The European Times - The Kyrgyz Republic by The European Times

THE KYRGYZ REPUBLIC

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THE KYRGYZ REPUBLIC

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The Kyrgyz Republic INTRODUCTION • Economy Minister Notes Government’s Commitment to Openness 4 • EU Ambassador Highlights Progress Being Made 5 • Ambitious Development Programme to Drive Economy Forward 6 • New Embassy Promoting Stronger Ties with the UK 8 • Ambassador Highlights Strong Ties between the Russian Federation and Kyrgyzstan 9 • Turkey Committed to Long-Term Partnership 10

GOVERNMENT • Democratic Government Based on Constitution

BUSINESS & INVESTMENT OPPORTUNITIES • Leading Business Association Working to Upgrade Investment Climate • Chamber Launching Innovative Private-Sector Projects • Enhancing Attractions for Foreign Investors • Kalikova and Associates • AmCham Helping to Boost Kyrgyzstan’s Investment Appeal

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INTERNATIONAL FINANCIAL INSTITUTIONS • World Bank Celebrates 20th Anniversary of the Partnership with the Kyrgyz Republic • International Partners Confident about the Kyrgyz Republic’s Future • EBRD Bullish on Kyrgyzstan • USAID Long-Term Partner for Kyrgyz Private Sector

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FINANCE

Centerra Gold Inc. Mining and Energy Driving Kyrgyz Economy Kyrgyz Komur Harnessing Vast Energy Resources to Power the Future National Electrical Grid of Kyrgyzstan

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COMMUNICATION & TRANSPORT • Massive Infrastructure Projects Creating New International Links • Meeting the Challenge of Transport-Infrastructure Development • Rapidly Developing ICT Sector Attracting Global Investors • Kyrgyz Telecom • Continent Print Company • #One Magazine

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AGRICULTURE • High-Potential Agriculture Sector Focussing on Quality 49 • Agriculture Crucial for Boosting GDP and Fighting Poverty 51 • Global Partners Helping Agriculture Sector Achieve its Potential 52

HEALTH & EDUCATION • Ambitious Healthcare Reforms Creating New Investment Opportunities • Bringing Healthcare up to International Standards • Significant Progress in Upgrading Education System • Education at a Crossroads

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TOURISM & CULTURE

• Ministry of Finance Overseeing Ambitious Reform Measures • Commercial bank KYRGYZSTAN

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• National Bank Chairman Reports Impressive Banking-Sector Growth Rates • Mol Bulak Finance • Financial Sector Performing Well • Baitushum and Partners

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ENERGY & MINING • Energy Ministry Focussing on Hydropower, Transmission Network

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Exceptional Opportunities for Tourism Investment Golden Dragon Hotel Park Hotel Unspoiled Nature and Rich Cultural Heritage Hyatt Regency Bishkek Tasty Dishes Made from Local Ingredients Gentasvale Restaurant Kyrgyz Konyagy Diverse, Unique Cultural Attractions EVI-Autocenter Top 10 for Visitors

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Regional Director: Mihai Petrut – International Business Analyst: Ulrike Bruening – Project Coordinators: Maarten Pennings, Leigha Proctor – International Manager: Aukje Oostendorp – Editorial: Emily Emerson-Le Moing – Head of Production: Vicky Kox – Production Coordinator: Stefanie Mentens – Design: Martine Vandervoort, Dirk Van Bun, Walter Vranken, Johny Verstegen – Special thanks to our interpreter: Aida Tulelieva

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THE KYRGYZ REPUBLIC

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Economy Minister Notes Government’s Commitment to Openness Temir Sariev, Minister of Economy and Anti-Monopoly Policy, discusses his country’s goals.

European Times: What are your ministry’s responsibilities? Temir Sariev: This ministry focuses on maintaining the country’s macroeconomic stability, but we are involved in many other areas. For example, we contribute to formulating the government’s fiscal and tariff policies, we help determine public-sector investments, we control trade policies and related issues, we determine policies about the use of natural resources, and we are responsible for technical regulations and standardisation, among many other matters. We also have a whole department devoted to issues related to competition and anti-monopoly efforts, we have a one-stop shop for imports and exports, and we oversee the government’s privatisation programme. European Times: What are some of your current projects? Temir Sariev: One of our most important projects is to develop the mining sector, which has attracted strong interest from international investors. Getting mining products to market requires efﬁcient infrastructure, so we are also concentrating on infrastructure development, both within Kyrgyzstan and between our country and others in the region. Kyrgyzstan has great potential to become a regional trade hub. European Times: What other economic sectors are you focussing on at the moment? Temir Sariev: Developing the country’s hydropower resources is another top priority. We are only achieving around 10% of our potential renewable-energy production. Kyrgyzstan is also participating in the regional CASA-1000 energy project, and we are building new transmission lines to Kazakhstan and China and exploring a project to build a regional gas pipeline.

Temir Sariev, Minister of Economy and Anti-Monopoly Policy

European Times: Why should European companies and investors get involved in Kyrgyzstan? Temir Sariev: Kyrgyzstan is the most open country in Central Asia. We know that openness and transparency are the keys to our long-term success. Kyrgyzstan has a history of innovation: we were the ﬁrst Central Asian country to declare independence, introduce a national currency, privatise state-owned enterprises, create a parliament, and enter the World Trade Organisation. Today, Kyrgyzstan has a visa-free regime, no censorship, a Wi-Fi network that covers 85% of the country, stringent anti-corruption policies, and a very strong private sector. This year the country attracted €638.7 million (US$823 million) in donor funding and investments. We welcome more investors from Europe, especially since EU investors will bring in not only new technologies and methods but also high standards. I want European investors to know that Kyrgyzstan has tremendous investment potential and is committed to democracy, openness and stability.

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Introduction

EU Ambassador Highlights Progress Being Made Chantal Hebberecht, the ﬁrst EU Ambassador to Kyrgyzstan, discusses her delegation’s activities. European Times: How have relations between the EU and Kyrgyzstan evolved since the partnership agreement between them went into force in 1999? Chantal Hebberecht: Our delegation is engaged in dialogue with Kyrgyzstan’s leaders on a wide range of issues, including human rights, rule of law, social services and reforms, education, the business climate and trade. Through its partnership agreement, the EU actively promotes European values, aims to boost trade between the EU and Kyrgyzstan, and supports the country’s economic development.

“Our main priority here is to support democratic reforms and to make sure economic and social development moves forward.” European Times: How would you rate the cooperation between the EU and Kyrgyzstan? Chantal Hebberecht: We have experienced an unprecedented level of openness and frankness from our Kyrgyz government partners. We have also found a very high level of civil participation and transparency in the broad public debate. Our activities extend beyond cooperation with the government. For the EU it is very important to combine a bottom-up approach with a top-down approach. European Times: What are some of the EU’s projects here? Chantal Hebberecht: We are planning to launch two major projects in early 2013, one a rule-of-law initiative budgeted at €13.5 million and the other a €20 million education programme. We do not just provide ﬁnancing, however. Our main priority here is to support democratic reforms and to make sure economic and social development moves forward.

Chantal Hebberecht, EU Ambassador to Kyrgyzstan

European Times: What are some of Kyrgyzstan’s attractions for European investors? Chantal Hebberecht: Kyrgyzstan is the only Central Asian country with such a developed democratic process. The country has a multi-party parliamentary system and a democratically elected coalition government which is making efforts to ﬁght corruption. In addition, civil society and the private sector are able to play an active role in the democratic process and in the economy. The Kyrgyz government is taking measures to establish a favourable investment climate, for example by trying to gradually reduce the number of required licenses for companies. Trade between Kyrgyzstan and the EU grew by 40% in 2011 compared to 2010. European Times: What sectors have particularly strong investment potential? Chantal Hebberecht: Mining is of course important but the tourism sector also has great prospects, and the new regulations allowing visa-free entry for travellers from dozens of countries is a big boost for the tourism industry. I invite EU travellers to come to Kyrgyzstan and see how beautiful it is, how warm and welcoming the Kyrgyz people are, and what a promising future this country has.

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Bishkek White House

Ambitious Development Programme to Drive Economy Forward A Central Asian country with great natural beauty and a rich cultural heritage, the Kyrgyz Republic was formally annexed to Russia in 1876, became a Soviet republic in 1936 and achieved independence in 1991. After some turbulent years as it made the difficult transition to a free-market economy, the Kyrgyz Republic has achieved political and economic stability. It is regarded as a pioneer in instituting parliamentary democracy in otherwise authoritarian Central Asia, and in 2011, the country’s current president, Almazbek Atambayev, took office in an historic peaceful transition of power. He vows to promote an end to the internal conflict that has hampered the Kyrgyz Republic’s development in the past.

In early December 2012, the Kyrgyz government unveiled a €5.31 billion plan to revitalise the economy over the next ﬁve years with help from Russian, Chinese and Western investment and aid. The new investment plan includes 15 energy projects with a cumulative investment need of €4.17 billion, as well as transport and communication projects worth nearly €683.1 million and agriculture developments requiring more than €303 million. In announcing the new plan, President Atambayev said, “The main task for the next ﬁve years is to exist as a state in our own right and to lay the foundations for the successful growth of the Kyrgyz Republic.”

Skilled labour, a regulatory environment which encourages foreign direct investment, and strong support from global partners and international funding organisations are other plus factors. Known for its commitment to an open economy, the Kyrgyz Republic was the ﬁrst Commonwealth of Independent States country to be accepted into the World Trade Organisation, and many Kyrgyz government-owned enterprises have been privatised. The Kyrgyz Republic has created the most liberal conditions in the CIS for foreign trade as well as the lowest taxes.

Right fundamentals for sustained growth

The government continues its reform programmes designed to upgrade the business environment and has streamlined the processes of starting a business and obtaining construction permits as well as enhanced protection of investors. As a result, the Kyrgyz Republic is now ranked among the top 50 countries in the world in the World Bank’s latest ‘Ease of Doing Business’ report.

The Kyrgyz Republic already has many of the fundamentals for sustained economic development. Along with its strategic location along the ancient Silk Road in the heart of a high-potential region, the Kyrgyz Republic has signiﬁcant natural resources which include abundant hydropower; large deposits of gold and rare earth metals; locally exploitable coal, oil, and natural gas; deposits of nepheline, mercury, bismuth, lead and zinc; agricultural land; and the tourism potential of unspoiled natural beauty.

Reforms upgrading business climate

Agriculture currently dominates the Kyrgyz economy. Cotton, tobacco, wool, and meat are the country’s main agricultural products, although only tobacco and cotton are exported in signiﬁcant quantities. The main industrial

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Introduction

reduce the budget deﬁcit to just over 5% of GDP.

Bishkek

products are gold, small machinery, textiles, processed foods, cement, shoes, timber, refrigerators, furniture, electric motors, and rare earth metals. The Kyrgyz Republic’s industrial exports include gold (which accounts for around half of the country’s total industrial production), mercury, uranium, natural gas, hydropower, cotton, wool, garments, shoes, meat, tobacco and machinery. The Kyrgyz Republic’s leading export markets are Uzbekistan (accounting for 25.4% of total exports in 2011), Russia (22.2%), Kazakhstan (20.1%), China (7.8%), the UAE (5.5%), Afghanistan (5%), and Turkey (4.2%). The Kyrgyz

Republic’s main imports are oil and gas, machinery and equipment, chemicals and foodstuffs. The country’s main sources of imports in 2011 were China (59.8%), Russia (13.9%), and Kazakhstan (5.2%).

Return to GDP growth The Kyrgyz Republic’s GDP grew by about 8% annually in 2007-2008, partly due to higher gold prices internationally, but slowed to 2.9% in 2009. After a contraction to .4% GDP growth in 2010 related to political stability, the economy grew by 5.7% in 2011. Also that year, the government managed to

GDP declined during the first half of 2012, largely because of a drop in gold production at the Kumtor mine. Nevertheless, the non-gold industrial sector grew by 8.2% during the first half of the year while the agriculture sector grew by 1.2% and the services sector by 7.5%. In addition, the construction sector achieved a remarkable 20% growth over this period. Inflation remained at .9% in the first half of 2012 thanks to lower food and fuel prices, but the trade deficit widened in the first quarter of the year, with imports growing by 37% and exports declining by 11%. The Kyrgyz Republic’s gold production is expected to recover in 2013, supporting GDP growth of around 5.5% for 2013 as well as a reduced trade deficit, according to a recent study by Asian Development Outlook. The study also predicts that the Kyrgyz Republic’s current account deficit of 8.3% of GDP should drop to around 6.8% in 2013. To keep the country’s economic development on track, the Kyrgyz Republic’s government aims to continue to fight corruption, restructure domestic industry, improve the business climate and attract more foreign aid and investment.

Bishkek by night

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New Embassy Promoting Stronger Ties with the UK Judith Farnworth, UK Ambassador to Kyrgyzstan, discusses the Embassy’s commitment to supporting Kyrgyzstan’s development. European Times: What is the focus of the UK Embassy’s mission in Kyrgyzstan? Judith Farnworth: The UK decided to open the embassy here last year as part of a broader review of our global presence. The UK’s key foreign policy priorities are: values, security, prosperity and consular responsibility. All of them resonate in Kyrgyzstan to a greater or lesser extent. We are keen to support efforts to embed the values of democracy, human rights and the rule of law here; and believe that stability in the Kyrgyz Republic will enhance the security of the wider region. We are funding several projects in these areas. We don’t have a Commercial Section in this Embassy but we are exploring opportunities for promoting business ties with Kyrgyzstan. Our consular team in Almaty supports the local British community. European Times: What kind of relationship do you have with the Kyrgyz government? Judith Farnworth: We have been made very welcome. The Ministry of Foreign Affairs is our key partner, but we also work closely with the Ministry of Defence on security issues, and the First Deputy Prime Minister and Minister of Economy on commercial opportunities, for example, and we’ve been discussing judicial reform with the Justice Ministry. We are open to working with all the ministries, in fact. European Times: How would you describe the business climate? Judith Farnworth: There are opportunities in mining, infrastructure, tourism and agriculture, to name just a few. We welcome efforts to date to liberalise the market and are encouraged that the new Government Program is focussed on completing the process. We are interested in plans for a one-stop shop for business. The most obvious message for the Kyrgyz authorities is that the best advert for future investors into any country is the success of existing business. A transparent business envi-

Judith Farnworth, UK Ambassador to Kyrgyzstan

ronment, level playing ﬁeld, clear regulatory framework, simpliﬁed procedures, predictability of tax arrangements, enforceability of contracts and intolerance of corruption are all essential. European Times: Do you plan any trade missions? Judith Farnworth: We have commissioned a British consultant to produce a report on potential business opportunities and hope to follow up with a trade mission here in 2013. We are also happy to share UK experience with Kyrgyz policy-makers to save them having to reinvent the wheel. European Times: What is your personal message to potential investors? Judith Farnworth: Kyrgyzstan has a great deal to offer as a tourism destination plus some areas of interesting business potential. Kyrgyzstan is a beautiful place. I would encourage anyone to visit. They will be pleasantly surprised!

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Ambassador Highlights Strong Ties between the Russian Federation and Kyrgyzstan Andrei Krutko, the Russian Federation’s

could result in diminished water supplies for them, and we are now trying to assist Kyrgyzstan in explaining that these fears are not justiﬁed. For example, the construction of the Kambarata-1 plant actually means that less water will be needed for operating the Toktogul hydropower station, so ultimately more water from the reservoir of that plant will be available for the Fergana Valley in spring and summer. It should also be noted that these plants are of vital importance for Kyrgyzstan, especially in winter time for heating, since the major part of the country’s energy supply is electricity.

Ambassador in Kyrgyzstan, discusses the close connections between the two countries. European Times: How would you describe the relationship between the Russian Federation and Kyrgyzstan? Andrei Krutko: The Kyrgyz Republic is one of the Russian Federation’s closest allies. The two countries are members of the Collective Security Treaty Organisation as well as members of the Community of Independent States and of the Eurasian Economic Community. Moreover, the Russian Federation and Kyrgyzstan share a long history of friendship and there are indeed a lot of cultural similarities between our people. In other words, the two states are really close to each other in terms of wellestablished political, humanitarian, cultural, military and economic ties. European Times: What are some current projects in Kyrgyzstan which the Russian Federation is supporting? Andrei Krutko: Just about three weeks after my term as an ambassador here began, President Vladimir Putin visited Kyrgyzstan and the two governments achieved very farreaching agreements concerning hydro-energetics development in this country. One of the agreements is for

Andrei Krutko, the Russian Federation’s Ambassador in Kyrgyzstan

the construction of the Kambarata-1 hydropower plant and the other is for the construction of four hydropower plants in the Upper Naryn river region.

“Russian investors are aware of Kyrgyzstan’s great potential. Political conditions here are more stable now, taxes are relatively low, and qualiﬁed labour is available at low cost.” These ﬁve hydropower plants are to boost Kyrgyzstan’s electricity production by around 30%. Some neighbouring countries have expressed concerns that the construction of these plants

European Times: Why are Russian investors entering the Kyrgyz market? Andrei Krutko: Russian investors are aware of Kyrgyzstan’s great potential. Political conditions here are more stable now, taxes are relatively low, and qualiﬁed labour is available at low cost. The system of professional and vocational education is still intact, so young people can be adequately educated. Of course there are also challenges here. These include a need for more investment in local production activities so that Kyrgyzstan would be able to achieve its goal of joining the Eurasian Customs Union. Investors anywhere need to know for sure that their interests are to be protected, and therefore President A. Atambayev is taking the right steps to guarantee their protection. In my opinion Kyrgyzstan today is truly a land of opportunity.

