Analysis on ICT sector

06.09.2018

1.1 General information

  Information and communication technologies (hereinafter ICT) are actively used by the population and enterprises in the Kyrgyz Republic.

 According to the National Statistics Committee in 2016 the number of economic entities using ICTs amounted to 11.9 thousand and compared to 2012 has increased 1.3 times. The share of business entities using ICT in urban settlements amounted to 67.7%, in rural areas - 32.3%.

The largest share of enterprises and organizations using ICT is in Bishkek (more than 40 percent in total), the smallest - in the Talas oblast (about 4 percent).

The share of economic entities with state-owned ownership using ICTs in 2016 is 45.2 % from the total amount, and with private ownership - 54.8 %.

Out of the total number of economic entities with state ownership (5,400), only 2.7 percent are connected to the State Computer Network, of which 529 entities have their own website, and 192, or 36 percent, with the content in Kyrgyz language.

In 2016 the number of specialists of enterprises and organizations engaged directly in the field of information and communication technologies amounted to more than 20 thousand people, and compared to 2012 has increased1,6 times. The largest share was in Bishkek (29.2 percent), and the lowest (0.9 percent) in Naryn Oblast.

 

Table 1: Indicators of computer service in 2016

Total,

 

    units

including

urban settlements

of them

Bishkek c.

countryside

Local area networks

7 682

6 611

3 944

1 071

Email

4 784

3 757

2 280

1 027

Access points to the Internet including ADSL and

18 383

10 790

8 726

7 593

    dedicated lines

5 665

3 987

1 923

1 678

Own WEB-sites from which:

1 625

1 457

1 096

168

    providing on-line services

877

809

638

68

Web-sites in Kyrgyz language

394

362

241

32

Number of enterprises connected to the State Computer Network

187

131

60

56

             

            Source: Data from the National Statistics Committee, Publication "ICT in the Kyrgyz Republic, 2012-2016

 

The computer service of enterprises and organizations is characterized by the presence of local computer networks (LANs), Internet access, the availability of e-mail and Web sites, access to the State Computer Network (SCN).

In 2016, about 49 percent of the local computer networks (LANs) in the republic operated in economic entities with state ownership.

More than 51 percent of access points to the Internet accounted for economic entities with state ownership, of which 60 percent - for work in the mode of ADSL and on leased lines.

In 2016 187 enterprises of the republic are connected to the State Computer Network (SCN). About a third of them (32 percent) are located in Bishkek. A significant part of the enterprises connected to the SCN (more than 79 percent) account for economic entities with state ownership.

The dynamics of the number of access points to the Internet in 2009-2017 show a positive trend, almost doubling in this period (Table 2).

 

Table 2: Number of access points to the Internet in the Kyrgyz Republic for 2009-2017                                                                          

                                                                        

 

Year

Total (units)

 
 

2009

11 030

 

2010

13 939

 

2011

15 345

 

2012

16 756

 

2013

16 855

 

2014

13 752

 

2015

15 375

 

2016

18 383

 

2017

22 044

 

Source: Data from the National Statistical Committee, 2009-2017

 

The average monthly salary of ICT workers has a positive growth dynamics and as of the end of 2017 it is one of the highest among the branches of the economy (Table 3).

 

Table 3: Average monthly salary of ICT workers in 2005-2016

 

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Information and communication

4734

5768

7508

9403

10896

13782

16019

17615

19161

21862

24678

26204

Source: National Statistical Committee data, 2005-2016

 

            The number of graduates in the field of ICT increases: in particular, the industry has a significant demand for primary and secondary vocational education in ICT, while the number of graduates with higher education comparatively remains at about the same level (Table 4).

