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

  • The Kazakh economy is past the worst, with a rebound in oil prices offering support for the tenge, mitigating inflationary pressures, and allowing for monetary policy easing in the coming months. Strong sovereign position will prevent a collapse of the banking system.

  • Kyrgyzstan's economy will struggle to recover in the coming quarters despite the gradual rebound in commodity prices and rebounding Russian growth. Nevertheless, regulatory and political uncertainty, subdued remittances from Russia, and weak external demand will keep a lid on the country's recovery.

  • Economic conditions in Tajikistan will continue to deteriorate despite a gradual rebound in commodity prices in the coming quarters. While a credit line arrangement with the International Monetary Fund will help the country avoid a balance of payments...

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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BMI View: Kyrgyzstan offers an extremely inhospitable crime and security environment for businesses. While there are few specialist risks for foreigners or foreign businesses, the overall risks of insecurity, crime and violence affect every organisation operating in the country. In particular, the country's issues with governance and accountability have led to public unrest, high crime rates and the dominance of organised criminal influences. As a result, Kyrgyzstan receives the lowest score for Crime and Security Risks in the Emerging Europe region, with 30.8 out of 100.

Poor Security Environment Deters Investment
Kyrgyzstan & Emerging Europe Regional Average - Crime & Security Risk Scores
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Kyrgyzstan Labour Market

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BMI View: Businesses operating in Kyrgyzstan face considerable labour risks mainly due to the country's poor education standards, resulting in a shortage of skilled labour and costly processes regarding importing labour. Despite a relatively large young workforce with high levels of female participation, the skilled and urban pool is limited. Importing foreign workers requires a lengthy and tedious visa application process, increasing costs for businesses. Kyrgyzstan is placed 10th out of 31 countries in the Emerging Europe region with a score of 58.9 out of 100, between Armenia and Serbia.

Low Labour Costs Boost Regional Performance
Kyrgyzstan & Regional...

Kyrgyzstan Logistics

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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 41.0 out of 100 for its Logistics Risk, placing it third from the bottom out of 31 countries in the region.

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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...

Kyrgyzstan Industry Coverage (4)

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: Gas-fired power will remain the dominant source of power in Uzbekistan over our 10-year forecast period through to 2025, as robust gas production and limited gas export opportunities weaken the government resolve to diversify the Uzbek power mix. The aim to privatise certain power assets to raise cash and spur investment, amid the country's economic malaise, will register limited success due to structural challenges muting investor interest for such assets.

Latest Updates And Structural Trends

  • Uzbekistan is currently attempting to undertake a privatisation of its power sector - whereby 10 construction firms operating under the umbrella of Uzbekenergo are to sell off 15% or more of their shares to foreign investors. We do not investor interest to be robust for power sector assets, as a result of a...

Kyrgyzstan Power

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BMI View: An ageing electricity grid network and lack of new capacity coming online means Kyrgyzstan's power sector will remain vulnerable to cuts and losses over our 10-year forecast period. Hydropower will remain the dominant source of power generation owing to continued focus on increasing hydropower capacity. Lack of diversification and insufficient funding for planned hydropower projects means power generation growth will remain stagnant up until 2025.

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Headline Power Forecasts (Kyrgyzstan 2015 - 2021)
2015e 2016f 2017f

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

Latest Kyrgyzstan Blogs

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

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