Kyrgyzstan

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

Kyrgyzstan

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

  • In light of the extreme oil price weakness into 2016, the macroeconomic and social stability outlook for Kazakhstan - the biggest oil exporter in Central Asia - has deteriorated even further, prompting us to take an even more bearish outlook on the country's growth prospects. Nevertheless, the possibility of economic and/or banking sector collapse remains limited due to the strong sovereign risk profile.

  • While the Kyrgyz som has been stable in recent trading against the US dollar, we expect the currency to depreciate significantly in 2016. The National Bank of Kyrgyzstan, which has propped up the som through heavy FX intervention, will discontinue this policy due to limited FX reserves. As a result, mounting depreciatory forces in the form of lower remittances from Russia and reduced gold exports will come to the fore, significantly weakening the som....

Kyrgyzstan Operational Risk Coverage (9)

Kyrgyzstan Operational Risk

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BMI View: Kyrgyzstan's growth is inhibited by an underperforming logistics sector and small market size, presenting considerable risks for investors. While utilities costs are particularly attractive and drive down overheads, the lack of reliability in the country's utilities sector means that while costs are low, power, fuel and water supplies are unreliable and cause disruption to business operations. Additional risks include poor domestic transport infrastructure, high costs and complications involved in trading internationally, and low international connectivity. Overall, Kyrgyzstan receives a score of 32.3 out of 100 for its Logistics Risk, placing it second from last out of 31 countries in the region.

Kyrgyzstan...

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...

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...

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...

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...

Kyrgyzstan Industry Coverage (3)

Defence & Security

Kyrgyzstan Defence & Security

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BMI View: Kazakhstan's determination to develop a solid domestic defence manufacturing base has been exemplified in its strong push to setting up numerous joint ventures and partnerships with key foreign industry players as well as its efforts to organise its own international exhibition of weapons and military equipment - KADEX. With a somewhat unstable regional environment, Kazakhstan will see to its defence expenditure being increased over our forecast period in an effort to be ready to combat any potential breaches in security. However, BMI believes that if it is to truly excel in this field and achieve its goal of creating a strong...

Power

Kyrgyzstan Power

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BMI View: Turkmenistan and Uzbekistan will rely on gas-fired power generation during our 10-year forecast period, as a result of large domestic gas supplies coupled with few export commitments. Tajikistan and Kyrgyzstan, on the other hand, will suffer from power generation shortfalls, due to headwinds preventing diversification away from unreliable hydropower. The deteriorating macroeconomic backdrop - with China slowing down and Russia experiencing poor economic performance and commodity prices falling - underscores our muted view for the region this quarter.

Latest Updates And Structural Trends

  • The devaluation of the Kazakh tenge puts pressure on the currencies of Kyrgyzstan, Tajikistan, Turkmenistan...

Telecommunications

Kyrgyzstan Telecommunications

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BMI View: We maintain a cautiously optimistic outlook for the Central Asian telecommunications market as a whole. There are some growth opportunities in the region, particularly with regard to 3G and 4G technology Uptake. Nevertheless, state interference and political risk remains the most important risk of doing business in the Central Asian region. This was again amplified as government involvement became a key theme over the course of 2015. In Turkmenistan, a new state-owned company was created to spur competition, in Kyrgyzstan, state-owned Kyrgyz Mobile Company was sold to state-owned MegaCom and in Uzbekistan, state-owned Uzmobile launched a GSM network to better...

Latest Kyrgyzstan Articles

  • We have revised down our CME milk price forecast for 2016 and now see price...

  • We believe that there is currently disconnect between oil prices and fundam...

  • Price-elastic consumption growth and more limited growth in supply will mai...

Latest Kyrgyzstan Blogs

  • China's ambitious plan to build connections with Europe and the Middle East...

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