CHINA NOW KYRGYZSTAN'S MAJOR TRADE PARTNER

The event was organized by the Ministry for Economic
Regulation (MER) of the Kyrgyz Republic and the China-Europe
Association for Technical and Economic Cooperation (CEATEC).

Representing Kyrgyzstan at the forum were First Deputy Prime
Minister Akylbek Japarov, Deputy Minister of Economic
Regulation Sanjar Mukanbetov, Head of the Investment and
Innovation Department of the Central Agency for Development,
Investment and Innovation Kudret Mamatov, President of the
Chamber of Commerce Jumasarlyk Nurjanov, and members of the
Bishkek-based International Business Council (IBC) and local
business community.

The Chinese delegation included representatives of the
Ministry of Commerce, Department of Commerce of Xinjiang, and
representatives of 40 major Chinese companies.

Chinese investment

Since 1995, Kyrgyzstan has received more than $3 billion in
foreign direct investment, said Akylbek Japarov. During this
period Kyrgyzstan has received $163.5 million of Chinese
foreign direct investment (FDI), representing 5.3 per cent of
total FDI in the Kyrgyz economy.

Unfortunately, this does not correspond to the current
realities, said Japarov. The Kyrgyz Government expects Chinese
companies to invest in the Kyrgyz economy without guarantees
from the state, he added. Japarov expressed hope that with
assistance of Chinese partners, FDI in Kyrgyzstan would
increase to $1 billion. Chinese Ambassador to Kyrgyzstan Wang
Kaiwen noted that good-neighborly relations between the two
countries have been developing in recent years and success has
been achieved in many sectors of economy.

According to Chinese data, the trade turnover between the
two countries reached $7.33 billion in 2008, four times more
than in 2006. In 2009, despite the global crisis, the figure
continues to grow. Currently, hundreds of Chinese investment
projects are being developed in Kyrgyzstan, and there are about
300 joint Kyrgyz-Chinese ventures in the country.

Major trade partner

According to Deputy Minister of Economic Regulation Sanjar
Mukanbetov, the trade turnover of Kyrgyzstan with China totaled
$772.6 million in 2008, which was an 85 per cent increase
compared to 2007. Since January 2009, bilateral trade has
already reached $3.45 billion. China has provided assistance to
Kyrgyzstan in the spheres of electric energy, chemical
industry, light industry, machine building and agriculture. The
main items of bilateral trade are agricultural products and
textiles. Kyrgyzstan also exports refined oil products and
inorganic chemicals to China. Most of the exports from China
include machinery and mechanical appliances, electrical
equipment, chemical fiber, vehicles, and ferrous metals.

According to the MER, China is one of the most important
trade partners of Kyrgyzstan. However, the ministry
acknowledges that traditionally the trade balance is in favor
of China. In 2008, imports from China exceeded the export from
Kyrgyzstan 13 times. Also, traditionally, the Kyrgyz Republic
exports raw materials, metals, and hides, while the potential
for exporting manufactured goods or deeply processed products
from Kyrgyzstan to China is hardly explored. Yet, the Kyrgyz
Republic has goods to offer even to such a highly saturated
market as China, said Ulanbek Akmatbayev, general director of
Reemtsma-Kyrgyzstan and the IBCs first deputy chairman.

Head of the Chinese delegation, CEATEC President Xu Bingjin
said that long-term cooperation has laid a solid foundation for
trade and economic relations between the two countries. China
attaches great importance to trade and economic cooperation
with Central Asian countries within the SCO. The Chinese
government has offered SCO member countries a $10 billion loan
for the development of strategically important sectors of the
economy.

Investment climate

Managing Director of MGN Capital, Robert Genkin, briefed
guests on the investment climate in Kyrgyzstan and the
prospects for possible cooperation in such fields as natural
resources, energy, agriculture, trade, and tourism. Today it is
difficult to find a CIS country which may show positive
economic growth, said Genkin. According to the Ministry of
Finance, in Kyrgyzstan, real GDP growth for January-September
2009 amounted to 2.9 per cent. The IMF predicts GDP growth in
Kyrgyzstan at 0.9 per cent in 2009 and at 2.9 per cent in
2010.

Legal aspects of doing business

A partner of Kalikova & Associates law firm, Ulan Tilenbaev,
told about the legal aspects of doing business in Kyrgyzstan.
According to Tilenbaev, 100 per cent foreign capital is allowed
in Kyrgyzstan. Risk of losses is limited to the value of the
contributions (in LLC) and to the value of stocks owned (in
JSC). Registration of LLC and JSC takes only five days.

He also explained what types of business activities are
subject to licensing in Kyrgyzstan. It was good news for
foreign business people that entrepreneurial activities in the
mining industry, hotel and resort management, import and sale
of telecom and IT equipment, software development, fruit and
vegetable processing should not be licensed in Kyrgyzstan.

Moreover, foreigners may lease agricultural land and may own
buildings and structures on any land plot. There are no
restrictions on currency import and export, current payments,
operating revenues and cross-border transfer of capital. Access
to finance can be reached through 22 banks and 325 microfinance
institutions.

The Kyrgyz side presented to the Chinese delegation about
150 investment projects worth more than $1 billion. Proposals
were related to the implementation of infrastructure projects
in development, energy, communication, rehabilitation and
construction of roads, and introduction of new technologies.

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