Business & Economy - The Times Of Central Asia

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Middle Corridor

Kazakhstan Middle Corridor Railway Cuts Detour, but Caspian Bottlenecks Remain

Kazakhstan expects to complete the roughly 323-kilometer Moyynty-Kyzylzhar railway across the Karaganda and Ulytau regions of central Kazakhstan by the end of 2026. The new line will shorten the Middle Corridor by 149 kilometers and ease congestion on the existing route via Zharyk. Kazakhstan Temir Zholy said in July that 202.5 kilometers of track had been laid. For the China-Europe route, however, the next test is the Caspian Sea. Containers must be transferred from trains at ports in Kazakhstan to ships bound for Azerbaijan, then returned to rail. The speed and regularity of these transfers will determine whether the hours saved within Kazakhstan translate into shorter delivery times. What the New Line Changes Moyynty-Kyzylzhar will give transit trains a more direct route from the Chinese border toward the Caspian and ease pressure on the Moyynty-Zharyk section, where east-west freight competes with domestic traffic. The project is designed to accommodate double-stack container trains and includes provisions for future expansion and electrification. The World Bank projects that capacity on the section will rise from 14 to 28 pairs of freight trains per day, while transit time via the new route is targeted to fall from eight hours to six by 2031. In February, the World Bank approved an $846 million guarantee intended to mobilize $1.41 billion in commercial financing for the project. Across Kazakhstan, the time savings will be more modest. Transit from Dostyk, on the Chinese border, to Aktau is expected to fall from about 72 hours to 68 hours by 2031. Farther west, the country is also modernizing the Shalkar-Beineu and Beineu-Mangystau sections leading toward the Caspian ports. The Caspian Remains a Bottleneck The European Union (EU) aims to reduce transit time along the Trans-Caspian route to no more than 15 days. The European Bank for Reconstruction and Development (EBRD) has estimated that the route has the potential to move cargo between China and Europe in around 18 days, but infrastructure and connectivity constraints have produced transit times ranging from 14 to 60 days. For shippers, reliability is as important as speed. Freight Is Growing Faster Than Caspian Capacity Pressure on the Caspian section is already increasing. In 2025, Kazmortransflot carried 59,400 twenty-foot equivalent units (TEU) on the Aktau-Baku-Aktau feeder route, more than 15% above the 2024 level of 51,400 TEU. In May 2026, container traffic between Aktau and Azerbaijan reached a company record of 7,451 TEU. Kazakhstan is expanding its port infrastructure as well. The EBRD and the EU are financing upgrades at Aktau, including two dedicated container berths and new handling equipment. The project is expected to double the port’s container-handling capacity. Caspian fleet capacity is another constraint as rail freight grows. Falling Caspian Sea levels are also limiting how fully some vessels can be loaded. From an Alternative to Russia to a Commercial Route After 2022, geopolitics increased demand for the Middle Corridor. It offered Europe a route to Central Asia and China that bypasses Russia, while providing Kazakhstan with another connection to European markets. The corridor increasingly has to compete on commercial terms....

