OREANDA-NEWS. February 28, 2011. The International Business Council (IBC) wishes to convey concerns from its members regarding the state of the business environment in Kyrgyzstan, reported the press-centre of IBC.     

The IBC unites more than 100 businesses, both local and foreign, operating in Kyrgyzstan and representing more than USD1 billion worth of investments in the country. Over more than years, cooperation between the business community represented by IBC and the Government has become stable in reaching mutual understanding of common purposes and tasks. The business community has always been the basis for raising and strengthening the economic independence of the country, and it is the key to Kyrgyzstan’s future prosperity and stability. 

However, there seems to be a growing tendency in the country to disregard the property rights which serve as the basis of businesses. It occurs mainly due to the opaque policy pursued by the Government in respect of nationalization of various business entities. The business community has been excluded from the process of determining the destiny of the nationalized facilities, in which it has its own property. Meanwhile, in accordance with the laws of the Kyrgyz Republic and international agreements to which Kyrgyzstan is a signatory, the business community has a voice and right to protection.

Insecurity of private property rights in Kyrgyzstan was confirmed by various studies of independent international organizations. Kyrgyzstan holds 97th place out of 125 countries on the IPRI index (International Property Rights Index) and got 25 points out of 100 points in the property rights protection according to the Heritage Foundation. 

IBC believes that at present the country's investment climate is becoming less conducive to attracting new investors. The investment climate has deteriorated sharply after the events of April 2010 and continues to deteriorate, primarily because of investors’ uncertainty that property rights are properly protected in Kyrgyzstan. 

The massive investment outflow last year is not only the result of the April events, but also, to a far greater degree, the result of ill-conceived public policies in the area of investments and businesses. The lack of continuity of the government policies and lack of predictability and consistency of judicial decisions together with the “rich” legacy in the form of corruption cause investors’ uncertainty.  All this undermines investors’ confidence and affects the investment climate in the country, the replenishment of the state budget and creation of new jobs.

Currently, the program of nationalization initiated by the Interim Government has been delayed. We understand that this is a necessary measure aimed at establishing justice. Therefore, to avoid perception of corruption, it is important that the nationalization should be carried out transparently with the participation of civil society and business communities. Most importantly, it is needed to keep the rule of law in each case and protect property rights of honest investors.

With a budget deficit and far-reaching goals of the Government, it is unclear how the state budget could be replenished while the Government's policy leads to "pushing away" investors. If the Government does not urgently take measures to improve the business environment, there is a great risk that the country will lose confidence of both local and foreign investors.

IBC asks to draw your attention to the above mentioned issues and provide immediate assistance in resolving them. In turn, IBC is ready to offer its ideas on creating a favorable investment climate in the country and keeping existing investments and attracting new investments to build an economically strong country with a good international image.