Investment policy of the Republic of Kazakhstan

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MINISTRY OF EDUCATION AND SCIENCE OF RK

INTERNATIONAL ACADEMY OF BUSINESS

“ECONOMICS AND LOGISTICS” DEPARTMENT

THE TERM PAPER ECONOMIC THEORY

“Investment policy of the Republic of Kazakhstan”

Completed by the 1^st year student

of “Finance” specialization

F1202

Klimov K.V.

Almaty 2012

Content

Introduction

Chapter I. Investments, their economic substance, classification and structure

1.1 Investments as an economic category, and their role in the development of macro-and microeconomics

1.2 Classification of investments and their structure

Chapter II. Investment policy RK

2.1 Investment activity of the Republic of Kazakhstan

2.2 Foreign investments

2.3 Priority areas for investment in Kazakhstan

2.4 Problems and perspectives of the development of investment funds

Conclusion

Literature review

Introduction

My term paper is called “Investment policy of the Republic of Kazakhstan” I chose this theme, because I believe that the investments plays a huge role in the development economy of the Republic of Kazakhstan. In fact, the investments define the future of the country as a whole, and are the driving force in the economy.

Market economy, despite its many positive features, not able automatically adjust the entrepreneurial and investment activities, as well as all the economic and social processes in the interest society and every citizen. For example: It does not provide social equitable distribution of income does not guarantee the right to work, and not aims at protecting the environment.

Private business is not interested to invest in such industries and such projects that do not generate high enough profits, but for society and States are simply vital (the coal industry, railways, roads, agriculture, etc.). This should take care of the state.

Thus, the economy of any country can not develop normally, and investment will not invest if the state did not provide appropriate conditions for this.

State to perform its functions of economic regulation uses both economic (indirect) and administrative (direct) methods of influencing the investment and the economy by publications and adjustment of relevant laws and regulations, as well as by a certain economic, in number and the investment policy.

In recent times the investment climate in Kazakhstan changed for the better. This was facilitated by the efforts of the country to improve the business environment, reforms in the economy, upgrade legislation.

At the end of 1999 the Republic of Kazakhstan has signed bilateral agreements with more than 30 countries for the promotion and protection of investments, State has more than 1000 enterprises with foreign participation and more 100 enterprises transferred to the Government in the management of foreign investors.

Today, only the total amount of foreign direct investments Kazakhstan approximately 6.8 billion U.S. dollars. And according to the press Service of the Ministry of Foreign Affairs of the Republic of Kazakhstan, the volume of a U.S. investment is 1.9 billion U.S. dollars, which is 28% of the total direct investment and is the largest in Central Asian region. So way through new investors, total investments by U.S. economy in the Republic of Kazakhstan should exceed this year the figure 4 billion U.S. dollars.

It must be emphasized that the main flow of foreign direct investment in total expression is involved in oil and gas complex. For past four years in this region invested more than half of all foreign capital. With higher levels of investment, invested in metallurgical complex: from 0.2 million in 1993 to 453million in 1999. Grow as investments in other sectors economy, the volume of which during this period increased by 1,5 times. All these figures talk about that today in Kazakhstan can not only lead entrepreneurial activity, but also adequately protect proprietary interests of the entrepreneur.

economic investment policy

Chapter I. Investments, their economic substance, classification and structure

1.1 Investments as an economic category, and their role in the development of macro-and microeconomics

Investments - a relatively new term for our economy. Within centralized planning system was used only one concept "Capital expenditure", which refers to all costs reproduction of fixed assets, including the cost to repair them.

In the Act of December 27, 1994 number 266 with amendments is defined as investments: “Investments - all property and intellectual property invested in facilities entrepreneurial activities to generate income, including:

- movable and immovable property and rights, the right retention and other than goods imported and intended for implementation without processing;

- shares and other forms of participation in business organizations;

- bonds and other debt obligations;

- demands cash, goods, services and any other performance on treaties relating to investment;

- right to the results of intellectual activity, including copyright rights, patents, trademarks, industrial designs, technological processes, know - how, normative - technical, architectural, engineering and design project documentation;

- any right to engage in activities based on the license or another form provided by a public authority ".

Investing - activities related to the implementation of investment Foreign investment in the facilities business in order to profit (income).

For investment in a broad sense refers to cash property and intellectual property of the State, legal and individuals directed to the creation of new enterprises, expansion, reconstruction and modernization of existing, acquisition real estate, stocks, bonds and other securities and assets for profit and (or) a positive effect.

Investments - is a broader concept than capital investments.

Investments divided into portfolio and real.

Portfolio (financial) investments - investments in stocks, bonds, other securities, the assets of other enterprises.

