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Eurasian Business Briefing Kyrgyzstan

EEU doomed, predicts Bzhezinsky

Zbignev BzhezinskyThe Eurasian Economic Union (EEU) will be dead and buried within in ten years or as soon as Russia accepts that it is a a European state, Zbignev Bzhezinsky predicted this week. In an interview with the daily Gazeta, (more…)

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Turkic Council draws up proposals for common customs procedures

Turkic Council MapThe member states of the Turkic Council — Azerbaijan, Kazakhstan, Kyrgyzstan, and Turkey – are in the process of drawing up proposals for a common customs procedures and standards for the movement of goods, its Secretary General Ramil Hasanov said this week as they look (more…)

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Gazprom earmarks $1.5bn for Kyrgyz gas infrastructure

Yurt KyrgyzstanKyrgyz gas: Gazprom is set to invest $1.5 bn in Kyrgyzstan’s gas infrastructure over the next 15 years, it announced yesterday. Following high level talks in Bishkek, (more…)

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Kyrgyz PM Sariyev resigns amid accusations of corruption

Kyrgyz PM Temir SariyevKyrgyz Prime Minister Temir Sariyev and his entire cabinet resigned last week after a parliamentary commission accused it of corruption, a move highlighting tensions between different factions of President Almazbek Atambayev’s supporters. Sariyev resigned last Monday (more…)

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Bishkek and Beijing sign up to Trans Asia pipeline through Kyrgyzstan

Surveying the route of the Trans Asian pipelineTrans Asia pipeline : The authorities in Bishkek and Beijing last week agreed to build a natural gas pipeline through Kyrgyzstan to transport gas from the hydrocarbon fields in Turkmenistan and Uzbekistan to China in a deal that could be worth as much as (more…)

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Kyrgyz tourist sector given boost by Business Insider travel survey

Tian Shan Mountains Kyrgyzstan

Tian Shan Mountains Kyrgyzstan

Kyrgyz tourist sector:  Business Insider magazine has ranked Kyrgyzstan as the top emerging travel destination in the world for 2016. Mongolia came in third and Iran seventh. “Wilderness, wildlife and culture; these themes will illuminate the year’s travel itineraries,” the publication predicts. “Escapism and authenticity are key and nowhere offers them quite like fledgling and far-flung nations.
“Kyrgyzstan’s (more…)

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Kyrgyzstan unveils plan to strengthen som and ‘de-dollarize’ economy

Food market KyrgyzstanKyrgyzstan’s Ministry of the Economy yesterday released details of plans that it has drawn up in conjunction with the national bank to beef up the national currency – the som – and to ‘de-dollarize’ the country’s economy. 
The plans entail restricting the circulation of the US dollar, stabilising the som’s position on the international currency market, boosting demand for domestic goods and developing home-grown substitutes for imports.
They also allow for reasonable currency interventions to smooth sharp fluctuations in the som’s exchange rate, the introduction of measures to attract bank deposits in the national currency and the restriction of purchase and sale operations in foreign currencies on the domestic market. The government already regularly monitors the price of basic food products such as flour, bread, meat, macaroni, butter, vegetable oil, rice, and beans to ward off unjustified price surges.
Imports currently account for as much as 80% of total consumption and 40% of the average food basket, meaning that any rise in the value of the dollar’s value inflates prices,

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Cotton, electricity and the Aral Sea: The troubled waters of Central Asia

Tian Shan glacier

Tian Shan glacier

Fed by the melting glaciers of the Tian Shan and Pamir Mountain ranges on Kyrgyzstan’s and Tajikistan’s borders with China, the Amur Darya and Syr Daria rivers meander westward for over 2,000 kilometres through Uzbekistan, Kazakhstan and Turkmenistan to what remains of the Aral Sea. Their waters bind the five states of Central Asia together in a frequently uneasy interdependence, with the downstream demands of the Kazakh, Uzbek and Turkmen agricultural sectors at constant odds with their upstream neighbours’ ambitions to boost their hydroelectric power production.
Before the Soviet era, the combined volumes of the two rivers flowing into the Aral Sea equaled those of the Nile, but central economic planning put paid to that as Moscow went all out to increase Uzbek cotton production. The amount of water diverted from the Amur Darya and Syr Daria for irrigation purposes doubled between 1960 and 2000, with disastrous consequences for the Aral Sea and its surrounding eco systems. Over the past four decades, the water levels of what was once the fourth largest lake in the world have dropped by 23 metres.
aral seaThe problem did not disappear with the collapse of the Soviet Union. Cotton remains Uzbekistan’s main cash crop to this day, with raw cotton and non-retail pure cotton yarns accounting for around 20% of all exports making it the world’s fifth largest cotton exporters. Tashkent’s dependence on its “white gold” is not going to go away any time soon.
Chronically short of their own hydrocarbon reserves, both Tajikistan and Kyrgyzstan see the development of their hydroelectric power industries as a means of simultaneously meeting their domestic power requirements and of generating additional income through exports to South Asia. Both are urgently needed. As a result, water discharges for power generation are already taking precedence over the agricultural demands of their downstream neighbours.
On the upside – at least from their point of view – neither Tajikistan nor Kyrgyzstan are currently producing hydroelectric power at anything like their full capacity. Recent estimates suggest that Tajikistan has the potential to exponentially increase its annual hydropower capacity from 17.09bn kWh in 2013 to 300bn kWh a year, and Kyrgyzstan from 14.9bn kWh in 2011 to 142bn kWh.

