The analysis and assessment of the current state of small and medium business in the republic of Kazakhstan

Purpose – consists in studying of development of small and medium business in the Republic of Kazakhstan. It is necessary to show that development of small and medium business in the country is one of key questions of further economic development of Kazakhstan.

Methodology – the research was under construction by the following general scientific methods: abstract logical, settlement and constructive, forecasting and method of generalization.

Originality / value – authors is carried out own point of view concerning creation of effective development of small and average business in Kazakhstan. Represents the offers and recommendations following from results of a research which are aimed at the development of small and medium business the system of the organizational actions directed on development of small and medium business is offered.

Findings – established the priority directions on enhancement of the state support and regulation of small and medium business. Research results showed the need of development of small and medium business for Kazakhstan consists that it promotes overcoming crisis, financial stabilization of economy, solve strategic and tactical problems of macroeconomic nature, industry development, and promotes reduction of the level of unemployment. All these factors prove importance of development of small and medium business. 

The small entrepreneurship in the Republic of Kazakhstan became the phenomenon mass and rather dynamic. For the last seven years the number of subjects of a small and average entrepreneurship in the Republic of Kazakhstan was doubled practically and following the results of 2015 reached 1,6 million units. As a result the share of subjects of a small and average entrepreneurship in a total quantity of accounting entities raised from 92% to 95,5%, and remains at this level within the last three years [1].

Thus, the private entrepreneurship becomes more and more mass type of activity among an economically active population that demonstrates favorable business climate in the country.

Dynamics of number of the active and registered subjects of a small and average entrepreneurship has a general positive tendency. Since 2005 the number of the registered subjects of a small and average entrepreneurship grew by 88%, active – for 51%. at the same time, if to treat dynamics by years apart, then it can be divided into 3 stages: – 2005-2007 – during this period which in general is characterized by rapid growth of economy of Kazakhstan (at the level up to 9-10% a year) the number of subjects of a small and average entrepreneurship steadily increased on average by 12% a year; – 2008-2009 – during this period entrepreneurial activity of the population decreased against the background of sharp delay of growth rates of economy that was expressed in reducing number of subjects of a small and average entrepreneurship; – 2010-2015 – this period is characterized by recovery of growth of economy and increase in number of the registered subjects of a small and average entrepreneurship. At the same time the level of actively operating plants changes not steadily that is shown in table 1.

In absolute expression the number of the registered subjects of SAB for the end of 2015 has increased by 907 thousand units in comparison with an indicator of 2005, the number of active subjects of SAB – by 395 thousand units at the same time a share of active subjects of SAB in total number of the registered subjects of SAB, having a positive tendency until the end of 2009, having increased from 68% to 71%, in 2010 was reduced to 55%. Following the results of 2015, according to operational data, the level of actively acting subjects of SAB among registered also has made 55%.

Dynamic increase in number of subjects of SAB happens against the background of systematic policy of the state on development of sector of private business through optimization of the taxation system, reducing administrative barriers, rendering direct financial and non-financial support, etc [2].

In the annual rating of Doing Business – 2015 of the World Bank (WB) and International Finance Corporation (IFC) Kazakhstan rose with 53 by the 50th line item in the list from 189 countries of the world, in a year Kazakhstan achieved positive results in such spheres as receipt of construction licenses (growth on 4 points to the 145th place), registration of property (growth on 9 points to the 18th place) and permission of insolvency (growth on 1 point to the 54th line item). The city-state of Singapore remains the leader of the world ranking in usefulness of conditions for business activity.

In January-September, 2015 in comparison with January-September of previous year production (in the comparable prices) increased by 9,3%, number occupied for 0,4%, the number of active subjects for January 1, 2015 increased by 1,7%. 

Table 1 – Number of active small business entities 

Production by subjects of a small and average entrepreneurship for January-September, 2015 constituted 10132,4 billion tenges. In a total quantity of subjects of SAB the share of individual entrepreneurs constituted 73,7%, peasant farms – 17,5%, legal entities of a small entrepreneurship – 8,3%, legal entities of an average entrepreneurship – 0,5%. In structure of active subjects of SAB on forms of business the subjects performing business activity without formation of legal entity prevail, are individual entrepreneurs whose number in 2015 made 662 814 units or 73,7% of a total quantity of active subjects of a small and average entrepreneurship. The number of PEASANT FARM made 157 766 or 17,5%, and legal entities the entities of a small and average entrepreneurship – 79 388 subjects or 8,35% of a total quantity of active subjects of SAB [3].

Despite of happy significant amount of the entities representing small and medium business, a role those in economy remains still insignificant. So, SAB share in GDP is given in table 2. 

