The Kyrgyz Republic has taken several steps to develop leasing as a financial instrument for small and medium-sized businesses. On July 23, 2002, the President signed the Law on Financial Leasing. In May 2008, the Law on changes and amendments to the Tax Code re: leasing was signed by the President.
In the Kyrgyz Republic, two major banks, Kyrgyz Investment and Credit Bank (KICB) and Tolubay Bank, currently finance leases, and Microfinance Fund Bai-Tushum reach the country’s poorest regions. Additionally, the Financial Company to support credit unions has financed 43 leases in 2007. Three banks (Ecobank, Ineximbank and Aiylbank) and a microfinance institution FINCA plan to begin providing leasing products in 2008.
Common trends
In 2007, the above mentioned institutions financed 44 leases for a total value of $612 thousand. One of the most important factors hindering the growth of leasing in 2007 was the tax system of leasing in the Kyrgyz Republic, especially the VAT issue. In addition, local banks have a lack of long-term financial resources to provide leasing.
The Financial Company to Support Credit Unions has enough financial resources to increase its leasing portfolio. However, as National Bank regulations limit the equity of credit unions, the Financial Company is restricted from carrying out costly leases.
Microfinance fund Bai-Tushum started its leasing operations through a grant received from the United Nations Development Program to support SMEs in the Kyrgyz Republic and now provide leases from its own funds.
Lessors in the Kyrgyz Republic
($ thousand)
