Smail Zhenis

Master student speciality of management of KNPU at Abai, Almaty city, Kazakhstan

DEVELOPMENT TRENDS OF SMALL AND MEDIUM BUSINESS IN KAZAKHSTAN

Annotation: Economic reforms in our country marked the beginning of intense occurrence of small and medium enterprises. Small and medium enterprises, possessing the big mobility than large corporations, and they are able to respond more quickly to fluctuations of consumer's demand. As shown by the world practice, breakthrough to the world market can be realized, primarily, through the active development of small and medium-sized businesses. Today it is the main backdone of the economy in developed countries. As a result, this article focuses on development of small and medium enterprises. Reviewed the current assessment criteria of business entities, was analyzed the status and development of small and medium enterprises and the directions of the state support of small and medium businesses. The number of active SMEs, the volume of issued micro loans to legal entities and legal persons, the main figures of financial-economic activities of legal persons SMEs, the main indicators of activity of subjects of small and medium business. Accenting attention on problems arising by the functioning of small and medium enterprises. Also consider measures to encourage and support the sectors of the economy. Provide statistics on the proportion and structure of small and medium entreprises in Kazakhstan.

Small and medium businesses – are basis of a stable civil society, and of its development depends the welfare of all kazakhs. SMEs not only performs an important social role, supports the economic activity of most of the population, but also provides considerable tax revenues to the budget. In the current difficult situation, the SME can act as a stabilizer, and therefore entitled to the due attention of society and the state.

World experience shows that if the state wants to develop dynamically and steadily, its socio-economic programs should always include measures to stimulate small and medium business. Today, in developed countries SMEs account for between 40% to 90% of gross domestic product(GDP).And therefore it is quite natural that the governments of these countries place a priority on supporting this sector.In principle, Kazakhstan SMEs moving in line with global trends, however, its share in the economy is very different from the global criteria.

According to the statistics Committee of the Ministry of national economy of the Republic of Kazakhstan small and medium enterprises (SMEs) provides employment to the national average of 17% of the employed population. The share of small and medium enterprises (hereinafter – SMEs) in the economy of Kazakhstan is falling behind the level of comparable countries and is expected to increase from 17% to 50% by 2050.

Increasing productivity of SMEs and the solution of the problem of self-employed – a way to increase the size of SMEs. However, the increase of the number of employed in the sector at the expense of the unemployed cannot be used as a tool to measure productivity growth due to the low level of unemployment in the country.Compared to comparable countries of the Kazakhstan SME sector provides less employment – 30% of jobs in the country, compared with 55% of the world average, while the level of self-employed in Kazakhstan is three times higher (29% versus 10% in the world).The catalyst for the growth of the SME sector can be a formalization of self-employed activities through simplification of business environment that can become a significant source of growth.Currently, the share of the service sector in SMEs accounted for 24%, while in the world, the figure is 40% (EU) to 63% (USA).

The percentage of contribution of small and medium business in Kazakhstan's GDP is 25.6% in the current year, for comparison, in 2015 this figure was 26.2 percent.This was announced by the Minister of national economy of Kazakhstan Kuandyk Bishimbayev speaking at a regular Government meeting. At the same time, he said, the number of active small and medium business increased by 1.3% in 2016 (from 1,285,287 up to 1302 56). The number of employed in the sector, at the end of 2015, amounted to 3,146,576 persons, which is 2.8% more than in 2014 (3,062,010). Of SMEs in 2015 produced products amounting to 15 858.4 billion tenge, which is 1.8% more than in 2014 year (14 609 700 000 000 tenge).

"Despite of the increase on list of above indicators of SMEs, a decrease in the contribution of this segment of entrepreneurship in the economy due to the deteriorating external environment and reduced lending to the economy by banks of the second level. The share of contribution of SME in GDP, according to operational data, is 25.6% against 26.2% last year.

