Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
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 is rampant and rule of law is weak. The judicial system is not independent and every sector of government struggles with capacity and resource shortages. For most areas of interest, a legal framework exists but enforcement is poor, including in the area of intellectual property rights. Additionally, an unpredictable legislative environment makes it difficult to ensure stability with respect to corporate tax rates, property rights, and regulation that affect the business climate. Investors should be aware that more than an estimated 24% of the economic activity in the country occurs in the unregulated gray economy. Investors in politically sensitive areas, such as resource extraction, can spend much of their time renegotiating contracts with the Kyrgyz government, and in a worst-case scenario, may lose control of their operations, as was the case with the Canadian-owned Kumtor gold mine in 2021.
In August 2015, the Kyrgyz Republic acceded to the EAEU, joining Belarus, Armenia, Kazakhstan, and Russia. The Kyrgyz Republic joined the EAEU to strengthen economic integration and trade with member countries, and Kyrgyz migrant laborers now enjoy greater legal protections within the Union. However, the Kyrgyz Republic has struggled to harmonize its laws with EAEU policies and regulations, and thus far has yet to experience the full, tangible economic benefits of membership. Accession has somewhat negatively impacted the Kyrgyz Republic’s non-EAEU trade, as the government has increased tariffs on hundreds of categories of goods to meet Union 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.