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Threshold for benefits lowered, but access to international courts restricted

The investment threshold for receiving benefits in Kyrgyzstan has been lowered from $50 to $10 million, but at the same time foreign investors have lost the opportunity to apply to international arbitration courts. Bakyt Omurzakov, an adviser on business regulation and a representative of the Asian Leadership Center, told 24.kg news agency.

He participated in the process of amending and supplementing the Investment Code as part of the activities of the International Business Council in 2014-2015. Bakyt Omurzakov noted that at that time the goal was to attract large companies to the mining industry.

«We introduced threshold amounts and preferences to support this sector and create conditions for large foreign investors,» he said.

The latest amendments to the 2023 code lower the threshold for receiving investment benefits to $10 million. However, according to Bakyt Omurzakov, exclusion of the rule allowing investors to apply to international arbitration in the event of disputes raises serious concerns.

«If an investor faces political or economic changes that worsen his situation, for example, tax conditions change and his investments cease to be profitable, he no longer has the opportunity to appeal to the International Court. Such cases will be considered only by local courts, where the investor may face bias,» he noted.

According to the business regulation adviser, this is an alarming signal for foreign investors, since the elimination of international arbitration may reduce the country’s attractiveness for large investments in infrastructure and private projects.

Recall, Deputy Chairman of the Cabinet of Ministers Bakyt Torobaev reported that the government provides preferences for large investors investing more than $10 million in the economy. These companies are exempt from paying VAT, sales and income taxes. In addition, the state is ready to provide land for the placement of production facilities.

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