220 2014 SPECIAL EDITION

PU B LISHED SIncE 199 6 No. (220) /2014 :: www.polishmarket.com.pl

SPECIAL EDITION

POlANd

ECONOMIC COOPERATION

KAZAKHSTAN

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Photo: Marta Smolińska

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Honorary Patrons: DePuty Prime minister anD minister of tHe economy – Janusz PiecHociński PresiDent of tHe PolisH acaDemy of sciences – Prof. micHał kleiber rector of tHe WarsaW scHool of economics – Prof. tomasz szaPiro organizer – “PolisH market” December 2014 polish market

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Tomorrow’s technology for mining and industry

Underground mining machinery automated longwall systems incl. Mikrus thin-seam longwall system Electrical equipment Rendering services • shaft sinking • lateral development ul. Grabowa 1 (ул. Грабова 1) 40-172 Katowice (40-172 Катовице) POLSKA (Польша) тель.: +48 /32/ 6047000 факс: +48 /32/ 6047100 e-mail: kopex@kopex.com.pl

SPIS TREŚC CONTENTS

4. From the Publisher: Poland - Kazakhstan 6. Nursultan Nazarbayev, President of the Republic of Kazakhstan: The Path to the Future 8. Janusz Piechociński, Deputy Prime Minister, Minister of the Economy: Important and promising economic partner 10. Yerik Utembayev, Ambassador of the Republic of Kazakhstan in Poland: The Path to the Future an opportunity for close cooperation between Kazakhstan and Poland 12. Marek Pol, Director for Development at POL-MOT Holding S.A., former Deputy Prime Minister, Minister of Industry and Trade and Minister of Infrastructure: An open door to Kazakhstan

24. Kazakhstan - a new direction in the development of KGHM ZANAM 26. M28 STOL Turbo-Prop Aircraft 28. Santo member of Polpharma Group investment project 31. Lekam - one of the fastest growing pharmaceutical companies in Poland 32. Marek Multan, Vice President of Arcus SA: Kazakhstan a country of great opportunities for Polish investors 34. Alexander Voronin, lawyer from the Kazakh branch of the Chałas & Partners Law Firm: How to safely and effectively enter into contracts with business partners from Kazakhstan

14. Kazimierz Marcinkiewicz, Former Prime Minister, Head of the the Council for Cooperation and Development of the Polish-Kazakh Partnership Platform: A favourable investment climate 16. Information about economic relations between Poland and Kazakhstan by Department of Promotion and Bilateral Cooperation at the Ministry of the Economy

Cover: ASTANA, KAZAKHSTAN REPUBLIC - June 24, 2013: View of the Nurzhol Boulevard and President’s Palace Acorda Photos on issue: www.shutterstock.com

SPECIAL EDITION

Publisher: Oficyna Wydawnicza RYNEK POLSKI Sp. z o.o.

(RYNEK POLSKI Publishers Co. Ltd.) President: Krystyna Woźniak-Trzosek Vice - Presidents: Błażej Grabowski, Grażyna Jaskuła Address: ul. Elektoralna 13, 00-137 Warszawa, Poland Phone (+48 22) 620 31 42, 652 95 77 Fax (+48 22) 620 31 37 E-mail: info@polishmarket.com.pl

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Editor-in-Chief: Krystyna Woźniak-Trzosek Deputy Editor-in-Chief: Ewelina Janczylik-Foryś redakcja@polishmarket.com.pl Marcin Haber m.haber@polishmarket.com.pl

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GRUPA CARBOAUTOMATYKA

POLAND – K AZAKHSTAN

The Polish economy consistently scores points, which place it first among the fastestgrowing economies in Europe. For those who are not impressed by GDP-growth statistics any more, regardless of their form, Eurostat has announced a record-breaking 16 million employed, the highest for 25 years, and the largest decrease in unemployment since the beginning of the crisis; only Germany and Malta have made it to the podium beside Poland. In their annual report, Eurostat’s economists calculate that in Poland the current individual consumption per capita has reached 75 per cent of the EU average, overtaking the Czech Republic and Slovakia.

POLAND, GO GLOBAL – LET’S OPEN UP TO THE WORLD Against the backdrop of European economies plagued by apathy, Poland unceasingly appears to external observers as a “green island,” a country with its own economic recipe for success and, as a result – especially to countries determined to invest in their own future – as a more and more recognisable, trustworthy and attractive partner.

This is not only and not primarily a matter of prestige. Specifically, this is one of the positive-feedback mechanisms known as “success breeds success.” Subsequent analyses of this year’s economic results will certainly provide measurable evidence showing that, to a large extent, we owe the results to good business cooperation with foreign markets. This is particularly interesting because, for some time, such cooperation was perceived as a threat to optimistic GDP-growth prospects, indicating, e.g. the poor growth performance of the German economy, to which we are strongly related, or the slump in the previously dynamic trade with Ukraine and Russia. However, flexibility, as well as the capability of quick response and rapid adaptation to changing market conditions, have once again turned out to be one of the chief assets of Polish entrepreneurship.

The government strategy of the diversification of the Polish foreign trade, laid down in the programme “Poland, Go Global – the promotion of the Polish economy on international markets,” turned out to be an appropriate and modern initiative. 15 branches of the economy were identified as the most promising export perspectives. Algeria, Brazil, Canada, Kazakhstan, Mexico, Turkey, and the United Arab Emirates where indicated as the most prospective markets, on which the government decided to concentrate the limited funds of the state promotion of support for Polish undertakings. Judging by this year’s results, this strategy stands a fair chance of success.

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THE CASE OF KAZAKHSTAN Kazakhstan’s territory is almost nine times the size of Poland, but its population is half that of Poland. Economic experts prophesy that the country has a bright future ahead and call it “the world’s money box,” considering the accumulation of the improbably large and varied resources of raw materials. Kazakhstan has 99 out of 105 elements in Mendeleev’s Periodic Table. The country has researched 70 and uses 60 of them. The 493 deposits that have already been discovered contain 1,225 kinds of mineral ore. Kazakhstan comes in first in the world for its deposits of zinc, tungsten, and barites; second for silver, lead, and chromite; third for copper and fluorite; fourth for molybdenum; and sixth for gold. Kazakhstan also has significant deposits of crude oil and natural gas, matching Saudi Arabia, Kuwait and the United Arab Emirates stride for stride. Together with the already-discovered and potential deposits on mainland Kazakhstan, they weigh more than 6.1bn tonnes. The gas reserves in turn amount to 6 quintillion cubic metres. Although advanced extraction of conventional deposits is still considered an issue of distant future, the Kazakh authorities have already set aside a certain sum of money to be spent on drilling for shale gas.

With such natural treasures, Kazakhstan obviously has tremendous growth ambitions. The country is now finalising “The Strategy of the Innovative Industrial Development of the Republic of Kazakhstan for 2003-2015,” whereby its annual pace of GDP growth reached 105-107% and the GDP per capita in 2013 rated at USD 14,100 (according to external sources). In his recent address to the nation “The way of the future,” the Kazakh President Nursultan Nazarbayev announced further reforms and investments aimed at ensuring the long lasting growth of the country. The keystones of this plan are huge road, rail, and air infrastructure investments leading in particular to the extension of external export possibilities, including the Caspian Sea ports, and the energy infrastructure. An important part of this plan is the country’s programme aimed at supporting national, and especially foreign, entrepreneurship through the policy of establishing preferential economic zones and creating incentives for foreign investors, in particular those who bring new technologies to Kazakhstan.

ARE WE ABLE TO WIN WITH SPACE AND... POLITICS? The Kazakh growth plans are creating investment opportunities for Polish companies. We are trying to take these chances. In the last dozen or so months, the Polish-Kazakh relations have been strengthened significantly. They take the form of visits exchanged between top government officials, activation of the operations of the intergovernmental committee, Kazakh-Polish conferences and business forums, economic missions, and a growing presence of Polish entrepreneurs on international trade fairs in Astana and Almaty. The Polish-Kazakh Trade and Industry Chamber and the ethnic Poles – the descendants of Tsarist and Stalinist exiles – have livened up. Poland is certainly no longer perceived in Kazakhstan as an unknown and exotic country.

This brings measurable results. In particular, the growth in exports, which places Kazakhstan sixth among the recipients of Polish goods in Asia, renders this market strategically significant to the Polish economy. Polish investments are also finding favourable conditions on this market and we count for much more. Especially in the mining industry, in which we have a lot of potential and competitive technologies, the building trade, agricultural machines and technologies, the means of transport – especially aviation, and the military sector.

Will these chances be taken? The mediocre level of capital reserves, which are necessary to support Polish investment projects in Kazakhstan, constitute a barrier, at least on our part. However, Europe has never had cheaper capital, so, if we want to leverage it for such investments, we have to do it now. However, now also means the political crisis over the area of 4 thousand kilometres separating Poland from Kazakhstan. Pessimists consider it to be another transport barrier, optimists - an additional incentive for Poland as a EU Member State and for Kazakhstan as a pillar of the Eurasian Economic Union to make greater efforts to solve the Russian-Ukrainian crisis.

Krystyna Woźniak-Trzosek Editor-in-Chief President Rynek Polski Publishers Co. Ltd.

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THE PATH TO THE FUTURE Nursultan Nazarbayev, President of the Republic of Kazakhstan

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TODAY, AS WE RESPOND TO THE CHALLENGES WE FACE, I PROCLAIM KAZAKHSTAN’S NEW ECONOMIC POLICY “Nyrly Zhol” (The Bright Road).

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he world is facing new challenges and threats today. The world economy has still not recovered from the global financial and economic crisis.

The recovery continues at a very slow and uncertain pace, and some countries remain in decline.

The geopolitical crisis and the policy of sanctions pursued by the leading powers create an additional obstacle for the recovery of the world economy.

From my experience, I feel that the years to come will become the time of global trials. The entire architecture of the world will be changing. Not all countries will be able to get through these complications in a decent manner. Only strong states, with their people united, will manage to do that. Kazakhstan, as a part of the world economy and a country located very close to the epicentre of geopolitical tensions, is experiencing negative pressure from all these challenges. We see the results: prices in global markets are dropping, and general economic growth is slowing down.

As is known, the global economic forecasts for 2014 and the next two years were revised downward by the International Monetary Fund and the World Bank. That means we need to revise our own plans, and make adjustments for the coming period. There is no time for hesitation. The measures I will talk about today will be implemented from January 1, 2015. We must promptly take all the possible measures to prevent negative trends.

