In connection with the limited admission of border since April, 8th from the side of Uzbekistan, today thousands of traders are compelled to be engaged in trade bypassing official border.

According to data of National Statistical Committee of Kyrgyzstan, in 2010 the foreign trade turnover of the Kyrgyz Republic with Republic Uzbekistan has developed for the sum 150 mln. dollars of the USA and in comparison with 2009 it was reduced to 50 %. The reason of such decrease was reduction of deliveries of the russian air kerosene from the Kyrgyz Republic to Republic Uzbekistan from 114,6 mln. dollars of the USA in 2009 to 0,2 mln. dollars of the USA in 2010.

The minimum content of the Chinese goods in the structure of export of official statistics KG gives the grounds to assert that the goods are exported to Uzbekistan illegally, by contraband and “shuttle” way. Similarly, in the structure of import of the Kyrgyz Republic from Republic Uzbekistan actually there is no agricultural production (fruits and vegetables) because of its shadow character of a stream. Contraband trade occurs in frontier settlements far from supervising bodies. On all perimeter of border, about 1099 km or 28,3 % from the total extent of borders of Kyrgyzstan, are available illegal ways on which from Kyrgyzstan the goods are moved to Uzbekistan and on the contrary (see pictures below).

Importance of illegal trade for a self-survival

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Frontier trade plays a huge role in maintenance of employment of the population and increase of business’s activity. This trade brings the income for the people working on markets, and also for the activity connected with markets and trade. In the remote regions where employment is scarce and salaries low, transboundary trade creates the income for house and is more profitable than the majority of other accessible kinds of economic activities.

According to the research of the World Bank (WB), considerable illegal trading streams pass through Kyrgyzstan. Its essential part passes through the regional market “Karasuu”, in a direction of Uzbekistan and Tajikistan. Karasuu is a trading platform both for re-export, and for export of domestic production. The market is focused on a 12-million Fergana contingent. Only 15 % of production of market Karasuu is realized to local consumers (the graph from the right). Regarding to research of WB, in the market there are more than 10 thousands of containers; employment is more than 16 thousands of people (indirect more than 70 thousands of people); the share of wholesale trade in total amount of sales is 80 %.

According to traders of market Karasuu, till April, 7th 2010 monthly turnovers of containers at wholesalers were not less than 40-50 thousand dollars and up to 100 thousand dollars, in retail was from 5 to 25 thousand dollars. At the present, on the average the container’s turnover in a month at retail sellers is about 2000 dollars; at wholesalers – about 11500 dollars. This data testifies about more than 50 % decrease in container’s turnovers after April, 7th 2010.

The cost of a total volume of the goods directed from market Karasuu towards Uzbekistan in 2010 is 605 million US dollar (in comparison with the official data volumes of illegal trade exceed more than 5 times).

According to the results of survey, in export structure the clothes and footwear prevail (68 %) (the graph from the right). In import – vegetables and fruit (46 %) (the graph from the right).

Only one firm “Abu-Sahi” (according to traders, belongs to Gulnara Karimova) is engaged in transportation of the goods through borders. In this case traders bring the goods in “Abu-Sahi”, pay for transportation and wait for delivery of goods to Tashkent city. The cost of transportation of 1 cubic meter has increased for 2 times after closing of border and now costs 630 dollars.

At the present time closing border by Uzbekistan prevents movement of the capital, labor and the goods, destroys the transboundary local markets, undermines a common labor market, and complicates the development of private business in the whole region. It aggravates inequality of social and economic development, increases poverty and instability in region. The big part of goods turnover is in a shade, the basic stream of labor and trading migration became illegal. Such situation only stimulates distribution of corruption and decreases safety in region.

With an aim to improve the situation it is necessary: to take measures on maintenance to the full realizations of agreements in sphere of crossing of border and mutual trade between KG and UZ; creation (under the consent of both parties) joint zones of frontier trade with a corresponding infrastructure; revision of system of customs registration and the simplified taxation; to work a complex of special measures on safety of the people who are engaged in frontier trade; to accelerate process of delimitation and demarcations of frontiers.

CAFMI,  February 10, 2011

Bishkek-Osh, Kyrgyz Republic

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