Real investments - investments in the creation of new, reconstruction and modernization of existing enterprises. In this case, enterprise - investor, investing, increasing its manufactured capital - the basic production funds and the necessary for their functioning working capital.

In the implementation of portfolio investment, the investor increases its financial capital, receiving dividends - income securities.

Government of the Republic of Kazakhstan (RK) adopted a law on state support for direct investment, which is based on the Constitution of the Republic of Kazakhstan and consists of rules and regulations - legal acts.

State support of direct investments is:

· in legislative guarantees of investment activity;

· the establishment of systems and incentives and preferences;

· in the presence of a single state body authorized to represent the Republic of Kazakhstan to investors;

· to provide guarantees to cover political and regulatory risks in accordance with the treaties concluded by the Government of Kazakhstan with international organizations and relevant regulatory acts of the Republic of Kazakhstan.

Purpose of state support of direct investment is the creation of favorable investment climate for accelerated development production of goods, works and services in priority sectors economy, a list which is approved by the President of Kazakhstan.

In achieving the goal of Kazakhstan has the following tasks:

1. The introduction of new technologies, advanced technology and know - how.

2. Saturation of the domestic market with high quality goods and services.

3. State support and encourage domestic producers.

4. The development of export-oriented and import-substituting industries.

5. Rational and comprehensive use of raw materials base of Kazakhstan.

6. The introduction of modern methods of management and marketing.

7. Creation of new jobs.

8. The introduction of continuous training of local personnel, improving their skills.

9. Ensuring the intensification of production.

10. Improving the environment.

State regulation of investment activities positions in production is in the form of capital investment and maintained by state authorities of Kazakhstan, specifically - the cost of construction - erection work for buildings and structures; acquisition, installation, adjustment of machines and equipment design -survey work, the content of the Directorate under construction company; training and retraining, the costs of allocation and resettlement in connection with the construction and other.

In statistics and economic analysis of real investment is also called the Capital - Capital-investment include following elements:

· capital investment;

· cost of major repairs;

· investment in the acquisition of land and objects of nature;

· investments in intangible assets (patents, licenses, software research - research and development - design work, etc.);

· investment in replenishment of inventories.

The main place in the structure of Capital-occupied investment investment in fixed capital in the amount of which include the cost of new construction, reconstruction, expansion and technical upgrading existing industrial, agricultural, transport, trade and other enterprises, the cost of housing and cultural - Domestic construction.

An investment as an economic category serves several important functions, without which there is normal development of the economy of any state. Investments at the macro level are the basis of:

· to implement the policy of expanded reproduction;

· to accelerate the NTP, improve quality and competitiveness of domestic products;

· for the restructuring of social production and the balanced development of all sectors of the economy;

· to create the necessary raw materials industries;

· for civil construction, development, health, culture, higher and secondary schools, as well as to address other social problems;

· to alleviate or solve the problem of unemployment;

· for the protection of the environment;

· for the conversion of the military - industrial complex;

· to ensure the defense capability of state and solving many other problems.

For the economy of Kazakhstan, which has long been in a state economic crisis, investments are needed primarily for its stabilization, revitalization and expansion. Investments in production, new technologies help to survive in a tough competition (both domestic and on the external market), provide an opportunity for more flexible regulation of prices their products, etc.

Investment plays a crucial role at the micro level. This level, they are especially needed to achieve the following objectives:

· expansion and development of production;

· avoid excessive mental and physical depreciation of fixed assets;

· raising the technical level of production;

· improve the quality and competitiveness of a particular company;

· environmental activities;

· acquisition of securities and invest in assets of other enterprises.

Thus, investment is an important economic category and play an important role both at macro and micro levels, primarily for simple and expanded reproduction, structural change, profit maximization, and on this basis, the solution of many social problems.

But - for the general economic instability, high inflation, high interest rates on loans that exceed the level of profitability enterprises in recent years, the volume of capital investments and capita construction declined sharply, that does not help, but rather worsened the economic situation of the republic.

State investment in the country is characterized by dynamics following parameters:

· total investment;

· share of investment in gross domestic product (GDP);

· proportion of real investment in total investment;

· total value of real investment;

· proportion of real investment in the capital and other

Indirectly, but rather an objective state of investment characterize the growth of the main macroeconomic indicators:

1) national income;

2) GDP and GNP;

3) the volume of industrial production;

4) release of selected key industrial products;

5) of agricultural production;

6) productivity of labor;

7) And others.

Objectivity of these indicators in the evaluation of investment due to the fact that their growth is inconceivable without investment. These indicators to characterize the efficiency investment. If the growth rates of these indicators are ahead of growth investment, it is a clear sign of efficiency investment and vice versa.