The number of active SMEs on 1 December 2016

	Total	including				All in percent to the corresponding period of the previous year
		legal entities of small business	legal entities of mediumbusiness	Individuals business	^Farm
Republic of Kazakhstan	1 180 780	188 876	2 741	809 117	180 046	94,5
Akmola region	44 890	5 617	130	35 659	3 484	96,6
Aktobe region	50 612	8 197	99	37 940	4 376	100,9
Almaty region	112 031	7 052	145	61 247	43 587	94,0
Atyrau region	44 402	5 426	96	36 847	2 033	95,2
West Kazakhstan region	40 484	4 687	91	31 152	4 554	101,7
Zhambyl region	56 832	4 200	58	36 775	15 799	89,1
Karagandy region	84 416	14 466	196	63 120	6 634	97,9
Kostanay region	53 423	5 874	147	42 550	4 852	87,7
Kyzylorda region	38 048	4 509	63	30 328	3 148	90,7
Mangystau region	47 244	6 476	96	39 342	1 330	101,4
South Kazakhstan region	174 779	13 770	155	92 352	68 502	95,3
Pavlodar	44 324	7 564	90	33 178	3 492	99,5
North Kazakhstan region	28 166	4 160	140	21 128	2 738	81,8
East Kazakhstan region	88 136	8 504	170	64 176	15 286	87,0
Astana city	101 398	30 635	298	70 442	23	102,7
Almaty city	171 595	57 739	767	112 881	208	92,9

By state on December 1, 2016 the number of active SMEs in comparison with the corresponding date of the previous year decreased by 5.5%.The total number of SMEs the share of individual entrepreneurs accounted for 68.5%, legal entities of small business – 16%, farming 15.3%, legal entities of average business – 0,2%.

The volume of microcredits given to legal and physical persons for the 2nd quarter of 2016

	Individuals		Legal entities
	Quantity,units	The amount, thousand tenge	Quantity,units	The amount,thousand tenge
Republic of Kazakhstan	87 206	40 943 529	582	92 377 377
Akmola region	102	611 086	37	761 828
Aktobe region	275	1 250 386	152	915 145
Almaty region	449	758 590	8	60 930
Atyrau region	1 283	613 129	-	-
West Kazakhstan region	159	630 081	6	80 065
Zhambyl region	125	539 015	-	-
Karagandy region	2 853	596 152	7	3 403 044
Kostanay region	754	872 128	32	575 631
Kyzylorda region	181	1 139 988	43	384 480
Mangystau region	13	15 577	2	7 000
South Kazahstan region	4 220	5 380 371	122	2 048 058
Pavlodar region	276	388 092	2	5 125
North Kazakhstan region	134	469 887	44	729 422
East Kazahstan region	2 175	1 008 888	17	259 775
Astana city	126	445 369	17	80 328 200
Almaty city	74 081	26 224 790	93	2 818 674

According to the head of the Ministry of national economy of RK, the reason and main problems of development of small and medium-sized businesses are the lack of funding, lack of liquid collateral outside the major cities, the barriers of the second tier banks for lending to SMEs, lack of access to markets.

The main figures of financial-economic activities of legal persons SMEs and their share (by kinds of economic activities) for 2016.

Sector	The number of employed persons	The volume of produced goods and rendered services, million KZT.	The share of SMEs in the industry among the employed population,%	The SME share in industry in % of output
Total	1 413 460	13 666 248	17%	22%
Agriculture, forestry and fisheries	99 737	368 709	6%	12%
Industry	234 805	3 452 443	22%	16%
Construction	234 088	2 794 632	35%	58%
Trade	290 736	3 250 546	23%	34%
Transportation and warehousing	81 252	1 305 857	14%	25%
Services accommodation and food	33 795	132 107	20%	28%
Information and communication	38 242	267 870	24%	20%
Financial and insurance activities	16 199	182 599	8%	11%
Operations with real estate	72 881	407 484	83%	10%
Professional, scientific. and tech. activities	113 348	958 987	70%	50%
Activities in the field of administrative service.	89 620	337 307	46%	35%
Education	22 922	16 319	2%	1%
The health and social services	17 090	17 759	4%	1%
Arts, entertainment and recreation	53 315	108 455	40%	32%
All other types of services	15 430	65 174	5%	4%