Today the government is already working quickly at my order. We have revised the parameters of the republic’s budget for 2015. And this is right, as the drop in prices of our export raw materials has led to the reduction of the flow of money to our income. At the same time, the government have a tough yet specific task: it must fulfil all social liabilities in full.

In a crisis, as we’re seeing the world over, economic policies must be re-evaluated. The sectors that need support are those which create the highest multiplier effect on economic growth and employment. We have already had such an experience. Suffice it to recall our successful anti-crisis measures in 2007-2009.

As you see, life makes adjustments to the best laid plans. And we should add new content to the platform of our party based on today’s reality.

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On my orders, the government has completed the development of a new large-scale development programme. Today, as we respond to the challenges we face, I proclaim Kazakhstan’s New Economic Policy “Nyrly Zhol” (The Bright Road). This is what I devote my state-of-the-nation address for 2015. The policy will have a counter-cyclical character and will be aimed at continuing structural reforms in our economy. What does this mean?

Over the years, when the situation in external markets was favourable, and the prices of oil and our export products were at sufficiently high level, we diverted revenues from those exports to the National Fund. One of the main tasks of the National Fund is to increase resistance of our economy to external shocks, including when prices of natural resources drop.

We were putting income from extraction and sales of raw materials into this Fund during all these years. We used USD 10 billion out of the National Fund to fight against the crisis of 2007-2009. As for the rest of the money, we have not spent it.

We saved and multiplied it. Now we are in the period when we must use these reserves. They will help overcome uneasy times and stimulate the growth of our economy. These resources are not intended for short-term measures. We will spend them on the transformation of our economy, namely – the development of transport, energy, industrial and social infrastructure, and small and medium businesses.

In February, a decision was made to allocate KZT 1 trillion from the National Fund to support economic growth and employment in 2014-2015 in two tranches of KZT 500 billion. To finalise the initiated projects and resolve pressing issues, I have

instructed the government to divert the second tranche of KZT 500 billion from the National Fund to the following purposes: First, KZT 100 billion should be additionally allocated to issue easy-term loans to small and medium businesses, as well as large enterprises. This will secure the implementation of projects in the food and chemical industries, engineering, as well as the service sector.

Second, to revive the banking sector and buy out “bad” loans, I have ordered additional capitalisation of the Fund of Problem Loans in the amount of KZT 250 billion in 2015.

Third, to raise new investments, we need to improve respective conditions. For these purposes, I have ordered the government to allocate KZT 81 billion in 2015 to complete the construction of the “dry port” complex, the infrastructure of the special economic zones at Khorgos – East Gate and the National Industrial Petrochemical Technological Park in Atyrau and Taraz.

Fourth, to continue the construction of the EXPO-2017, I have ordered the allocation of KZT 40 billion in 2015 adding to the already allocated KZT 25 billion.

Fifth, on the eve of EXPO-2017, we need to take care of the development of Astana’s transport infrastructure. This year the capital airport will reach its maximum capacity – 3.5 million people. Therefore, to increase its potential, I have ordered the allocation in 2015 of KZT 29 billion on the construction of a new terminal and a reconstruction of the landing strip. This will allow us to increase the airport capacity to 7.1 million of passengers per year by 2017.

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THE SECOND WAVE OF PRIVATISATION

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azakhstan will see the second wave of privatisation in 2014-2016. It is a logical continuation of the government’s policy of increasing the role of the private sector and reducing that of the state in the country’s economy.

The privatisation proceedings are conducted in accordance with the provisions of the Law of 1 March 2011 on the State Treasury, pursuant to the Rules for Selling Privatisation Objects, as approved by the Decision of the Government of the Republic of Kazakhstan of 9 August 2011.

The privatization of the state assets in the second wave of privatisation will be carried out by way of commercial tenders and auctions using the electronic platform.

Natural persons and non-state legal persons, as well as foreign companies can participate in the privatisation. Commercial tenders or auctions can be joined only by those registered as participants and submitting a tender price or a tender offer.

There are no restrictions or preferences with respect to determining the winning bidder (domestic or foreign entrepreneurs):

the investor wins who offers the most favorable terms, or the best price for the object of privatisation.

The list of objects subject to privatisation in 2014-2016 was established by the Decision of the Government of the Republic of Kazakhstan of 31 March 2014 on Certain Questions Regarding Privatisation.

The full list of privatisation objects can be found on the website of the Register of the State Treasury and Privatisation: www.gosreestr.kz, which is also accessible through banners on the websites of the Government of the Republic of Kazakhstan: www.egov.kz and www.government.kz, as well as on the website of the Ministry of Justice of the Republic of Kazakhstan: www.adilet.zan.kz.

The website of the Register of the State Treasury: www.gosreestr.kz contains a lot of interesting information for those interested in participating in the privatisation process, including detailed instructions on how to join tenders.

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IMPORTANT AND PROMISING ECONOMIC PARTNER ADDRESS BY JANUSZ PIECHOCIŃSKI, DEPUTY PRIME MINISTER AND MINISTER OF THE ECONOMY, AT THE CLOSE OF THE POLISH-KAZAKH ECONOMIC FORUM (ASTANA, NOVEMBER 21, 2014)

Dear Mr Minister, Ladies and Gentlemen, I wish to warmly greet all participants in today’s Polish-Kazakh Economic Forum, which accompanies the 6th meeting of the PolishKazakh Intergovernmental Commission for Economic Cooperation.

I am glad that the Forum has been organized and that the presence of Polish and Kazakh businesses is so strong here because I am firmly convinced that undertakings of this kind are an important platform to discuss the potential for intensifying bilateral economic cooperation and conducting new projects aimed at developing contacts between Polish entrepreneurs and their foreign partners.

Kazakhstan is an important and promising economic partner for Poland. It is Poland’s fourth largest trading partner among countries making up the Commonwealth of Independent States.

In recent years Polish-Kazakh trade has expanded rapidly. In particular, in 2013 the value of trade between our countries increased by 23.6% to nearly USD1.2 billion. In the first eight months of 2014, the value of trade more than doubled to reach USD 1.6 billion. Investment

by Polish businesses on the Kazakh market is also on the rise. According to our data, there are now around 160 Polish-owned businesses registered in Kazakhstan. By the end of the first quarter of 2014 they invested in Kazakhstan a total of USD150 million.

But we see further prospects for the development of trade and investment between Polish and Kazakh businesses. Poland’s strong macroeconomic results and forecasts for the economic development of our countries in the years ahead are an indication that these relations will further strenghthen. In 2013, the Polish economy grew by nearly 2%. We project that the growth rate will exceed 3% in 2014. In recent years, the Kazakh economy has been expanding at an even faster pace

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– more than 5%. These results will undoubtedly have a favourable impact on the development of economic relations between our countries.

Among the sectors which, as we believe, offer prospects for a further development of cooperation between Polish and Kazakh businesses is the building industry, housing and municipal sector, pharmaceutical industry and medical services, agriculture and agri-food processing, mining machines and equipment, energy industry, environmental protection technologies, logistics and transport services, defence industry, chemical industry, ICT services, electromechanical sector and automotive industry.

I would like to stress that the continued interest on the part of Polish entrepreneurs in trade and investment cooperation with Kazakh partners is due not only to the fast pace of growth of the Kazakh economy, but also to a very favourable business climate in Kazakhstan and a stable and balanced economic policy pursued by the Kazakh authorities, including the state programme for the development of innovation-based industry in Kazakhstan and the country’s new economic policy presented by President Nursultan Nazarbayev in his address.

Polish companies have noticed chances for strengthening their presence on the Kazakh market, including in the integration processes in which Kazakhstan takes part and preparations for the International Exhibition Astana Expo 2017. The recently completed negotiations on a new Agreement on Partnership and Cooperation between the European Union and Kazakhstan as well as almost finalized negotiations, on Kazakhstan’s entry to the World Trade Organization contribute to the interest of Polish entrepreneurs in trade and investment

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opportunities offered by Kazakhstan. Poland has played an active role in both processes and has supported them.

Polish enterpreneurs are ready to offer their Kazakh partners innovative products and technologies of high quality and at competitive prices. They may be used in the process of rapid development of the Kazakh economy and have already gained recognition from Kazakh buyers. But Poland is interested not only in strengthening the presence of Polish companies on the Kazakh market. We also encourage Kazakh entrepreneurs to become more active in Poland. In this context, I would like to mention the preferential terms for investment in special economic zones in Poland. Let me add that by investing in Poland one gains access to the single market of the European Union, of which Poland has already been a member for 10 years. We encourage Kazakh businesses to invest in our country. We would like them, in particular, to take an interest in the Warsaw Stock Exchange and the investment instruments it offers.

The Polish and Kazakh authorities see the potential for the development of bilateral economic cooperation and take measures to support it. I wish to note here with satisfaction that our cooperation at governmental level has intensified, following visit paid to Kazakhstan by the Minister of Agriculture Marek Sawicki and a delegation of Polish entrepreneurs headed by (former – ed.) Prime Minister Kazimierz Marcinkiewicz. We are continuing this process during my visit to Kazakhstan through dialogue between our veterinary services and institutions responsible for supporting the development of small and medium enterprises and by attracting foreign investment. Regular meetings of the Polish-Kazakh Intergovernmental Commission for Economic Cooperation are an important platform for intergovernmental dialogue on the current state and prospects for bilateral economic cooperation. The 6th meeting of the Commission, chaired jointly by me and Minister R. Zhoshybayev, will be held today. At its meetings, the Commission discusses all issues associated with bilateral economic relations, including long-term trade and investment projects, and the problem of barriers, indicated by businesses, to the development of cooperation between our countries such as visa procedures and the absence of a direct air connection.

We are also aware of the need to intensify dialogue at the level of regional authorities and to support bilateral trade and investment cooperation through contacts between partner provinces and districts.

To this end, we are in talks about organizing the first Forum of Regions Poland-Kazakhstan in 2015.

Contacts at the level of trade associations and institutions operating in the business environment are also of great importance for the development of bilateral economic relations. I would like to point here with satisfaction to a notable example of such fruitful cooperation, which is this Forum - organized by the Polish Information and Foreign Investment Agency and the Kazakh Kaznex Invest agency in conjunction with the Polish-Kazakh Chamber of Trade and Industry and the Kazakh Chamber of Entrepreneurs - and to the publication of a catalogue showing what Polish and Kazakh businesses have to offer.

