2.3. Development of joint ventures in Kazakhstan.

The creation and development of joint ventures in Kazakhstan began in 1989. As you know, the first joint ventures in Kazakhstan have been co-operatives. Growth and the introduction of cooperatives due to the following motifs: the prestige of the company, but rather the resale of imported goods, tax avoidance, the pursuit of freely convertible currency. The first legal instrument governing the joint ventures was the law of the Kazakh SSR "On foreign investments" from 12.07.1990.

Thus, according to statistics, in 1989 there were 8 joint ventures in 1995 –15, in 1996 - 225, in 1997 – 674, in 1998 – 1140, in 1999 - 491, in 2000 - 736, in 2001 - 995, in 2002 - 1388. Thus, after gaining independence, the adoption of national laws that promote entrepreneurship and facilitate the attraction of foreign capital, joint ventures are developing rapidly. In the study of the first experiment and creation of joint ventures in Kazakhstan revealed numerous problems that have clearly demonstrated that Kazakh organizations, as direct participants in the joint

enterprises, and implementing state regulation of the joint venture are not ready for widespread adoption of joint ventures in the practice of economic activity. Therefore, Kazakhstan, like other CIS countries, faces a pressing issue increasing investments in priority sectors of the economy with a view to their modernization and introduction of new technologies. It is also required considerable investment and creation of the market infrastructure.

Let us consider information on joint ventures by sectors and types of ownership and make a conclusion.

The number of joint venture industries and ownership for 2002:

Name of the sphere	Shared ownership (with foreign participation)		Foreign ownership
	Quantity	Weight in %	Quantity	Weight in %
Total	880	100	499	100
Industry	277	31,4	64	12,8
Agriculture	13	1,4	0	…
Transport	20	22	18	3,6
Construction	43	4,8	19	3,8
Trade and catering	268	30,4	271	54,3
Logistics	9	1,0	4	0,8
Blanks	9	1,0	2	0,4
Information and computer services	2	0,2	1	0,2
Other activities of material production	12	1,3	2	0,4
Housing and utilities	5	0,5	0	…
Non-production of public services	4	0,4	0	…
Health, physical education and social security	22	2,5	6	1,2
Culture and Art	5	0,5	3	0,6
Education	9	1,0	4	0,8
Science and scientific services	8	0,9	1	0,2
Management	3	0,3	2	0,4
Civil society organizations	1	0,1	0	…
Other	12	1,3	2	0,4

On January 1, 2002 in the republic acted in 1388 with the participation of foreign partners, partners from 81 countries with a statutory fund of $ 57,481.7 million tenge. The largest number of enterprises set up with companies in Russia -  237, Turkey - 228,Germany – 116, U.S. - 115, China - 79, UK - 53, Iran – 45, 38 in South Korea, Switzerland -  35, Italy - 33. The contribution of non-residents in the charter capital of joint ventures and foreign enterprises exceeded 23 061 KZT and made 40.1% of the total authorized capital of these enterprises. The largest number of workers employed in industry 59.9 thousand people, trade and public catering - 6 million people (8.4%), construction of 2, 5 million people (3.2%), business (brokerage , advertising, auditing activities, market research) -1.9 million people (2.4%), transport-1, 5 million people (1.9%). Joint ventures are exported, mainly raw materials and sell their own products mainly for the domestic market.

Today, direct investments give Kazakhstan minimal results, both in terms of capital inflows, and the overall impact on the economy. Another factor hindering this process was the inadequacy of the legal and institutional structures, unpredictable risks and practical difficulties in carrying out business activities. Among the most significant obstacles to investment in the economies of the CIS, including Kazakhstan and Western businessmen and bankers are still concerned about the problems of political, economic, technological, information risk, which are estimated to business, cover the expected benefits of cooperation. Both foreign and domestic businessmen for investment activity put forward as unpredictable changes in tax policy uncertainty in the delimitation of competence and powers of the central and local authorities. To the difficulties of organizational - legal, they include: lack of guarantees for long-term and large-scale investment, the lack of practical application of financial and property liens, security mechanisms for the implementation of investment programs and the effect of legal support that needs to comply with contractual obligations through loans or arbitration, the high degree of insurance. Many specific problems are still unsolved: lack of infrastructure, commercial and legal information, especially communications. They faced and difficulties in finding qualified local partners who can jointly with foreign companies to realize the investment project. There is inadequate representation of foreign and Kazakh partners on the value of contributions to joint ventures on business, the financial statements, which makes a comparative economic analysis of proposed projects. Each of these problems has their own negative impact on the scale of investment proposals and offers various levels of its decision. But none of them are minor.

Western companies and their representatives in Kazakhstan understand that to create a sustainable market economy, a perfect trade law and regulation, property rights, and full convertibility of national currencies a long time is required, as long as macroeconomic stability will be achieved. They believe that the republic's government to take actions that reduce uncertainty and reduce the risks of companies that will provide substantial growth in trade. Global experience has shown that foreign direct investments have some significant advantages compared with other economic assistance.

