Overview
The Kyrgyz Republic’s emerging ICT sector is poised to be a major economic driver to power modernization and regional development, offering significant investment and trade opportunities. The IT sector is one of the fastest growing industries in the Kyrgyz Republic. The Kyrgyz Republic has risen in the rankings of the Global Innovation Index from 117th (2013) to 94th (2022) among 132 countries. Founded in 2021, the Ministry of Digital Development is tasked with digitalizing government services and increasing the number of services the population can access online. In 2011, the Kyrgyz Republic established the regions, first “High Tech Park”, a preferential business regime for IT businesses with dramatically reduced or eliminated tax burdens for IT companies exporting digital goods and services abroad. In 2019, the Kyrgyz government adopted the “Digital Kyrgyzstan 2019-2023” strategy aimed at the following targets:
- Improving digital infrastructure and internet connectivity
- Ensuring “digital literacy” and providing IT education to promote domestic employment opportunities
- Developing e-government services and platforms
- Promoting economic growth through the digital transformation of the financial technology and banking sectors
The U.S. Embassy supports the digital development of the country through a variety of events and programs. In 2021, the Embassy helped High Technology Park and government agencies organize the first online IT Expo ConnectKG. In September 2022, with assistance from the U.S. Embassy and the USAID Future Growth Initiative (FGI) project, a regional showcase of Central Asia tech talent, led by Kyrgyz developers, was held in New York City. In March 2023, building on the success of the New York forum, the Central Asian IT Business Forum and Awards Ceremony was organized with the support of U.S. Embassy in the Kyrgyz Republic. The event brought together representatives from some of the most successful IT companies in the region and from international markets.
Leading Sub-Sectors
IT Software and Services
Since its inception just over thirteen years ago, the Kyrgyz IT landscape has enjoyed consistent, positive growth, making it one of the most profitable and self-reliant sectors in the Kyrgyz economy. In 2011, the Kyrgyz government, in collaboration with the Kyrgyz Software and Service Developers Association (KSSDA), launched the High-Technology Park (HTP) of the Kyrgyz Republic; https://www.htp.kg/
Modelled after the High Technology Park in Belarus, HTP is a tax-beneficial economic zone oriented towards promoting exported IT services and products. Nearly 38 percent of software and other Kyrgyz IT exports go to the United States, while the remainder reach over 30 other markets including Japan, Canada, Ukraine, Kazakhstan, India, and Germany. HTP residents specialize in software and mobile application development, gaming, and interactive technical service centers. Currently, HTP has 270 companies-residents, with 1,800 employees. HTP’s earnings for 2022 was $47.7 million, from which 92 percent was from exports. Among the largest countries to which IT services and products are exported: USA (36 percent), Russia (13 percent), Kazakhstan (11 percent), Cyprus (11 percent) and the UK (4 percent).
Opportunities
Under the digital transformation roadmap, the Kyrgyz government seeks to digitalize many citizen services and modernize ICT infrastructure including customs and logistics centers, healthcare service centers, educational institutions, and transport hubs. The implementation of the Digital Transformation Roadmap for 2019 - 2023 follows three directions - infrastructure support, and automation of all business processes and the introduction of digital public services. The main achievement is the launch of a digital documents project. As of today, four documents are available: e-ID passport, driving license, technical passport (vehicle registration), and birth certificate. In addition, extensive work continues on high-speed internet infrastructure. Under the Digital Central Asia (DCASA-KR) project, a fiber-optic network will be deployed throughout the Kyrgyz Republic with 30 new backbone nodes designed as points of presence (PoPs), as well as a distribution network of 200 nodes designed as access points, providing broadband internet access to a total of 4,000 facilities. In total, more than 2,500 kilometers of cable will be laid under the project; to date, more than 380 kilometers of Fiber Optic Communication Line (FOCL) have already been laid across the country. These measures will provide about 60 percent of the country’s population with access to the high-speed internet. Meanwhile, the lack of data availability in real time, necessary for making managerial decisions, and the lack of effective coordination of the processes of digital transformation of public administration persist. The Government of the Kyrgyz Republic has announced a strategy “Digital Kyrgyzstan 2024-2030” to be adopted in December 2023 with the participation of representatives of the business community and academia, as well as foreign experts.
Prospects for U.S. exporters include broadband internet access technologies, consumer electronics, educational software, fintech and banking computer services and hardware, analytical software, ICT equipment, cyber security solutions, and legal and financial services. Cloud storage services are also in demand.
The growing eCommerce sector holds opportunities for U.S. products and services. The eCommerce Association of Kyrgyzstan expects the market to grow by 14 percent to $185 million by 2023. The main goods sold via eCommerce are clothing, electronics, food (restaurants and supermarkets), furniture, appliances, and toys. Both digital and physical infrastructure are still being developed for Kyrgyz eCommerce, with needs for consulting, construction, software development, digital payment methods, and data protection and privacy rights development providing opportunities for U.S. companies. Digitizing customs and export procedures to make Kyrgyz exports more competitive is another need identified by the ECommerce Association. For more information, please see the eCommerce section of this guide.
Limited available financing remains a constraint for the government, which relies heavily on international donor assistance to fund major ICT projects. The country is also an emerging outsource market for international tech startups and companies seeking business process services, due to its zero percent tax regime through HTP, low overhead costs, and skilled local IT workforce.
Resources:
Ministry of Digital Development:
High Technology Park: htp.kg
ECommerce Association of Kyrgyzstan:
https://www.facebook.com/ecommerceinkg/
Kyrgyz Software and Services Development Association