Table 2 – Share of a small and average entrepreneurship in GDP 

Apparently from table 4 the downward tendency of SAB share in GDP is observed from year to year. At the same time it doesn't occur due to uneven decrease in a share, – there is a decrease, both shares of medium business, and a share of small business. It should be noted that till 2007 the share of products of MSB in gross domestic product of the country tended to growth. However from 2007 for 2014 it changed in the opposite direction. If in 2007 SAB contribution to GDP constituted 20,4%, then in 2015 it decreased to 17,3. In 2015 the share of a small and average entrepreneurship in GDP of Kazakhstan constituted 18,1%, number occupied in small and medium business – 2,5 million people, the number of active subjects exceeded 760 thousand.

Production by active subjects of SAB in absolute monetary value annually increases. Sharp growth of an indicator was observed in 2008 almost twice in comparison with previous year. It resulted from introduction of amendments to the legislation on a private entrepreneurship: new criteria of determination of subjects of an average entrepreneurship were entered at the expense of what their number included a part of the entities which were earlier classified as large [4].

Within the last three years of GDP of Kazakhstan in real terms shows stable growth. So, in 2012 as a result of increase by 7,5% of GDP constituted 27 301 billion tenges. In 2013 GDP grew by 5% that allowed to reach the level of 30 073 billion tenges. For 2014 GDP increased by 6% and constituted 33 521 billion tenges.

Production of MSP for 2015 is estimated at the level of 9 020 billion tenges that in the ratio with the runway constitutes 27%. The real surplus of products of SAB for 2015 constituted 3,3%.

In this sector is issued products for the total amount about 8 trillion tenges. The president of Kazakhstan Nursultan Nazarbayev in the message to the people "Strategy Kazakhstan-2050 set the object: by 2050 to enter number 30 of the most developed countries of the world. At the same time SAB share in economy of Kazakhstan shall grow by 2030 twice, and by 2050 this sector of economy shall become, according to Nazarbayev's promises prevailing.

This fact causes vigilance besides that the Government pursues active economic policy on ensuring diversification of economy and steady rates of economic growth due to increase in a role of SAB. In developed countries the share of products of SAB reaches 50% of GDP above. Criteria of reference of the nentities to category SAB in various states rather strongly. Nevertheless, even taking into account possible amendments, a contribution of small business entities to economy Kazakhstan is very small. Comparison of macro indicators of a small entrepreneurship of Kazakhstan with indicators of developed countries is shown in the figure 1.

Figure 1 – Comparison of Macro indicators of Small Business of Kazakhstan with Indicators of the Developed Countries 

On a share of an occupied population in SAB sector in general employment indicators of Kazakhstan are also much lower in comparison with the developed states. If in developed countries it constitutes from 47% (Canada) to 75% (Japan), then in Kazakhstan in 2015 it constituted only 32% [5].

The industry analysis of development of SAB shows very diverse picture in the category of the certain countries. Apparently from the figure 1 in world practice of development of small and medium business the bigger specific weight occupies an industry of agricultural industry, but at the same time, industrial small and medium scale enterprises (the Czech Republic, the Countries of OECD, England) are more developed, than in Kazakhstan.

Figure 2 – Branch structure of macro indicators of SAB

The share of SAB occupied in industrial sector of economy is an important indicator of high-quality development of a small entrepreneurship and economy in general. The entities of the industry, and first of all nprocessing industry provide diversified development of national

Indicators of activities of SAB in an industry section in 2015 are stated below. Apparently from the figure 3, the greatest number of SAB performs the activities in the sphere of trade (44%), and in agricultural industry (19%). The smallest quantity of SAB works in industrial sector (3%) and a construction (2%). In the sphere of transport and communication 19% of SAB [6] function.

Figure 3 – The main indicators of activities of SAB in industry section 

Comparison of Kazakhstan with economies of developed countries isn't always correct as doesn't consider a difference in structure of GDP, degree of a maturity of the markets and their social and demographic features. Besides, as we already specified in the previous chapter, development of SAB in the industry shan't be end in itself as in Kazakhstan there are no natural conditions for development of SAB in the industry.

Industry representation of quantity occupied in SAB characterizes SAB role in the solution of an important social task on employment of the population. This indicator significantly depends on quantity of the operating SAB in these or those industries of economy that explains similar proportions in an industry section – growth of quantity of the operating SAB in proportion resolves employment issues.

The analysis of production confirms a positive role of SAB working in the sphere of the industry where only 3% of the operating SAB provide a 10% share of production of SAB of all industries.

Similar to only 2% of SAB operating in the sphere of a construction provide a 15% share of production of SAB of all industries. SAB of transport and communication solve an economic problem on ensuring GDP growth by means of increase in production approximately in proportion to their quantity: occupying 7% of number in the SAB industry coal mine, this industry provides a 7% share of production of SAB of all industries. Trade, occupying the greatest share in quantity of SAB (44%), provides only 28% of amount of production, thereby, emphasizing the inefficiency in the solution of an economic task of GDP growth by means of increase in production. The same role is characteristic of SMSB of agricultural industry where 19% of a total quantityn of SMSB provides all a 16% share of production of SAB of all industries [7].

