Embassy of India Astana, Tel:(007-7172) 925700-703 Fax:(007-7172) 925717

No.Ast/Com/202/09/2009 October 07, 2009

Economic & Commercial Report for August, 2009

1. GDP Growth Rate:

2004 9.6 2005 9.5 2006 10.6 2007 8.5 2008 3.0

In its monthly report, the Statistics Agency of Kazakhstan reported that GDP in the 1st quarter of 2009 was KZT 3045.9 billion ( USD 20.3 billion approx). GDP decreased by 2.2% in comparison with the same period of 2008. According to the Ministry of Industry, Foreign trade turnover of Kazakhstan in January-July 2009 was USD 36.6 billion. The main trading partners of Kazakhstan were Russia and China amounting to USD 6.6 billion (18.0%) and USD 5.1 billion (14.1%) respectively. Kazakhstan exported primarily minerals (71.4%), metals and metal products (13.7%), chemical products, products of animal and plant origin, foodstuffs (4.6%), machines, equipment, means of transport and devices (1.2%). The main imported products were machines, equipment, means of transport, devices (35.1%), metals and metal products (26.8%), chemical products, rubber and plastic (12.1%), minerals (9.6%), products of animal and plant origin, foodstuffs (8.4%) and wood (3%).

2. Rate of Inflation (Consumer Price Index):

Year %age 2006 8.4 2007 18.8 2008 9.5 January-June, 2009 3.8 July, 2009 0.3 August, 2009 0.2

¾ Year on year inflation till August, 2009 was 6.2 %.

3. Total External Trade of Kazakhstan to CIS and non-CIS countries (In USD for January – July 2009)

2009 January-July (in Share %age of trade mln dollars) External trade turnover 36,614.95 Exports 21,003.40 CIS countries 3,738.28 17.80 Non-CIS countries 17,265.12 82.20 Imports 15,611.55 CIS countries 6,796.95 43.50 Non-CIS countries 8,814.60 56.50

4. Foreign Trade of Kazakhstan (January to July 2009)

Items January- July 2009 (in mln USD) Import 15,611.55 Export 21,003.40 Total Foreign Trade (in USD) 36,614.95 Trade Balance (in USD) (+)5,391.85

5. Total trade and share of 10 major countries:

Country January- July 2009 (in Share %age of total mln USD) trade Russia 6,601.35 18.00 China 5,172.15 14.10 Italy 3,697.32 10.10 Ukraine 2,233.68 6.10 Switzerland 2,214.06 6.00 France 2,038.86 5.60 Germany 1,368.96 3.70 USA 1,127.08 3.10 Great Britain 1,104.682 3.00 Netherlands 1,050.03 2.90

6. Principal ten Export Destinations: (Export in USD for January- July 2009)

Country January- July 2009 (in Share %age of total mln USD) trade Italy 3,137.50 8.56 China 2,822.97 7.70 Switzerland 2,112.00 5.76 Russia 1,816.54 4.96 France 1,800.68 4.91 Netherlands 906.30 2.47 Ukraine 785.23 2.14 Great Britain 735.42 2.00 Uzbekistan 503.05 1.37 Israel 462.26 1.26

7. Principal ten Import Sources of Kazakhstan: (Imports in USD for January-July 2009)

Country January- July 2009 (in Share %age of total mln USD) trade Russia 4,784.81 13.06 China 2,349.17 6.41 Ukraine 1,448.45 3.95 Germany 1,171.10 3.19 USA 865.26 2.36 Italy 559.82 1.52 Great Britain 369.25 1.00 Japan 364.11 0.99 Turkey 289.60 0.79 France 238.20 0.65

8. The principal four export items from Kazakhstan to India for the period of January- July, 2009 (in thousands USD)

Items Thousands USD 1 Iron and plain steel slabs 37,653.30 2 Petrochemicals 24,069.90 3 Leather 12,083,70 4 Asbestos 6,115.20

9. The principal five export items of Import from India to Kazakhstan for the period of January- July,2009 (in thousands USD) Items Thousands USD 1 Pharmaceutical and medical products 23,697.10 2 Tea 19,020.20 3 Electrical equipment and spare parts 8,255.30 4 Industrial machinery, equipment, milling 6, 966.10 machinery and spare 5 Cosmetics and Detergents 2,869.70

10. Kazakhstan’s trade with India for January – July 2009

Overall trade with India has increased from USD 153.91 (from January to July, 2008) to USD 167.40 million (from January to July, 2009) resulting in an increase of 8.76% in total trade. In comparison with period from January to July, 2008, imports from Kazakhstan have increased by 94.68% (from USD 41.21 mln to USD 80.23 mln) whereas India’s exports to Kazakhstan have decreased by 22.65% (from USD 112.70 mln to 87.17 mln).