Electricity Supply

Kazakhstan Targets End to Electricity Deficit by 2027

Just days after a major disruption hit power systems across Central Asia, Kazakhstan reaffirmed its plan to fully cover domestic electricity demand by the first quarter of 2027. By the end of next year, the Energy Ministry expects the country to have a surplus of about 1.3 billion kWh. That margin would still leave relatively little room for error because it is equivalent to only about 1% of the electricity Kazakhstan consumed in 2025, when demand grew by 3.8%. The August 14 outage affected parts of Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan. Power was cut to some consumers in Almaty, Kazakhstan’s largest city, which has a population of about 2.4 million. The precise chain of events remains unclear. Kazakhstan’s national grid operator KEGOC said the disruption began when two hydrogenerators at Kyrgyzstan’s Toktogul Hydropower Plant shut down, sharply changing power flows and overloading Kazakhstan’s North-East-South transmission corridor. Kyrgyzstan’s Energy Ministry later acknowledged that the Toktogul shutdown was the initial disturbance but said it should not automatically be treated as the direct cause of the subsequent outages elsewhere in Central Asia. A special commission is investigating the incident, although public statements so far have not identified its chair. The outage exposed a risk in regional grid connections. Kazakhstan’s grid is connected to Russia and neighboring Central Asian systems. These links allow electricity to move across borders, but a sudden loss of generation or a major transmission failure can also affect several countries in quick succession. Kazakhstan has been a net electricity importer for several years. In 2025, the country generated 123.1 billion kWh and consumed 124.6 billion kWh. Electricity imports from Russia totaled 4.64 billion kWh, compared with exports of 2.16 billion kWh in the opposite direction. The net inflow from Russia fell from 3.41 billion kWh in 2024 to 2.48 billion kWh in 2025. Electricity consumption increased by 3.8% in 2025, while peak demand reached a record 17.724 GW on December 18. Kazakhstan is also seeking to attract energy-intensive industries and large data centers. Those expectations are reflected in longer-term development plans, which already include 7.8 GW of new and modernized coal-fired generation by 2030, with investment estimated at more than $15.5 billion. The authorities expect to close the remaining short-term deficit by rapidly commissioning new generating capacity. Around 2.6 GW is scheduled to come online in 2026. Four gas-fired power plants and expansion projects at two existing power stations account for part of that capacity, while ten new renewable energy facilities are also planned. The Energy Ministry says these projects should allow Kazakhstan to fully meet its electricity needs by the end of the first quarter of 2027. A further 845 MW is planned for 2027, of which 570 MW would come from renewable projects. By the end of that year, the ministry expects an electricity surplus of around 1.3 billion kWh. Renewable energy is expanding alongside Kazakhstan’s continued reliance on conventional generation. Thermal power plants accounted for 74.4% of electricity generation in 2025. Solar and wind facilities, along with biogas plants, provided 6.1%. The...

Currency

Kazakh Tenge Rises as Foreign Investors Buy Government Debt

Kazakhstan’s tenge has strengthened by 9.7% against the dollar since the start of 2026, making it the best-performing currency across Europe and Asia, according to the Financial Times. The newspaper points to an influx of foreign capital into Kazakhstan’s government debt: nonresident holdings of tenge-denominated bonds have risen from roughly $2 billion to $5 billion over the past year. The appreciation has come despite serious disruptions to Kazakhstan’s oil exports through Russia. Kazakh data show that foreign interest in government securities did not begin this summer. In July alone, nonresidents increased their holdings by 92.2 billion tenge, about $195 million, to 2.6 trillion tenge, or roughly $5.5 billion. Since the start of the year, their portfolio has grown by 32.9%, while their share of the market has risen from 6.2% to 7.2%. The Association of Financiers of Kazakhstan (AFK) attributes the interest to high real interest rates and relative macroeconomic stability. Why Foreign Investors Are Buying Kazakh Debt During 2025, nonresident holdings of Kazakh government securities rose from roughly 1.1 trillion tenge, about $2.3 billion, to 2 trillion tenge, about $4.2 billion. Growth continued this year. In June alone, foreign investors added 185.1 billion tenge, about $390 million, bringing their total holdings to 2.5 trillion tenge, roughly $5.3 billion. Their share of the market increased from 6.2% to 6.9% by then. The reason for the interest is fairly straightforward: Kazakhstan offers high yields while maintaining an investment-grade credit rating. The base rate remained at 18% through the spring. The National Bank cut it to 17% in June and announced a further cut to 16.75% on July 24. Annual inflation, meanwhile, declined for a ninth consecutive month and stood at 10.3% in June. For foreign investors, the combination of high interest rates and a strengthening tenge creates an opportunity to earn both on bond yields and currency appreciation. For the tenge itself, the same transaction works in reverse: before buying a Kazakh security, a foreign investor has to acquire the national currency. In June, AFK analysts cited nonresident transactions among the factors supporting the tenge, alongside foreign-currency sales by exporters, state-controlled companies, and the National Bank. Market Access Is Becoming Easier High yields alone do not explain the growing interest. Kazakhstan is also trying to make its domestic debt market easier for international investors to access. A primary dealer system has been operating since May 4. Five banks were granted primary dealer status and are expected to support the government securities market, including buying and selling bonds in the secondary market. In April, the National Bank announced that Euroclear had begun a project to make Kazakhstan’s government bonds eligible for settlement through its international system. A direct link with the local market infrastructure is planned for 2027. For foreign investors, this would make it possible to trade Kazakh government debt through a familiar global settlement system, alongside the existing Clearstream channel. Kazakhstan is also seeking eventual inclusion of its tenge-denominated government bonds in JPMorgan’s GBI-EM, one of the main international indexes for emerging-market government...

