RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/170 
4 September 2006  
 
(06-4121) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
KYRGYZ REPUBLIC 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by the Kyrgyz Republic is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on the Kyrgyz Republic.  Kyrgyz Republic WT/TPR/G/170 
 Page 3 
 
 
CONTENTS 
 
  Page 
I. INTRODUCTION 5 
II. ECONOMIC ENVIRONMENT 5 
 (a) Economic Developments for 1998-2005 5 
 (b) Current Economic Situation (2006) 9 
 (c) Trade and Investments 10 
III. ECONOMIC REFORMS OUTCOMES 14 
 (a) Monetary and Exchange Policy 14  (b) Fiscal Policy 15 
 (c) Taxation  16 
 (d) Industrial Policy 17 
 (e) Reforms in Agriculture and Forestry 18 
 (f) Energy  21 
 (g) Privatization 22 
 (h) Restructuring in Public Service and Good Governance 23 
IV. TRADE AND TRADE-RELATED POLICIES 23 
 (a) Trade Policy 23  (b) Customs and Tariff Regulation 24 
 (c) Non-Tariff Regulation 25  (d) Customs Procedures 29 
 (e) Technical Regulation 29 
 (f) Investment Policy 32  (g) Intellectual Property Protection 34 
 (h) Agriculture 36 
 (i) Competition Development Policy 38  (j) Government Procurement 38 
 (k) Banking Policy 39 
 (l) Non-Bank Financial Sector 40  (m) Transport 42 
 (n) Telecommunications 43 
 (o) Tourism  45 
 (p) Regional Trade Agreements 46 
 (q) Doha Round Participation 48 
V. ECONOMIC DEVELOPMENT AND TRADE PERSPECTIVES 50 
 (a) Middle-term Economic Forecast 50  (b) Future Trade Policy Directions 52 
 Kyrgyz Republic WT/TPR/G/170 
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I. INTRODUCTION 
1. This is the first report of the Government of  the Kyrgyz Republic on review of trade policy 
since its accession to the WTO in 1998. The main obj ectives of the report are to draw the attention of 
the WTO Members to the major results achieved by the Kyrgyz Republic since the accession and 
provide the information about policies and national re forms in foreign trade area.  The report includes 
economic and trade situation of the country, achievements in the trade policy since 1998, and future national policy directions and priorities. 
2. Since the accession to the WTO the Kyrgyz Repu blic has been successfully dealing with 
implementation of economic reforms, which are the necessary basis for the flexible reorientation of 
the economy to the use of new foreign opportunities,  as defined by the world trade developments.  
3. Regardless of the fact that specific constraint s related to the political events which took place 
in March of 2005 and resulting economic challenges existed, the Kyrgyz Republic continues to 
perform the liberal trade policy in order to cr eate conditions for fair competition and secure a 
favorable climate for investments’ attraction.  Th e world experience shows that trade liberalization 
has a positive effect on economies.  
II. ECONOMIC ENVIRONMENT  
(a) Economic Developments for 1998-2005  
4. Macroeconomic situation for the period under review has been mainly stable.  Since 1998, the 
structural reforms were undertaken in the Republ ic aimed at the recovery and reorganization of 
industrial and agricultural sectors, small and medi um business support and development, investments 
attraction, positive changes in the social area,  etc.  The reforms allowed for preserving the 
macroeconomic stability and ensuri ng sustainable economic growth.  
5. As a result, average annual GDP growth made up 3.7%.  The most problematic year over this 
period was 2002
, with the substantial slow down of econom ic growth because of severe accident at 
“Kumtor” gold deposit and 2005  (GDP decline by 0.6%) because of  the political situation in the 
country.  
6. Moreover, the gold mining sector impact on ec onomic development shoul d be marked (about 
8% of GDP) during the period under review.  The annual average GDP growth was 4% without gold 
mining sector.  The economic growth was achieved du e to agrarian and services sectors (share in GDP 
profile is nearly 70%).  
7. Improved confidence in national currency (stability of exchange rate), restraining the growth 
of monetary base, and moderate growth of consumer  prices, contributed to decrease of the inflation 
level from 16.8% in 1998 to 4.9% in 2005.  
8. Structural actions in monetary regulation made  it possible to stabilize exchange rate of Som 
and ensure convertibility of the national currency.  In 1998, it was impossible to keep the national 
exchange rate because of the Russian crisis. Thus the national currency has been sharply devaluated 
with respect to US dollar from 20.77 Som/dollar in 1998 to 48.44 Som/dollar in 2001.  
9. The national currency of the Kyrgyz Republic has been strengthened regarding US dollar 
since 2001.  For 2001-2005 the Kyrgyz national currency (Som) has strengthened by 18%. By the end of 2005 the exchange rate was 41.01 Som/dollar.  WT/TPR/G/170 Trade Policy Review 
Page 6 
 
 
10. The state budget revenues for 1998-2005 increased from 18% GDP in 1998 to 20.3% in 2005; 
in nominal value the increase equaled 14 billion Som or 3.2 times (from 6.3 billion Som in 1998 to 
20.3 billion Som in 2005).  
11. Increase in resources inflow allowed for conduc ting active expenditures policy with the focus 
on key problems in social protection, health care, and education.  During the last eight years for the 
purpose of budget stabilization and deficit decrease th e Government of the KR has been pursuing the 
policy of limited attraction of investments under its guarantee.  
12. Budget deficit decreased from 9.5% in 1998 to 4.4% in 2005.  
13. The total expenditures volume for investment pr ojects under the Public Investment Program 
(PIP) has reduced with respect to GDP from 8.4% in  1999 to 3.2% in 2005.  As a result of fulfillment 
of investment policy actions aimed at creation of mo re favorable investment climate and attraction of 
private investments into the economy, the count ry succeeded in compensating the decrease of 
investments volume secured by the KR Government.  Since September 2001, active measures to create a favorable investment climate have been undertaken, notably, Investment Matrices have been 
developed and introduced.
1 
14. The deficit of current accounts of balance-of-payments has been reducing from 22.1% of 
GDP to 1.6% of GDP accordingly, for the period 1998-2001.  However, since 2002 the reverse trend 
has been taking place and the deficit was 7.8% GDP in  2005.  The growth of deficit is explained by 
sharp growth of trade deficit due to increase in e xpenditures for imported fuel (international oil price 
increase) and fall of gold export.  However, the gro ss official international reserves made up over 600 
million US dollars by the end of 2005, thus covering 4. 6 months of import of trade and services 
against 2.1 months of import in 1998 owing to increase in capital inflow, involving the IMF assistance.  Balance-of-payments has changed fro m negative (-24.0 million USD in 1998) to positive 
value (48.8 million USD in 2005) (See table 2).  
15. Foreign trade turnover of the Kyrgyz Republic rose from 1075.7 million USD in 1998 to 
1862.7 million USD in 2005.  The increase was due to exports growth (average growth rate for the 
period was 4.7%), and imports growth (average growth rate - 6.4%).  
16. Successful reforms and formation of the land  market, development of market crediting 
institutions and consultanc y network, introduction of new technolog ies, better water supply for arable 
lands, and the government support rendered in the form of commodity credits for agricultural 
machinery, have conditioned the agricultural sector  growth over the recent years, with the annual 
average 3.4% growth.  
17. Due to successful reforming and expansion of ma rket services, development of trade and paid 
services, having domestic demand, the growth in services sector was 5.8% annually.  
18. The manufacturing share in GDP for 1998-2005 has been kept at the 16% level.  In 2000-
2001 only the manufacturing share has substantially  increased up to 25-23% because of raise in 
production output at light, wood processing, and machine building factories.  The average 
manufacturing growth for the period was 1.1%.  The main problem and risk for development of 
                                                     
 
1 Investment Matrices are short-term action plans of the Government aimed at improving the 
investment climate.  The Investment Matrices facilitated id entification of constraints and barriers to investments.  
Five (5) Investment Matrices were implemented, covering  the major areas, such as (a) deregulation of economy 
and incentives for investments; (b) strengthening the financial sector; (c) creation of favorable customs and 
taxation treatment; (d) creation of stable and fair  legal framework; (e) efficient trade policy. Kyrgyz Republic WT/TPR/G/170 
 Page 7 
 
 
manufacturing production of the Republic is high  concentration of actual industries and extreme 
dependence on the operation of certain base ente rprises (energy and gold mining industries).  
19. Annual average growth rate of gross constr uction products for 1998-2005 was 1.3%; the 
average share of the sector in GDP was 3.3% over th e period.  For the last eight years construction 
works have been mainly carried out at electri c power, transportation and communications, trade, 
agriculture, and housing building. 
20. In general, a number of employed popula tion increased by 11% over the period reviewed 
(from 1705 thousand to 1894 thousand people).  The shar e of employed population is nearly 37% of 
the total population of the Republic.  The major economic sectors employing the greatest number of 
the population are services and agriculture (about 90% of total employed population).  Unemployment 
level is still increasing. It increased by 3.8% a nd amounted to 9.7% in 2005 according to expert 
evaluation.  
Table No. 1 
Specific Macroeconomic Indicators for 1998–2005  
 1998 1999 2000 2001 2002 2003 2004 2005 
GDP growth rate (in percentage to 
previous year)  102.1 103.7 105.4 105.3 100.0 107.0 107.0 99.4 
Consumer Prices Index (CPI) (in 
percentage to December of the previous year) 116.8 139.9 109.6 103.7 102.3 105.6 102.8 104.9 
Number of employed in economy, 
thousand people (data of labor 
resources balance) 1,704.9 1,764.3 1,768.4 1,787.0 1,807.1 1,837.0 1,879.9 1,934.4 
Source:  National Statistic Committee of the Kyrgyz Republic. 
Table No. 2 
Balance of Payments of the Kyrgyz Republic 
(mln.US dollars) 
  1998 1999 2000 2001 2002 2003 2004 2005a 
Current account -363.9 - 184.2 -77.5 -24. 1 -49.4 -80.6 -75.1 -190.9 
Goods and services -333.5 -178.2 -82.9 -15.1 -80.5 -129.9 -193.4 -472.6 
Trade balance -220.7 -88.6 4.0 30.5 -74.0 -133.4 -171.2 -428.3 
Exports (FOB) 535.1 462.6 510.9 480.3 498.1 590.3 733.2 686.6 
FSU states 252.0 191.5 213.7 172.2 170.3 202.4 277.6 304.6 
Non-FSU states 283.1 271.0 297.2 308.0 327.7 387.9 455.5 381.9 
Gold 195.8 183.1 195.3 224.6 162.8 259.6 287.4 230.7 
Imports (FOB) 755.7 551.1 506.9 449.8 572.0 723.7 904.4 1,114.9 
FSU states 391.7 248.7 279.7 250.1 311.7 394.5 554.4 642.3 
Non-FSU States 364.1 302.4 227.2 199.7 260.3 329.3 349.9 472.6 
Services -112.8 -89.7 -86.9 -45.6 -6.5 3.5 -22.2 -44.4 
Transportation -69.1 -52.7 -47.6 -27.0 -16.1 -7.7 -36.0 -56.0 
Travels 4.9 3.4 -0.4 12.5 25.8 31.2 25.3 15.9 
Others (excl.TA) -1.4 2.2 3.8 4.9 26.2 24.5 29.1 33.0 
Technical assistance (TA) -19.8 -18.5 -20.4 -22.4 -22.1 -24.8 -22.3 -28.9 
Income -79.2 -74.0 -82.0 -60.0 -57.4 -62.4 -90.2 -80.5 
Income on direct investment -8.3 -4.8 -37.2 -25.6 -19.7 -26.7 -57.3 -35.9 
Table No. 2 (cont'd) WT/TPR/G/170 Trade Policy Review 
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  1998 1999 2000 2001 2002 2003 2004 2005a 
Income on portfolio 
investments -2.1 -0.4 0.0 -0.1 0.3 0.3 0.1 0.0 
Income on other investments -54.0 -57.3 -34.4 -24.0 -26.4 -22.7 -28.4 -35.6 
Interest payments 
(scheduled) -65.7 -67.3 -51.2 -35.6 -31.9 -27.1 -36.8 -41.1 
Other income on other 
investments 11.7 10.0 16.8 11.6 5.5 4.5 8.4 5.5 
Compensation of employees -14.7 -11.5 -10.3 -10.3 -11.6 -13.3 -4.6 -9.0 
Current transfers 48.7 68.0 87.4 51.0 88.4 111.7 208.5 362.2 
Official 47.1 67.3 45.5 31.6 29.9 17.0 23.7 27.5 
Private 1.6 0.7 41.9 19.5 58.5 94.6 184.8 334.7 
Capital And Financial 
Account 276.3 205.4 58.7 7.4 80.0 -19.6 120.4 118.9 
Capital account -8.1 -15.2 -11.4 -32.0 -7.9 -0.9 -19.9 -6.1 
Capital transfers -8.1 -15.2 -11.4 -32.0 -7.9 -0.9 -19.9 -6.1 
Financial account 284.4 220.6 70.1 39.4 87.9 -18.7 140.3 125.0 
Direct investments 86.6 38.4 -6.9 -1.1 4.7 45.5 131.4 60.1 
Portfolio investments -4.3 -0.1 -1.3 1.2 -12.0 6.0 -2.5 -14.5 
Financial derivatives 30.6 26.4 25.8 17.6 -5.1 -20.0 -20.5 0.5 
Other investments 171.5 156.0 52.5 21.7 100.4 -50.2 31.8 78.9 
Assets (- increase) -84.1 -0.7 -27.3 -4.0 21.5 -78.7 -29.6 -40.5 
Commercial banks 9.6 -1.4 -1.6 -16.5 -42.3 -50.2 -49.4 -20.1 
Other assets -2.4 0.7 8.5 0.2 24.2 -2.0 0.0 18.7 
Liabilities (+ increase) 255.6 156. 7 79.8 25.7 78.9 28.5 61.4 119.4 
Commercial banks 1.0 -2.8 -0.3 3.9 32.7 36.6 25.8 68.4 
Currency and deposits 1.0 0.4 -1.0 1.0 26.0 41.5 23.5 22.7 
Loans 105.6 133.3 41.2 18.6 35.6 -16.1 43.1 29.4 
General government 129.6 176.8 92.9 66.9 50.5 33.3 50.7 7.6 
Disbursement 149.7 188.1 127.4 110.2 87.8 74.9 95.0 58.5 
Amortization 
(scheduled) -20.1 -11.2 -34.5 -43.4 -37.3 -41.6 -44.3 -50.9 
Private sectors -24.0 -43.5 -51.8 -48.2 -14.9 -49.4 -7.6 21.8 
Disbursement 8.8 8.6 3.1 7.9 3.6 13.0 15.0 30.0 
Amortization 
(scheduled) -32.8 -52.1 -54.9 -56.2 -18.5 -62.4 -22.7 -8.2 
Other liabilities  0.0 13.0 2. 5 -2.1 -2.0 -1.7 -2.1 
Errors & Omissions 63.6 -3.1 3.0 20.0 -1.5 108.3 71.0 120.8 
Overall balance -24.0 18.1 -15.8 3.3 29.1 8.1 116.3 48.9 
Financing 24.0 -18.1 15.8 -3.3 -29.1 -8.1 -116.3 -48.9 
Memo items:          
Reserves by months of import  
under IMF methodology  2.1 3.4 4.3 3.9 4.0 3.8 4.6 4.6 
GDP (mln. USD) 1,633.8 1,225.6 1,367.2 1,530.6 1,614.2 1,922.2 2,211.9 2,441.8 
CA Deficit/GDP  -22.3% -15.0% -5.7% -1.6% -3.1% -4.2% -3.4% -7.8% 
a Preliminary data. 
Source:  National Bank of the KR  Kyrgyz Republic WT/TPR/G/170 
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(b) Current Economic Situation (2006) 
21. The overall social and economic policy objective of  the KR Government for 2006 is to create 
favorable conditions for sustainable economic gr owth and poverty reduction by maintaining the 
macroeconomic stability, improvement of quality of public administration and fight against 
corruption.  
22. The macroeconomic policy in 2006 shall be targeted to 5% growth of actual GDP and 
preserving the inflation level at no more than 5.7%.  
23. The inflation dynamics in 2006 shall be determin ed by the raising aggregate demand, changes 
in foreign economic environment, fiscal reform, a nd tariff policy of natural monopolies, changes in 
prices for fuel and oil, and seasonal fluctu ation of prices for agricultural products.  
24. During this year, the policy of floating excha nge rate shall be preserved.  The US dollar 
exchange rate is expected to reach 42 Som/US dolla rs.  The international reserves will be maintained 
at the level equal to 4.4 months of import of goods and services.  
25. Services and agrarian sectors in GDP profile shall dominate as before, at 41% and 30.5% of 
share accordingly.  The manufacturing share is not expected to change (16%).  
26. In 2006, 0.4% growth is forecasted in the ma nufacturing sector due to increase in energy, 
food processing, machine building, textile and sewing industries output.  The major obstacle for the higher growth will be decrease in gold production by 8.4%.  
27. The growth rate of gross agricultural output w ill be 4.5% in 2006.  For this purpose, it is 
planned to increase plant cultivation output (by 6. 8%).  Gross animal breeding output shall also 
increase by 1.7%.  
28. In 2006, the actual growth of gross output in service s sector is expected to be at 6.5% level, 
mainly due to the growth of market services, including trade.  
29. In 2006, the total volume of capital investments is forecasted to reach over 13 billion Som.  A 
significant growth of capital investments shall take place due to the increase of foreign direct 
investments, residential building, grant assistan ce, and additional domestic budget resources.  As a 
result, the actual growth of gross construction output is anticipated to be 15%. 
30. With regard to consumption, the GDP share will decrease from 98% in 2005 to 96% in 2006.  
The increase in private consumption (real growth 4.2%) shall be supported by real growth of the 
population cash income.  Although the share the public consumption will decrease from 19.5% in 2005 to 18.8% in 2006, 1%-growth is anticipated due to rise in wages, increase in pension payments, 
and allocation of funds for implemen tation of the housing program.  
31. The share of gross investments to GDP in 2006 will rise from 22% in 2005 to 22.6% in 2006, 
basically due to private investments.  
32. Net export in 2006 will go down and make up (-18.7% ) to the GDP, due to imports growth by 
7.8%.  
33. High deficit of the current balance-of-payments account at 5.3% to GDP is anticipated 
because of further increase in deficit of trade balance up to 437. 4 million US dollars, notwithstanding 
the moderate growth of current transfers by 16.5%. WT/TPR/G/170 Trade Policy Review 
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34. In January-June c.a. the trend of economic gr owth based on preservation of macroeconomic 
stability has been marked.  Despite that the output  of gold mining enterprises has decreased, the GDP 
growth was 3.1%.  The economic growth excludi ng gold production on ““Kumtor”  is 6.5%.  
35. Foreign trade turnover in goods in January – May 2006 was 893.5 million US dollars; that is 
the increase by 30% in comparison with the relevant  period of 2005.  Exports went up by 9.7% and 
equaled 301.2 million US dollars; imports went up by 43.5% and amounted to 592.3 million US 
dollars.  The trade balance was negative (defic it), amounted to -291.1 million US dollars.  
36. In January-June c.a. the inflation level was 4.1% , which is mainly caused by price increase for 
fuel, sugar, fruit and vegetables, etc.  
(c) Trade and Investments  
(1)  Foreign Trade Development 
37. Since recently, a number of countries having trade-economic relations with the Kyrgyz 
Republic have been increasing.  Today, the Kyrg yz Republic has trade-economic relations with 105 
countries of the world trade community (as of 2005); comparing with only 90 countries in 1998. 
38. Geographic expansion of foreign trade relations of Kyrgyzstan for the last years was 
facilitated by the WTO membership.  CIS countries o ccupy 55.4% of trade turnover of the Kyrgyz 
Republic, while foreign countries’ share is 44.6% ; of them WTO member-countries compose 43.2% 
share, including export – 52.3% and import – 37.6% (2005).  Upon accession to the WTO (1998) the share of WTO member-countries in total trade turnover of the Kyrgyz Republic made up 30%, only 12.3% in export and 40.5% in import.  
39. The growth of foreign trade turnover over th e period is observed (Figure No. 1); stable 
growth takes place since 2002.  In 2005, foreign trade turnover equaled 1773.3  million US dollars and 
increased by 418.1 million USD in comparison with 1998 (by 30%).  Foreign trade turnover growth 
was due to exports and imports increase.  Expor t volume amounted to 672.0 million US dollars in 
2005 and increased by 158.3 million US dollars or 30 % comparing with 1998.  However, export has 
decreased from 6.5% or 46.8 million USD in comparis on with 2004.  In 2004, the highest export level 
was reached: 718.3 million US dollars.  Import volum e equaled 1101.3 million US  dollars in 2005 and 
increased by 259.8 million US dollars or 30 % comparing to 1998. 
40. Principal trading partners of the Kyrgyz Repub lic are Russia (28.8% share in total trade 
turnover of the KR), Kazakhstan (16.7%), United Ar ab Emirates (10%), China (7.3%), Uzbekistan 
(4.3%), USA (4%), Switzerland (3.9%), Turkey  (2.9%), Ukraine (2.6%), Germany (2.3%).
2 
41. Foreign trade turnover with foreign countries increased from 683.9 million USD in 1998 to 
790.4 million USD in 2005.  Export of goods to foreign countries rose by 30% for the last five years and amounted to 368.7 million USD in 2005, that is  by 85.6 million USD more (1998 – 283.1 million 
USD).  Import of goods from foreign countries amount ed to 421.7 million USD in 2005 and increased 
by 5% comparing to 1998, or by 20.9 million USD. 
 
