The Kyrgyz Republic is located in the centre of Eurasian continent surrounded by the magnificent mountain range, Tien Shan (the Mountain of Heaven). The history of Kyrgyz is three thousand years old. As an independent, unitary and democratic state, modern Kyrgyzstan is a dynamic, developing country that puts focus on progressive growth of economic and social spheres of the country and stable rise of standard of living of Kyrgyz people. There are about 80 nationalities in Kyrgyzstan and, therefore, the issues of inter-ethnic concord and unanimity are essential in state policy.
Kyrgyzstan is strategically located by being at the junction between major trading partners such as: China, Russia and Kazakhstan. Historically, it determined trading and cultural interconnection in the region. Kyrgyzstan being first geographical stop for China on the way to the Central Asia plays an important role in the development of ‘economical corridor of China-Central Asia-West Asia’.
Kyrgyzstan is a member of many international organisations, which also has a positive effect on the economic development of the country.
Kyrgyzstan is the first Central Asian country that entered WTO in 1998, therefore, has the experience and developed legal framework in the field of commercial communications with the foreign countries.
In 2015, Kyrgyzstan officially entered Eurasian Economic Union (EEU) with the population of 182 million, and became a zone with free movement of goods, services, capital and labour force. Therefore, investing in Kyrgyzstan provides you access to EEU market.
In January 2016, the European Union officially published and provided to Kyrgyzstan a right for Generalized System of Preferences (GSP+). The production of Kyrgyzstan by more than 6,000 product positions, that are appropriate for the requirements of the EU, could be imported from Kyrgyzstan to the state-members of EU without custom fees. Nowadays, Kyrgyzstan is the only country in Central Asia that has received the right of GSP+.
The country has the most liberal tax treatment in the region. Income tax rate, income tax and VAT are favourably lower than those in Kazakhstan, Tajikistan, Uzbekistan and China.
Liberalisation of investment regime and foreign policy through elimination of administrative limitations and reducing obstacles for investors, improvement of legislation and liberalisation of external and internal trade regimes that were and still strategically important directions for the Government of Kyrgyz Republic.
In the last recent years, we managed to strengthen legislation framework for conducting investment activities in the Kyrgyz Republic, thanks to accepted amendments in investment, tax and other legislation.
There have been made amendments to the ‘Investment Law of the Kyrgyz Republic’, that provide protection to investors from risks, related to the changes in the legislation of Kyrgyz Republic. We added a norm that provides ‘stabilization regime’ for creation stable and predictable operational environment for the investors.
According to the World Bank report ‘Doing Business’ 2015, Kyrgyz Republic occupies the 9th position on the index of business start-up, the opening of the company in Kyrgyz Republic requires only 2 procedures, it takes 8 days and expenses related to them up from 2.4 per cent per capita income.
Kyrgyzstan is a mountainous country with a dominant agricultural sector. Cotton, tobacco, wool, and meat are the main agricultural products, although only tobacco and cotton are exported in any quantity. The economy also relies heavily on remittances from foreign workers. Following the independence, Kyrgyzstan carried out progressively market reforms, such as an improved regulatory system and land reform. Kyrgyzstan was the first Commonwealth of Independent States (CIS) country to be accepted into the World Trade Organization (WTO). Much of the government’s stock in enterprises has been sold. GDP per capita in Kyrgyzstan is expected to be USD1098.00 in 2019.
Kyrgyzstan international ranking is:
• Index of Economic Freedom: #79 in 2019 with a score of 62.3 vs. 51.8 in 1998 (first year of calculation for Kyrgyzstan);
• Ease of Doing Business Index: #70 in 2019 vs. #84 in 2006;
• World Press Freedom Index: #83 in 2019 vs. #97 in 2014.
Kyrgyz investment climate remained sufficiently attractive, enhanced by the liberal tax, exchange and customs legislations, not to mention all the advantages associated with WTO membership. The government prioritises the development of small and medium enterprises (SMEs), and is further improving the conditions for all businesses by decreasing the average tax burden. Kyrgyz enterprises draw substantial benefits from cooperation with foreign direct investors, who introduce advanced technologies, new equipment and quality operating standards to Kyrgyz businesses.