Tourism

Tajikistan Creates Tourism Fund as Visitor Numbers Rise

Tajikistan has created a dedicated fund to reinvest money collected from tourists and travel companies in the country’s tourism industry. The move comes amid rising visitor numbers, with nearly 890,000 foreign tourists visiting the country in the first half of 2026, up 16.7% from a year earlier. The tourist fee predates the fund, which the government formally established by a resolution adopted on July 1. The fund will be used to improve tourism infrastructure and service standards. The money will be kept in a separate account at the Ministry of Finance’s Central Treasury, while the Tourism Development Committee is required to report to the government every six months on how the funds are used. Tourism permit fees and fines for nonpayment will provide additional revenue. The fund will also receive 5% of the value of outbound tour packages sold to citizens of Tajikistan, channeling money from trips abroad into tourism development at home. For foreign travelers, the fee depends on the type of accommodation and is based on Tajikistan’s “calculation indicator,” a government-set benchmark used for official charges. In 2026, one calculation indicator is set at 78 somoni, or about $8.40. Under the current rates, the fee is 0.2 of the indicator per day at hotels and similar accommodation, and 0.15 at guesthouses and hostels. That works out to 15.6 somoni a day in the first category and 11.7 somoni in the second, roughly $1.70 and $1.30 respectively. The charge is small relative to the overall cost of a trip to destinations such as the Pamirs. The government resolution does not state how much revenue the fund is expected to collect. Uzbekistan was the largest source market, accounting for more than half of the total, or 510,400 tourists. Russia accounted for 175,800 and Kyrgyzstan for 89,000. Another 23,100 came from Kazakhstan and 22,700 from China. The committee expects Tajikistan to receive more than 2 million foreign tourists in 2026. Russia remains one of the country’s main source markets. Russian tour operators report growing demand for the Pamir Highway and the Wakhan Corridor. The Fann Mountains and combined trips through Tajikistan and Uzbekistan are also popular. Operators cite expensive airfares and insufficient tourist infrastructure as obstacles familiar to independent travelers. Tajikistan has difficulty competing with Uzbekistan for travelers drawn primarily by the architecture of its Silk Road cities. Its appeal lies elsewhere, particularly in trekking and road trips through the mountains. Some infrastructure problems have eased in recent years as electronic visas and eSIM services have become available and more hotels and restaurants are operating. Tourist information centers have opened, and sections of the Pamir Highway are being repaired. Service quality outside Dushanbe and Khujand, however, remains uneven. There are also security concerns for travelers heading toward the Afghan border. Some of the country’s most spectacular routes pass through the Gorno-Badakhshan Autonomous Region. After attacks from Afghan territory killed Chinese citizens in late 2025, Dushanbe increased security in border areas. The fund’s effectiveness will depend on how much it raises and...

Oil Exports

Push for Kazakhstan Oil Exports Diversification as CPC Disruptions Expose Capacity Gap

