Background -- September 1998

Strategic location	The Kyrygz Republic is located in the heart of Central Asia, bordering on Kazakhstan, Uzbekistan, Tajikistan, and China. The country’s mountains, rivers, and famous Issyk-Kul lake represent great assets and serve as a foundation for the development of tourism industry.
Resource rich country	The country is very rich in natural resources. The famous Kumtor gold mine is considered the tenth (some sources rank it eighth) largest in the world. The total gold reserves in Kyrgyzstan are estimated at 600 tonnes. There are also significant deposits of selenium free antimony ore, which is highly valued on the world market because of its quality. Apart from mineral reserves, the country possesses vast reserves of water and hydro-electric power. According to experts at Kyrgyzenergo, the country’s total hydropower reserves exceed 43 billion kWt/H. However, existing hydropower potential is utilised at only 30%. The country has ambitious prospects for developing the power sector.
Population	A nation-wide literacy rate of 97% means that there is a highly qualified labour force which is a great advantage to a potential investor. Moreover, the average monthly salary of about USD 40 (as of November 1997) also places an investor in the privileged position of being able to hire cheap, experienced and well-educated personnel. The population density is relatively high when compared to Kazakhstan (22 inhabitants per square kilometre), with over 60% of the population living in rural areas. The official unemployment rate for 1997 was 4.0%. In the first half of 1998 it fell to 3.7%.
Stable political system	The Kyrgyz Republic is a unitary state, with the President being the Head of State. Dr. Askar Akayev, the first ever President of Kyrgyzstan, was elected through uniform surffage. Recently, the Constitutional Court ruled that Akayev can seek a third term in office. The legislature is represented by a unicameral Parliament which is called the Jogorku Kenesh. There is no strong opposition in Kyrgyzstan, although certain human rights activists and movements are in place.

© Kazkommerts Securities 1998. Please cite source when quoting.

This report has been prepared by Kazkommerts Securities and provided solely for information purposes to recipients only. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. This information does not constitute an offer to buy or sell securities. Kazkommerts Securities or its affiliated persons may be buying, selling or holding long or short positions, acting as investment bankers, be represented on the Board of the issuers in securities mentioned herein. This report is not intended for the use of private investors. Investment in Kazakhstan markets is an extremely risky activity and many persons, physical and legal, may be completely or partially restricted from dealing in the Kazakhstan securities markets.

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