Mining - safest sector for investors in Kyrgyzstan

Mining is a more important industry in Kyrgyzstan, a partner at international legal practice Baker McKenzie Thomas Firestone said in an interview with Global Risk Insights (GRI). Thomas Firestone is a subject-matter expert on corruption in the former Soviet states of Central Asia.

«This is a hard question to answer because when we evaluate whether or not there’s more corruption in a country, there’s a debate as to what criteria to use. One thing that we rely on, and that pretty much everyone in the anti-corruption community relies on, is Transparency International (TI) rankings. In this regard, pretty much all of the countries that I’ve dealt with — Kazakhstan, Tajikistan, Uzbekistan, and Kyrgyzstan — have all been improving over the last four years in their TI anti-corruption rankings. So I think that’s a positive trend," Thomas Firestone said.

We’re seeing signs from several of the local governments about taking serious measures in terms of combatting corruption.

Thomas Firestone

In his opinion, corruption is not a problem that can be cleaned up overnight. Laws are the first step; they’re an important step, but only the first step. To be effective, laws have to be implemented effectively.

«These countries have a bad reputation for the way that they’re portrayed in the media, because of some of the cases that have come out. But that should not be a reason for foreign investors to run away from the region, — the expert said. — We think that there’s a lot of opportunity there. As I mentioned, our firm is a founding member of both the US-Kyrgyzstan and US-Tajikistan Business Councils. We’re actually taking a trade delegation to Kyrgyzstan and Tajikistan this July, and we’ve got great support from the local embassies and the local governments," he added.

«I think that the fact that local governments are trying to attract foreign businesses is also encouraging from a risk mitigation perspective. If you go into a foreign country and you’ve got the support of the local government for your project, I think that tends to reduce the risk. If the project is one that is supported by the government at a high level and has a high degree of publicity, I think that is less likely to happen. It’s not an absolute guarantee, but I think all other things being equal, it does provide some level of protection to the investors," Thomas Firestone said.

We’ve seen great outreach lately from the governments of Tajikistan and Kyrgyzstan in helping us to form these business councils, and I take that as an encouraging sign.

Thomas Firestone

Answering the question which of the leading industries are the safest for foreign investors, Firestone mentioned oil and gas in Kazakhstan, the textile industry in Uzbekistan and mining as a more important industry in Kyrgyzstan.