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Turkey Committed to Long-Term Partnership Nejat Akçal, Turkey’s Ambassador to Kyrgyzstan, discusses the ties between the two countries. European Times: How would you describe the relationship between the Kyrgyz Republic and Turkey? Nejat Akçal: Turkey and the Kyrgyz Republic have a very strong partnership based on historical, cultural and linguistic ties. Turkey was the ﬁrst country to recognise the Kyrgyz Republic’s independence in 1991 and now we are working together with Kyrgyz leaders to ensure the country’s sustainable growth. In 2012 alone, Turkey provided a credit of €76.52 million (US$100 million) to the Kyrgyz government to support publicsector investments. Turkey also provided €4.59 million (US$6 million) in grants for ﬁnancing technical-support activities and for the subscribed capital of the Kyrgyz Republic’s ECO Trade and Development Bank. Also in 2012, Turkey wrote off the National Bank of the Kyrgyz Republic’s debt to Turkey’s Eximbank; this debt totalled almost €38.26 million (US$50 million). This support is in addition to two other grants, both for €7.65 million (US$10 million), which Turkey provided to support the Kyrgyz state budget. Education is one of our priorities. We support many schools and universities here in the Kyrgyz Republic and we provide scholarships so that Kyrgyz young people can study in Turkey. In Osh, the Turkish investment agency, TIKA, invested €5.74 million (US$7.5

Nejat Akçal, Turkey’s Ambassador to Kyrgyzstan

million) in building one of the best technical schools in the region. Turkey believes that development begins with the younger generation. European Times: What economic sectors do you feel have the strongest potential in the Kyrgyz Republic? Nejat Akçal: Agriculture, infrastructure, energy, education, tourism and trade all have very strong prospects. Our credit lines include investment projects involving irrigation systems, forestry and agricultural development, and energy infrastructure. An important selling point for the Kyrgyz Republic will be its potential membership in the customs union involving Russia, Kazakhstan and Belarus, which will open the country up to many large markets. Since production costs here are

low, this will make the Kyrgyz Republic really attractive as a site for exportoriented companies. European Times: What are some of the challenges? Nejat Akçal: We value the government’s efforts to combat corruption and improve the quality of transport infrastructure. Through supporting capacity-building, international organisations can help the Kyrgyz government address these issues. The new government is very open and business-friendly, and investors will ﬁnd great opportunities here. The Kyrgyz Republic is becoming a real democracy where problems can be addressed. The fact that hundreds of Turkish entrepreneurs have managed to set up proﬁtable businesses here is proof that the Kyrgyz Republic has great potential.

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Government

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Democratic Government Based on Constitution The countryâ&#x20AC;&#x2122;s government is democratic with separate executive, legislative and judicial branches. The executive branch includes a President and Chief of State, a Prime Minister, Deputy Prime Ministers and a cabinet of ministers. The legislative branch, or parliament, is the unicameral Supreme Council, or Jogorku Kengesh, with 120 seats.

Key Leaders President and Chief of State Almazbek Atambaev, elected President in December 2011, was born in 1956 in the Chui region. In 1980 he graduated from the Moscow Institute of Management. He began his career as an engineer in the Ministry of Communications and held several posts in the government and in the private sector, including serving as Chairman of the Board of the Forum Industrial Group from 2004 to 2005; Chairman of the Board of Kyrgyzavtomash Corporation from 2005 to 2006; Acting Minister of Economic Development, Industry and Trade from 2006 to 2007; Prime Minister from 2007 to 2010; First Deputy Chairman of the Provisional Government of the Kyrgyz Republic in 2010; Member of Parliament and leader of the Social Democratic Party; and again as Prime Minister until he was elected President. He is known for his strong support of an open, modern economy for the Kyrgyz Republic.

Prime Minister and Head of Government Jantoro Satybaldiev, who has served as Prime Minister since September 2012, was born in 1956 in the Osh region. In 1979 he graduated from the Frunze Polytechnic Institute and began his career as a road-construction engineer. He previously served as Minister of Transport and Communications (from 1997 to 2000); head of the State Administration of Osh and as mayor of Osh, Member of Parliament, and as Deputy Prime Minister and CEO of State Directorate for Reconstruction and Development.

Elections The President is elected by popular vote for a six-year term; presidential elections were last held in October 2011. The Prime Minister is nominated by the parliamentary party holding more than 50% of the seats; if no such party exists, the President selects the party that will form a coalition majority and government. The Cabinet of Ministers is proposed by the Prime Minister and appointed by the President; ministers in charge of defence and security are appointed solely by the President. Members of the Supreme Council are elected by popular vote to serve ďŹ ve-year terms; the last legislative elections were held in October 2010. Supreme Court and Constitutional Court judges are appointed for 10-year terms by the Supreme Council on the recommendation of the President.

First Deputy Prime Minister Joomart Otorbaev, who has served as First Deputy Prime Minister since September 2012, was born in 1955.

He previously served as CEO of Philips Electronics in Central Asia, as the Special Representative of the President of the Kyrgyz Republic specialising in attracting investment, as Senior Advisor to the EBRD, and as Deputy Prime Minister for Economic Development. He oversees the Ministries of Economy and Finance as well as Communications, Customs and Tax Services, among other responsibilities.

Deputy Prime Minister Tayirbek Sarpashev, serving as a Deputy Prime Minister since September 2012, has held many private-sector posts, including Vice President of Tugolbai Ata. He coordinates the activities of the Ministries of Transport and Communications, Emergency Situations, and Agriculture and Land Reclamation as well as several state agencies.

Deputy Prime Minister Kamila Talieva, Deputy Prime Minister since September 2012, has held posts in the education sector as well as serving as Deputy Governor of Jalal-Abad and as a Member of Parliament. In her current role she coordinates the activities of the Ministries of Health, Education and Science, Youth and Employment, Culture and Tourism, and Social Development, as well as several state agencies.

Minister of Government Nurhanbek Momunaliev, born in JalalAbad in 1971, previously held several

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Government

regional government posts. He also served as First Deputy Head of Provisional Government in 2010. He oversees government activities.

Minister of Foreign Affairs Erlan Abdyldaev, born in 1966, graduated from the Moscow State Institute in international relations and speaks Chinese and English as well as Russian. She previously served as Assistant Foreign Minister of the USSR, First Deputy Minister of Foreign Affairs, Ambassador to China, and Director of the Institute for War and Peace until her appointment as Minister of Foreign Affairs in September 2012. She oversees the country’s international relations.

Secretary of Defence Major-General Taalaibek Omuraliev, born in 1965, was appointed Deputy Minister of Defence in 2009 and Chief of the Kyrgyz Armed Forces in 2010. He has served as Minister of Defence since 2011 and oversees the country’s armed forces.

Secretary of the Interior Shamil Atakhanov, born in 1948, has served as a colonel in the Russian armed forces as well as a professor at the Bishkek Financial and Economic Academy. He was Vice Prime Minister from 2011 to October 2012 As Minister of the Interior, he oversees internal security.

Minister of Justice Almambet Shykmamatov, born in 1969, is an attorney who served in several top legal posts until becoming Minister of Justice in 2011; he oversees the Kyrgyz Republic’s legal system.

Minister of Finance Olga Lavrova, born in 1956, is an economist who previously served as Deputy Minister of Finance, Chairman

of the Social Fund, and a Head of Gazprom before becoming Minister of Finance in September 2012. She oversees the country’s ﬁnancial activities.

Minister of Economy and AntiMonopoly Policy Temir Sariev born in 1963, previously served in the parliament, as President of the Kyrgyz Mercantile Exchange, and as Financial Director of Totoni, among other posts, before becoming Minister of Economy and Anti-Monopoly Policy in 2011. He oversees the country’s economic development programmes.

Minister of Agriculture and Land Reclamation Chyngysbek Uzakbaev, born in 1964, is an engineer who served as Director of the Water Resources Agency and Deputy Chairman of the State Committee for Water Resources and Land Reclamation before becoming minister in September 2012. He oversees agricultural and land-use programmes.

Minister of Transport and Communications Kalykbek Sultanov, born in 1956, is an engineer who, as Minister of Transport and Communications, oversees the country’s infrastructure development programmes.

Minister of Emergency Situations Kubatbek Boronov, born in 1964, is a civil engineer who became minister in 2011. He oversees responses to emergency situations.

Minister of Industry, Energy and Fuel Resources Avtandil Kalmambetov, born in 1955, is an engineer who as minister oversees the country’s industry, mining and other industrial activities.

Minister of Education and Science Kanatbek Sadykov, born in 1961, was a professor of literature and Director of the Eurasian Institute of Innovative Technology before becoming Minister of Education and Science in 2010.

Minister of Health Dinara Saginbaeva, born in 1958, is a physician who previously served as Head of the Primary Healthcare General Directorate of the Ministry of Health, among other posts, before becoming minister in 2011.

Minister of Culture and Tourism Ibrahim Junusov, born in 1961, was Director of the State Agency of Culture before becoming minister in 2011. He oversees the country’s cultural and tourism projects.

Minister of Social Development Kylychbek Sultanov, born in 1976, is a journalist who became minister in September 2012. He oversees the country’s social programmes.

Minister of Youth, Labour and Employment Aliyasbek Alymkulov, born in 1971, held several posts in the private sector before becoming minister in 2010. He oversees efforts to create new employment opportunities.

Chairman of the State Committee on National Security Major-General Beyshenbay Mambetomurovich Zhunus, born in 1957, was previously Deputy Director for National Security. He is responsible for overseeing national-security programmes.

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• Chamber Launching Innovative Private-Sector Projects • Enhancing Attractions for Foreign Investors • AmCham Helping to Boost Kyrgyzstan’s Investment Appeal

Business & Investment Opportunities

“Kyrgyzstan is a real democracy, and our government leaders are very accessible.” Aktilek Tungatarov, Executive Director International Business Council

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Business & Investment Opportunities

Leading Business Association Working to Upgrade Investment Climate Aktilek Tungatarov, Executive Director of the International Business Council in Kyrgyzstan, discusses the organisationâ&#x20AC;&#x2122;s goals for the local private sector. European Times: Who are the members and partners of the International Business Council? Aktilek Tungatarov: We have around 150 member organisations, including the leading private companies from various sectors of the economy as well as ambassadors of other countries and representatives of nongovernment organisations. The International Business Council (IBC) is the most important professional organisation in the country since it unites both the largest taxpayers and small and medium businesses in the Kyrgyz Republic. Our voice is always heard by government leaders and other stakeholders. European Times: What is your main objective? Aktilek Tungatarov: The IBC was founded in 2000 by foreign investors and our mission is to support the private sector in general. Today around 60% of our corporate members are local companies. Our main goal is to help build a stronger economy in Kyrgyzstan. We do this in part by giving recommendations to the government regarding improving legislation and making the business environment more transparent, efďŹ cient, corruption-free and investor-friendly. European Times: What is the IBC doing to attract more foreign investors? Aktilek Tungatarov: One of our goals is to persuade the government to be consistent in its decisions regarding investors, and we continue to lobby the government to do this. In general, though, our biggest contribution to stepping up foreign investment in Kyrgyzstan is to meet with foreign business leaders directly and give them an accurate picture of the perspectives and challenges of doing business here. The IBCâ&#x20AC;&#x2122;s website provides updated information in English and Russian. We circulate information to our members about legislative changes in the country and other informational and analytical publications on a constant basis in order to keep all stakehold-

Aktilek Tungatarov, Executive Director International Business Council

ers informed. We also organise networking events, roundtable discussions and other business forums. Many of our current tasks and responsibilities are comparable to those of an investment promotion agency, which Kyrgyzstan should establish in the future. European Times: Why should foreign investors choose Kyrgyzstan as a business and investment destination? Aktilek Tungatarov: In spite of the challenges, Kyrgyzstan is a real democracy, and our government leaders are very accessible. The country has joined a number of international trade organisations and signed multiple bilateral and multilateral trade treaties. Kyrgyzstan has a very open economy, welcoming and supporting foreign investors. In addition, we have favourable tax regimes, low electricity costs, and enormous resources for development, for example in the mining and tourism sectors, as well as great human capital.

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Chamber Launching Innovative Private-Sector Projects Marat Sharshekeev, President of

the

Chamber of Commerce and Industry of the Kyrgyz Republic, discusses the Chamber’s activities and projects. European Times: What is the Chamber’s mission? Marat Sharshekeev: The Chamber of Commerce and Industry is a nonproﬁt, non-governmental organisation made up of a team of optimistic experts. Pessimists do not belong here. Over the past 18 months since I became President, we have almost doubled the number of our members and now we have almost 500, as well as 20,000 associate-member companies, which is around half of all the companies in the country. Our membership includes consultancy ﬁrms, universities, banks and companies from all sectors. Membership in the Chamber is voluntary but our members understand that working together in this organisation is the best way to achieve results. The Chamber also serves as a platform for making connections between local companies and foreign investors and partners. To promote international ties, we regularly organise meetings, trips and exhibitions. Our mission is to promote and support the local private sector and to play a leading role in forming partnerships between local and international companies.

Marat Sharshekeev, President Chamber of Commerce and Industry

tive sports centre, the Issyk-Kul International Olympic Centre, a €264.2 million investment. One of the goals of this centre will be to promote drug-free athletics in response to the huge doping problems we are currently seeing in sports around the world. Many experts believe that the answer to this problem is new training methods in mountain climates. Sports training in higher altitudes can deﬁnitely boost athletes’ performance naturally. In many countries, artiﬁcial mountain environments are being created for sports training, but the Issyk-Kul area allows for ideal sports training in natural rather than simulated conditions.

climate, pure air and no risk of natural disasters. Issyk-kul lake is located between the ridges of the northern Tian Shan mountains at an altitude of 1,600 m. The lake covers 6,236 sq km and does not freeze in winter. It also has rich deposits of medicinal mud and peat. Moreover, it is sunny around 80% of the year. It is suitable for both summer and winter sports activities, including skiing on the 4,000 m peaks nearby as well as water sports. The area has long been known for its convalescence centres. The planned new sports facilities will be on the lake’s south-east coast in Karakol, which is around 400 km from Bishkek or 45 minutes by air.

European Times: What are some of the Chamber’s current projects?

European Times: What makes the Issyk-Kul area special?

European Times: What kind of facilities will it include?

Marat Sharshekeev: One of our main projects is to develop an innova-

Marat Sharshekeev: Issyk-Kul has great natural beauty, a mountain

Marat Sharshekeev: The development will focus on training centres,

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Business & Investment Opportunities

rehabilitation, and opportunities for practicing around 15 sports. It will be an international sports centre covering around 100 hectares at a mid-mountain altitude of 1,600 m. It will include two indoor universal sport complexes for team sports and martial arts; an indoor swimming pool for training sessions in swimming and water polo; two full-size football ﬁelds meeting FIFA training standards; open and indoor athletics arenas; a bicycle track; outdoor courts for tennis training and tournaments; playgrounds; boathouses; a sailing centre; an outdoor concert hall seating 400 people; an administrative building with meeting rooms; an employee residence; ﬁve hotels at different comfort levels; a shopping and entertainment complex; and special centres for sports medicine, rehabilitation and recreation.

“The Kyrgyz Republic enjoys rich natural resources, a skilled labour force, a strategic location and a supportive government.” European Times: What are your other major projects? Marat Sharshekeev: We are also involved in the new World Trade Centre, a cutting-edge development in downtown Bishkek. Featuring striking contemporary design, the centre has some 4,000 sq m of exhibition space on two ﬂoors, stateof-the-art conference facilities, rooms for smaller meetings,

underground parking, restaurants and a hotel next door. Everything has been equipped with the latest technologies. European Times: What else is the Chamber doing to promote Kyrgyzstan’s private sector? Marat Sharshekeev: Our main focus is to support small and medium-sized enterprises, which make up around 92% of all businesses in the country. Another of our priorities is to foster public-private partnerships because we believe business development cannot take place without such partnerships. The Chamber initiated the concept of public-private partnerships here and serves as the main liaison between the business sector and ofﬁcial government bodies concerning these initiatives. Now the Kyrgyz Republic has 18 public-private-partnership projects underway. To support these projects, we created the Department of New Projects within the Chamber that includes eight committees of experts in major sectors, from agriculture to tourism. We are also representing the Kyrgyz Republic at Expo 2015 in Milan, and we often represent the country in discussions with international organisations. European Times: Why should foreign investors target the Kyrgyz Republic? Marat Sharshekeev: The Kyrgyz Republic enjoys rich natural resources, a skilled labour force, a strategic location and a supportive government. We welcome foreign investors. They will ﬁnd outstanding opportunities here.

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THE KYRGYZ REPUBLIC

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Enhancing Attractions for Foreign Investors As an investment target, the Kyrgyz Republic offers a wealth of opportunities: vast untapped natural resources, a skilled low-cost labour force, a strategic location in a fast-growing region, a strong ﬁnancial-services sector, and an investment regime ranked the most liberal in Central Asia. And, according to a recent announcement by Kyrgyz Economy Minister Temir Sariev, the Kyrgyz Republic will join the CIS Customs Union by 2014, a real boost for investors in trade-oriented activities. According to the latest figures from the Kyrgyz National Statistical Committee, FDI in the Kyrgyz Republic has begun to grow again after it stalled during political upheavals in 2010. During the first nine months of 2011, FDI in the Kyrgyz Republic totalled €346.9 million, a major increase over 2010 when FDI for the whole year was €337.1 million. While these figures represent a decline from the €653.8 million in FDI the Kyrgyz Republic attracted in 2008, the return to growth is an encouraging sign.

FDI in a wide range of sectors Foreign investors have gotten involved in a wide range of sectors in the Kyrgyz Republic, from mining and manufacturing to food-processing, petrochemicals, banking, hotels and other tourism facilities, telecommunications and construction. Many foreign firms

are the contractors of international funding organisations, and a large number of foreign investors in the Kyrgyz Republic operate with local joint-venture partners. Joint ventures and foreign companies operating in the Kyrgyz Republic today illustrate the diversity of the FDI the country has attracted. They include Reemtsma Kyrgyzstan (cigarettes), Plaskap Bishkek (packaging and bottling), the Central Asian Group (entertainment and garments), the Hyatt Regency Bishkek, Coca-Cola Içecek, Centerra Gold (mining) and the Kyrgyz Petroleum Company. The Canadian gold-mining firm Centerra Gold, through its local subsidiary Kumtor Operating Company, has made the largest foreign investment in the Kyrgyz Republic to date.

In the ﬁrst nine months of 2011, the biggest foreign investors in the Kyrgyz Republic by country were Canada (48%), China (14%), the UK (7%) and Germany (6%). The Issyk-Kul region accounted for almost half of the FDI in the Kyrgyz Republic during this period. The Kumtor mine is located there, but the region is also a popular resort area and signiﬁcant foreign investment there has been in developing new tourism-related facilities.

