Role of investments in the economy of Kazakhstan
Table of contents: The Kazakh-American Free University Academic Journal №9 - 2017
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 .
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
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 .
The objectives of the investment
- 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,
- 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,
- 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 .
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 .
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
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
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 .
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
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
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
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
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
- 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
- creation of the necessary raw
- 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,
- 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.
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Table of contents: The Kazakh-American Free University Academic Journal №9 - 2017