(In million USD) Particulars 2007 % 2008 % 2009 2008 % 2009 Jan- Change Jan- Change Jan- Jan- Change July Dec. from Dec. July July 2006 India’s 48.10 -19.4 164.04 +241.03 80.23 41.21 94.68 3.26 Imports India’s 147.65 -1.87 203.82 +38.04 87.17 112.70 (-)22.65 10.34 Exports Total 195.75 -6.90 367.86 +87.92 167.40 153.91 8.76 13.60 Trade

11. Major Developments/High level visits:

Speaking at launch of the Zhetygen-Korgas new railway construction project on August 3, 2009 in , President Nazarbayev said that despite the crisis, hundreds of kilometres of railroad and thousands of kilometers of motor roads would be built in the next five years. The construction of Zhetygen-Korgas railway - an alternative route from China to Kazakhstan commenced from August 3, 2009. The length of the railway line would be 293 kms and the construction is expected to be completed in next 45 months.

Kazakh President met the heads of the People's Bank and KazKommertsBank in Almaty on August 4, 2009 and discussed the current state of the country's financial sector. The Head of State noted that he had reports on country’s economic and financial systems for the first six month of this year and believed that people’s confidence in Kazakh Banking System was increasing.

A delegation from USA headed by House of Representatives Minority Leader John Boehner met with Kazakh Prime Minister Karim Masimov on 8 August, 2009 in Astana and discussed cooperation in the oil, gas and energy spheres as well as activities of the joint Kazakh-American Commission on Energy Cooperation. Both sides discussed further development of cooperation between Kazakhstan and the USA on a wide range of collaboration issues. The prime minister briefed the visitors on the measures being taken by the Kazakh government to stabilize the national economy and ensure stability in the banking and financial sectors of the country. The meeting also touched upon ensuring security in the Central Asian region, primarily in fighting drug trafficking. Both sides confirmed the readiness of Kazakhstan and the USA to boost all-round cooperation in all spheres of strategic partnership.

Kazakh President Nursultan Nazarbayev announced in Astana on August 12, 2009 that the state budget for 2010 will be reviewed taking into account the continuing global financial crisis. He added that he did not see any substantial improvement in the situation in the global financial system. He further added that the state budget for 2010 will be reviewed keeping in view the National Fund and Gold and Foreign Currency Reserves of Kazakhstan.

The state-owned Khabar TV reported that Kazakh President Nursultan Nazarbayev had a telephonic conversation with Turkmen President Gurbanguly Berdimuhamedov on August 13, 2009. They discussed development of bilateral economic cooperation. The conversation focused implementation of a number of multilateral strategic projects, construction of a railway line which will link Kazakhstan, Turkmenistan and Iran, construction of the Caspian gas pipeline with participation of Kazakhstan, Russia and Turkmenistan and construction of the gas pipeline along the Turkmenistan-Uzbekistan- Kazakhstan-China route.

The Kazakh Minister of Labour and Social Protection, Gulshara Abdykalikova met with Representatives of the Estonian Ministry of Social Affairs, Local Authorities and NGOs on August 17, 2009 in Astana. During the meeting, both sides exchanged information on experiences of both states in the sphere of pension and social insurance, providing special social services to disabled people, issues of ratifying the Convention on the Rights of Persons with Disabilities and Anti-crisis Measures.

The privately-owned Interfax-Kazakhstan News Agency reported that the Presidents of Kazakhstan and Azerbaijan, Nursultan Nazarbayev and Ilham Aliyev, discussed over phone the current state of and prospects of bilateral relations on August 17, 2009. In particular, they discussed economic cooperation in the spheres of energy, hydrocarbon transportation as well as developing all- round cooperation in the Caspian region. They agreed to continue high-level bilateral contacts including official visits and informal summits. They also discussed the implementation of agreements reached during the talks in Moscow in July 2009 and preparations for the Kazakh President's visit to Baku in October [2009].

Interfax-Kazakhstan News Agency reported that the Kazakh President Nursultan Nazarbayev had a telephonic conversation with Moldovan President Vladimir Voronin on August 17, 2009. They discussed developing bilateral relations, economic, cultural and humanitarian cooperation between the two countries. Moldovan President briefed the Kazakh President about the results of the Moldovan Parliamentary Elections. They also discussed the forthcoming meeting of the Heads of CIS States in Chisinau in October 2009.

