Economy:
Like the other central Asian States, the government of Kyrgyzstan inherited a seriously unbalanced and dysfunctional economy from the Soviet Union. It chose a policy of rapid change, including privatisation and a freely floating and convertible currency (the Som, introduced in 1993) which has, by and large, been reasonably successful in ensuring steady economic growth (currently 3.5 per cent). This was also an important factor in attracting foreign aid and investment, which has done much to bolster the economy. Despite the relatively small area of fertile land, agriculture remains the largest employer, occupying almost half of the working population and contributing a similar proportion of GDP. Half of the irrigated agricultural land is devoted to livestock, which is the mainstay of the farming sector. Other agricultural products include grain, potatoes, fruit and vegetables, cotton and tobacco. Kyrgyzstan's economic potential lies in its mineral resources: there are known deposits of iron ore, copper, lead, zinc, mercury, antimony, tin, bismuth, vanadium, bauxite, molybdenum, manganese, silver and gold. Oil reserves, provisionally thought to be sufficient to cover domestic needs for 20 years, were located in 2001. There are also large amounts of decorative construction materials, such as marble, granite and limestone. The industrial sector was the main casualty of the post-Soviet era and output of metal goods, machinery, electronics and textiles has declined over the last decade. In the service sector, tourism has future potential, but given the dearth of necessary infrastructure, this must be considered a long-term objective. Finance grew quickly during the late 1990s following reform of the banking industry. In November 2000, the privatisation of several major state enterprises (including telecommunications, air transport and energy) was agreed by the Government despite serious domestic opposition. Kyrgyzstan belongs to the Central Asian Economic Union (ECO) which aims to promote regional economic co-operation and trade among the former Soviet republics and their neighbours. Kyrgyzstan is a member of the World Bank, the IMF (which in October 2001 agreed a US$100 million loan), the European Bank for Reconstruction and Development (as a 'country of operation') and the Asian Development Bank. The United Nations Development Programme has also been active in Kyrgyzstan.
   Business:
Kyrgyzstan is actively seeking overseas partners to modernise its industry and introduce new technology. To this end, it has enacted a number of laws to encourage and protect foreign investors; the law on property extends to all foreign investors the rights granted to Kyrgyz citizens with respect to ownership; foreigners are allowed to purchase businesses and buildings to carry out their activities, but the Government reserves the exclusive right to own land, natural resources, water, agriculture and livestock. There are significant tax holidays for foreign investors. In order to invest in Kyrgyzstan, foreigners must be registered with the Ministry of Economy and Finance. Applications to set up in Kyrgyzstan should be sent in the first instance to the State Committee on Foreign Investments and Economic Assistance (Goskominvest). The Government is particularly interested in encouraging investment in mining, industry - including electronics, light agricultural machinery and pharmaceuticals - petroleum, hydroelectricity and agriculture. Office hours: Mon-Fri 09.00-18.00, Sat 09.00-13.00 (Mar-Oct). Government office hours: Mon-Fri 09.00-17.00, Sat 09.00-13.00 (Nov-Feb). Agriculture is the largest economic sector, accounting for approximately 50% of total GDP. Livestock raising (primarily cattle, sheep, yaks and horses) is the primary activity. Grains, cotton, fruit, tobacco and silk are also produced, but only in the country's lower elevations. Blessed with extensive deposits of gold, coal, antimony and uranium, the bulk of initial foreign investment has been concentrated in the mineral extraction sector. The country also has considerable hydroelectric potential which could be tapped to meet the country's and its neighbors' extensive electric needs. To date, offshore investment has come primarily from Canada, China, Germany, Russia, Turkey, United Kingdom and the United States. All told, more than 2,400 joint-ventures and foreign companies in Kyrgyzstan since 1991. Kyrgyzstan was one of the first former Soviet Union countries to join the World Trade Organization (1999). Besides the mineral sector, significant investment opportunities also exist in the agricultural processing, light manufacturing and tourism industries.
   Kyrgyzstan's business attractions include:
progressive economic policies, including investment incentives (effective July, 1997 there will no longer be tax holidays given to new joint-ventures however there are other benefits such as no VAT on machinery imports); reformed regulatory structure; well-educated work-force; centralized, albeit remote, location for serving Central Asian markets; abundant natural resources; readily available debt financing for properly structured projects; positive attitudes towards foreign investors; freely convertible currency; well managed central bank; strong support from international financial institutions (IMF, World Bank, IFC, ADB, EBRD, Islamic Development Bank) and donors (USAID, Japan, Germany, Switzerland, Denmark); low wage level; free transfer of foreign currencies and profits; liberation of duty and taxes in free economic zones; and transition to International Accounting Standards is underway. Local banks can be a source of financial information as can Pangaea Partners. Since 1994, Pangaea has been involved in a variety of banking projects in the country including the management, together with Credit Commercial de France, of a $15 million fund for extending loans to local enterprises.