EPZA Value Proposition for BPO and ITES Sector InvestorsPresentation for NASSCOM delegates on 17th Sept 2013,

Venue: Stanley Hotel.

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PRESENTATION OUTLINEPRESENTATION OUTLINE

– Introduction to EPZs– Eligible EPZ activities– Status of Program– EPZ Value Proposition– EPZ service business opportunities– How to invest in service EPZs– How to invest in new ICT zones– EPZA contact

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INTRODUCTION TO EPZSINTRODUCTION TO EPZS

Background:• EPZs established under EPZ Act, CAP 517• Program managed by EPZ Authority, a government

agency under the Ministry of Trade

Scheme intended to:• provide for the promotion and facilitation of export

oriented investment• address infrastructural and institutional constraints to

efficient export-led production

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ELIGIBLE EPZ ACTIVITIESELIGIBLE EPZ ACTIVITIESActivities licensed under EPZ:

Enterprise licences: manufacturing or processing commercial activities – trading, breaking bulk, relabeling, repackaging,

regional distribution centres (no 10-year tax holidays, no domestic sales (EAC)

service – export related e.g. information, repair, brokerage, consultancy services excl. financial services (includes

BPO/ITES

Developer/Operator licence: for development of zone infrastructure

EPZ Business Service permit: for non-EPZ activities within the EPZs

providing support services e.g. banks, catering, freight, consultancy e.t.c

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SHARE OF EPZ INVESTMENT SHARE OF EPZ INVESTMENT BY SOURCE COUNTRY BY SOURCE COUNTRY

Foreign investors from: Bahrain, Belgium, China, Germany, Hong Kong, India, Netherlands, Qatar, Sri Lanka, S. Africa, Taiwan, Tanzania, UK and USA among other countries

Kenyan19.3%

Foreign56.6%

Joint Venture24.1%

EPZ investors

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SHARE OF EPZ ENTERPRISESSHARE OF EPZ ENTERPRISESBY LICENCE BY LICENCE

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SHARE OF ENTERPRISES BY SECTORSHARE OF ENTERPRISES BY SECTOR

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EPZ BUSINESS INVESTMENTEPZ BUSINESS INVESTMENTTARGET SECTORSTARGET SECTORS

EPZ target sectors (1):

Humanitarian Relief Supplies and Services

Electrical/Electronic : Lighting, switchgear, Consumer electronics,

transformers

ICT based services: call centres, BPO/back office

operations

Apparel & textile: fabric, garments, accessories, Cat. 9, sub-contracting

EPZ

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EPZ BUSINESS INVESTMENTEPZ BUSINESS INVESTMENTTARGET SECTORSTARGET SECTORS

EPZ target sectors (2):

Leather products: luggage, footwear, apparel, wallets,

gloves

Agro-processing: food, fruits, fibres e.g. sisal, flowers, fresh produce

Pharmaceutical and Medical Supplies

Regional Corporate HQ and corporate services

EPZ

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WHY INVEST IN Kenya’s EPZS?WHY INVEST IN Kenya’s EPZS?Value PropositionValue Proposition

Benefits of operating in Kenya’s EPZs

a) Improved competitiveness as a result of lower operating costs

b) Increased shareholder value due to increased profitabilityc) Increased efficiency due to hassle-free operationd) Increased employee satisfaction and productivity due to

convenient EPZ locations

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WHY INVEST IN Kenya’s EPZS?WHY INVEST IN Kenya’s EPZS?Value Proposition : Benefits to YouValue Proposition : Benefits to You

(a) Improved competitiveness as a result of lower operating costs

Labor costs guided by minimum government wage rates and statutory deductions (starting at US$ 59/mo plus 15% housing in outlying towns to US$ 112 plus 15% in major cities).