Level of investment has a significant impact on the volume national income of society; then it depends on the dynamics of many makro proportions in the national economy.

Are also a source of investment and savings. But a problem is that the savings made by some economic agents, and investments may be completely different group of people or economic subjects. The savings of the population at large are a source of investments (e.g., savings of the worker, teacher, doctor, police and etc.). But these individuals do not carry out capital formation or investment associated with the real growth of capital goods company. Course source of investment and accumulation are functioning in society industrial, agricultural and other enterprises. Here "Thrifty" and "investor" coincide. However, the role of wage savings Labor is not the same and entrepreneurs, is very high ,and differing processes of saving and investing all of these differences can lead the economy in the state, deviating from equilibrium.

Process of investment depends on such important factors as the expected profit margin or return on investment expected. If this profitability, according to an investor, is too low, then the investment will not implemented.

In addition, an investor in decision-making always takes into account alternative investment opportunities and there will be a critical level of interest rates. The investor can invest in new plant construction or factory (any company), and may place their money and resources bank. If the interest rate is higher than expected rate of return, then investments will not be implemented, and, conversely, if the rate of interest below expected rate of return, employers will implement projects investment.

Inflation most significant influence on investment activity which, in turn, depends on the state of the economy - with the stabilization and reviving the economy - it is reduced. It should be borne in mind that with process of inflation is closely related to the rate of bank credit.

Known that the demand curve for investment depends on the rate of bank cent (C) and the expected rate of net profit (H) of sub investment.



Picture 1. Demand curve for investment

the figure, the higher bank interest rate, the lower demand for investment, a similar relationship exists between the demand for investment and the expected rate of net profit. Advantageous to invest in If the rate of net profit exceeds the rate of bank interest, H> C ". Conversely, if the interest rate exceeds the expected rate net profit, Cn> H, then in this case, the enterprise investment unfavorable.

known that there is a nominal and real interest rate.

real differs from the nominal rate to inflation

Cp = Cn - Ui

Where:

Cp - the real rate of bank cent;

Cn - nominal interest rate on bank cent;

Ui - inflation level.

Should be emphasized that it is the real interest rate, rather than nominal plays a significant role in making investment decisions.

In terms of inflation, especially hyperinflation, when the bank interest for the credit is very high, investments for the enterprise will be profitable only in if the expected rate of return will be higher than that of bank interest, but such projects to find the company very difficult. This suggests concluded that hyperinflation is the most significant obstacle to recovery investment activities.

Financial stabilization, as international experience shows, there comes when the annual price increase does not exceed 40%, and the average - 2,8%.

If it is higher investment in production sharply reduced as the growth economy and living standard.

1.2 Classification of investments and their structure

For accounting, analysis and improve the effectiveness of their investments should be Science - a legitimate classification of both the macro and micro levels. Sophisticated, grounded in scientific terms the classification of investments not only allows them to correctly take into account, but also to analyze the level of their use on all sides and on this basis to obtain an objective information to develop and implement effective investment policy. In the tenure of a planned economy and in practice the most common received a classification of capital expenditure on the following features:

On the grounds earmarked for future facilities - this is their distribution sectors of the economy - the branch structure, which in turn forms two divisions - investment in production facilities purpose and objects of non-production purposes.

According to the forms of reproduction of fixed assets - for new construction, expansion and modernization of existing enterprises, and technical source of funding - centralized and decentralized.

Toward Use - in manufacturing and nonmanufacturing.

On the objects of their applications - Investments in the property (tangible investment) - Investment in buildings, facilities, equipment, supplies Materials: Financial investment (purchase of shares, bonds, and other securities). Intangible investments (investments in training, research and development, advertising).

On the basis of their influence and control in the company, whose shares are purchased investor. Based on this criterion all portfolio investments classified in:

- significant influence (the acquisition of more than 20% but less than 50% shares entitled to vote;

- ensuring control (ownership of an investor for more than 50% of the shares with the right vote);

- do not allow to control and no significant influence (ownership of less than 20% of shares with voting rights);

- do not allow to establish control, but significant influence

(possession of more than 20% but less than 50% of shares with voting rights);

- ensuring control (possession of more than 20% but less than 50% of shares parent company and 100% of shares in a subsidiary.

This classification is important for the formation of the optimal structure portfolio investment in the company.

Most comprehensive classification of investments is disclosed in the N.A. Blanca, in which all investments are classified as follows attributes: Object attachment, the nature of participation in investment, investment period, ownership of investment resources, regional basis.

