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Investment Climate in the Kyrgyz Republic

Investment Climate in the Kyrgyz Republic. Ministry of Economic Development and Trade of the Kyrgyz Republic. The Kyrgyz Republic. Capital city Bishkek Population 5, 2 mln . people Area 199,9 thousand . km 2 Climate Dry, Continental Head of State President

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Investment Climate in the Kyrgyz Republic

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  1. Investment Climate in the Kyrgyz Republic Ministry of Economic Development and Trade of the Kyrgyz Republic

  2. The Kyrgyz Republic Capital cityBishkek Population5,2mln. people Area 199,9 thousand. km2 ClimateDry, Continental Head of StatePresident Head of GovernmentPrime Minister GDP$ 3,9 bln. Foreign trade $ 3,9 bln. Currency$/som36

  3. 4000 3500 3000 2500 2000 1500 1000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 Foreign trade GDP Export Import Foreign trade In mln. $ USD

  4. Inflation rate % 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 (forecasted) Inflation rate Budget deficit in % to the GDP

  5. Average wage amount 400 350 300 250 In $ USD 200 150 100 50 0 2003 2004 2005 2006 Kyrgyzstan Kazakhstan Russia

  6. Introduction of national currency (in 1993) Introduction of private ownership to land (in 1998) Reforms Membership in Shanghai Cooperation Organization (since 2001) Membership in EurAsEC (since 2000) Membership in the WTO (since 1998) Membership in MIGA (since 1993) Broad privatization campaign (in 1991)

  7. Priority sectors of economy • Hydropower energy • Mining • Agriculture • Tourism

  8. Hydropower energy • Hydropower energy potential- 142 bln. K.W.H.per year • Export of electric power- 2 bln. K.W.H. • Expected demand in CA countries- 5 bln. K.W.H. • Expected demand in China and Pakistan - 7 bln. K.W.H. • Production volume- 14 bln. K.W.H.

  9. Mining sector The country has abundant mineral resources. The most leading of which are gold, mercury, antimony, less-common metals, tin, tungsten, coal, underground mineral waters

  10. Agriculture Kyrgyz Republic produced agriculture products more than it consumes, what provides good opportunity for their reprocessing with further exporting of finished goods abroad. Meat – 187,6 thousand tons Milk – 1197,6 thousand tons Wool – 10,6 thousand tons Volume of agricultural output and its reprocessing makes 28,9% or 3% to GDP.

  11. Tourism The Kyrgyz Republic possesses a huge potential for development of tourism thanks to unique nature, picturesque landscape, cultural and historical sights.

  12. Possibility of incentives and preferences • Liberal investment conditions • Law tax rates • National mode • Freedom of repatriation of capital, dividents and profit Investment policy

  13. Law on Investments in the Kyrgyz Republic • Ability for receiving preferences • Guarantee for invariability of legislation for 10 years • Right to apply to International arbitrage court • Guarantee for in-time payment of adequate compensation in case of expropriation • Freedom of capital, dividends and profit repatriation

  14. 35 Profit tax 30 Income tax 25 20 VAT 15 10 Social tax 5 VAT for import of 0 capital equipment 2006 2007 2008 2009 Tax rate

  15. Georgia 15 Azerbaijan 33 Turkey 59 Italy 65 Kyrgyzstan 68 Kazakhstan 70 China 83 Byelorussia 85 Russia 120 Uzbekistan 138 Ukraine 145 159 Tajikistan The Kyrgyz Republic’s breakthrough at the Doing Business Index(from 99th to 68th place within a year)

  16. The reforms are to be carried out in two phases - Starting a business - Dealing with licenses - Protecting investors - Trading across borders - Getting credit First Phase “100 days of reforms” (5 pillars) • - Starting a business • - Dealing with licenses • - Protecting investors • - Trading across borders • - Getting credit • - Registering property • Paying taxes • Hiring and firing workers Second phase reforms (8pillars)

  17. Foreign direct investments In mln. $ USD

  18. 180 150 120 90 60 30 0 Kazakhstan England China Germany Turkey Russia Austria FDI inflowby country in 2007. In mln. $ USD

  19. Other sectors 8,6 % Processing industry %30 Real estate 13,4 % Mining 12,4 % Finance Trade 26,9% 8,4% Structure of FDI inflow by sectors in 2007

  20. Free Economic Areas • Particular customs mode • Significant tax preferences • Facilitated arrival/departure regime for foreign citizens • There are three FEAs in Kyrgyzstan

  21. Kyrgyzstan – a transit country

  22. Why the Kyrgyz Republic? • Favorable and predictable legislation • Neighborhood of large economies (Russia, China, Kazakhstan) • Well-functioning financial system • Unlimited profit repatriation • Low average wage level • Well-educated population

  23. Thanks for your attention!

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