Kyrgyzstan Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

The EU 27 countries represent one of KG’s most important trading partners. Until 2018, exports of EU countries to KG exceeded imports. Since 2016, Kyrgyzstan has been using the benefits of the GSP+ system when exporting to the EU, the positive effect of which on trade with the EU was fully manifested only in 2018, when KG achieved a positive trade balance for the first time.

  • Allcountrylist: Overview of major industries in Kyrgyzstan, including mining, construction, transportation, tourism, and foreign trade.

While imports from the EU to KG reach stable values, exports from KG to the EU have a considerable fluctuating tendency. In 2020, in connection with the pandemic, there was a decrease in mutual trade compared to 2019, especially in KG imports to the EU. This tendency continued in 2021. The balance is again positive in favor of the EU. According to stat.kg, Great Britain is an important trading partner for the export of KG goods.

2017 2018 2019 2020 2021
Exports from the EU (million USD) 297.8 309.8 313.8 259.6 289.5
Imports into the EU (million USD) 246.3 758.9 898.9 50.2 47.5
Balance with the EU (million USD) 51.5 -449.1 -585.1 209.4 242.0

Source: stat.kg

Trade relations with the Czech Republic

The current volume of commercial and economic cooperation between the Czech Republic and Kyrgyzstan is low, at around 200 million CZK. The main obstacles include geographical distance, the weakness of the Kyrgyz economy associated with a lack of financial resources, a high degree of territorial risk, etc. In 2021, there was a substantial increase in mutual trade between the Czech Republic and KG, compared to the covid year 2020, telecommunication equipment is among the most exported items from the Czech Republic (about a third of the export value), medicines and live animals. Kyrgyzstan exports food products, mainly fruits and vegetables, meat and beverages.

2017 2018 2019 2020 2021
Exports from the Czech Republic (million CZK) 362.1 184.9 165.9 119.1 175.5
Import to the Czech Republic (million CZK) 15.8 52.6 17.3 18.8 29.3
Balance with the Czech Republic (million CZK) 346.3 132.3 148.6 100.3 146.2

Source: CZSO

Trade relations with countries outside the EU

Similar to the EU countries, the amount of imports from non-EU countries is stable beyond 2020. Exports from non-EU countries to KG traditionally significantly exceed imports from KG, which is reflected in the positive trade balance. The most important trading partners of KG in 2021 included Russia, China, Kazakhstan, Turkey, Uzbekistan and others.

2017 2018 2019 2020 2021
Exports from non-EU countries (million USD) 4,196.8 4,982.1 4,675.1 3,459.1 5,280.6
Imports to non-EU countries (million USD) 1,517.8 1,077.9 1,087.1 1,922.9 1,611.4
Balance with non-EU countries (million USD) 2,679 3,904.2 3,588.1 1,536.2 3,669.2

Source: stat.kg

Foreign direct investment

Kyrgyzstan is a country that depends on foreign investment. For this reason, the government is trying to attract the largest possible number of investors and create the most liberal investment environment for them. For this purpose, it has signed a number of agreements on the protection of investments, e.g. with Austria, Hungary, the Federal Republic of Germany or France. In order to improve law enforcement, Kyrgyzstan has applied for membership in the International Center for Settlement of Investment Disputes, ICSID. In this context, however, it should be mentioned that in the area of ​​OECD risk assessment, the country is placed in the worst, seventh category, and it is necessary to adjust your potential trade and investment plans accordingly. According to the Statistical Service of Kyrgyzstan, the total amount of direct foreign investments in 2021 reached USD 698.4 million. Investments were mostly directed to areas related to mining, processing industry, ICT and research. A third of foreign investment comes from China (23million USD). Other major investors include the Russian Federation, the Republic of Turkey, Great Britain, the Federal Republic of Germany and the Kingdom of the Netherlands.

From the point of view of direct investments, Czech companies are not very involved in Kyrgyzstan. Kyrgyz statistics state that by the end of 2021, direct investments from the Czech Republic reached a value of approx. 2thousand. USD. Larger investment units can only be afforded by a larger and stronger company due to the difficulty of lending by banks (higher investment risk).

