital by Fund «Damu» • Attracting funds from Asian Development Bank • Goal:Attracting long-term loans for placement in STBs for lending to SMEs • The first major loan of the Kazakhstan DevelopmentInstitute from a foreign organization after the financial crisis • An alternative to using budget funds • The ability to provide long-term loans (for replenishment and modernization of fixed assets) • The deal is strategically important for Fund «Damu»as a first step towards the diversification of funding sources • Terms of the loan: • Loan amount- $500 mln. • Interest rate – from4,99% • Term – up to 7 years • Target use– lending to new SME projects • Loan guaranteed by the Ministry of Finance • Receiving of 2 tranche from ADB is planned for 2013 • Fund is also working on obtaining credit rating • Other organizations are considered for attracting funds (IBRD, EBRD, Islamic Development Bank, etc.)

18. Head office: 111 Gogol Street, Almaty, 050004 Tel.: 8 (727) 244-55-66, 244-55-77 Call-centre: 1408 Fax: 8 (727) 278 07 76 E-mail: info@fund.kz Web site: http://www.damu.kz Thank you for your attention!