Dim Prospects for Business Federation

A new confederation of businessmen and industrialists is not going to bring about substantive improvements to Kyrgyzstan’s business climate, say analysts.



Founders of the new group, announced on August 22, say they want it to boost trade and the service sector, improve the country’s transport infrastructure and of industrial sectors that use local raw materials, and conduct professional training.



They say their organisation will help build constructive relationships between business and society. The new body will help represent and defend the interests of the business community in its dealings with the government. It will also assist in promoting a positive image of Kyrgyz business at home and abroad.



Analysts recognise that there is a need for a legal entity to lobby businessmen’s interests with the authorities. The confederation could become a link between trade unions, employers and the state, and perhaps provide the impetus to increase the private sector’s influence over state economic policy so that the business community’s interests are taken into account.



Such a body could also resolve problems within the business community, for example by developing ethical standards of business practice.



Despite this, analysts remain sceptical that this new association will be able to resolve systemic difficulties facing the country. For the confederation to bring about progressive changes to business, Kyrgyzstan would have to undergo a significant transformation: law enforcement agencies and regulatory bodies would have to obey the law, and the practice of giving special privileges to certain companies would have to cease.



Business activity would also have to increase significantly.



Analysts point out that one of the severest systemic problems is that of corruption among the officials responsible for creating a favourable climate for entrepreneurs and investors. While large companies can count on some sort of public support because of their high visibility – for instance using media campaigns - smaller enterprises have no choice but to “share the spoils” with corrupt officials in order to stay in business.



Analysts note that current management practices are a deterrent to investment and reduce the efficiency of most companies.



Finally, any action to reform the economy will inevitably come into conflict with forces intent on maintaining the status quo.



(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)