Attracting foreign direct investment in Kyrgyzstan

Written by Sandeep Nehra

Using foreign direct investment (FDI) suggests that the Republic’s economy will be able to attract not only additional financial resources, but also advanced production and management technologies.

The result of improving the investment climate could result in data from the National Statistical Committee of the CD. In 2004, the republic’s economy to attract foreign direct investment (FDI) in the amount of 175.6 million, compared with 2003 the increase amounted to 28,6 million dollars (147 million US dollars), which indicates an increased inflow of direct investments by 1919 , 5%. When considering the structure of foreign direct investment inflows into equity amounted to over 2004. 33.2 million dollars, which is 41.7% more than in 2003 (23.4 million dollars). The volume of retained earnings for the period under review amounted to more than $ 48 million, whereas for 2003 was reinvested 21.8 million dollars. The increase in 2.2 times indicated by the growing confidence of foreign investors. Financial leasing, for the period under review amounted to 0.7 million, down 5.5 times. In the form of other capital was attracted 93.7 million dollars, and for 2003 compared with – 98.1 million dollars. There was a decline by 4,5%. Loans from foreign co-owners of enterprises, determined in the amount of 40,5 million dollars, in comparison with 2003 the increase was 14% (5 million). Commercial loans totaled 53.2 million, a 15% lower than in 2003 (62.6 million dollars).

Foreign direct investment from countries outside the CIS, compared with 2003 increased by 22.7% to $ 146.6 million US dollars. The major countries investing were Canada – 26.5% of the total income of foreign direct investment, or 46.5 million, Turkey, respectively, 13.1% and 23.1 million dollars, the United States of America – 7.9%, and 14 million, Cyprus – 6.6% and 11.5 million, UK – 6% and 10.5 million dollars. Direct investments in the republic’s economy from the States – CIS Countries in 2004 also tend to increase. So, in 2003 received a total of 27.5 million dollars, in 2004 inflow of $ 29 million.

During this period, the largest investment undertaken Kazakhstan – 15.6 million (53.7% of total), Russian Federation -11.9 million (40.9%). Been reduced flow of funds from Belarus to 60.2% or 0.7 million, Uzbekistan – 69.3% or 0,7 million, Tajikistan – 75.1%, or 0.2 million dollars, and Turkmenistan – 75%, or 0.1 million, but with Georgia and Moldova income ceased however, a new foreign investor – Azerbaijan (0.2 million).

Attracting foreign investment in the structure of industries is as follows: manufacturing (53%), trade (14%), financial activities (6.2%), mining (5.7), agriculture (5.6%), transport and communications (3.9%), construction (3.3%), energy (1.3%).

FDI flows to Kyrgyzstan through the establishment of joint ventures and foreign enterprises, privatization of state enterprises with foreign capital, transfer of management of enterprises by foreign firms, joint and foreign banks.

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