                                                     
 
2 Data as of 2005. Kyrgyz Republic WT/TPR/G/170 
 Page 11 
 
 
1,355.21,298.7
841.51,773.3
1,659.3
1,058.6 1,053.61,072.2943.3
672.0718.3
581.7485.5
467.2504.5
453.8513.71,101.3
941.0
717.0
586.7
476.1554.1599.8
02004006008001,0001,2001,4001,6001,8002,000
1998 1999 2000 2001 2002 2003 2004 2005Trade turnover
Export
ImportFigure No. 1.
Dynamics of Foreign Trade Developmen t in the Kyrgyz Republic for 1998-2005
Source :   National Statistics Committee of the KR.Years(mln USD)
 
 
42. Foreign trade turnover with CIS countries for 1998-2005 increased by 46% and amounted to 
982.9 million USD (1998: 671.2 million USD); the increase is mainly due to export and import 
growth.  Export of goods to CIS countries rose from 230.5 million USD in 1998 to 303.3 million USD 
in 2005 or by 31%.  Imports from CIS countries e qualed 679.6 million USD in 2005; that is by 54% 
or 238.9 million USD more than in 1998. 
43. In 2001, the positive trade balance was marked , amounted to +8.9 million USD; it happened 
for the second time during 11 years (first positive tr ade balance was in 1994: +23.1 million USD).  
The largest deficit of trade balance over the pe riod was in 2005; it amounted to -429.3 million USD 
and increased by 1.3 times in comparison with 1998 (-327.9 million USD).  Worsening of the balance was resulted from the demand of manufacturing enterprises in imported raw materials, materials and 
components for production, including export products.  
44. The excess of import over export shall be ke pt in future, as manufacturing demand for 
imported raw materials, materials and components fo r export production is still sufficient.  The main 
imports for manufacturing purposes are petroleum produc ts, natural gas, coal, electric machinery and 
equipment, ferrous metals and articles of them, chem icals, plastic and articles of it, rubber and articles 
of it, overland vehicles, dyes and paints, etc.  The share of materials and raw materials in total import 
volume is 68-70%.  It should be marked that the negative balance at the given economic development 
stage is a natural process.  In future, in the pr ocess of manufacturing development the decrease of the 
negative trade balance should become one of the priorities of economic development.  
45. Kyrgyzstan exports to over 72 countries.
3  Main export items are precious metals (35% of 
total export volume); mineral, fuel and energy resources (12.5%), including electric power (3.1%); 
light industry goods (12%), including cotton fibe r (6.2%); clothes of knitted and textile fabrics 
(3.4%), wool (0.4%); foodstuffs and agricultura l raw materials (11.5%), including fruits and 
                                                      
3 Data as of 2005. WT/TPR/G/170 Trade Policy Review 
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vegetables (2.6%), milk and articles of it, (2.4%) , white sugar (1.7%), tobacco (1.7%), canned fruits 
and vegetables (0.3%), tea (0.2%); building material s (8.8%), including glass (4.9%), cement (1.9%), 
slate (1.4%), brick, ceramic tiles (0.3%); machinery,  electric equipment, mechanical devices and parts 
thereof (4.8%), including electric filament bulbs (2.3%), drilling machines and parts thereof (0.5%), 
centrifuges (0.1%), engines (0.1%); chemicals (5%) , including plastic articles (packaging) (2.1%), 
articles of inorganic chemistry (1.5%), mercury (0.6 %); scrap of ferrous and non-ferrous metals and 
articles of it (3.5%), overland vehicles and parts thereof (2.5%), leather raw materials and articles of it (1.8%); different finished goods (optical tools, photo and measuring devices, furniture, watches, 
articles of art) (5.1%).  
46. Imports into the Kyrgyz Republic are from 100 world trade community countries.
4. Main 
import items are mineral and fuel and energy resources (30.3% of total import volume), including petroleum products (23.4%), natural gas (2.7%), coal (1.7%), salt, lim estone (1.6%); chemicals 
(17%), including pharmaceuticals (4.9%), plastic ar ticles (3.4%), perfumery and cosmetics, soap and 
detergents, and dyes (2.7%); organic and inorganic chemicals and other chemic als (silicon, hydrate of 
sodium, carbonate dinatrium, sodium cyanide) (2 .5%); rubber and articles of it (2.0%), fertilizers 
(1.1%); foodstuffs and agricultural raw materials (15%), including wheat and wheat floor (2.4%), 
sugar (2.1%), tobacco and tobacco articles (1.9%) , confectionery articles and cocoa (1.4%), beer 
(1.1%), fresh and canned vegetables and fruits (1.1%) , alcohol and non-alcoholic drinks (0.8%), tea 
(0,3%); cars, electric equipment, mechanical devices and parts thereof (14.1%); ferrous, non-ferrous metals and article of it (6.0%), wood and cellulo se and paper articles (4.1%), including paper, 
cardboard, and printing articles  (2.1%), timber a nd articles of wood (1.9%), light industry goods 
(3.8%), including synthetic fabric (1.4%), knitte d and textile clothes (0.8%), footwear (0.4%); 
overland vehicles and its parts (3.5%); finished ar ticles, optical devices, photo and measuring devices, 
furniture, watches, articles of art (2.7%). 
(2)  Foreign Trade in Services  
47. For the period of the WTO membership, the ch anges in foreign trade in services took place; 
the negative balance decreased from -117.58 milli on USD in 1998 to -49.6 million USD in 2005.  In 
2003, the balance of international services was positi ve and amounted to 3.5 million USD.  Growth in 
export of services is marked annually since 2001 (see Figure No. 2).  Since 1998, the export of services increased by 4 times in 2005 and amounted to 255.5 million USD.   Prevalent portion of 
export of services has “trips” and “transport services” items.   
48. Import of services increased by 69% from 1998 and amounted to 305 million USD in 2005.  
The main items of import of services are “transport services”, “trips”, “business services”, “insurance 
services”.  
(3)  Attraction of Foreign Direct Investments  
49. During the last 5 years, the FDI volume has been annually increasing and amounted to 210.3 
million USD in 2005 (see Figure No. 3).  In comparis on with 1998, the FDI volume increased by 1.5 
times in 2005.  According to data of 2005, the major investor-countries are Kazakhstan (40.3 million 
USD), Germany (36.5 million USD), Great Britai n (29.5 million USD), Canada (26.1 million USD), 
Turkey (16.1 million USD), USA (11.7 million USD), Cyprus (10.5 million USD), Russia (8.1 million USD), Portugal (7.6 million USD), and Australia (4.9 million USD).  
 
                                                     
 
4 Data as of 2005. Kyrgyz Republic WT/TPR/G/170 
 Page 13 
 
 
 
255.5
208.9
154.7
61.82 64.95 62.82142
78.86305
231.1
151.3 148.8154.3180.4
151.2
124.97
050100150200250300350
1998 1999 2000 2001 2002 2003 2004 2005
Export
ImportFigure No. 2.
Development of Foreign Trade in Services  of the Kyrgyz Republic for 1998-2005
Source :   National Statistics Committee.Years(million US dollars)
 
 
108.6
89.6 90.1115.7146.9175.5210.3
136.3
050100150200250
1 9 9 81 9 9 92 0 0 02 0 0 12 0 0 22 0 0 32 0 0 42 0 0 5Figure No. 3.
Foreign Direct Investment into the Kyrgyz Republic
Source :   National Statistics Committee.Years(mln. US dollars)
 
 
 50. Dominating economic sectors for investing are processing industry, financial activity, mining 
industry, trade, repair of cars, household appliances, and articles fo r personal use, and construction. 
The share of these sectors is 95-99% in foreign direct investments inflow (see Table No. 3). WT/TPR/G/170 Trade Policy Review 
Page 14 
 
 
Table No. 3  
Inflow of Foreign Direct Investments by Activitya 
(thousand US dollars) 
 1998 1999 2000 2001 2002 2003 2004 2005 
Total 136,301.2 108,562.1 89,607.9 90,088.5 115,666.1 146,955.5 175,585.4 210,306.2 
Agriculture, hunting and 
forestry  299.9 620.3 40.8 130.1 805.3 2,009.9 9,752.7 763.4 
Mining industry  1,627.8 4,005.1 4,607.6 4,320.7 5,058.2 12,285.4 9,952.2 24,309.6 
Processing industry  27,873.9 55,732.4 44,026.0 50,897.4 52,802.4 73,164.4 92,972.8 94,799.6 
Electric power generation 
and distribution  68.5 0.1   31.5 322.6 2,202.8 103.8 
Construction  21,198.6 11,647.0 4,670.3 129.3 2,166.7 5,037.7 5,818.2 12,121.0 
Trade; repair of cars, 
household appliances and 
articles for personal use  58,868.4 15,488.5 14,686.9 23,267.3 19,737.8 22,626.9 24,579.1 21,834.6 
Hotels and restaurants  998.7 130.4 10,587.5 6,962.6 4,812.0 1,960.6 960.8 2,485.0 
Transport and 
communications  8,131.7 794.6 3,078.5 2,309.2 7,954.8 4,670.4 6,880.1 4,746.0 
Financing 5,375.3 1,663.7 1,560.3 469.5 6,005.6 3,960.5 10,813.5 41,024.1 
Transactions with real estate, 
lease          
and consumer services  11,633.8 18,083.4 5,600.1 1,377.3 13,171.7 3,544.8 8,791.7 7,369.4 
Public governance       1,393.5 677.3 75.3 
Education  58.7 45.4 72.6 80.1 2,612.2 9,325.0 1,000.2 0.2 
Health and social services  128.6 71.5 0.5 14.9 6.3 5,317.6 762.9 0.3 
Utilities, social and personal 
services  37.3 279.7 676.8 130.1 501.6 1,336.2 421.1 673.9 
a Without flow-out  
Source:  National Statistic Committee 
III. ECONOMIC REFORMS OUTCOMES  
(a) Monetary and Exchange Policy  
51. The principal achievement of reforming in moneta ry policy is that the inflation is kept at 4-
5% for the last five years, after the 1998-1999 cri ses, followed by the price increase up to 40%; at the 
same time the monetary “portion” of inflation and inflation expectations has been decreased.  
52. The cancellation of direct financing of the budget deficit since January 1, 1998 is of a great 
importance; dynamics of the money supply has been determined by the situation in the public finance 
area (Art. 24, Law on National Bank of the Kyrgyz Republic). 
53. The regime of floating exchange rate in place, improvement of monetary policy tools, 
development of interbanking crediting market have  reduced the inflation level; the macroeconomic 
indicators are improving from mid-1999.  
54. The outcomes of the exchange policy implementa tion are stabilization of the exchange rate 
and accumulation of international reserves, equaling 4. 6 months of import of goods and services as of 
the end of 2005.  The changes in dynamics of the national currency exchange rate against US dollar 
were characterized by raise of the national cu rrency from 17.4 Som per 1 US dollar in end-1997 to 
49.6 Som per 1 US dollar in mid-2001.  Decrease and stabilization of exchange rate took place later 
on.  US dollar exchange rate was fluctuating in th e range of 47.7 Som per 1 US dollar by end-2001 to 
41.3 Som by end-2005.  Kyrgyz Republic WT/TPR/G/170 
 Page 15 
 
 
55. The efficient regulation of the liquidity level in the banking system, with the help of the 
monetary policy tools enabled further decrease of interest rates for financial assets.  
(b) Fiscal Policy  
56. Since the day of independence, the budget system of the Kyrgyz Republic is undergoing 
constant improvement, so that to efficiently implement the financial and budgeting policy and 
cooperate with foreign financial institutions on a mutual beneficial basis.  Over the period under 
review the following significant achievements have been made in the budget system.  
57. The Ministry of Economy and Finance introduced the middle-term financing forecast into the 
budget process, as a tool allowing for national budgeting in connection with the pr iorities in social and 
economic development.  The introduction of such  system enables to establish reasonable limit 
expenditures (norms) for ministries and other budget  organizations for the middle-term period on the 
basis of sectoral strategies.  
58. To improve the efficiency of financing for priori ty development trends of the country in terms 
of limited financial resources of the national budge t, the introduction of the mechanism of budgeting 
on a program basis has been implemented since 2002.  Program budgeting allo ws ranging of measures 
set for compliance with tasks of national strategies an d identification of a priority level in the middle-
term strategy of budget expenditures.  
59. To adjust the system of mandatory paymen ts and improve the environment for business 
development, the stage-by-stage transition of fina ncing for budget organizations and institutions to 
full budgetary financing is being accomp lished within GSAC/GTAC programs.  
60. For the purpose of social mobilization of lo cal self-governance bodies, the mechanism of 
stimulating (share) grants was introduced in 2003;  the mechanism helps to determine the most 
necessary and priority trends in development of  social infrastructure at places and mobilizes all 
available resources.  
61. To strengthen control over expenditures with in Public Investment Program and improve 
efficiency of investments use through functional and economic integration of the PIP into the national 
budget, the expenditures for PIP have been incorporat ed into the Law on the Republican Budget of the 
Kyrgyz Republic since 2000.  
62. A number of draft laws stipulating financ ial independence and powers of local self-
governance bodies, and differentiating powers in pu blic expenditures management between various 
government levels were adopted.  
63. The powers of ministries, agencies and regions in public expenditures management were 
expanded; responsibilities and control over e xpenditures had also been strengthened.  
64. The transparency, subordination and timely use of budget funds were ensured; transfer of 
cash funds into the real time regime is planned w ith the use of information technologies; the Treasury 
system is in the process of automation (under GTAC framework). 
65. The important aspect of the Government’s activit y is foreign debt servicing.  In terms of 
growth of budget expenditures for paying off foreig n debt and co-finance the projects of the Public 
Investment Program, the credits are attracted only on a preferential basis.  WT/TPR/G/170 Trade Policy Review 
Page 16 
 
