FDI policy in Kyrgyz Republic

Interesting facts

I Issyk-Kul: 2nd lake in the world on water transparency

I 80 touristic zones

I 8000 кm2 – eternal glaciers

Why KYRGYZSTAN?

Rich mineral reserves

Neighborhood with large economies

Liberal investment environment

The lowest tax regime

Strategy and Goals of FDI

• Draft strategy on stage of development

• To double the FDI by 2017

• GDP growth

• Poverty reduction

1. Priorities

- Fight against corruption;

- Creating favorable conditions for business.

2. The key measures in fight against corruption are:

- reduction of the state apparatus by 20%,

- exclusion of unjustified interference of state bodies into the activity of business entities,

- reduction of state services from 20 thousand to 380;

- reduction of licensed activities from 500 to 180.

3. Also administrative obstacles and restrictions in the sphere of investment activity are being actively eliminated.

- administrative barriers and restrictions elimination ;

- legal environment improvement;

- liberalization of internal and external trade regimes.

Reforms for improvement of investment

climate

The law on investment in

Kyrgyz Republic

The law on public-private partnership in Kyrgyz Republic

Subsoil law

•Equal rights

•National regime

• Infrastructure development

•Raising of private capital to public projects

•Effective management

•Market mechanisms of mining regulation

•Fight against corruption

Investment Legislation of Kyrgyz Republic

FDI policy making and coordination

• The government of KR, Ministry of economy and line ministries responsible for FDI policy promotion

• The only body coordinating the FDI policy is Ministry of economy

Trade policy

• Open policy, the KR is the member of the WTO (tariffs, taxes and licences)

• KR is preparing to enter the Custom Union

Rating of Kyrgyzstan on ease of Doing Business

Index (Doing Business) Ministry of Economy of Kyrgyz

Republic

Indexes Kyrgyzstan

Doing business

Орду

68

Starting a business 12

Receipt of

permissions for

construction

66

Connecting to power

networks

180

Property registration 9

Receipt of credits 13

Protection of

investors

22

Taxation 127

International trade 182

Execution of

contracts

70

bankruptcy

procedures

132

Procedures

(quantity)

quantity of d

Days Expenditures

Starting a business 2 8 2,7% from GDP revenue

per capita

Property

registration

4 6 0,3% of cost of asset

143

112

92

78

71

68

50

Tajikistan

Ukraine

Russian Federation

Moldova

Region average index

Kyrgyz Republic

Kazakhstan

Comparative analysis of Kyrgyz Republic rating on ease with other countries of region

for 2013

Cheap and skilled labor force

Average Salary

Ministry of Economy of Kyrgyz Republic

0

100

200

300

400

500

600

700

800

900

2009 2010 2011

Kazakhstan Russia

Kyrgyzstan

Cost of electricity

0

0.02

0.04

0.06

0.08

0.1

0.12

Kyrgyzstan Kazakhstan Russia

I Value Added Tax (VAT) 12%

I Profit Tax (PT) 10%

I Income tax (IT) 10%

I Retail sales tax

I Limit on the expatriation of profit

I Inheritance tax

Tax regime

Tax type Kyrgyzstan China Kazakhstan Tajikistan Uzbekistan Russia

VAT 12% 17% 12% 20% 20% 18%

PT 10% 15-25% 10-20% 25-30% 9-35% 10-18%

IT 10% 5-45% 10% 8-13% 10% 13%

Environmental and Social issues

• National sustainable development strategy of the KR for 2013-2017

• Line ministries developed their own policies (FEZ, Green economy and programs)

What sector are attractive?

Agriculture

Mining

Tourism

Hydropower industry

What sector are attractive?

ICT

Transport and Logistics Light industry

Ministry of Economy of Kyrgyz Republic

Lessons learned

• Political stability

• Coordination of the policies

• Country image