Picture 2

All These classifications have the right to life in practical terms, but especially in science, because they allow a more detailed report investment and more in-depth analysis to improve use. But in modern conditions of these classifications is clearly enough.

Efficiency investments is largely dependent their structure. Under the structure of investment refers to the composition of species uses and their share in total investment.

Distinguished public and private investment structures.

The general structure of investments can be attributed to the distribution of real and portfolio (Capital-and financial). The total investment Capital-account for the largest share of investments. So in 1996,of the total investment share of Capital-was 81%, and financial-only 19%. Some private entities include the following types of structures of capital investment: technology, reproductive, sectoral and territorial.

Under the technological structure - refers to part of the cost of construction any object on the types of costs and their share in the total estimated, shows what percentage of capital investments in their total value directed to the construction and installation work (SMR) for the purchase of machinery equipment and their installation, the design and survey and other costs. The technological structure of capital investments has a very significant impact on the effectiveness of their use. Improvement of the structure is to increase the share of machinery and equipment at an estimated cost of project to the optimum level. In fact, the technological structure capital investment generates the ratio between active and passive parts of the fixed assets of the future enterprise.

Increase in the share of machinery and equipment, i.e. active fixed productive assets of the future business, contributes to its production capacity and, consequently, reduce capital investment per unit of output. Economic efficiency is achieved at the expense increasing the level of mechanization and automation of labor and reduce the conditional fixed cost per unit of output. Analysis of the technological structure capital investment is important both in scientific and practical terms.

Reproduction structure - also has a significant impact on effectiveness of their use.

Under the reproductive structure of capital investments are understood to distribution and the ratio of the total estimated cost of the forms reproduction of fixed assets. You can determine what percentage of capital investments in their total value is directed to: new construction, reconstruction and technical re -production. Theory and practice shows that the reconstruction and technical re-equipment of production is much more profitable than new construction, for many reasons:

Firstly shortening the duration of the commissioning of additional capacity;

Secondly greatly reduces the specific capital investments;

Dynamics of reproductive structures of real investment in capital may show certain changes or trends in positive and in negative terms. The negative aspect is that that increasing the share of real investment in new construction automatically may lead to a reduction in their share, directed at the expansion reconstruction and technical re-equipment of production, which may adversely affect the technical level of production and efficiency investments, and hence the whole economy.

Positive aspect of this same trend is seen in the fact that for the analyzed period, for example, rather turbulent process a small enterprises and it is through this increased share of investment allocated for new construction. Creating a small business in the ROK and increase its role in the economy are necessary and progressive process.

Important for the republic's economy has also allocation of real investment by sector of Kazakhstan, as it from this distribution depends largely on its future.

Cost-effectiveness of investments depends essentially on sectoral and territorial (regional) of their structure.

Under the industrial structure - refers to the distribution and the ratio of industries and the economy as a whole. Its development is to ensure proportionality and a more rapid development of those industries, which provide the acceleration of STP throughout the national economy of Kazakhstan.

From planning the sectoral structure of investments depends very much, especially the balance in the development of all sectors optimality of its industrial structure, accelerating scientific and technical progress and effectiveness of the entire economy of the republic. The state with the help of such budgetary and other instruments can significantly affect the trend in the sectoral structure of investment progressive direction.

Important for the effectiveness of investments in the economy has a structure investment funding and ownership.

Under the structure of investment by ownership refers to distribution and the ratio of ownership in their total amount, i.e. to which they belong: the state, municipalities, private legal or natural persons, or to a mixed form of ownership. It is believed that increasing the share of private investment in the total amount of positively affect the level of their use, and hence on republic's economy.

Under the structure of investments by source of financing respectively refers to their distribution and correlation in the context of sources funding. Improvement of the structure of investment is increasing proportion of extra budgetary resources to the optimum level. Based dynamic changes from year to year can be present and analyze those changes that have occurred under the influence of such factors as a negative and in positive ways. (For example, an increasingly important role as a source funding began to play a depreciation).

Efficiency investments in the company, its financial provision is also largely depend on their structure on enterprise. Under the general structure of investment in the company understood ratio between real and portfolio investment in their total amount.

Its development is to get the maximum benefit as from portfolio and real investment. This means that the proportion investment in the most effective projects should strive to the maximum. In current conditions essential for enterprises is the structure real, and the structure of portfolio investment. Under the structure Portfolio investment refers to their distribution and ratio of species securities purchased by the enterprise, as well as investments in assets other enterprises.

At the moment, when the share of public investment dropped sharply, and proportion of investment enterprises in their total value increases, the total efficiency investments increasingly depends on the effectiveness of their use directly in the enterprise and, in fact, of the total structure of investment in the company.