At a Government meeting in Astana on August 18, 2009 Kazakh Minister of Economy and Budget Planning, stated that the decline in the rate of economic development has reached its trough in the first 6 months of this year and the trend is towards the phase of recovery. He further informed that GDP had grown by 3 per cent in the second quarter of this year compared with the first quarter. A positive economic growth of 1.4 per cent was observed in June 2009 as compared to June 2008. In all, GDP fell by 2.3 per cent in Kazakhstan in the first half of this year. According to latest official estimates, Kazakhstan's GDP is expected to be 16,865.2bn Tenge (about 112bn dollars) or 1 per cent growth in 2009.

Addressing a Meeting on August 18, 2009 the Chairman of Samruk- Kazyna Welfare Fund, stated that Kazakhstan’s share in procurement of tenders by National Companies accounted for 63 percent which is likely to be increased upto 70 per cent by the end of this year. The Samruk- Kazyna Welfare Fund has already invested over 1 billion dollars for the development of the country’s economy in the last six months. The implementation of 30 big projects for a total sum of over 24bn dollars has already been launched which include eight projects in the energy sector, seven in chemical, four in oil and gas sector and two in the metallurgical sector. He informed that with implementation of these project, 44,000 jobs will be created and another 10,000 people will be employed when the production facilities start functioning.

President Nursultan Nazarbayev who paid a working visit to Akmola Region on 19th August 2009 said that despite the crisis, huge funds are being allocated to agricultural sector since the future of the country’s economy is closely connected with villages. The State has allocated 3.5 billion dollars to the domestic agricultural sector for the year 2009. As a result, seeds were sown in 1.6 million hectares more than that in the last year and production of wheat crop is expected to reach 17m tones.

At a Government meeting on August 19, 2009 Finance Minister informed that Budget revenues during the first half of this year reached 1,701bn tenge (over 11.3bn dollars). Actual local revenues reached 1,909.5bn tenge (over 12.7bn dollars) as against the planned 991.6bn tenge (over 6.6bn dollars). However, the revenues received from processing industry, construction sector, real estate and service sector have decreased. The assets of the National Fund are estimated to stand at 3,998.2bn tenge (26.6bn dollars).

Kazakh Finance Minister Bolat Zhamishev announced on August 25, 2009 that Finance Ministry will issue State-guaranteed bonds worth 15bn tenge (100m dollars) and put them into circulation soon. These bonds name “Maokan” can be purchased by ordinary people in exchange for their money to receive handsome return on their deposits. These bonds carry less profit than bank deposits but will be safer. The face value of the bond is set in tenge and is equal to 10 dollars.

The Kazakh and Uzbek Foreign Ministries held consultations in Astana on August 26, 2009. The Kazakh delegation was led by Deputy Foreign Minister and Uzbek delegation was led by Deputy Foreign Minister Baxtiyor Islomov. Both sides exchanged views on topical issues of bilateral cooperation in political, economic, trade, cultural and humanitarian spheres as well as on ways of further extending strategic partnership between the two countries. Both sides also noted the need to work out well-coordinated and mutually acceptable mechanisms for jointly using water and energy resources of the region.

In a Press briefing on August 26, 2009 the Official Representative of the Kazakh State Agency for Fighting Economic Crimes and Corruption, Murat Zhumanbay informed that the former Chairman of the Board of Directors of the Alyans Bank, Zhomart Yertayev has been arrested on suspicion of misusing 1.1bn dollars. A criminal investigation has been launched against the former head of the Alyans Bank.

Kazakh Prime Minister Karim Masimov and the Special Envoy of the US State Department for Eurasian Energy, Richard Morningstar discussed further collaboration and bilateral cooperation in Astana on August 26, 2009. In particular, they discussed cooperation between the countries in power generation. Richard Morningstar said that the USA has keen interest in the forthcoming Energy Summit which will be attended by Kazakhstan, Russia, Azerbaijan and Turkmenistan. At the end of the meeting, they also confirmed their intention to further strengthening cooperation between Kazakhstan and the USA.

Kazakh Prime Minister Karim Masimov and the Head of Russia's Sberbank [Savings Bank], German Gref discussed issues of bilateral cooperation in Astana on August 27, 2009. They exchanged views on the current situation in the banking sphere and on stepping up the activities of Russia's Sberbank in the Kazakh financial market. They also discussed the current microeconomic situation and scenarios of deepening crisis in the world.

Prime Minister Karim Masimov chaired a scheduled meeting of the Kazakh Government was held on August 27, 2009 and discussed forecasts for socioeconomic development and budget parameters for 2010-14 proposed by the Economy and Budget Planning Ministry.

