Concept of Development of the Manufacturing Industry of the Republic of Kazakhstan for 2023-2029

General information. The Concept of Development of the Manufacturing Industry of the Republic of Kazakhstan for 2023-2029 (hereinafter referred to as the Concept) is developed with the aim of achieving the goals set by the National Development Plan of the Republic of Kazakhstan until 2025. To solve the task of creating specialized factors and market conditions in the industrial sectors, the expansion of the toolkit of measures for state support of manufacturers in the manufacturing industry is envisaged, including package solutions within the framework of the agreement to enhance competitiveness.

The practical implementation of the task of expanding opportunities for the growth and development of small and medium-sized businesses (hereinafter referred to as SMEs) will be carried out through measures aimed at improving access to business financing through the expansion and increased targeting of programs and measures of state stimulation.

Principles and approaches. The Concept will be implemented within the framework of the Law of the Republic of Kazakhstan "On Industrial Policy of the Republic of Kazakhstan," taking into account the obligations of the Republic of Kazakhstan within international economic organizations.

The concept of the manufacturing industry will maintain continuity and be based on the following principles:

1. Focus on the production of processed products with high added value;
2. Integration of industrial-innovative and territorial development;
3. Orientation towards external markets, taking into account domestic opportunities;
4. Balance of strategic interests of the state, society, and business;
5. Effectiveness and targeting of incentive measures.

The policy of industrial-innovative development will be balanced between direct and systemic support, taking into account the obligations of the Republic of Kazakhstan within international economic organizations.

Joint-Stock Company "National Welfare Fund "Samruk-Kazyna". One of the instruments for shaping and implementing industrial policy is project financing and leasing financing. The following support measures for enterprises within the framework of the Concept are presented provided that the necessary amount of funds is obtained, taking into account international obligations of the Republic of Kazakhstan.

1. Long-term financing for projects in the manufacturing industry is provided by JSC "Development Bank of Kazakhstan":

- at a rate not exceeding 9% for the ultimate borrower, when budget funds are mixed with attracted funds in a ratio of 70/30, with the company's own participation not less than 20% of the project amount. Budget funds are allocated through budget lending by JSC "Development Bank of Kazakhstan" through JSC "Samruk-Kazyna" for a period of 20 years;

- at a rate not exceeding 11% for the ultimate borrower, when budget funds are mixed with attracted funds in a ratio of 60/40 for financing projects in the manufacturing industry, including the creation and modernization of infrastructure facilities. Financing of large investment projects with a value of over 7 billion tenge (over 3 billion tenge in the food and light industry sector) is provided for a period of up to 20 years, and financing of projects within the Program for the Development of Intraplanetary Value and Export-Oriented Production is provided for a period of 7-10 years. Budget funds are allocated through budget lending by JSC "Development Bank of Kazakhstan" through JSC "Samruk-Kazyna" for a period of 20 years.

2. Export financing for domestic producers.
- at a rate not exceeding 6% for ultimate borrowers through the mixing of budget funds with commercial funds in a ratio of 70/30 for a period of 20 years.

3. Financing of working capital for enterprises in the manufacturing industry.

- at a rate not exceeding 7% for the ultimate borrower through the mixing of budget funds with attracted funds in a ratio of 80/20 to ensure the competitiveness and sustainability of the national economy. Budget funds are allocated through an increase in the authorized capital of JSC "Development Bank of Kazakhstan" through JSC "Samruk-Kazyna".

4. Financing of projects in the manufacturing industry through JSC "Industrial Development Fund". *Subjects of industrial-innovation activities, in which fifty percent or more of the shares (stakes in the authorized capital) are directly or indirectly owned by the state, national managing holding, national holding, national company (except for the socio-entrepreneurial corporation, as well as entrepreneurs established within the framework of a public-private partnership agreement), are not eligible for financing of projects in the manufacturing industry.

Budget funds are allocated through an increase in the authorized capital and/or budget lending by JSC "Industrial Development Fund" to finance:

- Projects in light industry with a reward rate of no more than 3% per annum for end borrowers.

- Projects in processing industry are allowed to be financed at a rate not exceeding 9% for the end borrower when combining budget funds with attracted funds in a proportion where the share of budget funds is at least 70%, depending on the rate of attracting other funds.

