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Commercial
News Update - Kyrgyzstan
September, 2007
Author: Artyom Zozulinsky, BISNIS
Representative in the Kyrgyz Republic
INTERNATIONAL COPYRIGHT, U.S. &
FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2007. ALL RIGHTS
RESERVED FOR USE OUTSIDE OF THE UNITED STATES.
In this issue:
BUSINESS DEVELOPMENT & INVESTMENTS
ADB,
Kyrgyzstan sign agreement on reconstruction of Sarytash-Karamyk road
Koreans
willing to invest into construction of Bishkek-Kemin and Issyk-Kul-Almaty roads
Korean
company POSCO shows interest in construction of railways in Kyrgyzstan
Markogrov
Russian company shows interest in construction of aluminum plant in north of
Kyrgyzstan
Russia
to draft US$7m contracts with Dastan JSC
Lufthansa
City Center opens its office in Bishkek
EBRD
guarantees $2 million loan for on-lending to small business
KICB,
IFC sign agreement for US$4m in long-term credit line to KICB
Bishkek
thermal plant privatization terms under development
Powermen
plan to construct Kambarata water power station-2 on their own by 2010
Where
funding for hydro power plants Kambarata-1 and 2 will come from
Tender
for JOI development for construction of Kambarata HPPs set for Nov 6
Above
2 million people lived below poverty line in Kyrgyzstan in 2006
GDP
growth in Kyrgyzstan reaches 8.5% during 9 months
Investment
Council welcomes President’s decree on export-import procedures improvement
Kyrgyz
Government drops VAT rate for bread producers, cooking oil suppliers from 20 to
10%
Business Development and Investments
ADB,
Kyrgyzstan sign agreement on reconstruction of Sarytash-Karamyk road
Bishkek (AKIpress) - The agreement
on Central Asian Regional Economic Cooperation project (CAREC) on regional road
corridor improvement was signed by Kyrgyzstan and Asian Development Bank (ADB)
in Bishkek today.
The agreement was signed by acting Finance Minister Akylbek Japarov on behalf
of Kyrgyzstan and ADB Department for Central and West Asia Juan Mirand on
behalf of the ADB.
President Kurmanbek Bakiev and Asian Development Bank President Mr Haruhiko
Kuroda attended the official signing ceremony. Mr Kuroda is making a working
tour of Central Asian countries on the eve of the upcoming 6th CAREC
Ministerial Conference in Dushanbe set for Nov 2-3.
CAREC project on regional road corridor improvement will be financed from ABD
grant worth US$25.6 million.
ADB renders financial assistance for essential regional road net rehabilitation
aimed to reduce transport costs and enhance trade and cooperation between
Kyrgyzstan, Tajikistan and other Central Asian countries and also China.
The project includes rehabilitation of 263 km road with an extension of 550 km.
This road connects production centers in Osh (Kyrgyzstan), Dushanbe
(Tajikistan) and Xingjiang Uygur Autonomous Region (People’s Republic of
China).
“This project is an excellent example of regional cooperation and is of a great
importance for trade improvement between Kyrgyzstan, Tajikistan and China. This
project plays a significant role in setting up infrastructure and achieving
necessary agreements on transit custom issues,” ADB President Haruhiko Kuroda
said.
Koreans
willing to invest into construction of Bishkek-Kemin and Issyk-Kul-Almaty roads
Bishkek (AKIpress) - The Secretary
of Investment Committee under the Kyrgyz President, Talaibek Koichumanov, held
bilateral meetings on preparation of the business forum with South Korean
investors in Seoul.
Talaibek Koivhumanov had meetings with representatives of such companies as GS
Construction (former LG company), Rotem, Kolom, Korea Electric Power, Daewoo,
Dongbang, and also with the Chairman of Korean International Trade Association
(KITA).
During the meetings south Korean investors expressed willingness to get
involved into construction and reconstruction of international railway through
the territory of Kyrgyzstan and Bishkek-Kemin and Issyk-Kul-Almaty roads,
upgrading the Issyk-kul Airport in Tamchy village.