On its part, the Ministry of the Economy also takes measures designed to support the development of contacts between Polish and Kazakh companies. Kazakhstan has been included in the group of our seven promising markets and in 2014 we have continued in Kazakhstan the programme for the general promotion of the Polish economy and programmes for the promotion of the building, defence and mining machinery sectors. The programmes increase the potential for contacts between entrepreneurs through their participation in fairs, exhibitions, trade missions and other events organized in our

two countries. As part of these programmes, two missions to Poland for Kazakh journalists and entrepreneurs each will be organized by the end of the year.

I wish to encourage Polish and Kazakh entrepreneurs to benefit from the insurance and credit mechanisms offered under the government programme “Financial Support for Exports.” The programme is carried out by Bank Gospodarstwa Krajowego and the Export Credit Insurance Corporation. It is worth noting that under this programme Bank Gospodarstwa Krajowego can provide loans to Kazakh businesses for the purchase of Polish goods and services directly or through the agency of one of its partner banks in Kazakhstan. This system is a real and effective instrument for supporting our joint trade and investment projects. I wish to encourage Polish and Kazakh entrepreneurs to contact the representative of Bank Gospodarstwa Krajowego who is taking part in today’s Forum.

I am strongly convinced that the Forum’s meeting today is an opportunity for our central and local government officials, business support organizations and entrepreneurs to continue discussion about the potential for further strengthening and developing the mutually beneficial trade and investment contacts between Poland and Kazakhstan.

During his visit to Kazakhstan deputy Prime Minister and Minister of the Economy Janusz Piechociński held bilateral talks with: • First Deputy Prime Minister of Kazakhstan B. Sagintayev, • Minister of National Economy Y. Dossayev, • Minister of Investment and Development A. Issekeshev, • First Deputy Minister of Foreign Affairs R. Zhoshybayev.

The talks focused on the current state and prospects for economic cooperation between Poland and Kazakhstan. Measures aimed at enhancing this cooperation were also discussed. Participants in the talks pointed to the large potential for developing economic relations between the two countries. Polish businesses were encouraged to take part in Kazakhstan’s new economic policy announced recently by the Kazakh President Nursultan Nazarbayev, with detailed information provided about new privileges for foreign investors and other support mechanisms for prospective investors, including financial support.

Deputy Prime Minister Janusz Piechociński co-presided over the 6th meeting of the Polish-Kazakh Intergovernmental Commission for Economic Cooperation. He also took part in the Economic Forum which accompanied the Commission’s meeting. Around 150 persons from Poland and Kazakhstan attended the plenary session of the Forum. Among them were government officials and business people from both countries. During the Forum the Polish Chamber of Commerce (KIG) signed a memorandum on cooperation with the Foreign Trade Chamber of the National Chamber of Entrepreneurs of the Republic of Kazakhstan while the Unibep and DipStroyServis companies signed an agreement on the construction of an office, hotel and conference centre in Astana. After the plenary session Polish and Kazakh business people held bilateral talks.

Deputy Prime Minister Janusz Piechociński also met with members of the Polish community from the central and north-eastern part of Kazakhstan, including the president and vice-presidents of the Association of Poles in Kazakhstan. The main topics of the talks were problems of the local Polish community, especially Polish language teaching, repatriation to Poland and the organization of summer camps for Polish-Kazakh children and youth in Poland.

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KAZAKHSTAN HAS SET ITSELF A GOAL OF JOINING THE GROUP OF 30 MOST DEVELOPED COUNTRIES OF THE world.

Yerik Utembayev, Ambassador of the Republic of Kazakhstan in Poland

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THE PATH TO THE FUTURE

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AN OPPORTUNITY FOR CLOSE COOPERATION BETWEEN KAZAKHSTAN AND POLAND

The Path to the Future,” the address of the President of the Republic of Kazakhstan, Nursultan Nazarbayev, which was delivered two months before the end of the year, set out specific guidelines for the Kazakh government with regard to the tasks to be implemented as of 1 January 2015. In fact, international institutions predict a decrease in economic growth over the next two years, and therefore the government was ordered to take concrete steps. In the face of the global economic slowdown, it is especially important to take steps to overcome its effects and the said address was dedicated to it. It focused on the so-called new economic policy ”The Path to the Future,” which aims to improve the country’s economy and change its nature towards more industrial. Kazakhstan operates a national reserve in which profits are kept from the oil and gas sector and metallurgy. The amount of that fund has already exceeded 100 billion, and starting from the next year the resources collected will be invested. Part of them will be allocated for the current development, and part will be saved for the future.

It is planned that 3 billion will be spent on industrialisation of the country each year.

Up to KZT 100 billion are to be allocated for the development of small and medium enterprises, which is the primary axis of economic development. These funds will be invested first of all in the food and chemical industry, but also in heavy industry, especially in the construction of machines, which is one of the potential levers of cooperation with Polish companies. The second part of the funds will be directed at the banking sector, something extremely important for Kazakhstan. The third part of the funds will be spent on infrastructure projects. In this context, a dry port in the eastern part of the country is of great importance. Atyrau and Taraz have special technology parks. The Expo 2017 will be held in Astana under the theme “Energy of the Future,” and it is now a key project.

At present, the capital city Astana airport handles about 3.5 million passengers per year, the figure being planned to reach 7 million by 2017, as major funds will be spent on infrastructural development.

I would like to invite you to visit Astana in 2017. Poland made a lot of effort to support the application of Kazakhstan before the right to host the Expo was awarded.

The policy crafted by President Nazarbayev in his address encompasses a period of five years and is completely convergent with the timeframe of the economic development strategy of Kazakhstan. More than 100 foreign companies will be involved in its implementation. I am convinced that there will be large Polish companies among them. International corporations, including international investment funds, will have a role to play too. The World Bank, the European Bank for Reconstruction and Development, the Asian Bank and other financial institutions will allocate a total of 9 billion to 90 major projects.

Kazakhstan has set itself a goal of joining the group of 30 most developed countries of the world. One of the basic measures towards it is the process of decentralisation and transfer of power to the regions, which is currently being implemented. In this field, Polish experience is particularly interesting and valuable for Kazakhstan.

This is one of the areas in which we work now very closely with the Polish side. Previously, there were as many as 17 ministries, now only 12 remain, so some work has already been done.

As of May 2014, we moved from talk to action in the Kazakhstan-Poland relations. In recent months, Deputy Prime Minister and Minister of the Economy Janusz Piechociński, and Minister of Agriculture and Rural Development Marek Sawicki headed economic missions to Kazakhstan, accompanied by Polish entrepreneurs.

Kazakhstan has also signed a cooperation agreement with the European Union and an accession agreement to the World Trade Organisation, which is a very important stimulus.

While on their visits to Kazakhstan, Polish ministers and entrepreneurs talked about the products that Polish companies could supply to the Kazakh market, including agricultural machinery, aircraft and trains. We also discussed infrastructure projects which Poland could be involved in. During these very intense days, we talked about regional but also wide-scale initiatives, and generally about what Poland has to offer in this area.

As a follow-up to the new policy crafted by President Nazarbayev, I decided to launch the Kazakhstan-Europe-Poland cooperation platform, part of which are clusters that will help Polish investors • navigate the Kazakh market.

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AN OPEN DOOR TO KAZAKHSTAN Marek Pol, Director for Development at POL-MOT Holding S.A., former Deputy Prime Minister, Minister of Industry and Trade and Minister of Infrastructure, talks to “Polish Market”.

Kazakhstan does not belong to Poland’s major business partners. What kinds of goods and services can Poland provide for this country, and vice versa?

Not everyone knows that for many years Kazakhstan has been one of the fastest-developing countries in the world. Currently the country is focusing on the development of its infrastructure, industry and agriculture, so it has the same needs as every fast-developing economy. These needs comprise machinery, including mining equipment, state-ofthe-art appliances to facilitate the efficiency of the country’s economy, agricultural machines, means of transportation, and top-class services in various fields. Polish companies can meet this demand in most aspects. However, in order to enter the Kazakh market, it is necessary to meet the country’s most important requirement related to technologies and direct investments. The Kazakhs claim that they can buy things they need from any source. They expect Poland to participate in producing the required goods and sell them in Kazakhstan and Russia, with which Kazakhstan can trade without customs duties, and possibly in China.

Poland’s opportunity lies in the fact that we understand the development path of the Kazakh economy because we travelled it ourselves not long ago. Our country has one more important asset - many Polish managers speak Russian, which eases communication in the country where it is one of the two official languages.

PM

ALMOST A HUNDRED POLISH COMPANIES WERE SIMULTANEOUSLY INVOLVED IN VARIOUS ACTIVITIES IN Kazakhstan.

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What particular benefits can Kazakhstan offer Poland?

Kazakhstan is a large country abundant in key resources, which now are a precondition

PM

for economic success and prosperous exports, and also an excellent opportunity for further development. Out of 105 elements in the periodic table as many as 95 are found in Kazakhstan, and 80 are used on an industrial scale.

The country has rich resources of coal, petroleum, natural gas and ores of iron, copper, zinc, lead, phosphorites, chromium, manganese, silver and gold. In recent years it has occupied a leading position in the world in terms of uranium-ore extraction. Therefore, Kazakhstan can offer us everything it extracts and produces, and, as we can see, there is a lot of it. Most importantly, we can also benefit from a huge market including not only Kazakhstan but also Russia and Belarus. The customs union of the three countries is a major asset for Kazakhstan, which is particularly significant in the context of the tensions and conflicts in which Russia is currently involved. Kazakhstan provides an opportunity for the common expansion on the extensive Russian market.

Kazakhstan and the Asian part of Russia occupy almost half of Asia…

Kazakhstan alone has an area similar to that of the entire Western Europe, but with a population of only 16 million. For Asia, this is not much. The continent has a number of countries with larger populations.

Coming back to the previous question, apart from machines and equipment, Poland can become an investor in Kazakhstan. In my opinion, Poland as an economic player is reaching the stage of going beyond just searching for new markets to invest abroad. More and more production-oriented entrepreneurs are seeking location where they can be more competitive PM

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and benefit from a large and absorptive market. Taking this into consideration, Kazakhstan is an attractive area for Polish entrepreneurs. Apart from the scale and the needs of the market (including the Russian market), one of investment incentives is the policy of active support for investments put in place by the Kazakh government. Investors can count on considerable preferential treatment. However, all investments should be reasonable.

