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Special economic zones in Kazakhstan during the independence

10 February 2014
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According to experts, Special Economic Zones (SEZs) are part of the national economic space, which uses a special system of benefits and incentives, which is not used in other parts of the country. Thus, the SEZ are in varying degrees apart geographic area [1]. However, there are other definitions of the term. For example, in the anthology «Modern History of Kazakhstan», stated that «Special Economic Zone — This is a restricted area with a special legal status in relation to the rest of the territory and favorable economic conditions for domestic and foreign businessmen» [2, p. 536].

In the scientific literature, along with the term «special economic zone» also uses the term «free economic zone», which is considered to be equivalent, which in our opinion is not entirely true. Since the term «free economic zone» means any land, within which there are any preferential terms of economic and entrepreneurial activities, customs, currency, tax, and visa [3, p. 502]. From the above we can conclude that these two terms still have slight differences from each other and their values must be distinguished.

In Kazakhstan, however the concept of «special economic zone» legislation did not appear immediately. At the beginning of the 1990s, the term «free economic zone», formally enshrined in the law of the Kazakh SSR, was used. In law, the term means the following: «Free Economic Zone in the Kazakh SSR — a specially designated area with well-defined administrative boundaries and a special legal regime created in order to attract foreign capital, advanced foreign technology and management expertise for accelerated socio-economic development of the zone» [4; 5, p.8].

Only in the mid-1990s in the law of the Republic of Kazakhstan dated 26 January 1996 «On special economic zones in the Republic of Kazakhstan» was legally introduced the concept of the term «special economic zone» is a limited territory of the Republic of Kazakhstan, where a special legal regime [6; 7, p.177].

The next law governing the SEZ was the law of RK of July 6, 2007 «On special economic zones in the Republic of Kazakhstan», in which the term is defined as a bounded territory of the Republic of Kazakhstan with precisely defined boundaries, which created favorable conditions for the implementation of priority activities [8].

Subsequently, the law null and void in accordance with the following law of the Republic of Kazakhstan dated 21 July 2011 «On special economic zones in the Republic of Kazakhstan», which is currently in force. According to this law, the term «special economic zone» means that part of the territory of the Republic of Kazakhstan with precisely defined boundaries, in which a special regime for the implementation of priority activities.

Controls in the SEZ specially appointed management company. Besides it, the members of zone are legal entities engaged in the area of priority activities. The main purpose of these zones is to provide an enabling environment for investors to build in the area of high-tech industries. All participants operate under a special legal regime. The decision on the establishment of the SEZ made by the President of Kazakhstan, on the proposal of the Government in the form of the decree, which further will be complemented with additional decree. Validity of BMS does not usually exceed 25 years [9].

In 1991, the Supreme Soviet of the Kazakh SSR of 18 June was created Zhairem-Atasuysk free economic zone in the then existing Dzhezkazgan region became the first zone of its kind in Kazakhstan [5, p.8].

January 11, 1992 decisions of the Supreme Council of the Republic of Kazakhstan have been established: the East-Kazakhstan free trade zone within the administrative-territorial boundaries of the East Kazakhstan region [7, p. 32]; Alakul Zharkent and free economic zones within the administrative-territorial boundaries Alakul and Panfilov district Taldykorgan area and free economic subzone in Taldy Kurgan on the basis of enterprise «Taldy Kurganvneshtrans» [5, p.8].

April 13, 1992 by the Cabinet of Ministers of the Republic of Kazakhstan «Questions of free economic zones in the Republic of Kazakhstan» was approved provisions for the establishment Alakul, East Kazakhstan, Zhairem-Atasuyskoy, Zharkent, Karaganda and Mangistau free economic zones [7, p.47].

June 30, 1992 by the decision of the Supreme Council of the Republic of Kazakhstan Lisakovskaya free economic zone was created [7, p. 57].

March 5, 1994 by the decree of the President of the Republic of Kazakhstan «On measures to streamline the operation of free economic zones» were declared null and void the decision of the Supreme Council of the Republic of Kazakhstan on the creation of Atyrau, East Kazakhstan, Karaganda, Mangistau free economic zones. In the same decree of April godu18 Ppezidenta the Republic of Kazakhstan was established free trade zone «Exhibition Centre» in Almaty, Kazakhstan within the boundaries of the downtown business cooperation [7, p. 113, 119].