The issues related to partnership in energy sector, in particular, construction
of water power station Kambarata-1, power transmission line, Datka-500,
technology park and others.
Korean
company POSCO shows interest in construction of railways in Kyrgyzstan
Bishkek (AKIpress) - Prime Minister
Almazbek Atambaev on Wednesday met with the delegation of the Korean company,
POSCO, led by its Vice President Mr Chon Te Hen, reported prime minister's
press office.
Mr Chon Te Hen told the PM about activities of the company. POSCO produces
steel, it was founded in 1968. Today, POSCO is ranked 3rd in the world in size
of steel production. POSCO also constructs railways and cement factories,
produces construction materials. The company is active in mining development.
In Kazakhstan, POSCO plans to construct cement factory, which will produce 1
million tons of cement a year. "Our company can play one of the key roles
in development of Kyrgyzstan's national economy. In particular, we are
interested to take part in construction of railways in your country," said
Mr Chon Te Hen.
The PM thanked the POSCO representatives for their strive to help in economic
development of the country. "There are plans to construct
China-Kyrgyzstan-Uzbekistan railway. We will invite your company to take part
in the tender for Kyrgyzstan's part of this railway," stressed Almazbek
Atambaev.
Markogrov
Russian company shows interest in construction of aluminum plant in north of
Kyrgyzstan
Bishkek (AKIpress) - Great deposits
of alumina - the basic component of aluminum production can be found in
Kyrgyzstan. Markogrov Russian company, which intends to build aluminum
production plant in Panfilov rayon of Chui oblast, has shown its interest in
it.
Mr Agapkin, the company's representative came to Kyrgyzstan. The heads of the
rayon inspected the territory together with Mr Agapkin in order to choose the
plant's future location.
"Aluminum production is very energy intensive bussiness," head of
Panfilov rayon Mr Kuchukov says, "that's why we advised our guest to
distinguish the territory, necessary for plant building."
The required construction documents have been submitted already.
Russia
to draft US$7m contracts with Dastan JSC
Bishkek (AKIpress) - Russia plans to
prepare contracts for Dastan JSC to the value of US$7m, chief of Russian
Federal Atomic Energy Agency Sergey Kirienko said here on Friday.
The contracts are due to be drafted after Russia gains the state stake of 37%
in the company. In this case Russia will be able to take additional orders,
said Sergey Kirienko.
"Transfer of the controlling stake in Dastan JSC is important both for
Russia and Kyrgyzstan. This is a unique enterprise. We have agreed on almost
everything. Only technological details related to assessment of the factory's
assets are still under clarification," said Sergey Kirienko.
Prime Minister Almazbek Atambaev said Kyrgyzstan is asking US$30m for its
controlling stake in Dastan JSC. "The main thing is that we retain a
unique enterprise for the production of which we will gain billions of
soms," said the PM.
Kyrgyzstan is assigning its controlling stake in Dastan JSC to repay its debt
to Russia. The PM said: "We will ask to write off the remaining amount of
the debt and hope we will achieve mutual understanding."
Dastan JSC produces naval armament, special submarine equipment, medical
equipment, consumer goods. More than 1,000 people work at the factory. The
factory sells its production mainly to Ukraine, Russia and Kazakhstan.
Lufthansa
City Center opens its office in Bishkek
Bishkek (AKIpress) - Lufthansa City
Center opens its office in Bishkek on Oct 19, Kyrgyz Concept Company told
AKIpress.
Lufthansa City Center International is the largest worldwide travel agency
organization of its kind. As a global franchise company, Lufthansa City Center
combines flexibility and competence with economically independent entrepreneurs
under the umbrella of Lufthansa. Headquartered in Frankfurt/Main in Germany, the
worldwide Lufthansa City Center offices are to date represented with more than
580 offices in 70 countries.
Finance
EBRD
guarantees $2 million loan for on-lending to small business
Bishkek (AKIpress) - The EBRD is
providing Bai Tushum, one of the leading microfinance institutions in the
Kyrgyz Republic, with a US$2 million guarantee for local currency loans from
local banks. Bai Tushum will use the financing for on-lending to local micro
and small enterprises, thus significantly facilitating their access to finance,
EBRD said in its press release of Oct 26.
