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:

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

Operational roadmap for executing the "Concept for the Development of the Manufacturing Industry of Kazakhstan (2023–2029)"

Results achieved in ten months of 2023

№

Activity

Responsible parties

Implementation status

Course 1. Labor productivity in manufacturing

2

Executing projects in the manufacturing industry with the involvement of the Industrial Development Fund through augmenting its authorized capital and/or budget lending.

Ministry of Industry and Infrastructure Development,

Baiterek Holding,

Industrial Development Fund

In execution

19.1 billion tenge have been disbursed (including mixing), and approval has been granted for four projects totaling 81.3 billion tenge.

3

Executing projects in the manufacturing industry with the involvement of the Development Bank of Kazakhstan through budget investments or budget lending.

Ministry of Industry and Infrastructure Development,

Baiterek Holding,

Development Bank of Kazakhstan

In execution

2 export operations totaling 14 billion tenge have been approved for financing.

4

Investing in manufacturing enterprises through equity and mezzanine financing instruments.

Ministry of Industry and Infrastructure Development,

Baiterek Holding,

Qazaqstan Investment Corporation

In execution

4 projects totaling 9.5 billion tenge have been approved for financing.

5

Executing projects in the furniture, paper, packaging, woodworking industries, and the production of popular construction industry goods, excluding basic building materials (such as cement, ready-mixed concrete, reinforced concrete products, aerated concrete blocks, sand-lime bricks, dry building mixtures), with the participation of the Industrial Development Fund.

Ministry of Industry and Infrastructure Development,

Baiterek Holding,

Industrial Development Fund

In execution

The consideration of financing projects in the furniture, paper, packaging, woodworking industries, and popular construction industry goods will be contingent upon the submission of applications and the allocation of budget funds.

6

Modernizing domestically manufactured medical equipment.

Ministry of Healthcare

SK-Pharmacy

Baiterek Holding

In execution

The Industrial Development Fund is facilitating the modernization of sanitary transport.

Course 2. Investments in fixed capital within the manufacturing industry

14

Procuring of machinery: agricultural machinery

Ministry of Industry and Infrastructure Development,

Ministry of Agriculture,

Baiterek Holding,

Industrial Development Fund

In execution

119 units of equipment have been purchased for 4.8 billion tenge, including mixing.

15

Procuring of machinery: buses

Ministry of Industry and Infrastructure Development,

Baiterek Holding,

Industrial Development Fund

In execution

100 billion tenge have been disbursed (including mixing) and 1,853 items have been leased.

16

Procuring of machinery: fire, rescue, sanitary, municipal equipment, emergency vehicles, patrol cars

In execution

The feasibility of funding will be assessed upon the receipt of applications and the allocation of budgetary funds.

17

Procuring of machinery: vehicles for freight transportation

In execution

The Industrial Development Fund will explore the potential for financing projects related to the provision of mechanical engineering products, specifically vehicles engaged in freight transportation.

18

Procuring of machinery: passenger cars

Ministry of Industry and Infrastructure Development,

Baiterek Holding,

Development Bank of Kazakhstan

In execution

Projects are planned to be financed.

19

Procuring of machinery: vehicles and special-purpose vehicles, with the exception of agricultural machinery made in Kazakhstan

Ministry of Industry and Infrastructure Development,

Baiterek Holding,

Industrial Development Fund

In execution

20.2 billion tenge have been disbursed, 346 units of machinery have been purchased.

24

Encouraging export financing for domestic producers with an interest rate capped at 6%.

Ministry of Trade and Integration,

Baiterek Holding,

Development Bank of Kazakhstan

In execution

Projects are planned to be financed.

26

Establishing a high-quality ferrosilicon production plant with an annual capacity of 240 thousand tons in the Pavlodar region.

Ministry of Industry and Infrastructure Development,

Baiterek Holding,

Development Bank of Kazakhstan

In execution

Projects are planned to be financed.

31

Obtaining leasing financing for procuring technological equipment to establish an iron casting production plant.

Ministry of Industry and Infrastructure Development,

Ministry of Trade and Integration,

Baiterek Holding,

Development Bank of Kazakhstan,

Industrial Development Fund

Executed

The full disbursement of funds has been completed.

32

Manufacturing main gears for truck driving axles, involving equipment acquisition through leasing financing and the construction of a plant.

Ministry of Industry and Infrastructure Development,

Ministry of Trade and Integration,

Baiterek Holding,

Development Bank of Kazakhstan,

Industrial Development Fund,

Tobol Social-Entrepreneurial Corporation

In execution

Leasing transaction financing has commenced to produce main gears for truck driving axles, with a disbursement of 50.55 billion tenge.

36

Overseeing the progress of industrial and innovative projects outlined in the Unified Industrialization Roadmap.

Ministry of Energy,

Ministry of Acriculture

Baiterek Holding,

Samruk Kazyna JSC,

Akimats of regions and cities of

Astana, Almaty, and Shymkent

In execution

38

Building and renovating small industrial zones to foster the growth of small and medium-sized enterprises.

