Members of the International Business Council took part in the Bishkek Investment Forum 2016 (BIF) held on December 8 in Kyrgyzstan.

The JIA Business Association together with the Economy Ministry of Kyrgyzstan, the Embassy of India in Kyrgyzstan and the FSDS Public Foundation organized the forum attended by over 600 business representatives from Kyrgyzstan, Kazakhstan, Russia, Uzbekistan, Tajikistan, and India.

Earlier this year, Kyrgyzstan’s SMEs submitted more than 250 business projects to the forum organizers, who selected 60 most promising projects and included them in the BIF catalog.

Fourteen best business projects were presented at the forum, including breeding turkeys, production of stones used in construction, and manufacture of wood flooring from mountain elm.

One of the projects proposed the construction of a waste sorting and storage terminal in Bishkek. The payback will be from eight to 15 months, and the necessary investment is $220 thousand. The project authors plan to sort 60% of garbage and sell it to processing companies. This will reduce the amount of garbage in the city landfill located 30 kilometers from Bishkek.

The amounts of requested investments for the business projects ranged from $20 thousand to $2 million.

SMEs the source of domestic investment

According to Economy Minister of Kyrgyzstan Arzybek Kojoshev, the forum aimed to attract investments in small and medium businesses, to create a platform for establishing business contacts and to exchange modern technologies, ideas and experiences in doing business.

Kyrgyzstan received the largest FDI worth $1.5 billion in 2015. In the first 9 months of this year, FDI fell by 16.6% compared to the same period of 2015 and was $535 million, the minister said.

Compared with FDI, domestic investment tends toward stable growth in Kyrgyzstan. Domestic investments come from local enterprises, organizations and the population, as well as from banks and the state budget.

Entrepreneurship is a source of domestic investment and the basis for the development of the Kyrgyz economy. SMEs account for 39% of Kyrgyzstan’s GDP, the minister said.

For comparison, the share of SMEs is about 20% of GDP in Russia and 24% in Kazakhstan. In developed countries this figure is higher, for instance, 50% in Germany and over 60% in Japan.

State support

Kyrgyzstan’s SMEs have limited opportunities for growth into medium or large businesses.

With the state support, the SMEs could develop and grow into big businesses. There are legal mechanisms that support both external and domestic investors, the minister said. The Law "On Foreign Investments in the Kyrgyz Republic" provides for equal legal treatment for local and foreign investors.

To improve the business environment in the country, the Guarantee Fund has been recently established, and the Russian-Kyrgyz Development Fund has lowered interest rates on loans. The sales tax on export was abolished and the VAT registration threshold increased.

The Government also exempted newly established enterprises from state regulatory agencies’ inspections for three years, halved the timing of inspections, and has started large-scale optimization of the licensing system in the construction sector.

In 2017, the state budget will allocate 350 million soms to subsidize interest rates on concessional loans for export-oriented companies, the minister said.

It is also planned to reduce the number of permits, abolish fees for issuing licenses and to modernize the process of issuing licenses and permits. In addition, it is necessary to adopt a law according to which only courts will be allowed to cancel licenses.

To attract investors, the cost of investment visas has been reduced from 35 million soms to 10 million soms in Kyrgyzstan, MP Abdyvakhap Nurbayev said.

According to Chairman of the JIA Business Association Umbriel Temiraliev, attraction of long-term capital is the most difficult problem in business development. If this problem is solved, many companies would be able to get on their feet and develop, he concluded.

Cooperation with India

At the forum, a business delegation from India represented tourism and hotel business, agriculture and processing industries, education, healthcare, mining, international consulting services, and information technologies.

Tourism and organic products could become a brand of Kyrgyzstan, said Indian Ambassador to Kyrgyzstan Jayant Khobragade.

India plans to become an international air hub and to strengthen air cooperation with Kyrgyzstan. Direct air links have already been established between the two countries, the ambassador said.

India has offered Kyrgyzstan credit lines to help increase bilateral trade next year, the ambassador added.

In India, medical tourism is well developed and Indian business people are going to use their experience in Kyrgyzstan. The Indian side is also interested in establishing a joint medical institute, as the number of Indian students is growing every year in Kyrgyzstan. Currently, more than 3.5 thousand students from India are studying here. Indian investors also plan to build a modern hospital in Kyrgyzstan.

Next year, Kyrgyzstan will be able to export walnuts to India.

These days, New Delhi is hosting the first festival of Kyrgyz honey and walnut, organized by the Kyrgyz Embassy in India. The event is aimed at the promotion of Kyrgyz products in the Indian market.

The festival brought together representatives of business circles, the Indian Ministry of Agriculture and Chambers of Commerce, tour operators and journalists. Kyrgyz Ambassador to India Samargyul Adamkulova stressed the growing popularity of Kyrgyz honey and dried fruits in India thanks to the participation of Kyrgyz farmers in various trade and food exhibitions.

The Festival of Kyrgyz honey and walnut coincided with the Indian International Trade Fair 2016. Kyrgyzstan’s pavilion presented companies producing honey, nuts, and felt products.