KAZAKHSTAN TEMIR ZHOLY INDUSTRIAL LOGISTICS HUB SEZ “KHORGOS – EAST GATE” • Аstanа 2012
Strategic background of SEZ “Khorgos – East Gate” development • Strategic Plan for Development of Kazakhstan till 2020 •State program of forced industrial-innovative development of Republic Kazakhstan for 2010 - 2014 Background of SEZ “Khorgos – •The program on investments attraction, development of special East Gate” economic zones and export stimulation in RK for 2010-2014 •President of RK signed the Decree № 187 of November 29, 2011 "On creation of free economic zone" Khorgos - East Gate " • Creating a Hub "Khorgos" by technological coordination SEZ "Khorgos - East Gate" with the railway line "Zhetygen-Korgas", highway "WesternHead of State tasked to ensure by Europe - Western China" and in the long run with the airport 2016 the establishment of •International consultants LLP "Deloitte TCF" and AECOM are attracted, Kazakhstan as a trade, logistics which develop the concept of further SEZ development, feasibility study hub of the region adjustment, master plan and business plan for SEZ
SEZ“Khorgos – East Gate” is located in Panfilov area of Almaty region at the distance of 1 km from the state border with ChinaComponents of SEZ:• International Center for Boundary Cooperation (ICBC) International• Dry Port (Inland Port) airport• Industrial Zone• Residential ZoneStrategic sites:• Airport CPP 1• Altynkol Station Residential• Zhetygen-Khorgos Railways zone• West Europe – West China Highway ICBCTax and customs privileges and preferences• CIT - 0 %• Land tax- 0 % Industrial zone Dry Port• Property tax - 0 %• VAT - 0 %• Release from payment for the use of land for up to 10 years• Increase maximum level of depreciation on software from 15% to 40%• Regime of a free customs zone ReservedBenefits to investors: zone for• Provision of infrastructure facilities (power, heat, water, CBS) by SEZ government Highway Western China and Western Europe• Simplified procedure for labour importation• Guarantee of legal protection of SEZ participants Altynkol Station Priority activities: PRC• Warehousing and supporting transportation activities;• Food production; Total cost of the project – 3, 49 billion US dollars• Leather goods Manufacturing; Including:• Textile Manufacturing; Public funds – 0, 72 billion US dollars• Nonmetallic mineral product manufacturing; Private investments – 2 ,76 billion US dollars• Chemical products manufacturing’• Manufacture of metal products other than machinery and equipment;• Manufacture of machinery and equipment not elsewhere classified ;• Construction of buildings for exhibitions, museums, warehouses and offices in accordance with the design estimate documentation.
Benefits of SEZ “Khorgos – East Gate”• Geographical location, where East and West intersect• Creation of production with a difference of customs tariffs onfinished products and components imported from China• Dry port as an integral part of transport zone• Management on the principle «one window»• Proper level of preferences (customs duties, property andincome taxation)• National economic policy and Government financial support• Availability of electricity and utilities• Availability of skilled labor
Benefits to companies are competitive to other SEZ developments Kazakhstan SEZ is better Philippines Republic Morocco than benchmarked China Egypt Czech UAE Assessed Location Factors Locations Business EnvironmentNominal GDPReal GDP GrowthGDP Per CapitaInflationFDI Inflows Kazakhstan SEZ is worseOverall Doing Business ScoreOverall Economic Freedom than benchmarkedStarting a BusinessObtaining Construction Permits LocationsRegistering PropertyGetting CreditProtecting InvestorsPaying TaxesExport/Import DocumentsEnforcing Contracts Kazakhstan SEZ is neutral toResolving Insolvency Operating Costs benchmarked Locations Sukhna SEZ, Tangier Free Philippines Guangzhou MOROCCO Free Zone, Subic Bay FZ, Czech Free Zone, Pardubice Republic Jebel Ali CHINA Egypt Zone, UAE FZ, Assessed Location FactorsLabor Costs ($/year)Land Lease ($/m2/year) TBD TBD TBD TBD TBD TBDLand Sale ($/m2) TBD TBD TBD TBD TBD TBDConstruction Cost for SFB ($/m2)Electricity Cost (kWh)Cost of Getting Electricity (% ofincome/capita)Water ($/m3)Diesel ($/liter) Page 5
With an ease of Doing Business in Kazakhstan Starting a Business (57) 180 Dealing with Construction Getting Electricity (86) Permits (147) Resolving Insolvency (54) Registering Property (29) 0 Enforcing Contracts (27) Getting Credit (78) Trading Across Borders (176) Protecting Investors (10) Paying Taxes (13) Source: The World BankPage 6