The industrial-innovative activity subject ensures the participation with funds in the implementation of the project in the amount of at least 15% of the total financing amount (for projects aimed at increasing production localization, participation with funds in the implementation of the project in an amount of less than 15% is allowed). The financing amount should be at least 80 million tenge (at least 50 million tenge for light industry enterprises). The financing is provided for a period of no more than 20 years.

5. Leasing financing by JSC "Industrial Development Fund".

Renewal/modernization of automobiles, special equipment, agricultural machinery, and buses through the mechanism of leasing financing by JSC "Industrial Development Fund".

- Leasing financing is provided in tenge for automobiles and special equipment for a period of no more than 7 years, with a reward rate for applicants of 7% per annum, while the ratio of budget funds and other funding sources of JSC "Industrial Development Fund" should be 80/20. The advance payment is at least 15% from the local budget funds or the lessee's own funds (in the case of repayment of leasing payments from the republican or local budgets, financing without an advance payment is allowed). However, for bus models produced using welding and painting operations, the advance payment is at least 5%.

Renewal of the fleet of vehicles involved in freight transportation.
- Leasing financing of vehicles involved in freight transportation is provided in tenge through JSC "Industrial Development Fund" for a period of no more than 7 years, with a reward rate for applicants of 7% per annum, while the ratio of budget funds and other funding sources of JSC "Industrial Development Fund" should be 80/20. The advance payment is at least 30% from the local budget funds or the lessee's own funds (in the case of repayment of leasing payments from the republican or local budgets, financing without an advance payment is allowed).

- Leasing financing for applicants acquiring vehicles, special-purpose vehicles, excluding agricultural machinery (hereinafter referred to as vehicles) through leasing, is provided in tenge through JSC "Industrial Development Fund" for a period of 3 to 5 years with a reward rate for applicants of 3% per annum. The advance payment must be at least 30% (in the case of repayment of leasing payments from the funds of the National Road Management Operator, with the state having a hundred percent participation in the authorized capital and exercising the powers established by the Law of the Republic of Kazakhstan "On Highways," financing without an advance payment is allowed). Leasing financing based on the mechanism of public-private partnership is allowed. The sources of leasing financing will be the funds of the republican budget.

Renewal of the park of domestically produced medical equipment.
- Leasing financing for applicants acquiring domestically produced medical equipment is provided in tenge through JSC "Industrial Development Fund" for a period of no more than 7 years with a reward rate for applicants of 3% per annum. The advance payment is at least 30%. In the case of repayment of leasing payments from the republican or local budgets, financing without an advance payment is allowed. Leasing financing of medical equipment can be used by healthcare entities: local executive bodies, state institutions, state communal enterprises exercising economic management rights, state communal enterprises, municipal communal enterprises of the Republic of Kazakhstan, as well as medical organizations with private ownership.

6. Investments in share capital and the provision of mezzanine financing through JSC "Qazaqstan Investment Corporation" will be carried out through two financing schemes depending on the functioning of the enterprise:

- Equity and mezzanine financing for existing enterprises will be provided to processing industry enterprises through direct investment funds under preferential conditions: financing period up to 10 years, participation of JSC "Qazaqstan Investment Corporation" up to 49% in the share/capital, final reward rate - 8%, investment size in one project from 1 billion tenge to 5 billion tenge;

- Equity financing for newly established small and medium-sized businesses (hereinafter referred to as SMEs) without experience in similar business activities, jointly with the Development Financial Institution (DFI), under a 20-20-60% scheme (20% applicant's own funds, 20% DFI funds, 60% financing from the Development Bank). Financing of projects in collaboration with the Development Bank will be provided at 8% for the end recipient for medium-sized projects with a cost ranging from 2 to 7 billion tenge. JSC "Qazaqstan Investment Corporation" will provide equity financing under preferential conditions: financing period up to 10 years, participation of JSC "Qazaqstan Investment Corporation" up to 49% in the share/capital, final reward rate - 8%, size of equity financing in one project (20% DFI funds) from 0.4 billion tenge to 1.4 billion tenge. Financing from the Development Bank will be provided to enterprises in the processing industry at a nominal reward rate not exceeding the base rate set by the National Bank of the Republic of Kazakhstan, increased by 5 percentage points, with the difference subsidized by the government.

Budget funds will be allocated to increase the share capital of JSC "NUH "Baiterek" with subsequent replenishment of the share capital of JSC "Qazaqstan Investment Corporation" for the funding of direct investment funds to carry out investments in the capital of processing industry enterprises.

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