Role of investments in the economy of Kazakhstan

Table of contents: The Kazakh-American Free University Academic Journal №9 - 2017

Authors:
Dyussembayev Nurlan, Kazakh American Free University, Kazakhstan
Bordiyanu Ilona, Kazakh-American Free University, Kazakhstan

Over 15 years of independence, more than 50 billion US dollars were attracted to the economy of our country. In the early 1990s, the economy of the Republic of Kazakhstan was just getting on its feet and thanks to the soft tax climate created by EUs granted to preferences - investors from such countries as the USA, Russia, China, Canada, India, Italy, Singapore, Azerbaijan, Great Britain , France, the Netherlands, Turkey, Germany, Japan began to invest in many sectors of the economy, and this: the raw materials sector, the agricultural sector, the banking sector, light and heavy industry, chemical industry, manufacturing, construction business s automotive business, the market of cellular communication.

Investment - the cost of money, directed to the reproduction of capital, its maintenance and expansion. In the most general form, investments are investments of free funds in various forms of financial and material wealth. The investment process takes place in any economy as a redistribution of monetary resources from those who have them, to those who need them. Investments are divided into real and financial [1].

Real investments are carried out by the state and private corporations. State investments, as a rule, are directed to low-income or subsidized industries - infrastructure, social sphere. Sources of financing of public investments are taxes, internal and external loans, income from economic activities of state-owned enterprises, and the issuance of new money. Private investments have a large internal potential both at the expense of their own sources (depreciation, retained earnings, etc. and through borrowed sources - loans and securities.

Financial investments (portfolio investments) - investments in shares, bonds and other securities related directly to the title of the owner, giving the right to receive income from property.

Part of portfolio investments - investments in shares of enterprises of various industries of material production.

Portfolio investments are investments made by investing in the purchase of securities by providing their own funds in long-term loans.

Investment management is a specific economic function that is performed by a certain group of economic agents. The wider the process of investing in the state, the greater the role of commercial structures. State institutions also serve as a regulator of the investment process - creating the most favorable conditions that stimulate the investment process in the country.

Investment strategy is the art of managing the development of reproduction, science, culture, health and other spheres of state activity in accordance with the opportunities available to the investment potential. This is a long-term policy in the areas listed above. A special role in the investment strategy belongs to the long-term policy of the state in the technological sphere of the real sector of the economy. This particularly applies to industries where fundamental scientific research forms the basis for improving the quality of products, giving it new consumer values, differentiating products. The investment strategy should actively influence the market in order to generate demand for new generation products [2].

The objectives of the investment strategy:

- study and detection of signs of technological aging of produced (produced) products and search for alternative opportunities for renewal of production;

- determination of the phase change of the demand cycle in the market with a view to reviewing the strategy;

- In an unstable economy, strategic tasks are difficult to solve and require constant attention in the implementation of the basic functions of the investment process

- development and timely correction of strategic directions of investment activity in the country, in the region, in the industry, in the enterprise, in the firm;

- the formation of a system of investment objectives and its main directions for the long-term period with the identification of priority tasks to be solved in the short term

- development of a strategy for the formation of investment resources of the country, region, industry, enterprise, etc .;

- forecasting the overall need for investment resources necessary to implement the developed strategy for individual stages of its implementation, as well as determining the possibilities for forming its own investment resources;

- selection of the most effective investment programs and projects, corresponding investment strategy of the state, region, industry, firm;

- ranking of the selected options according to the criterion corresponding to the purpose of the object (maximum profit, social criterion and ecological-economic);

- development of strategic plans for the implementation of investment plans for the implementation of investment programs and projects, management of the investment process in the country, region, industry, the enterprise.

The Special Economic Zone (SEZ) is a specially designated territory with specific administrative boundaries and a special legal regime created for the purpose of attracting foreign capital, progressive foreign technological and managerial experience for the established social and economic development of the territorial zone.

Creation of EU is aimed at improving the economy of the region and solving important macroeconomic problems: stabilizing production and expanding it, modernizing the economy, and saturating the domestic market with highly skilled goods. Management is created by the Administrative Council from representatives of the republican and local authorities and management of domestic enterprises and organizations registered on the territory of the EU [3].

State investment support measures include investment preferences granted to investors when implementing investment projects by concluding a contract with an authorized body - the Investment Committee of the Ministry of Industry and Trade of the Republic of Kazakhstan.

The provision of investment preferences is regulated by the Law of the Republic of Kazakhstan "On Investments", adopted on January 8, 2015.

This law determines the legal and economic bases for stimulating investment, guarantees the protection of investors' rights when investing in the Republic of Kazakhstan, determines the measures of state support for investments, the procedure for resolving disputes with the participation of investors [4].

