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Kyrgyzystan Still a Long Way to Economic Success - 2001-09-05

The Central Asian nation of Kyrgyzystan has just celebrated, last Friday, the tenth anniversary of its independence. But it has a long way to go before it can be called an economic success.

VOA's Rebecca Santana filed this reports from a light-bulb factory the Kyrgyz town of Maili-Suu.

About 250-million light bulbs roll out of this factory every year and into light sockets around the world. The Maili-Suu Electricbulb Plant employs 3,400 of the town's citizens and provides almost all the city's tax revenue.

But despite its success, the company is facing problems, problems that illustrate why economic development is so difficult in Kyrgyzystan.

The lightbulb factory, like many of the factories in Kyrgyzystan, was built well before the end of the Soviet Union, and according to the factory's technical director, Adulaziz Yuldashev, it is time for some changes. He says the company needs to modernize its production lines so it can build energy-efficient bulbs, like those used in the United States and Western Europe, which are becoming very popular.

Unfortunately, Mr. Yuldashev adds, modernizing the factory would cost about $6 million, money his company does not have.

Kyrgyzstan's location and terrain are also major obstacles to economic development. It is located in the heart of Central Asia, far from any trade routes, and it is almost 100 percent mountainous. This makes transportation of goods very expensive. The northern part of the country is slightly more prosperous because it has access to southern Kazakhstan and can trade with that country.

But in the southeast, Kyrgyzystan borders Uzbekistan, which does not welcome imports.

Fernand Pillonel is with the Kyrgyz branch of the European Bank for Reconstruction and Development. He says the Uzbek government's opposition to free trade is a major problem for Kyrgyz businesses. "The border is closed, and where we could have the doors to a very big market, consumer market, which is represented by Uzbekistan, and its population, well here it's a closed door," he explains.

Because Kyrgyzstan has so few air links to the outside world, Kyrgyz companies they must send their goods for export to the capital, Bishkek, over dangerous mountain roads, a journey that can take up to 15 hours. There is currently a project underway which will cut the travel time to Bishkek in half.

But these large-scale public works projects come with a price tag. The Kyrgyz government is already carrying $1.5 billion in debt. That may not be that much for some countries, but Kyrgyzystan's entire budget for the year 2000 was only $1.2 billion.

Another problem facing Kyrgyzystan is that, while it is scenically beautiful, it has very few natural resources. There is no oil or natural gas, for example, to attract investors. Gold is one of the few natural resources found here, but the deposits are not abundant enough to entice many foreign investors.

Mr. Pillonel of the European Bank for Reconstruction and Development says, even though Kyrgyzystan's economy is relatively free, the country does not have a lot to offer outside investors, certainly not as much as its neighbors.

"If we look at the level of foreign investment in Kyrgyzystan, it is very low," notes Mr. Pillonel. "It is more or less at the height of Tajikistan, way, way [below] Kazakhstan and Uzbekistan or even Turkmenistan and this is not explainable by lack of reforms, political uncooperation. It is just related to the commodities that are not to be found in Kyrgzystan."

The Kyrgyz government is taking more steps in order to improve the economy, such as easing the tax burden. And, in December of last year, it approved laws that made it easier to buy and sell land. The question is whether these measures will be enough.