Kazakhstan has spent years looking for more ways to export its oil without relying so heavily on Russia. This summer has shown how difficult that remains. Shipments to Germany through the Druzhba pipeline have been suspended since May, disruptions on the Black Sea in July forced Tengiz to more than halve production, and now Russia is rerouting Kazakh crude from Ust-Luga to Novorossiysk to free Baltic capacity for its own oil. The shift comes as exports from Russia’s western ports ran 15% below plan in the first half of August, with Novorossiysk shipments of Russian Urals and Kazakh KEBCO falling to around 400,000 barrels per day. At least two cargoes of Kazakhstan’s KEBCO crude scheduled for loading at Ust-Luga in late August will instead be shipped through the Black Sea. No KEBCO loadings are currently planned at the Baltic port in September. The move will free up about 100,000 barrels per day of export capacity at Ust-Luga for Russian crude. Kazakh producers support the arrangement because shipments through Novorossiysk are currently more profitable. From a commercial standpoint, the decision is understandable. But Ust-Luga and Novorossiysk give Kazakhstan access to two different seas while remaining Russian ports. And Novorossiysk, where the KEBCO cargoes are now being redirected, had itself suspended crude loadings only a few days earlier. On August 14, loadings at the Sheskharis terminal, Novorossiysk port’s main oil-export facility, were halted following a drone attack. The facility handles around 700,000 barrels per day and loads Russian Urals and Siberian Light as well as Kazakhstan’s KEBCO. Operations resumed on August 16, and one of the first tankers to load was carrying Kazakh crude. Another 80,000-ton KEBCO cargo was due to begin loading on August 18. Kazakhstan’s far larger vulnerability, however, is the Caspian Pipeline Consortium. Its marine terminal near Novorossiysk is separate from Sheskharis. In 2025, the country exported 78.7 million metric tons of oil, of which 64.8 million tons were shipped through CPC. Volumes through the pipeline rose by 18% compared with 2024, largely as production increased following the Tengiz expansion. The July disruptions showed how quickly problems on that route can affect production inside Kazakhstan. After drone attacks near the CPC terminal forced restrictions on loadings, Kazakhstan’s oil and gas condensate production fell by about 21% by July 22 to roughly 1.63 million barrels per day, from a July average of 2.07 million barrels per day. Tengiz output dropped from a July average of around 925,000 barrels per day to about 406,000. A few days later, the situation deteriorated further. On July 26, Kazakhstan produced around 1 million barrels per day of oil and gas condensate, down from an average of 2.16 million barrels per day in June. Tengiz, Kashagan, and Karachaganak all had to reduce production. On July 27, CPC resumed loadings after a week-long suspension. CPC accounts for more than 80% of Kazakhstan’s oil exports, so replacing it quickly with other routes is impossible. The pipeline typically carries around 1.5 million to 1.7 million barrels per day....

Foreign Investment

Tashkent’s Rise Reshapes Central Asia’s Business Landscape

Tashkent is changing faster than it can adjust to its own growth. The city is already pressing against the limits of its existing airport; a vast new city designed for up to two million people is being built alongside it, and a separate financial jurisdiction drawing on English common law is being created. Uzbekistan is opening up further to foreign investment, and nearly two-thirds of the country’s foreign-invested enterprises are already concentrated in the capital. But being the leading business city in your own country and becoming a regional hub are not the same thing. Tashkent already has strong competitors in Central Asia. Given that competition, it is more useful to examine why companies are choosing Tashkent now and what the city still lacks than to declare it the region’s new business capital. As of July 1, 2026, Uzbekistan had 20,502 operating enterprises with foreign investment. Their number had increased about 1.4 times over five years. China accounted for the largest number, with 6,060 companies, followed by Russia with 3,454, Turkey with 2,293, and Kazakhstan with 1,307. As of June 1, 12,480 of the 19,921 enterprises with foreign investment then operating in Uzbekistan were located in Tashkent. That was almost 63%. Why Tashkent? Part of the answer is obvious: the institutions and services businesses rely on are concentrated there, from government and finance to professional services, technology firms, and skilled workers. That creates a network effect: companies come because partners, clients, and suppliers are already there. But the capital had roughly the same administrative advantages ten years ago without attracting business on anything like the current scale. What changed first was Uzbekistan’s economy itself. After 2016, the country began moving away from its previous closed economic model. One of the first major steps was currency liberalization in 2017. Changes followed in trade, taxation, privatization, and the treatment of foreign investors. The state still plays an enormous role in the economy, but it has become considerably easier for foreign private businesses to operate. Uzbekistan’s GDP grew by 7.7% in 2025. The IMF expects growth of about 6.8% in 2026, while pointing to a longstanding problem: the state’s large footprint in the economy, including major state-owned enterprises and banks, continues to constrain competition and private-sector development. The combination of rapid growth and a gradually more open economy has benefited Tashkent more than any other city in the country. Uzbekistan also has an advantage that cannot be created by government decree. With a population of about 38.5 million, it is Central Asia’s most populous country and has a large domestic consumer base. It is also the region’s only country that borders all four other Central Asian republics. For an international company, Tashkent can serve both as an office for the Uzbek market and as a gateway to neighboring countries. Now, Tashkent is entering territory long occupied by others. For decades, Almaty has concentrated banks, international representative offices, private companies, and professional talent. In 2018, the Astana International Financial Centre began operations, with a...