Kyrgyzstan Business & Economy - The Times Of Central Asia

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Will Construction Of Kyrgyzstan’s “Chinese Railroad” Start This Year?

The China-Kyrgyzstan-Uzbekistan railroad construction project is the largest project in Kyrgyzstan’s transport sector, according to the authorities in Kyrgyzstan, and its implementation will help realize the transit potential of the republic while connecting it with the countries of southeast Asia. The new railroad will be important not only for the three named countries through which it will pass; it will also shorten the route from East Asia to the Middle East and Southern Europe. The total length of the Kyrgyz branch will be 280 kilometers. It’s worth noting that Beijing developed a feasibility study for this project back in the early 2000s, whereby the route was first determined. The Chinese study proposed building a shorter route across the territory of Kyrgyzstan, which would have been about 250 kilometers long. But the authorities in Kyrgyzstan at the time proposed lengthening the route by over 100 kilometers in order to add more villages to the route, thereby securing access to the economic benefits of the railroad for more citizens. For the longest time, authorities in the three countries couldn’t agree on which gauge to set. This hinged on the fact that China, Turkey and Iran are building using the European gauge of 1.435mm, while Central Asian countries use the Russian standard of 1.620mm. As a result, the parties decided on a so-called transition from one gauge to the other. According to some reports, this transition will be located in Kyrgyzstan in the village of Kazarman. China will build its part of the railroad line to this settlement on its own. Financing for the Kyrgyz part of the railroad will be determined by the authorities in Kyrgyzstan in concert with their counterparts in Uzbekistan and other investors. The project’s cost is estimated at $4.7 billion. In the future, Kyrgyzstan plans to connect the new route with the northern part of the railroad in order to re-export Chinese goods to Russia. Chinese leader Xi Jinping recently hosted President Shavkat Mirziyoyev of Uzbekistan on a state visit to Beijing, where the two leaders discussed the China-Kyrgyzstan-Uzbekistan railroad, among other economic issues. In a conversation with his Uzbek counterpart, Xi Jinping noted that the countries should speed up negotiations and start construction of the railroad as soon as possible, which is a key component of China’s “One Belt, One Road” mega-project.

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€10bn To Be Invested In Trans-Caspian Transport Corridor

The two-day Global Gateway Investors Forum for EU-Central Asia Transport Connectivity opened on January 29th in Brussels, Belgium. The event brings together high-level representatives from the European Commission, countries of the EU, Central Asia and Caucasus, as well as Turkey. At the forum, the European Commission’s executive vice-president Valdis Dombrovskis announced that European and international financial institutions will commit €10bn ($10.8bn) in support and investments towards sustainable transport connectivity in Central Asia. The forum’s agenda includes discussions of the required investments to transform the Trans-Caspian Transport Corridor into a cutting-edge, multimodal, and efficient route, connecting Europe and Central Asia within 15 days. The European Commission said that Russia's invasion of Ukraine has underlined the urgency to find alternative reliable efficient trade routes between Europe and Asia. The development of transport connectivity is also a means to strengthen regional integration and economic development in Central Asia. The €10bn commitment is a mixture of ongoing and planned investments which the European Commission foresees to be mobilized for sustainable transport development in Central Asia in the short term. In concrete terms, several significant commitments are being made on the first day of the forum as part of the overall €10bn. The European Investment Bank (EIB), represented by its vice-president Teresa Czerwińska, signed memoranda of understanding totaling €1.47bn ($1.6bn) with the governments of Kazakhstan, Kyrgyzstan and Uzbekistan, as well as with the Development Bank of Kazakhstan. These loans will be made possible by guarantees provided by the European Commission.

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Kyrgyzstan’s GDP Reached $13.7bn In 2023

2023 Kyrgyzstan’s GDP grew by 6.2% last year to reach $13.7bn, a record high for the country, the chairman of the Cabinet of Ministers Akylbek Japarov announced at a government meeting on January 26th. Mr Japarov said that he believes the 6.2% figure for 2023 will be higher after the economic data for 2023 is updated and finalized. The head of the cabinet commented that to achieve a GDP of $30bn by 2030, Kyrgyzstan needs to ensure an annual growth rate of 9%-11.5%, and to reach the $200bn mark by 2050, the growth rate needs to average 10.3% per year. “It is difficult to maintain this pace, but we can achieve it,” said Japarov, adding that the government’s priority task is to create new jobs.

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EBRD Invested More Than €1.2bn In Central Asian Economies In 2023

