BISHKEK (TCA) — More than fifty agreements and contracts worth over $6 billion were signed at the 8th Kyrgyz-Russian Interregional Conference held in Bishkek on March 27-28.
The conference was attended by Russian President Vladimir Putin and Kyrgyz President Sooronbai Jeenbekov, as well as more than 700 representatives of Russian and Kyrgyz companies, heads of regions and key economic departments.
Special attention was paid to creating conditions for increasing trade and investment. It was decided to develop direct dialogue between the business communities of Russia and Kyrgyzstan by simplifying procedures and improving the business climate.
The heads of the two states agreed to declare the coming year the Year of Russian-Kyrgyz Cooperation.
Kyrgyzstan is creating stable conditions for cooperation and investment, President Putin said.
There is a positive dynamic in bilateral trade, which was about $2 billion and increased by 17% last year, he added.
Kyrgyzstan exports mainly textiles, shoes and food products to Russia. Among the food products, the most popular are dried fruits and nuts.
Russia is the second-largest importer from Kyrgyzstan, after China. Russia supplies fuel, construction equipment, food products, car tires, wood, pulp and paper products, and many other products to Kyrgyzstan.
More than 700 Kyrgyz-Russian joint ventures operate in Kyrgyzstan.
The Russian Direct Investment Fund (RDIF) increases counter investments, which amount to $350 million. Accumulated investments from Russia in Kyrgyzstan are more than $200 million, and from Kyrgyzstan in Russia — $150 million.
The RDIF will help Kyrgyzstan create a similar structure, RDIF head Kirill Dmitriev said.
“We will help the Kyrgyz Republic create its sovereign fund based on the model of the Russian Direct Investment Fund and we decided to invest over 6 billion rubles in joint Russian-Kyrgyz projects,” he added.
Eurasian Economic Union
“We record a good effect from the accession of the Kyrgyz Republic to the Eurasian Economic Union,” President Putin said at the conference.
Russia helps Kyrgyzstan to adapt to the EEU conditions. Through the Russian-Kyrgyz Development Fund, more than $300 million has been invested in projects in various sectors of the Kyrgyz economy.
Russia allocated $200 million to upgrade Kyrgyzstan’s customs infrastructure and equip border points. After these activities are completed in 2020, Kyrgyzstan’s products will be able to undergo certification for compliance with the EEU technical regulations directly in the country.
Energy and mining
Russia and Kyrgyzstan have a long history of energy cooperation, Alexander Novak, Russian Energy Minister said. Russia remains the largest supplier of petroleum products to Kyrgyzstan.
Russian Energy Minister and Chairman of the State Committee for Industry, Energy and Subsoil Use of Kyrgyzstan Emil Osmonbetov signed an agreement on cooperation in the supply of oil and petroleum products.
A roadmap to attract investment of Russian Gazprom to Kyrgyzneftegaz for the development of the oil and gas and oil refining industries was also signed.
Bilateral cooperation in high technologies is also deepening. Promising projects include the production of crystal plates for solar power plants in Kyrgyzstan. Russia is ready to start production of modern LED devices here.
The Kyrgyz State Committee for Industry, Energy and Subsoil Use signed a $1.2 billion cooperation agreement with Rosgeology JSC aimed at investing in the exploration of Kyrgyzstan’s mineral resources.
Russian VTB Bank, Alliance Group JSC and Alliance Altyn LLC will start implementing Jerooy gold field development project. The total investment in the project will be about $600 million in the next 20 years, President Putin said.
VTB and Alliance Altyn signed a $180 million investment agreement for the Jerooy gold deposit development, said VTB head Andrey Kostin.
Jerooy is the second largest gold deposit in Kyrgyzstan after Kumtor. According to preliminary exploration data, its reserves are 84 tons of gold and about 10 tons of silver.
In 2015, the license for the right to develop the deposit was sold to Russian Vostok-Geoldobycha company for $100 million at an auction in Bishkek. Its subsidiary Alliance Altyn is now developing the deposit and plans to produce 5 tons of gold annually from 2020.
Agreements pre-estimated at $5-7 billion were signed between the transport ministries of Kyrgyzstan and Russia and the railways administrations.
The memorandum provides for further development of Kyrgyzstan’s railway infrastructure as part of the North—South and China—Kyrgyzstan—Uzbekistan projects.
Kyrgyzstan has great opportunities for cooperation in tourism with Russia.
Kyrgyzstan has entered the top thirty countries popular among tourists from Russia, according to analytical agency TourStat.
About 10 thousand tourists from Russia, mainly from the Siberian and Ural regions, annually come to Lake Issyk-Kul, as well as to Kyrgyz ski resorts, President Putin said.
Mountain and extreme tourism, as well as ecotourism, are becoming especially attractive for Russian tourists, President Jeenbekov said. Tourists are also interested in Kyrgyzstan’s cultural and historical heritage.
Environmentally friendly products
In Russia, there is a high demand for organic agricultural products from Kyrgyzstan, and the interest of Russian importers in partnership in the agricultural sector was high at the conference.
According to the memorandum of cooperation signed between the Kyrgyz Agriculture Ministry and Russian RosAgroMarket LLC, it is planned to build a trade and logistics center in Kyrgyzstan.
Agreements and memoranda worth $500 million were signed in the agricultural industry. These are agreements on the construction of trade and logistics centers, opening of processing enterprises, production of organic agricultural products, and the delivery of products to Russia. Agreements provide for exports of fish, honey, fruits and vegetables, dried fruits, meat products, and wool.
“Agriculture is not well developed in Kyrgyzstan and does not make such a contribution to GDP as industry, but agricultural products are extremely important for the country,” Kyrgyz Economy Minister Oleg Pankratov said at the forum. “The creation of logistics centers gives us hope for the development of animal husbandry,” he added.
Meat supplies to Russia are growing. The export of meat products increased by 11% in 2018 compared to 2017.
The Russian side is planning to increase the import of beef from Kyrgyzstan, said Maxim Novikov, head of a large Russian trade company.
“Earlier, we had certain barriers and there were bans on the meat import from Kyrgyzstan, but they were lifted in February 2019. We hope that soon our partners will enter the Register of authorized enterprises for the importation of products into Russia. Starting with small shipments, we are planning to increase meat supply up to 15 thousand tons a year. Kyrgyzstan’s unique natural conditions play an important role,” Novikov said. The company is also interested in the supply of crop products, he added.
Russian businesspeople are ready to cooperate with Kyrgyzstan in agricultural production, processing and marketing.
The matter is whether Kyrgyz farmers will be able to provide the volumes that Russian food and vegetable wholesale networks require. Worldwide, the agricultural sector is a subsidized industry which needs the State’s support. Until the mechanisms for processing the harvested crop and its marketing abroad are developed, it will be difficult to solve the existing problems.