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 that U.S. firms seeking to do business with the Kyrgyz government face. 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. Inadequate preparation for the implementation of EAEU requirements, non-standardized application of the common customs code, lack of qualified phytosanitary laboratories, and unclear documentation requirements continue to affect importers and exporters. In addition, ongoing disagreements with its neighbors, particularly Kazakhstan, can often lead to long transit delays for goods at the border.
The Kyrgyz Republic is seeking to bring strategic sectors under its control by changing legislation. These actions have a noticable impact on the market environment, increasing the role of the state in the economy and reducing the share of the private sector in several key areas.