Plan to Boost Tourism Seen as Flawed

The Kyrgyz government wants to create a free economic zone on the shores of Lake Issyk-Kul, the country’s major tourist area, but NBCentralAsia observers warn that the scheme will be vulnerable to abuse and may bring few tangible benefits.



At a government meeting on May 23, Turusbek Mamashev, director of the state tourism agency, proposed making the whole of the Issyk-Kul administrative region into a free economic zone, in hope of attracting investment in the lake’s resorts.



Issyk-Kul, with its huge lake ringed by high mountains, is Kyrgyzstan’s main tourism hub, and over one million visitors generated about 165 million US dollars last year. Mamashev says turning the area into a free economic zone would boost that revenue.



Omur Karamurzaev, deputy director of the Ak-Bulak travel agency, agrees that foreign investors are more likely to back infrastructure development projects at the lakeside if taxes are cut.



“If the state itself is unable to sort out the tourist industry and create a really good environment for tourists, then foreign and local entrepreneurs should be given the chance to do it,” he said.



However, Sapar Orozbakov, director of the Bishkek-based Institute for Economic Analysis, says that despite the potential benefits, Issyk-Kul could go the way of other free economic zones in Kyrgyzstan.



“We shouldn’t offer preferential terms to all and sundry. It should be a level playing field for all, otherwise it could turn into yet another mechanism for corruption. Look at what happened to the Bishkek, Naryn and Talas economic zones – they haven’t delivered results, this one will be the same,” he said.



The free economic zones set up towards the end of the Nineties have gained something of a reputation for being tax havens that have not brought the government the returns it expected.



Sergei Masaulov, an expert with the Centre for Public Technology, believes tax breaks in Issyk-Kul will fuel a short-term economic surge, but “nothing more”.



Tourism only accounts for three or four per cent of Kyrgyzstan’s gross domestic product and Masaulov believes it would be wiser to develop tourist activities in other, lesser known regions though eco-tours, adventure sports, and cultural tours.



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