March 2016

Investment Policy Review of the Kyrgyz Republic

This report analyses Kyrgyzstan’s legal and regulatory framework for investment, providing insight into how the country could improve its investment policies with the objective of meeting the Sustainable Development Goals.


Publisher

United Nations Conference on Trade and Development (UNCTAD)


Document Type

Reports


Country

Kyrgyz Republic

Region

Asia

Building Block

Assessment and diagnostics

Financing strategy


Useful Links


Tags

#FDI #PolicyReform #MobilisingFinance #ShiftingInvestmentSystems #TaxReform #InnovativeFinancing

UNCTAD Investment Policy Reviews (IPRs) are intended to help countries improve their investment policies and to familiarise governments and the international private sector with an individual country’s investment environment. 

Kyrgyzstan’s IPR, initiated at the request of the Government, was carried out through two fact-finding missions in November 2013 and February-March 2014. The mission received the full cooperation of the relevant ministries, departments and agencies, in particular the Department of Investment and Public-Private Partnerships within the Ministry of Economy. The mission also benefited from the views of the private sector, foreign and domestic, bilateral donors and development agencies. 

The IPR assesses the country’s potential to attract foreign direct investment (FDI) and to diversify flows beyond the extractive sector. The report highlights location advantages, challenges, as well as recent policy reforms that have contributed to shaping the country's trade and investment regimes. 

The IPR finds that the legal framework specific to FDI is adequate, but its implementation raises concerns and could be strengthened. Whereas reforms positively impacted the general business climate in key areas (e.g. business facilitation, taxation, land surveying, and several aspects of the labour legislation) in recent years, there is still room to further enhance State capacities to effectively implement policies and increase transparency in public administration. 

The IPR also proposes a strategy to target investments which could significantly contribute to sustainable development, in particular with regards to employment creation and poverty reduction. Priorities for investor targeting should include garments and textiles, tourism, and agro-industries, where foreign presence has been limited despite high potential. Improving the sustainability of mining and promoting business linkages should also be pursued. Finally, the promotion of public-private partnerships (PPPs) to foster FDI attraction in infrastructure projects is recommended. The newly established investment promotion agency will have a key role to play in achieving these objectives.