FOUNDATION FOR EXPORT OF KAZAKHSTAN ANNUAL REPORT 2018 01 Economic competence of the State is composed of many factors with one of the most important – the products export to the other countries. Support of the export potential is the foundation of successful development of the Kazakhstan economy. Three rectangles put in the graphic symbol of the logo of KazakhExport symbolize the keystones of that foundation – the guarantee of the State, stability and integrity of the export support system. Contents Key Events in 2018 • ..............................................................................• 2 • Message of the Chairman of the Board of Directors • ....................• 4 • Message of the Chairman of the Management Board • .................• 6 • 1. About KazakhExport • ........................................................................• 8 • 2. Development strategy • ...................................................................• 17 • 3. Operating results • .............................................................................• 22 • 4. Financial results • ...............................................................................• 38 • 5. Procurement practice • .....................................................................• 40 • 6. Primary goals and tasks in 2019 • ..................................................• 42 • 7. Corporate governance • ...................................................................• 44 • 8. Risk management • ...........................................................................• 56 • 9. Human resources policy • .................................................................• 60 • 10. Social responsibility policy • ...........................................................• 63 • 11. Charity and sponsorship • ...............................................................• 64 • 12. Financial statements • .....................................................................• 65 • Relocation to Astana City Establishment of a representative office in Almaty City KEY Reissuance of license No.2.1.55 dated 21 May, EVENTS 2018 to the right to carry in 2018 out insurance (reinsurance) activity in “general insurance” industry Making amendments Putting into experimental to Resolution of the operation of the single Management Board of information platform Digital the National Bank of the Baiterek Republic of Kazakhstan No.170 “On fixing Entry of KazakhExport statutory values and to the Board methods to calculate of representatives of prudential standards and the Insurance ombudsmen other binding rules and under the new requirements limits of the amount of of the legislation concerning capital of a bank at a insurance activity particular date and the Signing the Memorandum Rules for calculating and of cooperation with the limits of the net foreign Azerbaijan export and exchange position” dated investment encouragement 13 September, 2017 fund – AZPROMO concerning attribution of an agreement of voluntary loan insurance to the hard type of pledge 2 Signing the Memorandum of understanding and cooperation and the Joint Signing a reinsurance Plan of Actions between agreement between the Ministry of Foreign KazakhExport and the Russian Affairs, the National export credits and investments Chamber of Entrepreneurs insurance agency “EXIAR” under of the RK “Atameken” the XIII International Conference and KazakhExport for the “Eurasian Economic Integration” purposes of strengthening of interaction, concurrence Signing the Agreement for and coordination of implementation of joint projects actions between the with Belgazprombank OJSC parties regarding under which the instrument promotion of the provided for financing trade Kazakhstan goods, works projects between the residents and services export in of the Republic of Kazakhstan the near and far foreign and the Republic of Belarus, countries which is absolutely new instrument for the Belarusian Affirmation of the financial market strength rating assigned by Moody’s at the level Baa3/stable In accordance with the State of the Nation Address by the President of the Republic of Opening representative Kazakhstan dated 5 October, offices in the cities 2018, the funds to support of Kazan and Xi’an KazakhExport are provided for within the limits of 500 billion tenge for support of the processing industry and non- resource export Participation in the international exhibition of imported products (China International Import Expo), which is the first in the PRC’s history 3 Ключевые события 2018 года • Обращение Председателя Совета директоров • Обращение Председателя Правления • 1. О компании KazakhExport • 2. Стратегия развития • 3. Операционные результаты деятельности • 4. Финансовые результаты деятельности • 5. Практика закупок • 6. Основные цели и задачи на 2019 год • 7. Корпоративное управление • 8. Управление рисками • 9. Кадровая политика • 10. Политика в области социальной ответственности • 11. Благотворительность и спонсорство • 12. Финансовая отчетность • • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements • Dear Ladies and Gentlemen! n fulfilment of the State of and opportunity to take competitive positive dynamics. At the end of Ithe Nation Address by the niche in the world trade will allow 2018, the volume of non-primary First President of the Republic ensuring stable development of the goods, works and services exports of Kazakhstan – Yelbassy – country on a long-term horizon. amounted to $22.9 billion. The Nursultan Nazarbayev: “Third outrunning growth is recorded in Modernization of Kazakhstan: In August 2017, the Program such industries as wood-working Global Competiveness” dated “National Export Strategy of the industry – by 62%, chemical 31 January 2017 the government Republic of Kazakhstan” for 2018– industry – by 22%, mechanic has developed the Strategic 2022 was adopted. To determine engineering – by 19.3%, food Development Plan of the Republic success of the Program specific industry – by 7.6%. of Kazakhstan until 2025. The indicator was taken: sesqui- principal goal thereof is to attain fold increase in volume of non- The export geography is expanding. quality and stable economic resource Kazakhstan export by The major markets for Kazakhstan recovery leading to social welfare 2022 as against 2015, as well as processed goods became China, of the Kazakhstan people up to the diversification of sales markets and Russia, the European Union level of the OECD countries. export of goods and services. countries, Uzbekistan, Turkey, Japan, Kyrgyzstan, UAE, and Afghanistan One of the systemic reforms In this regard the key role is assigned which account for about 75% of the furthering achievement of the target to “Export Insurance Company total export. goal is activation of the private “KazakhExport” JSC established in sector owing to development of accordance with the best world The basic indicators of foreign trade competitive environment and practices. and export demonstrate stable export potential. Development of growth. As compared to 2017, the the effective strategy considering The interim results of realization of foreign trade turnover of Kazakhstan potential of the domestic economy the National Export Strategy show increased by 20% up to $93.5 billion, 4 Ключевые события 2018 года • Обращение Председателя Совета директоров • Обращение Председателя Правления • 1. О компании KazakhExport • 2. Стратегия развития • 3. Операционные результаты деятельности • 4. Финансовые результаты деятельности • 5. Практика закупок • 6. Основные цели и задачи на 2019 год • 7. Корпоративное управление • 8. Управление рисками • 9. Кадровая политика • 10. Политика в области социальной ответственности • 11. Благотворительность и спонсорство • 12. Финансовая отчетность • export increased by almost 26% and The financial strength rating of the in 2018 of the insurance liabilities approximated to $61 billion. Export Company assigned by Moody’s in the amount exceeding 90 billion of the finished products increased Investors Service agency is affirmed tenge that 2.2 times exceeds the by 16%, or by $485 million. at the level of Baa3, the outlook of level of 2017. the financial strength rating is kept As at 1 January 2019, KazakhExport “stable”. It is important to note that In 2019, KazakhExport will continue supported more than 70 Moody’s rating agency affirms the to work on institutional development Kazakhstan exporting companies Company’s rating at the level of the of the Company through receipt of in all regions of Kazakhstan with sovereign rating of the Republic of the State guarantee for the liabilities 27 of which enjoyed the services Kazakhstan for several years. of KazakhExport and increase in of KazakhExport in 2018 for the equity capital for the purpose of first time. In particular, more than KazakhExport is a full member of ramping up non-resource export. 300 insurance agreements were such international associations as concluded that 1.5 times more “Prague Club of the Berne Union” and Chairman of the Board of Directors, than in 2017. The export contracts “Aman Union”, which include world’s Deputy Prime Minister to the amount exceeding $1 billion