FTAs and treaties

Treaties with the EU

EU-Kyrgyzstan cooperation develops on the basis of the Partnership and Cooperation Agreement (PCA), which was signed in 1995 and entered into force in 1999. As of December 2017, the negotiation of an extended PCA between the EU and Kyrgyzstan is underway. In December 2019, the strengthened agreement on partnership and cooperation was initialed, but it has not yet been signed and ratified.

Contracts with the Czech Republic

The bilateral contractual basis is formed by the following bilateral agreements: Protocol on cooperation between the Ministry of Foreign Affairs of the Czech Republic and the Ministry of Foreign Affairs of the Republic of Hungary (1995), Treaty between the Czech Republic and Kyrgyzstan on cooperation in the fight against organized crime, illegal handling of narcotics, terrorism and various dangerous types of crime (1998) and the Agreement between the Government of the Czech Republic and the Government of the Kyrgyz Republic on Air Services (2004), etc. On April 9, 2019, the Treaty on Avoidance of Double Taxation between the Czech Republic and Kyrgyzstan (effective from 30 November 2020) and the Cooperation Agreement between the Ministry of Industry and Trade of the Czech Republic were signed and the Ministry of Economy of KG (entry into force by signature on 9 April 2019, the same day the first meeting of the Working Group for Economic Cooperation was held).

Kyrgyzstan has been a member of the Eurasian Economic Union (EEU) since May 20, 2015. Among other things, the KG side negotiated the maintenance of preferential tariffs for the supply of Chinese equipment for several infrastructure projects in progress. Kyrgyzstan’s entry into the EEU resulted, among other things, in better access of selected agricultural goods from KG to the Customs Union market.

Developmental cooperation

The economy of Kyrgyzstan continues to depend on technical and development assistance from a wide range of donors, especially the UN, EU, OSCE, UNDP, USAID, IMF, World Bank. Bilaterally, it mainly cooperates with China, development cooperation is also developing with Turkey. EU support to Kyrgyzstan takes place, among other things, through the mechanism of action plans, development cooperation projects, which focus on three main areas: the rule of law, education and integrated rural development. For the period 2021-2027, digitization and a green and climate-resistant economy were newly added. In the period 2014-2020, the EU allocated EUR 174 million for development cooperation projects in Kyrgyzstan. Since 1991, approx. 500 projects for approx. 200 million euros have been financed by the EU in Kyrgyzstan. Export opportunities are opening up for Czech companies, especially in the field of rural development,

The Czech side provides development assistance to the Kyrgyz side through Czech financial resources in the EBRD, Czech Trust Fund in UNDP, B2B programs of the Czech Republic and also the program of the Ministry of Foreign Affairs of the Czech Republic for small local projects.

Prospective fields of study (MOP)

Prospective sectors for supply and investment in Kyrgyzstan include investment units (e.g. small hydropower plants), transport infrastructure and traffic management, green technologies (wastewater treatment, hot water heating, solar panels), small breweries, beer production technology and food technology as a whole. Other possibilities exist in tourism, in agriculture, residential construction is also promising, there are also possibilities in the realization of consumer goods. Limited interest is registered for possibilities in the area of ​​gas extraction and processing.

There are several joint Czech-Kyrgyz companies, especially in the field of RES, other Czech companies are continuously active in Kyrgyzstan. If Czech companies are involved in business in KG, they are sometimes companies with representation in Kazakhstan, from where they also cover their business activities in KG. The biggest problem for the promotion of Czech companies is export financing. According to experience from other countries, identifying development programs financed from abroad with the aim of participating in them, at least as a subcontractor, is proving to be the most promising way.

There are also a number of prominent Kyrgyz entrepreneurs operating in Kyrgyzstan, with whom it is possible to agree on mutually beneficial projects. On the KG side, the JIA association and the KG Chamber of Commerce are also interested in the development of bilateral economic cooperation.

Kyrgyzstan Trade