The EBRD’s guarantee is the second to Bai Tushum, after a first one was issued
last year, and it is one of the products available under the Non-bank
Microfinance Institutions Framework II for Early Transition Countries (ETC). In
many of these countries local currency funding is still in short supply, which
represents a serious impediment for the expansion of micro and small
enterprises. Easing access to finance is therefore a key challenge to achieve
sustainable growth.
Established in 1997, Bai Tushum has become a leading microfinance institution
in the Kyrgyz Republic with a strong rural focus. The institution offers a
range of agricultural loan products for crop production, livestock and
food-processing. Bai Tushum currently has around 10,000 clients, with the
majority of the portfolio outside the capital Bishkek.
Fernand Pillonel, Head of the EBRD’s office in the Kyrgyz Republic, said the project
confirmed the Bank’s commitment to supporting the micro and small enterprise
sector. It is expected that it will serve as an example to the sector and
encourage more local banks to finance microfinance institutions. The EBRD
expects to be able to offer more local currency loans in future, he added.
The EBRD’s Non-bank Microfinance Institutions Framework for Early Transition
Countries aims at strengthening microfinance institutions in the Bank’s eight
poorest countries of operations. Loans are provided for on-lending to the
smallest borrowers across the ETC countries Armenia, Azerbaijan, Georgia, the
Kyrgyz Republic, Moldova, Mongolia, Tajikistan and Uzbekistan. The facility is
accompanied by a technical cooperation framework funded by donor governments.
Through its micro and small enterprises programs the EBRD has supported over
one million small enterprises throughout Eastern Europe, Russia, Central Asia
and the Caucasus.
KICB,
IFC sign agreement for US$4m in long-term credit line to KICB
Bishkek (AKIpress) - Kyrgyz
Investment and Credit Bank (KICB) and the International Finance Corporation,
the private sector financing arm of the World Bank Group, have signed an
agreement for US$ 4 million in long-term credit line to KICB, reported KICB in
its press release.
The IFC credit line will broaden bank’s funding base and support the growth of
its credit activities. Since 2001, KICB has gradually developed into one of the
leading providers of term finance to private sector of Kyrgyz economy.
IFC is an existing shareholder of KICB with an equity stake of 20 percent. In
addition to IFC, KICB’s founders include Government of Kyrgyz Republic, Aga
Khan Fund for Economic Development (AKFED), Deutsche Investitions- und
Entwicklungsgesellschaft mbH (DEG), KfW Entwicklungsbank (KfW) and the European
Bank for Reconstruction and Development (EBRD).
“KICB has achieved good results in building strong and sound credit portfolio”
said Mr. Kwang-Young Choi, Chief Executive Officer of KICB. “We are very
satisfied with this credit line from the IFC”, he continued, “and KICB will
effectively utilize this credit line for extending more loans to SME sector
during 2007-2008”.
Since establishment of KICB in 2001, total of USD 75 million credits were
approved. Credit portfolio of the bank increased by 71% during last 9 months of
2007 which shows the dynamic growth of the bank, trust of clients and
soundness.
Shareholders of KICB are finalizing increase of charter capital of the bank
from USD 7 million to USD 10 million, which will be completed before end of
2007. After the capital increase, bank will be able to attract additional
credit lines from International Financial Institutions. Currently KICB is under
negotiation for attracting credit lines totaling USD 7 million, which will be
finalized before end of 2007 and negotiation of attracting additional USD 10
million will start in 2008.
Energy Sector
Bishkek
thermal plant privatization terms under development
Bishkek (AKIpress) - The State
Committee for State Property Management reported that at the present time the
working group set by the Kyrgyz Government is working out more optimal
mechanism of methods and terms of Bishkek thermal plant's privatization.
According to the adopted law on introduction of amendments and additions to the
law on a special status of the cascade of the Toktogul water power stations and
national high voltage transmission lines, Bishkek thermal plant will be
alienated in established order from the structure of open joint-stock company
“Electric Stations” for the purpose of investment attraction on its
modernization,” the State Committee for State Property Management reported.
