Economics

What Are The Biggest Industries In Kyrgyzstan?

The textile industry is one of the major industries in Kyrgyzstan.

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Kyrgyzstan is a landlocked country in Central Asia characterized by mountainous terrain. It has been at the crossroad of several great civilizations as part of the Silk Road and other cultural and commercial routes. Since gaining independence from the Soviet Union in 1991, Kyrgyzstan has endured ethnic conflicts, political conflicts, economic troubles, revolts, and transitional governments. All these factors have worked together to slow down the market reforms in places such as land reforms and improved regulatory system. Corruption, regional instability, and low foreign investments have also hindered the country’s economic performance. However, despite the challenges the country is currently facing, Kyrgyzstan is ranked 70th on the ease of doing business index (2013). The economy relies heavily on the country's natural resources and is dominated by the agricultural sector with tobacco, cotton, wool, and meat as the main agricultural products. Here are Kyrgyzstan’s major industries and their contribution to the country’s economy.

Agriculture

Agriculture is the backbone of the economy of Kyrgyzstan, employing about 48% of the country’s workforce and accounting for 20% of the total GDP. It also provides a refuge for workers who have been displaced from other industries. Although agriculture is the most important industry in Kyrgyzstan, only 7% of the total land area is under crop cultivation and another 44% is used as pasture for livestock. The country is mainly mountainous (including the Pamir Mountains and Tian Shan Mountains) and agriculture is mainly centered in the Talas Province, Chuy Province, and Ferghana Valley. The major agricultural crops produced in Kyrgyzstan include potato, cotton, tobacco, vegetables, and fruits. Following a sharp reduction in the 1990s, the country witnessed a significant increase in subsistence farming in the 2000s. Grain production and livestock grazing account for the largest share of the agricultural workforce. Most farmers are also shifting from cotton and tobacco to grain farming. Private household plots are responsible for 55% of agricultural output while private farms account for 40%. The rest of the output is from state-owned farms. Despite the significant role played by the agricultural sector, it has been slow to modernization since the fall of communism and the growth experienced has not been sufficient to reduce poverty. Poor agricultural practices have resulted in the degradation of agricultural land. Land reforms remain a controversial issue in Kyrgyzstan and have proceeded at a slow pace since 1998.

Fishing

Although Kyrgyzstan is a landlocked country with no access to major water bodies such as seas and oceans, fishing remains an important part of the national economy. Fisheries resources are mainly obtained from the lakes such as Kara-Suu, Son-Kul, and Issyk-Kul, and large reservoirs. Like most of the sectors of the economy, the fisheries sector was also greatly affected by Kyrgyzstan’s withdrawal from the Soviet Union. The production decreased from 950 tons in 1988 to only 131 tons in 2000. However, the country has the potential to produce 1,500-2,000 tons of freshwater fish per year. The country has about 700,000 hectares of natural ponds, 3,400 kilometers of rivers, and a reservoir with a total area of 5,800 hectares. All these water bodies provide a perfect environment for aquaculture development. With the growing economy and demand for an alternative source of protein, the demand for fish has significantly increased. The fishing industry is expected to be a major source of income, food, and employment for most households in Kyrgyzstan once it fully transitions from centralized to a market economy.

Forestry

About 954,000 hectares or 5% of Kyrgyzstan is forested. Of the forest cover, 28% is classified as primary forest while about 57,000 hectares is planted forest. Between 1990 and 2010, Kyrgyzstan gained about 14% of forest cover. Although the country has a small forest cover, the forests are of great socio-economic value to the people. They are sources of firewood for cooking and raw material for industrial processes such as paper making. Kyrgyzstan has the largest wild growing nut forest in the world. Other types of forests include conifers, riparian, and juniper forests. These forests contain a total of 56 million metric tons of carbon. Kyrgyzstan’s forest industry is confronted by a number of challenges including lack of timber imports, illegal logging of wood, and overgrazing.

Mining

Mining in Kyrgyzstan dates back to the 3rd and 4th centuries when several sites were excavated for minerals such as copper, iron, lead, gold, mercury, and silver. The country has a number of minerals and extraction plants, especially in the southern part of the country. The key minerals include iron ore, aluminum, copper, gold, silver, and mercury. There are also deposits of oil and natural gas in Kyrgyzstan. All the output of the mineral sector is exported. The gold resources from the Kumtor gold mine are refined at Kara-Balta Mining Plant and thereafter exported to the western market. The gold mine is one of the largest in the world. Based on world prices, Kyrgyzstan’s mining industry is valued at US$ 73 million with coal production accounting for US$29 million. The most profitable area of the mining and mineral sector is gold extraction.

Manufacturing

In the post-soviet era, the manufacturing industry suffered a sharp reduction in its production because of the disruption of the supply of raw material and energy. The disappearance of the Soviet market also contributed to the decline of the industry as industrial products lacked market. Although the manufacturing industry has not fully recovered, its role in the nation’s economy cannot be ignored. The major components of this industry include textile and clothing, food processing, mineral processing. Kyrgyzstan has been home to several garment making companies with the garment industry growing by over 1100% since 2014. Most garment making companies operate as cut-make-trim garment manufacturers. The estimated garment industry production is currently at $375 million and accounts for about 7% of the total export. About 300,000 people are employed in the sector (12% of the total workforce). The challenges faced by the textile industry in Kyrgyzstan include lack of access to finance and underdevelopment capacity to meet the market demand.

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