SEZ: Industry Model Multi-modal Automotive Light Agriculture Construction Visitor Workforce logistics hub assembly and Manufacturing agro-food and Building economy development machine /Engineering/M sector / Materials and Technical assembly etal Products processing College Core Logistics Automotive Supporting the Opportunity for Supporting •Casino (long- •Technical level Plus support assembly plants other sectors value added development of term) and basic skills function processing the zone •Hotels provision •Automotive •Automotive •Complementary •Sector specific •Financial supply cluster supply chain • Added value •Added-value food/drink and workforce •Legal •Agricultural •Light food processing assembled leisure offer training facilities •Administrative vehicles manufacturing products and •Other leisure •High Education •Trains/rolling •Precision •Canning and components and recreational Facility stock Engineering packaging •Processing •Agricultural Machinery supply industryPage 7
alleged zoning plan ALLEGED SEZ ZONING PLANStage-by-stage development of SEZ zones(logistical, trading, industrial) within 25 years isplanned
Components SEZ «Khorgos – East gate»1) ICBC "Khorgos" - a network of trade and exhibition centers with appropriate transport and logistics, social, domestic, administrative and business infrastructure, and with a special legal regime to conduct of cross-border trade and cooperation with China and other countries.2) Dry port - transport and logistics center with railway lines, railway branches deadlocks, rail and truck terminals, a set of specialized terminals and warehouses.3) Industrial Zone - a complex of industrial enterprises on various types of industrial activity, linked by a single engineering and transport infrastructure.4) Basic infrastructure of SEZ "Khorgos - East Gate": Railway line Zhetygen - Khorgos was opened on December 9, 2011. Highway Western Europe - Western China will be opened in 2013 Airport Khorgos is a perspective.
International Center for Boundary Cooperation (ICBC): Main preconditions: Initiative of Presidents of the RK and PRC during the visit of President of the RK Nursultan Nazarbayev to China 22- 25 December 2002 Agreement between the Government of the RK and the Government of the PRC on the regulation of "Khorgos"ICBC dated July 4, 2005. 3,42 km sq area 1 ,85 km sq area Aims: To develop cross-border trade and economic, scientific- *CCP-1 technical and cultural cooperation of the RK and PRC Special legal regime:: 30 days a visa-free regime; Free moving of citizens of Kazakhstan, China and other countries between the Kazakhstan and Chinese parts of the Center within its borders through special pedestrian traffic shift. Exemption from customs duties for goods, the amount and weight of less than 1,500 euros, and 50 kg; Cost of project according to Feasibility Study – 2, 551 Vehicle and billion US dollars: pedestrian crossing Private investments – 2,061 bill. US dollars Public budget - 0,49 bill. US dollars Stages of completion of constriction at «Khorgos» ICBC: December 2, 2011 - construction sites to ensure free people flow August 2012 - construction sites to provide freight flows December 2012 - completion of major infrastructure sites STATE BORDER From 2013 to 2018 - phased completion of construction projects funded by private investment. Total area of ICBC 5,28 km2 www.mcps-khorgos.kz
Attraction of Private Investment to ICBC “Khorgos” Cultural Center for Trade Exhibition International Transportation and Zone Ehxibition Zone (0,065 km sq ) Business Transshipment (0,384 km sq ) Cooperation terminals (0, 047 km sq ) (0,166 km sq ) Hospitality area (0, 031 km sq ) Center for regional Total area cooperation and small Sports and 1,85 km sq business recreational area (0,10 km sq ) (0, 06 km sq ) EthnographicInvestment objects: park International TouristThere are 103 investment objects on the territory of Kazakhstan part of (0,192 km Resort Areathe ICBC “Khorgos" and 48 of them are free. sq) (0, 033 km sq )Free investment objects:7 ethnographic parks, hotel and tourist complex Conditions for attracting investors: • Provision of infrastructure facilities (power, heat, water, CBS) by government• International Tourist Resort area • Preferential rates for renting lands• 12 hotels •Duty-free trading (1500 euro,• 2 administrative buildings up to 50 kilos)• 5 conference rooms under construction objects •Simplified procedure for labour importation• 16 trade pavilions with warehouses• 5 terminals designed objects The expected amount of tariffs for communal services: free objects Electricity 0, 08 US dollar per 1 kWh (without VAT Water 0, 31 US dollar per 1 cub. meter (excl. VAT) Drainage 0,26 US dollar per 1 cub. meter (excl. VAT) www.mcps-khorgos.kz
