Kyrgyzstan is considered an early transition country. This refers to a few countries of the former Soviet Republics that is lagging behind the rest of the region in their transition to market economies. Poverty, unemployment and corruption are high. Investor confidence is low.
On the other hand Kyrgyzstan is the first Parliamentary democracy in the region. And elections held after the 2010 revolution was considered the most free and fair ever in Central Asia. Kyrgyzstan offers potential for development. It has shown its willingness to take bold measures to fast track the development process.
Why SMEs with Foreign Investment?
The SME sector in Kyrgyzstan is in the early stages of development. While it is already the largest employer and biggest contributor of taxes, a more vibrant sector will make a tremendous contribution to the economy.
The SME sector needs expertise, equipment and funding. This will allow the sector to produce more goods and services domestically instead of importing, and to increase exports. So instead of importing condensed milk from Ukraine and chicken from USA, it can be produced locally. Foreign investors can contribute the expertise, equipment and funding that the sector requires.
Kyrgyzstan’s investment climate is not the most attractive. While Kyrgyzstan already has many laws and a legal system in place, it is not functioning as well as it should. This negatively affects investor confidence. As a result investors avoid Kyrgyzstan. For foreign investors is it an easy decision. There are many other countries in the world for investors to choose from.
Investor climate needs to be improved. The normal methods of improving the investment climate take a long time to produce results. By focusing on a small sector, SMEs with foreign investment, and securing widespread high level support, SIA will produce results quicker. This is much needed.