March 5, 1994 by the decree of the President of the Republic of Kazakhstan «On measures to streamline the operation of free economic zones» were declared null and void the decision of the Supreme Council of the Republic of Kazakhstan on the creation of Atyrau, East Kazakhstan, Karaganda, Mangistau free economic zones. In 18 April the same year, decree of President of Kazakhstan was established free trade zone «Exhibition Centre» in Almaty, Kazakhstan within the boundaries of the downtown business cooperation [7, p. 113, 119].

In 1996, by the following decrees of the President of the Republic of Kazakhstan have been established:

— August 23 — Lisakovsk special economic zone within the city Lisakovsk Kustanai region, with a life expectancy of up to 2010 which replaced the pre-existing regime of free economic zone [7, p. 199; 10, p. 46];

— October 8 — Kyzylorda special economic zone in the city of Kyzyl-Orda of Kyzyl-Orda region with a life expectancy of up to 2007 [7, p. 202];

— October 9 — Akmola special economic zone. Subsequently, a decree was amended in accordance with which the area was renamed «special economic zone of the city of Astana." The first chairman of the SEZ was appointed A. Bulekpaev. Area has become a powerful impetus to the capital intensive infrastructure formation and development of the city. For example, through the action of the SEZ in Astana were built neighborhood «Samal», 9th block, a sports complex «Kazakhstan», many government buildings [7, p. 202; 11, p. 95 — 108];

— November 14- Zhairem-Atasuyskaya special economic zone this replaced the pre-existing regime of free economic zone with a life expectancy of up to 2007. Zone was located in the Zhezkazgan area and included the city of Caracal, towns and Zhairem Shalginsky and reserve lands Zhezkazgan area. As a result of the SEZ Zhairemskiy Mining Plant went on to become the largest company of Kazakhstan for the production of iron and manganese concentrates. Also in the area was started concentrating factory on processing of manganese ore and carried out construction of its own steel plant producing zinc and lead [7, p. 206; 12, p. 155].

However, according to experts the first results of most educated in the 1990s SEZ jeopardize established regional economic ties and weakened the position of domestic producers and contributed to the growth of unfair competition. In connection with this, it was decided to close the Atyrau, East Kazakhstan, Karaganda and Mangistau free economic zones. The main reason for the closure zones researchers believe that decisions about their education were adopted without a thorough analysis of the economic capacity of the regions, besides out properly developed legal and institutional mechanisms for the use of zones and areas of administration was not independent in solving financial, fiscal and organizational issues [13].

March 31, 1999 issued a decree of the President of the Republic of Kazakhstan «Some issues of special economic zones in the Republic of Kazakhstan» on which were prematurely eliminated: Lisakovsk, Kyzylorda Zhairem-Atasuyskaya special economic zones. As a result of all companies operating in the 1990s zones by the year 2000 there was only one serving — a special economic zone of the city of Astana [7, p. 298, 13].

By the mid-2000s functioned following SEZ «Astana — new city», «Seaport Aktau», «Information Technology Park «Alatau». Also, industrial zones have been established in the Karaganda region and in Astana, which were built high-tech industries [14, p.37].

In the modern period in Kazakhstan there are 10 special economic zones «Burabai», «Astana — new city», «Seaport Aktau», «National Industrial Petrochemical Technology Park», «South», «Park of innovative technologies», «Pavlodar», «Sary-Arka», «The chemical park"Taraz» «," Khorgos — East gate». All SEZ researchers have identified the following general advantages attractive to investors:
— The imposition of VAT at the zero rate the sale of goods consumed by the zone members to carry out activities that meet the objectives of the SEZ;
— Provision of land and construction of infrastructure at the expense of budget funds;
— Exemption from payment for the use of land for SEZ participants for up to 10 years and from the property tax;
-Reduction Corporate income tax on 100% of income from activities consistent with the objectives of SEZ;
-Absence of Customs duties and contributing to a reduction of administrative barriers [15].

Let’s consider some examples of the favorable effect of the SEZ in Kazakhstan.
In the special economic zone «Astana — new city» were implemented following successful projects:
-Companies ALSTOM (France), carrying out production of electric locomotives. The advantages of electric current company here, is that they allow you to reduce power consumption for traction, reduce their negative impact on the railway track, greatly reduce the cost of maintenance and repair [14, p.37; 15].

