Alibekova
V.N. Master of Finans , Musabaeva
Z.K., Master of Economic
Tustikbaev
M.E.student of International ITUniversity, Almaty
ATTRACTION
OF FOREIGN INVESTMENTS IN AGRARIAN AND INDUSTRIAL SECTORS OF KAZAKHSTAN:
PROBLEMS AND SOLUTIONS
Kazakhstan is the
agrarian country, and a level of development of agro-industrial complex always
acted and continues to act as the defining factor of economic and political
stability of society. Being one of the priority directions of development of
economy of the republic, the agriculture has the huge potential and big
reserves. Different climatic conditions of Kazakhstan allow to grow up almost
all moderate thermal belt cultures and to develop animal husbandry. Steady
functioning of agriculture in many respects defines economic and political
situation of the country. Thus, the agriculture has an important strategic
role.
Running of investment
activity is the important factor of agricultural development. There are many
requirements as: institutional transformations, attraction to agrarian sector
of large-scale investments, also effective use of investments. Practically all
spheres and branches of agrarian and industrial complex need investment.
Spheres like: agriculture, processing industry, branches of production funds or
the housing sphere. Therefore creation of prerequisites for mass inflow of
investments in agrarian sector and their efficiency becomes the most important
element of the state agrarian policy.
More than 60 percent of
the consumer market is formed from the agrarian sector of economy which
provides raw materials that give opportunity to stabilize economic conditions.
For development and improvement
of productive forces it is necessary to provide at the state level formation
favorable economically equal market environment in which the economy becomes
susceptible to investments. It can be substantially reached by introduction of
the new managing system which is adequate to market system considering
specifics of agriculture.
Investment processes in
agriculture respond for general economic laws but accounting is shown with
specific features for agrarian business. Features of agriculture are different
from others and need comprehensive analysis and special account while forming
material base and investment policy in branch from industries.
The obvious need for
investments in agrarian sector requires effective use of resources. Attraction
of foreign investments is necessary economic process. It is known that
investments aspire generally in the most highly profitable and steadily
developing branches where the highest return for the capital per unit of
investments is provided in short period of time. In fact, the number of
attracted FDI has been growing since Kazakhstan took Independency. Kazakhstan
gained the leading position on the volume and quality of the attracted foreign
investments among Custom union countries in 2012. Thus, FDI volume in the Russian Federation was 18,66 bln.
dollars, in RB – 10,35 bln. dollars. Kazakhstan outstripped such countries as
Turkey, Poland, and Ukraine in FDI index. Strategic position of Kazakhstan in
the Asian region, rich mineral deposits, measures for development of the
corresponding legal base are factors that make Kazakhstan more attractive. In
order to create optimum conditions for attraction of FDI, decrease in
investment risks, Republic of Kazakhstan has legislatively installed the system
which guarantees the protection of foreign investments. First of all, it should
be noted that conditions of investment activity for foreign people are more
convenient.
The analysis of volumes
of the attracted foreign investments over the countries investors during
1993-2011 showed that the main volume of PII arrived from the developed
countries, such as: Netherlands (24,1%), USA (15,3%), Great Britain (7,7%),
France (6,1%), Italy (3,9%), Canada (3,3%) and Switzerland (3%). Moreover large
investors in economy of Kazakhstan are Russia (3,9%), China (3,9%) and South
Korea (2,8%), the contribution of the investment capital which arrived from
offshore zones is also essential (The Virgin Islands – 5%). Shares of other
countries are insignificant and make about 3%. In total number of investing
countries are approximately 116 states. By the statistics for the period
1993-2011 years, volume and structure of the attracted FDI to Kazakhstan in
branches of economy show that 41,2% of all direct investments were sent to
branch of economy "Operations with real estate, rent and services to the
enterprises" (which about 95% it is the share of activities for carrying
out geological investigation and researches), 30,6% – to the mining industry,
10,5% – to manufacturing industry.
The small part of foreign
direct investments lie on development of trade and car repairs and products of
house use (5,7%), financial sector (4,9%), activity of the professional
organizations and associations (2%), civil engineering (2,3%) and transport and
communication (1,6%).Other branches take only 1% of all FDI. Such distribution
of FDI is connected with the high level of profitability of raw sector of
economy.