 
66. The use of funds of the Centralized Fund fo r Poverty Reduction (CFPR).  Resulted from the 
sale of the Kyrgyz portion of “Centerra Gold In c.” shares at the stock exchange, the Government 
received 106.6 million Canadian dollars or 3.5 b illion Som on September 27, 2004.  The expenditures 
for CFPR funds should be forwarde d to development in priority sectors, such as health care and 
education, and should not give additional burden on the budget.  
67. Since 2005, the work is carried out to implemen t the Concept for Housing Credit.  At present, 
the efficient housing crediting system for low inco me population is being formed.  At the current 
stage, the efforts are focused at three sectors or Programs: 1) Housing for a Young Teacher (doctor) in 
Rural Area; 2) Housing accumulating crediti ng system; 3) Share housing building.  
(c) Taxation 
68. Taxation policy of last years has been implemented within the Concept for Taxation Policy 
Improvement and Strategy for Fiscal Reform, as well as within the program of arrangements with the International Monetary Fund.  At present, quite favourable taxation treatment  is created.   Since 
January 1, 2006, the income rate for natural pe rsons is 10 percent, the base non-taxable minimum 
amounted to 650 Som; revenue tax for enterprises is  decreased from 20 to 10 percent (starting from 
January 1, 2006), while the given decrease will be valid for natural and permitted monopolies since 
January 1, 2007; the VAT on agricultural goods is cancelled; several non-efficient local taxes are 
eliminated; VAT exemption is stipulated by offsetting in importation of capital assets.  
69. Under Decree of the President of the Kyrgyz Republic of April 13, 2006, No. 172, the 
middle-term Strategy for Taxation Policy Improve ment in the KR for 2006-2008 was approved.  
70. The most important taxation measures within the Strategy are as follows: expansion of 
taxable base with simultaneous reduction of tax bur den for economic entities, including approval of 
provisions on efficient tax collection for real estate,  review of land tax rate, liquidation of all Free 
Economic Zones (FEZ), except for “Bishkek” FEZs.  
71. In addition, it is planned to improve and strengthen tax administration, increase the efficiency 
of tax and customs bodies.  The particular attention is given to streamlining the taxation of small and 
medium business, and interaction with internati onal organizations on alr eady developed and still 
operating projects, considering the best practice of advanced countries.  
72. The new draft Tax Code of the Kyrgyz Republic  was elaborated.  The Draft is submitted for 
consideration by the Jogorku Kenesh (the Par liament) of the Kyrgyz Republic (KR Government 
Resolution of March 31, 2006, No. 212).  
73. The Draft Law covers both fiscal tasks, and social aspects.  It is anticipated that good faith tax 
payers shall be granted with more privileged (liber al) taxation treatment.  At the same time, tax and 
administrative pressure on unfair payers will be inte nsified due to improvement of administration.  
Notable indulgence is observed in administrative a nd procedural sections of the draft Code (all 
unavoidable legislation contradictions are interp reted for the favour of a taxpayer; provisions 
stipulating minimization of contacts of tax payers w ith tax services and the taxation principles are laid 
down, in particular “the principle of good faith tax payer”); the cases of non-compliance of regulatory 
acts to the Tax Code and the retirement of hopeless debts are defined. 
74. To attract large-scale world producers for inv esting into the national economy and create a lot 
of joint and foreign enterprises, the work on si gning the Agreement on Avoidance of Double Taxation 
with foreign countries is being carried out.  As of May 1, 2006, Agreements on Avoidance of Double 
Taxation with 27 countries were concluded.  The given Agreemen t was enacted with 17 countries, Kyrgyz Republic WT/TPR/G/170 
 Page 17 
 
 
namely, the Republic of Kazakhstan, the Russian Fe deration, Belarus, the Republic of Uzbekistan, 
Canada, Turkey, India, Ukraine, Tajikistan, Poland , Mongolia, Switzerland, Austria, China, Iran, the 
Republic of Moldova, Finland. The Agreement with Malaysia was ratified by the Jogorku Kenesh of 
the Kyrgyz Republic and will be soon enacted.  Th e Agreements with Germany and Pakistan were 
signed and are currently undergoing domestic proce dures.  Similar agreements are initialling with 
Georgia, Armenia, Netherlands, Latvia and Czech  Republic.  At present, the draft Agreements 
submitted from Azerbaijan and France are being analy zed.  The first negotiation round with Korea is 
planned to be conducted.  
(d) Industrial Policy  
75. The Government of the Kyrgyz Republic h as undertaken programs for industry and export 
development.  Alongside, complicated transitional processes of economic reforms significantly changed the GDP profile; manufacturing share was only 16%.  
76. During last decade the GDP manufacturing shar e has undergone strong fluctuations. The GDP 
share was up from 11.1% in 1996 to 25% in 2000, and had been constantly getting down by 16% 
(2005).  Growth in manufacture over the period (1998-2005) was 1.1% on average.  
77. The importance of manufacturing in the economy of  the country is caused by the fact that it 
supports more than half of budget receipts and employ s a large amount of people; this is despite that 
the GDP share is low.  
78. The reform period has been characterized by re duction of share of finished products and 
growth of share of raw materials sector.  For exam ple, light industry share has been reduced during 
last seven years from 8.4% to 2.4%; food industry – from 18.1% to 12.9%.  However, metallurgy 
share has been increased from 40 to 46%; electric pow er – from 9.6 to 18.7, accordingly.  At present, 
the manufacturing is based on gold and energy, with the 65% share.  
79. For 2005, the manufacturing production in th e Republic was 49.7 billion Som (87.9%).  
Decline in manufacturing is due to reduction of  production output at Kumtor deposits.  Without 
considering enterprises of Kumtor deposit the ma nufacturing output was 31.6 billion Som (95.4%).  
Production output in mining and processing indus tries has been reduced (86.1% and 84.4% 
accordingly). 
80. The production output in coal mining, oil and g as, oil processing, cellulose and paper, food 
processing, publishing and printing, chemical, metallu rgic, leather sectors, finished metal articles, 
electric machinery, other non-metal mineral goods, machinery and equipment had reduced.  
81. The positive results were gained in energy ( 101.6%), textile (113.3% ), clothing (115.7%), 
wood processing (102.3%), production of rubber a nd plastic articles (102.2%), vehicles and 
equipment (102.6%). 
82. The modern industrial producti on consists of mining and processing industries, energy sector, 
including 39 types and subtypes of economic activity throughout all production sectors.  
83. The main objective of the industrial policy of the Kyrgyz Republic for next years is 
diversification of processing economic sectors a nd shift from raw materials orientation in 
development, preparation of conditions for trans ition to innovative economic forms in the long-term 
perspective.  WT/TPR/G/170 Trade Policy Review 
Page 18 
 
 
84. The industrial diversification strategy should be performed with the focus on value added 
sectors.  Such sectors are textile and sewing, agro in dustrial, energy, mining and construction.  Mainly 
domestic resources are used in these sectors; howe ver, they are not always targeted at deep 
processing.  For example, cotton processing: out of 35 thousand tons of cotton fiber, the textile sector 
processes 1.5-2 thousand tons, the remaining part is  exported.  Due to increase in cotton processing 
within the country and output of finished goods, it is planned to gain high production growth rate of 
cotton yarn and fabrics.  
85. The economic efficiency of the process of deepen ed processing of local resources is evident, 
the matter is not only to increase the share of finished products in export and saturate domestic 
market, but also to create additional workplaces,  expand the taxable base.  It conditioned the 
performance of the policy of further growth of manuf acturing, taking into account the natural decrease 
in gold output and the need to overcome GDP dependence upon gold mining and energy sectors.  
86. The industrial development for next years shall be based on macroeconomic stability, 
attraction of investments at the maximum possible level, sciences and innovations, improvement of 
professional level and education, modern infrastructur e, and development of i ndustry in regions with 
the deepening processing of local raw materials.  
(e) Reforms in Agriculture and Forestry  
(1)  Agriculture  
87. Agriculture is a major economic sector of the Ky rgyz Republic.  In 2005, in GDP profile the 
share of agriculture was 30.5%.  In agriculture  and forestry 340 thousand economic entities were 
created, including 296 thousand collective (farm) ho ldings.  In 2005, gross output of agriculture, 
hunting and forestry amounted to 63307.5 million So m and reduced by 4.2 percent in comparison 
with 2004.  In 2004, GDP growth by 4.1 percent was gained.  
88. Large scale sectoral reforms were implemented in 90s.  Political reforms had been speeded up 
since 1995.  The significant progress was achieved in  agricultural and land reform.  As a result, the 
land has become a subject to purchase and sale; market  relations were introduced in agriculture.  The 
government has fully liberalized the policy of centr alized planning and distribution of material and 
technical resources and goods produced.   
89. The self-sufficiency was gained in particular industrial products, thus allowing solving the 
main tasks of food security of the country at the level of minimal consumption rate.   
90. The Government of the Kyrgyz Republic in cooperation with the European Economic 
Commission has developed and approved the Nationa l Policy for Food Safety in the Kyrgyz Republic 
in 1999.  
91. Despite that there is a number of problems,  Kyrgyzstan has self-sufficiency in basic 
agricultural goods, including meat, milk , vegetables, and partially grain.  
92. At the same time, the constant increase in population demand and prices for food, low 
income, insufficient export, and growth of import of  food, complicate the provision of food safety of 
the country at the level of consumption standard.  F ood safety is one of the main priorities of the KR.  
93. Principal producers of agricultural commodities are small collective and farm holdings.  The 
management of agricultural business is improving, the financial responsibility for the management 
results have been increased.  Kyrgyz Republic WT/TPR/G/170 
 Page 19 
 
 
94. Market mechanisms of land use are developed;  the Constitution was added with the provision 
on land property and the Law of the Kyrgyz Repu blic “On Management of Land for Agricultural 
Purpose” was adopted, envisaging purchase and sale tr ansactions of land; the work to improve the 
registration system for land has started.  
95. The new Land Code of the Kyrgyz Republic en ables dispute settlement of land issues under 
court proceedings and ensures creation of arbitral mechanisms as an alternative method to solve land 
conflicts.  
96. Significant changes have undergone in public regul ation of agrarian sector at the republican 
and regional levels.  The governme nt bodies shifted to economic methods of regulation instead of 
direct interference into production processes a nd management of economic activity of goods 
producers.  
97. However, the agriculture has undergone difficu lt transition process in search of new economic 
forms and property ownership.  The reform had b een performed in terms of lack of experience, 
legislative framework and regulatory act s, especially at the initial stage.  
98. Below are given the indicators of plant growing and animal breeding developments from 
1998 to 2005.  
99. Plant growing. The main challenge is stable provision of grain, most of all, the wheat grain 
for the population.  In this regard, yields of cereal s increased up to 600-610 thousand hectares, that is 
50% of total area of tillage; it is a monoculture.  
100. While gross grain output increased from 1.6 in 1998 to 1.7 million tons in 2005, the wheat 
grain production is gradually decreasing from 1.2 in 1982 to 1.0 million tons in 2005.  Fodder corn 
grain production is gradually rising from 440 to 490  thousand tons; and barley production is up from 
150 to 245 thousand tons.  
101. Production of industrial crops is unstable; wh ile production of raw cotton increased from 45 
to 123 thousand tons, tobacco production decreased from 28.0 to 13.6 thousand tons.  Production of 
sugar beet roots was up from 430 in 1998 to 812 thousand tons in 2004; however, it has decreased by 
287 thousand tons in 2005.  
102. Bean production is increasing steadily and rapi dly from 2.5 to 48 thousand tons in 2005.  
Potato production was rising and it came to the ma ximum level of 1362 thousand tons in 2004; thus 
resulting in sale difficulties.  Therefore, in 20 05 the production decreased up to 1141 thousand tons.  
103. Vegetables production increased from 520 to 735 thousand tons, melons and gourds – from 
70 to 85 thousand tons.  Production of fruits and ve getables is unstable: frequent spring cold, in 
particular in northern regions of the Republic, results  in loss of fertility and fruits elements of stone 
fruits plantings. However, totally, the collection increased from 102 in 1998 to  160 thousand tons in 
2000.  In 2003, the decrease up to 130 thousand t ons took place; in 2005 the production was increased 
up to 176 thousand tons.  
104. High demand for grain resulted in reduction of  yields of fodder crops by 257 thousand 
hectares by mid-90s; of them 141.0 thousand hectares of perennial plants; the saturation by fodder crops on arable lands decreased up to 15.2% on the av erage, while the advisable area should be 30%.  
However, recently due to rise in livestock and de mand for fodder, the perennial plants sowing is 
increasing, as it is the main type of plants used for fertility of soils.  WT/TPR/G/170 Trade Policy Review 
Page 20 
 
 
105. Grape production was at the maximum level in 2000-2001 (26-27 thousand tons) and 
minimum in 2003 and 2005 (12.7-13.7 thousand tons ); the average level in other years was 
17-18 thousand tons.  
106. Oil-bearing crops production is closely related to  high demand of population for vegetable oil. 
Therefore, its production is raising and made  up 90.7 thousand tons in 2005 comparing to 
80 thousand tons in 1998. 
107. Cattle breeding . From 1998 to present time the growth of livestock was increasing by 11%, 
including cows – by 7%, poultry – 51%.  However,  livestock horses and pigs reduced by 1% and 21% 
accordingly.  Livestock productivity is increasing, si nce average milking of 1 cow is increased by 
11 kg and amounted to 2156 kg; average sheep shear is up by 0.1 kg and amounted to 3.5 kg; egg-
laying qualities of egg-laying birds is up by 3 eggs and amounted 120 eggs.  
108. Meat, milk and egg production is increasing; milk production increased by 123 thousand tons, 
eggs by 105 million pieces, and meat by 1.2 th ousand tons.  Wool production has decreased by 
711 kg. 
(2)  Forestry  
109. The Forest Code of the Kyrgyz Republic was developed and adopted in 1999. It envisages 
much better framework for the forest sector, giving  more responsibility and a new status to employees 
in the area of protection of forests.  
110. As a result of forest restoration actions and tr ansfer of former kolkhoz and sovkhoz forests, 
the total area of the State Forest Fund has increas ed; it includes lands covered with forest, and not 
covered with forest, but designated for forest se ctor needs.  New especially protected natural 
territories and other structural units and government  authorized bodies for forest sector development 
were organized. 
111. To train and prepare future experts of forest sector the chair of forestry was established under 
the Kyrgyz Agrarian University and professional vocational institutions we re supported to develop 
new calculation programs and methodological aspects of education.  
112. The local population is getting more involved in to the forest sector through development of 
lease relations and communal management of forestry; the private forms of for estry activity, such as 
nursery forest, creation of forest cultures, stoc king up and processing of wood and non-wood forest 
goods, etc. were introduced. 
113. Regulation on Provision and Use of Areas of the State Forest Fund (SFF) for Lease was 
approved by Resolution of the Government of the Ky rgyz Republic of April 15, 1997, No. 226.  The 
Regulation provides for transfer of lands of SFF to lease.  
114. Lease of lands from the Forest Fund is expanding , but not all lease-related issues were settled 
(taxation, contracts, etc.).  There is no clear  understanding of the Concepts of Communal Forestry 
Management, thus resulting in  improper interpretation.  
115. Under the Law of the Kyrgyz Republic on De centralization and Privatization of State 
Property in the Kyrgyz Republic, the state property used by the forestry sector shall be gradually 
transferred to the private ownership.  Kyrgyz Republic WT/TPR/G/170 
 Page 21 
 
 
116. At present, in accordance with  Resolution of the Government of the Kyrgyz Republic 
No. 576, of September 22, 2001, approving the List of Objects Subject to Privatization, timber 
enterprises are privatized.  The for est sector does not process wood.  
117. Regulation on Communal Forestry Management in the Kyrgyz Republic, aimed at efficient 
forestry management, involvement of the population into management and protection of forests was 
approved by Resolution of the Government of the Ky rgyz Republic No. 377, of July 27, 2001.  The 
State Program “Forest for 2001-2005” was adopted (Resolution of the KR Government of November 
17, 2001, No. 715).  In 2004, the Concepts for Development of Forestry in the Kyrgyz Republic was adopted and shall act until 2025 (Resolution of the KR Government of April 14, 2004, No. 256), 
giving the directions for transparent reforms taki ng into account the need in large-scale involvement 
of local population to forest management fo r the purpose of support of social and economic 
development of regions, and preservation of fo rests through sustainable multifunctional use.  
(f) Energy  
118. Total hydro energy capacity of 252 large and me dium rivers of Kyrgyzstan is 160 billion kWh 
of electric energy, with technical capacity of these rivers amounting to 100 billion kWh, and 
55 billion kWh of economic capacity.  At present, the te nth part of technical hydro energy capacity of 
the Republic is used.  
119. Since 2000, the actions to develop small scale hy dro energy have been undertaken.  Under the 
actions taken, it is planned to improve Alamedinsky hydroelectric pow er stations system (HPS) with 
output of 120.0 million kWh, rehabilitation of 20 operating small HPS with 10.0 Megawatt capacity 
and output of 84.6 million kWh, as well as constructi on of 27 new small HPS with overall capacity of 
68.0 megawatt and output of 281.0 million kWh.   
120. Export of electric energy during 1998-2005 was accompanied by changes of cyclic nature, 
mainly caused by hydrological situation (See Table No. 4).  
Table No. 4 
Electric Energy Export  
Year 1998 1999 2000 2001 2002 2003 2004 2005 
Electric power 
export, mln. kWh 798.1 2,011.3 3,153.1 2,164.9 1,060.6 1,708.6 3,191.0 2,604.8 
Source:  State Inspection on Energy an d Gas under the KR Government. 
121. The Kyrgyz Republic exports electric energy in to the Republic of Kazakhstan, the Republic 
of Uzbekistan, the Republic of Tajikistan, the Ru ssian Federation and Peopl e’s Republic of China. 
Energy system of the Republic is connected with  the Central Asian countries by the network of 500 
kW and operates under the common energy regime.  
122. In 2000, the Kyrgyz Republic restructured the en ergy system.  As a result, vertical integrated 
“Kyrgyzenergo” JSC was separated into one gene rating company holding hydro and heat electric 
power stations, one transmission energy company operating electric networks with voltage 110-500 
kW, four electric distribution energy companies, and one heating distribution energy company selling 
electric and heating power to consumers. All energy companies were reincorporated and are open joint stock companies. WT/TPR/G/170 Trade Policy Review 
Page 22 
 