Summarizing all the above, we can conclude - the analysis of the structure investments in various fields has the scientific and practical importance.

The practical significance of this analysis is that it allows determine the trend of changes in investment patterns and on this basis develop a more effective and efficient investment policy.

The theoretical significance of analyzing the structure of investment is that on the basis of this analysis identifies new factors not previously known, affect investment and efficiency investment, which is also very important for the development of investment policy.

Chapter II. Investment policy RK

2.1 Investment activity in the Republic of Kazakhstan

At the present stage of development of Kazakhstan as a new independent state, orienting to the market economy, the main direction of economic reforms is to develop and implement investment policy aimed at ensuring high economic growth and raising economic efficiency.

To solve these problems, as well as to ensure the structural transformation of the economy through a program of the government's actions to deepen reforms in the context of limited domestic sources of financing essential attraction of foreign capital in the economy.

Investment policy is one of the main elements of economic policy, system of measures that determined the volume, structure and direction of capital investments, growth of main funds and its innovation by new technologies. It stimulates and regulates investment process, forms conditions for stable social-economic development of state, region, branch and business at a whole.

Investment policy is based on legislature. In the annual Epistyles of President of RK, decrees of President of RK and in investment laws it is determined directions of investment activity.

Investment policy of state includes: Regional investment policy; Branch investment policy; Investment policy of economic subjects.

Regional investment policy is aggregation of measures that regulates by state for providing with investment attraction of region for foreign and native investors. Such factors as natural resources, economic potential and climate conditions influence on investment activity.

Branch investment policy is realized for: Choice and support priority branches; For accelerating science-technological progress and introduction new technologies and forms of organization of work in production.

Investment policy of economic subjects is connected with searching resources of investments and its effective investment in constructions of new and repairing of old manufacturing.

The goal of state investment policy of Kazakhstan is realizing support of important branches for providing with economic growth and increasing productivity of work.

In the Republic of Kazakhstan's transition to market relations simultaneously created and normative - legislative framework in investment.

February 28, 1997 № 75 - 1 SAM left the Law "On State Support direct investment ", which regulated the relations arising in process support for direct investments in Kazakhstan, which designates the only state agency authorized to government support and represent the Republic of Kazakhstan - "Agency of RK Investments, whose chairman is appointed and dismissed by office only by the Government of Kazakhstan.

Also April 5, 1997 Presidential Decree № 3444 "On Approval list of priority sectors for attracting direct domestic and foreign investment "was defined list of the most priority and most important industries for investment until 2000.

In particular areas such as:

1. The industrial infrastructure.

2. Manufacturing.

3. Objects city Akmola.

4. Housing, social facilities and tourism.

5. Agriculture.

Presidential Decree of 6 March 2000 number 349 were approved rules granting privileges and preferences in investment activities.

But foreign entrepreneurs were dissatisfied with the incompleteness and instability legal framework of economic activity, which operated the system accounting and reporting, the high level of taxation (imperfection of the tax system in Kazakhstan) and its volatility, high cost credit, official corruption and arbitrariness of local authorities, crime in economy, lack of security guarantees and the inadequacy of accounting international accounting standards. All this has played a large and positive role.

Since accounting - is an international record business, it should was primarily to improve and lead to international model, an incumbent until 1996, the ROK did not match this.

first and important step in reforming the accounting system was abolished the old position and the Decree of the President having the force of the Act, 26December 1995 number 2732 introduced a new Regulation on Accounting and reporting from 1 January 1996, which governs the system accounting and financial reporting. In addition the National Commission on accounting was transformed into the Department of Accounting and audit of the Ministry of Finance of the Republic of Kazakhstan. Was adopted and introduced from 1 January 1997, the new General Plan accounts economically financial activities based on standards developed by him and

Methodical instructions to them - all this is allowed to bring the system accounting to the international level.

Next step was improving the tax system, because all taxes are ultimately reflected in the financial result - net profits remaining at the disposal of the enterprise and which is one of the sources for investment.

In Kazakhstan adopted a new tax code, which is developed in assessment taking into account the best achievements in this field as in our Republic and abroad, which will undoubtedly improve the legal framework taxation.

The Law on Taxes and other obligatory payments to the budget "№ 2235 of 24April 1995, provided for substantially the same tax rates for residents and for non-residents and other investors.

At improving the investment activity also influences the level of development Small and medium-sized businesses in the country. as the economy of any state can not function properly and grow without optimal combination of large, medium and small businesses, with small business is playing an increasing role in the economy of the republic. So it taken a number of resolutions aimed at the development, improvement and protection Small and medium business (to support small business.

