ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of March 14, 2013 No. 133

About the Development program of processing industry of the Kyrgyz Republic for 2013-2015

For the purpose of development of industries of processing industry, more complete use of the existing production capacities, the Government of the Kyrgyz Republic decides expansions of export and import substitution on the basis of increase in competitiveness of domestic production:

1. Approve enclosed:

- The development program of processing industry of the Kyrgyz Republic for 2013-2015;

- The actions plan on program implementation of development of processing industry of the Kyrgyz Republic for 2013-2015 (further - the Actions plan).

2. To the ministries, administrative departments, offices of plenipotentiaries of the Government of the Kyrgyz Republic in areas, local public administrations and local government bodies quarterly, no later than the 15th following reporting quarter to represent to the Ministry of Energy and Industry of the Kyrgyz Republic information on accomplishment of the Actions plan.

3. To the Ministry of Energy and Industry of the Kyrgyz Republic quarterly, no later than the 25th following reporting quarter to submit the generalized report on accomplishment of the Actions plan in Government office of the Kyrgyz Republic.

4. This Resolution becomes effective from the date of official publication.

5. To impose control of execution of this Resolution on department of the industry, fuel and energy complex and subsurface use of Government office of the Kyrgyz Republic.

Approved by the Order of the Government of the Kyrgyz Republic of March 14, 2013 No. 133

The development program of processing industry of the Kyrgyz Republic for 2013-2015

1. General provisions

The modern industry of the Kyrgyz Republic is subdivided on: mining, processing industry and power industry. The most volume is the processing industry which specific weight makes over 80 percent.

The structure of the industry includes 17 industries, from them two industries - in the mining industry; 14 industries - in processing industry and power industry - as separate industry.

From them five industries are economical and nalogoobrazuyushchy, including four industries - in the field of processing industry.

Among them: metallurgical and pishchepererabatyvayushchy industries, textile and sewing production; production of other nonmetallic mineral products and power engineering specialist. In total, the specified industries turn out over 90 percent of industrial output.

In the field of the industry there are over 2090 companies with number of the occupied more than 200 thousand people.

Despite small share in GDP - percent 16,8 following the results of 2012, the industry remains the most important industry of economy from the point of view of contributions to the budget and export deliveries.

This circumstance causes need of carrying out purposeful industrial policy and implementation of the further reforms providing stable development of this industry of economy.

2. Program purposes

The purpose of this Program is:

- increase in production and export of industrial output;

- providing competitiveness of the Kyrgyz industrial output in the markets of the Customs union;

- increase in specific weight of industrial output in GDP;

- creation of additional workplaces in the industry;

- protection of local producers, development of the domestic market for separate manufactured goods;

- increase in industrial and technical know-how through attracting investors to the Kyrgyz Republic.

3. Directions of development of processing industry

When forming industrial policy it is necessary to consider several features. First, the modern policy of development of the industry shall be aimed at optimization of business environment with growth perspective. Secondly, task of the state is elimination of the difficulties in the market interfering industry development namely: carrying out structural changes, support of new industries and assistance to increase in product competitiveness, both on external, and on internal the markets.

This Program provides development of the industry based on support of priority industries of processing industry which are strategically important for the country. It is reasonable to politician of development of the industry to perform on the basis of carrying out researches of industries as a result of which industry development programs can be developed further.

Development of processing industry is interconnected with realization of the following directions.

1) trade Development

One of important aspects of foreign trade is the possibility of the entry of the Kyrgyz Republic into the Customs union. The basic decision on the entry of Kyrgyzstan into the Customs union is made, it is necessary to determine on what conditions and when it will occur.

At the same time, the most vulnerable for the republic is the question of customs duties. The operating average rate of customs duty in the Kyrgyz Republic constitutes % 5,1, average rate according to obligations on the WTO - % 7,5, and average rate of the Common Customs Tariff (CCT) of the states of the Customs union - % 10,6.

During negotiations it is important to achieve favorable conditions for sustainable development of the domestic industry and to strengthen line items of the Kyrgyz Republic in industrial production.

2) Tax policy

Along with initiatives of private entrepreneurship, one of the main roles in development is played by the state which shall create favorable conditions for business development and productions, in particular, to provide favorable tax climate.

During creation of most favored nation treatment concerning newly created, and also operating plants it is reasonable to provide:

- consideration of possibility of cancellation of the sales tax;

- subsidizing of interest rates for exporters (creation of export-import national credit institute);

- preferential access to financing in national credit institutes for the companies performing export;

- preserving zero rates of import customs duties when importing the fixed assets which are not made in the republic for the export companies;

- preserving liberal conditions of the tax and customs legislation.

3) Assistance to investments, export and cooperation

Creation of the favorable investment climate.

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