MANILA, PHILIPPINES - The Kyrgyz Republic's drive to achieve higher and broad-based economic growth is being supported by an Asian Development Bank (ADB) program to improve the business and investment environment.
ADB's Investment Climate Improvement Program includes three subprograms. The first subprogram grant is estimated at $15.4 million. Indicative grant amounts for subprogram 2 and subprogram 3 are $20 million each. An additional $600,000 technical assistance will provide implementation support.
The Kyrgyz Republic, a landlocked country with a small population base of just over 5 million, needs to attract investments and diversify its economy. Economic growth has been modest and volatile, and driven largely by one commodity, gold. Unemployment and underemployment have been persistently high. About 35% of the population lives below the poverty line and 7% in extreme poverty.
"Taking better advantage of the country's natural resources as well as expanding growth potential in the non-resource sector will require significant improvements in the investment climate," said Sona Shrestha, a Senior Economist with ADB's Central and West Asia Regional Department. "Investors currently face a challenging environment characterized by an inefficient regulatory regime, financing constraints, and infrastructure bottlenecks."
The program will focus on reforms that will reduce entry and exit barriers and compliance costs for businesses. It includes measures to improve the enforcement of financial contracts which will help lower credit risk and improve investor access to finance.
The program will also create a clear legal and regulatory framework for public-private partnerships in infrastructure. Infrastructure bottlenecks, particularly in power and transport, add considerably to the cost of doing business. It is clear that the infrastructure investment requirements cannot be met with government's resources alone.
"The Program enjoys support at the highest level of the government, so this is a unique opportunity for ADB to advance difficult but necessary reforms," said Ms. Shrestha.