Protecting investors’ interests Along with its many high-potential sectors, the Kyrgyz Republic offers a business environment geared to protecting foreign investors’ interests. A member of the World Trade Organisation, the Kyrgyz Republic has adopted a regulatory regime

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Business & Investment Opportunities

Kalikova and Associates

Dynamic Female Entrepreneur Leads Thriving Law Practice Gulnara A. Kalikova, founder and Senior Partner of Kalikova and Associates, is an example of the potential of Kyrgyzstan’s new generation of leaders.

in compliance with WTO standards. Foreign investors are guaranteed repatriation of capital, dividends and proﬁts; foreignowned businesses are charged the same tax rate as domestic ones; Kyrgyz law guarantees protection for foreign investors from expropriation and nationalisation of their businesses; foreign exchange is widely available; and the local currency, the som, is easily convertible. The Kyrgyz government is working hard to improve the Kyrgyz Republic’s attractions for investors, and in November 2012 the Asian Development Bank announced it would provide the Kyrgyz Republic with a €15.1 million grant to help the government make the country’s business environment even more investor-friendly. The Kyrgyz Republic has signed bilateral investment treaties with many countries, including the US, Armenia, Azerbaijan, Belarus, China, France, Georgia, Germany, India, Indonesia, Iran, Kazakhstan, Malaysia, Mongolia, Pakistan, Switzerland, Tajikistan, Turkey, the UK, Ukraine, and Uzbekistan. The new €5.2 billion development programme the Kyrgyz Republic announced in December 2012 will create even more opportunities for foreign investors. Potential Russian investment in the new programme is estimated at more than €3 billion, and Russian power companies INTER RAO UES Group and RusHydro have already agreed to support large hydropower projects. China, which has pledged loans to the Kyrgyz Republic of over €755 million, is also stepping up its presence, while the Kyrgyz government has directly invited the US and Turkey as well as several international lending institutions, including the World Bank, to participate in the ambitious development effort.

After establishing herself as an attorney in Kyrgyzstan, in 2001 she decided to continue her studies in the US. After graduating from the LL.M. program at Harvard Law School, she returned to Kyrgyzstan and opened her own law practice instead of taking a more secure job with an international law ﬁrm.

Gulnara A. Kalikova, Senior Partner

The firm she founded is now thriving, but Gulnara Kalikova does not view this success as static. She says, “I believe that professional success means doing a job you like and trying to do it well. I prefer constant change and my business gives me this opportunity. For me, success is defined as the constant pursuit of a goal.” She is proud of building up the firm from one attorney to a strong professional team of 20 lawyers who have had extensive experience in providing legal support for major FDI projects in Kyrgyzstan. Gulnara Kalikova demonstrates that women can achieve their professional goals in Kyrgyzstan. She says, “My advice to other female entrepreneurs here is to be active, positive and optimistic. Do not wait for gifts from life and do not hope that everything will happen on its own. Do not be afraid of taking on responsibility, and, finally, do not despair if something goes wrong.” In recognition of her accomplishments, Gulnara Kalikova has been listed in the international legal directory ‘Who Is Who in Legal’ since 2003.

71 Erkindik Boulevard - 720040 Bishkek Tel: +996 312 66 6060 gkalikova@k-a.kg - www.k-a.kg

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THE KYRGYZ REPUBLIC

AmCham Helping to Boost Kyrgyzstan’s Investment Appeal The American Chamber of Commerce

planned to reduce the country’s dependence on its neighbours. Mining, textile, tourism and agriculture are the fastest-growing sectors today, and the government is issuing new exploration licenses, for example for gold and rare minerals. Concerning agriculture, Kyrgyzstan now exports high-quality food products to Kazakhstan and Russia and the sector has much room for development. Tourism is another growth industry. Kyrgyzstan is a beautiful country with much to offer travellers, from beautiful Issyk-Kul lake to great winter-sports resorts and incredibly hospitable people.

in the Kyrgyz Republic is a business association whose members are leading foreign and local companies. As in all countries where it operates, AmCham in Kyrgyzstan is an effective lobbying organisation which serves as a liaison between the government and the private sector and works to support its member companies and enhance the country’s business climate. In the past, AmCham provided the Kyrgyz government with recommendations to enhance the Kyrgyz national

European AmCham investors?

credit ranking, the export of Kyrgyz goods, taxation and labour legislation and the protection of property rights. Almaz Dushembiev, Executive Director, discusses AmCham’s activities and Kyrgyzstan’s investment attractions. European Times: What are some of AmCham’s projects in Kyrgyzstan? Almaz Dushembiev: One of our biggest projects is organising industry symposiums to connect local suppliers and producers with the U.S. trading partners. Another is a joint project with the Central European University. We held a regional seminar entitled ‘Leaders of Business on Integrity in Practice’ which brought together business leaders from all over central Asia to discuss issues of integrity in business. Some of the main themes were

Almaz Dushembiev, Executive Director AmCham Kyrgyzstan

assessments of the current corporate sector, supporting ethical business practices and improving integrity cooperation in the region through education. European Times: What are some investment opportunities in Kyrgyzstan today? Almaz Dushembiev: The Kyrgyzstan government has been working hard to improve the business climate, including instituting legislation to protect investors. The government is also involved in the new Silk Road Project to connect all countries along the famous route by road and railway. Hydropower is one sector with enormous development potential, and a new grid is being

Times: What is doing to attract

Almaz Dushembiev: We are working around the clock to make the world more aware of Kyrgyzstan’s investment and tourism appeal. We organise events, work closely with the government and build connections between stakeholders. We are also involved in improving Kyrgyz legislation, together with our partners from the National Alliance of Kyrgyz Associations and the International Business Council. European Times: What is your personal message to our readers? Almaz Dushembiev: Take a chance and visit our country; you will not be disappointed! Come and explore Kyrgyzstan’s virgin landscapes of incommensurable beauty and check out our exceptional business opportunities. You will be very welcome here.

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• World Bank Celebrates 20th Anniversary of the Partnership with the Kyrgyz Republic • International Partners Confident about the Kyrgyz Republic’s Future • EBRD Bullish on Kyrgyzstan • USAID Long-Term Partner for Kyrgyz Private Sector

International Financial Institutions

“Kyrgyzstan is certainly capable of strong growth.” Alexander Kremer, World Bank Country Manager in the Kyrgyz Republic

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THE KYRGYZ REPUBLIC

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World Bank Celebrates 20th Anniversary of the Partnership with the Kyrgyz Republic Alexander Kremer, the World Bank’s Country Manager in the Kyrgyz Republic, discusses the Bank’s activities over the past two decades. European Times: What are the World Bank’s projects in the Kyrgyz Republic? Alexander Kremer: We have been active in the Kyrgyz Republic for 20 years and have provided financing of over €774.5 million, including €154.9 million since April 2010. Our financing is 45% grants and 55% highly concessional loans. We operate in practically every sector of the economy as well as in the social sphere; urban and rural infrastructure, transport, energy, private-sector development, education and healthcare. In terms of funding volume, the larger part of our support is directed into agriculture and rehabilitation of irrigation schemes. Our overall goal is to help the country achieve macroeconomic stability. We are now in the middle of a two-year assistance programme which was devised in the aftermath of the April 2010 events and is aimed at ensuring stabilisation through supporting stable macroeconomic and fiscal balance, improving governance and fighting corruption, and working for social stability in the Kyrgyz Republic. European Times: performing?

How

the

government

Alexander Kremer: Back in June 2010, even the most optimistic scenario did not envisage all the progress that has been made. Kyrgyzstan has held a successful constitutional referendum and two successful general elections − parliamentary and presidential. The macroeconomic programme agreed on with the IMF is on track despite major challenges. Construction and services have been growing and mining should be growing as well by 2013. In addition, the government has made sincere efforts to ﬁght corruption. One positive achievement is the reform which has made land registration open, transparent and quicker. A very important ongoing process is the reform of the legal and institutional framework for the mining sector. The World Bank has been providing advisory support to the Kyrgyz government in this area as well.

Alexander Kremer, World Bank Country Manager in the Kyrgyz Republic

European Times: What does Kyrgyzstan need to do to attract more investors? Alexander Kremer: The interface between the state and private investors needs to become more transparent, and the Kyrgyz government is working on this. It is now less a matter of changing the rules, but more a matter of changing the behaviour of institutions to make sure that the rules are applied. Reforms of the mining sector, improvements in education, the ongoing battle against corruption and the need for higher energy tariffs, are issues the government will have to face. European Times: Where do you see Kyrgyzstan in ﬁve years? Alexander Kremer: When you look at what the country has gone through since April 2010, you realise there is probably no challenge that it cannot deal with. Kyrgyzstan is certainly capable of strong growth. I advise international investors to come here and meet the Kyrgyz people, who are quite extraordinary in their entrepreneurialism and openness to new ideas.

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International Financial Institutions

International Partners Confident about the Kyrgyz Republic’s Future The Kyrgyz Republic, ranked Central

Kyrgyz Republic: Lending by Volume (Millions of US Dollars)

Asia’s most open economy, places a high

Partnership for Peace.

150 135 120 105 90 75 60 75 60 45 30 15 0

The World Bank is a long-time supporter, providing more than €755 million for 49 International Development Association projects in the Kyrgyz Republic since 1992, of which 32 have been completed. The World Bank Interim Strategy Note, which covers August 2011 to June 2013, focuses on the Kyrgyz Republic’s sustained economic development. It will be followed by a full Country Assistance Strategy. In ﬁscal year 2012, the Kyrgyz Republic achieved a 33.2% disbursement rate for its World Bank funding, the highest rate in Central Asia.

The IMF and USAID are also providing essential support. In 2011, the IMF approved a three-year lending programme of €80 million for the Kyrgyz Republic, while the USAID, which has a number of ongoing projects in the Kyrgyz Republic, appointed its ﬁrst ofﬁcial representative there. Other international funders include the Kuwait Fund for Arab Economic Development, which recently provided €8.9 million for the reconstruction of the Bishkek-Torugart highway.

priority on strong international partnerships and on playing an important role in regional and global affairs. Since its independence in 1991, the Kyrgyz Republic has joined a number of international organisations, including the World Trade Organisation, the UN, the Euro-Atlantic Partnership Council, the Organisation for Security and Cooperation in Europe, the IMF, the World Bank, and the NATO

The European Bank for Regional Development is another valued partner. From 1995 to the end of May 2011, the EBRD launched 75 projects in the Kyrgyz Republic with a net business volume of €329 million and the bank continues to disburse around €15 million per year for various projects, around 84% of them in the private sector.

136

58,8 33.85

2009

2010

Strong support from the EU The EU is also boosting its involvement in the Kyrgyz Republic as part of its ambitious Central Asia Strategy, which includes the Transport Corridor Europe-Caucasus-Asia (TRACECA) project for a transport route connecting Armenia, Azerbaijan, Georgia,

2011

2012

Moldova, Ukraine, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, Uzbekistan, Romania, Bulgaria and Turkey. The EU’s Partnership and Cooperation Agreement with the Kyrgyz Republic has provided the legal framework for EU-Kyrgyz bilateral relations since it entered into force in 1999. The EU’s programmes in the Kyrgyz Republic focus on rural development and poverty reduction; support for social, political, judicial and market reforms; and regulatory reforms in the energy sector. In mid-2012, the EU announced it had allotted an additional €51 million to the Kyrgyz government to support judicial reforms, a social safety net, education and agriculture development. International organisations are clearly conﬁdent about the Kyrgyz Republic’s future.

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EBRD Bullish on Kyrgyzstan Larisa Manastirli, Head of EBRD Resident Office in Kyrgyzstan, discusses the bank’s local projects and goals. European Times: What are the EBRD’s activities in Kyrgyzstan? Larisa Manastirli: We have launched 87 projects so far with a combined budget of more than €414 million. Our latest country strategy focuses on four key areas: critical infrastructure, the financial sector, private enterprise, and policy reforms. Concerning municipal infrastructure, the EBRD provided its first loan to the municipality of Bishkek and the Bishkek Water Company to enhance the city’s water-supply network back in 2009. Since that time we have built quite a strong pipeline of projects for the municipal sector in the fields of water supply, waste-management and public transport, among others. We have already committed to two more water-system projects in southern Kyrgyzstan and we plan to finance new trolley busses for Bishkek. We want to cover the whole country. European Times: What about the financial sector? Larisa Manastirli: The EBRD is probably the biggest private investor in this sector in Kyrgyzstan. We are working with eight institutions, including commercial banks and micro-finance organisations. We are shareholders and lenders for KICB and Demir Bank, the largest private banks in the country. Concerning micro-financing, which is very important in Kyrgyzstan, we are promoting better supervision, consolidation and responsible lending practices. The EBRD was also the

Larisa Manastirli, Head of EBRD Resident Ofﬁce in Kyrgyzstan

first international financial institution to provide loans in the local currency, and we are working with the National Bank to develop a local capital market. European Times: What kinds of support do you provide the private sector? Larisa Manastirli: We are working with companies in every sector of the economy. We are trying to show the Kyrgyz authorities that the way they treat foreign investors will influence other potential investors. The private sector has been plagued by problems, but many companies are operating to high standards and also giving back to local communities. Kyrgyzstan needs to promote such companies. The EBRD sees great potential in mining, agriculture and agro-processing, the energy

sector, tourism, manufacturing and many other areas. European Times: How does the EBRD support the government? Larisa Manastirli: We work with different institutions to improve regulatory frameworks and the overall business climate in Kyrgyzstan. We encourage public-private partnerships. European Times: Why should European investors target Kyrgyzstan? Larisa Manastirli: Kyrgyzstan has enormous potential and many brilliant investment opportunities which offer great growth rates you will not see in matured economies. There are risks here, but the returns are higher.

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International Financial Institutions

USAID Long-Term Partner for Kyrgyz Private Sector Carey Gordon, the US Agency for International Development (USAID) Representative, discusses USAID’s programmes in Kyrgyzstan. European Times: Can you tell us about USAID’s activities? Carey Gordon: USAID has been active in Kyrgyzstan since the country’s independence and has launched a range of programmes with different partners over the years. The average budget is around €30-45 million per year. USAID programmes are involved in four major areas: economic growth, rule of law and governance, public health, and education. Unlike many other donors, USAID does not offer direct budget support to the host government. However we work closely with the government of the Kyrgyz Republic, with private organisations, either profit or non-profit and with other donors. European Times: What are some of your specific projects? Carey Gordon: On the economic front we are involved in key sectors like energy and agriculture as well as government-private sector relations and on various economic policy matters such as trade, taxation and licensing. We also promote good governance, judicial reform and the strengthening of non-governmental organisations. Concerning healthcare we are involved in the fight against HIV/AIDS and tuberculosis and in the government’s mother-andchild health campaign. Finally, we support the American University of Central Asia, a university student testing program, a student loan project, and a youth programme to train young entrepreneurs. We have also launched more than 300 smaller projects focussing on conflict mitigation since mid-2010, working with different ethnic groups, and we provide technical and advisory assistance to the government. European Times: How would you rank Kyrgyzstan as a business base and investment target? Carey Gordon: The government of the Kyrgyz Republic is very interested in broadening its foreign direct investment

Carey Gordon, USAID Representative

(FDI) base to include more investment from the EU and the US in addition to the investments it receives from Russia, China and other countries. The government welcomes foreign technical expertise as well as financial investment. For Kyrgyzstan to be a success story, it needs commitment and effective coordination between business groups and the government. The government of Kyrgyzstan through many forums seeks to improve the investment climate and it welcomes international assistance to do so. USAID works closely with business associations which are active here, other international donors, and the Development Partners Coordination Council, which brings donors together to improve the effectiveness of international assistance. We have very good collaboration with the government, which is actively promoting reforms across many sectors, addressing corruption, and becoming more responsive to business and people’s needs. Of course much work still needs to be done. European Times: What changes do you expect to see in Kyrgyzstan over the next few years? Carey Gordon: I am a firm optimist about the future here. Kyrgyzstan needs to focus on maintaining political stability, continuing to address corruption, improving government efficiency and improving the legal system. International investors should come to Kyrgyzstan to see for themselves. This is a beautiful country with many opportunities and a government which seeks investment and partnerships.

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THE KYRGYZ REPUBLIC

• National Bank Chairman Reports Impressive Banking-Sector Growth Rates • Financial Sector Performing Well

Finance

“We have a liberal investment climate, and foreign investors have access to all sectors.” Mirlan Baigonchokov, Deputy Minister of Finance

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Finance

Ministry of Finance Overseeing Ambitious Reform Measures Deputy Minister of Finance Mirlan Baigonchokov has a sound experience of working with the Ministry of Finance since 1995 and was appointed Deputy Minister of Finance in 2010. He discusses the government’s current ﬁnancial-sector goals.

Mirlan Baigonchokov, Deputy Minister of Finance

European Times: What are the priorities of the Ministry of Finance? Mirlan Baigonchokov: Our focus is on supporting the government’s mission of maintaining macroeconomic and political stability and continuing the process of liberal reforms. Since independence, Kyrgyzstan has seen major reforms in the public sector including the ﬁnancial sector. A major accomplishment is that we have optimised public spending and made it efﬁcient.

In 2008 we began a successful three-year budget programme under the supervision of the World Bank and the IMF. We are currently working with the IMF in a programme targeting microeconomic stability up to 2014 that includes controlling inflation, achieving budget consolidation, reducing external debt and continued reforms of the banking sector. Our main priority is to continue to reduce the budget deficit through effective management of the national budget. We also want to speed up reforms and further increase the efficiency of the public finance management.

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Commercial bank KYRGYZSTAN

Prosperous Kyrgyz Bank Open to EU Partnerships

European Times: How has Kyrgyzstan coped with the global ﬁnancial crisis? Mirlan Baigonchokov: The financial sector has proved generally stable. While some commercial banks had liquidity problems, this helped us to identify some improvements we needed to make in our financial-sector legislation, and we have addressed this through reforms. In 2000, for instance, we had a budget deficit of 9% of GDP, and we managed to reduce this to 5% of GDP in 2011. Our target is to continue to lower the budget deficit to 3%. We also reduced inflation from 20% in 2010 to 9% in 2011; we expect the total for 2012 to be around 8%. We reduced our external debt from 130% of GDP in 1990 to 47.7% in 2011 thanks to reforms.

