The Bishkek-based International Business Council (IBC), one of the largest business associations in Kyrgyzstan, has prepared an analytical note analyzing key institutional factors affecting the business environment and investment attraction in the country.
According to the report, while Kyrgyzstan’s GDP increased by 11.1% in 2025 compared to the previous year, the quality of the institutional environment remains a key factor for long-term economic development. Strengthening the rule of law, increasing the predictability of government regulation, developing a competitive environment, and minimizing unjustified government interference in business activities are essential for sustainable investment.
Continuing institutional constraints—criminal prosecution of entrepreneurs, increased fiscal pressure, uncertain property rights protection, and elements of state monopolization—create systemic risks for private investment and the long-term sustainability of economic growth.
Foreign direct investment (FDI) from January to September 2025 amounted to approximately $885 million, an 18.5% increase compared to the same period in 2024. However, the share of FDI remained approximately 4-5% of GDP, indicating the existing potential for improving the investment climate.
The IBC notes that one of the factors contributing to investment uncertainty is the practice of criminal prosecution of entrepreneurs, which increases the feeling of legal uncertainty and can influence investment decisions.
Tightening tax administration also impacts business activity. In recent years, the amount of additional taxes, penalties, and fines has increased significantly. For example, the amount of accrued penalties increased from 2.49 billion soms in 2020 to 25.3 billion soms in 2024 and 33.84 billion soms in the first eight months of 2025 (an increase of more than 13 times).
The IBC also notes the importance of ensuring reliable protection of property rights, which directly influences investment decisions and long-term business planning.
Authorities in Kyrgyzstan have repeatedly pledged to support investors. At a government meeting on February 27, President Sadyr Japarov emphasized that any unjustified pressure on businesses is unacceptable as the country is striving to create a favorable investment climate.
Japarov warned law enforcement officials that bona fide businesses that contribute to the country’s development should be fully protected. “Where entrepreneurs operate in an atmosphere of fear and pressure, economic growth stalls. This harms the state and the people,” the president said, adding that law enforcement agencies should cease unjustified inspections of businesses and stop interfering in their work by exercising excessive control.
The IBC also notes that Kyrgyzstan’s high economic growth in 2025 was driven primarily by public investment, infrastructure projects in construction, energy, and transport, as well as expansion of the services sector and growing domestic demand. According to the International Monetary Fund (IMF) and the World Bank, Kyrgyzstan’s economic growth in 2024-2025 was largely driven by government investment, which increases the economy’s short-term resilience while increasing its dependence on the role of the state.