But the effective use of investment resources is impossible without the securities market and in particular - Stock Exchange. And here, in order to implement the development strategy of Kazakhstan till 2030, January 28, 1998, № 3834 was adopted by Presidential Decree, which adopted the Programme of Action and including in the field of investment policy, goals and priorities. The Decree of the issues to ensure a favorable investment climate in the Republic in terms of market economy (along with economic and social issues), and also covered issues related to ensuring the effective protection of foreign investments. In the section "Favorable investment climate" a decision on the accelerated development of the stock market, protect and support small businesses, etc.

The last changes on Investment Law were on January 8th, 2003.

Thus, both politically and legally in the Republic of Kazakhstan has created a very favorable investment climate.

Now Kazakhstan is a country with a dynamically growing economy; therefore, the GDP growth should be accompanied by a high rate of fixed capital savings. The financial crisis and economic slowdown have adversely affected the global economy, and Kazakhstan was not an exception. Despite this, business activity here is rapidly recovering. According to preliminary estimates, in Q2-2009Kazakhstan's GDP added more than 3 percent as compared to the previous quarter. In order to secure both the macroeconomic and financial stability, the Government has enforced and implements the Plan for economic stabilisation.Systemic measures are in place to stimulate the aggregate demand. New Tax and Budget Codes have been revised and enacted. Furthermore, the legal basis to introduce instruments of Islamic finance and investment is being created. Efforts to attract there sources of international financial institutions to fund important investment projects are at the final stage. In the conditions of the crisis, from late 2008, the Kazakh economy suffered from a short-term contraction in the investment activity. However, by March 2009,the negative trend was successfully reversed: the investment growth rate made 102.2% y-o-y. In April2009, the rate reached the highest level of 136.9%, and in June it went down to 107.3%.

The important contribution to this positive trend was made by our partners -foreign investors, who perceive the investment attractiveness of Kazakhstan as high. This year, foreign sources financed as much as 45 percent of the total fixed capital investments, and the amount of these investments increased 2.4 times.

Kazakhstan managed to attract unsecured loans from its strategic partners and investors - China and Russia. Negotiations on receiving funding from Arab countries to finance formidable investment projects are on the way.

The investment growth is complemented by the adequate improvement in the quality of investments. For example, the fixed capital investment structure mischaracterized by the growing share of investment in machinery, equipment, appliances and other capital works. From January to April 2009, such investments grew more than 1.7 times.

2.2 Foreign investment in Kazakhstan

Foreign investment plays an important role in the economy of any country. It is not the first decade of foreign direct investment growing faster than international trade. The major investors, who invested in the economy of the Republic of Kazakhstan the capitals are large countries like the U.S., Germany, UK, Japan, South Korea, France, etc. These countries are not only enliven the investment climate in Kazakhstan, but also help the development of the domestic economy. Attracting foreign investment, creating the conditions for a real improvement in the productive structure of the economy of Kazakhstan, a new high-tech production, modernization of fixed assets and modernization of many businesses, the effective use of the existing potential of qualified specialists and workers of the republic, the introduction of the latest achievements in the field of management, marketing and know-how, filling the domestic market with quality domestic products while increasing the volume of exports to foreign countries.

From the point of view of politicians and economists of the Republic, with the participation of foreign capital can perform the following tasks:

· improve the export potential, to overcome its raw orientation;

· To strengthen the country's export expansion and consolidate its position in foreign markets;

· increase the scientific and technological level of production with new equipment and technology, management and marketing;

· increase tax revenues to the state budget;

· create new workplaces in the national economy;

· achieve economic independence of Kazakhstan.

The need to engage in the economy of large investment resources efficient and effective use of foreign and domestic investment required to create a single state body. According to the Law of the Republic of Kazakhstan "On state support of foreign direct investment" created the State Committee of the Republic of Kazakhstan on investment, now the Investment Committee of the Ministry of Foreign Affairs of the Republic of Kazakhstan, the main purpose of which is to promote investment activity for the dynamic development of economy and society.

The legislative acts and organizational measures have contributed to creating a favorable investment climate and attract foreign investment in Kazakhstan.

Investment Climate - the criterion of maturity of market reformsand trust of the international community to the stability of property rights, to the situation in the country as a whole. In 1996, the leading rating agency has assigned credit ratings of Kazakhstan. Autumn of 1996 to enter the international financial market as a result of credit rating presentations by three leading international agencies Kazakhstan first assigned ratings of at BB. Among the countries of the CIS and Baltic Kazakhstan is the second country after Russia to receive an international credit rating. How Kazakh policy arranges foreign investors can be judged by the results in early December 1998 in the London Investment Summit, in which Kazakhstan was named one of the most attractive for investments CIS

At this stage, the main focus of economic reforms in Kazakhstan becomes a design and implementation of investment policy, aimed at providing a high rate of economic growth. Foreign investments are divided into public and private.

