Kyrgyzstan privatisation resume

State Property Fund, Kyrgyzstan

One of the main directions of the significant economic reforms in the Kyrgyz Republic is considered to be the creation of the open market economy. As a result of the successful implementation of privatisation of state owned enterprises, active promotion of foreign direct investment, development of small and medium size businesses and the role of the private sector in GNP, the country has changed significantly. The aim of the government's activities is to form a real basis for the stable development of a social-oriented market economy.

At the very beginning, the Government of the Kyrgyz Republic identified priorities, stages, forms and methods for privatisation. For example, during the first stages of privatisation between 1992 and 1993, it was planned to privatise the entities of the retail trade and food industry. At the present time, the level of privatisation in these sectors is 96.4 per cent. The main aim of the privatisation policy of the second period, 1994-1995, was to reorganise medium size companies operating in the industrial, transport and construction sectors of the economy. This reorganisation included reorienting production for new markets and forming new business relationships with suppliers of raw materials. For these purposes, the State Property Fund of the Kyrgyz Republic used the method competitive selling of state owned shares of the companies. To make it more efficient, the above mentioned selling was based on the preparation of business plans and competitive bidding. At the present time, the level of privatised companies is as follows: industry - 79.2 per cent; construction - 56.3 per cent; transport - 47.1 per cent. The level of privatisation averaged across these sectors is 60.7 per cent.

Nevertheless, the process of privatisation of state property in the Kyrgyz Republic has not achieved adequate competitive conditions to increase the efficiency of the local economy. For the purpose of resolving such strategic problems, the Government decided to demonopolise the largest companies in such sectors of the economy as telecommunications, printing, aviation, energy and recreation, through privatisation. The main idea of this demonopolisation is segmentation of the strategically important national companies in order to attract foreign direct investors who will bring to these new segmented companies their skills in international management, marketing, new technologies and financial expertise.

This type of privatisation has become the main reason for changing the privatisation strategy. The main principles of the new policy are as follows:

  • decreasing the speed of privatisation due to the complexity of the companies;
  • using a case by case method of privatisation;
  • attracting strategically important foreign and local investors.

Case by case privatisation includes financial diagnostics for companies and corporatisation of companies into state owned joint-stock companies, and/or the introduction of corporate governance. After implementing all the necessary procedures, the government shares in these companies may be sold through:

  1. commercial tender (level of price plays the key role);
  2. investment tender (future investment conditions are the main criteria);
  3. open auction.

In August 1996, the State Property Fund formed a list of companies that will be privatised using case by case privatisation methods and are deemed to be attractive to foreign investors. To co-ordinate all of the steps effectively in the process of case by case privatisation, the State Property Fund created the Case By Case Privatisation department. The first tender for these companies is planned to be conducted in October 1997. In order to make the privatisation process of these companies more efficient, the State Property Fund plans to attract international consultancies that will provide all the necessary assistance in informing the world about investment opportunities in the Kyrgyz Republic.