What was the purpose of your visit to Kazakhstan as a representative of POLMOT in the group of Polish entrepreneurs, which was also joined by Deputy Prime Minister Janusz Piechociński?

The POL-MOT Group is highly diversified in terms of products and services. In Kazakhstan I discussed the opportunities for exporting, or producing together with the Kazakh partners, Ursus tractors and agricultural machines under the brand. As you know, POLMOT is the majority shareholder in Ursus S.A. We hope that Kazakhstan will be interested in state-of-the-art European tractors, assembled in Kazakhstan and gradually localised. Moreover, in Kazakhstan we present our industrial production lines for briquettes and pellets made of straw, hay and other types of biomass. Kazakhstan is abundant in these types of fuel, and producing heat and energy from them is a genuinely innovative environmentally friendly project for a number of towns and cities in this vast country. As the POL-MOT Group, we build very innovative energy-saving houses in Poland and abroad. It is possible that soon we will launch activities in this field in fast-developing Kazakhstan. Ursus, which is best known for producing tractors and agricultural machines, also manufactures environmentally friendly urban-transport buses.

Our trolleybuses can already be seen on the streets of Lublin, and soon we will launch our full-size electric bus. The Kazakh cities can be interested in these products. Kazakhstan is working intensively on improving the purity of its air and water.

PM

that does not have a detrimental impact on the environment. Probably not many people know, Kazakhstan has its own photovoltaic cell plant, built in cooperation with French partners.

There must be more areas of the company’s activity that you discussed in Kazakhstan.

What attracted great interest among our contractors, not only from Kazakhstan, but also other large countries which in the next few years are planning to develop the aviation market, is mobile air traffic control towers, which are delivered by one of our companies, POL-MOT Rail. For a relatively low amount of money and in a short time period it is possible to install a tower based on a container structure on a newly built airport. One of them is already operating at Lublin Airport. We also offer a mobile version of the product. The towers can fit in several containers and be delivered to any airport in the country, for instance in the event of failure of the existing tower. They have their own power-supply sources and all the systems necessary for the safe control of air traffic. The Polish Air Navigation Services Agency already has such a tower. We tried to convince our partners in Kazakhstan that we would do a good job participating in the development of their aviation market.

As you can see, we can offer a lot in various fields… Recently I have been to Kazakhstan twice and each time there was much to discuss…

Polish companies were simultaneously involved in various activities in Kazakhstan. This is a definite proof that we perceive Kazakhstan as a gateway to other much bigger opportunities than the Kazakh market.

PM

Do you think that Kazakhstan’s customs union with Russia can have a negative impact on Polish-Kazakh economic relations due to the tensions between Poland and Russia?

I think quite the opposite. The tensions are an opportunity for Kazakhstan and Polish companies intending to invest in this country. This can be confirmed, for instance, by the number of companies which have recently travelled to Kazakhstan. In November, 32 Polish companies participated in the economic mission headed by the former Prime Minister Kazimierz Marcinkiewicz (currently President of the Polish-Kazakh Council for Economic Cooperation). At the same time, over a dozen more Polish enterprises came to Kazakhstan with the Minister of Agriculture Marek Sawicki. Simultaneously Almaty hosted of the World Food Fair, which was attended by 40 Polish companies, making Poland the second most numerously represented country in the event, following Kazakhstan. Almost a hundred PM

The tractors made by Ursus are only one of the examples of POL-MOT’s activities which you’ve mentioned. Which of the tractors can find their way onto the Kazakh market? What types of tractors are the most popular there?

Ursus, after being taken over by POL-MOT four years ago, has considerably extended its range of products. Ursus has never before produced tractors with a power from 50 to 180 KM. Such tractors can be used mainly in the southern parts of Kazakhstan, where small and medium-sized agricultural holdings predominate. The climate is also much milder than in the north. This makes for higher yields and a longer plant-vegetation period than in the northern part of the country.

In the north, where large holdings have an area of over a dozen to several dozen thousand hectares, there is demand for large tractors, but we don’t produce such. These holdings can use the Ursus tractors only as auxiliary equipment, e.g. in cattle breeding. For these vast areas of land agricultural aircraft are also required. For years Poland has produced the Dromader, wellknown around the world and enjoying a good reputation. It would be great to relaunch the production of these machines within PolishKazakh cooperation.

PM

What is the rationale for the previously discussed economic missions to various countries with the participation of highlevel politicians and the representatives of the business sector? What kind of benefits do they bring for entrepreneurs?

My experience as a government official and a participant in missions representing the business sector shows that the presence of major politicians is a great support for business entities: they open many doors and help initiate economic relations with countries. This is not an easy task. If someone observed the work of a member of the Polish Government during such missions, they would be surprised how much effort and energy such door-opening requires. This was the case in Kazakhstan.

Whether business entities make use of the open doors is completely up to them.

• PM

Kazakhstan Why? Of course, for the same reasons why the rest of the world is making huge investments in environmental protection. There is also another reason - noblesse oblige - as in 2.5 years the capital city of Kazakhstan will host EXPO 2017 with the motto “Future Energy”.

In the future, light, heat and power for various appliances will be provided with energy PM

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A FAVOURABLE

INVESTMENT

CLIMATE

Kazimierz Marcinkiewicz, Former Prime Minister, Head of the the Council for Cooperation and Development of the Polish-Kazakh Partnership Platform

O

INVE STM ENT ur visits to Kazakhstan were highly successful and very fruitful. I hope they will indeed bear some fruit. The meetings with the President, the Prime Minister and the Minister of Finance in May were very promising. It was then that we learned about Kazakhstan’s plans to pass a special law to provide 30-percent reimbursements for investment expenditures exceeding USD 20 million, and 10-year corporate and land value tax exemptions. This would create some of the best opportunities for investment. The talks during our November visit to Kazakhstan were already very specific. On a side note, it coincided with Mr Sawicki’s visit to Kazakhstan. We had a meeting with him in Astana and summed up both debates together with Kazakhstan’s Minister of Agriculture. It seems that this sector in particular shows the willingness and need to cooperate. No wonder they cooperate only with the best there are, hence the willingness. There are many Dutch in Kazakshtan and basically all players in the agri-food sector. They see, though, that Poland has been

I THINK THE TIME IS RIPE FOR US TO RAMP UP OUR EFFORTS TOWARDS VENTURING INTO KAZAKHSTAN ON A LARGER scale.

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incredibly successful in this sector and that Polish technologies are the most modern.

This is why they are interested in agri-food production and processing, or perhaps primarily in agri-food processing. Kazakhstan’s Minister of Agriculture came up with the idea of a socalled “Display Cabinet”, in which he wants to use 10 hectares of land for an agri-food “showcase” of how the food is produced and processed, and he wants Polish entrepreneurs to join in. This would be outside the agri-food cluster, which we are talking about as well. Our talks addressed the use of aircraft for agriculture, as well as tractors and other agricultural machinery, and also the processing of our flagship products such as apples. Indeed, it is hard not to mention apples this year, but – we also talked about our other products, including vegetables, and white and red meat. It was very interesting indeed and we realise that we have to bring together everyone ready to engage in such cooperation. For our next visit in February or March we need to come up with some very specific proposals.

We also had some interesting discussions on many other sectors. I remember talking to the President of Kazakh Rail, who spoke about PESA trains and their popularity. He said that when these trains temporarily went out of operation for maintenance or cleaning, people would call and ask what happened to the them.

Indeed, they got used to the quality these trains ensure. This, I think, suggests that they are willing to buy more from us. It was a very intensive visit. Marek Pol and I stayed there the longest, for five days. We visited as many as three cities - Astana, Shymkent and Almaty, meeting in each of these places the top figures in Kazakhstan. In Astana, for instance, we met the Prime Minister and five Ministers. We had a brief but very substantial meeting with the Prime Minister and he even wrote down a numer of a number of things down. After the meeting, already by

the evening, we were told to change our schedule of meetings, as the Prime Minister assigned the members of his government to have further meetings with us. This shows that Kazakhstan is very much looking forward to the opportunities offered by Poland and Polish business. They were also interested, for instance, in the roadconstruction fund and other solutions we have successfully implemented in Poland, and they want to draw from our experience.

It is important to note that Astana is now a huge construction site, and building activity in Shymkent is about to go into overdrive. A special programme is in place to redevelop the latter as part of the plan to bolster cities remote from Astana. This entails building roads, and the related need for building equipment and materials, which Polish companies will be more than willing to supply and perform. There is also a big demand for machinery, as the Kazakh mining industry at large is developing very rapidly and is the main driver of economic growth in this country. I believe I have never experienced a situation where even the first visit culminates in a letter of intent. Indeed, Polish companies, including Kopex and KGHM, signed letters of intent with some major Kazakh players. This clearly shows the favourable climate for Polish business in Kazakhstan. And it is up to us whether we tap into this opportunity and drum up business there or continue to hesitate and calculate. I think the time is ripe for us to ramp up our efforts towards venturing into Kazakhstan on a larger scale. It is not that every company has to invest USD 20 million. All we need to do is to build a cluster and this cluster will be regarded as a major investment. We will bring together companies to create such a cluster and take advantage of the good investment opportunities offered by Kazakhstan.

•

REPUBLIC OF K AZAKHSTAN INFORMATION ABOUT ECONOMIC RELATIONS BETWEEN POLAND AND KAZAKHSTAN

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GENERAL INFORMATION ABOUT KAZAKHSTAN AREA: 2,724,900 km2 POPULATION: 17.3 million CAPITAL: Astana CURRENCY: tenge (KZT) National Bank of Poland official exchange rate (early September 2014): USD1=KZT182.01, EUR1=KZT239.8 SELECTED GOVERNMENT MEMBERS: • President of the Republic of Kazakhstan – Mr Nursultan Nazarbayev • Prime Minister of the Republic of Kazakhstan – Mr Karim Massimov • First Deputy Prime Minister – Mr Bakytzhan Sagintayev • Minister of Economic Integration – Ms Zhanar Aitzhanova • Minister of National Economy – Mr Yerbolat Dossayev • Minister of Energy – Mr Vladimir Shkolnik • Minister of Investment and Development – Mr Issekeshev • Minister of Finance – Mr Bakhyt Sultanov • Minister of Agriculture – Mr Asylzhan Mamytbekov The most important regional agreements on integration and preferential treatment signed by Kazakhstan: Commonwealth of Independent States (CIS), Customs Union of Belarus, Kazakhstan and Russia, Common Economic Area, Agreement on Free Trade of CIS, Eurasian Economic Union, Central Asian Economic Community and Shanghai Cooperation Organization.