 

Table 4: Number of graduates of educational organizations in the field of ICT

 

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

                           

ICT of primary vocational education

-

-

-

-

-

-

-

-

1551

1333

1485

1159

1367

ICT of secondary vocational education

87

68

29

181

272

249

301

341

332

945

1520

1584

1098

ICT of higher professional education

1244

1239

887

1074

1211

1053

1131

1003

1075

944

883

1121

761

Source: National Statistical Committee data, 2005-2017

 

 

Table 5: FDI inflows in the information and communication industry (thous. USD)

 

2010

2011

2012

2013

2014

2015

2016

2017

Total

666 086,0

849 201,1

590 733,3

964 507,1

727 091,2

1 573 243,7

813 960,7

616 793,1

Information and communication

922,5

3 243,4

2 642,0

3 235,3

13 168,7

5 699,3

1 251,0

14 422,4

Source: National Statistical Committee data, 2005-2017

 

      

 

 

1.2.   Communication sector

According to the State Information and Communication Committee of the Kyrgyz Republic (SICC), the competitive market exists in all segments of the communications industry and the total number of operators is 397 entities:

 

Indicator name

as of 30.09.2017.

Total number of active operators

397

Total number of valid licenses, pcs.

748

 

 Source: SICC of the KR,  http://www.ict.gov.kg/index.php?r=site%2Factivity&cid=15&aid=43

 

Revenues of cellular companies for the period from 2005 to 2015 had high growth rates, with a decline in the volume of services in 2016-2017 (Table 6).

 

Table 6: Revenues from cellular services, million soms

The name of indicators

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Revenues

2316

2620

6168

9369

12324

12463

14560

17101

20363

21816

22476,0

20776

18446

Source: National Statistical Committee data, 2005-2016

 

            The decrease in the volume of services of the communications industry for the period from 2016 to 2017 is because there is a decline in the total volume of services rendered by telecom operators due to the tendency for some services to substitute others. For example, the use of traditional voice traffic is gradually replaced by data traffic, primarily due to the diversity and profitability of using Internet services, which is also reflected in the incomes of telecom operators.

 

1.2.1 Implementation of 4G communication services

            According to the SICC data, as of the end of 2017, 401 4G base stations (hereinafter referred to as BSs) were installed by communication operators:

Bishkek city

26 BS

Osh city

7 BS

Chui oblast

121 BS

Talas oblast

20 BS

Issyk-Kul oblast

46 BS

Naryn oblast

12 BS

Jalal-Abad oblast

52 BS

Osh oblast

90 BS

Batken oblast

27 BS

 

1.2.2 Construction of a fiber-optic backbone communication network.

According to the SICC, the total length of the trunk fiber-optic lines built and commissioned at the end of the second quarter of 2017 amounted to 17,507,045 km, of which 8,264.974 km are trunk lines, including:

Chui oblast

2179,777 km

Talas oblast

509,851 km

Osh oblast

1584,783 km

Jalal-Abad oblast

1447,599 km

Batken oblast

442,611 km

Isyk-Kul oblast

1324,453 km

Naryn oblast

775,9 km

 

 

 

1.3 Using ICT in the banking sector

According to the National Bank of the Kyrgyz Republic, as of the end of 2016, there were 1.6 million bank payment (plastic) cards in circulation (Table 7 and 8), which, compared to 2012, 4 times more. For servicing of bank payment cards 1,3 thousand ATMs were provided, the number of which in comparison with 2012 increased 2.1 times, as well as 7.1 thousand payment terminals (2.9 times).

 

Table 7: Number of plastic cards in circulation and peripheral devices by territory                                                                                                                                   (units)

 

Number of plastic cards in circulation

Number of peripherals

ATM

POS-terminals

Kyrgyz Republic

1 615 753

1300

7101

  Batken oblast

82 932

51

110

  Jalal-Abad oblast

222 423

145

411

  Issyk-Kul oblast

119 243

117

478

  Naryn oblast

85 525

47

101

  Osh oblast

257 865

183

614

  Talas oblast

55 168

44

87

  Chui oblast

142 962

102

661

  Bishkek city

649 635

611

4 639

   Source: Data of the National Statistical Committee, Publication "ICT in the Kyrgyz Republic, 2012-2016 years