The data presented in this table show that for the further study and development of recommendations to improve the attractiveness for the population in the creation of SMEs in the regions of interest sectors: Agriculture, forestry and fisheries, education, health and social services, financial and insurance activities. According to statistics, the largest number of enterprises operate in the trade sector (37%) and agriculture (23%). In the field of transport and communications employs 8% of SMEs in the industry – 3% construction – 4%.

As regards the share of small and medium entrepreneurship in the GDP and output of goods and services, Astana city (60%) and Almaty (32%) and West Kazakhstan region (36%) gain first places. Outsiders on this indicator become Atyrau (8%), Kyzylorda (10%), Karaganda (10%) and East Kazakhstan region (10%).Finding the Atyrau region at the bottom can explain by the high rate of GRP because of the major businesses in the area. As you know, the West of the country forms the basis of the oil and gas industry, these regions are the leaders in value added due to the high margins of the industry. The main risks for them has low level of diversification of the economy. In the center and East of Kazakhstan are concentrated the main enterprises of mining and metallurgical complex. This macro-region is an example of a balanced economy with a significant share of population and GDP, but its performance still lags behind the leading regions. The share of SMEs in GRP of the two regions are relatively low due to the nature of key sectors.

Agricultur sector is prevail in the north of Kazakhstan. Agricultural areas characterized by low productivity and low share in GDP of Kazakhstan. Currently, the agricultural sector in the country has a low profitability. In addition, 84.2% of all rural settlements of the country are depressed. Another problem of the industry is low wages that make it unlikely for the population, especially for young people. According to the prognosis, in Kazakhstan will increase the outflow of employed population from rural areas to cities (urbanization), and the demand of rations will continue to grow. Thus, there is an urgent need to increase productivity in agriculture. It should also be noted that agriculture has a great potential of integration into world markets, with the growth of rations deficit in the world. In the southern regions of the Republic there is no pronounced specialization, but the high importance have services sector. These areas show the lowest performance, including due to the significant share of agriculture in GRP. In regions agricultural and service oriented, the share of SMEs in GRP are quite high. Almaty and Astana are financial centers with developed sectors of trade and services, in addition, most large enterprises chooses Astana a place of registration. The study of departmental statistical data shows significant achievements in the provision of educational services to SMEs in these cities, when in some regions the rate is close to zero. These two cities are centres of development of SMEs, as they provide more favorable conditions for the growth of the sector.

Small businesses involved in trade, because of their mobility, most likely, reorintate to cheaper and less quality products and will work with the markets of the nearest neighbors (China, Uzbekistan, Kyrgyzstan and Turkmenistan, etc.).

Entrepreneurship is not for the first time faced with crises in the economy. The experience of the crisis of 2008-2009, most likely, business will soon go to "standby". A good tool for entrepreneurs in the new environment is a unified program of support and business development "business Road map - 2020", which includes the instruments for financial and non-financial support. Chamber of entrepreneurs is ready to teach businessmen to cost optimizations, productivity, cooperation in a crisis.

According to official statistics, on January 1, 2016, the rate of registered SMEs decreased in 2014 by 8.1% (135 775 units) and amounted to 1 666 116 units. Compared with 2014 the number of registered legal entities increased by 2.3% and amounted to 300 643 units, SP decreased by 11.8% to 1 040 767 units. The number of employed in the SME sector in Kazakhstan has exceeded 3.2 million people. "By reducing the number of operating companies in 2015 is increasing the number of employed in SMEs and production. This shows the increasing demand for domestic products due to the fact that imported products are more expensive and become less competitive".