Kazakhstan is now conducting negotiations on its entry to the World Trade Organization (WTO).

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BASIC INDICATORS OF KAZAKHSTAN’S ECONOMIC DEVELOPMENT

2010

2011

2012

2013

Jan.-June 2014

GDP (USD billion)

150

186.2

199.9 1

222.2 2, 4

84.8 3, 4

GDP (growth)

106.9

107.5

105.0

106.0

103.9

PKB (per capita, USD thousand)

9.0

11.05

12.06 1

Budget deficit (as % of GDP)

2.5

2.1

3.0

2.1

na

Public debt (as % of GDP)

15.0

12.4

13.1

13.2

na

Inflation (%, average)

7.1

8.3

5.1

5.8

6.2

Unemployment (%)

5.8

5.4

5.3

5.2

5.1

Exports (USD billion)

59.2

88.1

92.3

82.5

48.0

Imports (USD billion)

29.8

38.0

44.5

48.8

22.8

Net inflow of FDI to Kazakhstan (USD billion)

11.5

13.9

13.3

10.8

2.2 5

Kazakhstan’s net direct investment in other countries (USD billion)

7.8

5.4

1.5

2.4

-0.6 5

converted according to the KZT/USD exchange rate as at the end of December 2012 (USD1=KZT150.42) converted according to the KZT/USD exchange rate as at the end of December 2013 (USD1=KZT153.61) 3 converted according to the KZT/USD exchange rate as at the end of June 2014 (USD1=KZT183.51) 4 preliminary data 5 data for the first quarter of 2014 1

2

Source: Statistical Agency of Kazakhstan, Kazakhstan’s Ministry of Finance, National Bank of Kazakhstan Forecasts (IMF) 2014: GDP growth - 5.6%, inflation – 9.2%, unemployment – 5.2% 2015: GDP growth – 6.1%, inflation – 7.5%, unemployment – 5.2%

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12.9 2, 4

4.9 3, 4

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LEGAL FRAMEWORK FOR BILATERAL ECONOMIC RELATIONS THE MOST IMPORTANT AGREEMENTS REGULATING THE POLISH-KAZAKH ECONOMIC RELATIONS INCLUDE: • “Agreement on partnership and cooperation establishing partnership between the European Communities and their member states and the Republic of Kazakhstan,” signed in Brussels on January 23, 1995 (Official Journal L 196 of July 28, 1999); • “Agreement between the Government of the Republic of Poland and the Government of the Republic of Kazakhstan on economic cooperation,” signed in Astana on July 6, 2005 (M.P. of 2006, No. 13, item 171; effective since January 21, 2006); • “Agreement between the Government of the Republic of Poland and the Government of the Republic of Kazakhstan on the support and mutual protection of investment,” signed in Almaty on September 21, 1994 (Journal of Laws of 1995, No. 121, item 584; effective since May 25, 1995); • “Convention between the Government of the Republic of Poland and the Government of the Republic of Kazakhstan on avoiding double taxation and preventing income and property tax evasion,” signed in Almaty on September 21, 1994 (Journal of Laws of 1995, No. 121, item 586; effective since May 13, 1995).

TRADE BETWEEN POLAND AND KAZAKHSTAN Kazakhstan is Poland’s fourth largest trading partner among the countries which make up the Commonwealth of Independent States.

Taking into account all the countries with which Poland maintains trade relations, Kazakhstan was in 39th place in 2013 as Poland’s trade partner in exports and in 40th place in imports. And in the first nine months of 2014, Kazakhstan ranked respectively 43rd and 26th among the 250 countries and dependent territories with which Poland trades.

In 2013, a total of 1,454 Polish firms, out of Poland’s 43,200 exporters, exported goods to Kazakhstan while 116, out of Poland’s 46,700 importers, imported goods from Kazakhstan. In January-September 2014, the figures were respectively: 1,235 firms out of 35,800 and 96 firms out of 43,700.

The table below provides data on Poland’s goods trade with Kazakhstan in recent years.

2010

2011

2012

Jan.-Dec. 2013

Jan.-Sept. 2014 USD million

USD million

2009

USD million

2010 = 100

USD million

2011

= 100

= 100

USD million

2012

Trade value

837.8

112

1,007.8

120.3

960.8

95.3

1,187.1

123.6

1,653.1

210.2

Exports

412.3

92

493.5

119.7

568.0

115.1

597.0

105.1

407.3

96

Imports

425.5

141

514.3

120.9

392.8

76.4

590.1

150.2

1,245.7

344.2

Balance

-13.2

-20.8

-

175.2

-

6.9

-

-838.3

-

= 100

Jan.-Sept. 2013 = 100

INVESTMENT According to data from the National Bank of Poland, Polish direct investment in Kazakhstan was worth USD120.7 million at the end of 2013. And according to Kazakh data for the end of the first quarter of 2014, the figure was USD53.3 million. Around 160 Polish-owned businesses are registered in Kazakhstan against 73 in 2004 and only 42 in 2002. The businesses have various forms of ownership.

The oil and gas sector is the most important area of operation for Polish-owned businesses in Kazakhstan. Their activity includes oil and gas exploration and the development of oil and gas deposits. The second most important sector is the pharmaceutical industry. Polish firms are also present in the power sector, rail infrastructure sector, construction, building materials sector, machinery and transport equipment industry, and in the sectors dealing with the production of plastic pipes and household chemicals.

In turn, Kazakh direct investment in Poland was worth USD26.5 million at the end of 2013, according to the National Bank of Poland, and USD0.9million at the end of the first quarter of 2014, according to Kazakh sources. Among the sectors in which Kazakh businesses invest in Poland are production lines for the food-processing industry.

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CONDITIONS FOR ACCESS TO THE KAZAKH MARKET INTRODUCTION Kazakhstan is valued highly for its investment climate and conditions for conducting economic activity. According to the World Bank’s latest report “Doing Business 2013,” Kazakhstan ranks 49th in the world in this respect and is regarded as a very attractive investment location. In the previous edition of the World Bank survey, Kazakhstan was in 47th place.

In order to increase the inflow of foreign investment, the Kazakh authorities adopted in June 2014 new regulations designed to encourage foreign entities to invest in the country. Under these regulations, the following preferential treatment solutions are offered for new investment projects carried out in Kazakhstan (the kind of preferential treatment offered to an investor is described in detail in the investment contract the investor signs with the Investment Committee at Kazakhstan’s Ministry of Investment and Development): • exemption from corporate income tax for up to 10 years; • exemption from land tax for up to 10 years; • exemption from property tax for up to eight years since the date when the object of investment, like for example a manufacturing site, was put into use. This regulation applies exclusively to real estate which has been put into use for the first time; • refunds for up to 30% of the costs incurred to carry out construction and finishing works, and to buy equipment after the plant has been fully put into use on the basis of documents confirming the expenditure; • exemption from the duty to obtain work permits for employees of an organization supervising the implementation of an investment project and for its subcontractors in the area of research and design, engineering services and construction works (the exemption is available for up to one year since the moment of the project’s completion; the list of occupations and the number of foreign workers is specified in detail in the investment contract); • stability of the rules governing the above tax exemptions and of the right to employ foreign workers without the need to apply for work permits; • “one-stop-shop” service offered to investors by the Investment Committee (the investor submits an application completed with appropriate documents and negotiates terms of the investment contract on its basis); • simplified procedure for the purchase of sites for investment projects; • support from the Investment Committee in securing guarantees for the implementation of orders by state-owned firms; • exemption from customs duties on the import to the Republic of Kazakhstan of machines and spare parts for the time when the investment project is implemented.

THE ABOVE PREFERENTIAL TREATMENT MAY BE GIVEN IF THE FOLLOWING CONDITIONS ARE MET: •

• • • • •

the investment project is carried out by a newly established legal entity. This status is held by organizations which have been registered not earlier than one year before the date when the application for preferential treatment was submitted, whose scope of their activity is consistent with the list of priority activities defined for the implementation of the project and the project is carried out under a single investment contract. The list of priority activities is specified by the government and it is possible to make changes to it only once a year. The gambling sector, the extraction of mineral raw materials or the production of excise goods – with the exception of motor vehicles with an engine displacement of over 3,000 cubic centimetres, excluding buses, microbuses and trolleybuses must not be included in the list; the investor sets aside no less than around USD20 million for the investment project; the newly established legal entity is not going to conduct activity in special economic zones, is not a joint-stock company with a stake held by the state nor an autonomous educational organization; Kazakhstan’s national budget is not a direct source of financing for the investment project or security for its financing; the investment activity is not carried out under a concession agreement; the activity is not subsidized by the government of Kazakhstan.

Additionally, in order to make it easier for entrepreneurs to visit Kazakhstan, on July 15, 2014 the Kazakh authorities temporarily removed visa requirements for at least one year for the nationals of 10 countries - the largest foreign investors in Kazakhstan: the United States, the Netherlands, United Kingdom, France, Germany, Italy, United Arab Emirates, Malaysia, South Korea and Japan. The solution applies to holders of all types of passports issued by these countries. The nationals of these countries have the right to enter Kazakhstan and stay there for up to 15 days from the moment they crossed the border, irrespective of the purpose of their visit. Polish nationals going to Kazakhstan, apart from holders of diplomatic passports, need to have an appropriate visa, regardless of the purpose of their visit.

Kazakhstan has also established the institution of investment ombudsman appointed by the government. The main task of the ombudsman is to help investors and protect their rights in the country.

Generally, the economic policy which the country now pursues is aimed at attracting foreign investors and raising the volume of domestic production so as to replace imported products with goods made in Kazakhstan.

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PROSPECTIVE DIRECTIONS OF ECONOMIC COOPERATION Among the economic sectors which offer prospects for further trade and investment cooperation between Polish and Kazakh businesses is, in particular, the building industry (including infrastructure projects), construction of petrochemical facilities, municipal services, pharmaceutical industry and medical services, agriculture and agri-food processing, manufacture of mining machines and equipment, environmental protection technologies, logistics and transport services, defence industry and chemical industry. We also see prospects for the development of our cooperation in the IT sector and in the delivery of modern machines and energy-efficient equipment.

