Expert Igor Shestakov assesses economic prospects of Kyrgyzstan

The political scientist named areas of the economy that were not hit by the crisis during the pandemic.

The Kyrgyz authorities have actively started to develop business, especially after the decrease in the number of COVID-19 cases. On August 1, the country's leader Sooronbai Jeenbekov announced the authorities' plan to allocate more than 10 billion soms for business development at the first stage. It should be mentioned that in February, the head of the state noted that investments and business are not going to the regions due to bureaucracy and pressure from the security forces. Political scientist, co-chairman of the Club of regional experts of Kyrgyzstan "Pikir" Igor Shestakov told about the spheres of the economy which are attractive to investors, problems and prospects in this direction.

Promising areas

According to the expert, the most promising areas in Kyrgyzstan are the agrarian and mining industries. The expert stressed that agriculture is not only one of the traditional spheres for the republic because 70% of citizens live in rural areas. It did not suffer during the pandemic, and market demand did not fall. Moreover, agricultural products have export potential.

The expert reminded that Kyrgyzstan has several preferences for the supply of quality food products to the EAEU countries. China can also become a major buyer of agricultural products.

However, for further development, it is necessary to solve the issue of technical equipment in this area. According to some assessments, the physical wear and tear of machinery and equipment is 80%. An increase in the volume of state support can have a positive impact on the development of agriculture while the number of subsidies remains insignificant.

Despite the global crisis caused by the pandemic, the mining industry also has solid potential in terms of attracting investment.

- The mining industry is also promising in terms of investment. The state has deposits of gold, tin, tungsten, rare earth metals, aluminum, coal, antimony, and molybdenum. Perhaps not all of these resources are in demand due to the global crisis, but the crisis will not last forever, so this area certainly has a huge potential, - said Shestakov.

The expert added that the demand for gold, for example, is maintained by the central banks of the most developed countries.

Besides, the textile and pharmaceutical spheres may become promising shortly, marked the political scientist.

Developed and undeveloped

The leading position is occupied by the service sector, especially the trade sphere. Shestakov highlighted that the republic's businessmen made good money on re-export from the PRC without much investment. Kyrgyzstan has been one of the leaders in this direction for a long time.

Kyrgyz labor migrants sent to their homeland 2 billion dollars a year. At home, money was usually spent in the service sector.

In the past few years, the tourism sector has brought the republic 500 million dollars annually, influencing the development of catering and the production of souvenirs. However, considering the pandemic, financial performance in tourism will recover in four years.

During the pandemic, the light industry was able to quickly "restructure" itself. Mass production of protective equipment was initiated.

- The situation with the pandemic showed that the light industry was able to reorganize itself in a short time, starting the mass production of masks, which were previously mainly exported from China. Another example is the quick establishment of the release of disinfectants, first of all, sanitizers, - said the expert.

The sad situation remains in the industrial sector. Shestakov stated that its potential was destroyed in the 90s.

Attractiveness and risks

According to the expert. Kyrgyzstan can be classified as a leader in Central Asia in terms of how the country implements "economic freedoms" for businessmen. However, there are enough negative moments that scare those who want to invest.

- There are some serious issues, the first one is undoubtedly corruption. Since officials demanded kickbacks over the years of independence, the republic has lost many profitable investment projects, - emphasized the expert.

The political scientist stressed that a set of measures must be taken to fight corruption. The expert reminded that the scale of corruption seriously worries the current leader of Kyrgyzstan. Therefore, Jeenbekov declared the fight against corruption one of the key areas of his work. Investors want to see the "transparent" work of government agencies.

- The second major problem is conflicts between foreign companies and local communities. Their number has decreased in recent years, but problems remain. There are many reasons for this, but first of all, it is an environmental issue. There are cases when investors violate the rules, but there are many examples when environmental requirements were a factor of pressure on investors from certain groups. The problem has been discussed for a long time at all levels of government, but so far no compromise has been found, - said the expert.

Chinese money

China is one of the main trade partners of Kyrgyzstan. Moreover, the bulk of investments in Kyrgyzstan comes from Chinese business. According to Shestakov, at least 60% of goods at Kyrgyz shopping centers are imported from the Middle Kingdom. However, Beijing tries not only to invest in the friendly republic but also to lend to it.

- In recent years, the topic of Chinese loans has received a wide public response; in total, Kyrgyzstan owes the PRC 1.7 billion dollars. High-profile criminal cases were opened for several loans to infrastructure projects. It is related to abuse of office, where former prime ministers, heads of ministries and parliament members were involved, - noted the expert.

The political scientist stressed that in Kyrgyzstan it is necessary to develop a different approach so that money leads to the implementation of projects, and not to criminal cases. After all, the republic has potential, considering its membership in the EAEU and participation in Beijing's initiative to revive the Great Silk Road.

- Kyrgyzstan needs to use the mechanisms of these integration projects to increase the output of export-oriented products, which will primarily be in demand in the EAEU markets. In particular, it has to increase the creation of joint ventures with Russia and China, thus solving the acute problem of creating jobs, - the political scientist believes.

The expert added that the country can become a significant transport hub, but first it is necessary to attract not credit, but investment funds.

05 авг 2020, 08:23
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