H.E. Asein Isaev Ambassador of Kyrgyzstan

Kyrgyz Republic has a rich history in the Old Silk Roads, but most of that history is still a secret for Europeans

What is your country doing to disclose these hidden secrets to the West? Manas Kumbez, Tash-Rabat caravanserai (IXth century) Burana Tower, Mount Suleiman, Uzgen architectural complex,
Shah-Fazil mausoleum these are really treasures to be discovered by the Europeans — how can we promote these new touristic destinations? Is there need for more investments in the tourist industry — what are the opportunities?

Kyrgyzstan indeed has a rich historical past associated with the Great Silk Road. The customs and culture of the Kyrgyz people have absorbed the culture of different nations, and there are also a lot of borrowings in the national language of the Kyrgyz people.

You are absolutely right that such objects as Tash-Rabat, Burana Tower, Manas Kumbez, Shakh Fazil Mausoleum and others are the historical heritage of Kyrgyzstan of those times and that these treasures were closed to Europeans for various reasons. Being part of the Soviet Union and the iron curtain between the countries of the West and the USSR played big role in it. After the collapse of the Soviet Union and obtaining independence, Kyrgyzstan started to make active attempts to open up to the world the hidden treasures, both historical and natural.

It is important to say that Kyrgyzstan is primarily interested in the development of tourism and makes maximum efforts to promote it by creating comfortable conditions for tourists, creating a favorable visa environment in the country for EU citizens, improving infrastructure, and working to open direct flights between the Kyrgyz Republic and EU countries.

In 2012 Kyrgyzstan adopted the Law, according to which country unilaterally established visa-free regime for citizens of 45 countries, including most European countries to come for a short stay up to two month without getting visa and simplified visa regime for citizens of 67 countries, which allows to easily obtain a longer period visa.

In recent years Kyrgyzstan introduced and launched the “Electronic visa system”, that allowed people from all over the world, to apply for Kyrgyz visa and get it within 3 business days, without need to find and go to embassy or consulate, and adopted the provision, according to which citizens of most countries were exempted from registration procedures on mutual basis for up to 90 days.

Regarding assistance in promoting tourism and investment, I want to note that the development of tourism in general needs a range of activities and the Kyrgyz Republic certainly needs the development of tourism management and tourism infrastructure. Kyrgyzstan, having historical cultural values and a natural landscape that is attractive for tourists, is still learning how to show and present it. At the same time, the tourism sector in the Kyrgyz Republic is a direction with a high “giveback”, given the rising number of coming tourists. At the same time, the country has a huge potential, which is confirmed by the fact that the flow of foreign tourists is increasing markedly, as in other much more developed countries that have all the conditions for this.

Kyrgyzstan is constantly working on improving the legal environment for entrepreneurs involved in the organization of tourism services and it is also important to state that great attention is paid to the rule of law.

Currently, a large number of travel companies, including European ones, operate in the country. For example, according to official data of the National Statistics Committee of the Kyrgyz Republic, the Netherlands is the leader in Foreign Direct Investments in the field of tourism, whose share in 2017 was more than 60%.

An important international event in popularizing the culture and history of Kyrgyzstan are the World Nomad Games. This year, the Nomad Games were held for the third time, having received great fame in the world. The WNG allowed to reach a wider public from the EU, which now plans to visit Kyrgyzstan in the future and learn more about its history and attractions.

In addition, the Kyrgyz Republic annually participates in various fairs and exhibitions dedicated to tourism. There is an extensive advertising campaign through the media, the work of diplomatic missions and consular offices.

Kyrgyz Republic occupied a very strategic geographical position on the ancient trade routes, and was embracing the cultural achievements of East and West. Your country was the bridge that connected the East and the West. Three branches of the ancient caravan — 7000 km — route had passed through the territory of Kyrgyzstan, namely, the Pamir-Alai, south and north, which runs through Tien-Shan and Pamir high mountain passes. Does your country now also plays a new role in the new Silk Roads that China is promoting through its One Belt One Road policy? What are the main projects to give your country a regional role — leaving behind its isolation as a landlocked country? Can you document your country’s new Silk Road plans.

Yes, the current territory of Kyrgyzstan served as the main bridge on the giant trade route connecting the East and West. Located on the Great Silk Road, Kyrgyzstan was the crossroad of trade and cultural traditions between China, Iran, India, the Arabian Sea and the Western world.

I have to say that the Great Silk Road never stopped to function as the connection bridge between East and West, because trading always remained between Western and Eastern countries and some routes are still used in Kyrgyzstan as highways.

As before, Kyrgyzstan maintains trade and economic relations with neighboring countries through its territorial location. Kyrgyzstan occupies an advantageous geographical position. Our country is a part of the Great Silk Road, and in a new format it is a road to economic prosperity for all who take part in its development.