‘Commercial bank KYRGYZSTAN’ OJSC, launched in 1988, is one of the country’s oldest banks. With an extensive network of 80 branches and a diverse portfolio of services, ‘Commercial bank KYRGYZSTAN’ today is the largest bank with private domestic capital in the country. Muras Rysbekovich Kachkeev, Chairman, explains, “We are a top partner for corporate clients as well as for individual clients, including SMEs, large companies, private entrepreneurs and individuals. Our mission is to provide every customer with banking services of any kind throughout the country.” The bank aims to reach €3.2 million (KGS200 million) in proﬁts in 2012, a signiﬁcant increase over the 2011 total of €2.2 million (KGS135 million).

Ambitious growth strategies

“We have a liberal investment climate, and foreign investors have access to all sectors.” European Times: How would you describe the investment climate in Kyrgyzstan? Mirlan Baigonchokov: Kyrgyzstan has been steadily improving its ranking in the World Bank’s Doing Business Report through further improving the business climate. We have a liberal investment climate, and foreign investors have access to all sectors. The legislation that protects investors’ interests was adopted. Kyrgyzstan offers significant investment opportunities, for example through the privatisation of state-owned companies and creating a system for public-private partnerships. We welcome foreign investors.

Under new leadership since 2009, ‘Commercial bank KYRGYZSTAN’ has changed its focus to a more diversiﬁed portfolio and has ambitious development strategies for 2012 to 2014. “Over the past three years, we have introduced a stateof-the-art automatic banking system, expanded the range of services and greatly improved our risk management, among other advances,” Muras Kachkeev points out. As for the future, ‘Commercial bank KYRGYZSTAN’ is open to partnerships with European investors and banking groups. Muras Kachkeev concludes, “Kyrgyzstan’s banking sector offers excellent growth potential and ‘Commercial bank KYRGYZSTAN’ aims to be the number one bank in the country.”

Togolok Moldo st. 54 a - Bishkek Tel: + 996 312 615 364 bankkg@bankkg.kg - www.cbk.kg

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Finance

National Bank Chairman Reports Impressive Banking-Sector Growth Rates Zina Mukaevna Asankojoeva, Chairman of the National Bank of the Kyrgyz Republic, discusses recent developments in the country’s banking sector.

Zina Mukaevna Asankojoeva, Chairman National Bank

European Times: Can you give an overview of the Kyrgyz Republic’s banking sector? Zina Asankojoeva: There are now 22 commercial banks in the Kyrgyz Republic, in 14 of which foreign capital is represented, and we have an extensive network of more than 860 bank branches located in all regions of the country. Foreign banks in our market include subsidiaries of such banks as UniCredit Group (Italy), Halyk Bank (Kazakhstan) and Kazkommertsbank (Kazakhstan), as well as a branch of the National Bank of

Pakistan. Overall, foreign participation in the capital of the Kyrgyz banking system totals 36% of all paid-up nominal capital. All banks are universal and provide a full range of services. European Times: What about banking assets and returns? Zina Asankojoeva: The Kyrgyz banking sector is stable and steadily developing, and has established a safety cushion to deal with potential internal and external shocks. Banking assets total around €1.3 trillion and

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THE EUROPEAN TIMES THE KYRGYZ REPUBLIC KYGRYSTAN

grew by 16.5% in 2012, while the deposit base grew by 24.7% and the total loan portfolio grew by 14.2%. These growth rates demonstrate the great capacity of our banking system. Our non-banking financial segment, specifically micro-financing institutions, is also growing rapidly.

“The Kyrgyz banking sector is stable and steadily developing” European Times: What are some of the National Bank’s current projects? Zina Asankojoeva: One of our current projects is to develop a new banking code, which should be finalised in 2013. The code will strengthen the legal framework for banking in the country, eliminate any inconsistencies and contradictions, institute clearer legislation, and define legal relationships in the banking sector. We have almost finished a big initiative to bring Kyrgyzstan’s payment system up to international standards. The National Bank is also one of the key players in the government’s programme to increase the share of non-cash payments and settlements, and we are playing a leading role in combating money-laundering and terrorism-financing. European Times: What are the National Bank’s priorities for the next five years? Zina Asankojoeva: Our main goal, as the country’s central bank, is to maintain inflation at single-digit levels in the medium term through following an appropriate monetary policy. Other key tasks include developing financial markets, promoting increased competition in the banking sector, and strengthening our financial sector overall. European Times: Why should international financialsector investors choose the Kyrgyz Republic? Zina Asankojoeva: Our country’s legislation meets international standards, including the possibility for free movement of capital and a lack of restrictions on the volume of foreign-currency transactions and conversion deals. We have relatively small requirements of around €10 million for initial capital formation, and the Kyrgyz Republic offers quite high returns on investment.

Mol Bulak Finance

Microfinance Leader Helping to Build Tomorrow’s Kyrgyzstan Mol Bulak Finance has grown from an initial capital of around €46,700 to reach over €23.5 million in equity and is now ranked Kyrgyzstan’s market leader in equity size. Serving over 100,000 customers from 112 offices throughout the country, Mol Bulak Finance was established by Kyrgyz citizens for Kyrgyz citizens and is the preferred financial-services partner for a wide range of customers. CEO Babur Tolbaev explains, “We have a loan portfolio of €43.9 million and provide credit services to groups as well as individuals. We always put our clients Babur Tolbaev, CEO first, and our dynamic management team has many years of experience in Central Asia’s microfinance sector.” Mol Bulak has earned a stellar reputation for helping its customers develop sustainable, productive business ventures. One of Mol Bulak’s successful projects is MBF-Farm, for which Mol Bulak created a special online programme that helps boost productivity, reduce costs and expand the company’s client base. Another success story is Mol Bulak Fashion Week, for the third time held in November 2012, to showcase Kyrgyz designers and to support Kyrgyzstan’s rapidly growing textile and fashion sectors. Babur Tolbaev concludes, “These are just two examples of programmes we run in order to ensure community development and to help spur on the growth of Kyrgyzstan’s high-potential economy. We are open for international investors to support us in achieving our mission.”

Abai st. 48a - 720017 Bishkek Tel: +996 312 979 695 bishkek@molbulakﬁnance.kg - www.mbf.kg

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Finance

Financial Sector Performing Well The Kyrgyz Republic has a strong and well-developed financial sector which includes nine foreign banks and a rapidly growing microfinance segment. As of June 2012, the Kyrgyz Republic had 22 commercial banks and 264 branches of commercial banks. The local economy is primarily cash-based, although non-cash consumer transactions, such as debit cards, have been growing in recent years and the financial-services sector overall offers significant investment opportunities. Entirely foreign-owned banks currently operating in the Kyrgyz Republic are Demir Bank, the Bank of Asia, the National Bank of Pakistan, Halyk Bank, Kazcommerce Bank Kyrgyzstan, FinanceCredit Bank and UniCredit Bank. Other banks are partially foreign-held, such as Manas Bank and Kyrgyz Investment and Credit Bank, whose shareholders include the EBRD. The National Bank of Kyrgyzstan took control of Asia Universal Bank following the revolution of April 2010 and reorganised it as Zalkar Bank, which is set for privatisation. The financial sector is overseen by the independent National Bank of Kyrgyzstan, which regularly intervenes in the local market to stabilise the Kyrgyz som. The Kyrgyz Stock Exchange was formed in 1994 and began trading in 1995. The Kyrgzy Stock Exchange Press Club, which has a web site available in English, provides up-to-date information about the stock market and about economic issues in the Kyrgyz Republic.

Meeting international standards The financial sector is steadily being upgraded through new regulations. Since 2008, new banks must meet a minimum charter-capital requirement of around €9.8 million. Banks must also maintain a 10% reserve with the National Bank of Kyrgyzstan, and a deposit-insurance system protects individual investors. With the support of the government and international organisations, accounting systems in banks and enterprises are being converted to international standards. The banking system is performing well. According to the National Bank of Kyrgyzstan, the banking sector achieved total net gains of over €16 million in the first

half of 2012 and boosted total assets by 13.5% to reach €1.1 billion. The banking system’s total deposits stood at €777 million in June 2012, a 20.4% increase over the January 2012 total, while loan activity also rose. Return on assets reached 2.7% and return on equity rose to 16.9% over the same period. To keep this positive performance on track, the Kyrgyz Republic has launched the Financial Sector Development Project, supported by the World Bank. Its aims are to enhance financial sector stability and increase access to financial services throughout the country. The project has four components: strengthening the legal, regulatory, and supervisory framework for banks, micro-finance organisations and credit unions; expanding financial services via Kyrgyz Post Office’s network; supporting Aiyl Bank’s privatisation and deposit mobilisation; and modernising moveable collateral and debt-resolution regimes.

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THE KYRGYZ REPUBLIC xxxxxx

Baitushum and Partners

Innovative Microfinance Institution Now Offering Full Banking Services Baitushum and Partners, founded in 1997 as a USAID project to support Kyrgyzstan’s agriculture sector, has been steadily developing new products and services and in 2009 the company achieved the first equity investment in Central Asia. Now serving around 30,000 customers, Baitushum and Partners transformed itself from a microfinance institution into a licensed bank this year and has very ambitious goals for the future. It aims to increase its loan portfolio from the current €48.8 million (KGS3 billion) to €144.8 million (KGS9 billion) by the end of 2016. Gulnara Shamshieva, Chairman, explains, “We decided to establish our own bank, diversify our products and services and revise our cost structure to make our products more affordable in order to better serve our customers. In 2011 we became the first micro-financing institution licensed to accept deposits as well as provide loans. Now that we are a licensed bank, we are steadily expanding our product portfolio.” Baitushum and Partners is known for its world-class standards and transparency, and it has the strong support of its institutional shareholders. The bank focusses primarily on providing loans averaging around €1,522 (US$2,055) to entrepreneurs in many sectors, although around half of the bank’s business involves the agriculture sector. With the expansion of our loans to small and medium-sized businesses, the average loan amount will increase. Defining the advantages of working with Baitushum and Partners instead of with a standard commercial bank, Gulnara Shamshieva says, “We are more flexible than a big commercial bank and we are willing to serve all kinds of clients, including clients with small businesses in rural areas. We believe that clients like these deserve the same products and services as any customer anywhere.”

Gulnara Shamshieva, Chairman

technology,” Gulnara Shamshieva explains. She adds that the bank is planning to expand a leasing service that will be particularly useful for farmers. She praises the potential of Kyrgyzstan’s private sector and urges international investors and partners to come to the country and see for themselves all the opportunities awaiting them there.

MICROFINANCE BANK

New mobile-banking services Baitushum and Partners has built up a network of seven branches and 27 cash points, and plans to expand this to 11 branches and 44 cash points in 2013. The bank also aims to launch an innovative mobile-banking service. “We want to be much closer to our clients and at the same time we have to manage our operational costs, so we are investing in new IT

Umetaliev st. 76 - Bishkek - Tel: +996 312 900 464 baitushum@baitushum.kg - www.baitushum.kg

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• Energy Ministry Focussing on Hydropower, Transmission Network • Mining and Energy Driving Kyrgyz Economy • Harnessing Vast Energy Resources to Power the Future

Energy & Mining

“Our goal for the near future is for Kyrgyzstan to have its own transmission lines and to be energy-independent.” Avtandil Kalmambetov, Minister of Industry, Energy and Fuel Resources

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Energy Ministry Focussing on Hydropower, Transmission Network Avtandil Kalmambetov, Minister of Industry, Energy and Fuel Resources, discusses key energy-sector projects now underway.

European Times: What are the Ministry’s responsibilities for the energy sector? Avtandil Kalmambetov: The Ministry helps develop energy policies and regulations and works to ensure reliable power supplies throughout the country. We oversee the production, distribution and transmission of electricity and we are also in charge of Bishkek’s heating system as well as overseeing utility companies and electricity-generation units. We ensure gas is supplied to customers by Kyrgyz Gas, and we oversee the country’s production and distribution of around 1.3 billion tonnes of coal annually. Before independence, Kyrgyzstan had around 100 power-production units; now we have around 60, most of which have been privatised. European Times: What are some of your current priorities? Avtandil Kalmambetov: We are focussing on developing hydropower plants. Kyrgyzstan’s hydropower potential is an impressive 142 billion kWh, and only 10% of this is currently being exploited. Our plants date from the 1960s and new technologies and modernisation are urgently needed. For the future of the energy sector, we are interested in building a new hydropower plant, Kambarata 1, and a dam on the upper Narin River. Kambarata 1 will have an installed capacity of 1900 MW and should produce around 5.1 billion kWh per year. This project will create around 18,000 jobs, help Kyrgyzstan achieve energy independence, and provide energy for export. European Times: Are you also developing Kyrgyzstan’s transmission infrastructure? Avtandil Kalmambetov: We have launched a project to build and install high-voltage transmission lines throughout the country. At present we are still transporting our electricity via lines located in Uzbek territory.

Avtandil Kalmambetov, Minister of Industry, Energy and Fuel Resources

Our goal for the near future is for Kyrgyzstan to have its own transmission lines and to be energy-independent. We have already begun the modernisation of our energy infrastructure around Bishkek and we want to extend this modernisation throughout the country with the help of investors and partners. European Times: What about regional energy initiatives? Avtandil Kalmambetov: Kyrgyzstan is very interested in cooperating with our neighbours in regional energy projects. We already have a strong energy-sector partnership with Kazakhstan, and through our involvement in CASA-1000, we plan on playing a key role in developing Central Asia’s energy sector. As the world’s energy resources decrease, we believe that all countries must think proactively and work together to ensure adequate supplies of energy in the future.

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Energy & Mining

Centerra Gold Inc.

Mining Operation Serves as Benchmark in Kyrgyz Economy “The story of Kumtor is very much the story of the Kyrgyz Republic,” explains Michael Fischer, President of Kumtor Operating Company. Kumtor Operating Company was launched in 1992 by Cameco Corporation, which had been introduced to the Kumtor gold deposit in Kyrgyzstan while looking for uranium properties in the country. Gold production at Kumtor began in 1997 and Centerra Gold was formed in 2004 acquiring all the gold assets of Cameco. Today, Centerra Gold’s Kumtor mine in Kyrgyzstan is the biggest western-owned gold mine in Central Asia, producing around 600,000 ounces of gold per year. The mine produced a total of 260.7 tonnes of gold between 1997 and 2011. Kyrgyzaltyn JSC, which is controlled by the Kyrgyz government, has a 33% share in the equity of Centerra Gold. The Kumtor Mine, which plays a major role in the national economy, is owned 100% by Centerra Gold. Michael Fischer explains, “In 2011, Kumtor accounted for around 25% of Kyrgyzstan’s industrial output, 12% of its GDP and 50% of its export revenues. In addition, Kumtor directly employs more than 2,700 people, 95% of whom are Kyrgyz Nationals, as well as 1,000 contractors.” The mine is operated according to the highest international environmental and safety standards; in fact, its safety record surpasses that of most mines worldwide, including mines in North America.

Michael Fischer says, “We are very proud of our environmental footprint and safety systems, and we use the most up-to-date truck ﬂeet in the world to move over half a million tonnes of material every day.” Production at the mine is planned until 2021, but Kumtor is committed to ensuring that the surrounding area will continue to develop sustainably even after the mine is closed. The mine’s employees are being trained in skills which will help them ﬁnd good jobs anywhere in the future, and Kumtor supports a number of local corporate-social-responsibility initiatives, including donating 1% of its gross monthly revenues to the Issyk-Kul Development Fund. In 2011, Kumtor provided €10.4 million (KGS 636 million) to the fund for more than 300 projects, including ones involving local farmers. In addition, Kumtor also funds three micro-credit operations, as well as, educational projects, including a business-training initiative in partnership with the EBRD. One of Kumtor’s projects is ‘School 27’ in Bishkek, an apprenticeship program for disadvantaged young people. Also, in 2012, Kumtor

signed an agreement with the Kyrgyz Government to fund €16 million (US$21 million) into a national micro-credit ﬁnancing program to provide ﬁnancing for small sustainable development projects throughout the Kyrgyz Republic. Kumtor not only serves as a benchmark in Kyrgyzstan’s private sector; it also demonstrates the strong investment potential of the Kyrgyz economy. As Michael Fischer explains, “If international investors want to see what can be accomplished in this country, they should take a close look at Kumtor.”

Centerra Gold Inc. 1 University Avenue, Suite 1500 Toronto, Ontario, M5J 2P1 Canada Tel: +1 416 204 1953 info@centerragold.com www.centerragold.com

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Mining and Energy Driving Kyrgyz Economy The Kyrgyz Republic’s exceptional natural resources include gold and other minerals as well as extensive hydropower potential, and the energy and mining sectors are key drivers of the Kyrgyz economy. Mining contributes around 10% of the Kyrgyz Republic’s GDP and 26% of total tax revenues as well as 50% of the country’s export earnings, while the energy sector accounts for around 3.9% of GDP and 16% of total industrial production. © IBC

The government has placed a high priority on continuing to develop both sectors with the help of international investors. As Temir Sariev, Minister of Economy, explains, “We understand that global demand for mineral resources will continue to increase each year, thus we consider the mining industry a priority sector for us, along with the power sector.” Both sectors face challenges which the Kyrgyz government is working hard to alleviate. The government has instituted new mining legislation and mineral-licensing procedures, including the Extractive Industries Transparency Initiative, to bring the Kyrgyz Republic’s mining laws in line with international standards. In addition, the government now holds auctions or tenders to sell licenses for mineralresources development and requires feasibility studies and communityservice initiatives (including local job creation and training as well as infrastructure development) for

all new mining projects. Investors in mining initiatives are protected by law.

“We consider the mining industry a priority sector for us, along with the power sector.” National mining company Kyrgyzaltyn owns licenses to operate the Makmal, Terek-Saj, and Solton-Sary gold deposits, owns a gold reﬁnery in Kara-Beldy, and participates in several joint ventures. Canadian mining company Centerra Gold, in which the government has a 33% share, operates the Kumtor Mine, which accounts for 95% of the Kyrgyz Republic’s gold production; the government plans to hold an IPO to sell at least 25% of its share. Another project in the works is to create a precious-metals exchange.

