Business & Economy - The Times Of Central Asia

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Afghanistan

Central Asia Expands Trade and IT Cooperation with Afghanistan Amid Regional Growth Plans

The Central Asian countries continue to develop their trade relations with Afghanistan, a crucial factor in the region's economic growth and resilience against economic and political challenges. Afghanistan's key trade partners in Central Asia are Uzbekistan, Turkmenistan, and Kazakhstan. While Tajikistan and Kyrgyzstan play a smaller role, they still contribute by exporting electricity and agricultural products to Afghanistan. Afghanistan is Uzbekistan's fifth largest export market. Over the past five years, trade turnover between the two countries has grown by nearly 1.5 times, reaching $866 million in 2023. Currently, 550 enterprises with Afghan investments operate in Uzbekistan, with 443 being fully Afghan-owned. Joint projects span industries such as food production, construction materials, agriculture, tourism, and textiles. Recently, Uzbekistan and Afghanistan signed business agreements worth $4.5 million between their private sectors. For Turkmenistan, the most significant project involving Afghanistan is the TAPI gas pipeline. President Berdimuhamedov recently directed the government to accelerate the development of the Galkynysh Gas Field and expedite the TAPI pipeline's construction. The state company Turkmengas has already completed a 214-kilometer section on Turkmenistan's territory, fully preparing it for operation. This project is a key component of the country's socioeconomic development and investment program for 2025. Additionally, Turkmenistan is poised to become a transport hub for international corridors passing through Kazakhstan, particularly the North-South and Middle corridors, as well as the Lapis Lazuli corridor, which connects Turkey, Georgia, Azerbaijan, Turkmenistan, and Afghanistan. Although Kazakhstan does not share a border with Afghanistan like Uzbekistan and Turkmenistan, it remains an active trade partner. The Times of Central Asia has previously detailed trade relations between Astana and Kabul, highlighting Kazakhstan’s potential not only for expanding trade but also for entering Afghanistan’s IT market. The Afghan news portal AVA Press notes Kazakhstan’s role in regional stability and economic development. It also mentions Kazakhstan’s humanitarian aid to Afghanistan, including earthquake relief in 2023 and food assistance in 2024. The article touches on Afghanistan’s IT sector challenges and Kazakhstan’s potential role in addressing them. Afghanistan lags in IT development and relies on imported technologies, but Kazakhstan, recognized for digital transformation, could be a valuable partner. Kazakhstan’s e-government model, including the eGov platform, serves as an example of how digital services can improve governance and infrastructure. Choosing Kazakhstan as an IT partner is seen as a strategic decision based on the country’s internationally recognized digital achievements, strong economic ties, and mutual trust.

Agriculture

Rosenberg King Prawns to Be Bred in Turkmenistan

Turkmenistan’s Elin Balyk fish farm is expanding its operations by introducing the breeding of Rosenberg freshwater king prawns. Located in the Ak Bugday district of Ahal province, on the Karakum River, Elin Balyk has been engaged in fish farming for over a decade. The farm operates on a 130-hectare site, granted for free use for 99 years. It features 20 ponds covering a total area of 400 square meters, along with six indoor rearing facilities that house shrimp and fish at various growth stages - from larvae and fry to mature commercial stock and breeding specimens. A newly launched hatchery, equipped with technology from Russia, Iran, and Europe, enhances production capabilities. The facility employs modern aquaculture methods, including a closed water circulation system that limits water loss to just 10%. The intensive fish farming process avoids antibiotics and chemicals while ensuring optimal oxygenation levels. As part of its diversification efforts, Elin Balyk has begun breeding Rosenberg freshwater shrimp, a species native to Thailand. These prawns can grow up to 100 grams in weight, with body lengths comparable to an adult’s palm. Looking ahead, the company plans to introduce Vannamei shrimp, a saltwater species, and has trained its specialists in Iran and Thailand to master the necessary aquaculture techniques. An additional land plot is expected to be allocated for this expansion.

