Kyrgyz Hope for Big Money from Kazakstan

While the level of Kazak investment in Kyrgyzstan looks likely to continue growing despite the continuing political instability in that country, NBCentralAsia’s economic experts say a 2.5 billion US dollar investment plan looks over-ambitious for the moment.



A new business opportunities forum held in Almaty on September 22 heard that investment in the Kyrgyz economy so far in 2006 had grown by 130 per cent year on year to reach 28 million dollars.



Despite this, Kyrgyz deputy prime minister Daniyar Usenov scolded investors from Kazakstan for not doing enough in his country. He said his government afforded them the most preferential conditions available, slashing profit taxes to ten per cent and abolishing value-added tax for equipment imported from Kazakstan.



However, Kazakstan’s minister for energy and mineral resources, Baktykoja Izmukhambetov, said investors feel inadequately protected in Kyrgyzstan, citing attempts to seize Kazak business assets there.



Izmukhambetov was probably referring to an open letter which the the Association of Kazakstan Entrepreneurs sent to Kyrgyz president Kurmanbek Bakiev on August 8, complaining of that tax officials targeted their businesses with illegal inspections and allegations, and that other government agencies were guilty of “misconduct”.



The letter came a month after a July 2006 meeting in Astana between Bakiev and his counterpart Nursultan Nazarbaev, during which the Kyrgyz leader said top-level decisions were being taken to create favourable conditions for Kazak businesses.



At the Astana meeting, the two presidents announced a 2.5 billion dollar investment plan for Kyrgyzstan.



Economic experts in Kazakstan are sceptical about the prospects for such a massive growth in investment. Yaroslav Razumov, for example, says the general political instability in Kyrgyzstan could trigger an outflow of investment at any time. If the situation were to stabilises, however, he predicts that some major investment projects could come from Kazakstan.



But even if that were to happen, NBCentralAsia analysts say a 2.5 billion dollar figure is unrealistic – it is probably unaffordable even for Kazakstan with its fast-growing economy.



The experts say the figure may have been derived from massaging the numbers – the investment target may have been based on the total value of all the projects in which Kazakstan has expressed any kind of interest. Just one such major project, the completion of the Kambarata hydroelectric power stations, has an estimated price-ticket of around two billion dollars.



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