Investment Environment of the Agricultural Sector in Kyrgyz Republic

Kyrgyz Republic has implemented policies to transition the most liberal and democratic in Central Asia to achieve economic stabilization and restructuring. The country has a market-friendly trade regime, and no exchange controls. They joined the WTO in 1998. Government of Kyrgyzstan is actively working to improve the investment climate in the country. The last five years, investment arrays have been developed and implemented to increase private investment and promote economic growth. In addition, policies to limit inflation, reducing the budget deficit, and maintaining the stability of the real exchange rate has helped to improve the investment climate.

In recent years, inflation was running below 5 percent and som / dollar has remained stable, with some appreciation of the som against U.S. dollar in 2002 and 2003. The budget and current account deficits have improved since 2000. However, macroeconomic fundamentals remain an issue with important implications for the sustainability of future growth and capacity to reduce poverty Kyrgyzstan. These problems are caused by high levels of public spending and public debt, slow important elements of the program of economic reform in the banking sector and poor governance structure. There are also chronic problems of corruption, employment, and inefficiency in the public sector.

The inflow of FDI is important for Kyrgyzstan to achieve sustainable economic growth and improve their export potential. Although domestic savings rose 12 percent to 13 percent of GDP in 2002-2003, the amounts are not yet sufficient for the country. The country also has to limit the growth of external public debt by reducing the scale of the loans financed by the Public Investment Program and grants from international development organizations. And to attract more foreign direct investment necessary financial resources, technology, management, and linkages to export markets.

While the cumulative FDI to Kyrgyzstan were U.S. 453 million U.S. dollars from 1993 to 2001, FDI in 2003 and U.S. $ 2004 147 million and U.S. $ 175 600 000, respectively. With a new investment policy of the government of Kyrgyzstan, inward foreign direct investment shows trend. However, agriculture, processing industries, especially agricultural products still requires stable FDI inflows. While the domestic market for processed foods is low, Kyrgyzstan faces a more difficult competition for agricultural products and foodstuffs. Traditional export markets in the CIS countries are currently building new food import links with China and Europe. consumer expectations in these traditional markets have increased significantly since the 1980