Reasons to Invest in Kyrgyz Republic
Top 10 reasons to invest in KG:
The Kyrgyz Republic is located in the heart of the Eurasian continent. The country occupies a strategic location on the Silk Road - between the markets of the former Soviet Union and Europe, the Middle East, South Asia, and China. Kyrgyzstan is a transit country with the potential to become a major route for transit of goods through the transport corridor of Central Asia. This route will be developed within the TRACECA Program envisaging connecting European and Chinese/Japanese markets using Caucasian and Central Asian countries as a transit hub. To effectively use this potential, Kyrgyzstan must attract huge amounts of investment capital for the development of its transport infrastructure including a new railway from China through Torugart in Kyrgyzstan to the Fergana Valley in Uzbekistan and upgrading and developing its road network.
Nowadays, Kyrgyzstan’s ground transportation, rapidly developing railway system, and airports are playing increasingly important role in connecting the western world with developing Asian countries.
Kyrgyzstan’s banking sector showed outstanding growth for the past 5 years. Most of the financial indicators such as assets, loans, and equity tripled and in some cases quadrupled. Number of investors in the Kyrgyz financial market increasing every year and currently there are 21 major banks in the republic.
Kyrgyzstan’s current population is 5.3 million people with 1.1%. average population growth rate for the last four decades. Over 60% of the population is represented by people in the age group of 15-64 years and 30% in the age group of 0-14 years. With growing population, literacy rates among the two gender groups remain high and represented by 99.3% for males and 98.1% for females.
Kyrgyz Republic‘s location and geographic features allows it to be one of the most efficient hydro energy producers in the world. Glacier topped mountain ranges and significant elevation differentials combine to provide stable water flows that are key for storing and producing electricity using hydro power stations. Hydroelectric plants generate most of the country's electricity and at low cost. This allows the Kyrgyz Republic to export roughly 10% of its hydro-energy, mostly to Kazakhstan, Uzbekistan and even to Russia’s Siberia.
Water resources are strategic, vital natural resources having interstate importance especially in the Central Asian region with partially dry and sandy soils. Kyrgyzstan has huge resources of ground and surface waters, the significant stocks of which are in the rivers, eternal ice-houses and snow massifs. The supply of fresh water preserved in the mountain glaciers is 650 billion m3, which exceeds 12 times rivers flow resources in the country.
Kyrgyz Republic is striving to improve its ranking in the World Bank’s Doing Business report, which is an annual report that investigates “the regulations that enhance business activity and those that constrain it.” In the 2009 report Kyrgyz Republic shot up to 68th spot, up from 99th in 2008 and 173rd in 2006, earning the third fastest reformer title. Akylbek Japarov, Minister of Economic Development, has assumed personal responsibility for improving Kyrgyz Republic’s standing in the Doing Business ranking. He expects to see Kyrgyz Republic 34th next year and has launched a number of reforms, most of which are currently in the last stages of implementation. A testament to his commitment to improve the business environment is this year’s leap of 31 spots.
According to the new tax code that the Parliament approved in October 2008, starting in January 2009, VAT will be lowered to 12%, from the current 20%. The types of taxes will be reduced from sixteen to eight. This is all in addition to the 10% flat corporate tax implemented in 2006, which still is the lowest in the world. The new tax code is also instrumental in addressing another common problem in transitional economies - incessant inspections. It is a standard practice to inspect every single tax-paying corporation in the country at least once per year, wasting limited resources of the corporation and the state. The new code sanctions only random checks and only for those companies that are suspected of fraud.
The government keeps on making dramatic changes by transferring major state enterprises from government to private ownership in order to boost productivity, transparency and efficiency while decreasing corruption. Even strategic sectors of the economy will be subject to privatization, including energy, telecommunications, petroleum and transport.
Kyrgyzstan is one of the few small countries with an untapped market that can offer investors so many profitable opportunities in different sectors such as energy, telecommunications, tourism, transportation, banking, and real estate.
The IMF overall trade restrictiveness index accounting for both the level of tariffs and NTB’s incidents equals “1” for Kyrgyzstan which means it has the most liberal trade regime among the CIS countries.
