investment opportunities of the kyrgyz republic...fdi in 2015 – 37 125 million usd gdp share –...
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Investment Promotion Agency Ministry of Economy of the Kyrgyz Republic
Investment opportunities
of the Kyrgyz Republic
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FDI overview
FDI in 2015 amounted USD 818 million
Kyrgyzstan credit
rating
0
500
1000
1500
2009 2010 2011 2012 2013 2014 2015
FDI by years
11% 12%
8%
10% 2% 1%
24%
32%
FDI by sectors (2015)
Energy provision Construction
Services and wholesale Finance and insurance
Mining Other
Manufacturing Professional, scientific, and technical activities
S&P
B (stable)
Moody’s
B2 (stable)
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Why Kyrgyzstan is attractive for investors?
Stable
macroeconomic
indicators
The lowest tax rates
within the region Cheap and skilled
labor force
Cheap electricity Visa free
access to
61
countries
Strategic
location
Favorable trade
regimes
Liberal
legislation Free economic zones
The easiest
place to do
business in the
region
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Stable macroeconomic environment
2.2 2.5
2.8
3.7
5.1 4.6 4.6
6.1 6.5
7 7.4
6.6
0
1
2
3
4
5
6
7
8
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Nominal GDP (USD billion)
433 476 543
722
966 871 880
1124 1178
1263 1258 1178
0
200
400
600
800
1000
1200
1400
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
GDP per capita
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Liberal legislation
Equal conditions for foreign and
local companies
Guarantees of protection from
expropriation of investments and
compensation of losses
Wide protection of foreign investors
rights
Access to all sectors of economy
Participation in privatization,
purchase of shares and securities
of Kyrgyz companies
Freedom of choice of form and
objects of investments
Guaranteed repatriation of
investments, property and
information outside the Kyrgyz
Republic
Freedom of monetary operations
No intervention into business
activities
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The lowest tax rates within the region
Tax Kyrgyz
Republic
Tajikistan
Uzbekistan
Kazakhstan
China
VAT 12% 20% 20% 12% 17%
Income Tax 10% 8-13% 10% 10% 5-45%
Profit Tax 10% 25-30% 9-35% 10-20% 15-25%
Only 8 types of taxes in the country
• VAT • Tax on subsoil use
• Income tax • Sales tax
• Profit tax • Land tax
• Excise tax • Wealth tax
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Free economic zones (FEZ)
• 0% Profit tax, Import and export fees
for raw materials and end products
• All types of currencies without limits
• Simplified customs clearance
procedures
• 100% repatriation of investment and
profit
• Simplified entry/exit regime for
foreign employees
• Low rent rates
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Cheap and
skilled labor
force
Cheap
electricity
Visa free access to 61
countries
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The easiest place to do business in the region
According to the World Bank report “Doing Business” and international economic freedom
index, calculated by the Research Center of Heritage Foundation, the Kyrgyz Republic has
highest ranks in following categories:
Taxation
Easiness of doing business
Labor market freedom
Free trade
Investment freedom
Favorable government finance policy
Doing Business 2015
0 2 4 6 8 10 12
China
Uzbekistan
Kazakhstan
Russia
Tajikistan
Kyrgyz Republic
How many procedures does a business starting take?
0 10 20 30 40 50
ChinaUzbekistanKazakhstan
RussiaTajikistan
Kyrgyz Republic
How many procedures does it take to start own business?
0 2 4 6 8 10 12
China
Uzbekistan
Kazakhstan
Russia
Tajikistan
Kyrgyz Republic
How being the rights protected at credit operations? (on
0 10 20 30 40 50 60
ChinaUzbekistanKazakhstan
RussiaTajikistan
Kyrgyz Republic
How many days does it take to register property?
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Kyrgyz Republic is located in the middle of the Eurasia and neighbor to
the biggest markets such as China, Russia, Kazakhstan.
Kyrgyz Republic has access to the market of 180 million people
Strategic location
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Favorable trade regimes and EAEU
THE PREFERENTIAL TRADE REGIME
Member of the World Trade Organization (WTO) since December 20, 1998
Member of the Eurasian Economic Union (EAEU) since August 12, 2015
Member of the Generalized System of Preferences (GSP +)
Access to new markets
No barriers to the movement of
goods, services, capital and
labor
The influx of investment and
prospects for large projects Labor force equality
EAEU
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STABILIZATION REGIME
The investor has a right to choose and apply the most favorable tax regime for 10 year period in case of changes in legislations
SOVEREIGN CREDIT RATING
Kyrgyz Republic was assigned sovereign credit ratings "B2 stable" and "B“ by the international credit rating agencies «Moody's Investors Service» and «Standard & Poor's» correspondently.
INVESTMENT INCENTIVES
List of Investment Incentives was issued as an open source for the investors, which ensures transparency by providing fiscal and non-fiscal incentives and preferences.
Improvement of Investment Climate
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• Adopted fiscal policy concept for 2015-2020 years
• Businesses with turnover up to 100 000 $ are exempted from VAT
• Simplified taxes for the construction industry (was fixed at 12$ per m2)
• Leasing companies were exempted from VAT, income tax and sales tax
• Introduced tax contract (with fixed tax value) for catering, resort and recreational field and housing construction
• Under the consideration the implementation of reduced Income Tax for newly established enterprises within first 5 years and the possibility of exempting them from the land tax
• Import of banking equipment was exempted from VAT
Fiscal measures to support investors
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• Reduced number of permits and licenses from the 500 to 101
• Introduced the principle of "silence gives consent" in the licenses issue system.
• The number of public services were reduced from 20 000 to 373
• Simplified procedures of state registration/ Registration for starting business includes only 2 procedures
• Reduced number of controlling state bodies from 21 to 13
Reduction of Administrative Barriers
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By entering the Customs Union, Kyrgyz Republic opens up additional opportunities:
• Unified customs territory
• Uniform trade policy
• Uniforms customs code
• Free trade of goods within the customs area
• Free movement of goods, services, labor and capital
Market Capacity
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OPPORTUNITY – MARKET SIZE
Population of the Kyrgyz Republic – 6 million
Population of Eurasian Economic Union – 183,3 million
Total – 189,2 million
ACCESS to 189,2 million market without customs duty
Eurasian Economic Union
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Kyrgyz-Russian Development Fund was founded in 2015
• Total Capital 500 millions $ USA
• Possibility to attract additional 500 millions $ USA from investors
The Fund provide law interest credits to projects in agriculture, textile industry, transport and housing construction, infrastructure.
Kyrgyz-Russian Development Fund
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Overview of sectors of economy
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FDI in 2015 – 14.7 million USD
The volume of production due in 2015 – about 100 million USD
“Kumtor” Field development –1.2 billion USD
Gold reserves at the field “Djeruy” 97076 kg
Mining
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FDI in 2015 – 10.9%
Share of GDP – about 5%
Consumption per capita – 1375 kWh per year
The annual growth in electricity demand– 7%
The HPP potential – more than 80 billion kWh per year
Available potential is realized only by 10%
Energy
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Agriculture
FDI in 2015 – 131.8 million USD
Share of GDP – 14%
Gross production– 2.7 million USD
279,8 thousand Farms
Cultivated area – 1185.9 (thousand ha.)
All products are free from VAT (12%)
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FDI in 2015 – 37 125 million USD
GDP share – 4.5%
2015 – 99.2 thousand economic entities
International tourists in 2015 – 2 million 400 thousand people
5th place in the list of “Must-visit countries" (by «The Telegraph»)
Tourism and services
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Thank you
for your attention!