Investing in CAREC Tourism

If you are looking to invest in CAREC Tourism projects it is critical to understand the regulatory framework, financing mechanisms and alternatives for each country and for the region.

Legal framework, limits, and guarantees

(Source: Investments Regulations Report 26 Feb) . Footnotes not included

Azerbaijan investment protection is based on the Law on the Protection of Foreign Investment, dated January 15, 1992 No. 57 (PFI Law), the Law on Investment Activity of January 13, 1995 No. 952 (Investment Law), and international agreements ratified by the country.

The legal regime of foreign investments, as well as the activities of foreign investors in their implementation, cannot be less favorable than the regime for a property, property rights, as well as the investment activities of persons of Azerbaijan with the exceptions provided by this Law. For foreign investments in priority sectors of the national economy and in certain territories, the legislation may establish additional benefits (Art. 5 of the PFI Law).

Most of the activities are generally open to foreign investment. However, there are substantial limitations for the foreign investment in the fields of mining, oil and gas, satellite communication, and military arms’ sectors, where state ownership is mandatory and shall be prevailing over the private. Media and bank sectors are also limited to foreign participation.

Under Azerbaijani legal acts, there may be determinations upon the territories in which the activities of enterprises with foreign investment are restricted or prohibited, based on considerations of ensuring defense, national security, environmental protection and protection of the population (Art.7 of the PFI Law).

PFI Law guarantees stability of legislation for the foreign investors and in case of any change in law (except for changes in legislation related to defense, national security, public order, taxation, loans and finance, environmental protection, morality and public health – Art.10 of the PFI Law), investors could apply the legislation applicable at the moment of their investments, counting 10 years from the date of its amendment.

Institutional framework

Ministry of Economy oversees the investments area and, under its initiative, the Azerbaijan Export and Investment Promotion Foundation (AzPromo) was established. It is a public-private enterprise responsible for marketing, investment promotion and facilitation in Azerbaijan.

The primary aim of AzPromo is to attract foreign investment into the non-oil sector. According to the Order of the President of the Republic of Azerbaijan on several measures to promote investment and protect the rights of foreign investors, dated January 18 of 2018, a new investment legislation shall be developed based on international experience and practices.


Expropriation of foreign investments is generally prohibited and is allowed in exceptional circumstances when damaging the people and state interests. So far, there are no such cases of foreign companies that suffered from official nationalization.

A decision on nationalization must be made by the Supreme Council of the Republic of Azerbaijan and investors are entitled to effective and adequate compensation. A requisition is allowed in the events of natural disaster, epidemic, or other extraordinary situation, requiring a prior decision of the Cabinet of Ministers of the Republic of Azerbaijan (Art. 11 of PFI Law).

Since 2016, expropriation is permitted when necessary for social justice and effective use of land by virtue of the Constitution of Azerbaijan.

Land and Real Estate Ownership

Land and real estate are allowed for foreign lease, although it is prohibited for foreigners and international organizations to own or purchase the land.

Another problem, regarding the real estate rights, is poor record-keeping and title registration in rural lands. Therefore, it is often unclear who is the owner of certain land plots.

Repatriation of capital

After payment of the relevant taxes and fees, foreign investors can freely transfer abroad their income and any other amounts, including compensation for losses incurred in foreign currency legally in connection with the investment. Foreign investors are also entitled to reimbursement of investments in the event of termination of investment activity (Art. 14 of the PFI Law).

Dispute Resolution

Disputes or disagreements arising between foreign investors and enterprises with foreign investment, Azerbaijani state bodies and/or enterprises, and other Azerbaijani legal entities, are to be settled in the Azerbaijani court system or, upon agreement between the parties, in a court of arbitration, including international arbitration bodies.


The Law on the implementation, based upon special financing, of investment projects related to construction and infrastructure facilities, dated March 15, 2016 No. 177-VQ (Investment Projects Law) is the main law regulating PPPs in Azerbaijan. Another regulation is the Order on approval of the “procedure for establishing conditions for investors to implement investment projects related to construction and infrastructure facilities within the framework of the “Build-operate-transfer” (BOT) model, requirements for investors in accordance with the types of construction and infrastructure facilities, features and conditions of contracts, price of goods and services received as a result of investment” dated December 7, 2016 (BOT Order).

PPPs are not restricted in any field of the economy, and specifically, the types of infrastructure to which the Law applies are mentioned, which includes, inter alia, tourism objects, roads, logistics centers, and stations, energy stations, etc. (Art. 3.1. of the Investment Projects Law). An investor implementing a PPP project under the Investment Project Law is entitled to exemption from state duties and charges with relation to that activity.

The role of procuring authorities is usually performed by the Ministry of Economy, though according to the law, procuring authority could be any executive body authorized to conclude contracts with investors for the construction and infrastructure facilities specified in Article 3.1 of the Investment Projects Law, in accordance with the BOT model (Art.2.04 of the Investment Projects Law). Ministry of Economy is also a key state body responsible for PPPs facilitation and support; it provides the required approvals and authorizations during the stages of PPP projects and monitors their implementation (Art. 6 of the Order on BOT).

Investment incentives

Starting from 2016, the Government offers special incentives to investors interested in tourism through the Investment Promotion Document (IPP), which is a mechanism envisaging discounts in tax payments and customs’ duties for imported goods. IPPs are granted for the investors in the Tourism and Recreation Zones (specially allocated touristic areas) for investments amounting to minimum 1 million manats (approx. $600,000) in the hotel sector; 0.1 million manats (approx. $60,000) in the food and beverage sector; and 0.5 million manats (approx. $300,000) in the attraction sector. Besides, in the regions not included into the Tourism and Recreation Zones, investments amounting to 0.1 million manats (approx. $60,000) in the hostel sector; and 2 million manats (approx. $1.2 million) in 2- and 3-star hotel sector are eligible for the incentives. During seven years, the IPP grants entrepreneurs a 50% discount in income and profit tax payments; VAT and customs duty exemptions for imported technology, devices, and equipment; as well as exemption from the property and land taxes.

There is also the mechanism of Free Trade Zones (FTZ) initiated by the Government. Currently, the FTZ is established in the territory near the Port Alat. The business participants of FTZ are exempted from taxes and customs duties, protected from nationalization, and have guarantees of a free flow of funds in and out of the FTZ. FTZ’s administrative bodies establish their own regulations on employment, migration, and dispute resolution. Tax incentives also exist for companies in the export business except for oil export. Such incentives include exemptions on corporate tax, property tax, favorable tax treatment for manufacturing equipment, and subsidies. Investors having the investment certificate, which is granted to investors in priority non-oil sectors such as tourism, are entitled to 50% exemption on income tax, 100% exemption of land tax, and 100% relief from customs duties on imports of machinery, equipment, and devices for seven years.

Legal framework, limits, and guarantees

(Source: Investments Regulations Report 26 Feb) . Footnotes not included

The regulatory framework on FDI provides open and favorable conditions for foreign investors. However, they do not have preferential treatment. The primary laws governing FDI relations are the Law of Georgia on Promotion and Guarantees of Investment Activity, dated November 12, 1996 No.473 (Investment Law) and the Law on State Support for Investments, dated June 30, 2006 No 3424-ES (Law on State Support for Investments). The Investment Law lays out the legal grounds for the implementation of both foreign and local investments in the territory of Georgia and guarantees for their protection, and defines a legal order to promote investments. There are also other laws and regulations governing foreign investment. In 2014, an Association Agreement including the Deep and Comprehensive Free Trade Area (DCFTA) between Georgia and the EU was signed. According to the Association Agreement, Georgian legislation will be harmonized and integrated with EU legislation. Thus, there is an active and ongoing process to align Georgia regulations with EU standards.

There are no limits or restrictions for foreign ownership except for the requirement for the state to have a controlling interest in air traffic control, shipping traffic control, railroad control systems, defense and weapons industries, and nuclear energy. Only the state may issue currency, banknotes, and certificates for goods made from precious metals, import narcotics for medical purposes, and produce control systems for the energy sector.

Investment guarantees, offered to foreign investors under the Investments Law, include full and unconditional protection of investment compensation paid to an investor at the moment of deprivation in amount of the real market value of the deprived investment and losses incurred in connection of such deprivation, and property rights equal to citizens and entities of Georgia.

