On October 25, 2022, the International Business Council (IBC) held a roundtable "Actual issues of business and investment climate in the Kyrgyz Republic".

The event was attended by representatives of the Ministry of Economy and Commerce, the National Investment Agency under the President of the Kyrgyz Republic, acting. Business Ombudsman Nurlan Musuraliev, representatives of business associations, international organizations and the expert community.

“We are often approached by companies, entrepreneurs, experts, business associations and international organizations who would like to share their views on economic development and improvement of the business environment in the country,” said Askar Sydykov, IBC Executive Director.

Given the latest regulatory initiatives and the current business environment, the business community is in particular need of state support and the development of a public-private dialogue. There are a lot of legislative initiatives, which have caused a wide discussion among the business community. In addition, the situation in the business environment is quite complicated.

“We must respond to changing conditions. To discuss all these issues, we decided to hold a roundtable to bring all interested parties together at one site,” the IBC head explained.

The participants of the meeting discussed the barriers to business development, exchanged views on economic development and improvement of the business environment in the country and suggested ways to solve existing problems.

International rankings

According to the Index of Economic Freedom, by 2021, Kyrgyzstan has reduced its performance in many areas. According to the publication, the main problems that led to the decline in Kyrgyzstan’s ranking are:

• Lack of transparency in the judicial system;

• Political interference in the judiciary;

• Corruption;

• Unsustainable and poorly administered taxation;

• Bureaucracy and political instability hinder business freedom;

• The overall investment climate is subject to significant risk and uncertainty.

IBC head listed the main problems of the investment climate in Kyrgyzstan:

• Inconsistency of the state policy with the approved program documents;

• Weak judicial system, including the protection of the rights of entrepreneurs;

• Instability of legislation in the sphere of economy;

• Chaotic adoption of legislative and other decisions;

• Weak protection of private property;

• Bureaucracy and delays in the decision-making process;

• Pressure from law enforcement regulatory authorities;

• Influence of criminal and other informal structures;

• Inconsistent personnel policy and insufficient qualifications of civil servants.

Legislative initiatives that have received a wide response in the business community:

• New Tax Code of the Kyrgyz Republic and amendments thereto;

• New version of the law “On normative legal acts”;

• Draft Law on Amendments to the Law “On Public Procurement”;

• Draft Law “On Measures of State Support in Conditions of Economic Restrictions”;

• Draft Law “On pricing”;

• Draft Law “On Amendments to the Code of the Kyrgyz Republic on Offenses”;

• Amendments to the legislation in state social insurance;

• Amendments to the legislation in subsoil use;

• Amendments to legislation in the securities market;

• Draft Law “On Voluntary Legalization and Amnesty of Individuals' Assets”;

• Draft law on the establishment of a state monopoly on the turnover of ethyl alcohol;

• A bill to expand the list of persons submitting information to the State Committee for National Security.

IBC offers its recommendations for improving the investment climate:

• Ensure a broad discussion of draft laws regulating entrepreneurial activity with representatives of the business community through mandatory approval of draft laws and regulations with stable business associations;

• Develop an effective strategy for business regulatory policy based on market economy principles;

• Suspend the development and promotion of legal acts aimed at worsening the business environment until a regulatory policy strategy is adopted;

• Implement the decrees of the President of the Kyrgyz Republic adopted in 2021 aimed at protecting property, supporting entrepreneurs and investors;

• Introduce a temporary ban (moratorium) on inspections of business entities;

• Provide for personal criminal liability of state bodies for violations related to obstruction, illegal interference in business activities, other acts that infringe on the rights and legitimate interests of business entities.

ADB forecasts

At the meeting, ADB Regional Economist for Central Asia Lilia Aleksanyan reported on the economic prospects of Kyrgyzstan. Both the IMF and ADB raised their growth forecasts for 2022. GDP growth in 2022 is expected at 3.0% as consumption will be supported by remittances and investment.

The banking sector of Kyrgyzstan has proven to be resilient to the current external shocks. Cash inflows increased sharply. The Kyrgyz som remained stable against the US dollar. Forecast risks are skewed to the downside.