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Investments in Kyrgyzstan. Uzbekistan as an example to follow

While Kyrgyz officials are telling fairy tales to investors, neighbors in the region provide them with real guarantees of work and safekeeping of funds. As a result, we attract millions, losing billions of dollars.

Debt is growing, no investment observed

Since 2010, Kyrgyzstan has signed 95 contracts for financial assistance, 84 percent of which are loans. According to expert Elmira Imanalieva, 40 percent is assistance from international organizations, 60 percent — assistance provided by foreign countries. The main donors of the republic are Russia, China, Japan and the European Union.

Deputy of Parliament Baktybek Turusbekov added that Kyrgyzstan has received $ 9.8 billion over the years of independence. About 24.9 percent was spent on transport infrastructure, 21.7 percent — on power sector, 5.4 percent — on the social sector, 3.6 percent — on agriculture.

At the same time, in reality, the country could raise much more funds. According to the Development Strategy for 2013-2017, Kyrgyzstan could realize projects for $ 12 billion, but missed the opportunity.

An economist Asylbek Ayupov notes that there have not been any major breakthroughs in the economy from 2010 to 2019. The authorities have nothing to boast about. The promised major projects were not implemented.

«Regions of the country can be developed only on the basis of Kara-Keche field and the construction of a railway. There are backward regions that pull the state back. We need to create a program for the development of the country. Projects should be adopted by law for responsibility. We must move from fairy tales to real things and use the capabilities of our partners,» the expert believes.

The president has already paid attention to the problem. The head of state bluntly stated that investors were simply afraid of coming to Kyrgyzstan due to corruption.

There are good investors who work honestly. But they are frightened by our corrupt officials. Investors do not want to spoil their reputation by contacting corrupt officials.

Sooronbai Jeenbekov

Nothing but boasting

But government officials obviously do not see the scale of the problem. They continue to be proud of the modest investment figures. For example, Azamat Zhamankulov, the Minister of Culture and Tourism of Kyrgyzstan said at a government meeting that 24 billion soms have been raised for the construction of hotels in the republic. Export of tourism services in 2018 amounted to $ 418 million.

The Agency for the Promotion and Protection of Investments intends to launch seven investment projects worth $ 83.5 million in 2019.

At the same time, the data of the National Statistical Committee is not at all in favor of the officials’ optimism. The inflow of foreign direct investment in January — September 2018 formed in the amount of $344.9 million, and the outflow was $ 328.1 million. The data of the Agency for the Promotion and Protection of Investments is also not encouraging. In 2018, only nine projects for $ 28.2 million were implemented.

Kyrgyzstan really has advantages that play in favor of investing in our republic. For example, the Kyrgyz Republic is part of the Eurasian Economic Union (EEU), it is considered as an island of democracy, we have relatively liberal tax legislation. Even these three factors would be quite enough to bring investors into the country. But we still do not know how to use our advantages, or our government lacks the scale of thinking, courage and creativity.

How does economic diplomacy work?

While we are running in place and leaving the investor with all the problems alone, the neighbors are actively using the possibilities of economic diplomacy. There is no need to go far for examples. After the change of president, neighboring Uzbekistan actively opens up to the world and invites big business to the country.

As a result, Uzbekistan, considered as an authoritarian and closed country, has managed to attract much more money than an open and democratic Kyrgyzstan for two years.

In 2018, during 18 interstate visits of the leadership of Uzbekistan, agreements on 1,080 projects for $ 52 billion have been signed. At least 456 projects worth $ 23 billion are already being implemented in the republic.

There are just a few simple examples of attracting investment. Before the visit of Shavkat Mirziyoyev to Germany, a German-Uzbek business forum was held in Berlin on January 14, 2019. Agreements of intent and investment contracts for $ 4 billion have been signed there.

In addition, for the further development of Safe City project, Uzbekistan agreed with the group of companies ATLAS International AC (Germany) on the joint implementation of the project to introduce modern road safety systems in Uzbekistan.

In the coming years, ATLAS International AC is going to invest 300 million euros in the Uzbek system of video and photo recording of traffic violations.

And what about our Safe City project? How many years have Kyrgyz officials been dragging it on? How many scandals we observed? And we still think when it is worth launching the project on an industrial scale. The tender for the second phase of Safe City has not yet been announced. Departments are still studying where the cameras should be installed.

Uzbekistan also manages, on favorable terms, to attract huge amounts of investment not only from private companies, but also from large financial institutions. For example, in 2018, the volume of the investment portfolio as a result of cooperation with the World Bank, the Asian and Islamic Development Banks, the European Bank for Reconstruction and Development reached $ 8.5 billion.

Kyrgyzstan continues to enjoy $ 200-300 million loan, which only increases the country’s external debt and does not bring real benefits to either the Kyrgyzstanis or the economy.