Institutional framework

The following state entities are engaged in investments promotion activities:

  • The Investment Division of Enterprise Georgia, a legal entity of public law under the Ministry of Economic and Sustainable Development, is primarily responsible for attracting, promoting, and developing FDI in Georgia. It performs the role of a moderator between the government and foreign investors, provides communication between them and ensures support and full access to information during the investment process serving as a “one-stop-shop” for investors.
  • Investment Centre of Georgia operates at the Ministry of Foreign Affairs of Georgia to promote investments, including identification of potential partners in Georgia and abroad, and giving recommendations to the legislative and executive authorities of Georgia for improving the investment environment.
  • Investors Council, acting as an independent advisory body to the Prime Minister of Georgia, is responsible for facilitating constructive dialogue and exchange of views between the Prime Minister, Ministries and other executive Agencies under their subordination on the one hand, and the private sector on the other hand, in order to improve and encourage a sound investment climate.


Expropriation for pressing social needs shall be carried out only for the implementation of the following works: construction of roads and highways, laying of railway lines, laying of pipelines for crude oil, natural gas, and oil products, construction of power transmission and distribution lines, laying of water supply, sewerage, and rainwater collector pipelines; laying of telephone lines; laying of TV cables; construction of structures and facilities for pressing social needs; works for national defense; and operations for the extraction of natural resources.

Land Ownership

Foreigners have no limitations in acquiring land, except for agricultural land. Foreigners or foreign legal entities can lease the property without any further restrictions, and their rights in this regard are similar to those of citizens of Georgia.

In turn, land status in Georgia can be changed, if such a necessity exists. National Agency of Public Registry has relevant authority. Georgia also offers very good conditions for property title registration.

Repatriation of capital

There are no restrictions on free capital flow in and out of Georgia, provided that the taxes are paid.

Dispute Resolution

Disputes between foreign investors and enterprises registered in Georgia shall be resolved according to the procedure established by agreement of parties, or in the courts of Georgia. If the procedure for dispute resolution is not determined by agreement of parties or the relevant international agreements of Georgia, then it shall be settled in local courts (Art.16 of the Investments Law).

Georgia is also a contracting party to the New York Convention, Singapore Convention and International Centre for Settlement of Investment Disputes (ICSID) Convention. Thus, foreign awards are recognizable and enforceable in the country, and ICSID mechanism of disputes resolution is also available for investors.

Moreover, Georgia has enacted legislation based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law. Local private arbitration firms, like the International Arbitration Center could also be exposed for investment disputes settlement.


The primary law governing PPPs in Georgia is now the Law of Georgia On Public-Private Partnership, dated May 4, 2018, No. 2273-IIს (PPP Law). PPP Law determines the legal basis for PPPs, including the rules and procedures related to the development and implementation of PPP projects, the principles of PPP, and relevant institutional systems, as well as other matters related to PPPs (Art. 1 of the PPP Law). In general, the PPP Law applies equally to concessions and other PPPs.

The Law of Georgia on the Procedure for Granting Concessions to Foreign Countries and Companies, dated September 19, 1996 No 396 (Concessions Law) determines general principles and procedures for issuing concessions to foreign investors for the procession of natural resources and for other related economic activities in the territory of Georgia, on the basis of a special agreement. More specific in describing implementation procedures for PPP projects, including required authorizations and approvals, is Article 9 of the Decree of the Government of Georgia “Approval of Investment Projects Management Guide”, dated April 22, 2016 No. 191. (Decree 191).  In addition, other laws and regulations apply to PPPs in Georgia.  Under PPP Law, there are no limits or exceptions in economic sectors, where PPP could not be applied.

The PPP Centre facilitates the development and promotion of PPP projects in Georgia. It acts as an information platform as well as the mediator between the private and public sectors. Under the law, it also shall, among other functions, identify potential PPP, assess the concept and propose it to an authorized body.

An authorized body in PPPs performs the function of the initiator of the PPP project, and shall identify any potential PPP project. It organizes the selection process and ensures participation of the PPP Agency and the Ministry of Finance of Georgia in the drafting and assessment of a PPP project (Art.7 of the PPP Law).

Any ministry, other state authority, a legal entity under public law, a municipality, the governments of the Autonomous Republics of Abkhazia and Adjara, or an enterprise established on the basis of holding more than 50% interest, could be authorized body (Art.2. z5 of the PPP Law). The role of the Ministry of Finance of Georgia is mainly to provide assessments of accessibility to public finances and of other questions at interest.

Investment incentives

According to the Law on State Support for Investments, requirements for the status of the “investments of special importance” are an investment with a total amount of more than eight million lari (approx. $2.8 million) or an investment that functionally and strategically has a significant influence on the development of the country’s economy and infrastructure.

Article 10 provides the procedure for awarding such status, which requires investors to fill in an investment application accompanied by a detailed plan for the implementation of the investment to the Government of Georgia.

As an incentive for investors, there is also a mechanism of Free Industrial Zones (FIZ) established in Georgia based on the Law on FIZ dated July 3, 2007, No. 5175.

Foreign companies operating in FIZs are exempt from taxes on profit, property, import, and VAT (Art. 9 of the Law on FIZ). Financial operations in FIZs may be provided in any currency.

Legal framework, limits, and guarantees

(Source: Investments Regulations Report 26 Feb) . Footnotes not included

Relations associated with investments in Kazakhstan are regulated by the Entrepreneur Code (EC) of the Republic of Kazakhstan, dated October 29, 2015, No. 375-V ЗРК, and industry-specific laws.

Under investments, the EC defines all types of property (except goods intended for personal consumption), including financial leasing items, as well as the rights thereto, which are contributed by an investor into the charter capital of a legal entity or an increase of fixed assets used for entrepreneurial activities, as well as for the implementation of PPP project, including the concession project (Art. 273 of EC).

Domestic and foreign investors shall be treated equally, however, the state tends to support domestic industry manufacturers more. Nevertheless, there is no restriction for a Kazakh legal entity having foreign shareholders/participants to apply for state support.

The protection of investments and investment guarantees established in EC and other laws are equally extended to foreign investors.

Restrictions on foreign ownership exist mainly in those sectors of the economy which historically were monopolized by the state, such as media, air transportation, telecommunication, agriculture. For example, there is a 20% ceiling on foreign ownership of media outlets, a 49% limit on air transportation services, and a 49% limit on telecommunication services.

Institutional framework

The state institutions and responsible for FDI are the following:

  • President’s Foreign Investors Council and the Prime Minister’s Council for Improvement of the Investment Climate provides a governmental platform for maintaining an active dialogue with foreign investors.
  • Investment Committee under the Ministry of Foreign Affairs issues decisions on granting preferences on a case by case basis and under the requirements established in rules of law.
  • National company Kazakh Invest under the Ministry of Foreign Affairs promotes FDI and provides access to a “single window” service, which simplifies many business procedures.
  • Astana International Financial Center (AIFC) is a regional investment hub with alternative jurisdiction for operations, tax holidays, flexible labor rules, the common law-based legal system, separate court and arbitration center, and flexibility to carry out transactions in any currency. AIFC aims to attract foreign investments in finance, securities, new technologies, and other industries.


Expropriation is possible only for state needs in exceptional cases listed in the Land Code (Art.84.2), among which is the construction of road infrastructure, implementation of concession projects, for specially protected natural areas, for health-improving and recreation. In the case of expropriation, compensation of damages and market value of the confiscated property shall be paid (Art.279.2 and 279.3 of EC).

Land Ownership

Foreigners can own industrial and residential property with exceptions, which are the country’s permanent residence status for individuals, or through the ownership of national legal entities even if controlled by foreign individuals or legal entities.

Foreigners are however prohibited to own farming land, land in the state forestry fund, and land in the border zones of the country.

There are also other categories of land which are prohibited for private use, such as land used for national defense and national security purposes, specially protected nature reserves, forests, reservoirs, glaciers, swamps, designated public areas, and land reserved for public needs.

Repatriation of capital

The state guarantees free use of investment profit after payment of taxes and other mandatory payments to the budget, which, under the monetary regulations means: the right of profit repatriation; and the right to open bank accounts in Kazakh banks in any currency in accordance with currency regulations (Art.277 of EC).