SUPPORT FOR POLISH EXPORTS AND PROMOTIONAL ACTIVITIES Because of the importance of the Kazakh market and the need to support interests of Polish businesses in Kazakhstan, the Polish-Kazakh Intergovernmental Commission for Economic Cooperation was set up under an agreement between the government of Poland and the government of Kazakhstan. The Commission is responsible for assessing the state of cooperation in individual areas, proposing new initiatives aimed at developing bilateral cooperation and proposing ways to solve problems in bilateral relations. Five meetings of the Commission have been held so far. The last one, chaired by Poland’s Deputy Prime Minister and Minister of the Economy Janusz Piechociński and Kazakhstan’s First Deputy Minister for Foreign Affairs Rapil Zhoshybayev, was held in Astana on November 21, 2014.

Kazakhstan occupies an important place in the Polish system of economic promotion because of the country’s development trends and potential for the development of economic cooperation. Kazakhstan has been chosen as one of Poland’s seven prospective markets, alongside Algeria, Brazil, Canada, Mexico, Turkey and the United Arab Emirates, markets where a comprehensive programme of general promotion is carried out in 2014 and 2015. As part of the programme, Poland supports cooperation between Polish businesses and Kazakh partners in the most promising areas, which include the agri-food sector, agricultural technology and food-processing machines, mining machines, powergeneration equipment, environmental technologies, pharmaceutical industry and medical equipment, cosmetics industry and furniture industry.

Additionally, three sectoral promotion programmes are conducted in Kazakhstan – a programme for the promotion of the building industry, the machinery and mining equipment industry, and the defence industry. Some promotional activities supporting exports are partially financed by the state. More information about these programmes and support instruments is available from the Exports Promotion Portal (www.exporter.gov.pl).

Offices of Province Marshals can also grant financial assistance for promotional activities in Kazakhstan as part of regional operational programmes. For detailed information see: www.mrr.gov.pl and the websites of marshals’ offices in individual provinces.

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POLISH ECONOMIC AND TRADE MISSIONS IN KAZAKHSTAN Department of Trade and Investment Promotion Embassy of the Republic of Poland Head of the Department, First Counsellor Andrzej Stefański 050059 Almaty, Republic of Kazakhstan 72. Zatayevicha Street tel.: (+7727) 264 79 11 fax: (+7727) 263 44 27 e-mail: almaty@trade.gov.pl www.almaty.trade.gov.pl Economic Department Embassy of the Republic of Poland 15 Sary Arka Street, Isker Business Centre 01000 Astana, Republic of Kazakhstan tel.: (+7717) 294 44 03 fax: (+7127) 294 44 01 e-mail: astana.amb.sekretariat@msz.gov.pl www.astana.polemb.net Compiled by the Department of Promotion and Bilateral Cooperation at the Ministry of the Economy, November 2014

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KAZAKHSTAN –

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T

he production and service activities of KGHM ZANAM focus mainly on meeting the requirements of the end users of machines and appliances and on ensuring the smooth operation of the production infrastructure of KGHM Polska Miedź S.A., which is a 100-percent shareholder in KGHM ZANAM. The current macroeconomic conditions have led many companies to seek business opportunities on foreign markets; KGHM ZANAM launched serious operations in this area a few years ago, incorporating expansion on foreign markets, focusing in particular on Central Asia, in its development strategy.

Why Kazakhstan? As Leszek Stojke, President of KGHM ZANAM, told us, “The Republic of Kazakhstan has been an attractive business partner for us for a good few years. Its growth potential has been recognised at the government level and many Polish companies are successfully building up their potential there. Kazakhstan also abounds in rich, natural deposits of copper, zinc, lead, uranium, silver and gold, and the mining corporations present there rank among the world’s largest. We perceive that country as an opportunity for our products, as they can perfectly address the needs of corporations in the sector of the underground excavation of hard rocks”.

What the current Management Board of KGHM ZANAM is doing now constitutes a follow-up to and an intensification of actions started a few years ago by Jacek Kardela, today Vice

economic mission which has clarified potential cooperation opportunities for KGHM ZANAM. “We are also sparing no efforts to foster our relations with the Republic of Kazakhstan here in Poland – the frequent meetings with H. E. Ambassador Yerik Utembayev and the cooperation with the Ministry of the Economy have created a chance for us to translate our exemplary relations at the government level into effective business coopera• tion”, added Leszek Stojke.

THE REPUBLIC OF KAZAKHSTAN HAS BEEN AN ATTRACTIVE business PARTNER FOR US FOR A GOOD FEW YEARS.

A NEW DIRECTION IN THE DEVELOPMENT OF KGHM ZANAM President of KGHM Polska Miedź S.A. These mainly involve meetings and talks, in addition to an active engagement with non-governmental organisations which promote business presence on the markets of Central Asia.

The recent months have brought about intensive work aimed at facilitating KGHM ZANAM’s entrance onto the Kazakhstan market. Especially worth mentioning here is the company’s participation in the Mining World Central Asia exhibition, the talks in Karaganda on the options for launching business in the Sary-Arka Special Economic Zone, and, last but not least, the

KGHM ZANAM Sp. z o.o. is the largest member of the KGHM Polska Miedź S.A. capital group.

It manufactures mining machinery and equipment, and provides services to mines, copper works and ore enrichment plants.

The company employs currently over 2,500 people.

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M28 STOL TURBO-PROP

A I RC R A F T M28 is operating from the islands of Indonesia, to the jungles of Venezuela, to the Himalayan mountains of Nepal.

P

ZL Mielec has a proud heritage of 75 years of aviation production in Mielec, Poland. The facility has produced over 18,000 aircraft from civil turbo-prop products to jet powered military products. In 2007, the facility was acquired by United Technologies, and after a multi-million dollar investment program, the factory has returned to world-class standards. Working together with Sikorsky Aircraft Corporation, we are now producing the Sikorsky S-70i BLACK HAWK, the M28 fixed-wing aircraft, as well as numerous aerostructures for major Tier 1 and Tier 2 suppliers.

The M28 aircraft offers a lot of excellent characteristics like Short Take-Off and Landing (“STOL”), the largest payload capacity in its class, operationality from any type of runway, easy conversion from one configuration to another, and a rear clamshell cargo door openable in flight. The fully configurable cabin area can be adapted to meet a number of mission profiles, including cargo/passenger transport, VIP transport, border patrol, as well as search and rescue operations.

The aircraft is operated by customers worldwide, including extreme environments of the Greenland, the Baltic Sea, the Himalayan mountains, the South American tropical rain forests, and the Southeast Asian jungle islands. Major fleet customers include the Polish Ministry of Defense, which utilize the militarized M28B “Bryza” for naval, air force, and border guard applications, and the United States Air Force, which operate a modified C-145A for special operations.

The M28 STOL aircraft is equipped with two Pratt & Whitney Canada PT6A-65B turboprop engines, a suite of avionics including the Bendix King Gold Series (made by Honeywell),

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digital map display, standard VHF radios (2 each), VOR/ILS/ GPS, MKR, DME, autopilot, ELT and the latest safety features such as TCAS II, EGPWS Mk VI, Cockpit Voice Recorder, and the SSFDR Flight Data Recorder. With its large, easily reconfigurable cabin, rear cargo door, rugged design and strong heritage, M28 is a true multi-purpose, short take-off and landing airplane, which has been adapted to operate from paved and unimproved austere runways, high elevation airfields, and in a variety of weather conditions.

The European Aviation Safety Agency (EASA) and the Federal Aviation Administration (FAA) in the US have certified the M28® fixed-wing aircraft for flight in known icing conditions.

Depending on the equipment installed, the airplane can be operated in various mission versions: - passenger transport - 19 seats or 18 and lavatory, underfuselage pod, - cargo transport -2300 kg payload, - passenger/cargo transport mix - paradrop - 17 paratroopers, with equipment providing for parachuting operations - ambulance /medevac - 6 stretchers, 8 seats (for passenger lighter injuries), 3 medical attendant’s seats, and observers’ seat - search and rescue - w/Searchlight, Radar, Chelton system , FLIR - patrol/ reconnaissance - w/special equipment: Patrol Radar, FLIR, Scaner IR/V •

SANTO MEMBER OF POLPHARMA GROUP INVESTMENT PROJECT

New Ampoule & Infusion Production Facility

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special edition

S

anto Member of Polpharma Group is the leader of the pharmaceutical market of Kazakhstan. The history of the plant counts over 130 years and is closely bound with that history of the Shymkent city. Since 1993, the enterprise is called Chimpharm JSC. In 2003, a new brand name of Santo was registered reflecting the successful story of a company starting with Santonin, its very first product made from the local herb. Santonin was highly demanded across many countries in Europe and in Japan. Even in our days, the wormwood herb features on the coat of arms of Shymkent city as a symbol of old manufacturing tradition of the region.

As of September 2011 Santo is a part of Polpharma Group whose investment project in Kazakhstan is a top priority among all international businesses of the Group. The main purpose of the investment project is to modernize the operations in line with GMP quality standards. The project is closely connected with constantly growing demand of Kazakhstan’s healthcare system for high quality and affordable medicines. Modernization is represented by a series of the investment projects intended to put the enterprise into the high technological production track to explore business opportunities in Eurasian Economic Union countries.

Polpharma is a leader of the Polish pharmaceutical market and an international pharmaceutical group active in the markets of Central-Eastern Europe, Caucasus, Mongolia and Central Asia. The group consists of five manufacturing plants and a trade office in Poland, the Russian company «Akrikhin» and the leading local manufacturer in Kazakhstan “Santo Member of Polpharma Group”.

Since 2011, the company pursues a large- scale investment project aimed at modernization of existing plants and construction of new industrial facilities according to the standards of Good Manufacturing Practice (GMP). The total investments of the company have already exceeded USD 100 million.

Joining Polpharma international pharmaceutical group allowed Santo to get access to innovative technologies of pharmaceutical manufacturing in accordance with international quality standards of GMP, as well as to gain valuable international experience in pharmaceutical business. Such an investment project being successfully implemented in South Kazakhstan is the best example of an innovative technologies’ transfer giving the company wide development opportunities and competitiveness growth. Polpharma’s investor activities have got the highest appreciation of state authorities in the Republic of Kazakhstan. In November 2013 Polpharma Group was awarded for the «Best Investment Activity». The Minister of Industry and New Technologies Asset Isekeshev personally delivered this award established by “Kaznex Invest”.