 
123. Generating and transmission energy companies shall not be a subject to further privatization 
under the legislation of the Kyrgyz Republic.  93 percent of these companies are state-owned and managed by a state body.  
124. In 2006-2007, further stage-by-stage privatization of electric distribution energy companies in 
the form of concession is anticipated.  
125. Today, construction of Kambaratinsky HES 1 a nd 2 is of vital importance.  Upon completion 
of construction of Kambaratinsky HES 2, electric power generation shall be executed by hydraulic 
units with 360 megawatt installed capacity.  Putting into operation of  Kambaratinsky HES 1 will help 
to raise the installed capacity of all HESs by 1900 megawatt. Construction of five hydro stations in 
upper flow of Naryn River makes possible to increase the installed capacity of hydraulic units by 
520 megawatt and construction of 5 HESs at Sarydjaz River, Issyk-Kul oblast – by 692 megawatt.  
126. Taking into account the coverage of demand fo r electricity in economy and the population, 
export to neighboring countr ies and inevitable losses, the output of electricity will be 13.6 billion kWh 
in the near future. 
(g) Privatization  
127. Today, the major privatization stages we re passed at a relatively high speed.  
128. At the first stage (1991-1993), the legislative framework for privatization and investment 
attraction was laid down; the relevant organizationa l infrastructure was formed.  The main focus was 
on the so-called “small scale privatization”, that is  privatization of commercial, public catering and 
consumer services objects.  
129. At the second stage (1994-1997), the principal task was to transform large and medium 
enterprises in industry, transport and construction sectors, and privatize enterprises with bankruptcy 
criteria, conduct mass (voucher) privatization a nd introduce corporate governance principles.  
130. During the third stage (1998-2000), as a result of global financial crisis in 1998, the 
privatization process was slowed down.  Reorgani zation of large strategic objects of monopolistic 
economic sectors and privatization of  non-productive area had been initia ted.  It should be noted that 
since 1998, Programs of State Property Privatizatio n are approved by the Jogorku Kenesh of the 
Kyrgyz Republic.  
131. At present, the largest direction of the state property reforms under the Privatization Program 
is to reform strategic economic sectors, privatize resort and recreation units, and state property objects not privatized before.   
132. As of January 1, 1991, 9989 state property objects were registered in the Republic.  They 
formed the basis and are used in the analysis of privatization process and calculation of the 
privatization level.  
133. As a result of reorganization of property relati ons in the KR, the total level of privatized 
enterprises is over 70%, as of January 1, 2006.  
134. The enterprises of strategic importance for th e economy of the Republic being the national 
welfare are privatized following the sectoral concepts  or individual projects developed on the basis of 
financial and economic assessment, given the strategi c, regional, sectoral, and specific peculiarities, 
including setting stages, procedure and terms for privatization.  Kyrgyz Republic WT/TPR/G/170 
 Page 23 
 
 
135. As of January 1, 2006, the state has share in 111 JSCs; out of them, the state control share is 
in 72 JSCs.  
(h) Restructuring in Public Service and Good Governance  
136. The experience accumulated by the Kyrgyz Repub lic since gaining the independence in 1991 
showed the need to reform the public service system .  On August 11, 2004, the Law on Public Service 
was adopted aimed at ensuring succession, stability, and independence of professional public service, hiring experienced public servants, and better efficiency of public service management.  
137. The Law has the following provisions: (1) to restrict political interference in government 
bodies operation the state positions were divided into political and administrative; (2) the Agency on 
Public Service Affairs was formed to elaborate and implement the uniform national policy in public 
service; (3) the institution of State Secretaries was formed in order to ensure stability and 
independence of professional public service; (4) th e principle of mandatory competition for public 
positions vacancies was ascertained.  
138. At present, the Agency is completing the form ation of the institution of State Secretaries 
based on a competitive selection
5; accomplishes programs for training and skill development of 
administrative public servants; takes part in competitive selection procedures and evaluation in 
government bodies; monitors the enforcement of th e given Law; introduces the modern information 
technologies; improves the legislation related to public service; undertakes measures to control the 
rule of law at public service; collects, analyzes and publishes income statements of public servants.  
139. The support to reform the public service is given by the World Bank through GSAC/GTAC 
programs (Governance Structural Adjustment Cr edit/Governance Technical Assistance Credit). 
140. With a view of further deepening of the administrative reform, Decree of the KR President 
“On Optimizing Government Bodies Structure” of  November 30, 2005, No. 607 was adopted. Under 
the Decree, 228 governance units shall be canceled, including 3 central offices, 37 subordinate units, 
157 oblast territorial units, 31 rayon territorial units.  At the same time, the partial reorganization of 
714 governance structures is anticipated, including 20 central offices, 57 subordinate organizations, 
109 oblast territorial units, and 528 rayon territorial units.  
141. Furthermore, the number of employees of state governance bodies is reduced by 
5539 individuals and 1164 office vehicles, thus leading to reduction of total expenditures for 
maintenance of governance offices by 279 million So m, including 154 million Som out of the salary 
fund.  
IV. TRADE AND TRADE-RELATED POLICIES  
(a) Trade Policy  
142. Trade has been always playing the key role in the economy of the Kyrgyz Republic.  Being a 
small country with vulnerable economy the Kyrgyz  Republic recognizes the need and importance of 
international integration and world trade liberali zation, and is willing to have access to foreign 
markets, required for both the st abilization of the balance-of-payments, and attraction of foreign and 
domestic investors into advantageous sectors.  Due to the reasons above the Kyrgyz Republic gives a 
great importance to the Uruguay Round results and multilateral trading system based on WTO rules.  
                                                      
5 State Secretaries in 24 government bodies were appointed.    WT/TPR/G/170 Trade Policy Review 
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143. The Kyrgyz Republic’s accession and membership  in the WTO has directly assisted in 
implementation of reforms.  During WTO membersh ip new laws, regulatory acts liberalizing foreign 
trade regime and attracting investments into the country were adopted; ge ography and profile of 
foreign trade turnover and exports have been  expanded and modified; the basis for safe and 
predictable trade system was laid down.  
144. The main package of legal and institutional docum ents regulating trade regime was adopted in 
1998 at the moment of accession to the WTO.  
145. Since 1998 and to the present time Kyrgyzstan liberalize foreign trade regime following the 
WTO commitments.  For the moment the Kyrgyz Republic does not apply customs duties for export 
of goods and quantitative restrictions on export and import.  There are no restrictions on import and 
export of currency.  Enterprises are free to choose any trade partner.  State and private companies 
have the right to engage into export/import transacti ons without specific registration or restrictions, 
except for cases when products are subject to export and import licensing.  
146. Export and import licensing procedures do not restrict imported goods by quantity or cost of 
exported/ imported goods.  
147. After accession to the WTO the new Customs Code and the Law on Investments of the 
Kyrgyz Republic were adopted.  The technical re gulation reform is in the progress; the Law On 
Technical Regulation was adopted.  The work is carried out on drafting Tax Code and Law on 
Licensing.  The WTO Enquiry Points were established.  
(b) Customs and Tariff Regulation  
148. The customs tariff is a code for customs duties ra tes; it represents one of the key tools of state 
regulation of foreign trade and a pplied for imported goods only.  Expor t of goods is not charged with 
customs duties.  
149. Prior to accession to the WTO, the uniform 10% customs tariff for all imported goods acted in 
the Kyrgyz Republic, customs and tariff systems have cumbersome scheme of exemptions difficult for administering.  
150. Upon accession to the WTO the Kyrgyz Republic annually reviews and approves the customs 
tariff for imported goods according to the WTO commitments.  
151. The Ministry of Industry, Trade and Tourism drafts the Law on Customs Tariff for Imported 
Goods to the Kyrgyz Republic jointly with other ministries and agencies, with active involvement of 
the private sector.   The information on draft law is placed in newspapers and official website of the 
Ministry (www.mvtp.kg). 
152. Draft Law on Customs Tariff for Imported Goods is submitted for approval to the 
Government of the Kyrgyz Republic and for furt her adoption by the Jogorku Kenesh.  After the 
Jogorku Kenesh considers and adopts the draft law, it is forwarded for signing to the President.  
153. Today, the Law on Customs Tariff of the Kyrgyz Republic No. 81 of March 29, 2006 is in 
force. The Law is based on the Commodity No menclature of Eurasian Economic Community 
(EAEC), approved on September 20, 2002, due to transition to 10-digit code.  
154. According to acting customs tariff, zero rates constitute 46.6% of commodity nomenclature, 
5% duty rates – 14.2%, 10% duty rates – 33.4%, 12% duty rates – 3.1%, 15% duty rates – 2.7%, Kyrgyz Republic WT/TPR/G/170 
 Page 25 
 
 
20% duty rates 0.2%, 30% duty rates 0.2 % of commodity nomenclature.  Specific duty rates amount 
to 0.11% and combined duty rates are 1.3%  
155. The modifications of customs tariff by years are given in the table below.  
Table No. 5 
Number of Commodity Items 
Customs Duty Rate  
1999 2000 2001 2002 2003 2004 2005 2006 
0 % 1,311 5,488 5,475 5,607 4,482 4,703 4,811 5,141 
1 % 3 - - - - - - - 
5 % 1,748 - 123 142 1,416 1,459 1,442 1,565 
5,5% - - - - - - - - 
6,5% - - 10 - - - - - 
7 % 8 - - - - - - - 
8 % 2 - - - - - - - 
10 % 5,869 4,588 4,468 4,370 4,017 4,172 4,067 3,688 
12 % - - - - - 345 345 342 
15 % 635 - - - 596 257 271 303 
17,5 % 411 332 332 498 - - - - 
20 % 498 155 155 - - - - 2 
25 % 14 - - - - - - - 
30 % 11 - - - - - - 2 
50 % 45 - - - - - - - 
Specific Duties  14 11 11 145 152 152 152 155 
TOTAL:  10,569 10,574 10,574 10,762 10,663 11,088 11,088 11,198 
Average Customs 
Duty Rate  9.18% 5.2 5.15% 5.09% 5.4% 5.1% 5.1% 4.84 % 
 
156. The Kyrgyz Republic gives preferences (no customs duties imposed) for goods from 47 least-
developed countries according to EAEC’s preference scheme.  
(c) Non-Tariff Regulation  
(1)  Trade Embargo and Sanctions  
157. The Kyrgyz Republic has no trade embargoes or sanctions.  
(2)  Quoting  
158. The Kyrgyz Republic does not apply ta riff quota on export/import of goods.  
159. The Kyrgyz Republic applies quota on import of alcohol beverages6 and beer from non-WTO 
member-countries under the Law on State Monopoly on Production, Storage and Sale of Spirits and Alcohol Beverages, and Resolution of the KR Govern ment of April 5, 2004, No. 227, approving the 
Regulation on Procedure for Quoting of Import of Alcohol Drinks and Beer  and Determination of 
Import Quota. 
                                                     
 
6 Alcohol drinks covered by procedure for quoting of alcohol drinks and beer include spirits of food 
raw materials (ethyl rectified, raw grape, fruit, cognac) , alcoholic beverages, cognac (brandy), calvados, grape 
wines, champagne and fruit beverages with more than 9% of ethyl spirit, spirits for technical purpose (ethyl hydrolytic and synthetic) and other types of beer. WT/TPR/G/170 Trade Policy Review 
Page 26 
 
 
160. The maximum amount of quota on import of alcohol beverages and beer is established.  The 
allocation of quotas on import of alcohol bevera ges and beer is performed by a competitive 
commission formed by the State Inspectorate on Cont rol over Production, Storage and Sale of Spirits 
and Alcohol Drinks under the Government of the KR (pursuant to the above said Regulation).  
161. Annual import volume of alcohol beverages and beer  is calculated on a competitive basis, as 
the average import value during the last three years justified by official statistics.  Maximum amount 
of quotas for import of alcohol drinks and beer are estimated on the basis of importers application, 
consumer demand in domestic market for a par ticular good, purchasing capacity, and production 
volume of alcohol drinks and beer by domestic pr oducers, with breakdown by quarters of a planned 
year within annual amount of quota on import.  
162. To protect environment and human health and life, quota on import of light medium 
distillates, other types of raw materials and components for production of commodity petroleum products depending on productive capac ity of operating petroleum processing plants were introduced 
in 1997 (Resolution of July 07, 1997, no. 404). 
163. In 2002, the given provision was canceled by R esolution of the KR Government of November 
18, 2002, No. 783.  The Resolution approves the Li st of Economic Entities Allowed to Import Light 
and Medium Distillates, Other Types of Raw Materials and Components for Production of 
Commodity Petroleum Products.  The List includes “Kyrgyz Petroleum Company” JV, “Vostok” JV, 
“”Kara-Archa” Ltd., “Kyrgyz-Russian TKN” Ltd ., “Tyan-Shansky Oil Concern” Ltd.  These 
companies are petroleum processing plants and licensed  to produce petroleum products.  In 2005, the 
given Resolution was added (Resolution of the GKR  of August 18, 2005) with temporary permission 
for “Geleon Trade” Ltd. to supply gas condensate for processing to “Vostok” JV from Kazakhstan.  
164. There are no quota and licenses on importation of raw materials and components for 
production of petroleum products.  The quantity of imported goods is determined following the 
productive capacity of operating petroleum plants, pursuant to the Resolution.  
165. Other importers may import raw materials for processing at operating petroleum plants. For 
this purpose, they need to make arrangement with a plant on the volume of delivery of raw materials.  
Alternatively, a petroleum plant may import raw ma terials for processing, if it has license to produce 
petroleum products.  They should address the Mini stry of Industry, Trade and Tourism to initiate 
additions to the List of the above indicated Resolution.  
(3)  Export and Import Licensing  
166. At present, import of 18 commodity groups
7 and export of 19 commodity groups8 is subject to 
licensing (Resolution of the Legislative Assembly of  Jogorku Kenesh of June 8, 1998, No.1101-1 as 
amended on June 25, 2004, З N 1690-II).  
                                                      
7 Licensable imported goods are: cryptographic devices; army equipm ent and military devices, means 
of protection from chemical agents, military uniform and clothes; normative and technical documentation to 
articles for military purpose, explosives, nuclear materials, technology,  equipment, materials, equipment and 
technology, which can be used in creation of missile, nuclear and other types of  weapon of mass destruction, some types of raw materials, articles, equipment, techno logy and scientific-technical information, which can be 
used in creation of army equipment and devices; precious metals, alloy, ores, scrap and wastes; precious stones; 
drugs, psychotropic substances; virulent poisons, hazard ous wastes, pharmaceuticals, weaponry, tobacco, spirit, 
alcohol beverages and beer. Kyrgyz Republic WT/TPR/G/170 
 Page 27 
 
 
167. The ground for issuance a license is as follows: 
- Conclusion of a specialized expert orga nization on possibility and expediency of 
export/import of a good based upon national interests, national and ecological 
security of the Kyrgyz Republic; 
- In the event of introduction of quantit ative restrictions on export/import of a good 
(observing WTO rules):  the availability of quota obtained by an applicant (economic entity), as a result of participation in competition and tenders according to the 
established procedure;  
- In the event of introducing a state monopol y (observing WTO rules) on export/import 
of specific goods: a permit (license) fo r the right to perform export/import 
transactions.  
168. The ministries and agencies issuing licenses are th e Ministry of Industry, Trade and Tourism, 
the Ministry of Interior, the Ministry of Hea lth, the State Commission on Drugs Control, the State 
Inspectorate on Control over Production, Storage and Sale of Spirits and Alcohol Drinks under the 
GKR, and “Kyrgyztamekisi” SJSC. 
169. The ministries and agencies that issue expert’s  conclusion are the Ministry of Interior, the 
Ministry of Finance, the Ministry of Emergencie s, the Ministry of Agriculture, Water Economy and 
Processing Industry, the Ministry of Defense, the Ministry of Health, the Ministry of Foreign Affairs, the National Security Service, the National Academy of Science.  
170. Pursuant to the Law On Licensing (Article 8) foreign legal entities or individuals, as well as 
individuals without citizenship shall receive licenses on the same conditions and under the same 
procedure as legal entities and individuals of th e Kyrgyz Republic, unless otherwise provided by 
legislative acts.  
171. Licensing procedure is not aimed at restriction of export/import of goods by quantity or cost.  
The introduction of licensing allowed for calcula tion of export/import of specific goods, which may 
negatively affect human health, consumer and ecol ogical welfare, national security, safety of artistic 
historical and archeological values and protectio n of national wealth a nd exhaustible natural 
resources.  
172. Licensing of export of scraps and wastes of nonferrous metals and monopoly on export of 
ferrous metals was introduced to regulate the activity in turnover of such products in the Republic and 
prevention of related violations damaging the national economy and secu rity.  The violations included 
stealing of phone, telegraph cables and electric cables  and other units with a view of illegal sale and 
re-sale, and exportation from the territory of the Kyrgyz Republic.  
173. At present, the new draft Law on Licensing is being accorded.  The draft contains provisions 
on automatic and non-automatic licensing (Article 26 of the draft law).  
                                                                                                                                                                    
 
8 Licensable exported goods are: live animals; medicine raw materials of vegetable origin; 
cryptographic devices, army equipment and military devices; means of protection from chemical agents; 
military uniform and clothes; normative and technical documentation to articles for military purpose; explosives; nuclear materials, technology,  equipment, materials; equipment and technology, which can be used 
in creation of missile, nuclear and other types of  weapon of mass destruction; precious metals, alloy, ores, scrap 
and wastes; precious stones; wastes and scrap of non-ferrous metals; virulent poisons; hazardous wastes;  weaponry. WT/TPR/G/170 Trade Policy Review 
Page 28 
 
 
(4) Prohibitions and Export Control  
174. The Kyrgyz Republic has not applied trade measures for protection of balance-of-payments.  
175. Export and import prohibitions are performed und er international conventions to protect 
human health and safety, environmental prot ection, and for national security purpose.  
176. The import and export of outdated and used artic les and equipment is prohibited, in operation 
of which ozone depleting substances are used (Freon) with a view to implement Vienna Convention 
for the Protection of the Ozone Layer and Montreal  Protocol on Substances That Deplete the Ozone 
Layer.  Under Basel Convention on the Control of Transboundary Movements of Hazardous Wastes 
and Their Disposal, hazardous wastes are subject to export and import control.  Pursuant to Rotterdam 
Convention on the Prior Informed Consent (PIC ) Procedure for Certain Hazardous Chemicals and 
Pesticides in International Trade,  the pesticides and industrial chemical substances are prohibited for 
use.  The Stockholm Convention on Persistent Organic Pollutants provides for export and import 
control for 12 chemical substances.  
177. The national policy in export control is carried out to ensure security of the country, its 
political, economic and military interests only.  
178. Export control covers controllable products, including certain types of raw materials and 
materials, equipment and technology, scientific a nd technical information, works and services, goods 
for double-purpose use, and results of intellectua l activity, which may be used in the process of 
creation of weapons of mass destruction, ways of delivery, other types of arms and defense 
technology.  The export control legislation includ es Law on Export Control of January 23, 2003, No. 
30, the KR Government Resolution No. 55 of Fe bruary 6, 1996 On Approval of Regulations on 
Procedures for Export and Import of Materials an d Technologies used in Creation of Chemical, 
Nuclear-Missile Weaponry and Resolution No. 330 “On Measures for Further Introduction of Export 
Control System in the Kyrgyz Republic” of May 4, 2004.  
179. The national check-list of controlled goods cu rrently under approval by the Jogorku Kenesh 
was drafted.  The draft List of Controlled Goods was elaborated under Agreement on Uniform 
Procedure for Export Control of EAEC member countries, signed by the heads of the Governments in 
October 2003.  
(5)  Anti-dumping, Safeguard, and Countervailing Measures  
180. Regulatory framework of the Kyrgyz Republic , which regulates safeguard, anti-dumping, and 
countervailing measures was developed pursuant to WTO Agreements and cons ists of Law on Anti-
dumping of the Kyrgyz Republic of October 31, 19 98, No. 139; Law on Safeguard Measures of the 
Kyrgyz Republic of October 31, 1998, No. 141; Law on Subsidies and Countervailing Measures of 
October 31, 1998, No. 140; Regulati on on Conduct of Investigation Prio r to Introduction of Safeguard 
Measures approved by Resolution of January 20, 2001, No. 15; Regulation of Procedure for Anti-
dumping Investigation and Investigation on Subsid ies Subject to Compensation, approved by 
Resolution of January 20, 2001, No. 14.  
181. The Kyrgyz Republic has not introduced an y anti-dumping, safeguard, and countervailing 
measures.  Kyrgyz Republic WT/TPR/G/170 
 Page 29 
 