Dispute Resolution

Dispute resolution mechanism in investment disputes allows investors to apply to international arbitration if there is a written agreement (or arbitration clause in the investment contract) concluded between the parties.

The EC also provides opportunities for dispute settlement through negotiation and Kazakhstani courts. Kazakhstan is a member of ICSID Convention and the New York Convention. 

Also, the international awards rendered by the ICSID, a tribunal applying the rules of the UNCITRAL, Stockholm Chamber of Commerce, London Court of International Arbitration, or Arbitration Commission at the Kazakhstan Chamber of Commerce and Industry are enforceable in Kazakhstan.


PPPs /Concessions legislation of Kazakhstan is based on the Constitution of Kazakhstan and consists of the Civil Code, Law of the Republic of Kazakhstan on public-private partnership, dated October 31, 2015, No. 379-V LRK (PPP Law), Law of the Republic of Kazakhstan on Concessions, dated 7 July 2006 No. 167 (Concessions Law) and other laws[1] and regulations (Art. 2 of the PPP Law). Apart from the laws, the variety of sub-laws approved by the Decrees of the Government and Orders of the Minister of National Economy regulate details of PPP relations, and main specifics of concessions.

Concession Law is more restrictive and is used less frequently than the PPP Law. PPP Law is wider in its regulation as it covers all types of PPP agreements including concession agreement and applies to any area of the economy. PPP projects could be local, republican and of special importance if, among other criteria, the cost of the project exceeds 4 million MCI (approx. $26 million). As a procuring authority could act any regional municipal authority (Akimat) or sectoral ministry depending on project type and importance. Certain objects are excluded from transfer to concession or PPP, among which is a land (except for transfer of lease rights for implementation of PPP contract), water, flora and fauna, protected areas and other objects provided in the list of objects that cannot be transferred for implementation for PPP including concession, approved by the Decree of the Government No. 710 of November 6, 2017.

A vast variety of state agencies and sectoral ministers are engaged in PPP circle, performing regulatory functions:

  • Government: approves the list of PPP projects of special importance and the list of objects of PPP in respect of which closed tender shall be provided;
  • Ministry of National Economy, as an authorized body on state planning, forms and approves the list of republican projects for implementation, and their tender documentation; elaborates the list of risks for the projects; attracts Center of Development of PPP for evaluation of implementation and expertise of business plans for the projects upon direct negotiations; maintains list of unscrupulous potential private partners; and issues rules and regulations, including contract and tender documentation;
  • Ministry of Finance, as an authorized body on budget performance and budget planning, agrees on tender documentation and the list of republican projects; and executes state guarantee agreements and state surety agreements related to PPP agreements.
  • Committee on State Property and Privatization at the Ministry of Finance, as a state property management authorized body in the field of PPP, accepts into a republican property the objects created under PPP; keeps a register of concluded agreements; and monitors PPP projects.
  • Other Ministries, as authorized state bodies of the relevant industry in the field of PPP, develop and approve tender documentation and model agreements in the relevant industry; organize both tender and direct negotiations; conclude the agreement; and monitor implementation of the projects.
  • Maslikhats of oblast, cities of republican significance and capitals, as local parliaments, approve the list of local PPP projects to be implemented.
  • Akimats of oblast, cities of republican significance and capitals, as regional municipal administrations, organize tender and direct negotiations for local projects, conclude agreements, monitor implementation, keep a register of concluded agreements, accept the objects created into communal ownership; and form a list of local PPP projects, planned for implementation.

Investment incentives

Benefits are available to investors formed as Kazakh legal entity, implementing investment projects in the priority types of activities. State preferences are provided under concluded investment contracts. The volume and duration of investment preferences depend on the type and amount of investments and include relief from certain taxes (corporate tax, property tax, VAT and land tax), customs duties, and provision of natural grants (land plots, buildings, structures, machinery, and equipment, etc.). However, the main obstacle for the investors wishing to receive the said privileges is an established threshold for investments in the amount equivalent to 2 million of MCI (approx. $13 million).

In addition to the investment preferences listed above, favorable conditions and a special legal regime are created for legal entities operating in special economic zones (SEZ), industrial zones and in AIFC.

The special legal regime is established in the territory of SEZ and includes exemption from taxes and customs duties, as well as favorable conditions for hiring foreign labor force for the whole duration of SEZ.

Industrial zones are secured by communications and basic infrastructure and aimed at acceleration of development of entrepreneurship in the industry field and creation of import-substituting and competitive industries.

Legal framework, limits, and guarantees

(Source: Investments Regulations Report 26 Feb) . Footnotes not included

Under the law, it is guaranteed equal treatment to investors and there are no formal limits on foreign ownership or control.

The Law On investments in the Kyrgyz Republic, dated March 27, 2003 No.7 (Investments Law) provide general investment guarantees, including protection of investments and investors; guarantees of export or repatriation of investments, property and information outside the country; protection against the expropriation of investments and compensation for losses to investors; income use security; guarantees of monetary transactions freedom; guarantees of free access to open information;economic independence of investors and recognition of investors’ rights; concession guarantees; and possibility of investing in special economic zones.

Nevertheless, there exist some concerns with regard to the implementation of some of these guarantees.

Institutional framework

The Government of the Kyrgyz Republic distributes the functions for the implementation of the Investments Law among ministries, state committees, administrative departments, and local state administrations.

The Investment Promotion and Protection Agency of the Kyrgyz Republic is the state executive authority for the implementation of state policy in the field of investments, exports, and PPPs, and it is responsible for assisting international companies.


Investments are not subject to expropriation (nationalization, requisitioning or other equivalent measures), except for the cases stipulated by the legislation. Exceptions refer to expropriations carried out in public interest on the basis of non-discrimination in the legally prescribed manner and made with the payment of timely, proper and real compensation for damage, including lost profits.

Land Ownership

According to the National Development Strategy for 2018-2040, land ownership and lease rights is a priority area for improvement for FDI attraction. However, so far the regulation of land issues is not clear and formal availability of the land for foreign use is restricted in practice.

Repatriation of capital

Despite the guarantee of free export or repatriation of profits gained on investment and proceeds of investment activities, it is not clear what procedures and/or limitations could apply.

Dispute Resolution

Parties can agree to any judicial institution, including domestic or international arbitration. If the parties fail to settle the dispute within three months of the date of the first written request, any investment dispute involving the public authorities of the state shall be settled by the judicial bodies of the Kyrgyz Republic. Kyrgyz Republic is a member to ICSID Convention and to the New York Convention.


The regulatory framework is well developed and represented mainly by the Law on PPP in the Kyrgyz Republic, dated March 23, 2003, No.66, Investments Law and sub-laws including the regulations on tender commission for the selection of private partners in PPP projects, and procedure for preparing the rules for conducting tenders and tender documentation for PPP projects, approved by the Decree of the Government, dated January 28, 2013.

To create a favorable environment for the development and successful implementation of the PPP mechanism, the Government adopted the Program for the development of PPP in the Kyrgyz Republic for 2016–2021, and established the Council private partnership in 2016.

The Program stressed the importance of enhancing application and quality of PPP financial instruments in accordance with international practices, including through establishing the fund for financing of infrastructure for the provision of long-term borrowed funds in national currency due to limited opportunities for the provision of such financing by the domestic banking sector; a guarantee fund to reduce the exposure to risks of the private sources of financing, including ensuring currency risks, risks of higher credit costs, risks of insufficient profitability, and political risks; and the fund of subsidized financing to finance the lack of viability of PPP projects that are economically sound and attractive, but not financially viable due to income from users’ payments.

Regulatory functions are performed by the Government, Ministry of Economy, and the State Risk Management Authority under the Ministry of Finance. As a procuring authority could operate any sectoral ministry, agency, committee, as well as local executive municipal bodies. PPP could be applied in any sector of the economy, which relates to the provision of the services to a wide variety of consumers, including tourism and recreation.

Investment incentives

Incentives include a reduction of tax on repatriation of profits by foreign investors to make it equal to the tax rate for domestic investors; exemption from several taxes, duties and payments; simplified customs procedures; and direct access to utility suppliers for businesses operating in FEZs.