Trade in SAB on this indicator also has the greatest specific weight. Occupying a 44% share by quantity of the operating SAB, they obtained 41% of all credits of BVU. This tendency proceeds within seven years. SAB of industrial sector on the level of appeal are at the average level for BHE: the amount of the credits for them made 11% whereas the share of industrial SAB constitutes 3%. 

The overview of active SAB in a regional section for 2015 is provided in the figure 4 which shows that the greatest number of SAB functions in the Southern Kazakhstan area (128 thousand), in Almaty region (93 thousand) and in Almaty (124 thousand). The smallest indicators have North Kazakhstan (25 thousand), Kyzylorda (29 thousand), West Kazakhstan areas (30 thousand) and Pavlodar (33 thousand) [8].

In work ranging of regions on a share of the operating SAB in total number of the registered SAB is carried out. The level of this indicator is higher, the best conditions of business exist in the region. So, in 2015 across Kazakhstan this indicator constitutes 54,5%. Above so-so republican level it was created in West Kazakhstan (63%), Mangystau, Aktubinsk, Povladar Regions (62%), Atyrau (59%), North Kazakhstan (57%) It is connected with the fact that approximately at the national average level there is SKR (55%), East Kazakhstan and Kostanay (53%) areas. In other regions this indicator is lower than republican and varies fromn52% (The Akmola region) to 49% (Astana).

Figure 4 – Share of active SAB in total number of the registered SAB 

According to committee according to the statistics of the Ministry of Finance of the Republic of Kazakhstan the greatest number of active individual entrepreneurs is concentrated in Almaty – 103 217 (15,6% of a total quantity), Southern Kazakhstan – 67 015 (10,1%), East Kazakhstan – 59 537 (9,0%), Karaganda – 52 924n(8%), Astana 52 835 (8%) Almaty – 46 940 (7,1%), the Kostanay region – 35 837 (5,4%).

A significant amount of actively working country farms is fixed in Southern Kazakhstan – 54572 (34,6%), Almaty – 43535 (27,6%), Jambyl – 15394 (9,8%) and East Kazakhstan – 11723 (7,4%) areas. When carrying out the analysis of the level of development of small business in a regional section it is necessary to consider distinctions in population of regions. Counting on 1000 inhabitants of EAN of regions the greatest number of active SAB works in Almaty (160,6 units) and Astana (135,1 units), Mangystau (121,6 units) and Atyrau (114,3 units) areas. The smallest concentration of subjects of SAB is observed in Jambyl (76 units), North Kazakhstan (76,5 units) and Pavlodar (76,9 units) areas [9].

Thus, the small business entities performing the activities in the form of the legal entity or small business and also the subjects of an average entrepreneurship functioning in priority industries of processing industry, transport and communication treat subjects of small and medium business which have high potential opportunities for expansion of internal production of increase in competitiveness of the products and as a result of strengthening of the role in the course of diversification of economy of Kazakhstan [10].

Summing up the results, it is possible to draw the following conclusions:

• In general growth of absolute measures of small business (nominal quantity of the registered, operating SAB, products amounts) is observed;
• SAB contribution to the budget increases quicker, than number of the registered and operating plants and quicker than their share in GDP;\\
• However there are negative tendencies of relative indicators.

Growth of number of small enterprises, undoubtedly favorably influences development of economy of the republic, resolving unemployment issues due to creation of new workplaces, development of the sphere and quality of the provided services; increases in competitiveness of domestic goods; growth of tax revenues in the budget. In turn, further increase in number of small enterprises, requires improvement of investing and financial and credit activities that will allow filling up current assets of the entities, to execute modernization, to create additional workplaces and a competitive environment.

Infrastructure of support of an entrepreneurship represents a complex of the organizations providing favorable conditions for creation, functioning and development of private business activity.

It is possible to carry to those:

• the state and created at the initiative of the state organizations;
• nongovernmental organizations;
• international and foreign

Depending on a functional orientation the structure of institutes of infrastructure is determined as follows:

• the state support and assistance at stages formation, functioning and business developments;
• financial support
• it is information – analytical support;
• support in the field of education and advanced trainings of a personnel [11].

For successful development of the business entrepreneurs shall have an open entry to the standard and legal acts, explanatory documents and instructions regulating their activities. In addition they need to possess information on the demand and supply in the market, competitors, suppliers of raw materials, sales opportunities of finished goods of participation in tenders. At least availability of an opportunity for increase in level of knowledge and specialized skills which they apply in the daily activities is important for entrepreneurs [12].