In December 2013, a new department for production of ampoule forms and infusion solutions equipped with start-of-art production facilities was proudly presented to the President of Kazakhstan, Nursultan Nazarbayev. The company has been recognized as the best manufacturer of consumer goods in the ceremony of “Altyn Sapa” Presidential Award. In the Plenary Session of the Foreign Investors Council on 12 June 2014 the President of the Republic of Kazakhstan, Nursultan Nazarbayev, introduced Jerzy Starak, the President of the supervisory board of “Polpharma”, as a new member of the Council. This is the only pharmaceutical and Polish company to receive the great honor to become a member of the organization which unites the most prominent

Mr Jerzy Starak meets with the President of the Republic of Kazakhstan Nursultan Nazarbayev during the Foreign Investors’ Council. Astana, June 2014

POLPHARMA’S INVESTOR ACTIVITIES HAVE GOT THE HIGHEST APPRECIATION OF STATE AUTHORITIES IN THE REPUBLIC OF Kazakhstan.

and sustainable partners of the Kazakh government in the field of long-term and large-scale investments into economic development.

Currently the company is the largest national manufacturer of drugs with a stable market share of about 45%. By now the company has three GMP certificates for powder antibiotics production (since November 2012), for the existing ampule production (since June 2013) and for a new modern production department (since December 2014) which has 350 mln of ampules and 4 mln of infusion packages and vials of production capacity. The new production department has increased the capacity of the existing plant by 40 percent! Moreover, all is ready to production of unique product in the Republic of Kazakhstan - infusion in packets and vials - in the new workshop.

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Mr Jerzy Starak explores the mockup of Santo Member of Polpharma Group together with the Company’s Management. Shymkent, May 2014

Signing of the Memorandum with South Kazakhstan Pharmaceutical Academy

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Today manufacturing facilities of the plant allow to produce up to 1 billion tablets, capsules, granules; 350 million ampoules; 24 million vials of antibiotics; 4 million packages of infusion solutions and 20 million of vials of syrups annually. The enterprise is the leader of pharmaceutical industry of Kazakhstan with a portfolio of more than 300 generic and original products in 12 therapeutic groups for treatment of various diseases. The company employs more than 1300 people. In 2014 the output amounted to KZT 14.1 bln. The company exports products to five countries: Russia, Kyrgyzstan, Tajikistan, Mongolia and Turkmenistan. The volume of exports amounts to KZT 1.1 bln. (7.5%).

Santo is running vast investments not only in these manufacturing facilities modernization but also into education and professional development of its own staff, academics and communities. Meeting the government’s agenda and local pharmaceutical industry’s demand, Santo is deeply engaged in cluster activities in Kazakhstan being eager to create a pharmaceutical cluster in Kazakhstan and explore further opportunities provided by Eurasian Economic Union. Close cooperation with scientists and practitioners of the Nazarbayev University, Medical University of Astana and the Pharmaceutical Academy of South Kazakhstan resulted in educating Kazakh specialists in the area of pharmaceutical industry focused on the GMP standards as well as in providing grants for Kazakh science development. In 2013, the company started scale «Academic program» in the frames of public-private partnership development task given by the President of the Republic of Kazakhstan, Nursultan Nazarbayev, to investors in May 2013.

The objective of the program is training high-qualified staff for modern pharmaceutical industry and education, quality, improvement of scientific employees and students of some leading universities of the country. Memorandums were signed with Center of Life Sciences of Nazarbayev University, Astana Medical University, Southern Kazakhstan Pharmaceutical Academy, Nazarbayev Intellectual School of chemical-biological field in Shymkent. As a result, Kazakh students and scientists received an opportunity to get acquainted with the company’s production facilities and research laboratories in Poland.

The company makes significant investments in modernization and construction of plants and new equipment, as well as in development of Santo staff, which constantly pass advanced trainings locally and in Poland, especially on GMP techniques. About 20 international experts from Europe have already visited Santo to hold trainings in different types of expertise. Around 200 specialists of Chimpharm JSC have been educated under special programs outside Kazakhstan. As a result, high-qualified professionals having knowledge in the field of pharmaceutical manufacture on international level now work in the company.

“This is a source of great honor and pride to me that our company is playing a leading role in the development of globally approvable GMP pharmaceutical facilities in Kazakhstan. The Polpharma Group has invested in Kazakhstan with the ambition, becoming a leading pharmaceutical company in the country of playing an important role in the development of export in the region including Eurasian Economic Union. I am sure that having a committed team of professionals in Santo, it will move us towards the ambitious goal of becoming the most modern, high-capacity sterile liquids production plant, unique in the whole Eurasian region”, says Jerzy Starak.

•

L

LEKAM special edition

ONE OF THE FASTEST GROWING PHARMACEUTICAL COMPANIES IN POLAND

LEKAM L

EKAM Pharmaceutical Company Ltd. is expanding both on the Polish pharmaceutical market and on international markets. LEKAM combines a homogeneous product portfolio, efficient leadership and highly skilled employees, that has allowed the company to quickly gain recognition in the pharmaceutical industry.

Presently LEKAM is one of the fastest growing pharmaceutical companies in Poland. A rapid rate of growth in terms of sales and revenues, combined with the top quality of products offered, has turned LEKAM into a phenomenon on the market. After 13 years of existence we became one of the top 10 companies on the Polish pharmaceutical market (based on IMS Data). LEKAM’s products have been honored with prestigious awards granted by both consumers and the medical community.

Our product portfolio is made up of a carefully selected Over The Counter (OTC) and Prescription Medicines (Rx) as well as Food Supplements (FS), Medical Devices (MD) and Cosmetics (COS). Our products have been on the Polish market from 2000 and have been exported since 2007.

LEKAM has currently a very strong position in many therapeutic fields and sees a rapid growth of production and sales. We have introduced onto the market and have been developing further the following therapeutic areas: • • • • • • • •

Psychiatry Cardiology Pulmonology and Respiratory Medicine Urology Gastroenterology Allergology Surgery Vascular Surgery

• Oncology/Hematology • CNS / Neurology • Endocrinology/Metabolism

The essential feature of LEKAM’s products is their high world-class quality. All of the products meet strict quality requirements set by the European Union. Our production methods hold a GMP certificate (Good Manufacturing Practice), whereas the ingredients for our clinical trials all abide by GLP (Good Laboratory Practice) guidelines and Quality Management Systems ISO 9001:2008 and some products meet all the legal requirements for the CE marking. What is more, the dossier of our all medicinal products has been prepared in CTD format (Common Technical Documentation). All of the above has only one goal – to meet the constantly rising demand for LEKAM products. What is more important, each increase in our production capacity goes hand in hand with the introduction of the most up-to-date technologies.

LEKAM’s production facilities are located in Zakroczym, near Warsaw, the capital of Poland.

The production plant together with the commercial office located in Warsaw make up LEKAM. The plant contains the production lines and laboratories to which the company owes its world-class generic medication. All our medicinal products have been developed by our inhouse R&D department.

Our success is people – their knowledge, experience, talent, creativity and commitment to the company. All of our promotional and informational activities are conducted by a team highly qualified specialists. Presently, LEK-AM employs around 500 people. The company’s employees have always abided by a number of values among which honesty, credibility, trust, quality and ethical behavior are at the forefront. In

the near future we are planning to combine our R&D activities with in-licensing opportunities.

This will allow us to deliver many world-class medicines in a short period of time. In-licensing opportunities will enable us to present patients and the medical community, with a wide selection of new products while still developing them in our own dossier. All of LEKAM’s efforts have only one aim – to supply our clients with the best possible products. We are aware that LEKAM would not have been one of the leaders of the Polish pharmaceutical market if it had not been for the top quality medicines offered at very affordable prices.

Dynamic development on the Polish pharmaceutical market and a significant increase in the range of products offered, sparked our interest in foreign markets. LEKAM is actively developing the markets in the Middle East, Europe, Asia, Africa, the Americas and Australia.

We have Representative Offices and cooperate with many business partners around the world.

The Department of International Markets would like to double our turnover in next years.

•

For more information please contact: Leszek Rymsza Director of International Markets email: leszekrymsza@lekam.pl tel. +48 22 635 80 41 ext. 506 mobile: +48 503 059 414 www.lekam.pl

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KAZAKHSTAN

A COUNTRY OF GREAT OPPORTUNITIES FOR POLISH INVESTORS

Marek Multan, Vice President of Arcus SA, talks to “Polish Market”

What is that the Arcus Group actually does?

The Arcus Group is a holding that brings together companies offering business solutions aimed at cost optimisation. It includes, among others, Arcus SA – one of Poland’s largest providers of office document management systems (copiers, printers, scanners, workflow) and mass correspondence management systems (mail sorters, postal and office equipment). Arcus SA is also the exclusive representative of Kyocera Document Solutions in Poland. The Arcus Group offers services aimed at optimising car fleet management costs. Arcus SA and T-matic Systems SA provide together IT solutions and services related to fleet monitoring (telematics), smart grids and intelligent ICT (information and communication technologies). It is the Arcus Group companies that carried out the largest in Poland implementation of smart meters. The third company making part of the Arcus Group is DocuSoft Sp. z o.o. manufacturing information and document flow systems. Its flagship product is the award-winning Vario.ONE system that allows to store documents in electronic version, thus significantly reducing the use of paper. Another company of the Group is Arcus Systemy Informatyczne, specialising in the integration of ICT solutions and implementation of ERP (enterprise resource planning) systems.

The biggest clients of the Arcus Group are banks, insurers, IT companies, postal and logistics operators and public administration both at central and local level.

PM

KAZAKHSTAN IS DEVELOPING RAPIDLY AND LEARNING quickly.

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How did it happen that the Arcus Group started investing in Kazakhstan?

Sometimes, when the issue of Arcus’s investment in Kazakhstan is raised in my conversations with managers in Poland, my interlocutors can hardly conceal their surprise. For many Polish businesspeople, the borderland between Europe and Asia is still a destination of exotic trips rather than a place to do business.