 
(d) Customs Procedures  
182. Since January 1, 2005, the new Customs Code  was enacted in the Kyrgyz Republic.  The 
fundamentally new provisions on a pplication of modern customs procedures, such as independent 
assessment, selection, post-entry control (insp ection after release of goods), and provisions 
streamlining the customs formalities and control of goods and vehicles moved through the customs 
border of the Kyrgyz Republic were laid down. 
183. The new customs Code of the Kyrgyz Republ ic was drafted in compliance with the 
International Convention on the Simplification a nd Harmonization of Customs Procedures (revised 
Kyoto convention). 
184. The new Customs Code provides for introduction of information systems and information 
technologies. 
185. The work to introduce the automated system on collection of statistical data on cargo customs 
declaration, customs receipts, check up and regist ration of documents for issuance of license for the 
customs bodies is in progress.    
186. Application of modern information technologi es allows for creation of new opportunities for 
speeded customs formalities, better reliability of custom s statistics, improvement of efficiency of fight 
against counterfeiting and violation of customs rul es. Automatization and computerization in customs 
area enable to improve efficiency of decision execution, monitoring of information and its 
availability, effective use of the uniform information system. 
187. Declaration may be submitted by electronic app lication, including details for goods to the 
customs body.  
188. For transparency purpose all regulatory acts re lated to customs issues are published in an 
official newspaper.  In addition, the important cu stoms information is posted on the website of the 
customs body.   
(e) Technical Regulation  
(1)  Technical Regulation Reform 
189. Upon accession of the Kyrgyz Republic into the WTO it was stressed that there is a 
cumbersome system of establishing mandatory requirements by the state.  The number of such requirements is unreasonably numerous.  The gove rnment completely oversight the enterprises’ 
activity in production and sale of goods, performance  of various processes, works and services.  By 
acceding the WTO Kyrgyzstan has become the pa rty to the WTO Technical Barriers to Trade 
Agreement and Agreement on Application of Sanita ry and Phytosanitary Measures, thus, committing 
to create the technical regulation system in full compliance with international rules, norms and 
standards, widely spread international prac tice and reduce technical barriers to trade.  
190. To reform the technical regulation system successfully the government bodies in 
collaboration with international organizations wo rked on creation of a legislative framework.  
191. The authorized body on technical regulation, which is the Ministry of Industry, Trade, and 
Tourism of the KR, creates conditions for transpar ency and openness of the technical regulation 
system.  The list of goods subject to mandatory cer tification was reduced by over 70%; indicators for 
the remaining part of goods subject to mandatory certification were cut down by 2-3 times.  It will WT/TPR/G/170 Trade Policy Review 
Page 30 
 
 
facilitate a sufficient reduction of expenditures a nd time spending by entrepreneurs (suppliers, seller) 
for certification of goods, as well as cases of abuse by certification bodies.  Exclusion of unjustified requirements by certification bodies and state execu tive bodies, lessened state in terference into market 
relations, reduction of terms of customs formalities for supply of goods to a consumer, cancellation of 
intermediate form of goods access to market allow to eradicating corruption due to clear distribution 
of functions in technical regulation.  
192. Since December 2004, the Law on the Fundamentals of Technical Regulation in the Kyrgyz 
Republic is in force.  The Law provides for st andardization principles under the WTO Technical 
Barriers to Trade Agreement.  
193. Pursuant to the WTO principles the requirements  to goods shall be clearly divided into two 
categories: (1) mandatory for fulfillment: minima l requirements to safety, which should become 
technical regulations; (2) voluntary: fixed by standa rds, the fulfillment of which shall be kept by 
producers.  Standards became the documents of voluntary application and should serve for 
improvement of competitiveness of goods.  
194. The technical regulation reform shall ensure cr eation of favorable cond itions for development 
of industry, entrepreneurship, and trade; improving citizens’ protection from consumption of unsafe 
goods; limiting state interference into market relations ; improvement of the investment climate of the 
country.  
195. In December 2005, first ten (10) fundamenta l standards of the National Standardization 
System harmonized with international rules an d norms establishing principal definitions in 
standardization area were approved.  The procedur e for drafting and content of national standards, 
recommendations for drafting standards by organi zations and technical committees were also 
established.  
196. The Fund of Standards acting in the territory of  the Kyrgyz Republic is 20000; of them about 
580 are national standards KMS and about 19000 ar e regional standards (Interstate Council of 
Standardization, Metrology, and Certification is  recognized by the International Standardization 
Organization as a regional standardization organi zation).  The level of harmonization of national 
standards with international is 50%, the level of harm onization of all acting Fund of Standards is 38%.  
197. 30 technical committees on standardization, as well as representatives of goods producers, 
scientific and research and public organizations for consumers’ rights protection, executive bodies and 
other organizations may draft national standards.  
198. Annually about 60 national standards are devel oped (reviewed and modified) by technical 
standardization committees in the Republic.  Kyrgy zstandard organizes participation of interested 
organizations in consideration of 350 dr aft regional (interstate) standards.  
(2)  Sanitary and Phytosanitary Provisions  
199. The bodies responsible for implementation of th e Agreement on Application of Sanitary and 
Phytosanitary Measures are the Ministry of Health  Care and the Ministry of Agriculture, Water 
Economy and Processing Industry of the Kyrgyz Republic.  
200. While performing state sanitary and epidemiological oversight the Department of State 
Sanitary and Epidemiological Oversight under the Mi nistry of Health of the Kyrgyz Republic, oblast, 
city, rayon centers of sanitary and epidemiological  oversight within their competence established by 
Law of the Kyrgyz Republic on Sanitary and Epidemiological Welfare of Population shall: Kyrgyz Republic WT/TPR/G/170 
 Page 31 
 
 
- take mandatory decisions to perform hygi enic and anti-epidemiological actions by 
legal entities, individual entrepreneurs and citizens; 
- apply measures of administrative sanctions in the event of committing sanitary 
violations, and give materials to law en forcement bodies to bring law offenders to 
liability in accordance with the Law of the Kyrgyz Republic; 
- control observance of sanitary rules,  hygienic provisions, sanitary and 
epidemiological actions in development a nd putting into operati on, production output, 
application and use of goods, including pur chased abroad, with further issuance of 
sanitary and epidemiological conclusion on safety indicators for human beings health; 
- issue sanitary and epidemiological conclusi on for production, application and sale of 
new types of goods to population, new technological production processes, food 
additives, manufacturing raw materials, materials and articles, which are in contact with food products, as well as for importati on of goods into the territory of the 
Kyrgyz Republic by citizens, na tural persons and legal entities.  
201. To improve the activity in veterinary area, bring it into compliance with international 
requirements, ensure protection of  animal and human beings health  from diseases, production and sale 
of good quality animal goods in terms of veteri nary and sanitary properties, the new Law on 
Veterinary was developed and adopt ed in April 2005.  The new Law sets forth requirements to be met 
by the WTO members on application of sanitary measures in veterinary.  The Law was approved by the Office International des Epizootics (OIE).  
202. The amendments were introduced into the La w on Chemicalization and Plant Protection in 
June 2003 related to sale of pesticides and agricultu ral chemicals and administ rative liability applied. 
In June 2005, the amendments were made into the Law on Seeds.  
203. The State Veterinary Department under the Ministry of Agriculture, Water Economy and 
Processing Industry of the Kyrgyz Republic is a contact point for OIE.  
204. Veterinary and sanitary requirements to impor ts of animals, anim al products, and other 
cargoes and goods controlled by the state veterina ry body were developed and approved by the 
Intergovernmental Council for Cooperation in Vete rinary of CIS member-countries and fully observe 
the provisions of the OIE Terrestrial Animal Hea lth Code, the enquiry WTO point on international 
trade in animals and animal goods.  
205. In 1999, the Kyrgyz Republic joined the C onvention of the European and Mediterranean 
Plant Protection Organization and recognizes all pr ovisions of the Convention (GKR Resolution No. 
214 of April 12, 1999). 
206. Since March 2002, the Kyrgyz Republic is a member of the Commission “Codex 
Alimentarius”.  In October 2003, the National Committee “Codex Alimentarius” was established.  
207. Risk level assessment is conducted in solution of  import issues, that is determination of a 
possibility of penetration of contagious diseases agents in importation of goods or impact of other 
factors, which require veterinary and sanitary actio ns so that to prevent emergence and spreading of 
diseases and forecasting of biological and economic consequences.  
208. Risk assessment is carried out on the basis of  information received about epizootic status 
regarding especially dangerous diseases of the OIE List A and B, analysis of the situation in a WT/TPR/G/170 Trade Policy Review 
Page 32 
 
 
country-exporter regarding specific diseases and a po ssibility of consequences of carrying agents into 
the territory of the country.  The import of meat of livestock and sheep, as well as live animals from unsafe countries with spongiform encephalopathy (m ad cow), foot-and-mouth disease, cattle-plague, 
and other especially dangerous diseases is prohibite d upon the official confirmation of welfare of 
countries in quarantine diseases. The risk assessment an alysis of a threat of carrying the disease is 
performed by the State Veterinary Department on th e basis of OIE data and information received from 
countries-exporters.  
209. The importation of quarantine cargoes and transit shipment along the territory of the KR is 
performed in presence of phytosanita ry certificate, issued by the state plant quarantine bodies of a 
country-exporter, and import quarantine permit.  All quarantine materials and objects crossing the 
national border and boundaries of special quarantine z ones shall be subject to phytosanitary control 
irregardless of the country of origin.  
210. Any requirements to phytosanita ry control shall be established within the framework required 
for provision of phytosanitary measures by reasona ble tools and within reasonable time limits.  
211. According to veterinary requirements to meat of  various animals, including imported poultry, 
meat obtained from slaughter of animal, which ha ve undergone effect of natural or synthetic 
estrogenic, hormone substances, thyrostatic pr eparations, antibiotics, pesticides, and other 
pharmaceuticals injected before slaughter later th an deadline recommended by guidelines, shall be 
prohibited for importation.  
(f) Investment Policy  
(1)  Public Investment Programs  212. Public investing is one of the serious fact ors supporting overall economic development, and 
specific regions.  There are several  economic areas where the use of direct private investments is 
either limited or impossible due to a noncommercial character.  
213. The Public Investment Program is a tool, by  which the Government plans and inputs capital 
investments into the state sector, so that to compensate non-market nature and support the economic 
environment for further growth of private investments.  
214. To date and in future, the policy of the Kyrgyz Republic is aimed at rejection of attraction of 
non beneficial credits (grant element is not less  than 45%) and securing commercial credits by the 
Government or the National Bank.  
215. In terms of increasing burden of foreign debt lia bilities, the policy of attraction of the most 
favorable loans is not aimed at k eeping the same extent as before in the middle-term and long-term 
perspective.  The basis of the policy is principles of stringent selection of new investment projects.  
Two main approaches, quantitative and qualitative rest rictions of borrowings are used; the approaches 
are basically determined by the IMF Poverty Reduc tion and Growth Facility Program (PRGF) and the 
need to reduce the foreign debt.  PRGF Program contains, inter alia,  a number of indicators limiting 
budget deficit calculated given the foreign financing of PIP.  
216. According to conditions of the PRGF Program  the Government of the Kyrgyz Republic 
reduced assimilation of the Public Investment Pr ogram from 9.4% of GDP in 1999 to 3.1% GDP in 
2001.  Kyrgyz Republic WT/TPR/G/170 
 Page 33 
 
 
217. Further reduction and leveling of investment  expenditures should be undertaken at the 
expense of reduction of the number of signed credit agreements and withdrawal of sectors, which are 
being privatized from the PIP list.  
218. With regard to foreign debt i ssues, the management of foreign debt acquires more importance 
in the economic strategy of the Government; forei gn debt is considered to be one of the factors 
directly affecting the PIP financial framework.  
219. The stress is put and will be kept on attracti on of grant assistance.  The principal donors are 
the World Bank, the Asian Development Bank, Ge rmany, the Islamic Bank for Development.  
According to the World Bank’s Country Assistance Strategy for 2006-2007 fiscal years, the allocated 
funds shall be in the form of grants.  Also sin ce 2005 the ADB shall give about 50% of assistance in 
the form of grants.  The given grant financing w ill have a positive effect on implementation of the 
IMF Program, since the IMF established annual restricti ons for signing investment and program loans.  
(2)  Foreign Direct Investments Attraction  
220. Attraction of foreign direct investments into th e economy is one of the principal tasks of the 
national economic policy and also the aspect of mutually beneficial economic cooperation with 
foreign countries.  Therefore, the Government mak es all efforts to create the favorable investment 
climate meeting interests of foreign investors and business.  
221. Foreign investments in the Kyrgyz Republic are regulated by the Law on Investments of 
March 27, 2003, No. 66, which gives the national trea tment of economic activity for foreign investors 
equal to that applied for domestic investors of the country.  
222. Pursuant to the Law there are no restrictions to foreign investments. All economic sectors are 
open for investment projects.  Besides, foreign inv estors are permitted to own 100% of property in all 
sectors.  In other words, there are no closed indus tries and sectors for foreign investors, which do not 
require creation of a joint venture.  Foreign employ ees at foreign enterprises are automatically granted 
with visa, work, and residence permits.  
223. The Law stipulates timely payment of adequate and efficient compensation in case of 
expropriation.  Therefore, investors are guaranteed with freedom of repatria tion of capital, dividends, 
and revenue. There are no restrictions to exchan ge of revenue in national currency to foreign 
currency, including export of currency for further im port or payment of prospective expenditures.  
Investors may keep the revenue in foreign currency;  no restrictions to convert it to the national 
currency exist. 
224. Today, there are no economic sectors in which fo reign investors’ activity is restricted, in 
accordance with the Law on Investments.  The restricti ons related to movement of foreign investors in 
specific territories are restrictions to move into territories of military areas and objects of national 
security, state reserves, etc.  There are no areas completely prohibited for movement of foreign investors.  
225. Foreign citizens and legal entities may be given la nd plots within a settlement (city, villages, 
and rural settlements) in the event of cr editing of mortgage residential building.
9 Foreign investors 
may lease agricultural lands for 49 years.  
                                                      
9 Right to land for foreign persons is established under Article 5, Land Code of the Kyrgyz Republic. WT/TPR/G/170 Trade Policy Review 
Page 34 
 
 
226. Foreign investors are granted with investment visa for the period from one to five years and 
foreign employees are granted with permits by migration services of Kyrgyzstan. 
227. Under taxation legislation of the Kyrgyz Republic  tax remissions are applied for any investor 
(both domestic and foreign) making investment of  own funds, loan proceeds or attracted funds.  
228. At present, four free economic zones operate in  the Kyrgyz Republic, namely, FEZ “Bishkek” 
located in the capital of the country; FEZ “Karakol” located at the shore of the Issyk-Kul lake; FEZ 
“Maimak” located at the border with the Republic  of Kazakhstan; and FEZ “Naryn” located at the 
Kyrgyz-Chinese border.  
229. Under the Law on Free Economic Zones in the Kyrgyz Republic, Article 8, FEZ entities are 
exempted from all types of taxes, fee and duties fo r the period of their activity in the free economic 
zone. The preferential taxation and customs treatm ent in the FEZ territory for all FEZ’s entities cover 
the whole period of their operation and only rega rding their operation in the territory of FEZs.  
230. In the event of performing an economic activity  by FEZ entities in the territory of the KR 
taxation is applied under the Tax Code.  Services rendered by FEZ entities for consumption in 
domestic market shall be charge d with VAT under the Tax Code.  
231. According to the IMF Memorandum on Economic Policy, the Government of the Kyrgyz 
Republic during 2005-2007 anticipates liquidation of  all FEZs, except for FEZ “Bishkek”, as the tax 
policy action for the 2006 budget.  Based on the gi ven Memorandum the draft Law on liquidation of 
FEZ Naryn and Maimak10 was submitted for consideration by the Government. 
232. Considering the current changes in social-ec onomic situation of the Republic the proposals on 
quality improvement of current Law On Investme nts are prepared; the new Law on Licensing was 
drafted.  
233. The Kyrgyz Republic has signed and ratified bila teral agreements with 24 countries in order 
to protect and stimulate investment s (Turkey, China, Ukraine, France, Armenia, Great Britain, USA, 
Malaysia, Indonesia, Pakistan, Iran, Uzbekistan, Ka zakhstan, Georgia, Azerbaijan, India, Germany, 
Switzerland, Belarus, Mongolia, Tajikistan, Sweden, Fi nland, and Moldova).  It is planned to sign 
agreements with seven more countries (Denmark, Ru ssian Federation, Austria, Netherlands, Hungary, 
Italy, Bosnia and Herzegovina).  
(g) Intellectual Property Protection  
234. Starting from 1996 the State Agency for Intellectual Property under the Government of the 
Kyrgyz Republic has been acting as a state bod y pursuing common state policy in the area of 
intellectual property rights protection (industrial pr operty objects, copyright and related rights, non-
traditional objects of IP) in the Kyrgyz Republic. 
235. Creation of efficient system of intellectual prope rty is a factor of economic growth, expansion 
of market relations and development of the activity of entrepreneurs and creative workers, as well as 
the prerequisite for formation of favorable investment climate.  
                                                      
10 No lost profits are anticipated from liquida tion of FEZ “Maimak” and FEZ “Naryn”, as FEZ 
“Maimak” was stood idle and not operated because of lack of production and inve stment, while FEZ “Naryn” 
shall have not more than 3-years liquidation period for entities producing export and import substitution goods and having significant investments. Kyrgyz Republic WT/TPR/G/170 
 Page 35 
 