Industrial Zone in SEZ “Khorgos – East Gate”Features of Industrial Priority activities: Zone• Industrial zone is a unified •Food production (processing of cereals, bakery, mill)engineering and transportinfrastructure • Light industry (processing of wool and leather goods, agricultural products)• using the features of Dry Port • Production of building materials• 80% from gross production is (brick, cement, asphalt plant, the productionoriented to export of ceramic tiles, etc.) •Chemical industry (domestic• 20% of gross production is oriented chemistry, lacquers, paints)to import substitution• gasification territory of industrial • Assembly plants (basing on thezone assemblages of the Assembly machine- building equipment)• release from payment for the use ofland for 10 years • Other manufacturing (reinforced concrete products, metal constructions, metal alloy)• increase in the market manufactured Perspective:products due to union economic space -Pharmaceuticalsof the Customs Union -Car Assembly production www.kaznextinvest.kz www.mint.gov.kz
Dry Port in SEZ “Khorgos – East Gate”Features of dry port Objects • Terminal zone• Implementation of • Warehouse zonewarehousing and supporting • Special storage areatransport activities • Container yard • Business Centre• Operation of multimodal • Administrativetransport, linking the port with building Forecast for goods traffic in therail and road routes direction of the China-Europe to 2020 year• The prospect of theconstruction of the airport • Good traffic will reach 170 million tones, 45% above the• Maintenance of high year 2010 (117 million tonnes).consequence dangerousgoods, goods with temperature • The challenge of Kazakhstan to attract 15 million. tones (8%) of this goodtraffic •Via Khorgos 3-4 million tons
Customs Procedures• Creation of industrial and logistics free economic zones, using free customs zone treatment.• Giving the status of SEZ-FCZ during construction of infrastructure facilities with amendments tothe Law on SEZ.• Initiation of the prohibitions and restrictions ordering in the CU• Fully interconnected electronic system of customs for both sides of the border, to avoid duplication.Logistics SEZ• The import of foreign goods into the territory of the logistics SEZ does not require declaration, butonly the implementation of procedures at the arrival of the goods.• In order to avoid double declarations, to coordinate a question on allocation LSEZ to the area of thecustoms authority of st. Altynkol.• In order to use simplified procedures, to develop a procedure for customs declarations andverification of goods imported exported from the territory LSEZ.• Fencing of railway line and construction of selected path from the checkpoint at the border to LSEZ.Industrial zone• To speed up customs clearance procedures, to provide for the temporary storageKey requirements for border and customs checkpoints:•Existing border and customs checkpoints at railway•Border and customs checkpoints at the new road (the Kazakh side of the boundary)•The customs checkpoint in the Dry Port Transport Area•The customs checkpoint at the road between transport area / duty-free zone (containing industrial and processingzones)
Customs procedures scheme of “Khorgos – East Gate” hub Direct Transit: Products are issued at the Altynkol station by transit procedure based on customs declaration and followed by logistics SEZ. Logistics SEZ (storage, loading, unloading, crushing): Items are followed to logistics SEZ and are issued by the customs authorities in a simplified manner by putting a mark on railway invoices at Altynkol station and at entrance to logistics SEZ. After the terminal operations, goods, exported from logistics SEZ, are declared with statement in customs declaration as a transit procedure or release for a domestic consumption. Industrial SEZ (recycling): The goods are followed to the industrial SEZ through the logistics SEZ with customs declaration registration in the customs procedure of Customs- free zone; Placing of the goods in territory of logistics SEZ is carried out in the simplified order; Export of the processed goods from SEZ territory is carried out by the statement of transit procedure or release for internal consumption (re-import), re- export.