Legal framework, limits, and guarantees

(Source: Investments Regulations Report 26 Feb) . Footnotes not included

Mongolia generally provides a regime of national treatment to foreign investors according to Law of Mongolia on Investments, dated October 3, 2013 (Investment Law), which is a primary law regulating investments in the country.[1] The purpose of the Investment Law is to protect the legal rights and interests of investors in the territory of Mongolia, to establish a common legislative guarantee for investment, to encourage investment, to stabilize the tax environment, to determine the rights and obligations of investors and the competences of a government body related to investment and to regulate other relations pertaining to investment (Art.1.1. of the Investment Law).

There is no regulatory discrimination against foreign investors in industries, foreign ownership or control of investments. However, a requirement of a threshold for investments in the amount of $100,000 to set up a venture, applies to foreign investors only. No such requirement exists towards local investors. No foreign investment screening mechanism exists in Mongolia. Investor guarantees include protection from illegal confiscation, protection of intellectual property, free transfer of assets and revenues, and freedom to apply to international arbitration regarding the dispute with the state authorities of Mongolia (Art.6 of the Investments Law). Nevertheless, there exist concerns with regards to the implementation of the promised guarantees.

Institutional framework

National Development Agency (NDA) is responsible for investment affairs with key functions to attract investment, to promote advocacy of the investment environment and to provide services to investors (Art. 9.1 of the Investment Law). NDA, acting as one-stop online services, has a broad competition and is entitled to provide comprehensive activities to implement FDI policy as well as issue stabilization certificates (SC) to certain investors (in the mining extraction, heavy industry, infrastructure sector, and other sectors).


Expropriation is prohibited except for if public interests arise. Mongolian state entities at all levels are authorized to confiscate or modify land use rights for purposes of economic development, national security, historical preservation, or environmental protection.

Any such expropriation or mobilization shall be compensated based on the market value of the assets at issue. However, expropriation cases of the last years have raised some concerns with regard to the sanctity of this state guarantee.

Land Ownership

Generally, foreigners are prohibited to own real estate property, and can only lease for a term of 5 years with an opportunity to extend the term for 5 years more. However, non-tax support of investors is available in the form of land lease up to 60 years with a possibility to extend up to 40 years in the free zones, and technological parks.

Repatriation of capital

There are no regulatory limitations for remittance of all inflows and outflows of funds, after fulfillment of tax obligations.

Dispute Resolution

Dispute resolution mechanism allows investors to apply to local courts as well as to international arbitration, including the ICSID Convention remedies, to which Mongolia is a member. Mongolia also signed the New York Convention, admitting the obligation to enforce foreign awards. Nevertheless, the enforcement of judicial decisions remains a problem due to its long-lasting procedure.


PPPs /Concessions process in Mongolia has not been smooth in recent years. In 2016, given the difficult economic situation and budget, the government of Mongolia decided not to conclude concession agreements conditioned with payments from state and local budgets, not to create new concessional obligations, and also to freeze concession projects that were not started before 2018. On regulatory level, the PPPs in Mongolia are allowed for implementation in all economic sectors and governed mainly by the  State Policy on Public-Private Partnership adopted by the Parliament Resolution dated October 15, 2009 No. 64 (PPP State Policy), the Law on Concessions, dated January 28, 2010 (Concessions Law) and its Government Resolution On Procedures on Granting a Concession through a Tender Process, dated July 7, 2010, No. 103 (Concessions Regulation) amended and updated further. It is worth to mention, that at the time of this report, the state has not provided a unified PPP Law, to replace the Concession Law. State regulation in PPPs is represented by:

  • Prime Minister, which delegated its authority to the Minister of Industry for implementation and procurement. It is responsible for issuing regulations and approving the list of concessions objects (Art. 6.1 of the Concessions Law);
  • Division of Concessions under the Ministry of Economic Development;
  • NDA is responsible for the development of FDI policy, conduct comprehensive activities for attraction and promotion of FDI, including the development of policy on PPPs and concessions, and implementation of concession projects. NDA also facilitates and provides technical support in implementing PPP projects.

Procuring authority could be a state administrative authority in charge of the concession object owned by the state, and the governor of the province (aimag) or the capital of the territory where the concession object is located and owned locally (Art. 3.1.7 of the Concessions Law).

Investment incentives

Appealing tax incentives is conditioned by certain amounts of investments. SC is an instrument for granting tax and other incentives to investors in certain industries. The duration of SC depends on the amount of investments, investment completion period and the region of operation of the investment. Qualified SC investors are offered favorable tax treatment for a period of up to 27 years.

Moreover, the government of Mongolia shall conclude an investment contract with the investor who is to invest more than 500 billion tugrugs (approx. $182 million) at the investor`s request with the purpose of stabilizing the environment of business activities (Art. 20.1 of the Investment Law).

Another non-tax support for investors is provided for investments in the free zones, production and technological parks, support to implement the creation of projects in infrastructure, science, and educational sectors, to increase the number of foreign workforce and specialists, to exempt them from employment fees and to grant the required permits at eased regime, multiple visas and residential permissions for investors and their families (Art. 12.1 of the Investment Law).

Legal framework, limits, and guarantees

(Source: Investments Regulations Report 26 Feb) . No footnotes included

Foreign investment protection in Pakistan is primarily regulated by the Foreign Private Investment Promotion and Protection Act, 1976 and the Furtherance and Protection of Economic Reforms Act, 1992 and Foreign Direct Investment Strategy 2013–2017.

The regulations establish equal tax treatment for both foreign and local investments. Thus, there is no regulatory discrimination of foreign investors. Nevertheless, the Board of Investments checks if the investment could negatively affect national security, having the power to prohibit foreign investments that are found negative.

Starting from 2016, Pakistan is a party to the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which helps Pakistan exchange banking details with the other 80 signatory countries to locate untaxed money in foreign banks.

Pakistan also joined the Base Erosion and Profit Shifting (BEPS) framework allowing automatically exchange reporting between countries to ensure a transparent tax environment.

In general, there are no restrictions to invest in any specific activities , except in industries concerned with national and public security, including high explosives, radioactive substances, arms and ammunition, securities, currency, and alcohol. In general, there is no minimum required threshold for investment, as well as no limit of foreign participation in share ownership. Also, tourism, housing, and construction are prioritized sectors and are eligible for lower tax and utility rates compared to “commercial sector” enterprises, like banks and insurance companies.

Institutional framework

The Board of Investments of Pakistan is responsible for investment promotion and facilitation, and the Securities and Exchange Commission of Pakistan, the main, however not the sole, regulatory body for foreign companies. The Board of Investments is a facilitation state agency with a primary function to promote investment in Pakistan and help investors to realize and operate their projects.


Foreign investment is generally protected from expropriation based on the Protection of Economic Reforms Act 1992 and the Foreign Private Investment Promotion and Protection Act 1976.

Land Ownership

Land rights and other real estate property rights are not specifically limited for foreigners, except in agriculture where foreigners may own up to 60% and may lease the land up to 50 years with a possibility of extension.

The laws allow full remittance of profits earned through the sale of any property owned by foreign persons, or compensation in value of the property.

Despite the well-developed legal norms, the titles to land plots are not easily obtained, and the whole process of official registration of the rights could be cumbersome.

Repatriation of capital

Remittance of profits, dividends over $5 million, and capital gains are allowed and dividends are exempted from taxation.

Foreign currency in any amount, remitted from outside the country through bank transfers is relieved from taxation by virtue of Income Tax Ordinance of Pakistan of 2001.

There are no other limits established for debt service, or payments for imported equipment, dividends, capital gains, remittance of profits, returns on intellectual property rights.

Nevertheless, there is a registration requirement for investor remittances; they have to be made based on a valid agreement and registered within 30 days after remittance was made.

Dispute Resolution

An investor can go for international arbitration in case of disputes arising from an agreement if that provision is included in the contract and after exhaustion of the local remedies for a period of 6 months. Pakistan is also a member of ICSID and New York conventions, and Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act 2011 is also in place.


PPPs / Concessions relations in Pakistan are regulated by the Public-Private Partnership Authority Act No.VIII dated March 27, 2017 (PPP Act) and the Private Participation in Infrastructure for Better Public Services Policy dated January 26, 2010 (PPP Policy).

In addition, Public Procurement Rules dated June 9, 2004 (Procurement Rules) apply to certain PPP projects, where Government and the private party established joint equity or ownership.  Other provincial PPP laws and regulations are applied locally in those provinces.

