Kyrgyzstan Trade Profile
Table of Contents
Overview
The Kyrgyz Republic is the 4th largest country amongst the Central Asian States. The Kyrgyz economy is vulnerable to external shocks owing to its heavy dependence on remittances (25% of GDP) and gold production (about 10% of GDP and 40% of exports). Strong and sustainable economic growth requires institutional strengthening and policies to develop the private sector, spur international trade, and encourage fiscally sustainable energy production.
Kyrgyzstan derives most of its GDP (around 50%) from the service sector, which is also the largest employer in the country. The agriculture sector has never thrived owing to mountainous terrain; however, the country is rich in mineral deposits such as gold which Kyrgyzstan has exploited. Gold is the foremost export and as of 2016 gold exports accounted for 10% of the GDP.
Most of the bilateral trade is focused on Kyrgyzstan’s neighbouring countries, namely, Russia, Kazakhstan, and China. However, major exports to Pakistan consisted of edible meat offal, raw hides, and machinery. Major imports, on the other hand, consisted of pharmaceutical products, furniture and bedding, and toys. Both countries need to tap into the vast trade potential with each other which will become a reality once CPEC comes into effect.
Kyrgyzstan’s top 10 export and import countries of 2019 are highlighted in Figures 1.1 and 1.2 below respectively.
| Figure 1.1 | |
|---|---|
| Country | Import USD$ |
| China | $1,734,970,508 |
| Russia | $1,404,285,223 |
| Kazakhstan | $649,333,709 |
| Turkey | $222,842,644 |
| Uzbekistan | $200,887,625 |
| United States | $90,256,904 |
| Germany | $70,778,007 |
| Ukraine | $48,471,885 |
| Belarus | $46,478,144 |
| India | $42,017,147 |
| Figure 1.2 | |
|---|---|
| Country | Export USD$ |
| United Kingdom | $833,229,811 |
| Kazakhstan | $347,065,658 |
| Russia | $281,252,923 |
| Uzbekistan | $138,879,699 |
| Turkey | $89,854,902 |
| China | $81,469,047 |
| Tajikistan | $57,205,443 |
| Lithuania | $17,133,575 |
| Iran | $15,428,765 |
| Ukraine | $13,630,197 |
Pakistan - Kyrgyzstan Trade Profile
Pakistan’s Exports to Kyrgyzstan
In 2019, Pakistan exported $5.86 million to Kyrgyzstan. The main export products were packaged medicaments ($1.46 million), unpackaged medicaments ($1.18 million), and sports equipment ($720 thousand). During the last 24 years, the exports of Pakistan to Kyrgyzstan have increased at an annualized rate of 2.89%, from $2.96 million in 1995 to $5.86 million in 2019.
| Pakistan Exports to Kyrgyzstan | Value | Year |
|---|---|---|
| Pharmaceutical products | $936.16K | 2020 |
| Organic chemicals | $175.54K | 2020 |
| Toys, games, sports requisites | $157.19K | 2020 |
| Coffee, tea, mate and spices | $104.79K | 2020 |
| Knitted or crocheted fabric | $79.67K | 2020 |
| Articles of leather, animal gut, harness, travel good | $52.08K | 2020 |
| Cereals | $42.51K | 2020 |
| Optical, photo, technical, medical apparatus | $39.09K | 2020 |
| Edible fruits, nuts, peel of citrus fruit, melons | $19.82K | 2020 |
| Vegetable, fruit, nut food preparations | $14.03K | 2020 |
| Essential oils, perfumes, cosmetics, toiletries | $10.69K | 2020 |
| Manmade filaments | $10.41K | 2020 |
| Tools, implements, cutlery of base metal | $3.98K | 2020 |
| Plastics | $2.55K | 2020 |
| Articles of apparel, not knit or crocheted | $2.30K | 2020 |
| Articles of iron or steel | $848 | 2020 |
Pakistan’s Imports from Kyrgyzstan
In 2019, Pakistan imported $1.66 million from Kyrgyzstan. The main products imported were dried legumes ($1.46 million), refined petroleum ($79.4 thousand), and sheep hides ($44.2 thousand). During the last 24 years, the imports of Pakistan from Kyrgyzstan have increased at an annualised rate of 4.29%, from $605 thousand in 1995 to $1.66 million in 2019.
Pakistan’s imports from Kyrgyzstan were US$125.31 thousand in 2020, according to the United Nations COMTRADE database on international trade. Imports from the years 2019 and 2020 are represented in the table below:
| Pakistan Imports from Kyrgyzstan | Value | Year |
|---|---|---|
| Inorganic chemicals, precious metal compound, isotope | $102.28K | 2020 |
| Aircraft, spacecraft | $12.33K | 2020 |
| Wood and articles of wood, wood charcoal | $6.94K | 2020 |
| Tools, implements, cutlery of base metal | $2.05K | 2020 |
| Tanning, dyeing extracts, tannins, derivatives, pigments | $1.64K | 2020 |
| Optical, photo, technical, medical apparatus | $57 | 2020 |
| Live animals | $10.05K | 2019 |
| Electrical, electronic equipment | $2.94K | 2019 |
| Machinery, nuclear reactors, boilers | $295 | 2019 |
| Other made textile articles, sets, worn clothing | $282 | 2019 |
| Commodities not specified according to kind | $113 | 2019 |
Increasing Imports and Exports
Imports from Pakistan over the past five years have averaged at $2.7 million. Although imports fell dramatically from 2013 to 2014, they seem to have picked some pace from 2014 onwards. Imports showed a growth of 28% in 2016. The import basket has been consistently dominated by pharmaceutical products for the last five years. Other imports include furniture, bedding, edible fruits, and nuts. The table below represents Kyrgyzstan’s top imports from Pakistan. The top 10 imports make up 88.17% of the total imports.