 

 

Table 8: Number of plastic cards by region for 2012-2016

 

2012

2013

2014

2015

2016

Total for the Republic

408 906

650 551

908 908

1 198 508

1 615 753

  Batken oblast

9 335

23 911

40 126

57 615

82 932

  Jalal-Abad oblast

27 847

65 349

108 547

156627

222 423

  Issyk-Kul oblast

23 715

48 111

67 112

89 769

119 243

  Naryn oblast

13 800

33 079

49 577

65 047

85 525

  Osh oblast

43 945

79 349

125 954

184144

257 865

  Talas oblast

8 324

15 083

25 676

39 524

55 168

  Chui oblast

24 790

48 738

73 774

103438

142 962

  Bishkek city

257 150

336 931

418 142

502344

649 635

 

    Source: Data of the National Statistical Committee, Publication "ICT in the Kyrgyz Republic, 2012-2016 years

 

 

1.4 In the field of information technology.

 

1.4.1 Implementation of the "e-government" system.

            In order to implement electronic governance ("e-government") in state executive bodies and local self-government bodies of the KR:

1) The Government of the Kyrgyz Republic issued an executive order No. 436-r (dated October 14, 2016) on the introduction of the Electronic Inter-Agency Interaction System “Tunduk” in the pilot (pilot) mode for piloting electronic services and data exchange in electronic format between information systems (hereinafter referred to as EIAIS "Tunduk"). The result of the implementation of this pilot project, joint with state authorities, is a a developed solution for electronic interagency cooperation and the launch of pilot electronic public services..

            At present, the following 12 state bodies of the KR are physically connected to the “Tunduk” EIAIS:

  • Ministry of Justice of the Kyrgyz Republic;
  • Ministry of Internal Affairs of the Kyrgyz Republic;
  • Ministry of Health of the Kyrgyz Republic;
  • Ministry of Education and Science of the Kyrgyz Republic;
  • Ministry of Labor and Social Development of the Kyrgyz Republic;
  • Social Fund of the Kyrgyz Republic;
  • State Tax Service under the Government of the Kyrgyz Republic;
  • State Customs Service under the Government of the Kyrgyz Republic;
  • State Registration Service under the Government of the Kyrgyz Republic;
  • State Service of Intellectual Property and Innovations under the Government of the Kyrgyz Republic;
  • Central Treasury of the Ministry of Finance of the Kyrgyz Republic;
  • State Enterprise "Single Window Center in the Sphere of Foreign Trade" under the Ministry of Economy of the Kyrgyz Republic.       

 

The following government agencies have signed agreements, physical connection procedures are prepared and communication channels are laid, but there is no switching equipment:

  1. The Mandatory Medical Insurance Fund under the Government of the Kyrgyz Republic;
  2. Ministry of Transport and Roads of the Kyrgyz Republic;
  3. State Committee of Industry, Energy and Subsoil Use of the Kyrgyz Republic;
  4. Ministry of Culture, Information and Tourism of the Kyrgyz Republic;
  5. The State Service for Regulation and Supervision of the Financial Market under the Government of the Kyrgyz Republic;
  6. State Agency of Antimonopoly Regulation under the Government of the Kyrgyz Republic;
  7. Military Prosecutor's Office of the Kyrgyz Republic;
  8. The State Service for Financial Intelligence under the Government of the Kyrgyz Republic;
  9. State Migration Service under the Government of the Kyrgyz Republic;
  10. Ministry of Emergency Situations of the Kyrgyz Republic;

 

            Agreements also signed with the following government agencies, however, communication channels are not installed, and there is no switching equipment:

  1. Department of Drug Supply and Medical Equipment under the Ministry of Health of the KR;
  2. The State Commission for Religious Affairs of the Kyrgyz Republic;
  3. National Commission on the State Language under the President of the Kyrgyz Republic;
  4. The State Service for the Execution of Punishments under the Government of the Kyrgyz Republic;
  5. The Supreme Court of the Kyrgyz Republic;
  6. Management of the affairs of the President of the Kyrgyz Republic and the Government of the Kyrgyz Republic;
  7. The Higher Attestation Commission of the Kyrgyz Republic;
  8. National Statistical Committee of the Kyrgyz Republic;
  9. The State Committee for Defense Affairs of the Kyrgyz Republic;
  10. Ministry of Agriculture, Food Industry and Melioration of the Kyrgyz Republic;
  11. Administration of affairs of the Jogorku Kenesh of the Kyrgyz Republic;
  12. City Hall of Bishkek.

 

        Pilot participants are configured to connect to fiber-optic communication lines, server equipment (server racks, rack server, UPS), server software Linux Ubuntu, specialized software virtual machines (adapter, security gateway), configured switch.

       Also, state bodies, which are service providers, develop application software for converting data to / from the data exchange format of EIAIS "Tunduk", and the process of testing data conversion with state bodies (consumers of public services) is conducted.

In the process of implementing the EIAIS "Tunduk", there is a shortage of experienced programmers for writing programs in the Java and ASP.NET. To solve this problem, experts from the State Enterprises "Infosystem" and "Infocom" were involved.

In addition to the ministries and departments that are connected to the EIAIS "Tunduk", it is possible to expand the infrastructure of the interagency cooperation system to other bodies.         However, for joining to the EIAIS "Tunduk", some government agencies have a lack of central server equipment and an automated control system. SICC makes recommendations to the hardware and software complex of state bodies intending to connect to EIAIS "Tunduk".

A secure VPN network has been built in government agencies to exchange data, which in turn slows down the further rapid implementation of the EIAIS "Tunduk", since not all connected or unconnected state-controlled Tunduk agencies are motivated to re-establish links with other government agencies. SICC conducts explanatory work on the non-reimbursable accession and use of the SEMV "Tunduk" channel.    

2) The project "Construction of a fiber-optic communication line for the construction of a unified system of infrastructure of state agencies of the Kyrgyz Republic" was implemented. In 2015, an agreement was concluded with OJSC Kyrgyztelecom on laying fiber optic links, a length of 60 km for the merger of 68 government agencies of the Kyrgyz Republic (ministries, departments, etc.) into one unified protected fiber-optic channel. In 2016, work was completed on laying fiber-optic lines in 68 government agencies and departments, and a fiber optic link, over 60 km long, was laid.

Currently, 34 government agencies have completed server hardware.

 

1.4.2. Implementation of the Taza-Koum Project

            The project was initiated by the previous President of the Kyrgyz Republic Atambaev A.Sh. and actively promoted by the Government of the Kyrgyz Republic under the Prime Minister of the Kyrgyz Republic, Isakov S.J.

            This Program was supported by the donor community, in particular by the World Bank.

            The main idea of the project is the digitalization of the country's economy, the use of modern ICT technologies in the provision of public services.

            The framework of the program is the eradication of corruption in the public sector by minimizing the impact of the human factor through the automation of administrative processes and procedures, and the provision of digital public services.

            The program is planned to radically reform the system of public administration through the prism of digital transformation.

            The initiators of the project have set ambitious goals, such as:

  1. Building a world-class digital infrastructure based on "green" technologies and clean energy (broadband telecommunications networks, data centers, cloud technologies, digital platforms);
  2. Creating an enabling environment for sustainable innovation development (policy, legal framework, institutions);
  3. Digital opportunities for all, digital skills for the digital economy (access to digital knowledge, innovation, experience and opportunities for production, use and sale of clean goods and services);
  4. Encouraging every citizen of the Kyrgyz Republic to become a digital citizen with the necessary knowledge and capabilities (citizens' involvement in the country's governance through digital technologies);
  5. The formation of an open digital society, driven by the data industry (open government data, sensory technologies and telemetry, the Internet of things, cloud computing, large data);
  6. Transformation of the Kyrgyz Republic into a safe place for life and work on-line (security of technologies, data and networks);
  7. Transformation of the Kyrgyz Republic into the regional hub of the digital Silk Road for digital business and digital innovations (favorable digital environment).