Investment preferences are granted to legal entities of the Republic of Kazakhstan created in accordance with the procedure established by the legislation of the Republic of Kazakhstan, including legal entities with foreign participation.

In accordance with the Law of the Republic of Kazakhstan "On Investments" there are 3 types of investment preferences, these are:

1) investment tax preferences;

2) exemption from customs duties;

3) state full-scale grants.

Investment tax preferences include preferences for corporate income tax, property tax and land tax.

There are two forms of preferences for corporate income tax:

1. Acting enterprises implementing investment projects to expand and update existing production facilities - the right to deduct the value of the fixed assets put into operation for a period of 1 to 5 years at the discretion of the investor with an investment of at least $ 181 million to deduct from the total annual income. If the excess This period of granting preferences can be up to 10 years, depending on the volume of investment.

2. New enterprises implementing investment projects in the framework of one (only) type of activity - exemption for income received from investment activities for a period of up to 10 years, also depending on the volume of investment. At the same time, new enterprises are recognized as taxpayers who passed state registration within 12 months prior to the moment of applying for investment preferences.

Preferences for property tax and land tax are granted for a period of 3 to 5 years, depending on the volume of investment.

The date of application of investment tax preferences is determined in the contract between the investor and the Investment Committee.

Exemption from customs duties may be provided upon import of equipment and components to it imported for the implementation of the investment project. Exemption from customs duties is granted for a period of one year with a possible extension of the term, but not more than up to five years from the date of registration of the contract.

The notification on the decision to release a legal entity from the imposition of customs duties is sent by the Investment Committee to the authorized body on customs matters within 5 working days from the date of the conclusion of the contract between the investor and the Investments Committee [5].

State full-time grants are provided in coordination with the relevant state bodies in the sphere of management of state property and land resources for temporary gratuitous use or land use with the subsequent transfer of full-scale grants into ownership, provided that all investment obligations under the contract are fulfilled. This measure implies the transfer of a state full-scale grant after the investor has fulfilled its obligations under the investment project.

Land plots, buildings, structures, machinery and equipment, computers, measuring and control devices and devices (with the exception of passenger cars), production and household equipment can be transferred as state full-scale grants.

The evaluation of state full-scale grants is carried out at their market value in accordance with the procedure established by the legislation of the Republic of Kazakhstan.

The maximum size of a full-time grant can’t be more than 30% of the investment in fixed assets of a legal entity of the Republic of Kazakhstan (the size of the investment project).

In the event that the estimated value of the requested state full-scale grant exceeds the indicated maximum size, a legal entity of the Republic of Kazakhstan is entitled to receive the requested property, paying the difference between its estimated value and the maximum amount of the state full-scale grant.

To make a decision on granting an investor a state full-scale grant (land plot), a written consent of the local akimat is necessary.

In coordination with the akimat, in addition to the willingness to provide land, its cadastral number, area, estimated value is also indicated.

With regard to fixed assets granted to the investor in the form of a state full-scale grant, investment tax preferences are not granted.

In general, when receiving investment preferences, there are no limits on the amount of investment. That is, preferences can be given to any investor regardless of the scale of the project.

Investors are provided with investment preferences provided:

- Investment in fixed assets of a legal entity of the Republic of Kazakhstan to create new, expand and update existing production facilities using modern technologies;

- The conformity of the envisaged investment activity with the list of priority activities;

- And submission of necessary documents in accordance with Article 19 of the Law of the Republic of Kazakhstan "On Investments".

The list of priority activities for which investment preferences are granted is approved by the Decree of the Government of the Republic of Kazakhstan dated May 8, 2003 No. 436 and includes 245 types of activities in accordance with the General Classifier of Economic Activities.

An application for investment preferences is accepted and considered by the Investment Committee of the Ministry of Industry and Trade of the Republic of Kazakhstan within 30 working days after its registration.

The contract comes into force from the day of its registration with the Committee on Investments.

Obligations of investors after the conclusion of the contract

At the conclusion of the contract, the investor undertakes:

1) not to change the declared type of activity;

2) strictly implement the work program for the project;

3) timely submit the necessary reporting to the Investment Committee.

The work program is an appendix to the contract that determines the calendar schedule for the implementation of the investment project. The work program can be amended by agreement of the parties once a year. In case of failure to perform or improper execution of the contract work program, the Investment Committee sends a written notification to the investor specifying the violations and sets a time limit of not more than 3 months for their elimination.

Early termination of the contract:

- Unilaterally, on the initiative of the Investments Committee, in the event of a breach by the investor of contractual obligations (Article 22 of the Law of the Republic of Kazakhstan "On Investments") - a legal entity pays the amount of tax and customs duties not paid as a result of investment preferences granted under the contract, Provided by the legislation of the Republic of Kazakhstan.