There are projects such as TRACECA that are aimed at strengthening economic relations, trade and transport communication in the regions of the Black Sea basin, South Caucasus and Central Asia, which is also considered as the modern Great Silk Road.

The BRI project, initiated by China, is certainly of great interest, since China opens up direct trade with the EU countries. China considers Kyrgyzstan as its important strategic partner and, with the entry of the Kyrgyz Republic to the Eurasian Economic Union in 2015, China has the opportunity to discover the markets of all the countries participating in the EAEU. This situation clearly shows a trend associated with economic integration. The regional role of our country is to provide territory for the transit of goods from China to other countries, where the main interest is territorial. Also the Central Asian region itself has a huge export potential and currently there are good positive integrational processes going in the region that will possible lead to development of production and export to the markets along the Great Silk Road. I want to say that it is a good opportunity to strengthen internal ties in the region.

Important projects for Kyrgyzstan have been and are being implemented. The construction of an alternative North-South road is underway, over a hundreds of roads in the capital are being repaired, as many other industrial and infrastructural projects. With the revival of the Silk Road, the amount of such objects and construction sites in Kyrgyzstan will grow. This is a chance not only to raise our own economy, but to embark on a path of sustainable development for decades ahead

Your country has still large development potential in terms of renewable energy — especially hydropower electricity. How will your government promote this sector?

Since Kyrgyzstan is a country capable of producing electricity at lower cost, the hydropower issue is a priority for the country. The Kyrgyz Republic is committed to maintaining the ecological environment and thus hydropower, being one of the most environmentally friendly and safe ways to produce electricity will remain relevant.

I can provide some official statistical data on the hydropower potential of the Kyrgyz Republic.

The total hydropower potential of the Kygryz Republic is 142.5 billion kWh and the percentage of the used potential is only 10%.

Only on the Naryn river can be built 8 cascades of hydropower stations and the total installed capacity of prospective cascades is 6450 MW.

As it can be seen from the mass media, the presence of foreign companies is increasing interested in supplying equipment, as well as creating conditions for the construction of hydroelectric power stations.

The state promotes the sector by giving it the priority status, as well by creating favorable conditions for foreign investment and the involvment of the world community to environmental safety issues. Kyrgyzstan is also a regular participant in various international conferences related to the safe production of electricity.

What is your governments main statement and strategy to promote Foreign Direct Investment (FDI) — what sectors and how can foreign companies mitigate risks; amongst others political ones?

Kyrgyzstan is the land of boundless opportunities with rich natural resources and great potential. Only for 27 years of independence, Kyrgyzstan managed to achieve the democratization of social and political life, liberalization of doing business conditions, foreign trade activities, membership in international organizations and unions.

Kyrgyzstan has provided to the entrepreneurs freedom of trade, opened up the opportunities for the development of production and access to international markets, as well as to its internal market. Furthermore, Kyrgyzstan has advantages in terms of investment attractiveness on a number of factors, as implementation of a program of market reforms and macroeconomic stabilization, it actively works on the privatization of telecommunications, energy and transport sectors, full-fledged free trade regime, free money exchange system and unrestricted movement of capital, liberal investment regime, where all sectors of economy are open to investors.

Mining, manufacturing, tourism and processing industry sectors are more attractive for investments. There are numerous large mining and processing enterprises operating in the Kyrgyz Republic. In the meantime, according to international experts, with a relatively small area and good geological exploration, mineral resource potential is used poorly.

Since investments are a major prerequisite for economic development in the Kyrgyz Republic, investment legislation of the country is quite liberal.

The Constitution is the basic and paramount law to which all other laws must conform, including the laws directly or indirectly regulating investment in the Kyrgyz Republic such as the “Law on Licensing”, the “Law on Joint-Stock Companies”, the “Law on Mining”, the “Law on Free Economic Zones in the Kyrgyz Republic”, the Tax Code, the Land Code, the Customs Code, the Civil Code, the “Law on Public-Private Partnership in KR”. Nonetheless, the principal law governing investment is the “Law on Investment in Kyrgyz Republic”.

Thus, under the legislation of the Kyrgyz Republic, foreign investors enjoy the national treatment applied to individuals and legal entities of the country. Legislation provides for a broad scope of rights and guarantees to foreign investors, including guarantees of export and repatriation of investment, property, and information out of the Kyrgyz Republic, guarantees of protection against investment expropriation and coverage of losses incurred by investors, guarantees of income use and freedom of monetary transactions, and others.