— Companies General Electric (USA) which produces diesel locomotives. In July 2009, the grand opening of a new locomotive plant was held. In December 2009, they released their first locomotive series «Evolution». Start of Kazakhstan’s first high-tech assembly plant locomotives testified about the real possibilities of our country and its attractiveness to investors. Produced a new generation of locomotives are consistent with Euro-3, resulting in the consumption of fuel and oil was 17 per cent lower than the old, and the percentage of harmful emissions into the atmosphere has dropped to 40 were also created favorable conditions for the operation of the locomotive crew. For example, in the cab were provided insulation and climate control [14, p.56; 15; 16, p. 228].

— LLP «Astana Solar» — a subsidiary of the «National Atomic Company» Kazatomprom «- the world leader in uranium production, the project» Creation of production of photovoltaic modules based on silicon Kazakh «KazPV». Activity — an example of the concept of Kazakhstan’s transition to a «green economy» and the «Energy Savings — 2020». Built by the factory is equipped with European automated equipment of the new generation, allowing the finished photovoltaic modules with a total capacity of 50 MW per year with an extension in the run up to 100 MW [15, 17].

SEZ «Seaport Aktau» since 2006 conducted a gradual expansion of the port of Aktau, which increased its capacity by 2 times — from 11 to 23 million tons per year. Subsequently, in the city of Aktau company «Arcelor Mittal» factory was built on production of oil pipeline [12, p.165, 18, p. 75].

SEZ «Information Technology Park «Alatau» or «Alatau IT City» was the first object of High-Tech Industry in Central Asia. In addition to the well-known benefits for all zones in the SEZ, the following additional benefits: reduction of social tax software companies up to 5 years, an increase in the marginal rate of depreciation from 15% to 40%, applied to software. This is the first major project to create industrial park at the national level in Kazakhstan. Existing businesses are engaged in the production of LCD televisions, monitors, personal computers, laptops, servers, software development, customization, semiconductor and other Electronic devices [15].

On the territory of SEZ «South» has implemented the following investment projects: LLP «Hlopkoprom-Cellulose» — the organization of production of cotton wool, cotton cellulose and carboxymethyl cellulose from cotton-technical resources; LLP «Oxy Textile» — complex automated spinning and twisting factory; LLP «AGF Group» — weaving manufacturer; LLP «Kagaz Shahary SEZ» — factory for the production of paper [15].

Acting on the territory of SEZ «National Industrial Petrochemical Technopark» projects were included in the list of important projects of «30 Corporate Leaders of Kazakhstan». The first project is the construction of an integrated petrochemical complex world-class, and the second — the construction of a complex for the production of benzene at Atyrau refinery. In addition, the company «Chevron» was deployed production of polyethylene pipes. Today on SEZ realized construction of the following important projects: integrated chemical complex, a complex for the production of ammonia and urea plants and factories for the production of polyvinyl chloride, butadiene, rubber and methanol [12, p. 164; 18, p. 75].

In addition to the economic function, in the history of independent Kazakhstan special economic zones have played the role of a testing ground for the realization of architectural ideas and urban plans. The President of Kazakhstan N. Nazarbayev mentioned about it his book «In the heart of Eurasia».
For example, in Astana due to intense activity of SEZ were built: the Islamic cultural center «NurAstana» apartment complexes «Otrar» and «Almaty» monument «Astana-Baiterek» diplomatic town, building a national company «KazMunaiGas», the hall of joint sessions of the Chambers Kazakhstan’s parliament, the new residence of the President of the Republic of Kazakhstan and many others. Also a highway «Center of Left Bank — Abylaikhan Avenue» was paved. The territory of the city has increased by 2.5 times. In the capital there was a big economic potential in the following industries: hospitality, service industry and tourism [11, p. 153 — 161; 18, p. 43].

In addition, the mechanism of areas’ activity has become one of the factors for the creation of a favorable investment climate. State in a relatively short time managed to create a stable flow of foreign investment. During 1991 — 2010 period of time about $ 140 billion foreign investment had been raised. The main investor countries were the Netherlands, USA, France, China, Japan and United Kingdom. By 2012, the amount of money involved in foreign investment amounted more than $ 160 billion [19, p. 175 — 176].

From the above it can be concluded that, for the proper functioning of SEZ in our country’s independence was established quite a strong legal framework. Despite early setbacks, seemingly jeopardized the existence of the process and the subsequent creation of free and later special economic zones, the government terminated the process of establishing such zones in Kazakhstan. On the contrary, learn from the mistakes of the 1990s, the government made the relevant findings, subsequently allowed to achieve positive results. Was fortified by the legislative mechanism of action of SEZ brought reliable investors, and established the process of granting privileges, performing activities are entrepreneurs. Subsequently, the process of increasing the quantitative and qualitative aspects of the process of creation of such zones has allowed to develop infrastructure in the regions, to open new branch in production, establish a process for the release of new products, create new jobs and contributed to the development of the construction boom, which benefited the rise of industry and the development of the economy of Kazakhstan in general.


