BISHKEK (TCA) — The Caucasus and Central Asia region showed a positive 4.1% GDP growth in 2017 which exceeded the expectations of the IMF, the recently published IMF report on prospects for the regional economy development says. As the forecast shows, this rate will not last long, therefore, the region needs to focus on developing a dynamic private sector and diversifying the economy.
Guarantee Fund
To assist entrepreneurs in finance access, the Kyrgyz Government established the Guarantee Fund in 2016. The Fund’s capital is 282 million soms, of which 72 million soms were allocated from the state budget.
Since its launch in November 2016, the Fund has approved 426 guarantees for 390.4 million soms. Entrepreneurs received loans in partner banks under the Fund’s guarantees.
The Guarantee Fund recently introduced a program to create the machine-building and automobile industries in the country. The machine-building enterprises stopped production in the early 1990s. Since then, the trade balance has a negative index, and imports of many types of machinery and equipment prevail.
According to another ambitious project, creation of electric vehicles will be a good response to the requirements of environmental friendliness and technological adaptability of transport. The first Kyrgyz electric vehicle will be presented by the end of May 2018, the Guarantee Fund said. Imported auto parts will be used to assemble electric cars.
Microcredits
Microcredit companies provided 380 thousand people across the country with loans worth 17 billion soms, the National Statistics Committee reported. The largest number of recipients and the greatest volume of issued microcredits were registered in Bishkek and the Chui, Osh and Jalal-Abad oblasts.
Women received most of the loans (over 61% of borrowers). According to creditors, 36% (6 billion soms) of all loans were directed for consumer purposes, 29% (5 billion soms) – in agriculture, and 17% (2.8 billion soms) in trade and public catering.
Private entities dominate
There are 98 state enterprises in Kyrgyzstan, of which more than 30 are loss-making ones. As of the beginning of this year, 1,130 state enterprises were registered but most of them did not function. The Government assessed the non-operating enterprises and liquidated most of them. As a result, 98 state enterprises currently operate but some unprofitable ones will be liquidated, and others will be merged.
In Kyrgyzstan, 690,300 economic entities are registered, both legal entities and individuals. Among them, private entities dominate (98.2%) and 63% of them are operating in agriculture, forestry and fisheries, the National Statistics Committee reports.
The Government creates preferences for the development of industrial production. Newly established enterprises will be exempt from property tax, land tax, profit tax, and sales tax for five years.
The state policy is currently aimed at the development of the regions. More than 70% of the country’s population lives in the regions, and most of the villages and towns are subsidized and do not have developed infrastructure and favorable business environment. Considering these circumstances, Kyrgyz President Sooronbai Jeenbekov declared 2018 the Year of Regional Development.
The Economy Ministry proposes to develop competition between 20 growth points. The regional development model is based on 20 cities and villages, including Bishkek, Tokmok, Kara-Balta, Karakol, Balykchy, Naryn, Kochkorka, Talas, Osh, Uzgen, and others. Reforms will be implemented on the basis of these cities, including economic and infrastructure development.
The Kyrgyz Government should take an interest in the latest program for the private sector development in neighboring Uzbekistan given that relations between the two countries are developing intensively.
Involving each family in entrepreneurship
At the initiative of President of Uzbekistan Shavkat Mirziyoyev, the government program to involve each family in entrepreneurship is being implemented in neighboring Uzbekistan.
Recently, the Uzbek President visited the Andijan province to see how the program is running.
The region is densely populated, and one or two plants cannot provide employment for a large number of people. They could support their families through entrepreneurship, handicraft, and poultry and fish farming, President Mirziyoyev believes. He entrusted the Uzbek Government to raise funds, provide the necessary equipment, and train the population to use it wisely.
“As a result, people will be able to arrange their own life, buy books for children, pay taxes, electricity, and increase revenues to the budget. A year later, the invested funds will be doubled,” the Uzbek President concluded.
