On January 23rd, the OECD organised the second workshop of the Improving the Legal Environment for Business in Central Asia (LEB) project at the Ministry of Economy in Bishkek, Kyrgyzstan. This second workshop was an opportunity to discuss the preliminary results of the LEB project, in particular the three identified priority reform areas for the Government of Kyrgyzstan – the operational environment for SMEs, taxation and contract enforcement – in a lively and collegial environment.
The workshop was opened by Mr Dastan Kadyrov, Deputy Minister of Economy, Ms Charlotte Adriaen, Head of the Co-operation Section at the EU Delegation to Kyrgyzstan and Mr William Tompson, Head of the Eurasia Division, OECD. Ms Adriaen noted that the EU-funded LEB project was part of a broader strategy to improve the competitiveness of Central Asia, a commitment to which the EU recently reiterated through its updated EU Strategy for Central Asia. Mr Tompson thanked Mr Kadyrov and the Ministry for their continued support of and commitment to cooperation with the OECD, before outlining the LEB project and its implications for Kyrgyzstan.
In his introduction to the project, Mr Sebastian Kupferschmid from the OECD explained the main project objectives, namely to help Central Asian countries develop better framework conditions for businesses and promote investment by improving the legal environment for domestic and foreign investors. Subsequently, Ms Iris Mantovani, from the OECD, presented the initial findings of the FDI Regulatory Restrictiveness Index for Kyrgyzstan. This marked the first time the country had been included in the FDI Index, an OECD tool used to measure the statutory limitations on investors entering a market. Ms Mantovani noted that, given Kyrgyzstan’s relatively open regulatory environment – with statutory limitations on only a few sectors, including media and aviation – low levels of investment were likely due to a lack of implementation and broader challenges in the local business climate.
Following Ms Mantovani, Mr Luke Mackle, from the OECD, presented dimension of the LEB work relating to the domestic business environment. Mr Mackle noted that longstanding issues with tax with the complexity of tax administration and unpredictability of tax policy has helped undermine the domestic business climate. Mr Mackle also noted that access to economic justice – in particular the predictable enforcement of contracts – remained a significant barrier to the development of a healthy private sector. Mr Mackle then outlined some initial recommendations concerning how to stabilise the tax code to increase predictability and address contract enforcement by ensuring the necessary support for the newly-created business ombudsman.
In addition to the OECD and the EU, the Workshop convened members of the development community, the diplomatic community, the private sector, and representatives from the Government, including from the Ministry of Economy, the Office of the General Prosecutor, the Ministry of Justice. Workshop participants were also pleased to welcome the former ambassador of the United Kingdom to Kyrgyzstan Mr Robin Ord-Smith in his new role as Business Ombudsman for Kyrgyzstan. Mr Ord-Smith outlined the progress and challenges in the development of this new and important institution, giving an update on its expected opening date as well as reiterating its status as an independent voice for the country’s private sector, both domestic and international.
Concluding remarks were delivered by Mr Tompson who reiterated the need to understand the centrality of a health local private sector to the broader investment climate. The former being the ‘canary in the mine’ of the latter – if smaller domestic enterprises are suffering in a challenging business environment, it is a signal that larger investors too will struggle.
In terms of next steps, the results of the workshop and the identified priorities will be discussed at Eurasia Week 2020, a ministerial-level event that will take place Tbilisi, Georgia on 17-19 March, 2020. In the following, two capacity building workshops with experts will be conducted in Q2-Q4 2020 in Bishkek to build capacities and help address the priorities identified.