The Kyrgyz Republic is a landlocked lower middle income country in Central Asia, with an estimated GDP per capita of $1,606.7[1] ($5,830 PPP). At equivilant to 28 percent of GDP, remittances play a large role in the local economy, as does gold export revenue (ranging from 8-13 percent of GDP) – almost entirely from the output at the Kumtor gold mine. The Kyrgyz Republic hosts a large, informal economy estimated to be the equivilant of between 25 and 72 percent of GDP. The top three industries are mining, textiles, and agriculture, but information technology (IT) and renewable energy are promising growth industries that could be attractive to U.S. investors. Due to geography and historical and linguistic ties, China, Russia, Kazakhstan, and Turkey are the country’s top trading partners. Keys to sustainable future growth include progress in fighting corruption, improving transparency in business permit issuance and taxation, addressing persistent energy issues, and attracting new sources of foreign investment while decreasing reliance on international donors.
U.S. companies should consider exporting to the Kyrgyz Republic to take advantage of the strong demand for U.S. products and services. Local businesses and host government recognize the high quality and brand reputation that U.S. firms can offer, and regularly seek the support of the U.S. Embassy in connecting with trading partners in the United States. There is high demand for U.S. banking services, in particular correspondent accounts with U.S. banks. As the Kyrgyz Republic further develops its economy, including greater digitalization and high-speed internet penetration, U.S. firms – particularly those in IT - have the opportunity to establish a long-term presence in this market.
The Kyrgyz Republic and other Central Asian countries play a significant role in the development of new trade routes between Europe and Asia, including the Trans-Caspian International Transport Route (TITR). The TITR links China and Central Asian countries to Europe via the Caspian Sea, the South Caucasus countries, and Turkey. In 2022, about 1.7 million tons of cargo transited this artery, which is twice as much as in 2021. The European Bank for Reconstruction and Development (EBRD) estimates that the Trans-Caspian route will further expand its potential, increasing its annual throughput capacity to nearly 5 million tons by 2030.
Political Environment
The Kyrgyz Republic’s history of political upheaval negatively impacts its investment environment. Since independence, the country has had five presidents and 26 different prime ministers. In October 2020, after protests over highly flawed parliamentary elections led to the resignation of President Sooronbai Jeenbekov, Sadyr Japarov, an opposition figure imprisoned since 2017, took office amid political tumult, and was subsequently elected president in January 2021. President Japarov introduced a new constitution, approved by referendum in April 2021, that transitioned the country to a presidential system, consolidated power in the executive branch, and weakened checks and balances. The Japarov administration undertook an extensive government reorganization, and several ministries were reorganized in 2021 and again in 2023, resulting in high turnover. At the initiative of the Japarov Administration, the Kyrgyz Republic has adopted several laws which have reduced political space since 2021, including a 2021 law criminalizing the spread of “false” information and a 2022 law imposing burdensome reporting requirements on NGOs. The government is also pressing for the passage of new laws targeting independent media and civil society which are modeled closely on Russian laws, including one based on Russia’s law on foreign agents. Freedom House and the Economist Intelligence Unit dropped their ratings of the Kyrgyz Republic’s democracy in 2022, citing the now-annulled October 2020 parliamentary elections and the subsequent concentration of power within the presidency.
The security environment can be unpredictable in several parts of the country. In the days following the October 2020 tumult, local marauders looted and raided the offices and facilities of multiple foreign joint-venture mining enterprises. The Kyrgyz-Tajik border is a flashpoint, although localized in the remote southwestern Batken region. Fighting between the countries’ border guards broke out in April 2021 and again in September 2022 in Batken province, resulting in dozens of casualties and the forced temporary evacuation of thousands of Kyrgyz citizens. Smaller skirmishes regularly break out periodically along the border. Water resources and the border demarcation remain disputed in these areas, though the governments of Tajikistan and the Kyrgyz Republic announced a mechanism for resolving border disputes in October 2023.
Foreign-affiliated companies, primarily Chinese-owned and in the mining sector, have been subject to local protests, at times resulting in vandalism and violence. Local populations tend to view Chinese investment projects with more scrutiny, due to perceptions that these companies’ activities degrade the environment, such as water sources, and do not contribute to the local economy.
In 2019, the majority Chinese company Zhong Ji Mining suspended operations at the Solton-Sary gold mine following violent clashes with hundreds of local residents who blamed the company for environmental degradation. The same year, the Kyrgyz government canceled a tender for the Naryn Free Economic Trade Zone, which had been awarded to a Chinese-Kyrgyz enterprise in response to protests by hundreds of local residents.
For background information on the political and economic environment of the country, please visit the Kyrgyzstan page on the U.S. Department of State Countries & Areas website.
[1] https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=KG