Economic week of Kyrgyzstan Feb. 10-15, 2020

Kyrgyzstan’s economic week this time was more eventful. This week it was announced which projects had finally begun to work, and that the British would assist the Kyrgyz Republic in the return of stolen assets, as well as the reasons for the weak investment flow into the country and investors' complaints. In addition, it became known that electricity consumption has increased over the year. Kyrgyzstan complained to the WTO about Kazakhstan, and that the EU allocated the last tranche of grant funds this week, and also that the production of a number of agricultural products increased. It is necessary to recognize as new this week the compulsory creation of departments or shelves in trading networks for locally produced products with the indication "Made in KG" on them.

January growth. Kyrgyzstan's GDP in January of this year amounted to KGS 31 billion 78.1 million (about USD 445) and increase made 1.8%.

According to data of the National Statistics Committee of the Kyrgyz Republic, GDP growth was ensured by all sectors of the economy: the growth in industry sphere made 0.8%, in the construction - 1.1%, in agriculture - 1.4%, in the services sector -6.4%,

New enterprises. This week announced which enterprises in the country were opened in 2019.

Shumkarbek Adilbek uulu, director of the Investments Promotion and Protection Agency of the Kyrgyz Republic said that, in 2019, 7 investment projects were implemented, the total amount of invested investments amounted to more than USD 65 million, which is 3 times more than last year.

“One of the major projects was the construction of a large plant for the production of heating radiators. The total investment of the project is USD 40 million. The plant is located on the territory of the Bishkek SEZ. The number of employees is more than 300 people. The company's activity is industry. Most of the raw materials are imported from Russia, Kazakhstan and even European countries, however, all added value is formed by Kyrgyzstan. And then the products are exported to Russia, Kazakhstan, Azerbaijan. All value added remains in the country. This is an export-oriented factory,” said Adilbek uulu.

Weak investment. Uncertainty in protecting investments negatively affects the flow of investors, Executive Director of the International Business Council Askar Sydykov told during his presentation at the second meeting of the Committee for the Development of Industry and Entrepreneurship.

He informed that in the report on the assessment of the Index of Economic Freedom indicated that protection of business in Kyrgyzstan is weak, and registration of property rights has become more difficult. The inflow of investments into the country, according to 2017-2018, was only 2.5% higher than the outflow of investments from the Kyrgyz Republic.

“The main reason for this is corruption, political instability, bureaucracy, weak infrastructure, etc. All these reasons are a wake-up call for business, and they prefer to invest in other countries. A business does not have confidence in protecting its investment. Today business for the state is a kind of “adopted son,” whom always criticize, but do not support and pay attention,” Sydykov said.

Energy consumption increased. In January 2020, subscribers of Severelectro OJSC consumed about 764.9 million kWh of electricity.

For comparison, in the same period of 2019, 706.9 million kWh of electricity was consumpred.

In the capital of Kyrgyzstan, in January, citizens consumed 348.5 million kWh of electricity.

Complaints from investors. Shumkarbek Adilbek uulu, Director of the Investments Promotion and Protection Agency of the Kyrgyz Republic this week, during the second meeting of the Committee for the Development of Industry and Entrepreneurship at the National Council for Sustainable Development of the Kyrgyz Republic, told about complaints from investors.

Following the results of the first meeting of the Committee, a number of instructions were given regarding improving connectivity to infrastructure and improving access to finance. A certain work has been done in this aspect, and, of course, certain work is being carried out regarding inspections and the impact of law enforcement agencies.

“Firstly, a decree has been adopted, according to which work is being carried out in the form of tax exemption for small and medium-sized enterprises. Information and consultation work is also underway. Many issues have been resolved. But, there are complaints from investors of many countries. These are Turkish, Chinese and Russian entrepreneurs. That is, those entrepreneurs who work here,” said Shumkarbek Adilbek uulu.

Kyrgyz products in Japan. Companies from Kyrgyzstan presented this week unique products of beekeeping and dried fruits from Kyrgyzstan at an exhibition in Japan.

The products were presented at the exhibition complex Makuhari Messe as part of the food industry exhibition "Food Table in Japan 2020", held from 12 to 14 February.

Complaints to the WTO. This week, the WTO Trade Facilitation Committee examined Kazakhstan’s trade restrictions on transit goods from Kyrgyzstan.

It is known that starting from March 2019, significant delays in the movement of transit goods from Kyrgyzstan are observed on the territory of Kazakhstan, which are caused by tougher inspections by the Kazakh authorities.

“In order to take all necessary measures to resolve the current difficult situation at the border, the Kyrgyz Republic throughout 2019 has been sending official written appeals to Kazakhstan and conducted bilateral consultations at the WTO site, where the Kyrgyz side thoroughly acquainted the Kazakh side with the critical situation of backup of cars and appealed to remove the trade barriers and act within the framework of the rules established by the WTO,” the Ministry of Economy said.

EU grant. The European Union transferred to Kyrgyzstan this week a grant in the amount of EUR 5 million 750 thousand to the account of the Central Treasury of the Ministry of Finance of the Kyrgyz Republic as part of budget support for the social welfare sector of Kyrgyzstan. The tranche will be received by the Government of the Kyrgyz Republic in the coming days, according to the EU Delegation to the Kyrgyz Republic.

This is the third and final payment in the framework of the budget support program of the social protection system of the republic. The aim of the program was to assist the government in reforming the area of social protection.

The total amount of grant funds allocated under this program since 2016 amounted to EUR 16.5 million.

Production growth. In January 2020, about 30 thousand tons of meat and 80 thousand tons of milk were produced in Kyrgyzstan.

“29.9 thousand tons of meat in live weight was produced by economic entities of all categories in the republic in January 2020, which is 498 tons or 1.7% more than the corresponding period last year,” the Ministry of Agriculture of the Kyrgyz Republic noted.

The increase in meat production in the republic is due to an increase in the number of livestock except for pigs..

Electronic invoices. Within a month, 124 companies joined the pilot project of the State Tax Service of the Kyrgyz Republic on the application of electronic invoices and currently their number is 627.

Companies are actively involved in the pilot project, which allows them to prepare for the mandatory use of electronic invoices.

The parties weekly test the Electronic Invoice information system. For each meeting during the week, IT-specialists finalize the information system of electronic invoices taking into account proposals and comments.

Made in KG. From now on, retail chains in Kyrgyzstan have to organize shelves for domestically produced goods with the designation “Made in Kyrgyzstan”.