Power losses being reduced In the energy sector, the Kyrgyz Republic has enormous export potential thanks to its significant hydropower resources, but the sector has been plagued by high commercial losses and low tariffs, as well as outdated and inadequate energy infrastructure, energy shortages in winter and governance issues. Progress is being made, however. In mid-November 2012, Avtandil Kalmambetov, Minister of Energy and Industry, reported that energy losses have been reduced from 36% to 20% and that the Kyrgyz Republic will continue to launch new projects to upgrade the transmission network and open new power stations. The Kyrgyz Republic is also taking an active role in the creation of the Central Asian regional electric power market (CASAREM) and is participating in the ambitious CASA-1000 project.

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Energy & Mining xxxxxx

Kyrgyz Komur

High-Potential Coal Industry Welcomes EU Investors Kyrgyz Komur is playing a leading role in developing Kyrgyzstan’s high-potential coal sector. Formed in August 2012, the company serves as an umbrella organisation for the country’s many small coal operations. Asanbek Moldokeev, General Director, explains, “Having one large coal enterprise under the supervision of the Ministry of Energy and Industry means that we can more easily ensure quality and environmental standards while also optimising overhead costs. Kyrgyz Komur handles coal marketing and management, exports and the implementation of new technologies.” Thanks to its extensive coal resources and strategic location in Central Asia, Kyrgyzstan once exported 4.5 million tonnes of coal per year to markets throughout the region, but this total dropped to around 150,000 tonnes with the collapse of the Soviet Union. Now Kyrgyz Komur is helping to turn that around. Asanbek Moldokeev says, “Kyrgyzstan produced 630,000 tonnes of coal in 2010, 840,000 tonnes in 2011 and around 1.2 million tonnes in 2012. Our goal for 2013 is to supply the Bishkek metropolitan area and to make Kyrgyzstan independent of imported coal from Kazakhstan. We aim to bring Kyrgyzstan’s coal exports back up to where they were before.”

High-quality coal at advantageous prices Kyrgyzstan has confirmed resources of 4.5 billion tonnes of coal with an

additional 6 billion tonnes currently being explored, mainly in the Karakesh and Sulukta areas, and Kyrgyz coal is known for its high quality. Kyrgyz consumers currently use a total of around 2.2 million tonnes per year, so there is strong export potential, particularly since Kyrgyz coal sells for around onefourth the price of coal available in Afghanistan. Kyrgyz Komur is particularly targeting the Tajikistan and Afghanistan markets as well as China. The Kyrgyz coal industry needs investment in new technologies and equipment in order to realise its full potential. Kyrgyzstan is already partnering with companies in South Korea and Russia concerning coal processing, and Kyrgyz Komur welcomes the chance to work with investors

and partners from Europe. Asanbek Moldokeev concludes, “The Kyrgyz coal industry needs around €38.1 million to €45.8 million in investments, for example in new technologies and the construction of railways for coal transport. Our coal companies and the government cannot manage this alone so we need foreign direct investment. Kyrgyzstan offers a pro-business environment and our coal industry has great investment appeal, especially since our coal regions have many other mining resources just waiting to be exploited.” Government of Kyrgyz Republic State Enterprise “Kyrgyz Komur” Ahunbaeva st. 119 – room 234 Bishkek Tel: +996 312 51 1908 kyrgyzkomur@mail.ru

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Harnessing Vast Energy Resources to Power the Future The Kyrgyz Republic’s massive energy resources have the potential to ensure the country’s energy independence as well as major export revenues. Hydropower leads the way, accounting for 80% of the country’s power-generation capacity of around 3 million kWh. The Kyrgyz Republic has over 170 rivers which could be harnessed to produce more than 80 billion kWh per year, according to some estimates. Most of the country’s hydropower currently comes from the Toktogul, Kurpsay, Tash-Kumyr hydroelectric stations on the Naryn River, which experts say could support around 33 additional hydropower plants with an estimated total capacity of 6,450 MW. The Kyrgyz Republic exports electricity to neighbouring Kazakhstan, Uzbekistan, Tajikistan, China and Russia, with over 2.7 billion kWh of electricity going to the Russian market each year. In addition to hydropower, the Kyrgyz Republic has exploitable deposits of coal as well as the potential to develop wind, solar and biomass energy.

Urgent need to update energy infrastructure In spite of this signiﬁcant potential, the Kyrgyz Republic is often plagued by power outages, particularly in the winter months. Outdated and inadequate energy infrastructure and an urgent need for investment in new machinery, technologies, power plants and energy-transport systems are holding the energy sector back. In addition, the Kyrgyz Republic has to import the oil, gas and most of the coal it uses to fuel its hydropower plants, in spite of its large coal reserves. To help cope with these challenges, the Kyrgyz government has launched its ‘Strategy for the Fuel and Energy Complex Development to 2025’, which includes building around 100 small hydroelectric plants with a total capacity of approximately 180 MW. In addition, the government’s recently announced €5.2 billion development drive includes 15 energy projects with a cumulative investment need of €4.1 billion. Russian power companies INTER RAO UES

Group and RusHydro have already agreed to support large hydropower projects outlined in the initiative. To attract FDI in energy projects, the Kyrgyz government established the Fuel and Energy Sector Transparency Initiative (FESTI) in 2011; it ensures transparent procedures for setting energy tariffs and open and competitive tenders for fuel export and import projects. FDI has been pouring in to the Kyrgyz energy sector, particularly through joint ventures. In just one example, Kyrgyz national power company Natsionalnaya Electricheskaya Syet and China’s Tebian Electric signed a €257.7 million deal to build the Datka-Kemin 500 kv power-transmission lines, a project which will help break the Kyrgyz Republic’s reliance on Central Asian transmission systems and will be a step towards energy independence.

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Energy & Mining

National Electrical Grid of Kyrgyzstan

Energy Company’s Mission: Providing Stable and Reliable Energy OJSC “National Electrical Grid of Kyrgyzstan” (NEGK) plays a crucial role in bringing electrical energy to customers throughout Kyrgyzstan and beyond. NEGK was launched in 2001 to handle Kyrgyzstan’s power transmission when the Kyrgyz government unbundled state-owned energy enterprise Kyrgyzenergo. Today, NEGK owns and operates more than 10,000 km of power-transmission lines of 110 kV and higher, as well as 190 substations with primary voltages of 500, 220 or 110 kV.

forward its modernisation programmes. Medetbek Aitkulov says, “We would be very grateful to have the support of European banks and investors. We have already successfully completed projects with European organisations, including the EBRD, and we have demonstrated that NEGK is a reliable partner. NEGK is a transparent company which is audited four times every year by external auditors.”

Medetbek Aitkulov, General Director (CEO)

Every year NEGK transports around 12 TWh of energy, nearly 10% of which is exported. NEGK brings wholesale electrical energy from all Kyrgyzstan’s hydroelectric power stations to four Kyrgyz Distribution Energy Companies (DEC) and 68 Large Industrial Consumers (LIC) as well as to neighbouring Kazakhstan, Uzbekistan and Tajikistan.

Ministry of Energy and Industry. Our task is not to generate proﬁts but rather to meet the government’s objectives for the energy ﬁeld. Our job is to provide stable and reliable energy throughout Kyrgyzstan.” He adds that NEGK is currently focussing on upgrading the country’s energy infrastructure, most of which was installed 30 to 40 years ago and cannot handle Kyrgyzstan’s current needs.

Medetbek Aitkulov, General Director (CEO), says, “We do not set electricity rates; this is the responsibility of the

The Asian Development Bank recently provided €41.22 million (US$55 million) to NEGK for upgrading lines and substations, and NEGK has launched a bidding process for partners to complete the project. NEGK has also received support from China to build a second 500 KW power line connecting northern and southern Kyrgyzstan to help relieve the power outages that have plagued the country in the past. NEGK welcomes the chance to work with European partners as it drives

Although it is 93% government-owned, NEGK is operated as an open joint-stock company with a rapid decision-making process. Medetbek Aitkulov points out, “I can make ﬁnancial decisions for up to 10% of the company’s total funds and the Board of Directors can do this for up to 20%. We recently signed a €291.36 million (US$389 million) agreement with Chinese company TBEA.” He adds that NEGK is involved in the regional CASA-1000 energy project, which represents outstanding opportunities for investors looking to get involved in Central Asia’s rapidly developing energy sector.

NEGK Jibek-Jolu ave. 326 720070 Bishkek Tel: +996 312 66 1001 nesk@elcat.kg www.energo.kg

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• Meeting the Challenge of Transport-Infrastructure Development • Rapidly Developing ICT Sector Attracting Global Investors

Communication & Transport

“Kyrgyzstan can be a gateway to Central Asia and China for European companies.” Maksatbek D. Dyikanov, State Secretary under the Ministry of Transport and Communications

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Communication & Transport

Massive Infrastructure Projects Creating New International Links Maksatbek D. Dyikanov, State Secretary under the Ministry of Transport and Communications, discusses major international transport corridors and other key projects his ministry is currently overseeing. European Times: What are the current priorities for the Ministry of Transport and Communications? Maksatbek D. Dyikanov: This ministry plays a crucial role in Kyrgyzstan’s economic development because all sectors depend on high-quality transport and communications infrastructure. Our country had a fairly undeveloped infrastructure in the Soviet years and we have made many major improvements since that time. We are currently involved in a number of ambitious transport projects, including building and improving the international transport corridors which pass through Kyrgyzstan and connect it to China, Kazakhstan, Uzbekistan, Russia and other markets. Concerning communications, we are steadily improving our ICT systems and services as well as our telecom infrastructure, and we have built a high-technology park designed as the ideal base for ICT companies. European Times: What are your priorities concerning transport-infrastructure projects? Maksatbek D. Dyikanov: Thanks to the country’s mountainous geography, around 95% of passenger and goods transport in Kyrgyzstan is by road, so road development, particularly of the main corridors, is our top priority. One key transport corridor is the one linking China, Kyrgyzstan, and Uzbekistan; we have budgeted the work we need to do on our section of this corridor at around €1.93 billion. We are ﬁnancing our transport-infrastructure projects with government funds as well as with the support of international organisations and investors. We have received support from China to launch several transport-infrastruc-

Maksatbek D. Dyikanov, State Secretary under the Ministry of Transport and Communications

ture projects and the Ministry of Transport and Communications recently signed a contract with a Chinese company to rehabilitate the Bishkek-Naryn-Torugart road. We are planning to implement a concession system as well as tenders to attract private investment which will help the government complete various initiatives in the transport sector. We have also received assistance from international organisations, including the Asian Development Bank, the World Bank, the European Bank for Reconstruction and Development, the EU, and a group of ﬁve banks in the Middle East. Our transport-infrastructure projects represent outstanding

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opportunities for international investors and companies and we welcome their participation.

operators to adopt a regional strategy for mobile communications which would lower prices for consumers in Central Asia.

European Times: In addition to road projects, what are some other current initiatives for the ministry?

We particularly encourage European investors who can help us build a bridge between Kyrgyzstan and Europe. Along with other countries in the region, Kyrgyzstan is working to revive trade along the Silk Road between Europe and Asia. Kyrgyzstan can be a gateway to Central Asia and China for European companies.

Maksatbek D. Dyikanov: We want to improve our airports, attract more international carriers to offer flights to and from Kyrgyzstan, and upgrade our airline fleets. Improving our air-transport services will play a big role in boosting the country’s international trade as well as our tourism industry. We also need to invest in our railway system, including in new rolling stock. One project which is now moving forward is the China-Kyrgyzstan-Uzbekistan railway, which will greatly improve conditions for trade-oriented companies. The World Bank is providing advisory assistance to Kyrgyzstan for this project. In the communications sector, one of our goals is to bring Internet connections to every village and school in the country. We have already equipped 470 villages with Internet service and we continue to drive this project forward. We are working with mobile operators to offer Internet connections in isolated rural areas. Another communications initiative for the ministry is to complete the transition to digital television. In all our transport and communications projects, we aim to bring new services to rural areas as well as to our cities. European Times: What kind of investors are you looking for? Maksatbek D. Dyikanov: Kyrgyzstan has created the right conditions for investors in transport and communications and this country offers a wealth of opportunities. We welcome know-how and technologies as well as ﬁnancial support. We also need lower prices for calls within the region; it costs more to call a neighbouring country than to call the US. We would like

“This country has a number of advantages for investors, including our young, well-educated, multilingual and technically knowledgeable workforce.” European Times: Why should investors target Kyrgyzstan?

international

Maksatbek D. Dyikanov: This country has a number of advantages for investors, including our young, well-educated, multilingual and technically knowledgeable workforce. Kyrgyzstan also has beautiful natural areas and great tourism potential. In addition, Kyrgyzstan’s people are very friendly and hospitable, and the government, including the Ministry of Transport and Communications, is doing its best to provide the best possible protection and support for international investors. I know that Kyrgyzstan’s international image has not always been the best, but investors should know that great progress is being made here every day and no one should be afraid to come here. Kyrgyzstan offers tremendous potential in many areas. I personally welcome international investors to visit us and see for themselves everything that this country has to offer.

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Communication & Transport

Meeting the Challenge of TransportInfrastructure Development The Kyrgyz Republic – a key stop on the historic Silk Road connecting Europe and Asia – is building on its strategic location to become a leading regional and international trade hub through upgrading its transport infrastructure. In its new development programme launched in December 2012, the government budgets almost €700 million for transport and communications projects. These will be achieved with the help of international funding organisations and investors. Building modern transport systems is a challenge for this land-locked, very mountainous country, especially since its transport infrastructure was neglected during the Soviet years. Bishkek and the rest of the northern part of the country are separated from the southern Kyrgyz Republic, including Osh, by a sparsely populated, mountainous region where roads and railways are difficult to build and maintain. As a result, northern Kyrgyz Republic’s transport system is more closely linked to Kazakhstan’s transport network than to the south, while the southern Kyrgyz Republic’s transport system is integrated with that of Uzbekistan. The Kyrgyz government is focussing on building and refurbishing transport systems within the country, including between north and south, and along routes connecting the Kyrgyz Republic to China, Kazakhstan, Uzbekistan, Russia and other markets.

Upgrading roads a priority Since most transport in the Kyrgyz Republic today is by road, upgrading major road-transport corridors is a current priority. One project connecting the Kyrgyz Republic to China and Uzbekistan is budgeted at €1.93 billion. Concessions and tenders will be offered for this and other projects, representing outstanding opportunities for foreign companies. China has already pledged its support for the Bishkek-Naryn-Torugart road and other transport initiatives. The Kyrgyz government also aims to continue to improve the country’s air and rail links. A crucial rail route is the China-Kyrgyzstan-Uzbekistan railway, which is being upgraded with the support of the World Bank. Manas

International Airport near Bishkek has been modernised and now offers up-to-date logistics services. To support its growing international trade, the Kyrgyz Republic is very active in the TRACECA project, an EU programme launched in 1993 to develop a transport route from Europe to China via the Black Sea, the Caucasus and the Caspian Sea. The route passes through Armenia, Azerbaijan, Georgia, Moldova, Ukraine, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, Uzbekistan, Romania, Bulgaria and Turkey. The Kyrgyz Republic is also participating in the Shanghai Cooperation Organisation, which is developing trade along a new Eurasian land bridge linking China and Europe.

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Rapidly Developing ICT Sector Attracting Global Investors The Kyrgyz ICT sector has been liberalised in line with World Trade Organisation criteria and includes around 250 telecom enterprises, both domestic and foreign. The sector is developing rapidly, contributing around 8% of the Kyrgyz Republic’s GDP. As part of the government’s telecom modernisation drive, the National Agency for Information Resources, Technologies and Communication now oversees telecom activities. The ICT sector is still dominated by Kyrgyz Telecom, which has a 92% share of the ﬁxed-line market and a 14% share of the telecom market overall. The Kyrgyz mobile-communications segment has grown particularly rapidly, averaging around 26% growth per year in 2009 and 2010, and mobile operators continue to bring competitive new services to the market. Mobile-services provider O!, for example, recently set up new base stations in the Issyk-Kul region and has enhanced its network’s capacity.

One of Central Asia’s highest Internet penetration rates The Kyrgyz Republic has one of the highest Internet penetration rates in Central Asia, reaching around 20% as of 2010. Per capita Internet subscriptions remain very low, however, since most users choose public

rather than private Internet access. In October 2012, two members of the Kyrgyz parliament launched the ‘Internet Parking’ project in downtown Bishkek to help locals learn how to use the Internet. For one year, free outdoor classes in Internet literacy as well as free Wi-Fi connections will be available along the city’s Freedom Boulevard between Chui Prospect and Kiev Street.

to residents throughout a very mountainous, high-altitude country is a major challenge, but a ﬁbre-opticcable project currently in the works should improve connections even in rural areas.

The Kyrgyz Republic’s telecom-services providers are slowly but steadily implementing cutting-edge new technologies. Global Asia Telecom, Sayma Telecom and Foris Telecom Kyrgyzstan are deploying LTE networks, while Totel, which has pre-Wimax frequencies, is also considering switching to a new technology for ﬁxed wireless broadband. Bringing top-quality telecom services

The ICT sector has been singled out by the Kyrgyz Republic’s Ministry of Economy as having particularly strong attractions for foreign investors. Google is one global player which has entered the market. In July 2012, Google announced that it plans to build data centres in the Kyrgyz Republic, citing the advantage of the country’s low electricity costs.

Another project by Kyrgyz Telecom to upgrade its analogue networks to digital is already around 80% complete but needs investor support to be ﬁnished.

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Communication & Transport

Kyrgyz Telecom

Telecom Leader Aims to Offer New Services North-south ﬁbre-optic cable network

Kyrgyz Telecom brings world-class services to individual and corporate customers in Kyrgyzstan. With a 92% share of the ﬁxed-line market and a 14% share in the overall telecom market, the state-owned enterprise remains the dominant player in the country’s liberalised telecom sector, which now accounts for around 14% of Kyrgyzstan’s GDP.

