In 2002, the volume of direct foreign investments into Kyrgyzstan reached US$118 million, which is 28% over the previous year, noted the President. The Secretary of the President’s foreign investments attraction representative informed that by June 30, a few points out of 41 of the third investment matrix plan were not realized. The program particularly specified the simplification of the visa regime for 28 countries, which took two years. As result, guests of Kyrgyzstan coming from developed states are growing in numbers.

However, almost all the participants shared the opinion that the main problem of attracting foreign capital to Kyrgyzstan is corruption in state structures. An anonymous questionnaire held among local officials and businessmen showed that 24% of them think corruption is growing, 31,5% see no changes, and the rest abstained from answering. A majority of respondents consider the most corrupted structure in the country to be the police. The Law Enforcement System is followed by Customs, Tax Inspection, and the Courts.

As experts noted, resistance by some official structures to the authorities responsible for foreign investment is quite significant. When the latter puts great effort into removing one administrative barrier, immediately two more appear, such the establishment of licenses in the tourist sphere or new tariffs for insurance contributions.

The President said the fourth investment matrix is decisive, and it will respond to three criteria: be realistic, specific, and manageable. “Our purpose is to make the new matrix maximally concrete, more prioritized, and practical,” said Deputy Prime-Minister Joomart Otorbaev, “The third stage will activate economic deregulation, the creation and development of appropriate laws, so as to remove some contradictions hampering attraction of foreign investments into Kyrgyzstan.”

In particular, conference participants discussed problems of giving preference, which is not only tax indulgence, but also the simplification of registration of new organizations, easing of licensing processes, and limitations to state interference in business. During the fourth stage of the matrix, the government plans to revise laws connected to free economic zones, deposits and hypothec, financial rent, etc. The intention is to raise efficiency of arbitration courts and protecting investors’ rights. Besides, the functions of the Council on economic policy are to be widened. The transfer of partly state enterprises with significant debts to the government will have a special legal base and a definite mechanism.

On June 27, President Akaev met head of the CIS Electric Power Council Anatoliy Chubays and members of the Council. At the conference, ministers and deputy ministers of energy, managers of energy companies, and international energy organizations representatives were present. The meeting was devoted to the integration process of CIS states in the energy sphere. In particular, the participants discussed questions of effective functioning and perspective development of CIS energy systems unification.

As Prime Minister Nikolay Tanaev informed at a press conference, the “first positive steps” towards the export of Kyrgyz electric energy to Russia were outlined in his meeting with Chubays. The Kyrgyz Republic is soon supposed to provide 2-3 billion kwh to Siberian regions through networks in Kazakhstan and Russia.

Another plan is the future participation of Central Asian countries and Russia in the building of the “Kambarata-2” hydroelectric power station in Kyrgyzstan. “I intend to make official visits to Kazakhstan, and then to Uzbekistan. This question needs to be discussed in details,” said Tanaev. He also stated that Kyrgyzstan and Tajikistan signed an agreement on the prolongation of electric lines from Batken to Kanibadam and to supply power to this Tajikistani region.

The two high level meetings play a strategic role for Kyrgyzstan. Analysis of the problems worsening investment climate in the country, and responsible realization of the fourth, decisive investment matrix influence the development of the Kyrgyz economy. And the energy integration of Kyrgyzstan to CIS states is an important factor in improving the country’s well-being through regulated power export.