At present, the President of the Kyrgyz Republic, S.Sh. Jeenbekov, and the Government of the Kyrgyz Republic set the task of continuing work on creating an "electronic government".

 

1.4.3 Implementation of the Digital CASA-Kyrgyz Republic Project, financed by the World Bank

The Government of the Kyrgyz Republic together with the World Bank of the Kyrgyz Republic initiated the project "Digital CASA - Kyrgyz Republic", which will work within the framework of the program of the Government of the Kyrgyz Republic to create an "e-government".

Under the Financing Agreement, 50 million US dollars are allocated for the Kyrgyz Republic, including 25 million US dollars on a grant basis and 25 million US dollars - a loan at 1.5625% per annum. The loan is granted for 38 years with a grace period of 6 years with a 0% interest rate.

The project has national and regional aspects:

The national aspect is related to the development of digital infrastructure, the development of public electronic services, mini-claudes (cloud data warehouses), through the creation of favorable conditions at the legislative and educational level;

The regional aspect is the improvement of the capacity of broadband Internet access networks between Central Asian countries and some landlocked countries in South Asia, the Regional Digital Platform (Eurasia Cloud), the Regional Center for Excellence in Digital Development (Competence Development Center and the development of digital skills).          

At this time, the project is undergoing an internal approval procedure.     

 

1.4.4 Implementation of the "Umnyi gorod"(Safe (Smart) City) project

            Launching the "Umnyi gorod" project was initiated by the Government of the Kyrgyz Republic in 2014 as part of the PPP promotion. A feasibility study was prepared and a tender was conducted to select applicants for the project. At the same time, the project remained unrealized due to the cancellation of the tender by the Minister of Internal Affairs.

To further implement the project, the Government of the Kyrgyz Republic actively began to promote the project by seeking investors and opportunities for implementing the project outside PPP.

At the end of 2017, Huawei Technologies Co., Ltd, Beijing China Veterans Lingxin Capital Management, and AKA Minerals and Mining LLC became potential investors.

Huawei Technologies Co., Ltd acted as a supplier of equipment, works and services. Other specified companies acted as investors, by investing in the Project.

As a result of negotiations, on January 11, 2018, the Investment Agreement on the implementation of the "Umnyi gorod" project with the listed investors was signed.

The subject of the investment agreement was the execution of works on the preparation of design estimates, the supply of equipment, construction, integration, maintenance and maintenance of the "Umnyi gorod" project in Bishkek, Osh and the Bishkek-Osh and Bishkek-Cholpon-Ata highways Bishkek - Manas International Airport, with a total investment volume of about $ 60 million, which could be adjusted based on the results of the Feasibility Study and Technical Review.

From the moment of signing the agreement, the investor represented by the company "Beijing China Veterans Lingxin Capital Management" within 60 days was obliged to provide the Government with the developed Feasibility Study of the Project. After that, the Government had to develop the Terms of Reference for this investor within 60 days, on the basis of which the orders for deliveries under the agreement were to be signed between him and the operator, represented by the State Enterprise "Infocom" under the State Registration Service of the Kyrgyz Republic. Under the terms of the investment agreement, investors were required to ensure full implementation of the Project within a period not exceeding 20 months after the approval of the Terms of Reference.

In this regard, the Government of the Kyrgyz Republic made a decision and notified investors about the termination of the Investment Agreement.

The reason for this was the failure to fulfill the obligations specified in the investment agreement in due time by the investor, which is expressed by the preparation and provision of substandard documents for the implementation of the Project, namely the Feasibility Study.