The small entrepreneurship is fundamentals of market economy and provides employment to a considerable part of the population, and also supports large industries and projects. Its formation is closely integrated also to change of mentality, outlook, culture and lifestyle of entrepreneurs, people independent and capable to bear a large load of responsibility. At the same time growth of small and medium business allows to solve socially – economic tasks of regional development. Conditions of world modern economy further development of power of large monopolies is followed by preserving and development of small and medium-sized companies that is caused scientifically – technical revolution. The matter is that production of many types of new products begins at the entities of small and medium-sized companies which in fight for the place under sun are forced to react more flexibly to the shift in demand, to look for requirements new still unsatisfied with production. Therefore not accidentally expenses of small firms on scientifically – research and design works counting on one occupied often exceed similar costs of large enterprises.

The international experience of formation of an entrepreneurship showed that the states of a transitional economy, as a rule, encouraged only trade mediation of the beginning entrepreneurs that did unprofitable activities in the sphere of production.

Backwardness of market infrastructure also is characteristic of a transitional economy. What constrained and constrains development of a small entrepreneurship. The output gap wasn’t stopping do1998 years in the Republic of Kazakhstan, inflationary tendencies. In case of which increase in prices obviously overtook increase in nominal yields of the population, led to narrowing of market capacity that significantly constrained development of business activity in the production sphere including on the basis of small business. It is necessary to refer to a restraining factor of development of a small entrepreneurship also underestimation of the importance of small and medium business in the sphere of production [13].

There are necessary measures for support and development of the arising small and medium business in market economy:

• development of complex state it is scientific – the reasonable development program of a small and average entrepreneurship as bases of creation of free competition;
• forming of financial base for its development and financial privileges (soft credits, preferential taxes, subsidies of non-paid nature, etc.);
• in the program the place of a small and average entrepreneurship in the priority directions scientifically
• technical progress shall be especially determined;
• in formation of small and medium business the special centers of small enterprises shall play an important role in various regions (the regional centers of the country);
• attraction of resources of large enterprises for the purpose of development of small and medium business on the basis of system of a cooperation of large and small business, especially in trade and services [14].

It is necessary to emphasize that small enterprises are a collateral sphere of economy. Small business restrictedly joins in economic structure, a competitive environment and in public job specialization. And the role it steadily increases in modern dynamic life. As shows experience of developed countries if in the past small enterprises were created as the result of aspiration of many to open own business, then creation of small enterprises is quite often initiated now by the large companies which charge to them to conduct separate types of production or to establish close ties with the market.

Questions of development of SAB in the Republic of Kazakhstan belong to the category of the most important and are considered at the highest national level. The present stage of development of small business in Kazakhstan, since 2001, is characterized by implementation of a number of the complex measures directed to streamlining of activities in the sphere of a private entrepreneurship, and including small business.

In the framework of the subprogram "Development of small and medium entrepreneurship in the Republic of Kalmyk, 2014-2017" state program "Economic development and improving the investment climate in the Republic of Kalmyk, approved by decree of the Government of the Republic of Kalmyk dated 26 April 2013 No 198 additional measures to support small and medium enterprises Autonomous establishment of Republic of Kalmyk Center of enterprise development». The subject of investment activity to be included in the Register of investors for the period, depending on the total volume of actual capital investment in production facilities over the last five years prior to the filing date of the application for inclusion of the subject of investment activity.

Successful experience of developed countries of the world in creation of competitive and diversified economy serves as evident confirmation of that fact that small business is one their crucial elements in this process. The condition and the level of development of sector of small business play an important role in ensuring sustained economic growth of the country, promoting the solution of a number of problems, such as unemployment, poverty, the undeveloped competition, inefficient use of material and non-material resources, dependence of the internal aggregate demand on import, etc.

Peasant farms are most developed in Almaty (45,29%) and Southern Kazakhstan areas (47,59%) in view of the environment promoting development of agriculture.

To important components use of the non-financial tools providing businessmen with consulting and training becomes an element of the state support of SAB recently more and more.

The greatest specific weight of legal entities of SAB in structure of all subjects of SAB is provided to Almaty, Astana and Mangystau regions. If availability in Astana and Almaty of a large number of legal entitiesт subjects of SAB is caused by financial development of two cities of Kazakhstan, then the situation of affairs in Mangystau region is caused by the fact that in from connection with receipt of the oil companies in some areas of Mangystau region almost all settlements received a push to economic development [15].

Peasant farms are most developed in Almaty (45,29%) and Southern Kazakhstan areas (47,59%) in view of the environment promoting development of agricultural industry.

Important components use of the non-financial tools providing entrepreneurs with consulting and training becomes an element of the state support of SAB recently more and more.

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