Investment Promotion Agency Ministry of Economy of the Kyrgyz Republic

Investment opportunities

of the Kyrgyz Republic

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)

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

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

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

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

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

Cheap and

skilled labor

force

Cheap

electricity

Visa free access to 61

countries

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?

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

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

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

• 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

• 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

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

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

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

Overview of sectors of economy

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

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

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%)

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

Thank you

for your attention!