Kyrgyzstan Still Too Risky For Investors?
Kyrgyzstan Still Too Risky For Investors?
As Kazakstan and Kyrgyzstan set up a joint investment fund to back the Kyrgyz economy, NBCentralAsia analysts say that the investment climate in Kyrgyzstan is still too risky for increased Kazak investment.
During a business forum in Bishkek on July 11, Kyrgyzstan and Kazakstan agreed to set up a joint investment fund and discussed the prospects of increasing Kazak investment in Kyrgyzstan.
Kazakstan will provide 100 million US dollars of the 120-million dollar fund which will be used to invest in Kyrgyzstan’s energy, tourism, mining, agricultural and bank sectors.
Kazak businesses invested 28 million dollars in the Kyrgyz economy last year.
So far, Kazakstan has mainly concentrated on Kyrgyz banking and Kazak investment currently makes up 40 per cent of the total capital in Kyrgyzstan’s banking system.
NBCentralAsia analysts say that political tensions in Kyrgyzstan are easing, but lawlessness and corruption continue to hinder the flow of foreign investment.
During a similar business forum last September, Kazak entrepreneurs said that political instability, lawlessness and corruption in Kyrgyzstan were discouraging foreign investment.
The opposition in Kyrgyzstan staged a nine-day demonstration in April, calling for the president’s resignation. The protest was broken up by the police and the furore has since calmed down.
Kyrgyz deputy minister for economic development and trade Sanjar Mukanbetov asserts that although there was a risk to foreign capital in Kyrgyzstan then, that risk has now diminished and the flow of Kazak investment should gather pace.
But Gulnur Rahmatulina, an economic expert at the Kazak Institute for Strategic Studies, says “the political system remains difficult and the power struggle continues”.
“Kyrgyzstan is now working towards improving its investment climate, but the rights and safety of investors are not guaranteed,” she said.
Dosym Satpaev, director of the Kazak Risk Assessment Group, says that central government and local administrations in Kyrgyzstan do not work together and the authorities should safeguard investors by clearly defining how its state structures work at all levels.
“When local governors think they are local presidents and define the rules for investors, it is of course, unprofitable and uncomfortable for any business,” he explained.
Director of the Bishkek Centre for Economic Analysis Sapar Orozbakov agrees, saying that “there is no rule of law in Kyrgyzstan” and Kazak business will not automatically head towards Kyrgyzstan simply because this joint fund has been set up.
Investors will come to the country if they believe they can make a profit, but Kyrgyzstan does not provide them with any certainty, he says.
For this joint fund to work effectively, Kyrgyzstan needs to draw up an investment programme highlighting the sectors most in need of funding, according to Avazbek Momunkulov, former head of Kyrgyz tax inspection.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
During a business forum in Bishkek on July 11, Kyrgyzstan and Kazakstan agreed to set up a joint investment fund and discussed the prospects of increasing Kazak investment in Kyrgyzstan.
Kazakstan will provide 100 million US dollars of the 120-million dollar fund which will be used to invest in Kyrgyzstan’s energy, tourism, mining, agricultural and bank sectors.
Kazak businesses invested 28 million dollars in the Kyrgyz economy last year.
So far, Kazakstan has mainly concentrated on Kyrgyz banking and Kazak investment currently makes up 40 per cent of the total capital in Kyrgyzstan’s banking system.
NBCentralAsia analysts say that political tensions in Kyrgyzstan are easing, but lawlessness and corruption continue to hinder the flow of foreign investment.
During a similar business forum last September, Kazak entrepreneurs said that political instability, lawlessness and corruption in Kyrgyzstan were discouraging foreign investment.
The opposition in Kyrgyzstan staged a nine-day demonstration in April, calling for the president’s resignation. The protest was broken up by the police and the furore has since calmed down.
Kyrgyz deputy minister for economic development and trade Sanjar Mukanbetov asserts that although there was a risk to foreign capital in Kyrgyzstan then, that risk has now diminished and the flow of Kazak investment should gather pace.
But Gulnur Rahmatulina, an economic expert at the Kazak Institute for Strategic Studies, says “the political system remains difficult and the power struggle continues”.
“Kyrgyzstan is now working towards improving its investment climate, but the rights and safety of investors are not guaranteed,” she said.
Dosym Satpaev, director of the Kazak Risk Assessment Group, says that central government and local administrations in Kyrgyzstan do not work together and the authorities should safeguard investors by clearly defining how its state structures work at all levels.
“When local governors think they are local presidents and define the rules for investors, it is of course, unprofitable and uncomfortable for any business,” he explained.
Director of the Bishkek Centre for Economic Analysis Sapar Orozbakov agrees, saying that “there is no rule of law in Kyrgyzstan” and Kazak business will not automatically head towards Kyrgyzstan simply because this joint fund has been set up.
Investors will come to the country if they believe they can make a profit, but Kyrgyzstan does not provide them with any certainty, he says.
For this joint fund to work effectively, Kyrgyzstan needs to draw up an investment programme highlighting the sectors most in need of funding, according to Avazbek Momunkulov, former head of Kyrgyz tax inspection.
(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)
