The investment climate in the Kyrgyz Republic is best for intrepid investors who have experience doing business in other parts of the former Soviet Union, and have both a high risk tolerance and flexible time horizons. Corruption and weak rule of law are ongoing challenges, and bribery often seems to be an inevitable cost of business. The judicial system is not independent, legal protections for foreign firms are poorly enforced, and the host government has a history of invoking criminal investigations to settle commercial disputes and to pursue predatory tax collection. Additionally, an unpredictable legislative environment makes it difficult to ensure stability with respect to corporate tax rates, property rights, and regulations that affect the business climate.
Identifying the decisionmakers for host government procurement and understanding tender requirements are additional challenges of U.S. firms seeking to do business with the Kyrgyz government. Decision making is opaque and companies often struggle to identify decision makers and correct points of contact within ministries and when submitting bids for government tenders. Working with a trusted local partner can mitigate these challenges and increase the chances of success.
The Kyrgyz Republic acceded to the Eurasian Economic Union (EAEU), which also includes Belarus, Armenia, Kazakhstan, and Russia, in 2015. The country still struggles to harmonize its laws with EAEU policies and regulations. Accession had somewhat negatively impacted the Kyrgyz Republic’s non-EAEU trade due to higher Union tariff rates. Inadequate preparation for the implementation of EAEU requirements, non-standardized application of the common customs code, lack of qualified phytosanitary laboratories, Russian politically motivated embargos of Kyrgyz products, and unclear documentation requirements continue to affect importers and exporters. In addition, ongoing disagreemnts with its neighbors, particularly Kazakhstan, can often lead to long transit delays for goods at the border.