Contract between Kazakhstan and the leading global company "Chevron" of the joint venture "Tengizchevroil" is recognized as the world's largest, which will operate for 40 years. In addition to receiving "Tengiz Neftegaz" 50% of income from the joint venture, the country is expected to make significant investments for the funds and payments. These revenues will increase with increasing profitability. During the contract period the republic intends to receive 80.4% of all income, and "Chevron" -19.6%.

However, the real effectiveness of joint ventures and lines of credit in the economy of Kazakhstan has remained small. Of the total invested headband only $ 20 million operate. 15 stated statutory funds from them are actually operating joint ventures. Foreign investments in the majority, as analysis shows, are under contract of intent. And those objects that are beginning to be implemented through individual and as a minor cost to make a visible contribution to the economy can not, although we can not say that the pace of attracting foreign capital is not increased. The most actively looking for areas of application are the capital of the United States, Germany and Turkey. The main conclusion which follows from the analysis is that the lack of a clear concept of attracting foreign capital, coupled with an unstable economic environment significantly reduces the motivation of foreign investors to invest in Kazakhstan, development of mutually beneficial and long-term cooperation.

According to the management of foreign companies, the investment climate in Kazakhstan generally favorable, but serious obstacles to further infusions of foreign capital can be: red tape, financial risk, weaknesses in tax and fiscal regimes in Kazakhstan, an underdeveloped legal infrastructure, foreign exchange controls. Despite the possibility of obtaining attractive returns on investment, the uncertainty is the dominant factor impeding investment in Kazakhstan. Investors need a stable and secure political environment. Kazakhstan is an attractive market for business reasons, the most basic nature: the Republic of peculiar large market potential, abundant natural resources and strategic location. The potential return on investment is essential for many respondents who expect to get more return on investment.

A significant contribution to investment and economic development of Kazakhstan called upon to make joint ventures, whose numbers continue to grow. As you know, one of the goals of joint ventures in various sectors is attracting more modern technology and equipment, respectively, and financial resources, and progressive management experience.

Conclusion

Joint venture is the main form of participation of foreign capital in Kazakhstan. Joint ventures now exist in all regions of our country. According to Western experts, the investment climate in Kazakhstan as a whole is good. But the subject of a favourable investment climate in Kazakhstan requires a separate study, one thing is the flow of investments is directed mainly in the extractive industries, attract foreign oil and gas, gold and uranium, nickel, chromium, copper and silver.

Joint ventures are one of the most dynamic and efficient economic sectors. This fact needs attention, study and analysis in the early recovery of the economy. Thus, the development of the joint venture must be an integral part of the structure and investment strategy of Kazakhstan, foreign participation is coordinating with the objectives of national development. On the example of the United Arab Emirates, Turkey, you can see some impressive results can be achieved through the effective exploitation of raw resources with the participation of foreign capital. It should be noted that on the example of joint venture "Tengizchevroil" you can see impressive results beneficial to both sides of the collaboration. The importance of business success lies in the fact that his unique experience of watching other potential investors, intends to master the Central Asian region. The success of "Tengizchevroil" showed the world that Kazakhstan is ready to take a leading position in the new Central Asian countries in its economic potential. However, the rate of growth, the extent of attracting foreign capital, industry structure and geographical location are not sufficient for the potential of a country such as Kazakhstan, which is not far-reaching with its export market, natural resources, skilled and cheap labour can be one of the main targets of foreign investment capital in the CIS.

Attracting the foreign capital in Kazakhstan's economy prevents several reasons:

• instability of the situation in the country;

• economic crisis;

• corruption of the authorities;

• rising unemployment;

• inflation;

In addition to these common causes of inflow of foreign capital in the ROK has hampered some of the factors:

• poor information of foreign investors about the potential for investment;

• inadequate procedures for registration of foreign investments;

• difficulty of access to local credit and stock market activity;

• relatively high taxes and low investment incentives;

• lack of insurance against political and economic risk.

From this we can conclude that the existing mechanism in the RK foreign investment and JV developed enough. Although the basic prerequisites for increasing the inflow of foreign investments are strengthening the political, economic and social stability in the country out of economic crisis, the improvement and development of forms of foreign capital (including the creation of joint venture) could significantly stimulate capital inflows.

Bibliography

1. “Совместное предпринимательство в Казахстане”, В.Г. Фурсов, 1994.

2. “Организационная культура: между иллюзией и реальностью”, Кристиан Шольц, 1995.

3. “International Business”, L. Hadeaba, 1994.

4. “What is joint venture?” <http://www.investorwords.com/2671/joint_venture.html>

5. “Definition, Explanation and Examples of Joint Venture” <http://www.accountingformanagement.com/definition_and_explanation_of_joint_venture.htm>

1 Л.В. Осипова, И.М. Синяева, «Банки и биржи», 1997.

2 Law of the Republic of Kazakhstan "On State Support of foreign direct investment," 24.04.98.

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