Currently, the Government of the Kyrgyz Republic is working on the project. The State Committee for Information Technologies and Communications and the “Infocom” state enterprise are responsible for the project. They proposed a new concept for the project and it is divided into two stages - 2018-2019-s and 2019-2020-s.

The selection of a contractor for the "Umnyi gorod" project is proposed to be conducted based on the results of an online auction. The competition for the implementation of the project will be announced on the site of state purchases by the method of lowering. Pre-auction will be held this year.

According to the preliminary feasibility study developed by the interdepartmental working group for the implementation of the "Umnyi gorod", $ 12 million will be required. These are the costs for fixing cameras, public surveillance cameras, road markings, road signs.

            The project proposes to equip:

  • 38 intersections of Bishkek with the installation of four cameras at each intersection
  • stationary complexes in Bishkek, designed to control the speed mode with automatic fixing of traffic violations and transfer of information to the data processing center;
  • portable car posts.

 

            Phase I of the project "Umnyi gorod" includes the installation of cameras to fix traffic violations on.

  • 38 intersections of Bishkek
  • Bishkek - Chaldovar;
  • Bishkek - Manas airport;
  • Bishkek - Kemin;
  • Bishkek - Ak Zhol checkpoint.

 

            Phase II of the "Umnyi gorod" project, plans to implement installations in Osh, Jalal-Abad, Balykchy, Karakol, and on the road Balykchy - Torugrat.

The project is planned to be implemented at the expense of the provider of services, which will be made at the expense of incoming fines.           

The main reasons for not implementing the project:

            One of the reasons is a disinterest from a certain part of the Ministry of Internal Affairs employees in the implementation of this project, since it can change or eradicate the corruption component that exists when checking traffic of vehicles and fixing traffic violations.

Another reason is the reluctance of the Ministry of Finance to allocate funds for the project from the budget, in this regard, the project is proposed to be implemented through investments.   At the same time, the involvement of investors in the implementation of the project is confronted with the issues of regulation of the public procurement system and the business model of the project.

According to the current system, state purchases are made on a tender basis with payment of the provision of services from the state budget. However, in the implementation of the project, payments from the project will come to the budget in the future. Many investors agree to return investment funds at the expense of future payments from the project, but the mechanism for returning investment funds to the investor due to future payments passing through the treasury accounts has not been worked out, which is the main obstacle to the implementation of the project.

            1.4.5 Implementation of the "Implementation of an Electronic System for Fiscalization of Tax Procedures" project

According to the Law of the Kyrgyz Republic adopted on April 13, 2018 No. 39 "On the introduction of an electronic system of fiscalization of tax procedures," a legal framework was created for:

1) the introduction of electronic invoices;

2) further improvement of KKM-online;

3) determination by the Government:

 the timing of reporting in electronic form without fail;

 the right of a taxpayer to receive an electronic patent,

 list of goods subject to marking, types of marking and terms of reference.

On May 30, 2018, under No. 386, an interdepartmental working group on the introduction of an electronic fiscal system for fiscal procedures (hereinafter referred to as the "WG") was appointed by the decree of the Prime Minister of the Kyrgyz Republic, which was entrusted within ten days:

- carefully study and, if necessary, finalize:

a) draft decisions of the Government of the Kyrgyz Republic on the introduction of an electronic fiscal system for fiscal procedures;

b) terms of reference for the introduction of an electronic fiscal system for fiscal procedures;

- develop procedures for conducting a competitive selection of a company to introduce an electronic fiscal system for fiscal procedures;

- prepare qualification requirements for the participants of the competitive selection of the company for the introduction of an electronic fiscal system for fiscal procedures.

Electronic system of fiscalization of tax procedures, includes the following projects:

- on the procedure for marking goods with control (identification) marks and identification means

- on certification of the goods to be marked

- on measures to introduce electronic invoices

-On order to maintain and apply tax reporting as an electronic document.

- on the implementation of a pilot project for the issuance of a voluntary, mandatory patent in the form of a document in electronic format.

-Conducting and application of CCM in re

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