Under PPP Act, an independent Public Private Partnership Authority (PPPA) was established to ensure that projects are consistent with national and sectoral strategies, ensure value of the projects by conducting evaluation analysis, and assessment of fiscal risks, advise and facilitate the implementing agency during all the stages of PPP procedures. PPPA also ensures that PPP agreement is consistent with the provisions of the Act, and acts as a gatekeeper during the planning, tendering, bidding and contract stages. The list of its functions specified in the PPP Act is not exhaustive.

The PPPs are not prohibited specifically in any fields of the economy. Nevertheless, the definition of the PPP project itself stipulates that it has to be only “an infrastructure project, provision of infrastructure-related services or both, under a public-private partnerships” (Art.2 (i) of the PPP Act). As a procuring authority, it could be “any of the line ministries, attached departments, body corporate, autonomous body of the Federal Government or any organization or corporation owned or controlled by the Federal Government” (Art 2(g) of the PPP Act).

Investment incentives

In April 2015, Pakistan and China created the China-Pakistan Economic Corridor (CPEC), with a great focus on infrastructure and energy production based on a bilateral economic co-operation agreement.

A few years ago, Pakistan adopted policies such as the Strategic Trade Policy Framework (STPF), Export Enhancement Packages (EEP) and SEZ aimed at attracting foreign investments mostly in infrastructure and industry.

The incentives opened possibilities for both domestic and foreign investors aligned with tax and tariff benefits, provision of dedicated infrastructure, and other facilitation services.

Investment incentives exist in the form of business facilitation measures, whereas direct incentives like loans, subsidies, state guarantees or reduced cost of land plots are not usually provided.

Prioritized activities like automobile manufacturing, solar energy, and information technology enjoy exemptions of customs duties on the import of equipment, and a wide range of tax incentives. For export-oriented industries, the government introduced and set up Export Processing Zones in several provinces, which provide for exemptions on taxes and duties on machinery, equipment and materials, and “single-window” authorizations facilitation services.

There is also the SEZ mechanism based on the SEZ Act of 2012, which offers auxiliary infrastructure, investor service and financial assistance and possibilities to set up companies and PPPs within the SEZ.

Legal framework, limits, and guarantees

(Source: Investments Regulations Report 26 Feb) . No footnotes included

The FDI legal framework is restrictive towards foreign investment, as well as less transparent than other developed countries. The recent policy of the Chinese government show some willingness to prioritize the promotion of FDI and to provide national treatment to foreign investors in allowed sectors of the economy. There is a new Foreign Investment Law (FIL), dated March 17, 2019, and enforced starting January 1, 2020, under which foreign companies will be subject to similar laws as domestic companies. Based on the previous laws, there are a number of implementing regulations and guidelines issued by the State Council, and ministerial regulations which govern the FDI relations in specific sectors of the economy. Acts of local regulators applicable to their local area do exist. The implementing regulations for the New FIL as well as their enforcement mechanisms have not been provided yet. In addition to FIL, new legal initiatives were approved in 2018:

  • Special Administrative Measures for Foreign Investment Access, dated June 28, 2018 (nationwide negative list), which define industries restricted or prohibited to foreign investment. Investments that are not restricted or prohibited, shall be registered but this does not guarantee that the foreign investor will have national treatment in receiving state authorizations, approvals, licenses, and other permits. For example, in telecommunications, foreign investors must obtain additional approval from the Ministry of Industry and Information Technology. Other impediments to foreign investments are the current industrial policy “Made in China 2025”, poor mechanism of protection and enforcement of intellectual property rights, and lack of rule of law.
  • Market Access Negative List, dated December 25, 2018, defines prohibitions and restrictions to investment for both foreign and local investors and distinguishes what economic sectors are only open to state-owned enterprises. This list attempted to unify guidance on allowable investments previously found in piecemeal laws and regulations that were often industry-specific.
  • Special Administrative Measures for Foreign Investment Access in the Pilot Free Trade Zones, dated June 30, 2018 (FTZ negative list) which established exceptions from nationwide negative list, such as increase of equity caps up to 66 percent in the development of new varieties corn and wheat, removal of some prohibitions in oil and gas sector, and nuclear fuel production.

Under the negative list, the foreign investors in certain industries must enter into a joint venture with a Chinese partner. In some industries, the Chinese partner shall have controlling interest, with specific equity caps. If there is a belief that foreign mergers and acquisitions with local firms could negatively affect national security, then the authorities could block such transactions. Therefore, national security reviews potential transactions at the beginning. It is worth to mention that the notion of national security is broad and, apart from military and national defense, could include infrastructure, culture, information technology, transportation, manufacturing, energy, and agriculture. Mergers and acquisitions of foreign capital with Chinese enterprises have become one of the main methods of international direct investment. Among the general guarantees, the new FIL emphasizes the equal application of procurement regulations, guarantee of protection from the collection of foreign investment, and protection of intellectual property rights.

Institutional framework

The Ministry of Commerce is a key regulator in investment relations and it supports FDI on a central level, whereas on local / provincial level promotion agencies operate under control of local commerce departments.

The Department of Foreign Investment Administration, under the Ministry of Commerce, is responsible for foreign investment promotion in PRC, coordinating with agencies at the provincial levels, engaging with international economic organizations and business associations, and conducting research related to FDI into PRC.


Expropriation of foreign property is prohibited except for special circumstances which may include national security interests, public needs, and other circumstances that are not specified in the law. Method of compensation is not provided, although there is a rule of fair compensation to be paid in case of expropriation (Art. 22 of the Draft Regulations for the Implementation of the FIL).

Land Ownership

Foreign investors are not allowed to buy land in PRC. The land in PRC belongs to the state and the collectives. Real estate ownership and lease rights are regulated differently on national and local – at or above the county-level.

According to the Xinjiang Uygur Autonomous Region Land Use Master Plan (2006-2020), it is planned that “rural collectively-operated construction land will be allowed to be sold, leased, or stock-equipped, and the state-owned land will be sold on the market at the same price”. However, no similar measures are planned under the General Land Use Planning of Inner Mongolia Autonomous Region (2006-2020).

Branches and representative offices (except enterprises approved to engage in real estate business) established by overseas institutions in the country and overseas individuals working and studying in the country may purchase self-use and self-occupied commercial houses that meet actual needs. For cities that implement a housing purchase restriction policy, overseas individual purchases of housing should comply with local policy provisions.

Repatriation of capital

Under the FIL, foreign enterprises do not have restrictions in free repatriation of their capital contributions, profits and capital gains in local currency or foreign exchange remittance of their capital outflows (Art. 21 of the FIL). However, the process of remittance is burdened with the required documentation to be submitted to the banks for their review and approval. Time for such review and approval is not specified and could take a few days to proceed.

Profit amounts equal to or less than $50,000 are not required to submit documents for the bank’s review. Other profit amounts shall be remitted upon the provision of tax documents aligned with the decision of the management of the company to distribute profits. In turn, no specific rules on the remittance of royalties and management fees apply. Foreign debt management rules apply to remittance of financial lease payments.  

Dispute Resolution

Dispute settlement is possible through local courts and international arbitration. Informal remedies such as mediation, informal conciliation, and arbitration are also more popular among businesses than ordinary litigation.

Often, investment disputes require arbitration in the Beijing-based China International Economic and Trade Arbitration Commission, by virtue of a corresponding investment contract. Under the new FIL, the competent department of commerce of the State Council shall, in conjunction with the relevant departments of the State Council, establish a complaint mechanism for foreign-invested enterprises, which shall promptly deal with issues that have a significant impact on the country (Art.30 of the FIL).

PRC is a member of the ICSID Convention and New York Convention, as well as an acceptor of many fundamental principles of UNCITRAL’s Model Law on International Commercial Arbitration.


In PRC, there is substantial PPP practice distinguishing BOTs, concessions and other cooperation forms between local governments and foreign investors. The legal framework regulating PPPs is broad and complicated. It contains regulations and policies applicable to national and local levels to PPPs. The State Council Guiding Opinions approved in the Notice of the Ministry of Finance dated November 29, 2014 (Notice 2014), have provided for the establishment and improvement of PPP mechanism systematically for the first time at the national level.