Prime examples of such international cooperation include the Kyrgyz-Canadian gold mining company Kumtor Gold, Gazprom Neft Asia, the Kant cement-slate industrial complex, the Interglass glass production factory, the cellular communications operators Sky Mobile LLC, Megacom, Fonex and telephone operator Saima Telecom, as well as a host of others. The aim is to create a favourable investment climate and to make an effort to provide beneficial conditions to foster further investment.
New Law ‘About Subsoil’ also provides extensive opportunities for investors and allows them to actively participate in development of the mineral deposits in Kyrgyzstan.
In 2015, Kyrgyz Republic was firstly assigned sovereign credit rating from two authoritative rating agencies Moody’s (B2 Stable) and S and P (B Stable). This will allow the potential investors more accurately identify and take into account the possibilities of the risks while entering the market of Kyrgyzstan. This will raise the awareness about the country and make Kyrgyzstan more attractive for the investors.
Our country has potential in hydropower energy that amounts 142 billion kW/h per year; at present time only 10 per cent of it is used. In this regard, considering the worldwide trend in transition to clean energy sources, we would like to encourage all development partners and business community to explore this possibility.
Free economic zones in the country provide great opportunities for doing business in the region. FEZ activities also provide a number of advantages such as: exemption from all taxes, duties and other payments from customs duties of goods, from quotas and licensing. Also, simplified entry and exit of foreign workers, express check-economic entity and direct access to the necessary infrastructure for the operation.
In addition, Kyrgyzstan has a huge potential in tourism sector because of its unique nature. We have plenty of reserves, biosphere zones and resort and recreation facilities. And opportunities for ecotourism, mountain tourism, alpinism, hunting and other types of outdoor activities can be explored.
The country’s mountains are its alluring feature. The country has 3 mountain peaks higher than 7000 meters above the sea level. Alpinism is one of the most popular recreational activities especially for the European tourists.
All of these factors along with visa-free regime for a period of 60 days for 52 countries make Kyrgyzstan, in the opinion of many journals and rating agencies, an attractive destination.
• Kyrgyzstan became the undisputed leader as the best tourist destination when it was nominated by National Geographic Traveler Awards 2014 as a place for ‘Wellness Vacation’
• British Financial Times 2016 listed it as one of the “7 countries to be visited”
• The National Geographic Traveler journal included Issyk-Kul among the best places to travel to in its April-May 2015 issue.
Kyrgyzstan and India are united by an ancient and rich history, traditional values, as well as adherence to the principles of democracy and parliamentarism.
As for the Kyrgyzstan and India relations it started in 1992 with gaining of independence by the Kyrgyz Republic. Since then relations at all level have been stable. Modern relations between the two states are progressively developing, being filled with new content. At the same time, there is a large untapped potential in bilateral relations.
On 14 October 1992, Kyrgyz-Indian intergovernmental commission on trade, economic, scientific and technical cooperation was established in accordance with the Agreement between the Government of the Kyrgyz Republic and the Government of the Republic of India, which includes such field of relations between the two countries as education. Nowadays, more than 9,000 students from India are currently studying in Kyrgyzstan.
Nevertheless, today bilateral trade between Kyrgyzstan and India does not meet the existing potential of the two countries, which is carried out by small private entrepreneurs with variable success.
In 2018, the trade turnover of the Kyrgyz Republic with India amounted only to 37.2 million USD and in comparison, with 2017 it increased by 15.2 per cent.
This year the Kyrgyz Republic chairs the summit of the Heads of the Shanghai Cooperation Organization 2019 to be held in Bishkek in June 2019.
During the summit, a number of important functions would be held in Bishkek, Kyrgyzstan, including the second SCO women’s forum (15-16 May 2019), the Business forum on ‘SCO: expanding the boundaries of cooperation’ (17 May 2019), and the second media forum of the SCO member states (23-26 May 2019).
Taking this opportunity, I would like to express my sincere gratitude to FICCI for the assistance in organising such important events.
By holding business forums, we along with the Indian counterparts can develop the main areas of bilateral trade and economic cooperation such as IT technology, agriculture, pharmaceuticals, hydropower, mining and exploration, and textile industry.
(The author is Ambassador Extraordinary and Plenipotentiary of the Kyrgyz Republic)
First published in Business Digest in June 2019