USAID REFORMA Project Year One Second Quarterly Report

The project began in 2011 and is implemented by Deloitte Consulting, LLP, with funding from the United States Agency for International Development (USAID). The project's primary objective is to enhance the business environment and promote economic growth in the region. In the second quarter of 2012, the project made significant progress in implementing its Year 1 work plan activities. One of the key achievements was the completion of a review and recommendations for optimizing and streamlining business licenses and permits by Foresight Foundation. The review identified 148 licenses that could be eliminated, representing approximately 32 percent of the total number of licenses. This is above the government's target of eliminating 25 percent of all licenses for conducting business activity. The project also initiated drafting of the 'Law on Licensing' by Foresight Foundation, which was presented to government institutions and the public in late May 2012. However, the government's haste in getting the law drafted and passed prior to the parliamentary summer recess was sub-optimal, resulting in a limited number of comments from the business community. REFORMA is now working with the Ministry of Economy and Antimonopoly Policy (MEAP) to solicit wider comment from the business community and conduct a public hearing. Another significant achievement was the completion of REFORMA's Mineral Resources Development Action Plan, developed in cooperation with the International Business Council. The action plan was approved by USAID in May, and the government indicated its willingness to participate in implementation. To strengthen MEAP's commitment to implementation, REFORMA has prepared an Agreement on Roles and Responsibilities to be signed by Minister Sariev. The project also mobilized an international expert, Mr. Kirk Adams, to provide external comment on the government's proposed changes to the legal and regulatory framework for development of its mineral resources sector. Mr. Adams commented on the 'Law on Subsoil' and the 'Provision on the Procedure for Regulation of Subsoil Use,' which puts forth procedures for competitive tenders and auctions for issuing new mining exploration licenses. However, the government declined REFORMA's offer to provide hand-holding assistance in conducting the first competitive tender according to leading international practices. In addition, the project launched a competitive tender among Kyrgyz organizations for creation of a Medium- and Long-Term Development Strategy for the Mineral Resources Sector. The outcome of the development strategy will provide stakeholders in the Kyrgyz Republic with the appropriate policy choices to ensure widespread economic growth, job creation, environmental and health protection, and a fair distribution of economic benefits to the government, private investors, and the Kyrgyz people. The project also completed two short-term consulting assignments to help the MEAP analyze the impact of Customs Union membership on Kyrgyzstan's import tariff structure and technical product regulations. The project's progress and challenges in government coordination, anticipated variances from the work plan, administrative and staffing issues, subcontracting and grant pipeline, performance, and results are also being monitored and addressed.