Despite the differences in the nature of the two economies, Kyrgyzstan and Pakistan are similar in several aspects. One of the many reasons leading to a low level of trade is the similarity in the imports of Kyrgyzstan and Pakistan. Six out of the top ten commodities being imported by both countries are common.
- Mineral fuels, mineral oils, and products of their distillation; bituminous substances; minerals
- Machinery, mechanical appliances, nuclear reactors, boilers; parts thereof
- Electrical machinery and equipment and parts thereof; sound recorders and reproducers, televisions
- Man-made staple fibres
- Iron and steel
- Plastics and articles thereof
Between Pakistan and Kyrgyzstan, there are various trade routes.
- In Pakistan, all the commodities are first gathered in Karachi, after which they are taken to Shanghai in the People’s Republic of China. The commodities are then unloaded at its seaport, and then loaded into Chinese trains and sent to Urumqi via the internal Chinese Railway. After arriving at Urumqi, all of the commodities, which are mostly Kyrgyz, are unloaded onto trucks and then delivered to Kyrgyzstan.
- All the other transits are carried out from Afghanistan and then through Uzbekistan and/or Tajikistan: Kyrgyzstan, Osh (Dostuk) – Uzbekistan (Dustlik); Uzbekistan, Buhara region (Alat)- Turkmenistan (Farab), and transported to Kyrgyzstan.
- All the commodities are collected in Iran and then dispatched to Kyrgyzstan through Turkmenistan or Afghanistan and then via Uzbekistan or Tajikistan: Turkmenistan (Farab; Turkmenistan (Sarahs) – Uzbekistan, Buhara region (Alat) – Iran (Sarahs).
- There is a visa requirement, which costs $500 when transit is done through Turkmenistan. Even though the transit process through Uzbekistan is not complicated, it becomes expensive owing to the Uzbek border.
Trade Framework between Kyrgyzstan and Pakistan
Bilateral Agreements
- Agreement on Trade and Economic Ties between Pakistan and Kyrgyzstan 1994
- Agreement on International Motor Transportation between Pakistan and Kyrgyzstan 1994
- Agreement between Pakistan and Kyrgyzstan on Cooperation and Mutual Assistance in Customs Matters
Due to the various opportunities for and barriers against trade that exist between Pakistan and Kyrgyzstan, various recommendations can be formulated for the government, business communities and international development stakeholders of both the countries. The recommendations are as follows:
- Continuing the development of the transport infrastructure which connects both the countries and providing the resources needed to keep it up and running.
- Working with PRC authorities to keep the TIR facility fully operational and keeping the transit of foreign trucks via China’s territory free of interruptions, which includes issuing entry/transit visas to truck drivers.
- Helping in the opening of direct flights between Kyrgyzstan and Pakistan.
- Helping in the removal of the visa regime that exists between the two countries.
- Consider the free trade agreement between Pakistan and the Eurasian Economic Union (EAEU), which includes Kyrgyzstan.
- Making it easier for Pakistani trade houses to be open in Osh, Kyrgyzstan and Bishkek and for at least one trade Kyrgyz trade house to be open in Pakistan.
- Facilitating access to trade which is essential and Kyrgyz market information (food safety measures, consumer preferences, phytosanitary and sanitary measures, customs and technical regulations, labelling etc.) to the agri-food producers and traders present in Pakistan and vice versa.
- Providing incentives for private investments such as tax into logistical centres/warehouses, TIR-compliant trucks, etc. to motivate investments to be made into personnel training in trade companies and logistics.
- Building capacity for the agri-food industry stakeholders and traders in matters relating to international trade.
- Better treatment, such as being free of delay, the business processes on the borders being transparent, and security requirements of a predictable nature, to be provided to traders present in both the countries. There should also be cooperation with transit countries to help establish and maintain proper transit standards.
- All the transit routes present between Kyrgyzstan and Pakistan should be included in ADB’S Corridor Performance and Measurement and Monitoring mechanism. There should also be regular publications of the monitoring reports regarding these routes.
Numerous experts agreed that there were excellent opportunities for mutual trade that existed between Pakistan and Kyrgyzstan. The best way for trade cooperation can be carried by transit via the Karakoram Highway since it is the safest and shortest pass which is situated between Pakistani Gilgit Road.
Recent Developments and Strategic Commitments
- Kyrgyzstan is interested in joining the China-Pakistan Economic Corridor project and benefiting from the tremendous trade opportunities offered by Gwadar Port.
- Bilateral collaboration between the two fraternal countries would be strengthened through improved economic ties and parliamentary diplomacy. Improving relations with Kyrgyzstan remains a priority for Pakistan’s foreign policy.
Key Institutions
- International Monetary Fund (IMF)
- The World Bank
- Central Asia Regional Economic Cooperation (CAREC) Program: The Central Asia Regional Economic Cooperation (CAREC) Program is a partnership of 11 countries and development partners, including Pakistan and Kyrgyzstan, working together to promote development through cooperation, leading to accelerated economic growth and poverty reduction. The program may serve as a proactive facilitator of practical, results-based regional projects, and policy initiatives critical to sustainable economic growth and shared prosperity between the regions, by helping establish multimodal transportation networks, increasing energy trade and security, facilitating free movement of people and freight, and laying the groundwork for economic corridor development.
- Asian Development Bank