Kyrgyzstan
In-depth country-focused analysis on Kyrgyzstan's economic, political and operational risk environment, complemented by detailed sector insight

Our comprehensive assessment of Kyrgyzstan's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Kyrgyzstan, as well as the latest industry developments that could impact Kyrgyzstan's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Kyrgyzstan before your competitors.

Country Risk

Kyrgyzstan Country Risk

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CORE VIEWS

  • Kazakhstan will not face the Russian annexation of regions heavily populated by ethnic Russians as occurred in the Ukrainian region of Crimea in early 2014. While northern Kazakhstan does have a high proportion of ethnic Russians, any aggressive action by Russia would spark backlash from rising regional power China, and put on hold any expansion of the Eurasian Economic Union.

  • Kyrgyzstan's reliance on gold exports and workers' remittances from Russia will mean the economy remains vulnerable to external shocks in the years ahead. In 2014 and 2015 the drought in northern Kyrgyzstan combined with increased demand from Russia for Kyrgyz agricultural imports will see food price inflation rise, subduing private consumption growth.

  • Despite an increase in violence along Turkmenistan's Afghan border, and more...

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Kyrgyzstan Operational Risk Coverage (9)

Kyrgyzstan Operational Risk

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Convoluted bureaucratic procedures act to inhibit investors' activities; however, the country's fiscal environment is one of its greatest assets, with low corporate and profit tax making it an attractive option. As a result foreign direct investment (FDI) is relatively high, and the government is looking to increase FDI as a means of boosting the country's prospects. Poor legal infrastructure and an unsophisticated banking sector are two additional contributing factors to Kyrgyzstan's extremely poor performance on Trade and Investment. BMI gives the country a score of 40.4 out of 100 in our Trade and Investment Risk Index, which places it 29th out of 30 countries in Emerging Europe, only ahead of neighbouring Tajikistan.

Kyrgyzstan underperforms on Economic Openness largely due to its undeveloped banking sector and its reliance on imports, which form 72.3% of GDP. The country's transition to a market economy after...

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Kyrgyzstan Crime & Security

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Kyrgyzstan poses a high degree of security risks to foreign business travellers, expatriates, and tourists. For the most part, the greatest risks to these groups are petty crime such as pick-pocketing and theft, rather than violent crimes. However, the persistent weakness of the Kyrgyz state means that there are limits to the government's ability to maintain order and security.

Combating terrorism is one of the government's top priorities. Militant Islamist ideologies are reportedly gaining adherents in Kyrgyzstan, especially in the south of the country, which shares borders with Uzbekistan and highly fragile Tajikistan - both of which are experiencing Islamist agitation. Kyrgyzstan's proximity to Afghanistan - the main hub of Islamist militancy and extremism - and adjacency to China's westernmost region of Xinjiang - where ethnic Uighurs are fighting for an independent state - exposes it to regional Islamist currents. We expect terrorism and...

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Kyrgyzstan Labour Market

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As a result of a poor-quality education system and low urbanisation, there is a limited pool of poorly educated workers, the majority of which are based in rural areas. Significantly, there is also a lack of workers educated to tertiary level, which increases risks to investors looking to move into sectors requiring highly skilled workers. However, Kyrgyzstan has one of the lowest minimum wages in the region, bringing down the cost of employment and reducing the labour market risk. Kyrgyzstan is a regionally poor performer for Labour Market risk overall. We have given it a score of 47.9 out of 100, which places it 5 th from bottom in Emerging Europe (EE), between Moldova and Macedonia, and 18.4 points behind BRICS member Russia.

Availability Of Labour presents a large risk to investors, with the small size of the country's workforce contributing to its score of 46.2, placing it 21st out of 30 countries in the region. After years of...

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Kyrgyzstan Logistics

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The major risks in Kyrgyzstan include poor domestic transport infrastructures, high costs and complications involved in trading internationally, low international connectivity, and a small market size. Kyrgyzstan receives an overall score of 31.12 out of 100 for its Logistics Risk, placing it in second-lowest position out of 31 countries in the region, above Mongolia only.

Kyrgyzstan's transport networks are hampered by the rugged, mountainous terrain which makes increasing capacities difficult, and the frequent geographic activity which makes large investment in infrastructures risky. Due to this, the rail and road networks suffer a lack of quality, increasing risks in terms of delays due to impassable sections of track or road. Air transport is relatively adequate in terms of quality, but the geographic spread of airports in Kyrgyzstan is limited and air cargo is an expensive method of transport.

Kyrgyzstan also...

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Kyrgyzstan Trade & Investment

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Convoluted bureaucratic procedures act to inhibit investors' activities, however the country's fiscal environment is one of its greatest assets, with low corporate and profit tax making it an attractive option. As a result foreign direct investment is relatively high, and the government is looking to increase FDI as a means of boosting the country's prospects. Poor legal infrastructure and an unsophisticated banking sector are two additional contributing factors to Kyrgyzstan's extremely poor performance on Trade and Investment. BMI gives the country a score of 39.4 out of 100 in our Trade and Investment Risk Index, which places it 29 th out of 30 countries in Emerging Europe (EE), only ahead of neighbouring Tajikistan, which scores 38.1. Kyrgyzstan is ranked 9.3 points behind BRICS member Russia, and 38.8 points behind regional frontrunner Estonia.

Kyrgyzstan underperforms on Economic Openness largely due...

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Kyrgyzstan Industry Coverage (2)

Defence & Security

Kyrgyzstan Defence & Security

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BMI View:   At present, Kazakhstan and the other four Central Asia countries, Turkmenistan, Tajikistan, Uzbekistan, and Kyrgyzstan   have limited defence budgets, yet numerous requirements. While BMI expects these budgets to increase incrementally over the coming years, BMI also expects the budgetary and underdevelopment challenges to limit those increases considerably.   These countries face numerous internal and external security challenges. Border disputes, criminality, domestic infighting and domestic and transnational terrorism are just a few of those challenges.

BMI expects Kazakhstan's defence spending to have reached USD2.8bn by the end of 2014 and...

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Telecommunications

Kyrgyzstan Telecommunications

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BMI View: Uzbekistan became the fifth and final Central Asian market to receive 4G LTE this quarter, as Beeline ( VimpelCom ) commercially launched the service in September 2014 . While it represents an important development for the region, we are largely bearish on the technology's short-term future , as the prohibitive cost will keep it out of reach of most subscribers, while 3G remains underdeveloped. Internet costs are some of the highest in the world, due to the landlocked nature of the region and government motivations to censor content. While t here is strong potential in the Central Asia telecoms industry, 4G will not see a significant uptake over our five...

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