On August 12, 2025, the President of the Kyrgyz Republic signed the updated Law “On Investments in the Kyrgyz Republic” (No. 198). The document is aimed at shaping a favorable investment climate, expanding the inflow of national and foreign investments, and strengthening legal guarantees for business.
Key Changes and Innovations
Freedom of investment and national treatment. Investments are permitted in all types of activities, except those directly prohibited by law. State bodies undertake not to interfere in the economic activities of investors except in cases explicitly provided for by legislation. Foreign investors are guaranteed treatment no less favorable than that granted to national investors in creating, expanding, and managing their investments under equal conditions.
10-year stabilization regime. A contractual stabilization mechanism for tax and non-tax payments is introduced: an investor who has concluded a stabilization agreement has the right to apply more favorable provisions, valid at the time of the agreement, for up to 10 years. Access to this regime is open to those investing at least 200 million soms within 3 years (typical projects) or 1 billion soms within 5 years (subsoil use projects). Failure to fulfill investment obligations leads to termination of the agreement and repayment of saved payments. A change of shareholders does not terminate the regime. At the same time, the law confirms the investor’s right to benefit from any subsequent improvements in legislation.
Free movement of capital. Investors are guaranteed the right to freely and without delay transfer funds into and out of the Kyrgyz Republic in freely convertible currency: contributions to capital, profits and dividends, proceeds from the sale of investments, interest, royalties, payments under contracts, compensations, and payments under decisions of competent authorities. The law separately stipulates the right to free conversion of soms into foreign currency for all investment-related payments. Restrictions are possible only in a limited list of cases (bankruptcy/creditor protection, securities and derivatives turnover, court decisions in criminal cases within the amount of damages, fiscal and economic regulations).
Protection of property and compensation. Expropriation is permitted only in cases explicitly provided for by law; requisition — in emergency situations with compensation; confiscation and seizure — exclusively by court decision. Seizure for public or state needs is possible only with proportional compensation of market value and incurred losses. Compensation is calculated at market value in freely convertible currency with the addition of market interest until actual payment. It is separately established that investment projects of strategic importance, including railway construction, are not subject to expropriation.
Institutional framework. The powers of the authorized state body for investments are expanded: shaping a positive investment image of the country, investor facilitation, coordination of state bodies, protection of rights and complaint review, maintaining registers of proposals and projects, monitoring agreement implementation, and preparing an annual investment climate analysis for the President and the Chairman of the Cabinet of Ministers. Mandatory reporting deadlines are introduced: state bodies and local governments must inform the authorized body of meetings with investors within 10 calendar days, and within 30 days after the end of the year provide data on investment attraction and project implementation. The authorized body must prepare the annual analysis within 60 days.
“Transparency of procedures and institutional reform. The mandate of the National Investment Agency has been strengthened, with expanded functions of investor facilitation, complaint resolution, and coordination of the actions of state and local authorities,” noted Damirbek Bikulov, Deputy Director of the National Investment Agency under the President of the Kyrgyz Republic.
New tools for project selection and support. The law formalizes the concepts of “investment lot,” “investment proposal,” and “investment project” with unified content requirements. Investor selection for proposals and projects is conducted through open competition; maximum timeframes for document review and grounds for return for revision are established. The model structure of an investment agreement has been unified: subject, rights and obligations, sources of financing, implementation and monitoring schedule, procedure for distribution of revenues and expenses, payment sequence in case of suspension/termination, fate of assets, liability of the parties, force majeure, and dispute resolution procedure.
Direct negotiations with the Cabinet and alienation of state property for projects. For strategically significant initiatives, the Cabinet of Ministers may conclude an investment agreement through direct negotiations if statutory thresholds are met and the investor has proven experience in the relevant field. Such agreements strictly regulate the alienation of state property: market valuation by an independent appraiser, targeted use for project purposes, prohibition of further transfer until full implementation, and return of assets to the state in case of non-fulfillment of obligations. All agreements must be pre-approved by the authorized body and entered into a centralized register.
Threshold levels for concluding agreements. The law distributes competencies based on project amounts: from local self-government bodies to ministries and the Cabinet of Ministers (for agreements worth 1 billion soms or more). Before signing, state bodies conduct checks of the investor’s business reputation, experience, and financial sustainability; if necessary, additional information is requested from foreign policy and national security bodies. Following the competition, the agreement must be signed within 30 days.
Investor obligations and sustainable business standards. Investors are obliged to comply with environmental requirements (including state environmental review in cases provided by law and application of best available technologies), antitrust rules and prohibition of unfair competition, labor legislation (including safe working conditions and training of personnel from among citizens of the Kyrgyz Republic), as well as to fulfill contractual obligations and provide information during project implementation. Ethical standards, human rights observance, anti-corruption measures, and tax integrity are separately emphasized.
Access to information, movement, and facilitation measures. The state ensures free access to regulatory legal acts and judicial decisions affecting investors’ interests; requires state bodies to publish up-to-date information on state and municipal services and provide open information upon request. Foreign investors and specialists are guaranteed free movement within the country with security caveats. The list of facilitation measures includes: stabilization regime for taxes, accelerated depreciation, development of special technical regulations (if absent), the right to use land plots and water bodies under sectoral legislation, connection to infrastructure, expedited issuance of licenses and permits, and investment visas. In territories with a special investment regime, the state may assume financial obligations to protect investments in priority sectors.
Complaints and disputes: a “pre-trial ladder.” An institutionalized pre-trial mechanism is introduced: an investor may file a complaint against the actions/inaction of state bodies; the latter are obliged to review it within their competence and restore violated rights. The authorized body considers appeals based on the principles of rule of law, objectivity, and efficiency, maintaining a register of complaints; state bodies must provide their position within 7 days. Disputes are resolved in stages: negotiations → mediation → national courts. If a valid arbitration clause exists, the dispute may be referred to international arbitration (including UNCITRAL rules or ICSID) six months after the investor’s written request for negotiations and consultations.
What this means for the country
According to the legislative intent, the new legal framework is designed to reduce regulatory risks for capital-intensive and long-term projects (through the 10-year stabilization regime and protection of capital transfers), accelerate the passage of initiatives through unified procedures and coordination by the authorized body, and enhance investor protection through the pre-trial mechanism and clear compensation rules. At the same time, the law balances business rights with obligations in the areas of environmental protection, competition, and labor standards, laying the foundation for sustainable economic and social development.
Reference. The Law “On Investments in the Kyrgyz Republic” (No. 198 of 12.08.2025) enters into force 15 days after its publication (published on 19.08.2025). The Cabinet of Ministers has been instructed to adopt the necessary measures arising from the law within six months.