Kyrgyzstan - Industry

Since the collapse of the USSR, the industrial and manufacturing sector has undergone considerable contraction. Between 1990 and 1995 production declined in all sectors of the power industry, engineering and metal-work, and fuel, light, chemicals, and petrochemicals sectors. By 1999, the industry sector accounted for 20 percent of the country's GDP and employed 15 percent of the labor force, according to the CIA World Factbook.

Kyrgyzstan's manufacturing plants are concentrated in and around the capital, Bishkek. Many of these enterprises were not competitive on international markets and thus have been shuttered and closed since they lost subsidies from the government. The enterprises that remain tend to operate well below capacity.

Unlike other developing countries faced with transferring workers from low productivity subsistence agriculture to higher productivity industry, Kyrgyzstan faces the opposite problem. The government seeks to spur industrial restructuring to cut employment in formerly subsidized, inefficient industries, and to encourage the emergence of new lower tech enterprises in the agricultural and service sector.

The only industrial sector that experienced significant growth recently was gold mining. In May 1997 the Kumtor Operating Company, which is two-thirds owned by the Kyrgyzstan Republic and one-third by a Canadian company, began gold mining operations. The construction of the mine cost US$450 million. The initial estimate of recoverable gold was 16.5 million troy ounces of gold, and gold was expected to average around 485,000 ounces a year over the life of the project. In late 1999 the company revised its estimates of recoverable gold downward, taking into account the changes in the price of gold and a revision of the geological expectations of the mining work. Accordingly, the amount of recoverable gold was revised downward to 4.27 million troy ounces. Company officials announced that the mine would be closed in 2008. This represents a major setback for the Kyrgyz government's development plans, given that revenue from the gold mine constituted a major portion of the government's income (40 percent in 1999).

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