“We have 440,000 contracts for ﬁxedline services, and even though there are now 247 licensed telecom operators in Kyrgyzstan, we are the only company that provides services to every city and village in the country. In the future, we aim to enter the mobile market as well,” explains Askar Baratbaev, CEO and President. In addition to providing ﬁxed-line services, Kyrgyz Telecom offers international calls, Internet data transfer, and tele-radio broadcasting. With the support of funding from the World Bank and the EBRD, Kyrgyz

Askar Baratbaev, CEO and President

Telecom has already upgraded 80% of its network from analogue to digital and is now looking for investors and partners to provide the €19.3 million necessary to ﬁnish this initiative. The company is also seeking ﬁnancial support to launch mobile services, a project with exceptional potential given Kyrgyz Telecom’s established market presence. Askar Baratbaev explains, “To offer mobile services, we need around €31 million. We are looking for credit at low interest, or for individual partners.”

Providing reliable telecom services in a very mountainous country where some villages are at around 4,000 m elevation presents major challenges. To improve its infrastructure and cope with these geographical constraints, Kyrgyz Telecom is working on a project to connect the northern and southern parts of Kyrgyzstan with a ﬁbreoptic-cable network. Askar Baratbaev says, “As you can imagine, this is challenging, but we have highly qualiﬁed engineers working on it. We hope to complete this project by the end of 2013. It helps that we are already the only company with a cable network that reaches throughout the country.” Kyrgyz Telecom is the ideal partner in Kyrgyzstan thanks to its market-leading position, positive image and strong track record. “Operating transparently is a high priority for us and we are strongly supporting our country’s e-government programme,” Askar Baratbaev says. Urging international investors to explore opportunities in Kyrgyzstan, he adds, “Europeans should not be afraid of Kyrgyzstan. Even though this country has had some troubles in the recent past, we are entering an era that is very safe and prosperous. We are ready to work with investors and partners from anywhere in the world.”

Kyrgyz Telecom 96 Chuy ave. 720000 Bishkek Tel: +996 312 68 1616 info@kt.kg - www.kt.kg

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Continent Print Company

Printing Leader Employing Cutting-Edge Technologies Continent Print Company, previously founded as a small printon-demand department of the leading IT-solution reseller in Kyrgyzstan, has steadily grown to become one of the biggest printing companies in the Kyrgyz Republic and a competitor in the Kazakhstan market. Owner and CEO Oleg Podobedov explains, “We employ the highest-quality equipment, including Müller Martini polygraphic equipment from Austria valued at more than €2 million. We have developed signiﬁcant capacity; for example, we can handle all the printing orders for the Kyrgyz Ministry of Education in only two to three months.” Continent Print is currently a full-power member of Continent Group, teaming advertising, printing and IT companies to handle a wide range of projects. The company’s customers include the Ministry of Education, UniCredit bank and other banks, Coca-Cola and other private enterprises, the World Bank, the USAID, political parties and others. “Our products for these customers range from journals and brochures to a wide variety of advertising materials. Continent Print is well known for its high quality, and a company in Kazakhstan chose us to print a journal called ‘Gloss’,” Oleg Podobedov says. Continent Print has been operating in Kazakhstan for the past two years and anticipates strong growth there once the regional Customs Union goes into force, although the Kyrgyz market will remain its primary focus.

Deﬁning Continent Print’s competitive edge, Oleg Podobedov says, “We operate on a very high level and use the latest advanced technology. We have invested massively in new technologies and equipment to make sure that we deliver highquality products. We also have eight years of experience in the printing sector and employ many highly skilled workers. Our performance speaks for itself, and we do our best to deliver all products on time and with high quality.” The company’s future goals include increasing production and continuing to improve its performance and international standards in order to expand in regional markets. Continent Print welcomes partnerships and new customers. Oleg Podobedov says, “We are open to any form of cooperation. We guarantee honesty and quality from our side. Unfortunately, many people have a very bad idea of the Kyrgyz Republic until they actually get to know it. The Kyrgyz people are dedicated and hard-working, and I sincerely believe in my country.”

Intergelpo st. 1 - 720054 Bishkek Tel: +996 312 655 556 oleg@continent.kg - www.continent.kg

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Communication xxxxxx& Transport

#One Magazine

Magazine a ‘Must’ Read for Those in the Know #One Magazine, launched around two years ago, has already made a name for itself in Kyrgyzstan as a ‘must’ read for those in the know. #One Magazine is widely recognised for its interesting and timely articles as well as for its high-quality production values. Standing out from other local publications in its quality, length (almost 200 pages) and impressive sales volume of around 3,000 copies per issue, #One Magazine brings sophisticated contemporary journalism to Kyrgyzstan. The magazine is designed for successful men with an interest in intellectual and cultural affairs, and for the equally successful women interested in similar issues. #One Magazine is distributed in key locations throughout Bishkek and is available on Kyrgyzstan Airlines flights. #One Magazine features stylish graphic design and exceptional images, including photographs taken by the most skilled professionals in Kyrgyzstan’s fashion and advertising worlds. Every issue contains interviews with all types of inﬂuential people, articles on the most interesting subjects of the day, discussions of cultural events, portraits of interesting personalities, and

elite, cultural figures, musicians, beautiful women who excel at a particular activity, community leaders and others who are playing important roles in today’s Kyrgyzstan. Each issue has its own theme; the September 2012 issue, for example, focussed on the visual arts while the October 2012 issue focussed on spiritualism. #One Magazine will continue to explore themes of particular significance in Kyrgyz culture.

Ayida Dolotbakova, Editor in Chief

in-the-know reviews of ﬁlms, theatrical productions, books, concerts and other not-to-be-missed happenings in Kyrgyzstan.

Annual #One Magazine Awards honour high achievers Demonstrating its commitment to playing a key role in Kyrgyzstan’s cultural scene and to promoting local personalities and achievements, the magazine held its ﬁrst annual #One Magazine Awards this year. The event honours individuals and organisations in many ﬁelds which have made their mark in Kyrgyzstan over the past year. Regular articles in the magazine focus on members of the local business

#One Magazine’s publishers, editors and writers are always ready to promote local talent and to provide a platform for creative people and for intriguing discussions on issues of importance in Kyrgyzstan today. The magazine is committed to maintaining the highest standards of journalism and to continuing to earn the trust of its rising number of readers. #One Magazine, the voice of today’s Kyrgyzstan, will continue to grow as it keeps pace with the country’s rapid development.

Razzakova st. 19/505 Business Center ‘Rossiya’ Tel: +996 312 39 8080 ofﬁce@onemag.kg www.onemag.kg

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• Agriculture Crucial for Boosting GDP and Fighting Poverty • Global Partners Helping Agriculture Sector Achieve its Potential

Agriculture

“Kyrgyzstan has enormous potential in the agriculture sector through adding value and boosting quality.” Akylbek Jumaliev, Deputy Minister of Agriculture and Land Reclamation

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Agriculture

High-Potential Agriculture Sector Focussing on Quality Kyrgyzstan’s Deputy Minister of Agriculture and Land Reclamation, Akylbek Jumaliev, discusses his ministry’s goals for the agriculture sector.

European Times: How important is the agriculture sector to Kyrgyzstan’s economy? Akylbek Jumaliev: After goldmining, agriculture is our leading sector, and it has tremendous growth potential. Kyrgyzstan has around 9,000 hectares of arable land on which farmers produce crops, wine, fruit (such as apricots), cattle for beef and milk products, sheep and other livestock. One problem the sector faces is that around 1,000 of our farms are very small, with low yields and high production costs. This makes our agricultural products less competitive. We are importing beef and pork from China, for example, and Kazakhstan produces grain more cheaply than we can. Our new

strategy, as a small country, is to focus on quality rather than quantity, for example by expanding our production of organic agricultural products. Kyrgyzstan has clean water, highquality mountain pasture and unspoiled land. Kyrgyzstan beef is already very popular in Kazakhstan because of its high quality. European Times: How does your ministry help farmers? Akylbek Jumaliev: The Ministry of Agriculture oversees standards, and one of our current priorities is to align our standards of agricultural products with international standards, particularly as Kyrgyzstan is about to join the Customs Union. We are seeking investor support to build up the facili-

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ties and human resources to help us meet global standards. We need laboratories as well as trained staff, and we are looking for ﬁnancial and technological assistance for this. European Times: What kind of support have you already received from international organisations? Akylbek Jumaliev: The World Bank and other global organisations have provided important assistance in our drive to control animal diseases, for example foot-and-mouth disease. We know that controlling livestock diseases is crucial for us if we want to step up our agricultural exports. We still need to upgrade our testing facilities, veterinary services and laboratories, and for that we need international support. European Times: What do you think Kyrgyzstan needs to do to attract more international investment in agriculture? Akylbek Jumaliev: We need to improve Kyrgyzstan’s global image through promoting stability and continuing to ﬁght corruption, and we need to offer more incentives for investors. Several organisations involved in the agriculture sector, for example professional associations for crop production and for meat processing, are working together to help upgrade the sector overall and make it more investorfriendly. The government organised an investment forum on agriculture and food processing, held in September this year, in which we highlighted the advantages of Kyrgyzstan’s agriculture sector. We need to make these advantages better known to global investors. European Times: What are some major recent foreigninvestment projects in the agriculture sector? Akylbek Jumaliev: A Spanish investor has launched a huge project

that focuses on improving the quality of pastures, animal health and training programmes in the agriculture sector. We also have a project to upgrade veterinary services, including new refrigeration systems, new drugs for veterinary treatments, facilities for genetic studies of animals, and more. Some of our projects are being funded through a €77.7 million (US$100 million) loan we received from the Turkish government, including a new irrigation system in southern Kyrgyzstan. Once this system is operational, we expect farmers to move to that area and begin cultivation and livestock production. We believe this area will turn into a major agricultural production centre. We have outsourced to private companies the job of cleaning the new irrigation channels. Another project we have begun is to set up 300 artificial-insemination plants to improve the quality of our livestock. European Times: Kyrgyzstan is already involved in regional trade of agricultural products. Are you targeting markets in the EU as well? Akylbek Jumaliev: We have wellestablished agricultural exports to Turkey, mainly of beef, and we are

already working with several Turkish companies which supply equipment and services to our farmers. Turkish investors have opened meat-processing plants here. We are definitely looking to expand and develop trade and partnerships with other countries in Europe. European Times: Looking to the future, what changes do you anticipate in Kyrgyzstan’s agriculture sector over the coming five to ten years? Akylbek Jumaliev: We are steadily expanding our markets, for example in the Middle East, and we are seeing more investors from outside the region. I believe these trends will continue. One of our potential investors is a food company from Qatar which is attracted to Kyrgyzstan because of our abundance of pure water for irrigation. We have already received a major investment from PepsiCo and our president recently helped inaugurate a new juice plant; we have been importing juice from Ukraine and now we will be able to produce it here. Organic agricultural production also has a great future here. Kyrgyzstan has enormous potential in the agriculture sector through adding value and boosting quality.

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Agriculture

Agriculture Crucial for Boosting GDP and Fighting Poverty The Kyrgyz Republic’s agricultural sector, which accounts for over a quarter of the country’s GDP and employs around half of the workforce, has expanded rapidly since the 1990s. The government has placed a high priority on keeping this growth on track and has completed land reforms, created a rural bank and agribusiness/rural advisory services, established water-user associations and pasture committees, and invested © IBC

in rural transport infrastructure, among other projects.

Boosting productivity

Agricultural development is particularly crucial for the Kyrgyz Republic given the high percentage of the country’s population living in rural areas, many of them with limited means. Through agriculture, the Kyrgyz Republic can not only boost its export revenues but also achieve food self-sufﬁciency and alleviate rural poverty.

The government welcomes international investment in the agriculture sector. The needs are great. Many of the country’s farms are small, familyowned operations with limited ﬁnancing for new equipment, technologies and methods. Productivity is often low and most farmers are not integrated into modern supply chains. Poor transport infrastructure, the lack of strong quality controls, and protectionist policies by some of the Kyrgyz Republic’s neighbours are other challenges.

The Kyrgyz Republic has around 9,000 hectares of arable land on which farmers produce cotton, tobacco, wool, vegetables, fruits, meat and other agricultural products. Tobacco and cotton are the top agricultural exports, and food-processing is one of the Kyrgyz Republic’s leading manufacturing sectors. In the Soviet years, the Kyrgyz Republic was well known for the high quality of its food products, and Kyrgyz agricultural products have the potential to succeed in regional and international markets given sufﬁcient investment.

The Kyrgyz Republic still imports agricultural products it has the potential to produce domestically, including beef and pork from China and grain from Kazakhstan. In fact, the only two agricultural products in which the country is self-sufficient are milk and honey. The picture is slowly changing, however; in September 2012 the Kyrgyz Republic signed a partnership to export meat to Saudi Arabia, and Turkey has announced it will provide needed help for the

Kyrgyz agriculture sector. International funding organisations, including the EBRD, have also stepped in to help Kyrgyz agriculture reach its full potential. The Ministry of Agriculture encourages investment that will help Kyrgyz farmers increase their productivity and become more competitive in local and regional markets. The ministry is also focussing on quality rather than quantity, including promoting organic farming.

Aigul JSC Chui 147 720011 Bishkek Tel: +996 312 43 9762

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Global Partners Helping Agriculture Sector Achieve its Potential International funding organisations are playing a crucial role in spurring on the Kyrgyz government’s agricultural-development programmes. The World Bank, the USAID and the EBRD are three partners which are supporting ambitious projects in the Kyrgyz agriculture sector. The World Bank’s On-Farm Irrigation II, Water Management Improvement, Agricultural Investments and Services, and Agribusiness and Marketing projects in the Kyrgyz Republic have all achieved promising results. Almost 450 pasture-users unions, 272 community seed funds and 450 water-users associations have been established through these efforts, and 122,000 hectares of irrigation systems have been rehabilitated. In addition, the programmes have supported 44 agro-processing enterprises and facilitated the sale of €12.3 million in agricultural products as well as ﬁnancing loans and mobilising €7.57 million in investments in the Kyrgyz agri-business sector. The USAID is another major player in the Kyrgyz agriculture sector. A recent USAID effort is the Kyrgyz Agro-Input Enterprise Development project, which builds on earlier initiatives and is helping to counter setbacks to the Kyrgyz agricultural sector following the disruptions of 2010. The project supports private entrepreneurs, farmers and commodity chains that offer the greatest potential for improving sustainable agricultural production and food security. It involves 20,000 progressive farmers who are planting

USAID-funded improved wheat varieties and 80,000 other farmers who are adopting better farming and animal-care practices as a result of various project initiatives. The USAID is also working with the Eurasia Group Switzerland to promote public-private partnerships in the Kyrgyz agriculture sector, and with the IFDC in the Seed Assistance Voucher and other programmes. In December 2012, the ﬁrst of two planned USAIDsupported apricot-processing plants was inaugurated in the southern Batken region.

Enhancing attractions for private investors The EBRD has long been actively involved in the Kyrgyz agriculture sector, particularly concerning increas-

ing access to ﬁnance for agribusiness and enhancing the sector’s attractiveness for private investors. The EBRD has helped launch alternative ﬁnancing and collateral schemes and provides technical assistance and training. Recent EBRD agricultural initiatives include an equity share in a Kyrgyz dairy-processing company and loan support for a food retailer. The EBRD has also been involved in water- and wastewater-management projects in the Kyrgyz Republic since 2009 and in early December 2012 it announced it was looking for experts to get involved in new water projects in Kant, Bishkek and Talas. Innovative projects like these are helping to draw FDI to the Kyrgyz agriculture sector. In just one example, PepsiCo recently announced it would invest over €1 million in a Bishkek milk plant in 2013.

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• Ambitious Healthcare Reforms Creating New Investment Opportunities • Bringing Healthcare up to International Standards • Significant Progress in Upgrading Education System • Education at a Crossroads

Health & Education

“I would like investors to know that Kyrgyzstan is definitely changing for the better.” Dinara Saginbaeva, Minister of Health

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Ambitious Healthcare Reforms Creating New Investment Opportunities Dinara Saginbaeva, Minister of Health, discusses recent major developments in Kyrgyzstan’s healthcare sector and outlines the ministry’s ambitious goals. European Times: What are some of the changes that have occurred in Kyrgyzstan’s healthcare system since the Soviet years? Dinara Saginbaeva: Any country’s healthcare system needs a lot of financial support from the government, so when the Soviet Union collapsed, there was no money to maintain healthcare in Kyrgyzstan at the previous level. A comprehensive reform of the healthcare sector began in 1996 with the support of international funding institutions, such as the KfW, WB, WHO, etc. The focus shifted towards primary healthcare, which now receives around 40% of the total healthcare budget compared to around 10% in the Soviet years. The number of hospital beds has been reduced and the number of medical institutions has been cut in half to achieve greater efficiency. The government has also introduced a new focus on family medicine as well as mandatory health insurance and, in 2001, a State-Guaranteed Benefit Program. Today, 76% of the population of Kyrgyzstan is insured. There is free care for pregnant women, children under the age of ﬁve and for the elderly over the age of 70. Financing healthcare has also changed as a result of the reforms, and the new system has proved to be very successful. Citizens contribute to the healthcare budget by making small direct co-payments, for example when they are treated in hospitals, and ﬁnancing is based on outcomes. Despite the fact that the healthcare sector in Kyrgyzstan is still supported by the government, many features of the free-market economy have been implemented. European Times: Are additional reforms planned? Dinara Saginbaeva: For the past 15 years we have been turning the healthcare system around, so the

Dinara Saginbaeva, Minister of Health

major work has been done. However, a reform process never ends. What was introduced in 1996 is not sufficient for today, so reforms will continue. A current priority is to further strengthen our outpatient care and to make our citizens more aware of what ambulatory or outpatient care means and what its advantages are. We also want to develop our family-health systems even more, as well as continue to upgrade the quality of our medicalsanitary care. The Ministry of Health will do everything in its power to ensure high-quality healthcare services for every single citizen of Kyrgyzstan.

