KYRGYZSTAN TODAY Policy briefs on - Department of Geography

102 9 Mongolia 3,0 2,6–3,3 7
109 10 Armenia 2,9 2,6–3,1 7
109 10 Moldova 2,9 2,4–3,7 7
134 12 Ukraine 2,5 2,2–2,8 8
145 13 Kazakhstan 2,2 1,8–2,7 6
147 14 Russia 2,1 1,9–2,5 8
151 15 Belarus 2,0 1,6–2,5 5
151 15 Tajikistan 2,0 1,7–2,3 8
158 17 Azerbaijan 1,9 1,7–2,1 8
166 18 Turkmenistan 1,8 1,5–2,2 5
166 18 Kyrgyzstan 1,8 1,7–1,9 7
166 18 Uzbekistan 1,8 1,5–2,2 8
To reduce corruption in Kyrgyzstan, what is most required is to seriously revise the
legislative process.
Taking into account that Kyrgyz legislation strives for international unification
and application of those standards, it should become a business practice to conduct
mandatory examination of drafted laws and ensure current legal provisions for terms
of corruption.
These actions will essentially reduce the possibility of corruption among civil
servants. The examination should reveal corruption preconditions and help block them
at the point when draft law is being developed. It is no secret that public officers have a
vested interest in breaches of the law. Through these mercenary motives, public officers
at various levels maintain illegal actions by accepting bribes. As a result, the State
effectively merges with shadow business.
The scale of quasi-state activities remains high, and many “private” for-profit
enterprises are linked to high-ranking officials, thus creating a large, informal public
sector in which officials receive their “rent” as regular income.
11. Shadow economy. The shadow economy, which reaches 50 percent of the gross
national product (according to the UNDP study), negatively influences the tax and social
base and leads to a vicious circle of mutual tax increases and shadow sector activities.
The shadow economy creates unfair competition for registered enterprises and deforms
official statistics. This results in inefficient decisions that guide the country’s economic
policies.
Therefore, the shadow economy cannot be considered merely a temporary
phenomenon. It will increase whenever there is no economic growth as well as during
employment increases and relatively fair income distribution. The judicial system plays
a significant role for reducing the shadow economy. If the rule of law does not work,
and businessmen cannot rely on the law and legal protection of their property, they
will find it more favorable to work in a shadow sector that has its own traditions and
mechanisms.
To legalize the shadow economy, it is necessary to develop and carry out a number
of reforms:
• create a favorable legal and business environment by decreasing costs for
business registration and strengthening the benefits of official registration;
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