Under the public investment meant mainly loans, loans that State or group of States provided another state and are governed by international agreements to which the rules of international law.

Under private investments understand the investments by private enterprises, citizens of one country into the objects of investment, located in the territory of another country.

Foreign investors have the right to make investments in the Republic of Kazakhstan in the following forms:

1. Equity participation in enterprises established jointly with the Kazakh legal entities and citizens of Kazakhstan.

2. Establishment of enterprises wholly owned by foreign investors.

3. Purchase of the rights to use land and other natural resources, public enterprises.

4. Purchase of other property rights, and more.

The main form is a equity participation in creation of joint ventures and foreign enterprises.

In accordance with the legislation of Kazakhstan, foreign investors in Kazakhstan provided full and unconditional legal protection.

Foreign investments may be made ??in any objects and activities that are not prohibited for such investment legislation of Kazakhstan.

In accordance with the Law "On Private Entrepreneurship", adopted June 19, 1997 foreign organizations may be small businesses, ie, number of employees in these firms are not more than 50 people and assets for the year is not more than 60 thousand monthly estimates.

Contributions to share capital by foreign investors may be made the legislation of the Republic of Kazakhstan in order in the form of buildings, structures, equipment and other property, land use, water and other natural resources, as well as other property rights, including intellectual property rights.

For the 1993 - 2001 years. inflow to Kazakhstan Foreign direct investment, net of repayment of loans provided by direct investors totaled $ 12.8 billion, of which $ 10.2 billion - investing in loans, cash requests and reinvested income received by individual enterprises and organizations (79.2%), $ 1.9 billion - Foreign equity (14.9%) and $ 0.7 billion - contributions to foreign investors (5.8%).

The largest share of enterprises engaged in foreign trade in the period on investments, take the company to private ownership

Foreign direct investment in Kazakhstan is through joint ventures, subsidiaries, privatization of state enterprises with foreign capital, the transfer of the management of foreign firms to large industrial and investment banking sector.

During the period from 1993 to 2001. the volume of foreign direct investment, including repayment obligations totaled 9157.2 million. Until 1995, Kazakhstan did not make loan repayments and other commitments to foreign direct investment. Since 1995, the republic began repayment of loans and other commitments to foreign direct investment.

According to the National Statistical Agency in 1998 in Kazakhstan there were 1475 companies with foreign participation, of which almost 60% in the form of joint ventures. In attracting foreign direct investment in 1998 was leading oil and gas industry (64, 9%), the second is energy complex (8, 7%).

Meanwhile, the need for Kazakhstan in the inflow of foreign investment is very high. Only in key industries require tens of billions of dollars (manufacturing, fuel, metals).

In 2001, Kazakhstan has received direct investments totaling nearly 2,5 billion. And the amount of foreign investment by 2002 will be not less than 1,5 - 2 billion.

2.3 Investment Policy priorities

Taking into consideration the crisis conditions, the top priority for the public investment and public private partnerships is infrastructure projects. The Roadmap of the efficient allocation of production capacities in Kazakhstan till 2020 will allow the Government in cooperation with private business to work out feasible investment solutions. Private sector projects will be focused on the development of infrastructure, full utilization of resources and expansion of the country's economic potential.

In January 2010, the Government will start the implementation of the5-year Industrial-Innovation Development Plan, which should drive economic diversification on the basis of innovative industrial development and stimulate the post-crisis breakthrough of the Kazakh economy.

The priority sectors within the Planare as follows: the agricultural complex, civil engineering and construction materials manufacturing, oil refinery, oil and gas infrastructure, metallurgy and production of finished metal products, chemicals, pharmaceuticals, and defense industry, power generation, transport and telecommunications infrastructure.

Implementation of the Plan will be supervised by the State authorities. In 2009-2011, investments from the state budget will increase by more than USD 10 billion; additional USD10 billion will be provided from the National Fund.

Funding of the industrialization process may be in the form of either private capital participation in priority projects with free niches for profitable investment, or as a public-private partnership. The examples of such projects include: implementation of pilot network projects in agriculture; construction of a bitumen plant in Mangystau region; production of metallurgical silicon in Karaganda region; construction of the Beyneu-BozoyAkbulak gas-main pipeline; reconstruction and modernization of the Atyrau refinery, chemical-gas complex in Atyrau region; ferroalloys modernisation in Zhambyl region; potassium fertilizers in Aktobe region; Moynak hydro-power plant construction.