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Health & Education

also like to build new hospitals and new facilities for medical diagnosis, and we need financial support of around €7.51 million to complete a rehabilitation centre near Issyk-Kul lake. In addition, we aim to build a cultural and sports centre, which is budgeted at €15.4 million, and a new neurology centre, for which we need around €30.9 million. Investors can contact the Ministry of Health directly to find out more about these and other investment possibilities. My deputy ministers and I are more than happy to work with potential investors.

““One of our goals is to attract investors in activities that are not directly part of the healthcare sector but are related, for example to food services and cleaning for hospitals and clinics.” European Times: What are some major challenges the Ministry of Health is facing? Dinara Saginbaeva: Lack of sufficient financing is the biggest challenge. We still have a deficit of 37% in the State-Guaranteed Benefit Program. Thanks to the support of donors, we have been able to implement a health-reforming program ‘Manas Taalimi’ and are now at the stage of implement-

ing the new ‘Den Sooluk’ Program. Our donors have supported educational programmes and equipment as well as financial support. But, we still need more financing, and we hope that the new government initiative to support public-private partnerships will attract private investment to the healthcare sector. We need expensive new medical equipment, new medical buildings and hospitals, and more. We have several projects we are ready to introduce. These are on organising a dialysis centre, centralising laboratory for health facilities, catering, computer tomography, angiography outsourcing and development of the voluntary health-insurance system. European Times: What kind of investors are you looking for? Dinara Saginbaeva: One of our goals is to attract investors in activities that are not directly part of the healthcare sector but are related, for example to food services and cleaning for hospitals and clinics. We would

“The healthcare sector offers almost limitless possibilities and is Kyrgyzstan’s most attractive sector to invest in today.” European Times: What is your message to international investors concerning investing in Kyrgyzstan? Dinara Saginbaeva: I would like investors to know that Kyrgyzstan is definitely changing for the better and that much progress has already been made in improving our healthcare system, but we still need support in reaching our goals. The events in our country in 2005 and 2010 were tragic, but also demonstrated that our people want to be free. They want democracy and a free-market economy. Investors should not be afraid to come here. They will be very welcome, because we are aware that we need their know-how and technologies as well as their financial support. The healthcare sector offers almost limitless possibilities and is Kyrgyzstan’s most attractive sector to invest in today.

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Bringing Healthcare up to International Standards institute of family medicine that includes over 700 centres staffed with specialists that USAID helped retrain. The USAID has also focussed on tuberculosis control.

Private healthcare growing

The Kyrgyz Republic has been reforming its healthcare system since independence, focussing on boosting the quality and efﬁciency of the country’s healthcare facilities and services as well as improving access to these services, particularly for residents of rural areas and the poor.

The National Health Care System Reform Programme (Manas) 1996-2005 and the subsequent Manas-Taalimi programme 2006-2010 resulted in significant improvements in public healthcare services, financing and medical education. The Ministry of Health and development partners extended the programme through 2011 to synchronise it with the Kyrgyz Republic’s national development strategy. The UK’s DFID, Germany’s KfW, the Swiss Agency for Development and Cooperation, the Swedish International Development Agency and the World Bank provided financial support for healthcare reform measures while WHO, UNICEF, UNFPA and USAID gave parallel financing. Through KfW’s support, for example, emergency services were strengthened throughout the country in a project budgeted at €20 million. Other KfWfunded initiatives included HIV/AIDS and tuberculosis-prevention programmes, a maternal and paediatric programme, and technical-support projects. With USAID’s support, the Kyrgyz Republic adopted a single-payer system and an

The private healthcare sector, which began with private pharmacies, has been growing steadily and now includes specialised treatment centres offering outpatient care. Around half of the country’s private healthcare facilities are in the Bishkek area. The private pharmaceuticals sector is a signiﬁcant growth area since imported pharmaceuticals account for around 95% of the pharmaceuticals sold in the Kyrgyz Republic today. Government spending on healthcare has increased as the Kyrgyz economy has grown; per capita public expenditures on health increased three-fold between 2005 and 2009 to reach 6.4% of GDP. The sector still needs signiﬁcant support in order to bring high-quality care to all members of the population, and the government welcomes foreign investors in healthcare products, equipment, facilities and services.

National Centre of Cardiology and Internal Medicine Togolok Moldo st. 3 - 720040 Bishkek Tel: +996 312 66 2318 nccim@elcat.kg

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Health & Education

Significant Progress in Upgrading Education System Kanatbek Sadykov, Minister of Education and Science, discusses recent advances in Kyrgyzstan’s education sector. European Times: How has education in Kyrgyzstan changed since independence? Kanatbek Sadykov: There have been a number of significant changes, and education has long been a top priority of the Kyrgyz government. In 2011, President Atambayev, who was then Prime Minister, began some ambitious education reforms, including raising teachers’ salaries to attract more people to the teaching profession. The current lack of teachers in the country at this moment is 1,307, while three years ago this deficit was still at 3,500 teachers. We have also seen a major increase in the number of young children going to school. In addition, in the first part of 2012 we achieved our goal of providing new desks, computers and new teaching methods to around 100 schools, and we continue to bring these improvements to more schools.

“Our main priority is to further upgrade our curricula.” European Times: What are your priorities for the education sector over the coming decade? Kanatbek Sadykov: Our main priority is to further upgrade our curricula. We also want to improve teachers’ methods and implement new

Kanatbek Sadykov, Minister of Education and Science

standards of teaching. In the highereducation ﬁeld, we want to develop more partnerships with European and other international universities, for example through the Erasmus programme. We already have Kyrgyz-German and Kyrgyz-European faculties in some of our universities, and we would like to expand this to other institutions. We are also striving for full implementation of the Bologna Process and we want to ensure that Kyrgyz diplomas are recognised internationally. We do not want to copy the European system, but we would like to use experiences and best practices from European education in order to develop our own system of accreditation compatible with the European one. Another priority is to improve our professional and vocational education, which we are doing in partnership with representatives from the business sector.

European Times: What are some of the international partnerships the Ministry of Education has already established? Kanatbek Sadykov: Kyrgyzstan has education partnerships with more than 60 countries, and Kyrgyz citizens have the opportunity to study in higher-education institutions abroad. In addition, around 15,000 foreign students from many different countries are currently enrolled in Kyrgyz universities. Kyrgyzstan participates in the Commonwealth of Independent States, the Shanghai Cooperation Organisation and the Eurasian Economic Community, all of which are very active in the ﬁeld of education. Kyrgyzstan’s education sector has made impressive progress in our 20 years of independence and we will continue to move forward.

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Education at a Crossroads The Kyrgyz Republic is in the midst of a number of ambitious reforms. As a recent OECD/World Bank report points out, the Kyrgyz education system, based on the Soviet model, has received significant public-sector funding but has been plagued by disappointing results. The report recommends strengthening school autonomy and accountability through school-performance information to stakeholders and school-based management; introducing mechanisms for more equitable distribution of resources, such as per student financing; and developing capacity in the Ministry of Education for the definition and monitoring of policies, quality standards, statistics and analysis. Improving access to early-childhood education, particularly for poor children in rural areas, is another priority. In a major step forward, the Kyrgyz government introduced a new law on pre-school education in 2009 with guidelines for the education and care of young children integrated into the State Standard on Pre-School Education. The Kyrgyz education system includes elementary school, secondary education, and higher education through public universities as well as through specialised institutions like the Kyrgyz-Russian, KyrgyzTurkish and American universities. Concerning higher education, goals for the Ministry of Education are to improve licensing and accreditation standards for higher-education institutions and to adopt an efficient system for enforcing these standards; to strengthen ties between universities and the private sector in order to better prepare Kyrgyz students to enter the labour force; to introduce a system to allow adults to pursue higher education for career development; and to bring Kyrgyz higher-education quality in line with international standards.

Adopting international systems Adapting the Kyrgyz system to international ones involves transitioning to a three-cycle structure (Bachelor, Master and PhD diplomas); raising public awareness of the value of these degrees; introducing up-to-date teaching and assessment technologies in

accordance with international quality standards; and strengthening relationships with higher-education institutions from other countries. A higher-education credit system based on workload and learning outcome is another project being considered. The Ministry of Education also aims to create new teachertraining programmes, strengthen minimum qualiﬁcations for teachers and professors, and develop an external quality-assessment system with the help of independent experts and international accreditation agencies. In addition, the Ministry of Education is reviewing ﬁnancing higher education, including ways to fairly distribute state funds and the possibility of student loans through Kyrgyz banks. Education in the Kyrgyz Republic is at a crossroads today. The country has set its sights high in terms of education reform and welcomes international partners to help it reach these ambitious goals.

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• Exceptional Opportunities for Tourism Investment • Unspoiled Nature and Rich Cultural Heritage • Tasty Dishes Made from Local Ingredients • Diverse, Unique Cultural Attractions

Tourism & Culture

“I invite international travellers and investors to come here and see for themselves what makes Kyrgyzstan an outstanding tourism destination.” Daniyar Kazakov, Deputy Minister of Culture and Tourism

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Exceptional Opportunities for Tourism Investment Daniyar Kazakov, Deputy Minister of Culture and Tourism, discusses Kyrgyzstan’s tourism potential and the ministry’s current projects. European Times: How has Kyrgyzstan’s tourism sector evolved over the past five years? Daniyar Kazakov: We have definitely made a lot of progress in upgrading the tourism sector and making it more desirable for investors. One major achievement is Kyrgyzstan’s adoption this year of visa-free entry for citizens of 44 countries. We have already seen an increase in tourism arrivals thanks to this. In addition, we have improved the legal framework for tourism projects, built new tourism infrastructure, attracted domestic and foreign investment, stepped up our tourism marketing, created diverse new kinds of tourism offerings all over the country, and improved tourism services. By the end of this year, we will have instituted new classification systems for hotels and for industry standards, and the government has created the Interdepartmental Commission on Tourism Development to coordinate the work of government agencies, local communities and the private sector in the field of tourism. European Times: What are the top attractions for tourists in Kyrgyzstan? Daniyar Kazakov: Every region of the country has its own special attractions. In the capital, tourists can visit our many museums and cultural venues, while outside the capital, they can travel to our rugged mountains, national parks and nature preserves, lakes, spas and ski resorts. European Times: Can you highlight tourism segments with particularly strong potential? Daniyar Kazakov: Adventure tourism, spa and wellness tourism, cultural tourism, eco-tourism, tourism on the Silk Road, and sports tourism all have enormous potential in Kyrgyzstan. The Talas area in the Tian-Shan mountains is just one natural wonder with great prospects for ecotourism, while the Osh region is ideal for cultural tourism. Saimaly Tash has the biggest cluster of petro-glyphs in the world, while the Chatkal region offers excellent opportuni-

Daniyar Kazakov, Deputy Minister of Culture and Tourism

ties for white water-rafting. The unique Issyk-Kul lake is an excellent place for rest and the Tian-Shan mountains provide numerous possibilities for mountain-biking, trekking, helicopter skiing and skiing. These are just a few examples. European Times: What is your message to potential investors in tourism projects? Daniyar Kazakov: We are improving the investment climate and will continue to do so. Projects in the works include the creation of a special tourist zone in the lovely Issyk-Kul region, near Tamchy international airport. Kyrgyzstan has a lot of mountains and may offer skiing services 6-7 months a year, so we welcome investors there. Also the construction of an Olympic training base on the shore of Issyk-Kul lake is very prospective. I invite international travellers and investors to come here and see for themselves what makes Kyrgyzstan an outstanding tourism destination and investment target.

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Tourism & Culture

Golden Dragon Hotel

Five-Star Hotel Now Offers Serviced Apartments The ﬁve-star Golden Dragon Hotel, which opened in 2005, focusses on providing world-class personalised service. The hotel’s management has assembled a skilled staff of people with international experience in the hospitality industry, including natives of Kyrgyzstan who have returned to the country after working abroad. “We are training our staff to make sure all our services meet international standards,” explains General Manager Ermek Musuraliev. The boutique property is ideally located in the centre of Bishkek and has 47 rooms, including four deluxe suites as well as singles, twins and deluxe rooms. Every room and suite is equipped with high-speed Internet access, international telephone lines, satellite TV, a safe-deposit box, air-conditioning and a mini bar. Earlier this year, the Golden Dragon opened 32 fully equipped serviced apartments, two of which are luxurious penthouses, in a building behind the hotel. Ermek Musuraliev says, “We believe that hotel-apartments will be the future of the hotel industry here in Bishkek. At the moment it is difﬁcult to rent apartments in the city centre. The advantage of our hotel-apartments is that not only do guests have a comfortable apartment with

a full range of services, but they can also count on easy check-in, just like in a hotel.”

Range of world-class amenities The Golden Dragon offers a conference hall, a banquet facility, a catering service, events organisation, a health club and gym, a Jacuzzi, Finnish and Turkish saunas, a restaurant and bar, and an open-air swimming pool. Massages and spa treatments are available on request. Deﬁning the Golden Dragon’s competitive edge, Ermek Musuraliev cites the hotel’s extra-spacious rooms and apartments, its skilled and friendly services, its range of special offers and its ﬂexible prices. He says, “We know the right approach towards our guests and have a huge willingness to develop our skills. We also organise several tours for our guests, from city walks to visits of art galleries, skiing trips and tours of the countryside.” The Golden Dragon aims to play a key role in boosting Kyrgyzstan’s tourism

industry, which offers enormous potential but still faces a number of challenges. Ermek Musuraliev says, “Our government has recently made visa regulations much easier, but there are still some problems with ﬂight connectivity to Bishkek. Kyrgyzstan has beautiful landscapes and mountains, and more tourism potential than any other Central Asian country. Europe should give our country a chance and believe in Kyrgyzstan.”

60 Elebaev Street 720005 Bishkek Tel: +996 312 90 2771 www.gdhotel.kg gdhotel@gdhotel.kg

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Park Hotel

Five-Star Boutique Hotel Opens New Extension The Park Hotel, located in the centre of Bishkek, offers a winning combination of five-star international standards and truly personalised service. The internationally oriented boutique hotel has almost 70 rooms, ranging from single deluxe to suites. The recently opened new section of the hotel offers mainly serviced apartments for longer stays. Each room is equipped with satellite TV, air conditioner, Internet access, lock box, mini bar and telephone with international access.

Okmot Almakuchukov is the co-owner of the hotel. He says, “We wanted to build a hotel in the city that could live up to international service standards and support the country’s economic development as well as the growth of the hospitality sector. We started off as a local family business and grew into a successful private enterprise with multiple properties such as the Club Hotel Royal Beach at Issyk-Kul lake. Our main focus is making our guests feel at home.” The guests of Park Hotel can enjoy sophisticated traditional and European cuisine in the restaurant. For recreation purposes the hotel offers a ﬁtness centre, swimming pool and a relaxing spa, sauna and hammam. Ideally located in the historical centre of Bishkek, the Park Hotel mainly serves corporate clients, government ofﬁcials and members of international organisations in Kyrgyzstan. The hotel offers state-of-the-art conference facilities, which can serve for small boardroom meetings to international seminars. For leisure purposes, Park Hotel offers a broad range of tourism

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packages. For instance guests can book organised visits to Kyrgyzstan’s beautiful mountain areas. In the increasingly competitive five-star hotel market in Bishkek, Park Hotel stands out for its friendly and professional service. To live up to international hospitality standards and demands, the staff is continuously trained to maintain and further develop their professional skills, making Park Hotel the perfect choice to stay in Bishkek. As a former Minister of Tourism, Okmot Almakuchukov is interested in developing his country’s tourism industry. Kyrgyzstan is part of the ancient Silk Road, the traditional trading route connecting the East with the West. To realise the full potential of this authentic heritage, close cooperation between the neighbouring countries along the Silk Road is required in order to develop it into a first choice international tourist attraction. The country also offers diverse opportunities in terms of eco-tourism and extreme sports. This was illustrated by the hosting of the World Championship in Multisports ‘Red Goluas’ almost ten years ago. Recent economic and political developments and reforms facilitate the opportunity for realising similar future events. In order to take advantage of this diverse tourism potential and opportunities in Kyrgyzstan, focus needs to be on foreign direct investments into the infrastructure as well as directly into the hospitality sector itself. Tourism is one of the key economic sectors in Kyrgyzstan which have significant investment prospects. European investors should realise that within a 2,000 km radius around Bishkek,

there live more than 2 billion people, making it the ideal hub for Central Asia. What is required now, are more direct ﬂights to the country connecting it to international key markets. At the same time other means of transportation and their infrastructure should be further developed such as motorways and railways. The visa free regulations for 44 countries initiated by the Kyrgyz government in 2012 are a positive development in opening up Kyrgyzstan towards Europe and the rest of the World. Foreign investors can rely on the guidance and support of local Kyrgyz entrepreneurs for future business developments, such as joint ventures for projects in the tourism and hospitality industry. The biggest asset of the Kyrgyz people is their openness which will be the way to success. We wish you a warm welcome!

Orozbekova Street 87 Bishkek Tel: +996 312 66 5518 hotel@parkhotel.kg www.parkhotel.kg

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Unspoiled Nature and Rich Cultural Heritage Issyk-Kul lake

The Kyrgyz Republic’s participation in the International Tourism Fair held in Berlin in March 2012 signalled the country’s drive to position itself as a high-potential entry on the global tourism circuit. With its rugged mountains, unspoiled lakes, long history as a trade hub on the fabled Silk Road, and rich cultural heritage, the Kyrgyz Republic has a lot to offer travellers in search of off-the-beaten-track destinations. Mountains cover over 90% of the country, making the Kyrgyz Republic a paradise for lovers of the outdoors. In summer, visitors can go trekking, fishing or horseback-riding along mountain trails or join guided tours that often include sleeping in a yurt. Mountain lakes are another attraction. Issyk-Kul lake, the second-largest alpine lake in the world, has spas and ski resorts and has been singled out as a top tourism development area thanks to its natural beauty and healthy climate.