Naryn River, site of proposed Kambar-Ata Dam

Naryn River, site of proposed Kambar-Ata Dam

David Trilling

If Tajikistan is going to get anywhere near to achieving this dream, then a good starting point would be to find the $6bn or so that it needs to complete the immense 13bn kWh Rogun dam across the Amu Darya Vakhsh River subsidiary. With the World Bank remaining non-committal on the question of funding, there has been speculation that Russia could finance the project as a means of luring Tajikistan into the Eurasian Economic Union; Moscow has already sunk $2bn into Kyrgyzstan’s Kambar-Ata Dam, one of six planned across the Naryn subsidiary of the Syr Daria. As for the AIIB, exactly how it deals with project that pitches two of its founder members against each other remains to be seen. It may be the first such dilemma faces, and it is very unlikely to be the last.
The fact remains, however, that if Central Asia is going to live up to Beijing’s expectations of a thriving economic zone, then something will have to be done about its power grid – and fast.
While the ADB estimates that combined electricity production in Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan has been increasing in recent years, it is not keeping pace with rising demand across the region, a state of affairs exacerbated by chronic underinvestment in its infrastructure. Most of Central Asia’s generation and transmission equipment was installed during the Soviet and many power plants are rapidly approaching the end of their working lives.
Tajik energy crisisThe results are predictable with Tajikistan’s Consumers Union Barknest recently reporting that many rural communities only had access to electricity nine hours a day and as little as 7.5 in some of the more remote districts. It is a situation made worse by the fact that, due to a lack of gas supplies, residents also have to use electricity for heating and cooking purposes. Again according to the ADB, some $36bn needs to be invested in Central Asia’s power sector by 2022 principally in the upgrading of existing and construction of new power plants, transmission lines and substations; and, of course, to strengthen power exchange between the countries of the New Silk Road.
In the meantime, the Aral Sea continues to die with the Uzbek authorities facing accusations that it would rather watch it dry out as this would make it easier extract the oil and gas deposits that lie beneath its seabed. In May 2015 its President Islma Karimov announced that $300m had been put aside for initial exploration to be carried out by an international consortium consisting of the Uzbekneftegaz National Holding Company (NHC), Russian’s Lukoil and China’s CNPC.
For whatever reason, the government in Tashkent is now focussing on plans to help improve the living conditions for people living on the perimeter of the Aral desert rather than bringing the sea back.; but creating a few lakes for fish farming or planting some saxaul trees on the seabed to reduce the spread of toxic salts are not going to reverse one of the world’s worst man-made environmental catastrophes.

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Western analysts warn of inflation as Kyrgyzstan joins EEU

Food market KyrgyzstanKyrgyzstan joins EEU: Kyrgyzstan’s membership of the Eurasian Economic Union finally becomes a reality this week amid Western concerns that it will lead to a sharp rise in prices and marks a step movement towards full political dependence on Russia.
The initial manifestation (more…)

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IMF Report 2014 – Kyrgyzstan

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IMF Report 2014 – Kyrgyzstan
Political context.
On April 3, 2014, parliament approved a new government, led by Mr. Otorbaev, the new Prime Minister. The ministers of economy and finances kept their positions. Moreover, on May 7, 2014, a new chairperson was appointed for the National Bank of the Kyrgyz Republic (NBKR). No major changes in economic policies are expected. In February 2014, parliament approved a new deal with Centerra, ending a two-year dispute over the Kumtor gold mine.
Background. In the first quarter, growth moderated to 5.6 percent (year-on-year) after the 2013 growth spike at 10.5 percent related to an unexpectedly high level of gold production. In the same period, inflation picked up slightly, owing to depreciation of the som in response to pressures from the depreciation of the Russian ruble and the devaluation of the Kazakh tenge.
The NBKR intervened heavily to mitigate these pressures, but has recently rebuilt reserves to ensure a more comfortable level of over three months of imports.
The current account is expected to deteriorate this year because of higher imports related to large public investments and FDI-financed infrastructure projects. Fiscal performance in 2013 was better than expected, with a deficit of 4 percent of GDP, but revenue headwinds call for a cautious budget in 2014.
The medium-term outlook remains broadly favorable, provided prudent macroeconomic policies continue and are supported with structural reforms, including tax policy and administration reforms, public financial management (PFM) reforms, and implementation of FSAP recommendations, in particular the Banking Code. Program. The program is broadly on track, with all end-December 2013 quantitative

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Cost of Doing Business in Kyrgyzstan 2013: JICA

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Cost of Doing Business in Kyrgyzstan 2013: JICA
A guide to opening a business in Kyrgyzstan prepare jointly by the Japan International Cooperation Agency (JICA) and the Kyrgyz Republic’s Chamber of Commerce.The guide covers the methods of opening an enterprise; required procedures; and costs, licenses and permits; certificates; taxes and social payments; and logistics and cargo transportation.

