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FDI policy in Kyrgyz Republic Interesting facts I Issyk-Kul: 2nd lake in I 8000 кm2 – eternal the world on water transparency glaciers I 80 touristic zones Why KYRGYZSTAN? The lowest tax regime Liberal investment environment Neighborhood with large economies Rich mineral reserves Strategy and Goals of FDI • Draft strategy on stage of development • To double the FDI by 2017 • GDP growth • Poverty reduction Reforms for improvement of investment climate 1. Priorities - Fight against corruption; - Creating favorable conditions for business. 2. The key measures in fight against corruption are: - reduction of the state apparatus by 20%, - exclusion of unjustified interference of state bodies into the activity of business entities, - reduction of state services from 20 thousand to 380; - reduction of licensed activities from 500 to 180. 3. Also administrative obstacles and restrictions in the sphere of investment activity are being actively eliminated. - administrative barriers and restrictions elimination ; - legal environment improvement; - liberalization of internal and external trade regimes. Investment Legislation of Kyrgyz Republic The law on investment in Kyrgyz Republic The law on publicprivate partnership in Kyrgyz Republic Subsoil law • Equal rights • National regime • Infrastructure development • Raising of private capital to public projects • Effective management • Market mechanisms of mining regulation • Fight against corruption FDI policy making and coordination • The government of KR, Ministry of economy and line ministries responsible for FDI policy promotion • The only body coordinating the FDI policy is Ministry of economy Trade policy • Open policy, the KR is the member of the WTO (tariffs, taxes and licences) • KR is preparing to enter the Custom Union Rating of Kyrgyzstan on ease of Doing Business Index (Doing Business) Ministry of Economy of Kyrgyz Republic Indexes Kyrgyzstan Doing business Орду Starting a business 68 Receipt of permissions for construction 66 12 Connecting to power networks Property registration 180 Receipt of credits 13 9 Protection of investors Taxation 22 International trade 182 Execution of contracts bankruptcy procedures 70 127 132 Comparative analysis of Kyrgyz Republic rating on ease with other countries of region for 2013 Kazakhstan 50 Kyrgyz Republic 68 Region average index 71 Moldova 78 Russian Federation 92 Ukraine 112 Tajikistan 143 Procedures (quantity) quantity of d Days Expenditures Starting a business 2 8 2,7% from GDP revenue per capita Property registration 4 6 0,3% of cost of asset Cheap and skilled labor force Ministry of Economy of Kyrgyz Republic Cost of electricity Average Salary 900 0.12 800 0.1 700 600 0.08 500 0.06 400 300 0.04 200 100 0.02 0 2009 Kazakhstan Kyrgyzstan 2010 2011 Russia 0 Kyrgyzstan Kazakhstan Russia Tax regime I Value Added Tax (VAT) I Profit Tax (PT) I Income tax (IT) 12% 10% 10% I Retail sales tax I Limit on the expatriation of profit I Inheritance tax Tax type Kyrgyzstan China Kazakhstan Tajikistan Uzbekistan Russia VAT 12% 17% 12% 20% 20% 18% PT 10% 15-25% 10-20% 25-30% 9-35% 10-18% IT 10% 5-45% 10% 8-13% 10% 13% Environmental and Social issues • National sustainable development strategy of the KR for 2013-2017 • Line ministries developed their own policies (FEZ, Green economy and programs) What sector are attractive? Agriculture Hydropower industry Mining Tourism What sector are attractive? Ministry of Economy of Kyrgyz Republic ICT Transport and Logistics Light industry Lessons learned • Political stability • Coordination of the policies • Country image