Ministry of Industry and Infrastructure Development,

Ministry of National Economy,

Ministry of Finance,

Akimats of regions and cities of

Astana, Almaty, and Shymkent,

Industrial Development Fund

In execution

8 applications are being considered

All programs

№	Activity	Responsible parties	Implementation status
Course 1. Labor productivity in manufacturing
2	Executing projects in the manufacturing industry with the involvement of the Industrial Development Fund through augmenting its authorized capital and/or budget lending.	Ministry of Industry and Infrastructure Development, Baiterek Holding, Industrial Development Fund	In execution *19.1 billion tenge* have been disbursed (including mixing), and approval has been granted for four projects totaling 81.3 billion tenge.
3	Executing projects in the manufacturing industry with the involvement of the Development Bank of Kazakhstan through budget investments or budget lending.	Ministry of Industry and Infrastructure Development, Baiterek Holding, Development Bank of Kazakhstan	In execution *2 export operations* totaling 14 billion tenge* have been approved for financing.*
4	Investing in manufacturing enterprises through equity and mezzanine financing instruments.	Ministry of Industry and Infrastructure Development, Baiterek Holding, Qazaqstan Investment Corporation	In execution *4 projects* totaling 9.5 billion tenge* have been approved for financing.*
5	Executing projects in the furniture, paper, packaging, woodworking industries, and the production of popular construction industry goods, excluding basic building materials (such as cement, ready-mixed concrete, reinforced concrete products, aerated concrete blocks, sand-lime bricks, dry building mixtures), with the participation of the Industrial Development Fund.	Ministry of Industry and Infrastructure Development, Baiterek Holding, Industrial Development Fund	In execution The consideration of financing projects in the furniture, paper, packaging, woodworking industries, and popular construction industry goods will be contingent upon the submission of applications and the allocation of budget funds.
6	Modernizing domestically manufactured medical equipment.	Ministry of Healthcare SK-Pharmacy Baiterek Holding	In execution The Industrial Development Fund is facilitating the modernization of sanitary transport.
Course 2. Investments in fixed capital within the manufacturing industry
14	Procuring of machinery: agricultural machinery	Ministry of Industry and Infrastructure Development, Ministry of Agriculture, Baiterek Holding, Industrial Development Fund	In execution *119 units of equipment* have been purchased for 4.8 billion tenge, including mixing.
15	Procuring of machinery: buses	Ministry of Industry and Infrastructure Development, Baiterek Holding, Industrial Development Fund	In execution *100 billion tenge* have been disbursed (including mixing) and 1,853 items* have been leased.*
16	Procuring of machinery: fire, rescue, sanitary, municipal equipment, emergency vehicles, patrol cars		In execution The feasibility of funding will be assessed upon the receipt of applications and the allocation of budgetary funds.
17	Procuring of machinery: vehicles for freight transportation		In execution The Industrial Development Fund will explore the potential for financing projects related to the provision of mechanical engineering products, specifically vehicles engaged in freight transportation.
18	Procuring of machinery: passenger cars	Ministry of Industry and Infrastructure Development, Baiterek Holding, Development Bank of Kazakhstan	In execution Projects are planned to be financed.
19	Procuring of machinery: vehicles and special-purpose vehicles, with the exception of agricultural machinery made in Kazakhstan	Ministry of Industry and Infrastructure Development, Baiterek Holding, Industrial Development Fund	In execution *20.2 billion tenge* have been disbursed, 346 units of machinery* have been purchased.*
24	Encouraging export financing for domestic producers with an interest rate capped at 6%.	Ministry of Trade and Integration, Baiterek Holding, Development Bank of Kazakhstan	In execution Projects are planned to be financed.
26	Establishing a high-quality ferrosilicon production plant with an annual capacity of 240 thousand tons in the Pavlodar region.	Ministry of Industry and Infrastructure Development, Baiterek Holding, Development Bank of Kazakhstan	In execution Projects are planned to be financed.
31	Obtaining leasing financing for procuring technological equipment to establish an iron casting production plant.	Ministry of Industry and Infrastructure Development, Ministry of Trade and Integration, Baiterek Holding, Development Bank of Kazakhstan, Industrial Development Fund	Executed The full disbursement of funds has been completed.
32	Manufacturing main gears for truck driving axles, involving equipment acquisition through leasing financing and the construction of a plant.	Ministry of Industry and Infrastructure Development, Ministry of Trade and Integration, Baiterek Holding, Development Bank of Kazakhstan, Industrial Development Fund, Tobol Social-Entrepreneurial Corporation	In execution Leasing transaction financing has commenced to produce main gears for truck driving axles, with a disbursement of 50.55 billion tenge.
36	Overseeing the progress of industrial and innovative projects outlined in the Unified Industrialization Roadmap.	Ministry of Energy, Ministry of Acriculture Baiterek Holding, Samruk Kazyna JSC, Akimats of regions and cities of Astana, Almaty, and Shymkent	In execution
38	Building and renovating small industrial zones to foster the growth of small and medium-sized enterprises.	Ministry of Industry and Infrastructure Development, Ministry of National Economy, Ministry of Finance, Akimats of regions and cities of Astana, Almaty, and Shymkent, Industrial Development Fund	In execution 8 applications are being considered