Kyrgyzstan looks for solution to economic problems in Eurasian Union

Kyrgyzstan looks for solution to economic problems in Eurasian Union
19:07 24 Aprel 2015
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Baku, Azerbaijan, Apr. 24

By Elena Kosolapova – Trend:

Kyrgyzstan wants to solve its economic problems through joining the Eurasian Union, Russian expert, Editor-in-Chief of National Strategy Issues magazine of the Russian Institute of Strategic Studies Ajdar Kurtov told Trend by phone April 24.

Kurtov pointed out that Kyrgyzstan is quite a poor country and is not very rich in natural resources. What natural resources it has are not enough for the national economy to properly function and the budget of the country to grow, he said.

Kyrgyzstan has for a long time lived at the expense of re-export of Chinese goods to neighboring countries, according to the expert. But recently, after the formation of the Customs Union of Russia, Kazakhstan and Belarus, this re-export started to decline.

“Due to the fact that Russia, Kazakhstan and Belarus have formed a customs union and began to impose order on its borders together, the possibility of re-export through Kazakhstan to Russia began to shrink dramatically,” the expert said.

The remaining markets for re-export of Chinese goods are limited, Kurtov said. Uzbekistan keeps its border closed to Kyrgyzstan, he said. And Tajikistan is one of the poorest countries in the CIS, the purchasing power of the population is at a low level, which means that it cannot absorb the large flow of Chinese goods.

As a result, Kyrgyzstan has to refocus its previous approaches to the economy and agree to negotiate about joining the Customs Union, Kurtov said.

“Although it was hard, because a significant social stratum of the population, dealing with re-export of Chinese goods has formed for more than 20 years of independence, the largest markets in Central Asia, engaged in trade have formed, and this business involved hundreds of thousands of people,” he said. “It is very difficult to change their affection to the case overnight. But the Kyrgyz authorities did it, because otherwise they would have to prepare for the loss of revenue.”

Joining the Eurasian Union for Kyrgyzstan is, in the first place, important to reduce the outflow of the population, which today is very high, according to Kurtov.

After Kyrgyzstan’s accession to the Eurasian Economic Union, Russian and Kazakh investments can be made in this country, since the conditions for doing business can be beneficial there. There is a very liberal attitude to business and minimal taxes in Kyrgyzstan.

Moreover, the labor force in Kyrgyzstan is much cheaper than in Russia and Kazakhstan and even in Belarus.

Kurtov said that the market of the Eurasian Economic Union is very large, therefore, placing enterprises, especially, those related to the local raw materials in Kyrgyzstan, can allow to successfully export these goods to the Eurasian Union markets and get considerable amount of profit.

“If the customs barriers for the Kyrgyz goods are lifted, Kyrgyzstan can get benefits in the agricultural sector, clothing industry and in many other spheres as well and this will give impetus to its economic development,” he said.

Kyrgyz people will get an opportunity to work in their homeland rather than going abroad for work.

“I believe that if there is an alternative - to earn less but stay in the homeland, with family or live in a foreign country and be subject to administrative troubles by the law enforcement agencies – many will choose the first option,” the expert said.

Kyrgyzstan’s accession to the Eurasian Union will expand the union’s market, which will have a positive impact on its activity.

“Regional associations related to economic integration become successful, when a certain market capacity is achieved,” he said. “It is believed that this association will be more successful if the market capacity reaches about 200 million people.”

The Eurasian Union does not have such a capacity for the present, he added. “There will be progress in this issue with Kyrgyzstan’s accession to the union.”

Kurtov said that this is only a theoretical model and currently, it is difficult to predict how it will be put into practice.

He added that Kyrgyzstan could go through quite a long period during which its citizens will have to adapt to the new rules, conditions for working and doing business.

Kyrgyzstan plans to join the Eurasian Economic Union in May.

Edited by CN

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Follow the author on Twitter: @E_Kosolapova

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