According to the above statistics, the share of SMEs in Kazakhstan's GDP is only 26%, for comparison, in European countries this figure twice and SMEs represents 99% of all European businesses and employs half of the working population.

In Europe, the support for SMEs engaged the European net of business support that works on the principle of one window. The net has about 600 partner organizations in more than 60 countries. More than 3,000 experienced professionals provide support in access to market information, clarify regulations and identify future business partners in Europe. Main activity of the organization is:

- assistance in obtaining financing.

- simplification of the legislative base;

- information support and advice;

- involvement of SMEs in the process of formation of legislative base.

In one of the most attractive countries for business – Singapore - following the scheme of support to SMEs. Specially created Agency "Spring", ensures the development and realization of various programmes supporting SMEs, developing entrepreneurial skills of SMEs, provides consulting services and trains personnel to control the business.

It is important that in Singapore, there are a variety of programs concessional lending, grants and funding the training of employees of SMEs.

"Three pillars" for the development of SMEs

In General, to accelerate the development of SMEs in any country it is necessary to activate three areas:

1. To create a favorable legal environment. Today, in many developed countries in the world have a sustainable legal system for SMEs. For example, in the United States in 1953, Law was published "about small business", in 1966, South Korea has published the Law "about small and average business". In Japan, they were adopted more than 50 legislative acts on support of SMEs on financing, Bank guarantees, cooperation with large businesses, actions in a crisis situation and others.

2. Proactive fiscal policy. In general, an effective fiscal policy has four key aspects. Firstly, you need to develop a mechanism for bank guarantees for SMEs. Secondly, to provide direct funding to SMEs by various non-profit organizations. Thirdly, the creation of a venture capital market and momentum to the market development of private equity investments, and, finally, the possibility for SMEs to gain access to capital markets.

3. To establish a diversified system of services. In the world there are many organizations providing support to entrepreneurs. The main profile of these organizations is the consulting, training, technical support and other services professional help.

One example of a successful platform for SMEs development is Silicon valley in California, USA, which became the launching pad for many of the largest it companies in the world like Apple, Google, Facebook, Intel and many others. The key success factors of Silicon valley is a well-developed infrastructure, low taxes, and various compensations from the state.

What prevents faster development of SMEs In Kazakhstan?

In General, the development of these areas will help to solve the major problems of SMEs in Kazakhstan. One of which is the low solvency of the population in the regions, which creates difficulties in making a profit entrepreneurs. Due to the low cost of the final product raises the question of profitability use high-end and expensive equipment at the enterprises. Another problem is the possibility of attracting "cheap" money for the development of the enterprise.

Another problem in the development of SMEs in Kazakhstan is the lack of managerial skills among representatives of SMEs, for example, skills such as project management are critical in this industry.

New opportunities to support SME provides a mechanism for public-private partnerships. The main advantage of which is the presence of the state as a business partner. In PPP projects, the government may provide land for the project, to pay compensation to the investment and operating costs, and other instruments of state support.

In the context of this topic identifies the most attractive measures to increase the participation of SMEs in the economic development of the country:

- Active step to educate the public to directed support for small and medium businesses;

- Expansion of economic activity and types of services for providing grants on creation of own business;

- Available consulting and educational assistance to the population;

- To develop guidelines for the population on the creation of SMEs.

In General, weak participation of SMEs in the sector manufacturing industries and construction may be associated with weak information work and the need for consulting and educational services, in contrast to the segment of granting of municipal, social and other personal services and transport and communications.

The list of the used literatures:

1. http://stat.gov.kz/faces/wcnav_externalId/publications

2. www HYPERLINK "http://www.forbes.kz/". HYPERLINK "http://www.forbes.kz/"forbes HYPERLINK "http://www.forbes.kz/". HYPERLINK "http://www.forbes.kz/"kz Information portal

3. www.kapital.kz Centre for business Economics