Other Notices of the Ministry of Finance (MOF) are Guidelines for Implementation of Mode of Cooperation for Government and Social Capital (the MOF PPP Guidelines); the Notice of the General Office of the State Council on Forwarding the Guiding Opinions on Promoting the Public-Private Partnership Mode in Public Service Field dated May 19, 2015 (Guiding Opinions); the MOF Notice on Issues relating to Promoting PPP, dated September 23, 2014; the MOF Notice on Regulating PPP Contract Management, dated December 30, 2014; the MOF Notice on Regulating the Operation of PPP Information Platform dated December 18, 2015; the MOF Guidance on Financial Affordability Assessment of PPP Projects dated April 7, 2015; the MOF Notice on Implementing the Policy of Replacing Subsidy with Reward dated December 8, 2015; as well as Guiding Opinions of the National Development and Reform Commission on Carrying out PPP, with the PPP Contract General Guidance issued by the National Development and Reform Commission (NDRC).

Moreover, provisions regarding PPPs are contained in the Guiding Opinions of the State Council on Innovating in Investment and Financing Mechanism and Encouraging Social Investment in Key Fields, dated November 16, 2014; Measures for the Administration of Government Procurement in PPP Projects dated December 31, 2014, (PPP Procurement 2014). Public procurement rules and laws could also be applied as PPP regulations .

The key regulator in PPPs is the Ministry of Finance, which established the China Public-Private Partnerships Center (PPP Center), acting as a cooperation center between the government and the private sector. PPP Center, among other functions, is responsible for the provision of information, research, training, capacity building, financial support, information collection, international exchanges. PPP Center assists the government in screening suitable industries for PPP, selecting appropriate PPP models and establishing a standardized PPP project process. As a procuring authority, also called “project executive unit”, could act any department and agency of the central and local governments. The project executive unit shall be engaged in the preparation, procurement, supervision, and transfer of a PPP project. Despite the absence of a unified legal framework in PPPs adapted for ease of potential foreign investors, there are no express prohibitions for PPPs in any specific sectors of the economy.

Investment incentives

As of now, Beijing, Zhejiang, and other places in PRC have issued policies on foreign investment to enjoy partial priority.

For instance, enterprises in high-tech industries have priority in the areas of examination and approval, registration, bank loans, customs procedures, personnel exit, setting up overseas enterprises, and necessary public facilities.

Relevant departments must urgently deal with matters in the approval process of project establishment, planning, feasibility study, licensing, registration, and construction, and do special things without delay.

Inner Mongolia Autonomous Region (IMAR) also elaborated specific investment policy documents aimed at decreasing administrative barriers for the investors. These include the “Guiding Opinions of the People’s Government of Inner Mongolia Autonomous Region on Further Strengthening the Investment Promotion” published in 2016; the “Interim Measures for the Administration of Investment Funds of the Inner Mongolia Autonomous Region” were published in 2018; “Administrative Measures for the Approval and Filing of Enterprise Investment Projects in the Inner Mongolia Autonomous Region” published in 2018; and ‘Measures for the Management of the Operation of the Online Examination and Approval Supervision Platform for Investment Projects’ published in 2019. Although these documents do not contain any particular investment incentives, however they establish the course for promotion of investments in key areas, including tourism. Under the “Guiding Opinions of the People’s Government of Inner Mongolia Autonomous Region on Further Strengthening the Investment Promotion” encouragement of investments is planned in the following dimensions: introduction of the key domestic cultural tourism enterprises, construction and operation of scenic spots, tourism infrastructure and service facilities, and development of characteristic tourism industries such as grassland tourism, Yellow River tourism, desert tourism and sightseeing agriculture; construction of major infrastructure through PPP; development of cooperation and exchange with Russia and Mongolia in infrastructure connectivity, agriculture and animal husbandry, energy, minerals, tourism, culture, health, education and other fields, ensuring full use of the platform of Manzhouli and Erlianhot national key development and opening experimental area, and actively encouraging international cooperation with developed countries and regions. The Guiding Opinions also aim at improving of efficiency of investment promotion methods, continuing to make full use of various industrial policies and preferential policies. Currently there is no indication that any regulatory support of these plans was implemented.

In Xinjiang Uygur Autonomous Region (XUAR), the “Interim Measures for the Management of Capital Construction Investment Projects in the Xinjiang Uygur Autonomous Region (2015 Revision)” were published in 2015; “Interim Measures for the Operation and Management of Xinjiang Uygur Autonomous Region Investment Projects Online Examination and Approval Supervision Platform” published in 2018; and “Interim Measures of Xinjiang Uygur Autonomous Region to Promote the Development of Equity Investment Enterprises” were published in 2010.

Under the Interim Measures of Xinjiang Uygur Autonomous Region to Promote the Development of Equity Investment Enterprises the preferences on individual income tax derived from capital interest, dividends, bonuses, income from the property transfers could be applied to investment enterprises established by domestic and foreign shareholders or partners registered in the autonomous region.

Such enterprises have to have registered place in Kashi Economic Development Zone, Horgos Economic Development Zone, Urumqi Economic and Technological Development Zone, Urumqi high tech Development Zone or Shihezi Economic and Technological Development Zone; as well as they have to meet the qualification requirements to enjoy the said tax treatment.

There is no indication of existence of any specific incentives for tourism investments.

Legal framework, limits, and guarantees

(Source: Investments Regulations Report 26 Feb) . No footnotes included

Investments in Tajikistan are regulated mainly by the Law on Investments dated August 3, 2018 No.1547 and the Law on Investment Agreement dated May 30, 2017 No. 1435.

Other laws regulate specific investment-related questions, such as Law on Concessions, Law on Resources, Law on Legal Status of Foreigners, Law on Free Economic Zones, Law on Natural Resources Tenders, and Law on Privatization of Housing.

There is also the Concept of State Policy on Investments and Protection of Investments, dated December 29, 2012, No. 755, which is aimed at facilitating state efforts on revealing and eliminating the barriers for investments, and provision of investor protection on state level.

The National Development Strategy 2016-2030 highlights the importance of private sector investment and plans to attract as much as $55 billion in FDI by 2030 through a range of incentives and improvement of the legal climate.

Under the Investment Law, the state guarantees equal rights for both local and foreign investors, the sanctity of investment agreements and laws, protection of rights and interests of investors, compensation of harm caused by illegal state acts, actions or inactions, and right of choice of more favorable conditions for 10 years after the new laws or legal changes were adopted in relation to taxes, quantity limitations in investments, and limitations in foreign share ownership. Such guarantees are not applicable in case of law changes concerned with national security, environment protection, morality, and ethics. Additional guarantees and protection measures could be provided upon investments in national currency equal to $5 million.

Generally, there are no restrictions to invest in any sector of the economy as well as there is no limit in foreign participation in local companies (no need of a local partner). Nevertheless, a screening mechanism provided by the Investment Committee exists in respect of investments to Free Economic Zones, investments that require state financing or guarantees and other investments that could affect national interests.

The Investment Committee approves or rejects the proposed project based on impact analysis on national security and economic performance. Areas such as aviation, defense, security, and law enforcement, require special government permission for the operation.

Institutional framework

The key regulator in the area is the Committee on Investments and State Property Management (Investment Committee). It has the primary function to facilitate FDI through its subsidiary TajikInvest State Unitarian Enterprise. A Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan is established by the Presidential Decree dated December 19, 2007 No. 356 (Council) and activates the work of the state agencies for business climate improvement, attraction of investments to the national economy, running a coordinated and sequenced investment policy, and for foundation of constructive dialogue between the state and business.


Expropriation is possible and there are no protection guarantees in case of procedural violations in privatizations of state-owned assets, or if the property was used for anti-government or criminal activities. Compensation for the expropriated property is usually below the property’s market value.

Land Ownership

The land is exclusively owned by the state and the sale is not allowed. Land plots can be granted for up to 50 years to foreign individuals and entities, except for agricultural land and land of specially protected territories which is prohibited for foreign use.

Based on the PPP contract, land plots could be transferred for the implementation of the PPP project to a private partner for the period established by the PPP contract (Art. 25 of the Land Code of Tajikistan).

Acquiring ownership of rural land-use rights can be particularly troublesome since many nominally privatized former collective farms continue to operate as a single entity.

Many of the new owners do not know where their land is and do not exercise their property rights.

Repatriation of capital

No limitations exist in currency exchange and other currency operations, thus all inflows and outflows of funds could be freely remitted.