Application fees (non-refundable US $250) License fees (US $1000 for Enterprise licenses, $5000 for

Developer/Operator licenses) Rentals – land (USS 5,000 /ha/yr) & buildings (ranging from US

$2-$3.50/ sqft/yr) Utilities – exclude VAT

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WHY INVEST IN Kenya’s EPZS?WHY INVEST IN Kenya’s EPZS?Value Proposition : Benefits to YouValue Proposition : Benefits to You

b) Increased shareholder value due to increased profitability, resulting from tax exemptions

10-year Corporate Tax holiday and 25% tax rate on profits thereafter (except for commercial activities)

10-year Withholding Tax holiday

Duty and VAT exemption on inputs

Stamp Duty exemption

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WHY INVEST IN Kenya’s EPZS?WHY INVEST IN Kenya’s EPZS?Value Proposition : Benefits to YouValue Proposition : Benefits to You

c) Increased efficiency due to hassle-free operation as a result of reduced bureaucracy & faster project start up: Operation under essentially one license issued by EPZ

Authority No minimum level of investment Rapid project approval (under 30 days approval on

application) One-stop-shop service by EPZA for set-up, facilitation

and aftercare (work permits, labour- relations, port, utilities etc.)

On-site customs documentation and inspection

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VALUE PROPOSITION – VALUE PROPOSITION – Benefits to YouBenefits to You

d) Increased employee satisfaction and productivity due to convenient EPZ locations, with requisite infrastructure, close to housing and social amenities with 24 hour security,

Lease ready factory shells and start immediate operations - rentals range from $2-3.5/sq. ft/year depending on location

Lease serviced land for construction of customized buildings - Athi River EPZ offers 1ha plots for $5,000 land rent annually + service charge or $100,000 stand premium for 50 years

Set up own EPZ on own/leased land - EPZA physical requirements must be met

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EPZ Export-Oriented Opportunities for NASSCOM Investors

Services• Software Applications Development• Customer support services including Call Centers and

mobile phone data based customer care• Back office operations including data entry, accounting

services, document editing, • Data mining, web design and web based research• Shared Service Centers for global ICT companies• Professional Consultancy including in ICT related fields

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EPZ Export Oriented Opportunities for NASSCOM Investors

Services– Data Centers-Animation and computer graphics– ICT related training

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Opportunities for NASSCOM Investors

Real Estate Development (incentives apply)

– Development of ICT compatible real estate • ICT Towers• ICT Office Park Campuses

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HOW TO INVEST IN EPZHOW TO INVEST IN EPZ SERVICE ENTERPRISE SERVICE ENTERPRISE

Investor makes enquiry on area(s) of interest Investor submits a short project proposal On acceptance, investor completes application form

and submits with application fee of US$ 250 EPZA evaluates project and provides investor with

letter of approval in principle within 30 days Investor incorporates EPZ company, locates a zone,

obtains environmental approval if required Pays annual license fee (US$1,000) and gets license Commences operations

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HOW TO INVEST IN EPZHOW TO INVEST IN EPZ SERVICE ENTERPRISE SERVICE ENTERPRISE

Major criteria for EPZ service enterprises Export orientation (over 80% sales outside EAC

partner states) Local sales subject to Ministerial approval and taxes New investment ( not conversion of going

concern)s in Kenya) EPZ location as primary place of business (not shell

companies) 100% foreign shareholding allowed

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HOW TO INVEST IN EPZs -DevelopersHOW TO INVEST IN EPZs -Developers Major requirements for New Zones including ICT towers

and ICT parks Individual land parcels on LR no. (not sectional title) Land tenure > 30 years; Unencumbered title Access roads, power and water supply suited to service-

related activities Limited tenancy by non-EPZs under Business Service

Permits(BSP) EPZA facilitates designation of land as EPZ by Minister for

Industrialization & Enterprise Development Investor pays license fee (US$ 5,000) and gets annual

licence fee and begins operations!

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We invite you to explore the attractive opportunities available

under our EPZ Program.

You can count on us for support!

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HOW TO CONTACT EPZHOW TO CONTACT EPZ AUTHORITYAUTHORITY

Chief ExecutiveExport Processing Zones AuthorityAthi River EPZ, Off Namanga Road

P.O. Box 50563 - 00200 Nairobi, KenyaTel: +254-45-6626421/2/3/4/5/6, Fax: +254-45-6626427

Email: info@epzakenya.com, Website: www.epzakenya.com

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