Throughout its history our company has contributed efforts to putting Kyrgyzstan on the global investment map.
Kyrgyzstan is a developing economy with much undiscovered potential
Kyrgyz real sector is dominated by mining, with opportunities open for investments of any size. Large scale mining concessions are available through government tenders, and smaller ones are obtainable via auctions or by direct applications to the regulating authority. There is a vibrant market for already licensed projects, both in exploration and production phase. Geological expertise is widely available – a legacy of the great exploration effort undertaken by the Soviet Union in Kyrgyzstan.
Agriculture is the investment of choice in Kyrgyzstan for many local and international players. The lack of financing at the ground level presents opportunities for traders to profit from huge price differences in the product sales chain.
Financial services are a growth industry in Kyrgyzstan. With population on the rise and getting more mobile and entrepreneurial, cross border transfers, micro-credit services, mortgage and commercial lending and other financial products enjoy a steady growth year by year.
Tourism is a promising industry regarded by many as one of the potential drivers of Kyrgyz economy. While Kyrgyzstan is yet to see large scale (100m$+) investments into hotels and infrastructure, smaller investment is flowing into the hospitality industry daily. Hotels and guesthouses are being developed in Bishkek, on the Issyk Kul lake and in more remote places. Innovative travel products are introduced to cater to international tourists.
Regional Investment Hub
Besides being home to many exciting investment opportunities in the real sector, Kyrgyzstan is the Central Asian investment hub whose outreach by far exceeds the country itself.
Being a WTO member as well as a participant of the Customs Union with Russia, Belarus and Kazakhstan, Kyrgyzstan is in a unique position to profit from both associations.
Episodes of political turbulence which occurred here in the course of the past 20 years never changed the country’s commitment to maintaining liberal and investor-friendly legislation and openness to international business. Presidents changed, but not the drive to develop an open and efficient financial infrastructure.
Kyrgyzstan has the most liberal and open capital market framework in Central Asia: there are no exchange controls, the tax system is simple and not burdensome, local companies and individuals are free to transact business internationally.
Local Stock Market
Kyrgyzstan’s stock market is still of limited size, but this is changing fast.
A progressive set of measures has been recently introduced to boost the market’s liquidity and appeal to both domestic and foreign investors.
Large Government-owned corporations have been directed to sell at least 5% of their equity through the Kyrgyz Stock Exchange in 2023. Equity in lucrative businesses, such as Airport Manas (a regional air hub near the country’s capital, Bishkek), KyrgyzAltyn (a profitable gold mining corporation controlling concession shares in several projects), Kumtor (the largest gold mine in Central Asia which recently came under government control following a deal with a Canadian public company), MegaCom (a fast growing telecommunications company) and a number of power generation and distribution corporations – is expected to be available to investors.
Efforts are underway to make Kyrgyzstan a regional Islamic finance hub by having Islamic securities (sukuk) issued locally. The legislation allowing the issuance of five types of sukuk is in place, and the investment industry is expected to announce their first placements shortly. Interstan Securities is preparing several Islamic securities issues for its clients.
The Presidential Decree of 17 November 2022 announced the introduction of two major measures which in the neighboring countries have historically proven to boost liquidity of the stock market. One is the introduction of ‘personal investment accounts’ through which locals can invest tax-free and the other is the opening of the national post office network to service stock market investments by local residents. Both measures are expected to generate public interest in stock market investing and provide a capital influx to Kyrgyzstan’s investment services industry.
Interstan Securities is working closely with Kyrgyz legislators to make the country an even more attractive place for international investment business by developing better legislation and industry guidelines.
• 10% profit tax (legal entities), but many zero-rate exemptions
• 10% income tax (individuals), but many zero-rate exemptions
• 12% VAT, but irrelevant for investment transactions
• 2-3% Sales tax, but only on domestic sales for cash
• Up to 10% withholding tax on interest and dividends, subject to tax treaties
• No withholding tax on capital gains
• Tax holidays for leasing firms, zero tax on certain Kyrgyz Stock Exchange trades etc.
• Availability of free zones – taxation from 1% to 2% of gross sales
Securities Market Regulation
• Prudential norms to protect investors are in place. Investors benefit from detailed regulations of conduct for professional investment firms, of which we are one.
• Foreign clients are free to use the Kyrgyz financial market infrastructure.
• Anti money laundering laws are in line with FATF standards, and the country is successfully undergoing periodic assessments of its compliance with those.
• Listing at the local stock exchanges is open for many types of securities; there are limited requirements for ‘technical’ listings in subprime sections of the exchanges.
• Capital gains from trading at the local stock exchanges are tax exempt (prime section only).