A list of companies for case by case privatisation

 CompanyIndustryCharter Capital (thousand soms)State Share (%)
1Trade House Ay-Churek Retail trade 219.7 28.17
2Kara-Kol Dan-Azyk (Wheat storage and bread combine) Food industries 6,845.0 71.21
3Chuy Dan-Azyk (Wheat storage and bread combine) Food industries 14,440.0 50.00
4Joint-Stock Insurance Company 'Kyrgyzstan' Finance 2,221.3 70.75
5Tunguch-Kant (Sugar and soft drink factory) Food industries 16,549.4 70.80
6VLKSM Bishkek (Garment factory) Light 6,366.7 80.00
7Bugu-Ene (Sewing factory) Light 3,776.0 70.24
8Ak-Bula (Wool scouring plant) Light 6,928.0 51.00
9Kasiet (Wool yarn factory) Light 2,500.0 60.00
10OREMI (Heavy electrical machinery plant) Consumer and industrial engineering 327.9 46.00
11KEMZ Corporation (Electrical machinery plant) Consumer and industrial engineering 875.4 34.30
12TNC Dastan (Electric engineering defence factory) Consumer and industrial engineering 1,459.0 58.00
13Jetigen (Electrical plugs / machine blades / consumer goods) Consumer and industrial engineering 441.8 38.05
14Osh PATC-1 (Passenger auto transport company) Transport 8,714.5 45.81
15Kyrgyzkabel (Electrical cables) Consumer and industrial engineering 679.6 35.00
16Aynur (Electric connectors and transformers) Consumer and industrial engineering 187.7 49.00
17Kyrgyz Tash (Decorative stone processing plant) Construction materials 1,864.0 70.14
18Tokmok AP KSM (Ceramic brick factory) Construction materials 8,732.2 36.99
19Mata (Textile plant) Light 17,180.0 71.07
20Jibek-Jolu (Mineral water / children's nutrition) Food industries   100.00
21Semetey (Fur factory) Light 26,989.9 70.20
22Dan-Azyk (Wheat storage and bread combine) Food industries 2,326.2 71.23
23Kara-Suu Dan-Azyk (Wheat storage and bread combine) Food industries 12,346.6 41.95
24Ak-Suu (Corn processing / sugar / fructose combine) Food industries 73,340.5 71.03
25Kyrgyz Starch-Treacle Plant Food industries 5,665.0 70.43
26Kyrgyz National Energy Company Utilities 7,470,107.7 94.50
27Akyl (Printing) Printing 31,084.6 80.00
28Kyrgyz Mining Combinate (Uranium gold refinery) Mining 203,817.5 87.00
29Kadamjay Antimony Combinate Mining 301,749.0 84.00
30NarynHyrdoEnergyStroy (Hydro-station construction) Construction 418.6 42.02
31Kyrgyz Too-Tash (Marble processing plant) Construction materials 7,283.7 70.23
32Anar (Transformers / connectors / ceramic insulator) Consumer and industrial engineering 423.58 31.39
33Kan Industrial Combine Others 2,712.4 71.23
34Dostuk (Electronic connectors / plastic consumer goods) Consumer and industrial engineering 1,176.6 36.99
35Kyrgyz Chemical-Metallurgical Plant (Silicon and rare earth metals) Metallurgic 49,005.0 70.00
36Kant Cement and Tile Combinate Construction materials 82,795.0 67.64
37Kurmenty Cement Plant Construction materials 429.39 70.81
38Kant Cement Plant Construction materials 14,219.2 70.91
39Linoleum Factory Construction materials 12,155.3 69.76
40National Airlines Company 'Kyrgyzstan Aba-Joldoru' Transport 982,793.5 82.00
41Ainek (Sheet glass plant) Construction materials 47,314.0 69.9
42Setun (Machine tools and consumer goods plant) Consumer and industrial engineering 451.31 84.17
43Kyrgyzstroyfarfor (Porcelain products) Construction materials 8,315.0 70.00
44Bishkek Auto-Repair Plant Services 11,002.4 75.00
45Bishkek Machine-Building Plant Manufacturing 304,140.0 85.00
46Janar (Electrical engineering factory) Consumer and industrial engineering 1,418.1 40.24
47Bishkek Leather-Commodities Plant Light 1,612.1 68.95
48Bishkek Chemical Plant (Paints) Others 2,943.0 70.60
49Kyzyl-Kya Sut-Azyk (Milk products) Food industries 2,036.0 71.18
50Uzgen-Sut (Milk products) Food industries 3,818.1 70.12
51Kyrgyzgasmunayzat (Gasoline and natural gas) Trade 308,358.0 90.00
52Kyrgyztelecom (Communications) Communication 573,147.0 85.00
53Kyrgyzneft (Oil extraction and refinery) Oil processing 605,070.0 85.00
54Plant 'KyrgyzHydroSteelConstruction' Construction materials 1,126.6 35.27
55Shop 'Min-Turkun' (Hardware trading company) Trade 2,353.7 50.00
56Issyk-Kul Hotel Tourism   100.00
57Bishkek Hotel Tourism   100.00
58Osh Hotel Tourism   100.00

For inquiries please contact:

A Chukin,
Deputy Chairman
State Property Fund,
57 Erkindik Ave.,
720040 Kyrgyz Republic
Tel: 7-3312-228346
Fax: 7-3312-620136

Back | Top