The State-owned Kazakhstan TV reported on 27 August, 2009 that revenues of the KazakhMys (Kazakh Copper company) decreased by 42 per cent in the first half of this year due to decrease in demand for copper in the world market. The price of one tonne of raw copper was 8,192 dollars in 2008 and now it is 4,024 dollars.

12. Intergovernmental Commission Meetings:

The 7th meeting of the Customs Union Commission took place in Moscow on August 12, 2009. After the meeting, the First Deputy Prime Minister Igor Shuvalov of Russia said that the Customs Union of Belarus, Kazakhstan and Russia has set up a single negotiating team for joining the World Trade Organization. The team consisting of representatives of all three countries, will be led by the Director of the Trade Talks Department of the Economic Development and Trade Ministry of Russia. This team will hold talks on the Customs Union accession to the WTO and also accession of Russia, Belarus and Kazakhstan to the WTO on acceptable terms. The group would be formed by 24 August and will immediately start formal talks with the WTO Secretariat.

13. Energy Sector:

Kazakhstan Newsline reported on August 4, 2009 that the Indian Government has given Oil and Natural Gas Corporation (ONGC) approval to partner with billionaire Lakshmi N Mittal to buy a 25% stake in Kazakhstan's prospective Satpayev oilfield in the Caspian Sea. ONGC Mittal Energy Ltd, the joint venture of ONGC Videsh Ltd and Mittal Investment Sarl, plans to invest US $400 million in the Satpayev oil field. The Cabinet Committee on Economic Affairs gave OVL, the overseas arm of the State-run ONGC, approval to invest its share of US $204 million in the oilfield. KazMunaiGaz (National Oil Company)’s press release announced on August 10, 2009 that after acquiring remaining 58 per cent of the shares in the Pavlodar Petrochemical Plant JSC, the Government has become the 100% owner of one of the most modern Petrochemical Plants in the CIS. An Agreement to this effect has already been signed on August 4, 2009. Before this new deal, the Government owned 42 per cent of the shares in the plant.

The State Statistics Agency reported on August 17, 2009 that the Oil Production in Kazakhstan amounted to 36.46 million tones in January-July 2009 which was 7.4 per cent more in comparison to the same period of 2008. The production of gas condensate amounted to 7.18m tones in January-July 2009 which was 3.7 per cent less in comparison to the same period of 2008. Kazakhstan extracted 20.57bn cu.m. of natural gas during first seven months of 2009 with an increase of 6.2 per cent in comparison to the same period of 2008.

KazMunaiGas has announced on August 12, 2009 that it has delayed the US $3.3 billion sale of the upstream firm MangistauMunaiGas to China National Petroleum Corp. A spokesman of KazMunaiGas said that both sides have agreed to postpone the deal due to some unresolved issues. The purchase of MangistauMunaiGas is as part of a US $10-billion loan for oil deal. MangistauMunaiGas is located in Aktau in Kazakhstan has 812 million tons of residual oil reserves. The deadline for the deal has been extended from July 31 to December 1, 2009.

14. Bilateral commercial visits that took place in August, 2009:

Mr. K.N. Lonkar, Manager (Management & Technical Services) of Hindustan Antibiotics Limited and Mr. Devendra Sharma, Officer (Quality Assurance) of Rajasthan Drugs and Pharmaceuticals Limited visited Kazakhstan from August 6-8, 2009 to discuss the prospects of cooperation in the field of pharmaceuticals. During the visit, they held discussions with the State-owned Samruk-Kazyna Pharmacia, Tore-Chingizid Limited company and representatives of Pharmaceuticals companies and discussed avenues for furthering cooperation in the field of pharmaceuticals.

Mr. Vijay Kumar Gupta, Managing Director of Svarn Group, a leading business group visited Kazakhstan on August 13-17, 2009 to explore business opportunities in the field of telecom and textile sector. During his visit, he met with Kazakh Chamber of Commerce & Industry, K-Cell and Nursat JSC in Almaty and Atameken Union National Economic Chamber in Astana and discussed prospects of furthering cooperation in the field of telecom and textile sector.

M/s A.N.S Trade Fair Private Limited, New Delhi organized a large trade fair ‘Best of India’ Exhibition from August 21-30, 2009 in Almaty in which 35 companies from India displayed their products which included handicrafts, jewellery, wooden furniture, shawls, ladies and readymade garments, kitchenware, pharmaceuticals, cosmetics, home furnishing etc. This exhibition was a grand success. It was well received by a large number of Kazakh businessmen and importers.

15. Calendar of forthcoming events/Trade fairs, exhibitions in Kazakhstan:

A copy of the same is enclosed.

(George Raju) Second Secretary (Commerce)/ Head of Chancery 07.10.2009

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