Management JSC MANAGING COMPANY "KHORGOS – EAST GATE” Created by: In a perspective: Functions: JSC Managing company of special 75% Private 25% • Developer economic zone “Khorgos – East Gate” Government • Infrastructure funding with 100% participation of JSC “NC • Services to zone and tenants “KTZH” • One stop shop Operator • Investment promotion Participants: Registered in SEZ Showing interest: • Panalpina World Transport LLP 82 • Kuehne + Nagel Ibrakom L.L.P Participants, out of • TOO «AsstrA Almaty» each: • TOO «Apply Logistics» • «Deutsche Bahn Schenker» 38 44 • Panalpina World Transport LLP In industrial • China Shipping In Dry Port zone • Cosco Group • M&M Logistics • DHL • InterRail The question of international managing company involvement is considered to ensure effective administration and management of SEZ "Khorgos - East gate“Page 16
Transportation and logistics hub "Khorgos – East Gate” Murmansk Arkhangelsk reverse traffic Kandalaksha Saint Petersburg Helsinki Ust-Luga Tallinn Krasnoyarsk Ekaterinburg Riga N.Novgorod Klaipeda Moscow Omsk Kaliningrad Novosibirsk Ulan-UdeBerlin Chita Samara Duisburg Minsk Astana Semey Vanino Warsaw Kiev Qaragandy Khabarovsk AktobePraha Ulan-Bator Kishinev Dostyk Odessa UssuriiskBudapest Bucharest Rostov-na-Donu Khorgos Konstanca Aktau Vladivostok Novorossiisk Urumchi Alma-Ata Поти Quryk Beijing Burgas Shymkent Sofia Bishkek Tashkent Tbilisi Turkmenbashi Pyongyang Seoul Istanbul Baku Dushanbe Ankara Gorgan Sarakhs Kuandzhu Ashkhabad Pusan Amirabad Tehran Changzhou Liayungang TLC and hubs on the Chingqing Gravity cargo for distribution territory of the RK Bender-Homeini Deli Bender-Abbas Kunming TLC and hubs in the Dubai The direction of traffic TC after the distribution Dhaka TLC and hubs in foreign countries Direction of reverse Yangon traffic Agent network Transcontinental corridor "Western Europe - Bangkok Transport and Logistics Western China" Cluster 17
The Map of the Transeuroasian Routes TRANSIT CORRIDORS OF KAZAKHSTANИСЛАНДИЯ RUSSIA Хельсинки Saint Petersburg 1 Moscow Omsk Yekaterinburg 2 Petropavlovsk Pavlodar 3 ASTANA Brest Lokot 7-2 7-3 Ozinki Уральск Karagandy Semey Naushki Uralsk Ukrain Aktobe KAZAKHSTAN Zabaykalsk 7-1 Mongolia Chop Shubarkol Shalkar 8 Zhezkazgan Saksaulskaya Dostyk Beineu Almaty Nahodka AKTAU 4 Shymkent Khorgos Urumchi Poti ГРУЗИЯ Georgia Тбилиси 5 KYRGYZSTAN Saryagash Baku Ablyk 6 Kashgar TURKEY Antequera CHINA Lianyungang Pusan Sarakhs Серахс Hakata ТУНИСА Route Distance, km Building of a railways line Zhezkazgan – Beineu Lianyungang – Riga – Krasta exp. 9 754 Lianyungang – Brest – Severny exp. 9 654 Length – 988 км; Lianyungang – Chop exp. 10 184 Cost – 591 млрд. тг. Lianyungang – Poti exp. 9 195 Volume of transportations to 2020 – 13 Lianyungang – Ablyk 6 128 mln.t/year Lianyungang – Sarakhs exp. 6 721 7-1 Nahodka exp. – Brest – Severny exp. 10 504 Reduction of distance of a route Dostyk st. – 7 739 Aktau st. on 1200 km; 7-2 Zabaykalsk exp. – Brest – Severny exp. 7-3 Naushki exp. – Brest – Severny exp. 6 981 The realization beginning – December, 2012
TRANSIT CORRIDORS OF KAZAKHSTANMain objective – to ensure the establishment of SEZ “Khorgos – East Gate” as one of the Customs Uniongates and the realization of transit potential, corresponding to the existing potential of Kazakhstan, oninternational transport corridors.
АО «Национальный Центр National Center for Development Развития Транспортной KAZAKHSTAN TEMIR ZHOLY of Transport Logistics Логистики» Thank you for attention! ContactsYerhat Iskaliev Yermek ZhumashevLogistics Vice-president Acting President of JSC "International Centre for Boundary Cooperation “Khorgos" 041310, 28 Ten In Gen st.JSC «National Company Golovackiy village, «Kazakhstan Temir Zholy» Almaty region,Telephone: +7 7172 604308 Republic of KazakhstanEmail: email@example.com Phone: +7 (72831) 3 63 51 Phone/Fax:+7 (72831) 3 63 12Websites: www.kazlogistics.kz E-mail: firstname.lastname@example.org www.railways.kz Web-site: www.mcps-khorgos.kzSvetlana AubakirovaVise-president of JSC «National Center forDevelopment of Transport Logistics» Dastan ZholzhanovPhone: +7 (7172) 611 735 President of JSC “Khorgos – Eastern Gates” Special Economic Zone Management Company”E-mail: email@example.com Phone:+ 7(701)7159395 firstname.lastname@example.org Fax 8 (72831) 3-62-01Web-site: www. ncrtl.kazlogistics.kz E-mail: email@example.com www.railways.kz Web-sites: www. ncrtl.kazlogistics.kz www.railways.kz