The European Bank for Reconstruction and Development (EBRD) says it invested more than €1.2bn ($1.3bn) in projects across Central Asia in 2023 to stimulate the region’s sustainable growth. Uzbekistan remained the leading recipient of EBRD funding in the region for the fourth year running, attracting more than €700m ($760m). The remaining €518m ($560m) were channeled to support projects in Kazakhstan, Kyrgyzstan, Mongolia, and Tajikistan. In Uzbekistan, the EBRD continued investing in renewable energy power generation and low-carbon technologies. It financed the construction of three greenfield solar power plants with a total installed capacity of nearly 900 MW. The bank provided funds to ACWA Power Wind Karatau to finance the construction of a 100 MW wind power plant in the autonomous republic of Karakalpakstan. It also provided a sovereign loan to modernise 118 pumping stations and improve the sustainability of water supply for irrigation in the densely populated Fergana Valley. Samarkand became the first city in the country to join the EBRD Green Cities programme, and is planning to deploy ecologically friendly electric buses as part of this engagement. In the financial sector, the bank continued working with local financial intermediaries such as SQB, Hamkorbank and Ipak Yuli Bank to support SMEs and promote green lending. Highlights of the EBRD’s work in Kazakhstan include the launch of the GEFF Kazakhstan II and an investment in a local currency bond issued by the country’s transmission system operator, KEGOC. The funds will help make the country’s electrical grid more sustainable and reliable. The bank’s loan to China Power International Holding and Visor International will be used to build, operate and connect the 100 MW Shokpar wind power plant to the transmission grid. The EBRD’s loan to Kazakhstan’s largest private rolling stock operator, Eastcomtrans, will help expand container-handling capacity at one of the most congested junctions near Almaty and address the issue of bottlenecks along the Trans-Caspian corridor. Last year marked the completion of the street lighting system in Ust-Kamenogorsk (Oskemen), which allowed energy-efficient LED street lights to be installed on 150 streets. In the financial sector, the bank extended a new loan to the country’s leading microlender KMF to support green lending and women’s entrepreneurship. In Kyrgyzstan, the EBRD supported the modernisation of water supply services in the Batken and Jalal-Abad oblasts. The bank signed a number of sovereign projects aimed at modernising key transport and energy infrastructure, which will help improve the country’s connectivity and climate resilience. These projects included loans to upgrade a 30km section of the Issyk-Kul Lake ring road, increase the reliability of the national electricity transmission and distribution grid, and rehabilitate and modernise the Lebedinovskaya hydropower plant. The EBRD also completed the Bishkek landfill project last year, which will provide major environmental benefits for the more than one million people living in the country’s capital. The completion of three infrastructure projects in Tajikistan allowed more than 400,000 people in 13 municipalities across the country to enjoy better access to clean and safe drinking water. Last year the EBRD launched the GEFF Tajikistan II and extended new GEFF loans to Bank...

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Seasonal workers in Kyrgyzstan look to Europe

The Russian Federation is now the leader in the number of migrants coming from Central Asian countries. However, according to the Kyrgyz Ministry of Labor, Social Security and Migration, the number of Kyrgyz working in Russia has decreased by 30% over the past year. According to the Ministry of Labor, for nine months of 2023, the number of Kyrgyz migrants in the Russian Federation decreased by 180,000 people. The tightening of Russia's migration policy, the weakening of the ruble, and the war in Ukraine are to blame. In addition, according to the National Bank of the Kyrgyz Republic, remittances from Russia to Kyrgyzstan decreased by almost one billion dollars (35%) during the reporting period. Remittances from the Russian Federation account for almost one third of Kyrgyzstan's GDP. Today, many migrants who previously worked in Moscow and other major Russian cities for decades have begun to consider new countries for work. In Bishkek, one can see many advertisements for construction workers in Bulgaria or plantations in the United Kingdom. The increase in the flow of migrants from Central Asia in London is explained by an increase in quotas for seasonal workers, as well as a decrease in the number of workers from Ukraine. Where men between 18 and 60 are banned from leaving the country due to mobilization. Before the war, most seasonal workers in the UK came from that country. In 2023, the number of work quotas for Kyrgyz people increased from 1,500 to 2,000 people, the Kyrgyz Ministry of Labor said. It also said Kyrgyz authorities support migration both westward and eastward. "Previously, our citizens worked legally in only two or three countries around the world. But at the moment the geography for official employment is expanding every year. Fifteen destinations are already available - people have a choice. This includes employment in the Persian Gulf countries, the UK, Germany, Japan and Hungary," Almaz Alybayev, director of the Center for Employment of Citizens Abroad under the Ministry of Labour, Social Development and Migration, told Kyrgyz media. The Kyrgyz government believes that Kyrgyz people will return from the UK and other countries with the capital and experience to start their own businesses, which will contribute to the growth of the state's economy and the welfare of its citizens. The example of Kyrgyz migrants working in South Korea is noteworthy. There, Kyrgyz migrants worked at factories producing doors and plastic windows. As a result, Korean technologies in this area are now actively used in Kyrgyzstan. The same can be said about innovations in agriculture, which are used by farmers in Great Britain. Kyrgyzstan is in many ways an agrarian country, which means that the experience of such migrants will be useful to the country.

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Kyrgyzstan Gives “National Significance” Status to Strategic Energy Projects

The Deputy Chairman of the Cabinet of Ministers, Minister of Water Resources, Agriculture and the Processing Industry of the Kyrgyz Republic, Bakyt Torobaev on January 16th held a meeting of the governmental commission for the selection of national investment projects. The meeting considered giving certain undertakings the status of “projects of national significance,” which, according to Torobaev, will help increase their attractiveness to investors. This will contribute to socioeconomic development, job creation, the development of industry and agriculture in regions where such projects are implemented, Torobaev stated. The commission granted the status of “projects of national significance” to the construction of the Kambarata hydroelectric power plant-1, the Kazarman hydroelectric power plants cascade, and the Kemin-Torugart 500 kV power transmission line. With this status, companies interested in investing in these will be exempt from value added tax, sales tax, and income tax for a certain period. The Cabinet of Ministers expects that this step will help speed up the implementation of these strategic projects. Construction of the Kambarata hydroelectric power plant-1 and the cascade of the Kazarman hydroelectric power plants are two flagship projects aimed at introducing new power generating capacities to help Kyrgyzstan overcome its chronic electricity shortages, which are especially acute in the winter months.