Kyrgyzstan to reduce regional imbalances

BISHKEK (TCA) — The UN supports the initiative of Kyrgyzstan President Sooronbai Jeenbekov to declare 2018 the Year of Regional Development, Ozonnia Ojiello, UN Resident Coordinator and UNDP Resident Representative in the Kyrgyz Republic said at the meeting with the Kyrgyz President on February 16.

Inequitable policy

It is vital to develop Kyrgyzstan’s regions, President Jeenbekov believes. For many years, there has been an imbalance in the development of the regions. Some of them are developing while the others remain without the attention of the state. The economic development of Kyrgyzstan currently depends on one or two regions. As a result, the state budget revenues are mainly formed in two or three cities. The development zone is concentrated around the capital Bishkek. The dependence of local budgets on the center has increased.

Moreover, the regional lobby has strengthened, Jeenbekov said. For instance, in 2016, the Government financed more than 220 projects. Most of social facilities — schools, kindergartens, and sports grounds — were built in the southern regions. It is known that many high-ranking officials and parliament deputies are representatives of those regions.

If the development policy of the regions is not changed, the difference between them will worsen.

The state monetary policy is not adapted to the development of regions. Economic policy adheres only to the sectoral principle and does not take into account the specifics of the regions.

In Kyrgyzstan, there are seven oblasts, 40 districts and 453 rural administrations, 84% of which are unprofitable and subsidized by the state. About 2 billion soms were allocated to maintain the regions last year and the same amount was planned for 2018.

According to the Economy Ministry, 39 enterprises are idle in the regions of Kyrgyzstan due to the lack of working capital, raw materials, worn-out equipment, lack of sales markets, or bankruptcy.

Internal migration

Due to a large regional difference in socio-economic development and poverty in the regions, the able-bodied population of underdeveloped regions has migrated to more prosperous regions.

There are two types of migration: internal migration which leads to the outflow of population from the regions to Bishkek and the Chui oblast and migration to abroad.
Migration leads to a shortage of skilled workforce, which reduces the potential of the regions.

According to official data, about 616 thousand Kyrgyz citizens are working in Russia. In 2017, labor migrants transferred more than $2 billion from Russia to Kyrgyzstan.

Strengthening competitiveness

Experts believe that Kyrgyzstan needs to develop comprehensive programs to strengthen competitive opportunities in the regions. The development of livestock could stimulate economic growth in Kyrgyzstan but agricultural products, especially livestock products, require veterinary and phytosanitary certification.

The country could benefit by creating logistics and processing centers that would combine small-scale production, starting with simple forms of cooperation in agriculture and ending with the creation of large agro-industrial complexes.

To solve the problem, it is necessary to abandon the existing approach to the distribution of budgetary, credit and grant assistance, leading to an imbalance in the development of the regions. Criteria of territorial planning should take into account the population density and geographical features of each village and region.

The credit policy should take into account the needs of the regions. The Russian-Kyrgyz Development Fund (RKDF) distributed soft loans without a specific plan and system, and some regions were left without the attention, Jeenbekov said. Therefore, budgetary and investment funds should be distributed evenly, in accordance with the interests and specifics of each region.

State support to farmers is ineffective. The President ordered the RKDF, Guarantee Fund, and Ayil (Agricultural) Bank to give priority to projects aimed at opening production in rural areas.

The RKDF has been working since November 2014. It was established to support entrepreneurs to adapt to the conditions of the Eurasian Economic Union and help develop Kyrgyzstan’s economy. Earlier it was reported that the RKDF’s capital would be $1 billion, but the fund started working with $350 million. As of October 2017, the RKDF financed 780 projects worth $254 million.

Enhancing local governments

The local population and local authorities are well aware of where, when and what production facility should be built to develop their regions. Therefore, to implement the concept of regional development, it is necessary to work with local representatives in close contact.

The rural population faces the lack of clean drinking water, undeveloped irrigation system, lack of social facilities — schools, hospitals and kindergartens, as well as bad roads and poor services. Providing the population with clean drinking water and sanitation is among the most important issues in Kyrgyzstan.

If there are problems, such as no electricity and drinking water or bad roads, people turn to the President for help. Such problems should be solved at the local level, but local authorities should have the financial, logistical and technical capacity to solve them.

It is necessary to review the system of public administration and local self-government at the regional and local levels. The President ordered to develop proposals for amending the laws and other regulations to significantly enhance the role and responsibility of local state administrations and local government bodies.

Questions raised

The President’s initiative to announce 2018 the Year of Regional Development raises many questions. On one hand, it is clear that Kyrgyzstan’s prosperity is impossible without consistent and comprehensive development of the regions.

For 26 years of independence, many years have been declared the Year of Youth, the Year of Health, the Year of Human Rights, etc. They did not leave any trace in the memory of the Kyrgyz people since they ended in nothing, media expert Naryn Aiyp said. The last year, declared the Year of Morality, Education and Culture, had brought nothing new either in the culture or upbringing of the younger generation, nor in the improvement of social morality, he added.

How and with what funds will the declared favorable conditions for SMEs be created? What kind of radical changes would expand the investment opportunities, help create new jobs and reduce the internal and external migration?

The years of Kyrgyzstan’s independence have convincingly demonstrated that the existing system of territorial division is too cumbersome, inefficient and unprofitable. Seven oblasts, more than 40 districts and over 400 rural administrations for a country of 6 million is impermissible, the expert believes.

The extra chains in the management system are not only useless, but they restrain the development of both the regions and the country as a whole.