Ideal choice for eco-tourism In winter, the Kyrgyz Republic offers all kinds of opportunities for skiing and other winter sports, and several ski resorts have been developed throughout the country. One is near Karakol, where the Soviet Olympic ski

team once trained. The Kyrgyz Republic is also a fascinating choice for cultural tourism thanks to its wellpreserved traditions, colourful local festivals and sports, and tradition of welcoming foreigners. And, thanks to its unspoiled natural attractions and cultural heritage, the Kyrgyz Republic is an ideal eco-tourism choice. To make the most of the country’s tourism appeal, the Kyrgyz government recently changed the visa regime to allow for visa-free entry for citizens of 44 countries. In addition, the government has upgraded regulations for tourism projects, launched a classification system for hotels, invested in new tourism infrastructure and streamlined the process of investing in tourism projects. The new Interdepartmental Commission on Tourism Development serves as a liaison between the government, local communities and the private sector concerning tourism initiatives. The Ministry of Tourism and Culture has also announced a plan for the tourism industry up to 2014 and has stepped up its international marketing efforts. Challenges include improving tourism infrastructure, coping with the unrest that has caused some countries to issue travellers’ advisories for certain parts of the country, and attracting more airlines to offer flights to Bishkek. The Kyrgyz Republic welcomes international travellers and investors in tourism projects, and as the country’s unique tourism appeal becomes better known, visitor numbers are certain to grow rapidly.

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Tourism & Culture

Hyatt Regency Bishkek

Five-Star Services in the Heart of Bishkek The Hyatt Regency Bishkek, Kyrgyzstan’s only international ﬁve-star hotel, serves as a benchmark for the country’s hotel sector. As Gozde Eren, General Manager, points out, “Hyatt is a pioneer, a standardbearer of high-quality service in Central Asia’s hospitality industry.”

Gozde Eren, General Manager

The hotel is ideally located in the heart of the city near all major cultural and business attractions and only a 35-minute drive from Bishkek’s airport. It offers 178 luxurious rooms and suites with breathtaking views and best-in-class amenities, including highspeed Internet access, a wide range of food and beverage options, a spa and ﬁtness centre and an outdoor pool. The hotel also has six meeting and conference venues as well as banquet facilities and catering services. Gozde Eren says, “Hyatt customers coming to Kyrgyzstan are going out of their comfort zones, into a place most of them do not know, but the Hyatt offers them a safe home-away-from-home.” The Hyatt Regency Bishkek excels at serving global travellers. Gozde Eren explains, “Our staff members come from all over the world, which brings

diversity and an awareness of what international guests expect in a hotel. Hyatt has ﬁne-tuned its services through the years to meet the highest standards, and there are great advantages to staying with an international chain, from the booking system to the loyalty programmes and from technical equipment to creativity.”

Exceptional tourism appeal Business travellers make up most of the Hyatt Regency Bishkek’s guests but Gozde Eren believes the hotel will welcome more leisure travellers as the world becomes more aware of Kyrgyzstan’s tourism appeal. She says, “Bishkek could be the Switzerland of Central Asia. Since mountains cover 94% of the country, Kyrgyzstan should be on everybody’s map for winter sports. For tourism investors, this country is a blank slate with enormous potential.” The Hyatt Regency Bishkek strongly supports local tourism-development projects and recently partnered with the US Embassy in a programme to train hotel managers and staff from the Issyk-Kul lake area.

The Hyatt Regency Bishkek’s guests include representatives from the World Bank, the IMF and other international organisations as well as airline crews, embassy staff and global business travellers. Gozde Eren says that guest totals are certain to rise as more airline connections to Kyrgyzstan open up. She adds, “Kyrgyzstan’s strategic position makes it ideal for developing a strong airline hub connecting Europe and Asia.” She urges international investors to follow Hyatt’s example and take a closer look at beautiful, high-potential Kyrgyzstan.

Hyatt Regency Bishkek 191 Abdrahmanov Street, 720011 Bishkek Tel: +996 312 66 12 34 Bishkek.regency@hyatt.com www.bishkek.hyatt.com

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Tasty Dishes Made from Local Ingredients Kyrgyz cuisine makes the most of readily available ingredients in this rugged land. Main dishes are based mainly on mutton, horse meat, sheep fat, milk products, and seasonal fruits and vegetables, prepared in ways that would ﬁt a nomadic lifestyle. In larger cities like Bishkek, Osh, Jalal-Abad and Karakol, many different regional and international dishes can be sampled in restaurants, but in rural areas, local cuisine predominates.

Manty

Typical Kyrgyz main courses include horse-meat sausages, roasted sheep’s liver, and beshbarmak, considered to be the Kyrgyz national dish. Beshbarmak is horse meat (and sometimes mutton or beef) boiled for several hours and served over homemade noodles sprinkled with parsley and coriander. If mutton is used, a boiled sheep’s head, considered a great delicacy, is placed on the table in front of the most honoured guest. Shashlik, skewered chunks of marinated meat or ﬁsh grilled over coals, is served in restaurants and by street vendors. Shorpa (or shorpo) is a meat-and-vegetable soup, while paloo (pilaf), another popular dish, is pieces of meat fried in a large cast-iron kettle and mixed with fried shredded carrots and cooked rice, with fried garlic cloves and hot red peppers on top. Uzgen paloo is made with rice from the southern Uzgen region, while in shirin paloo, dried fruits replace meat.

Popular noodle dishes Noodles and other pastry dishes are very common in both restaurants and

homes. Manty are steamed dumplings filled with ground meat and onions, while samsi are like Indian samosas, flaky pastry filled with meat and vegetables and fried. Lagman (or laghman) is thick homemade noodles covered in chopped peppers and other vegetables and served in a spicy, vinegary sauce. With their meals, Kyrgyz people eat flat bread, nan or lepyoshka, cooked over coals in a clay oven. Kalama is an unleavened bread baked on the top of a stove and is the most common bread eaten in yurt camps. Kattama is unleavened flat bread rolled with butter. Tea (chai) is the most popular beverage, and guests in a traditional Kyrgyz household are always offered nan and chai. Kymyz is a slightly alcoholic drink made from fermented mare’s milk, typical of a nomadic culture. Maksym, a slightly fizzy drink made by fermenting grains; jarma, also made from grains but not fermented; and fizzy chalap are other popular beverages. Sheep’s milk and camel’s milk are also highly prized. The favourite Kyrgyz sweetener is rich mountain honey.

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Tourism & Culture

Genatsvale Restaurant

Upscale Restaurant Offers Fine Georgian Cuisine in Bishkek Genatsvale Restaurant brings delicious Georgian cuisine and wines to Bishkek. Founded in 2011, the restaurant has quickly earned a loyal local following for its gourmet menus, impeccable service, two convivial bars, and spectacular views of the city centre and the Tian-Shan Mountains from an expansive fourth-ﬂoor outdoor terrace. The restaurant is very popular among both locals and foreigners. Director Mikhail Shetstobitv explains, “We focus on quality rather than quantity, which is why we attract a very exclusive clientele. We are seeing more and more international customers, who now make up around 30% of our guests. People who have travelled and lived all over the world appreciate our exceptional cuisine, wines, service and authentic Georgian atmosphere.” The restaurant’s 800 sq m of dining areas and bars, which are the ideal choice for special events, also set Genatsvale Restaurant apart from other restaurants in the city. In fact, Genatsvale Restaurant is often chosen as the venue for private parties for local expats as well as for embassy banquets and other exclusive gatherings. The American Chamber of Commerce in Kyrgyzstan held its

Nani Bregvadse, famous Georgian singer and Mikhail Shetstobitv, director

Members’ Day event in the restaurant earlier this year, and Bishkek’s International Club is another leading organisation which organises gatherings there.

know our guests will appreciate the afterdinner lounge bar in the new pavilion, which overlooks the city and snow-capped mountains,” Mikhail Shetstobitv says.

The restaurant’s renowned chefs are from Tbilisi and Kutaisi, Georgia, and employ authentic herbs and spices from the Caucasus as well as fresh, natural local ingredients. Their gourmet creations give diners a real taste of Georgia’s varied, innovative culinary heritage. The restaurant’s extensive choice of Georgian wines is another plus for guests.

The new lounge-bar will be able to accommodate up to around 120 guests and will be open from 11pm to 4am. Mikhail Shetstobitv concludes, “In our restaurant and bars, we always give our guests a warm welcome. We have brought the heart and soul of Georgia to Bishkek and combined this with authentic Kyrgyz hospitality.”

New outdoor pavilion with convivial lounge bar Genatsvale Restaurant continues to improve its facilities and is currently getting a makeover to enhance the authentic Georgian style of the dining room. In addition, the restaurant will soon have a new outdoor pavilion so that guests can enjoy the wonderful views from the terrace throughout the year. “We

Genatsvale Restaurant Gorkiy St. 27/1, Vefa Center, 4th ﬂoor Bishkek Tel: +996 555 389 988 info@genatsvale.kg - www.genatsvale.kg

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Kyrgyz Konyagy

Turning Flavourful Local Grapes into Award-Winning Cognacs Kyrgyz Konyagy (Kyrgyz Cognac) produces top-quality cognacs, brandies and other drinks which have earned a loyal following in the local market as well as abroad. Founded over 50 years ago, Kyrgyz Konyagy has developed world-class expertise. It employs the latest technologies, high-quality ingredients and traditional techniques, including the use of oak barrels, to manufacture its distinctive products. Kyrgyz Konyagy’s 1.7-hectare plant is the only cognac production facility in the Kyrgyz Republic. A full range of more than 10 brands of cognac, several brandies and other cognac-based drinks are now part of the Kyrgyz Konyagy portfolio. Depending on the brand, Kyrgyz Konyagy’s cognacs are aged from three to 20 years or more in oak barrels, and all develop a characteristic amber colour as well as floral aromas and harmonious tastes. One of the company’s signature cognacs is a 20-year-old OS Enesay, which combines pure waters from Kyrgyz mountain streams and locally grown grapes distilled and then aged in oak barrels. Thanks to the long aging process, this cognac has a particularly complex taste and has won a number of awards. Kyrgyz Konyagy’s mission is to transform sweet, ripe grapes into cognacs characterised by subtle, complex flavours. New entries to Kyrgyz Konyagy’s product portfolio include cognacs flavoured with cedar, coffee, cherries and chocolate, as well as Arashan, a unique balsam-based alcoholic beverage made from balsam berries, pure Kyrgyz mountain honey and more than 20 naturally grown medicinal plants.

The company’s products have won a number of awards in international tastings, including medals for Kyrgyz Konyagy’s KS Manas-1000, KVVK Manas and KV Kyrgyzstan brands at the World Association of Viticulture and Wine. Kyrgyz Konyagy also received a ‘European Quality’ award in 2009, and later that year the company’s OS Bakay 30-year-old cognac received a gold medal and was named ‘Best Cognac of the Year’ at a prestigious international event held in Yalta. Kyrgyz Konyagy will continue to focus on high quality and innovation to produce exceptional cognacs, brandies and other beverages for connoisseurs worldwide.

‘Cognac of the Year’ prize and many other awards All Kyrgyz Konyagy’s cognacs, brandies and other beverages are produced by skilled professionals who ensure the highest international quality standards. Kyrgyz Konyagy operates a modern production line and uses stateof-the-art automatic Italian equipment to bottle and label its products, handling around 3,000 bottles per hour.

Kyrgyz Konyagy Murmansk st. 250/1 - Bishkek Tel: +996 312 69 9355 ofﬁce@cognac.kg - www.cognac.kg

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Tourism & Culture

Diverse, Unique Cultural Attractions With its rugged mountain landscapes which required herders to move their ﬂocks throughout the year, the Kyrgyz Republic has a centuries-old nomadic tradition that is still alive and well today. Everything in ancient Kyrgyz culture is related to nomadic life, from clothing and food to the transportable yurt and a strong oral culture that includes legends passed down for hundreds of years. ‘Manas’, an epic poem preserved by generations of Kyrgyz storytellers, is still presented orally to audiences throughout the country. It contains more than a million lines and is 20 times as long as the ‘Odyssey’ and ‘Iliad’ combined. Focussing on the exploits of a Kyrgyz hero, Manas, it recounts the creation of the Kyrgyz homeland beginning in around the 10th century and illustrates the Kyrgyz people’s reverence for their cultural traditions.

Traditional camping in a yurt While most Kyrgyz people live in modern homes, they cherish their nomadic heritage. In summer, many Kyrgyz people still spend time in traditional yurts with their herds of animals, and several yurt camps cater to tourists in search of an authentic camping experience. A traditional yurt camp, or jailoo, is a collection of yurts – known as boz ui in the Kyrgyz Republic – around a high-altitude summer pasture. Boz ui are entirely handmade and

Kyrgyz families can demonstrate to visitors the process of erecting and taking down one of these stable but portable dwellings. Traditional games often played at a yurt camp include kok boru, a rugged kind of polo. The Kyrgyz handicraft tradition also still flourishes. Kyrgyz women create felt slippers, bags, decorative panels and traditional hats as well as colourful carpets, called shyrdaks, in a variety of sizes and traditional patterns. Naryn oblast is a wellknown centre for shyrdak-makers. Music is also central to Kyrgyz culture, and no festival is complete without concerts and dancing. Tradi-

tional Kyrgyz instruments include the komuz, a three-stringed pear-shaped instrument usually made of apricot wood. The choor, a wind instrument; a clay ocarina, the chopo choor; and the ooz komuz (a mouth harp), are also very popular. The Kyrgyz mountains, which made travelling through the country difficult in the past, have also resulted in great cultural diversity in one small country as different tribes developed their own cultures; customs in the northern part of the country are different from those of the more agricultural south. Diverse, colourful and unique, Kyrgyz culture is waiting to be experienced by visitors.

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EVI-Autocenter

Dynamic Auto Enterprise Offers Jeep Tours of Spectacular Sites EVI-Autocenter demonstrates the potential of Kyrgyzstan’s private sector. Established in 1995 as an automotive enterprise, EVI-Autocenter launched a Volkswagen dealership and has worked closely with Volkswagen’s technical experts over the years to maintain the high standards for which the German brand is known worldwide. At the moment EVI-Autocenter is the ofﬁcial provider of BOSCH technical services in Kyrgyzstan.

Committed to supporting Kyrgyzstan’s tourism development Today, one of the company’s priorities is the tourism sector and car-rental services that often go in close association. Vladimir Kim, Director, explains “We focus on increasing our collaboration with other businesses in the tourism sector, such as travel agencies, in order to further develop Kyrgyzstan’s tourism industry as a whole.” This year EVI-Autocenter began to offer guided jeep tours, taking visitors to stops on the Silk Road and into beautiful mountain areas. Kyrgyzstan is a very beautiful country with a lot of things to be seen; incredible mountains with unique ﬂora and fauna, scenic rivers, unique nut forests and waterfalls. Kyrgyzstan is famous not only for the natural beauty, but also for its rich cultural and historical heritage. “From our side we do our best to help our guests come as close as possible to the nature, feel the spirit and freedom of the mountain winds and at the same time spend a great time. To fulﬁl all this,

we provide our guests with a reliable transport and support of experienced mechanics, guides and cooks. Our motto is: Extreme should be comfortable,” Vladimir Kim points out. In winter, unique ski resorts please both beginners and experienced skiers alike. From smooth and easy slopes to exciting trails for free-style skiing, there is something for everyone. Advanced skiers can even take advantage of helicopter services to reach pristine snow that no one has yet skied. Vladimir Kim says, “We are working on establishing connections with major travel agencies to spread the word about our tours and the beauty of our country. We are always ready for cooperation and gladly invite the travel agencies from Europe and tour-leaders for mutual activity in the organisation of jeep tours and tours to Kyrgyz ski resorts.” The company’s website gives visitors information about tour options and showcases Kyrgyzstan’s tourism appeal. He concludes, “The sufﬁx ‘stan’ in a country’s name quite often creates a feeling of unease among Westerners, but people here in Kyrgyzstan are very friendly, open and hospitable. So to potential visitors in Europe, we say: come to Kyrgyzstan and discover the country for yourselves!”

Lva Tolstogo st. 19 - Bishkek Tel: +996 772 513 810 auto@evi.kg www.evi.kg

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Top 10 for Visitors Bishkek The Kyrgyz capital is a relaxed city with wide boulevards, parks and views of the snow-capped Ala-Too mountain range. Bishkek’s State Historical Museum showcases Kyrgyz history and culture. The Ala-Archa Canyon 40 km south of Bishkek has many hiking trails as well as the Upper Ala-Archa Mountain Ski Base, which offers skiing on glaciers even in summer.

Issyk-Kul lake Issyk-Kul lake, the world’s secondlargest alpine lake, is 170 km long and at an altitude of 1,600 m. The area is known for its pure air, spas, beaches, hiking trails into the mountains, natural hot springs and varied wildlife. Karakol, at the eastern end of the lake, is famous for its apple orchards and Sunday market.

Bokonbaevo eagle-hunting Hunting with eagles is an ancient Kyrgyz tradition that is in danger of dying out. The small town of Bokonbaevo on Issyk-Kul lake’s southern shore is one of the best places to see this in action.

Burana Tower This 10th century tower near Tokmok is a minaret and all that remains of the Karakhanid city of Balasagun.

Kochkor This small market town is a popular base for trips to lovely Song-Kol Llake

as well as for overnight trips to the jailoo (alpine meadows) of Sarala-Saz and Kol Ukok lake.

Arslanbob walnut forest The walnut forests surrounding the ethnic Uzbek village of Arslanbob in Jalal-Abad province are among the largest in the world. The area is ideal for summer hiking and winter skiing.

Song-Kol lake Although much smaller than Issyk-Kul lake, this alpine lake is widely regarded as the country’s most beautiful. Tours on horseback and a stay in a yurt camp are popular activities here.

Osh and its market The ancient trade centre of Osh is home to one of Central Asia’s biggest markets. The road from Bishkek to

Osh includes two passes over 3,000 m, the wide Suusamyr Valley, the immense Toktogul reservoir, the Naryn River gorge and the verdant Ferghana Valley with its famed rock carvings.

Tash Rabat caravanserai Half-buried on a hillside at 3,500 m, this former Silk Road caravanserai was built in the 15th century on the site of what may have been a Nestorian Christian monastery. It is a good starting point for a number of hikes.

Central Tian Shan Along the Kyrgyz Republic’s borders with China and south-eastern Kazakhstan, the Central Tian Shan has dozens of peaks over 5,000 m, including the 7,439-m Pik Pobedy (Victory Peak), and is Central Asia’s premier territory for serious trekking and mountaineering.

So much to discover!