- Early termination on the initiative of the investor - a legal entity pays the amount of tax and customs duties not paid as a result of investment preferences granted under the contract, with penalty accrual in the order established by the legislation of the Republic of Kazakhstan.

- Early termination upon agreement of the parties - a legal entity pays the amount of tax and customs duties not paid due to investment preferences granted under the contract.

Property in kind, granted as a state full-scale grant, or its original value as of the date of transfer, is returned within 30 calendar days from the date of the decision by the Investment Committee to terminate the contract ahead of schedule.

In conclusion we can say that any economic activity of an economic entity in a market economy is successful only when new technologies are introduced. The use of modern technology is due to the availability of financial resources. When investing free financial resources in operational, financial and investment activities, on the one hand, there arises the problem of the effectiveness of the use of invested capital, on the other - the problem of identifying free financial resources, their accumulation. The solution of this problem is possible with a careful study of such issues as: what is investment, what is the role of investments in raising the state's economy.

In a market economy, making profits is the driving motive of investment activity. This goal is mediated by the production of specific goods, the provision of services that are recognized in the market without this investment will be useless.

The investment process in the market economy is one of the most interesting and complex objects of research. He is the worst predictable, especially in the phases of crises. In any crisis, it is investments that are the hardest to fall, as they are financed largely by profits and loans and by the direction of future increases in earnings when taking a serious commercial risk.

Investments are necessary to achieve the following objectives:

- increase and expand the scope of activities;

- the inadmissibility of excessive moral and physical deterioration of fixed production assets;

- lowering the cost of production and sales of products;

- increase of the technical level of production on the basis of the introduction of new technology and technology;

- accelerating scientific and technical progress, improving quality and ensuring the competitiveness of domestic products;

- creation of the necessary raw materials base;

- increasing and improving the structure of exports;

- provision of positive structural changes in the economy;

- purchase of securities and investments in assets of other enterprises;

- balanced development of all branches of the national economy;

- solutions to social problems, including unemployment;

- redistribution of property between business entities, etc.

The investment activity in the state is aimed at revitalizing the reproduction process through domestic and external financing. Therefore, the state is pursuing a policy of fully attracting foreign capital for this complex of attractive factors.

In the economy of Kazakhstan, there are various processes that are both positive and negative in their possible consequences. Some individual facts testify to the fact that we periodically have attempts to introduce at the legislative level the notion of the exclusivity of the Kazakh economy, its own and its own way of development, when the interests of the state are placed above the interests of the world community. This approach has no market prospects and carries a significant danger, and with the systematic application of appropriate solutions can become the basis for subsequent problems and possible failures in the economic development of the state. The application of the investment approach in the development of the economy makes it possible to provide constant interest to this project on the part of the state. This means that the principles of the long-term investment and return of resources, the stable long-term nature of the laws in relation to investments will be taken into account, which allows us to count on the continued stability of the investment environment in the economy.

When we talk about the economic growth of a particular state, then under it, that is, under economic growth, we mean a stable increase in the gross domestic product. The growth of GDP in our country over the past few years shows a certain economic stability in the country and despite the global financial crisis, Kazakhstan completed 2009 with positive results and as a consequence - a favorable investment climate. Investment opportunities depend on the stage of the economic cycle on which a particular state is located. Naturally, the need for invested capital increases in the period of recovery and vice versa, the economic downturn narrows the possibility of demand for the direction of investment resources. Since investments in such a period can lead only to an overabundance of goods and services that can not be claimed.

One of the main priorities of the economy of our country is its industrial-innovative development, which is reflected in the "Strategy of industrial and innovative development of the Republic of Kazakhstan for 2003-2015". This program involves the development of growth in production and exports of domestic goods with added value. To achieve certain goals and objectives, identified in the "Strategy of Industrial and Innovative Development of the Republic of Kazakhstan for 2003-2015," state institutions were established. World practice shows that the period of the financial crisis age.

 

RESOURCES

1. MacKenzie I. Professional English in Use: Cambridge University Press, 2014.

2. Edward I.A. Predicting Financial Distress of Companies: Revisiting the Z-Score and 'ZETA(r), Models // http:// www. 99-99.ru/articles/altman.pdf.

3. Ringbakk K.А. The Corporate Planning Life Cycle. - An International Point of View. Long Rang Planning. 2015. V.5 Sept. P. P. 10-20.

4. Steiner G. Managerial Long Rang Planning. New York. McGraw- Hill. 2016;

5. Vancil R. Decentralization. Managerial Ambiguity by Design. Homewood. Dow Jones Irwin. 2015.



Table of contents: The Kazakh-American Free University Academic Journal №9 - 2017

  
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