Source: United Nations Cartographic Section Abbreviations ASEAN Association of South䇲East Asian Nations BOI Board of Investment CAD Computer Aided Design CAGR Compound Average Growth Rate CBTA Cross Border Transportation Agreement CIS Commonwealth of Independent States CMT Cut Make and Trim E/D Embarkation/Disembarkation EU European Union F/S Financial Statement FAOSTAT Food and Agriculture Organization stat GDP Gross Domestic Product ICT Information and Communication Technology IMF International Monetary Fund IT Information Technology JICA Japan International Cooperation Agency JNTO Japan National Tourist Organization KATO Kyrgyz Association of Tour Operators KPI Key Performance Indicator KSSDA Kyrgyz Software and Services Develops Association LNG Liquefied Natural Gas MBA Master of Business Administration MRP Machine Readable Passport NSC National Statistical Committee of the Kyrgyz Republic OECD Organisation for Economic Co-operation and Development OEM Original Equipment Manufacturing OJT On-the-Job Training PET Polyethylene Terephthalate SPA Speciality store retailer of Private label Apparel TSA Tourism Satellite Account UAE United Arab Emirates UNCTAD United Nations Conference on Trade and Development UNWTO United Nations World Tourism Organization WTO World Trade Organization Table of contents Summary .................................................................................................................................. 1 1. Selection of promising industries(initial macro data-based selection) ................................. 2 2. Narrowing down promising industries by sector ................................................................. 3 Chapter 1 Key features of survey .............................................................................................. 9 1. Background to survey ........................................................................................................ 9 2. Aims of survey ................................................................................................................ 10 3. Survey implementation conditions ................................................................................... 11 Chapter 2 Potentially Promising Industries Determined through Macroeconomic Analysis ... 14 1. Features of the Kyrgyz economy ...................................................................................... 14 2. Selection of promising industries ..................................................................................... 18 3. Primary and secondary industry sectors that passed preliminary selection based on macro-economic analysis ................................................................................................. 19 4. Tertiary industry sectors that passed preliminary selection based on macro economic analysis ........................................................................................................................... 28 Chapter 3: Business Environment in Agriculture and Livestock Industries .......................... 30 1. Introduction ..................................................................................................................... 30 2. Overview of Agriculture and Livestock Industries ............................................................ 30 3. Supply and Demand of Agricultural Products ................................................................... 31 4. Promising Business Model Candidates ............................................................................. 40 Chapter 4: Business Climate in Manufacturing Industry .......................................................... 47 1. Characteristics and promising sectors of the manufacturing industry ................................ 47 2. Garment industry ............................................................................................................. 50 3. Meat-processing industry ................................................................................................. 62 Chapter 5 Business Environment Surrounding the Service Industry....................................... 69 1. Current Situations of the Service Industry in Kyrgyz Republic ......................................... 69 2. Tourism-related industry .................................................................................................. 75 3. IT Industry ...................................................................................................................... 87 4. Transport Subsector ......................................................................................................... 92 Chapter 6 Investment Approaches by Japanese Companies ................................................... 97 1. Advantages and disadvantages regarding the Kyrgyzstan business environment for Japanese companies ......................................................................................................... 97 2. Important concerns when considering overseas business expansion and interest in the Kyrgyzstan market ........................................................................................................... 98 3. Results of a questionnaire collected from seminar participants in Japan .......................... 108 4. Corporate images of Japanese companies considering business operation in Kyrgyz, based on questionnaire results, and solutions for related issues ................................................ 115 Chapter 7 Investment promotion challenges .......................................................................... 117 1. Investment Law ............................................................................................................. 117 2. Kyrgyz Republic sustainable development strategy ........................................................ 118 3. How public institutions view the Kyrgyz investment climate: The World Bank's "Doing Business" survey ........................................................................................................... 119 4. Identifying issues through local interviews ..................................................................... 121 5. Specific examples of improvement measures ................................................................. 123 Chapter 8 Policy measures for the support of Japanese companies ......................................... 138 1. Thinking on support for Japanese companies in the Kyrgyz Republic............................. 138 2. Current situation and issues to be resolved ..................................................................... 139 3. Practical support plans ................................................................................................... 140 List of Figures Figure 1-1. Order of operations ........................................................................................ 13 Figure 2-1. Primary industry share of nominal GDP & per capita GDP (2012).................. 15 Figure 2-2. Trade balance, exports and imports ................................................................ 16 Figure 2-3. Selection of promising industries ................................................................... 18 Figure 3-1.Climate in Bishkek (normal value) .................................................................. 31 Figure 3-2.Changes in the Producer Price of Wheat.......................................................... 33 Figure 3-3.Changes in the Producer Price of Maize .......................................................... 34 Figure 3-4.Changes in the Producer Price of Potatoes ...................................................... 34 Figure 3-5.Changes in the Producer Price of Cabbages and Other Brassicas ..................... 35 Figure 3-6.Changes in the Producer Price of Carrots and Turnips ..................................... 36 Figure 3-7.Changes in the Producer Price of Beef Cattle (Meat live weight) ..................... 37 Figure 3-8.Changes in the Producer Price of Chicken (Meat live weight) ......................... 37 Figure 3-9.Changes in the Producer Price of Sheep (Meat live weight) ............................. 38 Figure 3-10.Changes in the Producer Price of Milk .......................................................... 39 Figure 3-12.Changes in the Number of Livestock............................................................. 42 Figure 4-1. Composition of the employed population (2011) ............................................ 48 Figure 4-2. Trends in production value of the textile and sewn products industry .............. 50 Figure 4-3. Trends in the export and import value of apparel and accessories ................... 51 Figure 4-4. Comparison with apparel exports of neighboring countries (2012) ................. 52 Figure 4-5. Trends in the export and import value of fiber for textiles and rags ................. 55 Figure. 4-6. Trends in the import and export value of yarn for fabrics and textile products 56 Figure 4-7. Trends in production value of the processed food industry.............................. 63 Figure 4-8. Meat production ............................................................................................ 64 Figure 4-9. Trade balance for processed meat products..................................................... 65 Figure 4-10. Balance of trade for meats ............................................................................ 66 Figure 5-1. Changes in Service Trade Balance in Kyrgyz Republic .................................. 70