The Bishkek thermal plant is a branch office of the open joint stock company
“Electric Stations” generating electric and heat power. Before this law was
passed, Bishkek thermal plant was not subject to any kind of alienation,
including circumstantial. This did not allow attracting investment for Bishkek
thermoelectric plant modernization.
Powermen
plan to construct Kambarata water power station-2 on their own by 2010
Bishkek (AKIpress) - Powermwn plan
to construct Kambarata water power station-2 on their own by 2010.
The financing scheme and construction plan for Kambarata water power station 2
is being developed, said Minister of Industry, Energy Sector and Fuel Resources
during the session of the Parliament on Thursday.
Bishkek (AKIpress) - The Islamic
Development Bank will give a credit of more than US$11m for 25 years with 7
years of a grace period for construction of high-voltage line in Batken oblast.
The line will stretch for 140 km, said Minister of Energy Sector Igor Chudinov
during the session of the Parliament on Thursday.
The Minister of Energy Sector said population of Batken oblast uses electric
power produced in Tajikistan now. "I think this line will allow us supplying
electric power to remote areas of Batken oblast independently from
Tajikistan," he said.
The members of the Parliament have ratified this agreement after discussions.
Where
funding for hydro power plants Kambarata-1 and 2 will come from
Bishkek (AKIpress) - During his
working tour of Issy-Kul oblast Kyrgyz President Kurmanbek Bakiev announced
that the hydroelectric station Kambarata-2 will be built using the country's
own resources and that for building Kambarata-1 investment capital will be
gathered. "Additionally, work is being done to increase the country's
export potential in the energy sector. If this can be done we will have solved
the issue of energy security," said the President.
Furthermore the President emphasized the need to increase business. "I
allotted particular attention to this issue in my Address to the People of
Kyrgyzstan. We want to reduce taxes on production industry profits to make
conditions better for increasing business in the given sector," said the
President. K. Bakiev especially noted that the chiefs of regional
administrations and rural municipalities must take active measures to enact the
official decisions on the creation of agricultural cooperatives.
Tender
for JOI development for construction of Kambarata HPPs set for Nov 6
Bishkek (AKIpress) - Unified Energy
System of Russia repeatedly announced the tender for preparation of the
justification of investments for construction of the Kambarata HPPs 1 and 2,
reported RIA-Novosti citing the press service of the company.
Envelopes with bids will be opened on Nov 6 at 1.00 pm of Moscow time, said the
Unified Energy System of Russia.
Initially, the call for bids was announced last May and was close by August.
However, the deadlines were extended twice as requested by applicants. In the
result, only two bids were received - Canada-based SNC-Lavalin International
Inc. and UK-based Mott MacDonald Limited.
The tender commission announced the applicants failed to meet the requirements
of the tender documentation.
The construction of the Kambarata HPPs began in 1986. At present, construction
of the Kambarata HPP-2 is 40% complete.
Macroeconomics
Above
2 million people lived below poverty line in Kyrgyzstan in 2006
Bishkek (AKIpress) - The Kyrgyz
National Statistical Committee released a statistical report, according to
which 2.72 million people lived below the poverty threshold in Kyrgyzstan last
year, including 75.2% of rural population.
At the same time, estimations of population's income levels in Kyrgyzstan show
that poverty rate, calculated on the basis of consumer costs, dropped from
43.1% in 2005 to 39.9% in 2006, which is 3.2% drop in general.
In 2006, poverty rate reached 47.7% in rural areas and 26.7% in urban areas,
which is less for 3.1%, said the National Statistical Committee.
GDP
growth in Kyrgyzstan reaches 8.5% during 9 months
Bishkek (AKIpress) - During 9 months
of 2007 the GDP growth in Kyrgyzstan reached 8.5%, reported the Kyrgyz Ministry
of Economic Development and Trade.
During 8 months of 2008 the real growth of GDP reached 8.5% (2.7% for the same
period of 2006), the nominal size of GDP amounted to 98.861 billion soms.
The real economic growth reached 9.2%. This per cent does not include Kumtor
project. Last year the real economic growth made 5.5%.
