According to the draft, the state will be able to impose price regulation for up to 90 days within a year, with the possibility of extension, on:
- socially significant goods and services, the list of which will be determined by the cabinet of ministers;
- goods and services provided by dominant economic entities.
The IBC considers these changes unjustified and potentially dangerous.
Threat to InvestmentsAccording to the IBC, limiting profitability to 25% will make Kyrgyzstan less attractive to investors, especially in capital-intensive sectors such as telecommunications, energy, and construction. High-tech companies require a higher margin for investment recovery and further growth.
Risks for the Telecommunications SectorMajor mobile operators may be affected by the new price regulation. This contradicts the country's digitalization strategy and may worsen service quality and slow down the implementation of new technologies.
Constitutional and Strategic ContradictionsThe proposed changes violate Article 41 of the Constitution concerning economic freedom and contradict the National Development Program until 2030, which envisions a reduction in state intervention in business.
Administrative RisksThe new mechanism will allow the government to include any services in the list of regulated services with virtually no restrictions. This will create legal uncertainty and may lead to arbitrary decisions.
“We believe that the state’s approach aimed at restoring direct state regulation concerning dominant companies, especially in the mobile communications market, contradicts the fundamental principles of the functioning of this institution,” states the IBC.
IBC Proposals
The business community proposes to maintain the current version of the Law "On Pricing" and keep in force part 5 of Article 6, which prohibits price regulation on all other services.“It is necessary to abandon the introduction of a maximum profitability of 25%. The development of the country's economy is impossible through administrative regulation and monopolization. This is only possible with adherence to market mechanisms, a competitive environment, and transparent regulation,” it is emphasized in the conclusion.
The IBC calls on the government and the Jogorku Kenesh to consider the business community's opinion before the final adoption of the law.