 
236. By today the legislative framework for IP pr otection has been formed and includes 13 Laws.11 
In general, the legislation of the Kyrgyz Republic  stipulates for the procedures and remedies (civil 
law, administrative, including border measures, a nd criminal law) that are called for assisting the 
rightholders to efficiently protect these rights with c onsideration of provisions of  international treaties, 
to which the Kyrgyz Republic is a signatory. 
237. Civil law remedies for protection of IPRs are set forth in the corresponding articles of the 
Civil Code and special laws, whereas criminal, ad ministrative and customs measures are envisaged in 
the corresponding Codes.  
238. In the area of international cooperation the Kyrg yz Republic has been a member of the WIPO 
since 1994. The country jointed the following 22 international treaties (Please, see Table No. 6). 
Table No. 6 
Membership of the Kyrgyz Republic in International Treaties in IP Area  
No. Name of a Treaty Date of Entry into Force  
1. Convention establishing the World Intellectua l Property Organization (WIPO) December 25, 1994 
2. Paris Convention for the Protection of Industrial Property December 25, 1994 
3. Madrid Agreement Concerning the Internati onal Registration of Marks  December 25, 1994 
4. Patent Cooperation Treaty (PCT) December 25, 1994 
5. Eurasian Patent Convention January 13, 1996  
6. Nice Agreement Concerning the International Classification of Goods and Services for the 
Purposes of the Registration of Marks  December 12, 1998 
7. Locarno Agreement Establishing an International Cl assification for Industrial Designs  December 12, 1998 
8. Vienna Agreement Establishing an Internationa l Classification of the Figurative Elements of 
Marks  December 12, 1998 
9. Marakesh Agreement Establishing World Trad e Organization (WTO), annex Ic: Agreement on 
Trade Related Aspects of Intellectual Property Rights (TRIPS) December 20, 1998  
10. Strasbourg Agreement Concerning the Internationa l Patent Classification (IPC) September 10, 1999  
11. WIPO Copyright Treaty (WCT) December 12, 1998 
12. Berne Convention for the Protection of L iterary and Artistic Works  July 8, 1999  
13. International Convention on Protecti on of New Plants Sorts June 26, 2000 
14. Patent Law Treaty (PLT) November 26, 2001 
15. Geneva Convention for the Protection of Producers of Phonograms Against Unauthorized 
Duplication of Their Phonograms  October 12, 2002 
16. WIPO Treaty on Performance and Phonograms  August 15, 2002 
17. Treaty on the Law of Trademarks  August 15, 2002 
18. Hague Agreement Concerning the Internati onal Deposit of Industrial Designs March 17, 2003 
19. Budapest Treaty on the International Recogn ition of the Deposit of Microorganisms for the 
Purposes of Patent Procedure March 17, 2003 
20. Rome Convention for the Protection of Perfor mers, Producers of Phonograms and Broadcasting 
Organizations  May 17, 2003 
21. Protocol Relating to the Madrid Agreement Concerni ng the International Registration of Marks June 17, 2004 
22. Nairobi Treaty on the Protection of the Olympic Symbol May 11, 2004 
239. In the area of copyright the country cooperat es with the International Confederation of 
Authors and Composers (CISAC), Paris. Kyrgyzst an has also signed bila teral inter-governmental 
                                                      
11 Part II, Civil Code, Patent Law of the Kyrgyz Republic, Law On Trade marks, Service Marks and 
Appellation of Places of Origin of Goods, Law On Copy right and Related Rights, Law On Legal Protection of 
Software and Databases, Law on Legal Protection of Topology of Integrated Circuits, Law On Commercial 
Secret, Law on Legal Protection of Selective Achiev ements, Law on Restriction of Monopolistic Activity, 
Competition Development and Protection, Law on Servic e Inventions, Utility Models and Industrial Designs, 
Law on Firm Names, Law on Patent Attorney, Law on Secrete Inventions. WT/TPR/G/170 Trade Policy Review 
Page 36 
 
 
treaties on industrial property protection with Ru ssia, Kazakhstan, Uzbekistan, Azerbaijan, and 
Armenia. An Agreement on IP protection h as been signed with the Turkish Republic. 
240. By the end of April, 2006 40637 industrial property objects are protected in the territory of 
the Kyrgyz Republic, of them 1902 – inventions (of which 1502 – protected by Eurasian patents), 
1 558 – industrial designs; 6 – utility models; 37171 – trademarks (of which 30587 protected pursuant 
to Madrid Agreement). 
241. Among the urgent problems faced by the country are illegal use of IP objects and sale of 
counterfeit goods.  
242. A necessity in efficient protection of rights and le gal interests of authors and IP rightholders is 
dictated by a host of objective reasons: status of the national economy, i.e. transition stage to the 
market relations, limited financial possibilities of IP  objects creators, poorly developed infrastructure 
in the given area, absence of traditions and legal culture in the area of IP objects exploitation.  
243. Coordinated actions of all ministries and agen cies, as well as public organizations aimed at 
identification and prevention of IPRs violations are required for establishing efficient system of IPRs 
protection.  
244. Understanding the importance of the given probl em, the Government of the Kyrgyz Republic 
issued Resolution # 93 on February 23, 2003 that established Inter-governmental Committee on 
Counteraction to Violations in IP area under th e Government of the Kyrgyz Republic. The Committee 
includes all law enforcement bodies and carries out a set of complimentary measures ensuring IPRs 
protection.   
245. Special structural sub-divisions have been cr eated in Kyrgyzpatent, notably unit on research 
and unit on examination of copyright and related rights objects, whose major goal is to examine the 
counterfeit nature of the goods, stud y and analysis of audio and video piracy. These structures closely 
cooperate with law enforcement bodies in identifying violations of copyrights and related rights. A 
special unit on fight with violations in IP area is w ithin the structure of the Ministry of Home Affairs. 
Inspections on identification of copyright and related rights’ violations in the area of audio and video 
business have been included within the plan of activities of law enforcement bodies. General 
Prosecution office of the Kyrgyz Republic issued a decree for all prosecutors of the regions and the 
capital ordering to strengthen the control over exam ination of complaints about observation of the 
legislation in the area of copyright  and related rights, and in case corpus delicti  is established to 
initiate criminal charges and conduct in vestigation in an efficient manner. 
246. Moreover it should be noted that for the purpose of fighting with piracy and counterfeiting 
law enforcement bodies jointly with employees of Kyrgyzpatent carry out activities on seizure of counterfeit audio and video products.   
(h) Agriculture 
247. During the next stage of reforms in agriculture , the state efforts are aimed at creation of 
favorable conditions for development of private collec tive and farm holdings, re lated to stimulating of 
production, processing and sale of products and rendering services by organizing new cooperation 
forms, as well as ensuring social protection to vulnerable population layers.  Kyrgyz Republic WT/TPR/G/170 
 Page 37 
 
 
248. Thereto, the Government approved a set of ac tions until 2010 covering development of plant 
growing12; animal breeding13; system of procurement and export of agricultural and processing 
goods14; water supply to rural areas15 to implement the National Strategy of the Kyrgyz Republic 
“Complex Rural Development”.16  
249. Principal actions to implement the Set of Ac tions on development of plant growing in the 
Kyrgyz Republic until 2010 are as follows: allocatio n of additional irrigated lands for seed-growing 
holdings; creation of additional specialized seed-g rowing holdings; strengthening of public services 
for crop variety testing and seed control by labor atory and field equipment; purchase of foreign 
equipment for labeling and packaging of seeds; creation of the republican biotechnological center for 
transition of potato seed-growing to virus-free basis;  creation of agricultural technical and chemical 
service centers at each ayil okmotu (rural board); finding sources of financing for purchase of specialized machinery and equipment on conditions to hand over to farmers and peasant, and services 
centers on leasing terms; saturation of market of the Republic with chemicalization means, spare parts, various types of agricultural machinery and equipment by reduction of prices, thus exempting 
suppliers of these products from VAT payment. The r esults of implementation of the Set of Actions 
will be growth of agricultural goods  in 2010 in comparison with 2003  (forecast): grain – 45%, sugar 
beet – 47%, raw cotton – 31%, tobacco – by 4.4 times, potato – 16%, vegetables – 41%, fruits and 
berries – 48%.  
250. Set of actions to develop cattle breeding provides for the following measures: improvement 
of regulatory framework for development of cattle breeding; reforming of management system in 
agriculture and creation of an institutional structur e; creation of cattle breeding auxiliary services; 
improvement of material basis, financial and tec hnical provision.  The results expected are production 
output of highly valuable and productive pedigree an imals, restoration of export of pedigree products 
of animal breeding.  
251. The principal measures for development of system of procurement and export of agricultural 
products and processing  are as follows: restructuring debts of export enterprises to the Social 
Insurance Fund if the export shar e of such enterprises exceeds 30 percent; determination of scaling of 
export producers in examination of options of partia l, preferential and full exemption from taxation; 
expansion of programs of crediting for export en terprises and economic entities; stimulation of 
increase in volumes of insurance transactions in foreign trade activity and expansion of types of 
insurable risks in this area; development of consultancy and marketi ng services; incentives for 
attraction of domestic and foreign investments into  development of the system of procurement and 
export of agricultural products a nd processing industry, etc.  The outcomes anticipated cover export 
growth agricultural and processing i ndustry products by 10 percent.  
252.  The implementation of the set of  actions for development of water supply in rural areas  
stipulates construction and reconstruction of the wa ter supply system in rural area. The result should 
be provision of rural population with good quality drinking water, with the growth by 80 percent.  
                                                      
12 Resolution of the KR Government of February 9, 2005, No. 70 “On Set of Actions to Develop Plant 
Growing in the Kyrgyz Republic until 2010”. 
13 Resolution of the KR Government of February 14, 2005, No. 81 “On Set of Actions to Develop 
Animal Breeding in the Kyrgyz Republic until 2010”. 
14 Resolution of the KR Government of February 25, 2005, No. 106 “On Set of Actions to Develop 
System of Procurement and Export of Agricultural Products and Processing Industry”. 
15 Resolution of the KR Government of February 28, 2005, No. 113 “On Approval of Set of Actions 
“Development of Water Su pply in Rural Area”. 
16 Decree of the President of the KR of June 23, 2004, УП N 210 “On National Strategy Complex 
Rural Development until 2010”. WT/TPR/G/170 Trade Policy Review 
Page 38 
 
 
(i) Competition Development Policy  
253. The national policy of entrepreneurship s upport and development has promoted the 
competition development.  For this purpose, a nu mber of laws, resolutions, aimed at removal of 
administrative barriers to entrepreneurship and priv ate sector development was adopted in 2001-2004.  
The simplified procedure for issuance of permits fo r designing and construction of small and medium 
businesses was introduced; the period for consideration of documents was reduced by 2.5 times; the 
number of unjustified inspections was decreased.  In  general, the number of licensable activities was 
reduced from 400 to 30 types; and the number of paid services rendered by executive bodies and structural units by 30%.  The rates and tariffs for services granted by the government bodies are 
reduced; the control over expenditures is toughened.  
254. One of the main features of the competiti on development is increase of the number of 
economic entities.  According to data of the Nati onal Statistic Committee as of the beginning of 2005 
the number of registered economic entities was 297.2 thousand.  During one year the number of entities raised by 10.2%, that is the increase by  210.5 thousand in comparison with 1995 (as of 
January 1, 1996: 86.7 thousand entities).  
255. The dynamics of the total number of industrial enterprises shows the sustainable growth.  
Their number increased by 205 entities in compar ison with 2001, that is the evidence of the 
demonopolization process in the industrial sector  and decrease of large enterprises.  
256. The number of economic entities in the market of construction services is constantly 
increasing, thus enabling competition development in the construction sector.  As  of January 1, 2000, 
there were 2784 enterprises, and as of January 1, 2005, 3655 enterprises operate, that is the rise by 
871 entities for 4 years.  
257. Road transport services sector achieved the most active formation of the competitive 
environment.  This is due to presence of the large number of enterprises both in public transport, and 
departmental, as well as increase of portion of passenge r and cargo transportations by road vehicles of 
the private sector.  
258. As a result of reorganization of “Kyrgyz Aba Joldoru” National Air Carrier JSC, the 
competition was established in the market of air transportations.  At present, 15 air companies were registered in the Kyrgyz Republic.  The number of foreign air carriers is increasing.  Recently, the flights of different air companies on a parity basi s have become operating.  The competitive activity 
of air companies in cargo transportations was strengthened.  
(j) Government Procurement  
259. Pursuant to Decree of the KR President of  January 29, 1997, the State Agency for 
Government Procurement was formed.  The Agency is  authorized to implement the national policy in 
government procurement.  The Law of the Kyrgyz  Republic “On Government  Procurement of Goods, 
Works and Services” was adopted on May 13, 1997.  
260. The World Bank conducted the survey of the go vernment procurement system in 2002.  
Based on the survey results the Report on Assessment of Procurements in the Kyrgyz Republic was 
prepared with recommendations to make amendmen ts to the Law On Government Procurement of 
Goods, Works and Services.  Kyrgyz Republic WT/TPR/G/170 
 Page 39 
 
 
261. In May 2004, the Law On Government Proc urement of Goods, Works and Services was 
amended. The given Law was brought into comp liance with the WTO Government Procurement 
Agreement and European Union guidelines.   
262. Today, the standard tender documents for pur chase of goods, works, and services are being 
developed in accordance with the new Law on Government Procurement. 
263. The draft Law on Electronic Purchases will be de veloped in the third quarter of 2006 with the 
following submission to the Government.   
264. The Kyrgyz Republic during the WTO accessi on process has committed to join the WTO 
Government Procurement Agreement.  At present, the Kyrgyz Republic have prepared and answered 
the Checklist of questions regarding joining the GP A. The answers to the US questions were also 
prepared. Two sessions of the WTO Committee on G overnment Procurement were held considering 
joining of the KR to the Agreement.  
(k) Banking Policy  
265. Despite the positive changes made under the WB  Finance Structural Adjustment Credit 
Program in 1996, the sharp worsening of financial sustainability of the banking sector has occurred by 
the end of 1998.  Worsening of the quality of credit portfolio of banks, increase in share of 
unprofitable or unpaid credits, poor management syst em, lack of control over executive officials’ 
actions by stockholders, imperfect system of internal  control and audit had resulted in insolvency of 
several banks.  
266. To prevent the system crisis, the National Bank of the KR jointly with the Government had 
undertaken actions to restore and restructure insolvent banks, intensify work on improving the 
legislative framework for oversight over commercial banks activity.  As a result of these joint actions, 
the viable core of the banking system has been pr eserved, and the system risk in banking sector was 
localized and neutralized.  
267. Today, there are no restrictions and limitations to opening and operation of foreign 
commercial banks, branches, and subsidiaries.  Fo reign capital share in the total banking capital 
increased by two times and constituted 62 percent as  of the end of 2005, in comparison with 30 
percent as of the end of 1998.  Out of operating commercial banks in 2005 th e prominent stockholders 
in 11 banks are foreign investors.  The given fi gures show the raise in confidence for the banking 
system by the foreign investors.  
268. With a view to improve sustainability and reliab ility of the banking system the requirement to 
300 million Som of authorized capital stock for ne wly opened commercial banks and 60 million Som 
of equity capital for operating commercial banks w as established.  Since January 2008 the amount of 
equity capital should be 100 million Som.  
269. As of December 31, 2005, the banking system  of the Kyrgyz Republic consists of 19 
operating banking institutions with 166 br anches located throughout the country.  
270. By the end of 2005, the correlation of assets,  credits, and deposits to the nominal GDP 
amounted to 22.0 percent, 7.7%, and 12.0 %, accordingly.  
271. The total regulatory capital of the banking syst em during the last years is increasing; it 
equaled 3.51 billion Som by the end of 2005, thus risi ng by 2.2 times during the last four years.  The 
significant growth rate was due to new inv estments into the capital of commercial banks. WT/TPR/G/170 Trade Policy Review 
Page 40 
 
 
272. The positive changes in the banking sector  took place mainly due to favorable 
macroeconomic trends (reduc tion of inflation level and stabilization of exchange rate).  As a result, 
the interest rates at interbank credit market have  been substantially decreased.  The trend toward 
crediting economy in national currency created prere quisites for development of domestic production, 
which is the main income source for th e population and reduction of poverty.  
273. To improve financial sustainability of banks th e requirements meeting international standards 
were set covering risk management , application of international st andards of financial reporting, 
disclosure of information, conduct of independent in ternal audit, organization of internal audit and 
control systems, introduction of corporate governance principles, fight against money laundering, and 
financing for terrorism. 
(l) Non-Bank Financial Sector  
274. The development of non-bank financial and cr edit institutions (NBFCI) has started since 
1997, when the first credit unions were formed.  
275. As of January 1, 1998, 15 credit unions, 2 speci alized financial crediti ng institutions operated 
in the Kyrgyz Republic.  Their credit portfolio amounted to 28.6 million Som. Over the period from 
1998 to 2006, a number of operating NBFCIs run up to 458 entities, including 320 credit unions and 
136 microcrediting companies and agencies; the cr edit portfolio amounted to 4225.1 million Som. At 
present, the NBFCI system renders services for 105.5 thousand of active debtors.  
276. In December 2005, the Medium Term Micro Finance Development Strategy for 2006-10 was 
adopted aimed at development of microfinancing organizations, credit unions  and other financial 
crediting institutions operating in microfinancing market.  
277. The State Agency for Financial Oversight a nd Reporting under the KR Government is the 
authorized body to conduct the uniform nationa l policy in development of accounting and audit 
system.  
278. As a main reforming tool, the International Accounting Standards (IAS) and International 
Standards for Auditing (ISA) developed by th e Board of Committee on IAS (London City) and 
Committee on International Auditing Practice of Financial Reporting (New York City) were 
adopted.17  
279. The policy objectives in the non-bank area are to create a legal environment and conditions 
for formation, development, a nd strengthening of non-banking fina ncial institutions; regulate and 
oversight over their activity; apply measures improving the activity in the given area, as one of the 
component of future investing into the economy of the Republic.  
280. Insurance. Upon adoption of the Law on Organization of Insurance in the Kyrgyz Republic in 
1998 the market has started to develop.  Under th e given Law, an insurance entity may be established 
and operate only in the form of a joint stock compan y (open or closed type).  The right for insurance 
contract was secured by the Civil Code (Chapter 46). 
281. The number of insurance companies reached 86 entities by 1998; of them only 39-45% was 
operating and the remaining part wa s not operating or closed due to lack of receipts of insurance 
payments.  However, for the last five years, the am ount of insurers has reduced by 2 times; at present 
                                                      
