10 Oct 2022 16:37

Russian companies interested in production localization in Kyrgyzstan, they will receive support - natn'l investment agency

OSH. Oct 10 (Interfax) - A host of Russian companies is interested in partial localization of their production in Kyrgyzstan, and national authorities are prepared to create the necessary conditions for this, head of Kyrgyzstan's National Investment Agency Umbriel Temiraliev said during the Russia-Kyrgyzstan Investment Forum.

The agency is currently in contact with both large and small Russian companies interested in partial localization of production or those thinking about entering the nation's market.

Kyrgyz authorities are proposing the option of Russian companies working in free economic zones or preferential territories. A public-private partnership mechanism is being proposed for implementation.

"Just yesterday we found out about the interest of one Russian company, which wants to partially transfer its enterprise here. They would like to launch assembly of transport equipment, including electric public transport. We are interested in attracting further investments from Russia and intend to do our best to develop and strengthen our relations," Temiraliev said.

At the same time, neither the Cabinet of Ministers, the nation's Economy and Commerce Ministry, nor the National Investment Agency itself identified the companies that have moved or are planning to move their production to Kyrgyzstan.

Russian business is ready to invest in Kyrgyzstan's transport and logistics infrastructure. Russian Deputy Prime Minister Alexei Overchuk said earlier.

Russia is currently one of the key investors in the Kyrgyz economy, with investments already amounting to $2 billion. In particular, digitalization in Kyrgyzstan's public sector is being implemented on the basis of Russian software and with participation of Russian specialists.

"And this is very important for us. We are ready to continue to offer solutions in the field of e-government, "smart" and safe cities, information security, and energy efficiency. Russian business is ready to invest in transport and logistics infrastructure," Overchuk said.

The issue of import substitution is currently very important, the deputy prime minister said. New trade relations and production chains are being built. In particular, new investment incentives are being created within the framework of the EAEU.

"One of the issues we are considering is subsidizing interest rates on loans to be used for implementation of projects providing a higher level of integration of our economies. Among other things, a digital service, the Import Substitution Exchange, has been launched in Russia today. The service allows for posting information about manufactured industrial products and concluding contracts for their delivery. This service is currently available to the relevant entities in all EAEU member states. Within the EAEU, we are beginning to draw up maps of joint projects, exchange information about ongoing or planned projects. All this will contribute to the consolidation and alignment of our countries' businesses," Overchuk said.

Russia remains Kyrgyzstan's leading trade partner, he said. The countries are actively boosting trade turnover, with a figure of $2.5 billion last year, the highest in eight years, and the trend continuing this year with growth of 40%. Turnover of food products was up 46% and imports of Russian oil to Kyrgyzstan have grown more than 1.5-fold. Turnover of chemical industry products was an increase of 42%. Overall, since the beginning of this year, the supply of Russian goods to the market of Kyrgyzstan was up 43%, and imports from Kyrgyzstan increased by 22%.

"This shows that our potential is far from being realized. In addition to our traditional exports of oil, gas, and metals, we have started supplying cars, including ambulances and fire-fighting vehicles, and medicines. In the last two years, Russian pharmaceutical companies have registered more than 50 drugs in Kyrgyzstan. As far as imports from Kyrgyzstan, we are boosting shipments of textiles, non-ferrous metals and agricultural products. In H1 2022, the supply of machinery and equipment to the Russian market increased by 85% compared to the same period last year," Overchuk said.

The network of banks that use Russian payment systems should be expanded, Overchuk also said.

Settlements in national currencies should be increased to avoid currency risks, he said. At the moment this indicator between Russia and Kyrgyzstan is rather modest: the share of settlements for exports to Kyrgyzstan in rubles is 47%, for imports to Russia - 67%.

"It is necessary to actively promote, develop, and expand the network of banks that use Russian payment systems - both the system for confirmation of financial messages [the System for Transfer of Financial Messages, SPFS] and the "Mir" card, which is accepted in Kyrgyzstan. This network should also be expanded," Overchuk said.