Restrictions on money transfers in foreign currency to Tajikistan and abroad for investors can be introduced only in order to prevent the legalization of income obtained illegally (Art. 11.1 of the Investment Law).

Nevertheless, all the inflows from outside the country are considered as revenue and shall be taxed.

Dispute Resolution

Dispute resolution of claims arisen due to investment contracts can be provided in Tajikistan’s Economic Court.

Parties of commercial contracts, including foreign investors, can also seek dispute settlement in international arbitration.

Tajikistan is a party to the New York Convention, with many reservations, one of which excludes cases concerned with immovable property from the scope of the convention.

Moreover, there were cases when international awards have not been enforced in Tajikistan. It demonstrates that the judicial system often is non-transparent and seems to carry executive preferences and poor enforcement.


PPPs /Concessions in Tajikistan are regulated by the Law On Public-Private Partnerships dated December 28, 2012 No. 907 (PPP Law) which establishes procedures of PPP authorizations, regulates mandatory content of PPP contract, and provides the rules on dispute resolution and termination of the contracts.

The stages of preparation and implementation of PPP projects are governed by the provisions of the Resolution of the Board “on the preparation and implementation of PPP projects in the Republic of Tajikistan”, dated September 25, 2014 No.81.

PPPs are generally allowed in all sectors of the economy, except for the objects that are prohibited to be transferred and used for the PPPs. Such objects are specified in the List approved by the Government Decree dated September 4, 2014, No.581 and includes objects of the State Courier Service, TV and radio broadcasting centers of the Committee on Television and Radio under the Government of the Republic of Tajikistan, objects related to production, processing, and storage of strong poisons, drugs, and poisonous substances, objects engaged in scientific researches, production, processing and disposing of radioactive materials, and specialized facilities for the production of baby food for medical institutions.

The State Committee on Investments and State Property Management could stand as a procuring authority, as well as any other agency, ministry or local executive authorities at interest. Activities related to project development and procurement are overseen by a cross-ministerial PPP Council, and the State Enterprise on Implementation of PPP Projects (PPP Unit) plays the key role as a PPPs authorized body. The PPP Unit acts as a secretariat of the PPP Council , promotes PPPs, provide regulation and guidance as well as approves and oversees PPP projects. However, it does not provide any technical support in the implementation stage of a concrete PPP project.

There is also a PPP Board, which is headed by the First Deputy of the Prime Minister of the Republic of Tajikistan and includes as its members the Minister of Finance, Minister of Justice, Minister of Energy and Water Resources, Minister of Economic Development and Trade, State Committee on Investments and Management of State Property, Committee on Architecture and Construction, Committee on Geodesic and Land Management, Director of the PPP Projects Implementation Center and head of the central or local state authority authorized to execute PPP contracts. In general, the PPP Board performs the regulatory role, issues regulations, and provides recommendations and approvals in respect of the developed drafts of PPP projects.

Investment incentives

Under the Law on Free Economic Zones dated March 25, 2011 No.700 (FEZ Law), the government set up four FEZs which offer reduced taxes and customs fees to both foreign and domestic businesses.

To apply for preferential tax treatment, manufacturing companies must invest a minimum of $500,000, trading companies $50,000, and service and consulting companies $10,000.

Other tax incentives are abolishment of a cotton fiber tax, reduction of sales tax by 1%, VAT exemption on imported materials, profit tax exemption for 12 months from the date of state registration of production company, and creation of more favorable treatment for small-scale entrepreneurs.

There are also profit tax vacations lasting two years for investments in the amount of $200,000- 500,000, three years for $500,000-2 million, four years for $2-5million, and five years for more than $5 million.

However, the mechanism of tax administration and the tax policy itself are not clear and could be burdensome for investors.

Legal framework, limits, and guarantees

(Source: Investments Regulations Report 26 Feb) . No footnotes included

Foreign investment in Turkmenistan is regulated by the Law on Foreign Investment dated March 3, 2008 No.184-III (Foreign Investment Law), the Law on Investment Activity dated May 19, 1992, No. 698-XII, and other laws and regulations. The Foreign Investment Law defines the legal framework for the activities of foreign investors, and enterprises with foreign investment in the territory of Turkmenistan and demonstrates the attempt of the government to attract foreign investment in Turkmenistan. There is also the National Program for the Socio-Economic Development of Turkmenistan for 2011-2030, which declared the need for institutional and market reform and diversification of the economy.

Under the law, FDI is defined as an ownership, acquisition by a foreign investor of at least 10% of the shares in the authorized capital of enterprise in Turkmenistan; and/or capital investment in fixed assets of a branch of a foreign legal entity established in Turkmenistan (Art.1.(4) of the Foreign Investment Law). Foreign investors are not legally limited in ownership or control of the companies, as well as there are no regulatory limitations in investing in any sectors of the economy.

Nevertheless, a screening mechanism for admission of international investments exist in Turkmenistan: all entities operating in the country, before mandatory registration with the Registration Department under the Ministry of Finance and Economy, must be reviewed and approved by the inter-ministerial commission which includes the Ministry of Foreign Affairs, the Agency for Protection from Economic Risks, law enforcement agencies, and industry-specific ministries. The commission assesses potential political and legal risks associated with the proposed investments and is entitled to reject the registration of an entity without giving the reasons for such rejection. The companies that have approved government contracts and registered with the Ministry of Finance and Economy are not required to pass such a cumbersome procedure. However, upon approval of such contracts, the state leverages price and profit ceilings.

The state guarantees include legal protection, multiple visas for a period of at least one year, free movement on the territory of Turkmenistan, free flow of capital, profit and other payments in and out of the country and, after taxes are paid, protection of intellectual property, compensations upon termination of investment activities and/or requisition (Art. 19-26 of the Foreign Investment Law).

Institutional framework

The Cabinet of Ministers of Turkmenistan develops and oversees the implementation of FDI policy. The Agency for Protection from Economic Risks under the Ministry of Finance and Economy is authorized to assess potential investments and provide screening of the financial status of the investor.


Expropriation is allowed only in cases prescribed by law in order to overcome circumstances of an emergency nature, including natural disasters, accidents, epidemics, epizootics, and their consequences.

Moreover, in the case of requisition, immediate compensation at market value and in foreign currency shall be paid, and, at the request of the investor, transferred abroad. Enforcement of such regulation is under great concern, due to the recent cases of expropriation by the government without compensation or legal remedy.

Land Ownership

The land in Turkmenistan is owned by the state and only leasing to foreign persons (both individuals and entities) is allowed, except for agricultural land.

Such lease is granted for non-agricultural purposes and shall be based on the decision of the President of Turkmenistan (Art. 48.1 of the Land Code). Foreign persons are allowed to own structures and buildings.

Repatriation of capital

All inflows and outflows of funds could be freely remitted. Nevertheless, the freedom to repatriate profits is impeded by the state restriction to foreign currency. The currency is not freely convertible, as it is controlled by the state and the country often fails to meet the exchange demand of foreign companies.

Dispute Resolution

Investment disputes have to be settled through negotiations or at a special court in Turkmenistan or, under the agreement of the parties, in mediation tribunal (Art. 29 of the Law on Foreign Investment). Under the investment contracts with the government, the disputes generally have to be solved locally since the government prefers to use its own courts. Turkmenistan also is a contracting state to ICSID Convention, however, it is not a member to the New York Convention.


Turkmenistan Law On Foreign Concessions dated October 1, 1993, No. 859-XII (FCL) determines organizational, economic and legal conditions of creation and activities of foreign concessions in Turkmenistan. The FCL governs relations on Concession/PPP in addition to general contract law rules. The law refers to the Cabinet of Ministers decisions regarding the award procedures, however, no such document, except in the oil and gas sector, is publicly available even though certain rules are said to exist.

The FCL favors only foreign investors and applies only to certain economic activities. However, it does not specify which sectors are allowed for concessions. The law focuses more on natural resources, rather than on other public services. Objects of concessionary activities are the parcels of land and the territories with the natural resources an water areas which are on them; the industrial facilities intended for investigation, development, production or operation of natural resources; and other objects. It is not clear from the law or other publicly available regulations who is contracting or who is the procuring authority for PPP/Concessions. Other concepts and procedures are also not provided expressly, and the FCL itself is too vague.

