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WEEKLY NEWSLETTER
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Kyrgyzstan
Index
Domestic economic investment declined precipitously in the early 1990s,
with government investment falling 55 percent in 1994 alone. In the first
quarter of 1995, total public and private investment was reported to be
391 million som, of which about 75 percent went to the Kumtor
joint-venture gold field. To stimulate foreign investment, the Kyrgyz
government has adopted a series of measures to improve the republic's
deteriorating economic environment. In the late 1980s, the republic
already had begun creating a legal infrastructure to support private
investment. The Basic Foreign Investment Law, adopted in June 1991, has
been amended several times since that time. In general, this law allows
foreign investors full use of their profits, including unlimited export of
profits in the form of foreign currency or merchandise.
Foreign firms also enjoy considerable tax advantages, which extend to
Kyrgyzstani partners in joint ventures. Investors are granted relief from
import duties on materials needed to establish a business, and they
continue receiving tax relief for up to five years, depending on their
type of business. After that time, several other types of tax relief are
available, including various forms of reinvestment in Kyrgyzstan's
economy.
As of April 1995, some 328 joint ventures were registered, but only 128
were actually in operation, the vast majority in trade. Only thirty-eight
joint ventures were active in manufacturing or mining. At that time,
sixty-eight foreign firms (outside the CIS) were registered, the majority
of which were Chinese, Afghan, and Turkish. Some fifty-two Russian and
thirty-six United States firms were present in some capacity. Kyrgyzstan
was among the first of the former Soviet republics to create free economic
zones, on the Chinese model, where taxes would be abated and duties
waived. The government initially created two such zones, in Naryn and Osh,
with another under consideration in Bishkek. The zones became the object
of heated debate, however, and by 1995 only the Naryn zone had taken form
as planned. The only large-scale foreign investment has been in the gold
industry, where the Cameco and the United States Morrison-Knudson
Corporation are participating in joint ventures.
Data as of March 1996
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