2010年-世界发展银行全球_Investment_Climate_in_the_Kyrgyz_Republic_as_Seen_by_Small_and_Medium_Enterprises_158页_3mb

Summary of the Investment Climate in the Kyrgyz Republic as Seen by Small and Medium Enterprises

Core Content

This report, published by the International Finance Corporation (IFC) in partnership with the Swiss Government, presents the findings of a survey conducted in 2009 among 2,010 small and medium enterprises (SMEs), individual entrepreneurs, and farmers in the Kyrgyz Republic. The goal of the survey was to assess the investment climate and provide recommendations for improving it.

The report highlights the challenges SMEs face in operating within the Kyrgyz Republic, focusing on the business environment, registration, permits, licensing, technical regulations, and taxation. It identifies key issues such as high tax rates, corruption, macroeconomic instability, and unreliable electricity supply as the main obstacles to business development.

Main Findings

1. Business Environment

• The global economic crisis had a relatively limited impact on the Kyrgyz Republic.
• The private sector has grown significantly in recent years, except for medium and large companies.
• High tax rates, corruption, macroeconomic instability, and unreliable electricity supply are the main problems faced by SMEs.
• Important legal reforms have been made to improve the business environment, but their impact has been limited.

2. Registration

• The "one-stop shop" principle has improved the legal framework for business registration.
• Small and medium companies comprise the largest proportion of respondents who completed registration in 2008.
• Registration procedures are more burdensome for SMEs compared to individual entrepreneurs.
• There is a need for further reform, especially in reducing the frequency of re-registration and simplifying the process.

3. Permits

• The lack of a unified permit law and a comprehensive permit register are the main shortcomings in the permit legislation.
• Permit coverage and frequency vary significantly across regions, with Issyk-Kul having the most onerous procedures and Jalalabat the least.
• The Ministry of Health, Fire Safety Department, Ministry of Transport, and local governments are the heaviest regulators on permits.
• Permit procedures are time-consuming and complex, promoting informal solutions.
• The total cost of complying with permit regulations in 2008 was KGS555.4 million ($15.1 million), representing close to 0.37% of national GDP.

4. Licensing

• The legal framework for licensing includes some good practices, but the implementation is slow.
• Licensing procedures are short-lived, with an average validity of 22.7 months for SMEs and 13.1 months for individual entrepreneurs.
• The short validity and complexity of licensing procedures are major issues.
• The total cost of obtaining licenses for all SMEs in 2008 was KGS1.7 billion ($47 million), with 17% of SMEs spending an average of KGS14,583 ($399) on this process.

5. Technical Regulations

• Technical regulations have evolved positively since the Kyrgyz Republic joined the WTO.
• Mandatory certificates are a significant hindrance to SMEs.
• The share of SMEs obtaining voluntary certificates of conformity remains very small.
• The implementation of technical regulations is slow, and the system is costly and inefficient.

6. Inspections

• Despite recent reforms, the legislative framework for inspections is not based on contemporary practice.
• Perceived risk is not a criterion for selecting businesses for inspection.
• The frequency of inspections dropped during the moratorium, but this period was not used to initiate reforms.
• The majority of inspections are performed by the four most active inspectorates.
• Information on technical requirements is not always readily available to entrepreneurs.
• Sanctions used do not encourage compliance.
• The existing system is costly for both businesses and inspectorates.
• Frequent inspections do not guarantee safety.
• Inspections place an onerous burden on all businesses and are not risk-focused.

7. Taxation

• The new Tax Code is an important step in improving the tax system, but additional reforms are needed.
• Tax revenues in the Kyrgyz Republic are growing.
• Tax accounting and compliance cost businesses an estimated KGS3.3 billion ($88 million) in 2008.
• Small and medium companies bear the greatest burden in fulfilling mandatory reporting requirements.
• Businesses with small turnover bear a comparatively heavier burden in terms of tax accounting and mandatory reporting.
• Tax administration is the most burdensome procedure for SMEs, with a total labor cost exceeding KGS4 billion ($108 million) in 2008, representing 2.9% of national GDP.
• Tax compliance costs are regressive, with businesses of lower turnover and profit bearing a heavier burden.

8. Survey Methodology

• The survey methodology is detailed in the report, including the sample size, survey period, and data collection process.

Key Recommendations

• Further reform is needed beyond the implementation of the "one-stop shop" principle.
• The legal framework for permits and licenses should be unified and comprehensive.
• The validity of licenses should be extended, and the procedures should be simplified.
• Technical regulations need to be reformed to be more efficient and less burdensome for SMEs.
• The inspection system should be reformed to be risk-focused and more transparent.
• Tax reforms should be implemented to reduce the burden on SMEs and encourage "graduation" from the patent regime to the simplified tax regime.

Additional Information

• The survey was conducted between May and August 2009, covering all regions of the Kyrgyz Republic.
• The report includes annexes with detailed data and information on the cost of procedures, legal frameworks, and regulatory bodies.
• The report is available at the IFC Investment Climate Advisory Services Project office in Bishkek, Kyrgyz Republic.