Investment incentives

One of the governmental initiatives for FDI attraction was the creation of Avaza Tourist Zone (ATZ) in 2007 to promote investments in tourism to the Caspian Sea coast, and establishment of a mechanism of FEZ to attract investments to certain territories.

The Law on FEZs allows businesses to operate on FEZ territory without profit ceilings and offers other rights and guarantees including exemption from profit tax if profits are reinvested in export-oriented and advanced technology enterprises, repatriation of after-tax profits, and exemption from customs duties, except on products of foreign origin.

Special legal regime for FEZ participants includes other protections and preferences on migration, labor, finance, currency, land and real estate (Art.1.2 of the Law on FEZ). T

he Law on FEZ specifically defines tourist-recreational zone as one of the FEZ types, aimed at provision of medical and recreational and tourist services, and formed on the basis of resorts, recreational areas, medical areas, and nature reserves in order to develop their potential (Art.1.9 of the Law on FEZ).

Legal framework, limits, and guarantees

(Source: Investments Regulations Report 26 Feb) . No footnotes included

Primary legislation on FDI in Uzbekistan consists of the Law on Foreign Investments, dated April 30, 1998, No. 609-I (FIL), the Law On Investment Activity, dated December 24, 1998, No. 719-I, the Law On Guarantees and Measures on Protection of the Rights of Foreign Investors, dated April 30, 1998, No. 611-I (Protection Law) , other laws and a number of decrees, resolutions, and instructions. In addition to regulations, the government prioritized a policy course for attraction of FDI through improvement of regulatory framework and enhancing involvement of the private sector through privatization, liberalization of state instruments and PPPs.

All sectors of the economy are open for foreign investments and there is no regulatory discrimination against foreign entities and individuals, except for some sectors related to national security such as energy, mining, telecommunications and airlines (i.e. those industries that historically were monopolized by the government) where foreign ownership and control is limited.

Guarantees for investors are outlined in the Protection Law and include stability of legislation for 10 years after certain changes that may negatively affect investors were adopted, non-interference of state bodies to the investor’s business, a guarantee of repatriation and return of investments, free access to public open information, and protection from nationalization.

Institutional framework

The key state bodies responsible for the acceleration of foreign investments are:

  • Investment Promotion Agency of Uzbekistan under the Ministry of Investments and Foreign Trade (Investment Agency) was established on January 28, 2019, in order to implement state policy on attracting foreign investments, creation of favorable conditions for investments, provision of informational, legal and other support for investors, coordination and cooperation between the state bodies and the private sector, and promotion and monitoring of inbound investments.
  • The Chamber of Commerce and Industry of Uzbekistan. It provides information, analysis, business registration and other facilitation measures to domestic companies and foreign investors.


Expropriation of foreign assets is prohibited except for requisition in events of natural disasters, accidents, epidemics, epizootics and in other circumstances of an emergency. The state shall pay compensation adequate to the loss and act as a guarantor of the timely implementation of compensatory payments.

Investments could be insured from requisition (Art.5 of the Protection Law, Art. 22 of the Law On Investment Activity).

However, based on a history of expropriation cases the government may cease assets based on other reasons, such as breach of contract or failures to perform other investment obligations.

Land Ownership

Land in Uzbekistan is owned by the state, whereas entities may own only constructions and buildings. Land can be leased by enterprises with foreign investment, international associations and organizations, foreign legal entities and individuals under the decision of the Cabinet of Ministers on temporary (up to 10 years with the possibility to extend) or constant basis.

Repatriation of capital

Repatriation of foreign capital and dividends is not formally limited if taxes and other financial obligations are performed (Art. 6-7 of the Protection Law). Nevertheless, banking limitations and a shortage of foreign currency in the country impede the free outflow of money. Recent reforms on the liberalization of currency regulation are pending to make a positive effect on procedures of conversion and remittance of foreign investments.

Dispute Resolution

Dispute resolution, according to the laws, is possible in local courts or through international arbitration based on international treaties and agreements signed by Uzbekistan.

The disputing parties are free to define the arbitration institute, venue, and applicable law in the investment agreement (Art. 10 of the Protection Law).

Uzbekistan is a member to ICSID Convention, New York Convention, and the 1992 CIS Agreement on Procedure for Settling Disputes Arising Out of Business Activity.

Nevertheless, in order to apply to ICSID or other international dispute settlement mechanism, the parties shall have a prior agreement in writing to such settlement. If parties failed to agree on the remedy, then local economic courts can settle commercial disputes.


The Uzbek Law On Public-Private Partnership dated May 10, 2019, No. ZRU – 537 (PPP Law), is now a primary law regulating PPPs in Uzbekistan, covering all forms of PPPs. The PPP Law establishes grounds for developing public infrastructure and municipal services under the PPPs framework in all sectors of economy and contains guidance on the rules related to all stages of PPPs implementation. For the implementation of the law, the government issued specific Resolutions of the Cabinet of Minister, providing PPP procedures and rules for certain sectors of the economy for the lifecycle of PPP projects. The regulatory authorities in PPPs are defined by the PPP Law, in accordance with which:

  • PPP Development Agency under the Ministry of Finance (PPP Agency) plays the key role of a PPP unit and is responsible for developing guidelines and analyzing best practices for PPPs as well as performing a gateway for project concepts valued more than $1 million;
  • The Cabinet of Ministers of Uzbekistan performs the role of legislator, also having the power to nominate the public partner for PPP projects under the request of the PPP Agency. The Cabinet of Ministers of Uzbekistan shall approve the project concept with a value of more than $10 million;
  • The President of Uzbekistan issues a decision on transfer of the ownership rights over PPP object to a private partner.

As a procuring authority, the law defines any public authority, local executive bodies, other state bodies, organizations or their association authorized to act on behalf of the state (Art. 3 of the PPP Law). PPP Agency, sectoral ministries and municipal authorities could also. perform the role of a public partner. In turn, there are no restrictions or specific definitions for a private party, thus it could be any entity, individual or joint partnership with or without foreign participation. The definition of PPP object is also broad and does not contain limitations.

Investment incentives

To stimulate entrepreneurial activity in the tourism industry, tax and customs incentives have been established for the construction and organization of hotel facilities, theme parks, imports of tourist-class motor vehicles, and others (in total about 20 privileges and preferences).

Another government incentive adopted specifically for tourism development is based on the Decree of the President of Uzbekistan on Measures for Accelerated Development of the Tourism Industry, dated January 5, 2019, No. PP-4095 (Tourism Program), and is aimed at the stimulation of the private sector to develop tourism infrastructure. The Tourism Program offers the following significant privileges for entrepreneurs: (i) compensations from the state budget of costs of investors on construction and equipping of the hotels in amount depending on the category of the hotel and quantity of the rooms; (ii) Uzbek legal entities could be partially and for the period of first 3 years, financed by the state in paying royalties under the franchise agreements concluded with top global hotel brands; (iii) abolishment of mandatory certification requirements in hotel services, licenses for transportation services, for catering facility that trade alcohol beverages to touristic destinations; (iv) some land plots may be sold to the investor after the hotel construction is completed; (v) priority right to receive land plots for lease at the request of the State Committee for the Tourism Development without a need to participate in auction; and (vi) exemptions from customs duties for imported equipment that will be installed in places of tourist installations or will be used for cultural heritage sites, museums, theatres, galleries, and protected natural areas.

Mechanism of free economic zones exist based on the Law on FEZ dated April 25, 1996, No. 220-I, allowing its participating businesses to have a range of privileges including exemptions from land tax, income tax, tax on property of legal entities, tax for development of social infrastructure, some other obligatory contributions, and customs payments for imported materials for their business activity in FEZ. FEZ participants may also have transactions with local vendors in foreign currency. The said privileges are available for the investors from 3 to 10 years of their operation, depending on amounts of investments, where the starting threshold is $300,000 and the upper threshold of investments is $10 million.

Tax and other incentives apart from the said above mechanisms could be granted to significant investments in priority sectors, projects in the SME sector in manufacturing of raw materials, and production of consumer goods and services (Art. 4 of the Protection Law). Investors shall be eligible for tax and other incentives, if the share of foreign investment is not less than 15% of the charter capital of a company, whereas in some industries this threshold could be higher and additional requirements to the amount of charter capital may be established.