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Doing Business in Kyrgyzstan 2015 – World Bank

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Doing Business in Kyrgyzstan 2015 – World Bank


Starting a business in Kyrgyzstan requires 2 procedures, takes days and costs 2.4% of income per capita. (Most indicator sets refer to a case scenario in the largest business city of an economy, except for 11 economies for which the data are a population-weighted average of the 2 largest business cities. See the chapter on distance to frontier and ease of doing business ranking at the end of this profile for more details.)

Introduction
The business environment
Starting a business
Dealing with construction permit
Getting electricity
Registering property
Getting credit
Protecting minority investors
Taxes
Trading across borders
Enforcing contracts 
Resolving insolvency
Distance to frontier and ease of doing business ranking

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Doing Business Guide Kyrgyzstan 2012/13 – PwC

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Doing Business Guide Kyrgyzstan 2012/13 – PwC
Kyrgyzstan’s GDP for the first two quarters in 2011 was approximately US$2.3bn, a 5.5% increase on the same period in 2010. This growth was mainly connected with the increase in gold production and construction activities. However, Kyrgyzstan is witnessing an increase in inflation, which was at 7.2% compared to the December of the previous year. Agriculture constitutes around one-third of the GDP and more than one-third of employment.
The mountainous terrain accommodates raising livestock – the largest agricultural activity. The primary crops include cotton, wheat, vegetables, fruit, and berries. While petroleum and gas reserves are negligible, Kyrgyzstan is rich in mineral resources such as gold and other precious metals. 

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Russia turns back Central Asian fruit imports at border

Fruit pickers Kyrgyzstan

Fruit pickers Kyrgyzstan

Helvetus

Central Asian fruit imports: Russia’s watchdog Rosselhoznadzor turned backed 11 trucks carrying 205 tons of fresh fruit and vegetables from Kazakhstan, Uzbekistan and Kyrgyzstan at its borders last week, it has emerged. The goods were rejected due to lack of documentation.

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Belarus ready to invest in Kyrgyz agriculture, Kobyakov tells Sariyev

Kyrgyz PM Temir Sariyev and Belarus PM Andrei Kobyakov in Burabay 28-05-2015

Kyrgyz PM Temir Sariyev and Belarus PM Andrei Kobyakov

Belarus.by

Belarus is ready to invest in Kyrgyz agriculture rather than just import its raw materials, Prime Minster Andrei Kobyakov told his newly appointed counterpart Temir Sariyev during a break-out meeting of the CIS (more…)

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Atambayev signs Kyrgyzstan EEU accession law

President Almazbek Atambayev KyrgyzstanKyrgyzstan EEU accession: President Almazbek Atambayev today signed off on a law that officially paves the way for the Kyrgyzstgan to join the Eurasian Economic Union. The law, which comes into immediate effect, will facilitate free trade with the other EEU members states of Russia, Belarus, Kazakhstan and Armenia. The EEU was set up in January to replace the old Customs Union and is intended to facilitate the free movement of goods, services, capital and labour.

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Central Asian economies slowing down, IMF predicts

IMFCentral Asian economies: The IMF today corroborated concerns voiced by the EBRD earlier this week that a combination of Russia’s economic slowdown and low oil prices were hampering growth across Eurasia. In its latest regional outlook report it is predicting that the average growth in the eight former Soviet states of Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Armenia, Georgia, Kyrgyzstan and Tajikistan would slow down to 3.2% this year from 5.3% in 2014.

 
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Drop in remittances hurting Central Asian economies, warns EBRD

Migrant workersRemittances to Central Asia, Eastern Europe and the Caucasus have fallen to 2009 levels, and are impeding the growth rates of Central Asian economies, the EBRD warned last week in its latest regional economic prospects report. “Deep recession (more…)

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Kyrgyzstan joins Eurasian Economic Union

Kyrgyz President Atambayev and Russian PM Medvedev at Victory Parade in Moscow 2015

Kyrgyz President Atambayev and Russian PM Medvedev at Victory Parade in Moscow 2015

Reuters

Kyrgyzstan joins Eurasian Economic Union: At a meeting of the Supreme Eurasian Economic Council in Moscow yesterday, Kyrgyzstan’s President Almazbek Atambayev officially committed his country to membership of the Eurasian Economic Union. “I am convinced that the Eurasian Economic Union will be for the common good of our people,” he said. “The Union will strengthen stability in the Eurasian region and will provide forward movement across Eurasia.” 

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Kyrgyzstan appoints new Prime Minister

New Kyrgyzstan PM Temir Sariev

New Kyrgyzstan PM Temir Sariev

Kyrgyzstan appoints new Prime Minister: Kyrgyzstan’s ruling three-party coalition has nominated acting Economy Minister Temir Sariev as the country’s new prime minister, following the resignation of Joomart Otorbaev last week. 
Sariev founded (more…)

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