First Case: The Path to Increasing Investor Confidence
Press release issued on December 23, 2013
SIA has started working on its first case, assisting a foreign investor facing problems. These are the initial steps towards increasing investor confidence, and economic prosperity.
Gaining foreign investor confidence is a complicated and time consuming process. Adopting investor friendly laws, having a favorable tax regime and giving assurances to investors that their interests will be protected is not enough. What is needed are examples of foreign investors problems being solved effectively, investors satisfied with their experience and then sharing their experience with other investors. This is the most powerful form of marketing. This is much needed in Kyrgyzstan, and is SIA’s focus.
SIA has a large and growing network of foreign institutions. Many of these foreign institutions have not yet invested in Kyrgyzstan. Many have expressed that they would like to see ‘results’ where investors problems are solved effectively. Results are important. It would demonstrate that in spite of the weak legal system, there is a way of protecting foreign investors. Investor confidence will start to increase only after foreign investors see real evidence of existing investors rights being protected.
Just one or few cases of investors rights being protected, or not, will have a significant impact on overall investor confidence. SIA is collaborating with all stakeholders to ensure that each and every case is solved in a positive way. Once this happens, investor confidence will increase and Kyrgyzstan will embark on a path of economic prosperity. Government is trying hard to increase investor confidence, however it cannot do it alone, it needs support of other stakeholders.
Right now many CIS countries are developing faster than Kyrgyzstan. For example about 10 years ago the Mongolian economy was smaller than Kyrgyzstan. Today the Mongolian economy is more than 60% bigger than Kyrgyzstan, with much lower poverty and unemployment, and much higher income levels. Mongolia is benefiting from increased foreign investment, not just in the mining sector but the rest of the economy. Kyrgyzstan and Mongolia have similarities, both have huge untapped potential. The difference is that Mongolia is already tapping its potential. The biggest barrier to realizing the full potential is corruption. It is discouraging foreign investors from entering Kyrgyzstan.