OREANDA-NEWS. May 21, 2007. The prospects of the processing industry in the south of Krygyzstan were discussed at the round table in Osh. Involved in the meeting arranged by the Osh office of the International Business Council (IBC), with the help of the OSCE’s field office, were local authorities, processing enterprises, small and midsize buinesses, bank officers, and international nongovernmental organizaitions, reported the press-centre of IBC.
 
The oblast administration views promotion of the processing industry as one of its priority tasks, said deputy head of the Osh oblast’s state administration Bolot Burgoev. To work effectively, our agricultural producers need bank credits. “Instead of exporting locally grown crops, our farmers should process them where they are – for example, make cotton yarn or other things that are in demand in our market,” Bugroev said.

The industry’s prime concerns are scarce financing, upgrading of equipment, product quality improvement, inadequate marketing and administrative barriers, said head of the OSCE Osh Field Office Jerome Bouyijou. The OSCE will try to sustain this sector through promotional efforts, and today’s event is just one of them, Jerome Bouyijou added. 
 
The IBC Strategic Advisor Goran Sumkoski assured the meeting participants of the IBC’s willingness to largely support businessmen. The IBC is ready to consider concrete proposals and to enter in its database any information on any enterprise that may help attract foreign investors.  Goran Sumkoski told about the upcoming investment forum scheduled for October 2007.    
For the sake of promoting domestic production, a new brand, “The Taste of the Sun”, has been created under the Association of Fruit Processing Enterprises (AFPE)’s project, reported director of the AFPE Osh branch Indira Turdubaeva. “Fruit processors are now facing difficulties with circulating assets,” said Turdubaeva. “Delivery of finished products is problematic, too. Moreover, lack of operation facilities and seaming machines makes it impossible to regularly process fruit and vegetables on a large scale, as is required by those clients who want to sell them in bulk to Kazakhstan and Russia. And to be able to enter the European market, our products should be up to international standards.”  
 
As everybody knows, small firms can’t go into the foreign market without respective certificates. Thus, to be allowed to sell through superstores, goods must have bar-coded tags, which is too costly a procedure for processors to pass through. 
 
 “To scale up export-oriented production, agricultural producers should be given soft credits,” believes director of the Osh Center for Business Information Omurbek Almanbetov. It is also necessary to revitalize idle plants and build new ones, as well as to develop the textile industry.
 
Touching upon the need to fight with smuggling from neighboring countries, the speakers pointed to the quality of contraband goods, which is much lower than that of domestic ones.        
The Agroelita cooperative, as its director Klara Primova reported, once failed to receive credits promised by the government. As a result, $600,000-worth supplies to Moscow were thwarted, and Agroelita was penalized.  “To exclude such situations, the government must guarantee the issuance of credits it promises,” Klara Primova insisted. 
 
Erkinbek Abdyrazakov, head of the economic development department of the Osh oblast’s state administration, focused on the issue of attracting foreign investments and promoting small and midsize processors. “Inadequate marketing and unpresentable packaging are some of our enterprises’ weak points. Besides, as the existing potential and labor resources remain untapped, we should expand production and prepare business plans,” said Abdyrazakov. In his view, a regional bank has to be established, to ensure timely crediting of local producers.
 
Kyrgyz Deputy Minister of Agriculture Akhmajan Makhamadov summed up the headaches of the processing industry, which happened to be a guinea pig in the early privatization campaign, with all the consequences of mistakes made along the way.
 
“Village communities call for organizational structures that would facilitate consolidation of local agricultural producers,” said Makhamadov. “This will make it easier to arrange terminals, a farmers’ exchange, wholesale depots. So far, the expenses of transporting harvested crops are higher than cost prices, since we don’t have cargo agents capable of carrying large shipments to the CIS states.”      
 
Also, a working group intended to lobby tax preferences for processing enterprises has been formed, reported Makhamadov.
 
The participants have advanced a number of suggestions and recommendations on removing administrative barriers for the sake of better investment climate - in particular, proposals on opening of a wholesale depot (or terminal) for selling processed goods; on shared-brand production; on founding a trading house in Russia or Kazakhstan. Lastly, it has been recommended that agricultural processors be granted tax preferences and low-interest bank credits.