We are a Polish company with Polish capital and a natural market for us is Poland. However, we are constantly looking for ways to ensure the dynamic development of the whole Group. We operate in the high-tech sector, offering companies and institutions solutions that allow optimal management. We have years of experience in servicing large companies, both Polish and foreign. We work for renowned corporations such as Danone, ArcelorMittal, Volvo, MAN Trucks, Unilever, Benckiser, Skanska, Eiffage, Hertz, Mahle, Siemens, Asics, InterSport, Arval, KGHM, Orlen, Synevo, Roche, Nordea, mBank, Millenium Bank; for publishers of the opinion-making newspapers such as “Rzeczpospolita,” “Dziennik Gazeta Prawna;” for central government bodies, local self-governments and hundreds of large and small and medium-sized businesses.

Before making the investment decision, we researched a number of neighbouring markets. We considered Kazakhstan to be the most promising, although not free from certain systemic drawbacks.

However, the extraordinary will and determination of the Kazakh people, both public authorities and society, to pursue the country’s development and modernisation aroused our respect and trust.

PM

special edition

Is Kazakhstan a good place to invest in?

Kazakhstan offers unique business opportunities for Polish entrepreneurs. Our nations benefit from a special relationship that draws upon historical experience. In the past, which was not always easy, the Poles and the Kazakhs were somehow forced to work together as hundreds of thousands of Poles were deported to Kazakhstan. Had it not been for the support and help of the local population, they would not have been able to survive in completely unknown and difficult conditions. At the same time, the Poles proved to be loyal partners, honestly performing their obligations. These years of mutual assistance and common affliction are what makes today’s relations between our countries exceptional and results in the Kazakhs having a lot of liking for the Poles. We are not anonymous for them and they have a vast knowledge of Polish customs and Polish culture. This is largely thanks to the local Polish community. According to various estimates, approx. 50,000 people of Polish descent live in Kazakhstan currently.

In many areas, we have a similar mentality and values, for example as regards family. We understand some of the nuances of the former Eastern bloc countries. A lot of Poles can still speak the Russian language and therefore are able to communicate with local partners more easily than entrepreneurs from other linguistic zones.

PM

Is it a promising market?

Kazakhstan has embarked on the path of a rapid and sustained economic growth. It can be said that today’s Kazakh economy is as dynamic as the Chinese one was a few years ago. The country is under transition from an economy based mainly on the extraction of natural resources into a value-added one. Therefore, you can observe a strong trend towards modernisation in Kazakhstan. Both

entrepreneurs and the government perfectly realise that the key to economic success is high competitiveness and innovation. That is why, Arcus’s solutions, which help optimise business and pay less for corporate services, meet here with great interest.

What does the Arcus Group offer on the Kazakh market?

Our subsidiary Arcus Kazachstan primarily offers correspondence management services (including specialised equipment, such as sorters, address printers, inserters), modern telematics solutions (car fleet and machine park management), media metering and workflow systems (Kyocera printers and copiers with a comprehensive management system of distributed structures). It is probable that ERP solutions offered by Arcus Systemy Informatyczne will be provided by our Kazakh subsidiary too.

In Kazakhstan, there is a huge demand for modern IT solutions offered by Arcus. For local selfgovernment bodies, as well as larger and smaller companies, improving efficiency and quality, as well as reducing costs (in the case of printing and workflow up to 30 percent) is an exciting prospect.

Also, a possibility to have a tight control over a machine park and a car fleet is interesting. Our offer for the Kazakh market was made to meet the local needs and we are currently holding advanced talks with major companies, the government and local self-governments.

a model of cooperation will be the most beneficial for all stakeholders. It makes it easier for us to get adapted to the specific nature of the Kazakh market, while our partners in Kazakhstan gain access to global know-how and the latest technological solutions offered by the Arcus Group.

PM

PM

Does the Arcus Group cooperate with local partners in Kazakhstan?

The best option for us seems to be to transfer know-how to Kazakhstan and to implement it based on local staff. We are in the process of negotiating contracts with potential business partners. We want local contractors to participate in executing contracts, because we believe that such PM

What is the experience of the Arcus Group in business cooperation with Kazakhstan?

What we envy the Kazakhs is their huge enthusiasm, determination and desire for knowledge.

Such feelings prevailed in Poland in the 1990s, but they have clearly dimmed ever since and we lack that spark.

Kazakhstan is developing rapidly and learning quickly. There are also some things that we, as a country, can learn from the Kazakhs. One of them is certainly the ability to plan long-term development. The state authorities have properly assessed their strengths and use the full range of natural resources and the mining potential of the country.

At the same time, they strongly rely on human resources and technologies. The 2030 and 2050 development plans are ready, which points to a longterm vision of modernisation management, while also facilitating planning for foreign investors.

Turning the eyes of the world to Kazakhstan is not only the result of a rapid GDP growth. Businesspeople and politicians realise that the country connects Europe to Asia and it can be a gateway to cooperation with countries such as Pakistan, Iran and China.

The world does already today appreciate Kazakhstan’s potential – the potential to be admired in all its glory during the Expo 2017 in Astana.

• PM

ARCUS S.A.

ARCUS Kazachstan

Товарищество с ограниченной ответственностью

ul. Kolejowa 5/7,

Pr. Abylay Khana 49/3, kv. 74

«Arcus Kazachstan (Аркус Казахстан)»

01-217 Warszawa, Polska

010000 Astana

Казахстан, г. Астана, район Алматы,

tel.: (+48 22) 536 08 00,

Jerzy Walenda

Проспект Абылай Хана, дом 49/3, кв. 74

(+48 22) 536 09 00

Dyrektor Generalny

Почтовый индекс 010000

fax: (+48 22) 831 70 43

tel.: +77012124941

Ежи ВАЛЕНДА

e-mail: handlowy@arcus.pl

e- mail: jerzy.walenda@arcus.pl

Директор Генеральный ,

www.arcus.pl

Тел. +77012124941 Е-маил. : Jerzy.walenda@arcus.pl

December 2014 polish market

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HOW TO SAFELY AND EFFECTIVELY ENTER INTO CONTRACTS WITH BUSINESS PARTNERS FROM

KAZAKHSTAN

Kazakhstan is a country of many opportunities, with a market that still has room for development, and is an attractive option for new investors. Many of them, including from Poland, have been for a long time and systematically strengthening their position in Kazakhstan, seeking in this country new prospects for boosting their businesses. As there is no shortage of those willing to venture out onto that market, it is worth knowing what to focus on when entering into contracts with partners from Kazakhstan.

34  polish marketspecial edition  2014

special edition

Alexander Voronin, lawyer from the Kazakh branch of the Chałas & Partners Law Firm The author specialises in corporate law, contractual law, labour law and tax law. He speaks Russian, Polish and English.

F

irst, a few words should be said about international contracts which govern parties’ mutual concessions and establish their rights and obligations. One aims at guaranteeing the delivery of a product, the other at the receipt of remuneration for the said product.

While contracts may have any form, there are certain generally accepted standards that determine their structure and content.

Before being concluded, each contract is the subject of negotiations during which parties try to reach a consensus as to its terms and conditions. Cooperation should be preceded by “mini Due Diligence”, i.e. carrying out research into the counterparty and the business activity it has been engaged in. The most common form of business in Kazakhstan is the “limited liability company” (the equivalent of the Polish “sp. z o.o.”).

The recommended move at an early stage of cooperation is to request from the counterparty some documents to check its legal capacity and verify its solvency. These include:

• an extract from the commercial register, • company incorporation documents: the memorandum and the articles of association, • the right to sign the contract, • financial statements for the most recent financial year.

One should also take note of how long the partner’s company has operated and of its market experience. That is because Kazakhstan has recently seen a number of “one-day” businesses which, once gaining their business partners’ trust, acquire goods on trade credit terms and then disappear. Therefore, caution is advised – you should only engage with companies that run a registered business in Kazakhstan, and have the required experience and market record. All this can be checked by browsing through projects that the potential counterparty has completed so far. And when the contract is ready for signing, please keep in mind that it will be concluded between parties from two different countries, so the risk of construal discrepancies might emerge. These usually concern the country of origin of a party, the registration details, and the right to represent the parties and sign the contract.

The legal basis for representing a business partner and signing a contract arises from the articles of association and the resolution of the partner’s executive body appointing a representative or granting a power of attorney. The articles of association of a Kazakh partner must be carefully examined, including whether they require a separate resolution of the shareholders or whether the contract must be approved and signed by several people.

The latter applies if the executive body consists of more than one

person, though in nine out of ten cases this will be a single-person entity. It will also not hurt to get acquainted with the resolution establishing the executive body to verify various funcions of the person(s) in charge of the body and to check its term, which may not exceed five years.

THE POWER OF ATTORNEY Another essential document is the power of attorney, which should specify the personal details of the authorised person, with the rights and obligations granted to him or her, signed by authorised person(s) and affixed with the mandatory authentication of the seal.

According to the law of Kazakhstan, a power of attorney without a specified time limit is valid for one year from the date of its being granted; on the other hand, it will always be valid for the maximum period of three years, irrespective of its declared date of expiry.

THE LANGUAGE OF THE CONTRACT Even though the legislator requires that contracts be drafted in Kazakh or Russian, other languages are allowed in the case of international contracts. The general rule for bilingual contracts is that the Kazakh or Russian version must be accompanied by its counterpart in the partner’s language. Should this form be not observed for whatever reason, a number of administrative and legal difficulties might emerge, e.g. the bank might refuse to confirm a payment in a transaction because it does not know the language used in the contract and is unable to verify the payment.

This basically applies to contacts with every state authority, exposing parties to unnecessary delays in implementing the contract provisions and, in consequence, generating extra costs for them. The parties should further agree on which language version will take priority in the event of text discrepancies.

This article is a sort of a brief manual aimed at showing how businesspersons can safeguard themselves, on their own and at a basic level, against the risk of losing their assets. The best solution, however, especially for more complex contracts, is to turn to a law firm which will provide you with expert assistance in • solving any problems that might crop up.

www.chwp.pl T +48 22 438 45 45 (Poland) T +7 727 244 04 60 (Kazakhstan) chwp@chwp.pl almaty@chwp.kz

December 2014 polish market

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BOILERS AND HEATERS FIRED WITH STRAW AND OTHER BIOMASS FUEL

WWW.METALERG.PL Metalerg Sp. z o.o. Sp. K. ul. Portowa 1a 55-200 Oława tel. +48 71 72 15 200 fax +48 71 313 49 90 metalerg@metalerg.pl

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