17 For introduction of IAS and International Standard for Audit the Laws On Accounting of April 29, 
2002, No. 76, and On Auditing Activity of July 30, 2002, No. 134 were adopted. Kyrgyz Republic WT/TPR/G/170 
 Page 41 
 
 
all 11 registered insurance companies operate.  There are no state insurance companies and 
specialized brokerage and re-insurance organizations. 
282. Insurance market of Kyrgyzstan is at the initial stage of development and comprises only 
0.2% of GDP.18 The amount of insurance premium per capita is not significant, which is 37.3 Som in 
2004 on average per capita, and it decreased by 25 Som in 2005.  
283. The main trends of the Strategy for Deve lopment of Financial Market are as follows: 
development of voluntary and mandatory insura nce; provision of reliability and financial 
sustainability of insurance system; development of state regulation; improvement of government body 
on insurance oversight; development of investment  activity for insurance entities; development of 
institution of insurance system and improvement of taxation; collaboration with international 
insurance organizations; improvement of insurance population culture and other important aspects.  
284. As a result of the Strategy’s implementation,  the main numerical features of modern 
insurance market (the volume of insurance fees a nd capacity of insurance companies) should increase 
by 10-12 times. 
285. Lottery and gambling industry .  The lottery activity is regulated by Regulation on Republican 
Lotteries, approved by Resolution of the Kyrgyz Republic of January 17, 2001, No. 11.  A permit is 
the certificate for the right to perfo rm lottery.  As of January 1, 2006, six (6) organizers of lottery 
operate.19 
286. The state regulation is aimed at provision of financial sustainability of lottery companies by 
working out economic justified prov isions which observance minimizes the risk in their operation. 
The control and oversight over the lottery busin ess pursue the increase of the general level of 
organization of lottery conduct, which will improve the population trust to lottery.  Further, the 
revenue budget part should be increased.  
287. Gambling activity is performed in accordan ce with the Law on Gambling Activity in the 
Kyrgyz Republic of July 26, 2004, No. 95.  As of January 1, 2006, 127 gambling institutions operate 
(15 – casino, 101 – halls and spots for playing machin es; 11 – totalizator (bingo, Russian lotto), 2 – 
handbook offices).  
288. Non-state pension funds . The reform of the pension system has initiated in 1997, when the 
transition from traditional distribution model of “so lidarity of generations” to the model based on 
personal savings of each citizen (conditional accu mulating pension system) was accomplished in 
accordance with the Law on State Pension Social Insurance.  
289. Since 1994 only one non-state pension fund operates in the KR.  For 10 years of operation 
only 1800 depositors were registered.  
290. The Law of the KR On Non-State Pension Funds  was adopted in 2001.  However, these funds 
have not been properly developed.  According to  the opinion of international experts, the main 
obstacle is improper interpretation of concepts of  private pension funds; legislative framework and 
conditions for organization are not sa tisfactory and require further development.  It is necessary to set 
incentives for attraction of population savings for a long-term period with a view to form pension 
accumulations and the relevant paying offs. 
                                                      
18 Insurance share in GDP of developed countries is 8 – 10% on the average. 
19 “MSFOD” Ltd., “Masis” Ltd., “Board for Lotte ry” SE, “Noi” Ltd. JV, “SHAN” Ltd., “Golden 
Ball” Ltd. WT/TPR/G/170 Trade Policy Review 
Page 42 
 
 
291. To protect rights of next generations of pensione rs, it is anticipated to have the stage-by-stage 
transition to accumulating pension system.  An employee will additionally deduct insurance fees, 
which will form pension accumulations by the pens ion age.   These funds will be forwarded to 
investing and investment revenue will be repaid in the form of larger amount of pension payments.  
292. In the long-term perspective, all pension sy stem will be shifted to servicing non-state 
accumulating pension funds.  The productive developm ent of non-state pension funds will be one of 
the significant factors of strong stimulating of the securities market development in the Kyrgyz 
Republic.  
(m) Transport  
(1)  Air Transport  293. Civil aviation in the Kyrgyz Republic is com ponent of the uniform transport system.  Its 
specific role is determined by the opportunity to ensure better speed of the passenger, cargo and postal 
conveyance for a long distance in comparison with other transportation means.  
294. At present, the Kyrgyz Republic singed 26  Intergovernmental agreements on air 
transportation with different countries, including 10 agreements signed for the period from 2000.  
295. The regular air flights are carried out by ov er ten (10) foreign air companies, namely, 
Russian, British, Turkish, Uzbek, Chinese, Tajik , and Iranian. Additional chartered flights and 
chartered transportations are performed, if necessary.   Moreover, Kyrgyzstan declared the policy of 
“open air” for cargo air transportations.  
296. 128 licenses were issued by air companies in 2005, including 110 passenger, luggage, cargo, 
and postal transportation licenses, 4 licenses for air works; 9 licenses for technical servicing of air 
crafts and relevant equipment, 5 licenses for landing and take-off of air crafts. 
297. The certification of airfields “Naryn”, “Kazarman”, “Batken”, “Issyk-Kul”, “Talas”, “Osh”, 
“Jalal-Abad”, “Caravan”, “Manas ” was carried out.  The certificates for flying suitability for 
43 airplanes were issued.  
298. At present, to liberalize air services market , the work on adoption of the Law on Civil 
Aviation of the KR and other regulatory acts is being performed.  
(2)  Road Transport  
299. The transportation of larger part of passenger and cargoes is performed by road transport in 
the Kyrgyz Republic; 95% of all cargoes are transported.   For the most cases, the road transport is the 
only transport means ensuring communication between different regions.  
300. At present, Kyrgyzstan concluded 23 Intergove rnmental Agreements on International Road 
Traffic. Besides, road transportations are regulat ed by the Memorandum on International Cooperation 
in Transport Area, interdepartmental Agreements on joint passenger transportations, agreements on 
opening of regular international bus routes, regula tions for implementation of  agreements, protocols 
on creation of permit issuance system, etc.  
301. Bilateral agreements cover technical issues such as emission of vehicles, size and dimensions 
of vehicles, and allow for application of own nati onal standard/norm by each country.  Besides, there 
are multilateral agreements, such as Minsk Agre ement (1999) On Dimensions of Vehicles, Kyrgyz Republic WT/TPR/G/170 
 Page 43 
 
 
Performing Interstate Transporta tions on Road Vehicles of CIS member-countries.  Road carriers 
should observe such provisions as maximum sizes and other linear paramete rs of vehicles.  CIS 
standards are complied with national standards/norms of PRC, but there are differences such as PRC standard require narrower width of a vehicle. The infringers shall be liable under the national 
legislation (additional payment, fees).  
302. The principles of payments/fees imply that th ey are charged for the use of roads, as 
determined by the Road Fund, rather than entry fee or transit fee, since they are granted under the 
Agreement. 
303. In 2005, 27236.9 thousand tons of cargoes were moved, that is 91.3% to the relevant period 
of 2004.  Water transport moved 25.5 thousand of tons of cargo, that is 75.4 % to the relevant level of 
the previous year.  
304. The passenger traffic by buses was 5588.0 million passenger km, that is 104.7 % to the 
relevant period of the previous year. 
305. 68389 licenses were issued totally, including  passenger carriages - 65618, international 
freight transportations - 2771, operation of bus sta tions and bus terminal - 35 licenses, or by 4149 
license more in comparison with the previous year, th at is 106.4 %. To perform  international carriages 
in 2005, 21613 permits were issued for the amount  of 27478000 Som, which was transferred to the 
republican budget in full volume.  
306. At present, 1034 bus routes operate in the Republic ; of them 45 international, 69 interoblast, 
657 intraoblast and 263 municipal (including Bishkek and Osh).  5200 buses operate on these routes.  
(3) Railroad Transportations  
307. The fundamental legislative acts regulating car go and passenger railroad transportations are 
the Agreement on International Railroad Cargo Traffic of November 10, 1951, Agreement on 
International Railroad Passenger Traffic, Agre ement on Interaction of CIS member-countries on 
Approaching Taxation Mechanism for Railroad Tran sport of March 10, 2000, On Cooperation in 
Technical Re-equipment and Modernization of Ra ilroad Rolling Stocks of  September 9, 1994, 
Agreement on Coordinating Bodies for Railroad Tran sport of CIS countries of February 14, 1992, 
Law of the Kyrgyz Republic On Railroad Transport of July 9, 1998 No. 90, and Statute of the Railroad of the Kyrgyz Republic of June 2, 2000, No. 315.  
308. Under the Article 7 of the Law On Railroad Transport of the Kyrgyz Republic the railroad 
and all objects and other property of railroad trans port, which ensure carriages, repair and recovery 
works, shall not be subject to denationalization and privatization.  Besides, paragraph 3.1.20 of the 
“Program for Privatization of State Property in the Kyrgyz Republic for 2004-2006” approved by the KR Government Resolution of March 19, 2004, No . 189 envisages that railroads shall be prohibited 
for privatization.  
309. Foreign railroad carriers have the right to de liver and take cargoes or passengers without 
mandatory transshipping at the border.  Transit carri ers may also provide international services in the 
Kyrgyz Republic.  
(n) Telecommunications  
310. The legislative framework in telecommunicati on area includes the Law on Informatization of 
October 8, 1999, No. 107, Law On Electric and Postal Communications of April 2, 1998, No. 31, On WT/TPR/G/170 Trade Policy Review 
Page 44 
 
 
Licensing, On Restriction of Monopolistic Activ ity, Competition Development and Protection” and 
other subordinate legislation.  
311. Liberalization and demonopolization processes in place, successful development of market 
relations and competition and accession of the Kyrgyz Republic to the WTO ensured the 
independence for economic devel opment of operators and communi cations services.  Operators 
provide service of fixed, mobile and radiot elephony communications, personal paging, data 
transmission, TV and radio programs broadcasting, etc. At present, 249 communications operators act 
in the territory of the Kyrgyz Republic, holding 316 licenses.  Due to strong growth of telecommunications and emergence of large variety of communication services, several operators 
have several licenses for such services.  
312. Currently, four mobile operators function in telecommunications market.  The competition 
level in mobile, fixed communicati ons and data transmission is not high.  The number of mobile 
subscribers is annually increasing by two times.  Re cently the development of mobile services with 
the use of pre-paid calling cards took place.  
313. Fifteen (15) operators work in the internati onal, long distance calls, and real-time packet-
switched voice transmission market.  International and long distance calls services are provided by 
four operators: Kyrgyztelecom open JSC, Saima- Telecom Ltd., Katel Ltd., and Winline Ltd.  
314. 38 operators render local calls services. 
315. 40 operators function in data transmission services, including Internet.   
316. Public access centers are opened (internet-cafes, internet-clubs, etc.), which provide a broad 
range of telematics services; at present 112 operators  are licensed to provide telematics services.  
317. At present, 38 companies provide services of constructing-and-mounting, balancing and 
commissioning in communications, such as Agrounive rsaltechnic Ltd., Komset Ltd., Stins Com Ltd., 
Nazar Ltd. and other.  
318. 50 operators act in the Republic, rendering servi ces in TV and radio programs broadcasting, 
of them 18 - radio-programs broadcasting; 18 - TV programs broadcasting; 7 - TV and radio programs 
broadcasting; 5 - cable TV broadcasting.  
319. TV services are rendered in all oblasts of the Republic by Kyrgyztelecom JSC and 
independent private TV and radio companies.  
320. Under Resolution of the KR Government On Privatization of State Share of Kyrgyztelecom 
Open Joint Stock Company No. 590 of December  19, 2005, the State Property Committee was 
assigned to held investment competition for privatiza tion of 77.84% of state share in Kyrgyztelecom.  
321. In 2003, due to end of exclusive rights of Kyrg yztelecom to render services of international, 
long distance calls and coming privatization, on May 7 the KG Government adopted Resolution On 
Introducing amendments into Resolution of the KR  Government On Licensing of Certain Types of 
Entrepreneurial Activity of May 31, 2001, No. 260, providing for conditions of obtaining a license for 
international and long distance calls, including r eal-time packet switched voice transmission (VoIP). 
322. Pursuant to the Law on Licensing of the Kyrgyz  Republic, issuance of licenses is performed 
on the paid basis.  The amount of payment for co nsideration of applica tion, conduct of required 
examination and registration of documents is determined based on appropriate costs of a body Kyrgyz Republic WT/TPR/G/170 
 Page 45 
 
 
authorized to perform a licensing activity and equals 300 Som or 3 minimal monthly wages.  The 
issuance of licenses is performed at equal terms for all persons (Kyrgyz and foreign), meeting 
requirements established for performance of the co mmunications sector activity.  The issuance of 
license is prohibited for the purpose of competition restriction.  
323. Postal communication services are provided by  seven commercial enterprises along with 
operator-monopolist Kyrgyz Pochtasy state enterprise.  For private competition the services in receipt, 
transportation and delivery of domestic and in ternational posting, express mail, courier, and 
distribution of periodicals are opened.  
(o) Tourism  
324. For the last years the KR Government has started to view tourism as one of the economic 
sectors for budgeting.  The Decree of the KR Pres ident On Creation of Favorable Conditions for 
Tourist Period in 2005 and Actions to Further Devel opment of Tourism in the KR of August 9, 2005, 
No. 307, recognized tourism as a priority sector w ith sufficient export opportunities and capacity for 
budget allocations.   
325. The principal regulatory acts in tourism area are the Law On Tourism of March 25, 1999, No. 
34, Resolution of the GKR On Program for Touris m Development in the Kyrgyz Republic until 2010, 
of February 2, 2001, No. 33, Resolution of the GKR On “Hospitable Kyrgyzstan” Marketing Strategy of Tourism Development in the Kyrgyz Republic, of October 6, 2004, No. 734. 
326. During last years the market of tourist services was formed due to consistent implementation 
of the national policy and market reforms.   
327. There is a developed transport sector (air lines and land), the sector for tourist 
accommodation, tourism operators sectors, guides a nd tour guide services; financial institutions now 
accept payment by Visa and MasterCard and cashing traveler cheque. Therefore, the level of services for tourists is improving.  
328. The State Program for Denationalization and Priv atization of Resort and Recreational Objects 
is almost fulfilled; at present all resort and recreati onal objects, in particular at the Issyk-Kul Lake are 
privately owned, except for a few.  The privatiza tion has become a strong incentive for foreign direct 
investments attraction. Due to FDIs the constructi on and restoration of hotels and holiday homes was 
carried out.  Mountain skiing centers were put into operation after reconstruction in Bishkek outskirts. 
329. The infrastructure projects such as reconstructi on of “Manas” airport, Bishkek-Osh road were 
fulfilled; the modern communications technologies provi ding regular connection with the entire world 
were introduced.  A number of high ranked hotels we re put into operation in Bishkek; new air lines 
were opened, where international air companies Bri tish Airways, Turk Hava Yolari, Aeroflot, etc. 
perform flights.  
330. Visa regime was simplified and registration for tourists from developed foreign countries was 
canceled; the procedure of border control for tourists was streamlined.  
331. Owing to joint efforts made by government bodi es and private entrepreneurs in tourism area 
the advertising and PR activity aimed at popularizatio n of Kyrgyzstan’s image as a tourism country is 
carried on in world tourist markets.  Annually the re presentatives of Kyrgyz tour industry take part in 
international exhibitions and fairs.  WT/TPR/G/170 Trade Policy Review 
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Table No. 7 
Main Indicators for Tourism Developm ent in the Kyrgyz Republic for 2002-2005 
No. Main Indicators 2002 2003 2004 2005 
1 Number of registered companies rendering recreation services  3918 4261 4601 4787 
2 Gross added value in tourism activity (mln. Som) 3019,7 3010,9 3372,2 3458,7 
3 In percent to GDP  4,0 3,6a 3,6 3,5 
4 Manufacturing production accomp anying tourism development 
(mln. Som) 77,1 77,2 97,6 98,0 
5 Investments into main capital in tourism (mln. Som) 1357,1 739,5 1645,9 876,0 
6 Capital assets brought (m illion Som) 1797,4 187,8 3337,9 3589,4 
7 Revenue from tourists transporta tions (million Som) 1289,4 1368,2 1684,0 1567,2 
 Retail trade turnover in touris m (million Som) 1691,3 1930,8 2279,3 2301,7 
8 Turnover of restaurants, bars, canteens and other catering 
companies (million Som) 1143,8 1469,9 1787,1 2184,7 
9 Export of tourist services (revenue from receipt of foreign 
citizens) (million USD) 35,7 47,8 75,6 70,5 
10 Number of visits by foreign citizens (thousand people) 139,6 211,3 971,6b 761,2b 
11 Import of tourist services (cos ts of citizens of Kyrgyzstan 
abroad) (million USD)  9,9 16,6 50,3 43,5 
12 Paid services to population (million Som):  
A Tour and trips  140,4 168,7 365,1 345,0 
B Health improving 223,6 248,6 375,6 359,4 
C Hotel and other accommodation plac es services  524,6 651,9 715,6 719,2 
a Decrease in GDP share due to reduction of construction volumes. 
b According to data of Border Service of  the National Security Council,, the number of foreign citizens entering the territory of the 
Republic, which fall under the WTO “tourist” category.  
Source:  National Statistics Committee of the KR 
(p) Regional Trade Agreements  
332. Within the regional cooperation framework the im portance is given to further development of 
relations with CIS countries, EurAsEC, Shanga i’s Organization for Cooperation (SOC), Economic 
Cooperation Organization (ECO), due to territori al proximity of the commonwealth countries, 
prevalent economic and cultural relations, and mutu al accessibility of domestic markets of countries 
for goods.  
(1)  Commonwealth of Independent States  
333. On December 8, 1991, the Agreement on Creati on of Commonwealth of Independent States 
was signed in Minsk, Belarus.  CIS members are A zerbaijan, Armenia, Belarus, Georgia, Kazakhstan, 
the Kyrgyz Republic, Moldova, Russian Federation,  Tajikistan, Turkmenistan, Uzbekistan, and 
Ukraine. 
334. The fundamental document for CIS countries c ooperation is the Agreement on Creation of 
Free Trade Area of April 15, 1994, as amended on April 2, 1999.  Furthermore, the Kyrgyz Republic 
concluded bilateral free trade agreements with Belarus (effectuated March 17, 2000), Tajikistan 
(effectuated December 7, 2001), Azerbaijan20, Armenia (effectuated October 27, 1995), Republic of 
Kazakhstan (effectuated November 11, 1995) , Republic of Moldova (effectuated 
                                                      