The growth in all sectors of economy, including industry(111.2%), agriculture
(102.2%), construction (139.2%), services (transportation of goods - 107.5%,
transportation of passengers - 105.3%, postal and communication costs - 166.2%,
repair of vehicles, home appliances - 112.5%, retail sale - 111.5%, services of
hotels and restaurants - 111.8%) contributed to this economic growth, said the
Ministry of Economic Development and Trade.
Legal and Regulatory
Bishkek (AKIpress) - The mandatory
confirmation of goods' correspondence to declaration of conformity has been
adopted by the Kyrgyz Government, reported the Government's press office.
In accordance with the Law on Basic Technical Regulations of the Kyrgyz
Republic the Government ordered that mandatory confirmation of goods'
conformity should be made in form of declaration of conformity based on
evidence of a producer (dealer), applicant's evidence and evidence of the third
party.
The goods included into the list of goods subject to mandatory confirmation of
conformity will require declaration of conformity. The declaration and
certificate of conformity will have an equal legal force in Kyrgyzstan.
The Ministry of Economic Development and Trade is assigned to maintain the
State Registry of goods, which underwent the procedures of mandatory
confirmation of conformity through approval of declaration of conformity.
Investment
Council welcomes President’s decree on export-import procedures improvement
Bishkek (AKIpress) - President
Kurmanbek Bakiev signed the decree “About State policy development in external
trade and measures on export-import procedures improvement” on Oct 25. As it is
mentioned in Investment Council’s report, “pursuant to this decree the head of
state determined basic directions of state policy in external economic
activity.” Investment Council considers this decree will allow cutting down up
to 50 current administrative procedures in external economic activity, to
ensure uniform commentary of regulatory and legal framework in this sphere and
also to implement new information technologies in external trade activities.
As it is mentioned in Investment Council’s report, the draft of this decree was
approved at the second session of the Investment Council. The approval was
anteceded by the joint efforts of the President’s administration experts,
Investment Council secretariat, Kyrgyz Ministry of Economic Development and
Trade and also interagency working group supported by the GTZ.
Investment Council secretariat regards that “state policy in this sphere should
proceed from necessity of entrepreneur consciousness presumption ensuring
increase of state agencies transparency and clients-oriented concern towards
entrepreneurs. This is conditioned by necessity of government services quality
improvement, entrepreneurs’ responsibility to ensure security and quality
standards of imported and exported production.”
With this in view the Government was given respective orders and at present time
the work is underway to implement the President's decision.
Kyrgyz
Government drops VAT rate for bread producers, cooking oil suppliers from 20 to
10%
Bishkek (AKIpress) - The members of
the Kyrgyz Government made a decision at their session on Thursday to reduce
the VAT rate for bread producers and cooking oil suppliers from 20 to 10%.
This decision was made as an urgent measure to ensure a sufficient supply of
grain, flour, and cooking oil in the country.
Prime Minister Almazbek Atambaev said this VAT rate drop will not affect
receipts of the public budget, since it will allow legalization for flour
makers and bread producers.
The Prime Minister said the Government provided 100 thousand tons of cheap
flour, which is sold in Kyrgyzstan at 10 soms per a kilo. The Government plans
to bring flour from Kazakhstan to northern parts of the country. The Prime
Minister said the scope of supplies of cooking oil increased.
Director of the Antimonopoly Committee Imankadyr Rysaliev said VAT rate
reduction will result in lower prices for these products.
Disclaimer: The information provided in this report is intended to be of
assistance to U.S. exporters. While we make every effort to ensure its
accuracy, neither the United States government nor any of its employees make
any representation as to the accuracy or completeness of information in this or
any other United States government document. Readers are advised to
independently verify any information prior to reliance thereon. The information
provided in this report does not constitute legal advice.
For more
information on Kyrgyz Republic, visit BISNIS online at: http://bisnis.doc.gov/bisnis/country/kyrgyzstan.cfm
BISNIS (www.bisnis.doc.gov) is part of the U.S.
Commercial Service (www.export.gov).
BISNIS Representative in Kyrgyzstan:
Artyom Zozulinsky (ZozulinskyA@state.gov)