In 2012 the volume of
investment including foreign, generally the capital of agriculture grew by 22%
and made 133,9 billion tenge. The gain of investments into agriculture is the
highest in comparison with other branches of economy. However the ratio of the
volume of investment to gross output in comparison with other branches
testifies to lag of agriculture. It should be noted that despite the
considerable capacity of agrarian and industrial complex, investors don't hurry
to invest the capital in agriculture. The share of the foreign capital is 0,08%
in structure of direct foreign investments. Holding an advantageous
geographical position, the land of RK is according to specialists of UNESCO, at
reasonable use can support more than 1 billion people. In this connection, the
perspective direction of an investment of FDI is the agriculture, here for
foreign investor considerable opportunities in animal husbandry, grain branch
open.
Development of agrarian
and industrial complex of Kazakhstan is one of priority tasks for ensuring food
security of the country. A huge sales market which was available after entering
of Kazakhstan in the Customs union and creations of the Common Economic Space
(CES) with Russia and Belarus, gives considerable opportunities for foreign
investors to invest in agricultural branch, especially in animal husbandry. The
grain branch can also become the perspective direction. Today Kazakhstan has
difficulties in grain infrastructure – outdated elevators and shortage of their
capacities, insufficiently developed transport system which doesn't allow
taking out large volumes of grain to short terms. All these problems open great
opportunities for attraction of direct investments. Increase of investment
appeal of agricultural branch requires introduction of a number of the
financial instruments directed on reduction in cost of the loans attracted for
financing of Projects of agrarian and industrial complex and instruments of
decrease in risks of creditors and investors.
The grain branch can become the
perspective direction. Today Kazakhstan faces difficulties in grain
infrastructure – outdated elevators and shortage of their capacities,
insufficiently developed transport system which doesn't allow to take out large
volumes of grain in short terms. All these problems open great opportunities
for attraction of direct investments. Increase of investment appeal of
agricultural branch requires introduction of a number of the financial
instruments directed on reduction in cost of the loans attracted for financing
of Projects of agrarian and industrial complex and instruments of decrease in
risks of creditors and investors.
Considering that domestic banks don't
want to give a credit to agricultural branch, attraction of foreign direct
investments can improve current situation in many respects.
At the moment in Kazakhstan for the
purpose of creation attractive conditions for foreign investments into non-oil,
export-oriented and hi-tech productions it is accepted and the government
Program for attraction of investments, development of special economic zones
and stimulation of export for 2010-2014 is realized. The investment relations,
measures of the state support, economic and legal incentives are regulated by
the Law RK "About Investments".
Also since 1998 Kazakhstan have created
the Council of foreign investors which is an advisory body which discusses
questions of investment activity and investment climate of RK. In structure of
Council, besides the Kazakhstan party, enter 30 large foreign companies and the
international organizations.
Achievement of these will be possible
only with the strengthened information support and development of Kazakhstanic
trends as the modern and developed country.Foreign investors has to have image
of the state with existence of attractive and various opportunities in
production and service branches. Much attentions have to be paid to informing
investors on potential niches. For this purpose republic created the national
website in 12 languages with detailed information on Kazakhstan, the priority
directions, the state measures of support and the existing investment
opportunities functions. The effective mechanism of attraction of FDI also is
holding joint investment forums in the countries investors with involvement of
representatives of business and government bodies of interested parties where
potential investors could learn about the existing opportunities and
conditions. Similar actions have to have systematic character.
In summary It should be noted that for
years of independence our country have
reached certain positive results in the attraction FDI and creation of a favorable business
environment. According to Conference of the UN on trade and development,
Kazakhstan is the leader among the CIS countries in volumes of the saved-up
direct investments per capita. On ease of business in 2012 Kazakhstan from 183
countries took the 47th place, thus having overtaken Russia, Belarus and China.
However, growth of economy and the growing needs for the capital and
technologies, demand carrying out further institutional reforms on creation of
attractive investment conditions and bigger protection of the rights of foreign
investors in Kazakhstan.
Foreign investments played and continue
to play an important role in rise in national economy. Now it is necessary to
provide in the short term a reasonable combination of the national and foreign
capital on scopes of application and to achieve their maximum effective use for
intensive diversification of economy towards redistribution of the invested
capital in agriculture and other branches of finished goods.
References:
1. The law RK from 28. 02. 1997 No. 75
– 1 ZRK "About the State Support of Direct Investments".
2. The law RK of 08.01.2003 No. 373 – 2
ZRK "About Investments"
3. A current state and the analysis of
investment climate in Kazakhstan A. Kozhakhmetova the Kazakh agrotechnical
university of S. Seyfullin EKONOMIK AND STATISTICS No. 1 2014
4. Sector of direct foreign investments
of Kazakhstan and perspective directions of its development. HON Evgeny,
"KURSIV", Almaty No. 28 (454), 19 of July, 2012.