20 The Kyrgyz Republic ratified the Agreement on March 2, 2006 (Law no. 72 of March 2). There is no 
information from Azerbaijan party about the ratification. Kyrgyz Republic WT/TPR/G/170 
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November 21, 1996), the Russian Federation (e ffectuated March 24, 1993), the Republic of 
Uzbekistan (effectuated March 20, 1997), Ukraine (effectuated December 31, 1997).  
335. Based on the agreements the Kyrgyz Republic  provides free trade treatment to all goods 
originating from CIS countries.  All CIS countri es, except for Turkmenist an, ensure free trade 
treatment for the Kyrgyz export.  
(2)  Eurasian Economic Community  
336. EAEC, the Customs Union successor21, was created in full compliance with UN principles 
and international law.  It is a clearly structured  organization with strict mechanism for adoption and 
execution of decisions.  It has international legal personality.  The Treaty on Formation of Eurasian 
Economic Community was concluded on Oc tober 10, 2000 in As tana, Kazakhstan. 
337. The members of the EAEC are five countri es from the date of formation: Belarus, 
Kazakhstan, Kyrgyzstan, Russia and Tajikistan.  As  requested by Moldova and Ukraine the observer 
status in EAEC was granted.  Due to joini ng of the Organization “Central-Asian Community” 
(OCAC) with the EAEC22, Uzbekistan is in the process of accession to the EAEC. 
338. The actual results of integrative interac tion of EAEC member-countries include the 
elimination of customs duties in mutual trade, ope ration of free trade treatment with no exemptions 
and restrictions, transition to principles of levy ing indirect taxes by a “country of destination”, 
adoption of commodity nomenclature of EAEC b ased on 10-digit coding system, formation of the 
Common Customs Tariff (62% of EAEC commodity nomenclature), adoption of international acts 
(88 documents in total), aimed at harmonization of foreign trade, tax, customs and tariff/non-tariff 
legislation, as well as related to currency regula tion, border issues, energy and transport.  
339. The level of harmonization of the Customs Tari ff of the Kyrgyz Republic for 2006 with the 
EAEC Common Customs Tariff (CCT) is nearly 30%.  The Kyrgyz Republic believes that the CCT will be formed after accession of EAEC members into  the WTO, considering their tariff commitments 
under the WTO.  Therefore, the Kyrgyz Republic has a position to join the CCT after accession of 
other EAEC members into the WTO; the KR declared this point for EAEC countries.  
(3) Shanghai’s Organization for Cooperation  
340. SOC was formed under results of meeting of head s of five counties (Republic of Kazakhstan, 
PRC, the Kyrgyz Republic, the Russian Federation, a nd the Republic of Tajikistan) in April 1996 in 
Shanghai, PRC, when the Agreement on Confidence -Building in the Military Field Along the Border 
Areas was signed. In April 2000 Uzbekistan joined the SOC.  
341. By signing the Memorandum between govern ments of SOC member-countries on Main 
Objectives and Trends of Regional Economic Coope ration and Launching the Process on Creation of 
Favorable Conditions in Trade and Investments of September 14, 2001, in Almaty City the 
cooperation in trade and economy has started.  At  the second meeting of heads of governments of 
SOC member-countries on September 23, 2003, Beiji ng, the Program for Multilateral Cooperation of 
                                                     
 
21 The Customs Union was originally formed between the Russian Federation and Belarus. Kazakhstan 
joined the Union in January 1995, and the Kyrgyz Republic in March 1996.  Tajikistan joined the EAEC in February 1999.  The Agreement on Customs Union formation was signed on January 20, 1995 in Moscow City 
(Belarus, Kazakhstan, the Kyrgyz Republic , the Russian Federation, Tajikistan). 
22 The decision on uniting OCAC with EAEC was taken by heads of governments on October 6, 2005 
in Saint-Petersburg. WT/TPR/G/170 Trade Policy Review 
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SOC member-countries was signed, and several vital decisions were taken, including SOC budget for 
2004.  On September 22-24, 2004, the regular SOC mee ting was held in Bishkek. In the course of the 
meeting a number of decisions were taken coveri ng SOC financial activity, creation of the SOC 
Development Fund, SOC Business Council, open ing of website of SCO regional economic 
cooperation, and Plan of actions to perform the Program for Multilateral Trade and Economic 
Cooperation of SOC member-countries.  
342. At present, the draft Intergovernmental Agre ement of SOC member-countries on creation of 
favorable conditions for road transportation is being developed.  The draft agreement is aimed at trade 
swaps between SOC countries and more efficient use of transit capacity.  
(4)  Economic Cooperation Organization (ECO) 
343. The initiators of ECO formation were Iran, Tu rkey and Pakistan. In November 1992, the 
Kyrgyz Republic, the Republic of Kazakhstan, the Re public of Uzbekistan, the Republic of Tajikistan, 
the Republic of Turkmenistan, Azerbaijan and Afghan istan joined the ECO.  The principal tasks of 
the organization are to speed up regional cooperati on in economy, science and technologies, develop 
communications infrastructure between ECO member -countries and at the international level.  
344. The Framework Agreement on Technical Assistance, Trade Agreement ECOTA23, 
Agreement on transit of transpor t and Framework Agreement on Tran sit of Transport are valid under 
the ECO.  
345. ECO trade agreements do not provide for free trad e zones, or formation of a customs union.  
ECOTA agreement is a preferential, but the Kyrgyz Republic is not a party to the Agreement, since it 
considered that the Agreement does not comply with WTO provisions.  
(q) Doha Round Participation  
346. The Kyrgyz Republic has supported the new mu ltilateral negotiations  round, initiated in 
Doha, and has the following position regarding cu rrent negotiations, as it was stated during 
6th Ministerial Conference in Hong Kong in December 2005.  
347. Agriculture: modalities on agriculture negotiations shoul d reflect the interests of small and 
vulnerable transition economies, but with high libera lization commitments, as Kyrgyzstan.  In this 
regard Kyrgyzstan requested provision of equal a pproach in undertaking new commitments, the same 
as anticipated for the least developed countries, re ferred to in paragraph 45 of the Decision of the 
General Council of August 1, 2004.  In the process of preparation for the 6th Ministerial Conference 
the Kyrgyz Republic jointly with Armenia, Georgi a, and Moldova made the joint statement for the 
Committee on Agriculture (TN/AG/GEN/10 of June  29, 2005) on concerns of low income and 
transition countries regarding new commitmen ts in agriculture to be undertaken.  
348. Non-agricultural market access: modalities for industrial goods should reflect the urge of 
WTO members toward significant improvement of ma rket access, as referred to in paragraph 13 of 
the Doha Declaration.  At the same time, the Kyrgyz Republic stressed that economic indicators 
clearly show that level of development of the country comparable to that of low-income and 
vulnerable developing countries, and some least developed countries, especia lly being a land-locked 
country and facing additional difficulties in economy a nd trade. In this respect, the Kyrgyz Republic 
requested the WTO members and the Negotiating Gr oup on Market Access to consider additional 
provisions in modalities for such countries.  The Ky rgyz Republic jointly with Armenia, Georgia and 
                                                      
23 ECOTA was signed by Afghanistan, Iran, Turkey, Pakistan, and Tajikistan. Kyrgyz Republic WT/TPR/G/170 
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Moldova made the joint statement to the Nego tiating Group on Market Access (TN/MA/W/56/Rev1 
of June 6, 2005) on concerns of low income a nd transition countries regarding new commitments to 
be undertaken.  
349. Liberalization of trade in services: The Kyrgyz Republic supported the Modalities adopted on 
March 6, 2003 at the session of the Council on Trad e in Services.  The Kyrgyz Republic made 
statement, which was included into the minutes of the special session of the Council on Trade in 
Service held March 3-6, 2003 and supported by th e WTO members. The statement noted that 
according to the schedule of specific commitments of the Kyrgyz Republic on trade in services, out of 
99 sectors and nearly 600 subsectors under UN CPC,  the Kyrgyz Republic undertook commitments 
during accession on 545 subsectors and activities.  This  is a quantitative portion of the schedule.  The 
qualitative portion is more evident in terms of openness of horizontal and specific commitments, 
which have no restrictions to market access and na tional treatment nearly by all sectors and modes of 
supply (except for a few strategic sectors and mode  4 of supply).  The schedule of commitments is 
equal to that of the group of Recently Acceded Memb ers, sometimes even more liberal.  It was also 
mentioned at the specific statement distributed among WTO members in WT/MIN(03)/W/3 of August 
26, 2003 before the Cancun Ministerial Conference.  
350. Drawing attention to Article 49 of the Doha Mi nisterial Declaration stating that negotiations 
“…shall be conducted with a view to ensuring benef its to all participants and to achieving an overall 
balance in the outcome of the negotiations”, and that the Kyrgyz Republic has already undertaken 
commitments with high liberalization level, diffe rent from those of the WTO original members, 
Kyrgyzstan has no opportunity to liberalize market access more than  commitments already 
undertaken and implemented since the WTO accession.  
351. With respect to the KR’s position in services the letter to the WTO General Director was 
submitted (no. 03-1-1/2551  of June 1, 2005).  
352. TRIPS:  The Kyrgyz Republic supported strengtheni ng of TRIPS provisions by ensuring clear 
and predictable rules under Articles 22 and 23, cove ring protection of geographic indicators regarding 
products, other than wines and alcohol beverages.   The Kyrgyz Republic also supported the WTO 
Decision on TRIPS and Public Health at the Ca ncun Ministerial Conference in 2003, since the 
Decision allows for the poor population of the worl d to get access to cheap  pharmaceuticals and the 
right to receive medicines from different countries and sources.  
353. Trade facilitation: Considering that one of the main cons traints for foreign trade is customs 
barriers at border and transit procedure the Kyrgyz Republic supported measures for improvement of 
Article V, VII, X of GATT proposed in the re port of the Negotiating Group on Trade Facilitation 
(Appendix E of the draft Ministerial Declaration).  The Kyrgyz Republic requested the WTO members to agree that adequate technical assistan ce shall be granted for capacity building for small 
countries with transition economy and low income u nder paragraph 5 and 6 of  the Appendix D of the 
Decision of General council of August 1, 2004.  
354. In February 2006 the Kyrgyz Republic has s upported the joint statement of EU, Canada, 
Japan, Armenia, Mongolia, New Ze aland, Moldova and Paraguay on proposals to the Negotiating 
Group on Trade Facilitation (TN/TF/W/ 79 of February 15, 2006).   WT/TPR/G/170 Trade Policy Review 
Page 50 
 
 
V. ECONOMIC DEVELOPMENT AND TRADE PERSPECTIVES 
(a) Middle-term Economic Forecast  
355. The middle term strategy of the Kyrgyz Republic for 2007-2009 defines the key activities by 
the Government, aimed at achievement of strate gic goals of the development: improvement of 
population welfare and poverty reduction on the basis of dynamic and sustainable economic growth.  
356. The important prerequisites for successful realization of macroeconomic policy are as 
follows:  
- Social and political stability in the country; 
- Fight against corruption and better public governance; 
- Keeping inflation at the level not more than 4.2%; 
- Conduct of agreed monetary and tax and budget policy;  
- Strengthening the banking system and deepening financial markets;  
- Ensuring stability of exchange rate; 
- Gaining the real GDP growth at the level of  6.3% on the average during the period due to 
growth in: 
- Industry - 11.6%; 
- Agriculture – not less than 4%; 
- Services – 5.7%; 
- Construction - 9%. 
- Further promotion of structural reforms in priority areas of economic development; 
- Incentive for small and medium business deve lopment through stre ngthening of market 
institutions and improvement of effi ciency of regulatory policy actions; 
- Creation of favorable investment climate for inflow of private investments; 
- Reduction of foreign debt burden; 
- Legalization of illegal economy; 
- Expansion of foreign economic cooperation.  
357. The GDP annual growth rate at the level of 6. 3% will be secured by the sustainable growth in 
all economic sectors.  
358. The main prerequisites for the sustainable development of industry  by 11.6% per year will be 
gold production output increase due to mastering of the southern-western area of Kumtor deposit and Kyrgyz Republic WT/TPR/G/170 
 Page 51 
 
 
putting into operation of Taldy-Bulak Levoberejnyi  and Jerui gold mining deposits, as well as growth 
by 4.8%  per year in other industrial sectors (without gold mining), as a result of radical reforms in 
energy sector, launching of standing idle and new enterprises, restructuring of enterprises debts, etc.  
359. The annual growth rates in agriculture  are forecasted at the 4% level, because of increase in 
agricultural production output by 4.5% per year, expa nsion of agricultural pr oduction given consumer 
demand in domestic and foreign markets, better access to crediting, etc.  
360. The sustainable growth shall be kept in services  sector in the middle-term perspective.  
Annual volumes of gross output in services will incr ease by 5.7% on average due to development of 
trade, transport and communications services, hotel a nd restaurants, export of tourist services by 15% 
per year.  Taxation policy actions to simplify ta xation for business entities shall also enable this 
process.  
361. The annual average growth rate in construction  area is anticipated at the 9% level due to 
increase of assimilation of investments in gold mining deposits, transport infrastructure, energy and expansion of residential building by development of housing credits and state support to construction 
of social housing.  
362. Monetary policy will be aimed at maintaining the inflation level at the level of no more than 
4.2%.  Dynamics of inflation shall be established by domestic demand, price fluctuations at foreign 
markets, budget and taxation and tariff policy.  
363. The policy of floating exchange rate  shall be kept in the middle-term perspective. The 
exchange rate of US dollar is anticipated at the level of 42 Som/USD.  The currency interventions 
shall be performed in volumes required for smoothi ng sharp fluctuations of exchange rate.  
364. The middle-term investment policy  provides for the annual average growth of gross 
investments by 23.5% to GDP.  Public investment s within the PIP framework  shall be reduced from 
3.1% in 2006 to 1.6% to GDP in 2009.  The inv estments growth will be se cured through raise in 
private investments resulted from removal of a ll administrative barriers, building confidence and 
improving sustainability of financial system a nd banking sector for the purpose of insurance of 
eventual investors’ risks, and creation of  favorable customs and taxation treatment.  
365. Net export  indicator will be improved.  The leading real export growth (9.5% annual average 
growth rate) over import growth (5% annual average growth rate) is forecasted due to increase in 
production and export of gold connected with putting new deposits Jerui and Taldy-Bulak 
Levoberejnyi into operation.  
366. As a result, deficit of current accounts of balance-of-payments  will be slightly improved from 
103.8 million US dollars to 89.9 milli on US dollars in 2009.  This forecasting is based on assumption 
of positive trade balance, despite the growth impair ment of inflow of private transfers.  The IMF 
forecast of world prices were used for forecasting the balance-of-payments.  
367. The main task for 2007-2009 in social policy sh all be the market-oriented social development 
in social protection, education and health care areas.  The annual average population growth by 
51-53 thousand people is planned during this period.  The growth of employment shall be 
17.5 thousand people annually.  WT/TPR/G/170 Trade Policy Review 
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(b) Future Trade Policy Directions  
368. The Kyrgyz Republic shall continue conducting th e liberal trade policy and ensure that trade 
policy tools are transparent, predictable, and e qual for both domestic and foreign legal entities and 
individuals.  The Kyrgyz Republic’s commitm ents under the WTO shall be observed.  
369. To expand trading, the Kyrgyz Republic shall pe rform the active diversification of industrial 
sectors (without gold) with the focus on value added sectors and export of finished goods, so that to move away from raw materials focus of the econo my.  Such sectors include textile and clothing, 
agroindustrial, energy, mining and construction areas, which use local resources at the larger extent, 
but do not always concentrate on deep processing.   For this purpose the Program for Export 
Development of the Kyrgyz Republic for 2006-2 008 and Program for Industrial Development for 
2006-2008 will be adopted.  
370. The particular attention will be given to improvement of quality of exported goods and 
competitiveness with the help of technical regulation reform.  
371. The export growth of finished goods of light industry, machine building, processing, 
construction and electric power resources is anticipated.  At the same time the import growth of 
products of machine building, electrical equipment,  petroleum products, natural gas, cars, medicines 
and pharmaceuticals, coal, chemical products will ta ke place, as such products either lack or not 
produced in the Republic.  
372. In addition, the prior objective of the state is  to ensure institutional framework for fast 
development of the legal activity of private sector, thus diversifying export and creating work places.  
The key political actions shall be continuation of  administrative barriers removal, further reduction 
and streamlining the registration, licensing, and pe rmit systems, which currently constraint business 
development.  Such actions will include, inter alia , further improvement of the legislative framework 
and creation of optimal taxation cond itions for businesses.   In this re gard, the important step will be 
the enforcement of the new Tax Code.  
373. The Kyrgyz Republic will continue to deve lop and strengthen good neighborhood partner 
trade-economic relations with CIS regional partners and foreign countries at bilateral and multilateral 
levels.  It will also support accession of CIS regiona l partners into the World Trade Organization.  Kyrgyz Republic WT/TPR/G/170 
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List of Abbreviations 
ADB  - Asian Development Bank  
CIS - Commonwealth of Independent States  EAEC - Eurasian Economic Community  
ECO  - Economic Cooperation Organization  
ECOTA - Trade Assistance Agre ement of ECO member-countries 
GATT - General Agreement on Tariffs and Trade  GDP  - Gross Domestic Product  
GSAC - World Bank Credit for Governance Structural Adjustment Credit  
GTAC - Governance Technical Assistance Credit HES  - Hydro electric power station  IAC  - International Accounting Standards  IMF  - International Monetary Fund  
KMS  - National Standard of the Kyrgyz Republic  
OCAC - Organization “Central Asian Commonwealth”  OIE  - World Animal Health Organization  PIP  - Public Investment Program  
SOC  - Shanghai Organization for Cooperation  
TRIPS  - Trade-Related Intellectual Property Rights Agreement  WIPO  - World Intellectual Property Organization  WTO  - World Trade Organization  
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