Reference:

1. T. Kaygorodtseva, Special economic zones in Kazakhstan [Internet portal G-global]. http://www.group-global.org/ru/publication/view/1759 (date accessed: 15.01.2014).
2. Modern History of Kazakhstan: Hrestomatia/ Comp. A. Auanasova, A. Sulejmenov. Ed. B. Ayagan. Almaty: Raritet, 2010, p. 560.

3. Large Law Dictionary, 3rd ed. ext. and rev./ Ed. prof. A. Sukharev. INFRA; 2009, p. 858.

4. Law of the Kazakh SSR, On free economic zones in the Kazakh SSR, dated 30 November, 1990, 360-XII (in accordance with the changes put forward to the Law of RK from 18.01.1992; Decrees of the President of Kazakhstan, having the force of law from 30.10.1995; from 5.11. 1995) [website of «Customs Forum of Kazakhstan»], http://new.keden.kz/ru/zakon_view.php?id=2597 (date accessed: 20/01/2014).

5. M. Sarsembayev, the legal status of economic zones in Kazakhstan and the world: Astana, Daneker, 2002,100 p.

6. The law of the Republic of Kazakhstan N 2823 of 26 January 1996 «On special economic zones in the Republic of Kazakhstan» [Website «Pavlodar.com»] http://www.pavlodar.com/zakon/?dok=01146&all=all (date accessed: 01/20/2014)

7. Chronicle of Independence of the Republic of Kazakhstan. Facts and Events (1991 — 2011 years), Pavlodar: Sytina Printing, 2011, 764 p.

8. Law of the Republic of Kazakhstan № 274-III of July 6, 2007 «On special economic zones in the Republic of Kazakhstan» http://www.epravo.kz/urist/detail.php? ELEMENT_ID=9351&SECTION_ID=9351 (accessed date: 01/20/2014)

9. Law of the Republic of Kazakhstan «On special economic zones in the Republic of Kazakhstan» № 469-IV of 21.07. 2011, http: /http://online.zakon.kz/Document/?%20Doc_id%20=%2031038117 (date accessed: 21.01. 2014)

10. Independent Kazakhstan: day after day. Chronicle of events: A Collection of Documents / Comp. B. Ayagan, A. Auanasova, I. Mukhtarova. Ed. B. Ayagan. — Almaty: Raritet, 2011 IIt. (1996 — 2000), p. 320.

11. N. Nazarbayev, In the heart of Eurasia, Almaty, Atamura, 2005, 192 p.
12. The history of independent Kazakhstan: Monograph / Society. Ed. H. Abzhanova, L. Nursultanova, Almaty: «Kazakh encyclopedia», 2011, p.400.

13. D. Balabekova, D. Medetov «Typology of free and special economic zones» [Website of the Institute of Economics and Law Ivan Kushnir]. http://www.be5.biz/ekonomika1/r2012/2980.htm (date accessed: 26.01. 2014)

14. B. Ayagan, A. Auanasova, A. Suleymenov. The recent history of Kazakhstan: Kazakhstan steady. III volumes: Scientific-popular edition. «Chronicle of independence», Almaty, LLP «Letter M», 2011, p. 320.

15. [Internet portal G-global]. URL: http://www.group-global.org (date accessed: 22.01. 2014)

16. Independent Kazakhstan: day after day. Chronicle of events / Comp. BG Ayagan, AM Auanasova, AM Sulejmenov. Ed. B. Ayagan, Almaty: Rarity, 2011 IVt. (2006 — 2011), p. 320.

17. [The site of «Astanasolar»]. URL: http://astanasolar.kz/ru/o-nas (date accessed: 25.01.2014)

18. President Nursultan Nazarbayev and modern Kazakhstan. Volume I. N. Nazarbayev and the socio-economic development of Kazakhstan: a collection of documents and materials in three volumes. / Ed. Ed. B. Sultanov, Almaty: KISR under the President of Kazakhstan, 2010, p. 256.

19. Kazakhstan: 20 years of independence: Monograph / Society. Ed. BK Sultanov — Almaty: KISR under the President of Kazakhstan, 2011, p. 408.


K. AKANOV

Junior Researcher, Master of Arts at
Institute of History of State CS of MES of Kazakhstan

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