Subject to its legislation, the Kyrgyz Republic provides the following guarantees to foreign investors:

national treatment of business activities, equal investment rights of domestic and foreign investors, no intervention into the business activities of investors, protection and restitution of infringed rights of investors in accordance with the legislation of the Kyrgyz Republic

export or repatriation of profit gained on investment, proceeds of investment activities in the Kyrgyz Republic, property, and information, out of the
Kyrgyz Republic

protection against expropriation (nationalization, requisition, or other equivalent measures, including action or omission on the part of authorized government bodies of the Kyrgyz Republic that has resulted in seizure of investor’s funds or investor’s deprivation of the possibility to use the results of their investment). In exceptional cases involving public interest, investments may be expropriated with concurrent state guarantees of appropriate coverage of damage incurred by the investor 

the investor’s right to freely use the income derived from their activities in the Kyrgyz Republic

the freedom to invest in any form into objects and activities not prohibited by the legislation of the Kyrgyz Republic, including the activities subject to licensing

freedom of monetary transactions (free conversion of currency, unbound and unrestricted money transfers; should provisions restricting money transfers in foreign currency be introduced into the legislation of the Kyrgyz Republic, these provisions will not apply to foreign investors, with the exception of cases where investors engage in illegitimate activities (such as money laundering)

free access to open-source information

the right to: establish legal entities of any organizational and legal form provided by the legislation of the Kyrgyz Republic; open branches and representative offices within the territory of the Kyrgyz Republic; select any organizational and managerial structure for the business entities, unless a different structure is explicitly required by law for the given organizational and legal form of a business entity; acquire property (with the exception of land plots), shares, other securities, including governmental securities; participate in privatization of state property, establish associations and other unions; hire local and foreign employees subject to legislation of the Kyrgyz Republic; and engage in other investment activities not prohibited by legislation in the Kyrgyz Republic  

recognition by public authorities and officials of the Kyrgyz Republic of all intellectual property rights of foreign investors

in the event of amendments to the Law of the KR on Investments, or the tax legislation of the Kyrgyz Republic or the nontax payments legislation, the investor and the investee who meet the statutory requirements have the right, during 10 years from the date of signing the stabilization agreement, to choose such conditions as may be most favorable to them for paying taxes including value added tax but excluding other indirect taxes, and nontax payments (except fees and charges for public services) in the manner provided by the laws of the Kyrgyz Republic. The procedure and conditions for applying stabilization regime to tax and nontax legal relationships are established by the laws of the Kyrgyz Republic

other guarantees specifically provided in bilateral and multilateral international treaties on the promotion and protection of investment, to which the Kyrgyz Republic is a party.

The World Bank states that the Kyrgyz Republic will need to diversify its economy. However only 7 percent of the land area is arable, the rest consisting of glaciers, mountains and pastureland or steppe that support livestock grazing. Further the country’s natural resources — comprising minerals, mainly gold, and water for hydropower generation — are also limited. What sectors are priority sectors for your government?

Yes, to realize the full growth potential the economic activities of the country need to be diversified. But I have to point that Kyrgyzstan’s vast natural resource reserves are used poorly at the moment. The hydropower potential of the country is used only for 10%, and less than 5% of significant potential for many types of natural minerals is being developed currently. So there is a good perspective in this direction for many years ahead.

But as I said, the economic activities have to be diversified and currently along with tourism, the priority sectors in the economy are the agriculture, mining and light industry, the service sector, as well electric power industry. Kyrgyzstan has a huge potential in the sector of transport and infrastructure, as the Kyrgyz Republic is striving to attain the status of an international transport hub. It is important to note that all sectors of the economy of the Kyrgyz Republic have potential and are open for investments.

Yes, that is true that most of the country consists of mountains, glaciers and pastureland. But in the modern changing world, where present advances in all sectors of economy give vast opportunities, our country has needed resources and potential for sustainable development. Kyrgyzstan is working on building an open and transparent state, raising life standard of citizens, as well as improving the business environment in the country through digital transformation. The ambitious project called “Taza Koom” (Pure community) is aimed at promoting its digital economy as a new engine of growth — ranging from digitizing the delivery of public services to broadening connectivity to promoting digital entrepreneurship.

The location advantages, which include low labour and electricity costs, abundant hydropower resources, good weather conditions for agriculture, attractive landscapes for tourism and overall competitive taxation and trade preferences and of course the human resources are preconditions for vast opportunities for foreign investments and sustainable economic growth.

More than 10 percent of the Kyrgyz population are migrant workers, mostly in Russia. Do you see this as a sustainable income for your economy and what is Government policy regarding this?

Yes, that is right that the money transfers of our fellow citizens who work abroad is a crucial part of the country’s gross domestic product.

As foreign trade policy is based on market liberalization, issues related to labor migration are the planned development of our foreign trade — trade in services. The role of the government in creating migration policy is closely tied to the historical and cultural aspects, current integration processes within the EAEU. The entry of the Kyrgyz Republic into the EAEU constituted the institutional base of the current migration policy of the Kygryz Republic, which is expressed in the cancellation of the work permits and other related documents. Accordingly, such favored conditions within the framework of economic integration have a positive effect on the stability of the state income from labor migrants.

Barbara Dietrich