Selection of priority investment directions for the State support is based on a number of certain criteria. These include scientific and technical novelty; economic feasibility; impact on other sectors of economy; social efficiency.

The state will complete market forces with a number of regulatory and support measures aimed at reducing uncertainty and providing stability of the market situation. Furthermore, the business will be provided with guidelines for efficient industrial development, stimuli for re-distribution of capital into acquisition of new technologies and markets, as well as with information support.

2.4 Priority areas for investment in Kazakhstan

· Infrastructure

· Petrochemicals

· Chemical industry

· Metals and Metalworking

· Transportation and Logistics

· Engineering, including oil and gas machinery

· Construction Materials Production

· Wood industry

· Light industry

· Pharmaceuticals

· Other non-commodity sectors of the economy

Financing of investment projects carried out through four national institute of development: Development Bank of Kazakhstan, the Kazakhstan Investment Fund, the National Innovation Fund and the Small Business Development Fund. Kazakhstan Development Bank specializes in financing major projects. Kazakhstan Investment Fund was created to provide financial support to private sector initiatives to create competitive industries in non-primary sector of the economy through participation in the authorized capital of newly created and existing enterprises.

National Innovation Foundation (NIF) - specializes in the financing of innovative projects and research and development, creating venture capital funds. Small Business Development Fund specializes in the allocation of soft loans for small and medium-sized businesses.

Means of development institutions that are intended to support investment, used to finance high investment projects, ensuring the creation of new jobs, new production, increasing output, improving quality and competitiveness of goods and services provided on a competitive basis in priority areas of non-oil sectors.

Principles of participation of development institutions in the investment projects are described in the documents governing the investment activities of these organizations: laws, memoranda, and investment returns.

Basic principles of participation of development institutions in the investment projects:

· Private sector initiatives - the development institutions are beginning to consider an investment project if bids from private companies

· Cost effective - the applicant must submit a technical-economic substantiation of the project, which should indicate the financial, marketing, organizational, technical feasibility of the project.

· Compliance with industry priorities - the project should be aimed at not on the extraction of natural resources, financial services, real estate construction (these sectors are excluded from the priorities of development institutions in governing documents), and the processing and delivery of services with high added value.

· Own part of the applicant - the applicant must possess their own resources for the project in addition to the participation of development institutions (own participation capital, collateral, land, provision of raw materials, permits for the regulated activity, the presence of the management team, professionals)

· Non-controlling part of the development institutions - institutions of development includes up to 49% in equity, the primary responsibility and authority for managing the company bears the applicant - a private company.

· Recurrence - all investments undertaken by development institutions should be returned.

· Pay - investments carried out by institutes of development should take into account the increase in the value of these investments, which includes the time value of money, the value of financial resources of development institutions, the risks associated with the project and operating costs of development institutions.

· Urgency - the return on investment is carried out according to the stipulated agreement.

· The technological and industrial cooperation for projects overseas - projects abroad should ensure transfer of technology to Kazakhstan or to provide raw materials, goods for further processing in Kazakhstan.

2.5 Problems and perspectives of the development of investment funds

With the growth of domestic economy and the accumulation of private capital to the population began to offer new investment instruments that constitute an alternative to bank deposits. On the background of overheating real estate market and a severe shortage of investment instruments people's interest in securities is visibly growing. This gives grounds for hope that the savings of the population will gradually be directed more towards the development of domestic business, rather than blowing a “bubble” in real estate or the support of foreign manufacturers of cars and luxury items.

Nevertheless, at present a major role in supporting long-term initiatives of the private sector along with banks play a developmental institutions, large institutional investors and financial-industrial groups. More recently in the capital markets of Kazakhstan have begun to appear new “players” - private equity funds (private equity funds), which, unlike portfolio investors invest directly in real assets or obtaining control of the business (the acquisition of its controlling stake). Depending on the investment strategy of private equity funds can be of various types: from venture capital and start-up to buy out and mezzanine.

The vast majority of private equity funds in the CIS countries are of the type “business development funds” or funds “middle stage”. Investment targets for these funds - companies that have worked well and which need additional capital to a new level. Development funds are characterized by medium-risk and relatively high yields, which makes them very popular. In the world there are vast amounts of such funds, they vary greatly in size, from tens of millions to many billions of dollars. In the CIS, the dimensions of such funds - from the tens of millions to two billion dollars.

In the eyes of many companies, the recipient an important advantage of direct investment funds is that they provide capital, but leave the reins of power in the hands of owners and managers. This distinguishes them from strategic investors, who prefer to have complete control over the enterprise. Unlike banks, private equity funds do not require a deposit and fixed periodic payments, while providing access to its extensive connections, improving the strategy and tactics of business.

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