The state program approved by the decree of Kazakhstan’s president on March 19, 2001 provides a complex of measures to develop Astana. Additional administrative, business, social, cultural as well as science and education centers will be created in the city before 2005.
The volume of construction works is huge: they are covering the territory over 1,000 hectares. To speed up construction and provide incentives for an investment inflow president Nursultan Nazarbayev signed a decree «On establishing the special economic zone: Astana, a new city».
The special economic zone (SEZ) on the left bank of the Ishim river has been in effect since January 1, 2002. The main direction of its production and economic activity is construction of administrative and residential complexes, parts of the capital’s infrastructure. There are special tax regulations in force there. For example, VAT is not imposed on turnovers of those companies, which are engaged in selling goods and arranging work and services for construction projects within the SEZ. Zero interest rate of VAT is applied in cases of selling goods and equipment, which are fully used during construction and commissioning of the parts of the infrastructure, as well as of administrative and residential complexes as provided for by designing estimate documents. There is no land tax on those sites in the SEZ, where they are constructed. There is no property tax on depreciated cost of Astana’s buildings and structures, which are owned by private persons and companies engaged in business activity without forming a legal entity.
The customs arrangements in the SEZ also have some specific features. The duty-free customs regulations cover:
– machinery and equipment to be used in construction works;
– goods fully used during construction works;
– goods and equipment needed for construction works and commissioning of projects as provided for by designing estimate documents of construction companies.
The special economic zone will remain in effect till 2007 within 6 land sections with a total area of 1052.6 hectares. Perimeters of allotted sections are considered boundaries of the SEZ and these sections are provided with special barriers.
Thus, investors and contractors will get real and quite tangible incentives provided, above all, by state support of direct investments in constructing projects in Astana. The general plan of developing the capital is being implemented at accelerated rate. The social infrastructure keeps expanding. There are more opportunities to increase employment: over 3,000 additional jobs will be created during functioning of the SEZ. Need for construction materials and other products of the construction industry is growing. This leads to a considerable demand for goods and services contributing to the growth of the country’s GDP.
The system of tax rebates and preferences provided by the state caused much interest of Kazakh and foreign banks in projects to develop Astana. It is noteworthy that banks are financing not only commercial projects but also construction of roads, bridges, parks, planting of trees. That is projects, which are intended to facilitate life and business in the new capital and make working and living there more acceptable.
Through establishing the SEZ the region’s economy is getting more involved in cooperation with foreign markets. Many advanced technologies of urban development are becoming accessible to Kazakhstan.
    Under the general plan investments in constructing projects and communication networks of Astana will amount to $1.622 billion. The use of this money will surely bring economic results to both the state and investors. The latter are provided with sites for construction in the city’s new center while there is a faster real growth of land capitalization. They also get a guaranteed right to continue their activity on terms effective at the moment of making investments regardless of any changes in the legal regime of the SEZ or its cancellation ahead of schedule.
Since 1997 when the city of Akmola (the former name of Astana) was declared Kazakhstan’s capital, a lot of things have changed not only in the city’s appearance but also in its social and economic life. Over 700,000 square meters of housing have become available. The industrial production has been steadily growing. The foreign trade turnover has increased almost 20 %. The volume of tax payments has gone up more than 4 times.
Thanks to advantageous conditions in Astana a really favorable investment climate has been created. The annual volume of investments in its basic capital has increased 2.9 times. All in all, over $1B have been invested in the city’s economy during these years.