Trade

Kazakhstan and China Set to Expand Trade and E-Commerce

Trade between Kazakhstan and China continues to grow, reaching $43.8 billion in 2024, according to China’s General Administration of Customs. Kazakhstan’s exports to China amounted to $15.8 billion, marking a 9% increase from the previous year. These figures were announced by Han Chunlin, China’s newly appointed ambassador to Kazakhstan, during a meeting with Kazakh Minister of Trade and Integration Arman Shakkaliyev on February 8. “This trend confirms our steady progress toward the ambitious goal of doubling bilateral trade turnover in the near future,” the ambassador stated. Strengthening Trade and E-Commerce Cooperation The meeting focused on expanding Kazakh-Chinese trade and economic cooperation, with particular emphasis on e-commerce platforms. Shakkaliyev highlighted that bilateral trade reached a historic high in 2024 and reaffirmed Kazakhstan’s commitment to diversifying its exports while expanding the range of products supplied to China. He also announced plans for trade and economic missions in 2025, alongside Kazakhstan’s participation in major exhibitions in China. A key discussion point was the development of online trade through leading Chinese e-commerce platforms, including JD.com, Alibaba, and Douyin. Kazakhstan’s Growing Presence in Chinese E-Commerce Alibaba: Launched in 2022, Kazakhstan’s dedicated section on Alibaba now includes 290 domestic companies offering over 7,500 products. Total sales on the platform have already surpassed $260 million. JD.com: In 2023, JD.com opened a Kazakhstan section, featuring over 60 products. Revenue from Kazakhstani goods sold on the platform grew from RMB 1 million in 2023 to RMB 1.3 million in 2024. Kazakhstan’s e-commerce industry has seen rapid growth in recent years. According to the Ministry of Trade and Integration, online transactions from January to November 2024 totaled approximately 3.2 trillion KZT (over $6 billion), accounting for 14.5% of total retail trade. As Kazakhstan strengthens its trade ties with China, digital commerce is expected to play an increasingly important role in bilateral economic relations.

Tax

Kazakhstan Announces Differentiated VAT Rates

Kazakhstan’s Cabinet of Ministers has proposed a differentiated value-added tax (VAT) structure, with rates ranging from 0% to 16% and an intermediate rate of 10%. This announcement was made by Vice Minister of National Economy Azamat Amrin. The proposal comes after President Kassym-Jomart Tokayev rejected an earlier plan to increase the VAT rate to 20%. “We propose the following mechanism: a general VAT rate of 16%, full exemption from VAT for agricultural producers, and an intermediate rate of 10% for certain industries. Thus, the government's proposed differentiation consists of 16%, 10%, and 0% rates,” Amrin said during a meeting with business representatives in Astana. The government plans to determine which industries will qualify for the 10% VAT rate following consultations with the business community. Amrin also noted that agricultural VAT exemptions currently apply to peasant farms (family-labor associations), while larger legal entities in the sector pay about a third of all applicable taxes due to existing tax incentives. Now, the government is ready to abolish VAT for these larger agricultural enterprises as well to enhance the competitiveness of Kazakhstan’s agricultural products. Budget Implications of the VAT Reform Kazakhstan’s current general VAT rate stands at 12%. The government expects that raising it to 16% will generate an additional 4 - 5 trillion KZT ($7.8 billion - $9.7 billion) in annual tax revenues. In late January 2025, Minister of National Economy Serik Zhumangarin estimated that revising the VAT rate could bring in an additional 5 - 7 trillion KZT ($9.7 billion - $13.6 billion). At that time, authorities were considering a VAT increase to 20%, but late last week, President Tokayev publicly opposed such a sharp tax hike. Tokayev Calls for a Balanced Approach “It is necessary to explore different options, taking into account the specifics of various economic sectors,” Tokayev said during a meeting with representatives of Kazakhstan’s largest businesses. “I have not previously commented on this matter, as every word I say can be interpreted as a direct order due to my official status. However, I now want to make my position clear: the VAT rate should be differentiated. The rate proposed by the government was still too high,” the president stated. Tokayev emphasized the need for a balanced approach that supports businesses while also increasing budget revenues. “The state needs optimal solutions that, on the one hand, create favorable conditions and do not hinder business, and on the other hand, bring order to the tax system and ensure sustainable budget growth,” he added. Following the president’s remarks on Friday, February 7, the government revised its VAT reform plan, announcing the new differentiated rates on Monday, February 10. VAT Reform as Part of Kazakhstan’s Broader Tax Overhaul As The Times of Central Asia previously reported, the draft of Kazakhstan’s new Tax Code, which includes the VAT reform provisions, also proposes a differentiated corporate income tax (CIT) rate for banks. The aim is to encourage business lending by making it more financially attractive than consumer lending or investments in government securities.

Digitalization

Kazakhstan to Build Fiber-Optic Highway for Internet Traffic

On February 6, Kazakhstan’s Ministry of Digital Development, Innovation, and Aerospace Industry signed a memorandum of cooperation with Freedom Telecom Holding Ltd. to construct a fiber-optic highway and data centers for the transit and storage of international internet traffic. According to the ministry, the West-East national highway will significantly expand data transmission capacity and position Kazakhstan as a key hub for international internet traffic transit. The project aims to enhance connection speeds, improve data transfer efficiency, and establish an alternative route for internet traffic between Europe and East Asia. The hyper-highway is scheduled for completion in 2026. It is expected to attract major international clients, including IT firms, telecommunications companies, and financial institutions seeking fast and secure data transit. Kazakhstan views the hyper-highway and data center initiative as a strategic step toward strengthening its digital infrastructure. The project will boost Kazakhstan’s role in global internet traffic transit while establishing a robust and secure data storage network. The development will be financed through private investment. Freedom Telecom, a subsidiary of Freedom Holding Corp. (Kazakhstan), currently provides broadband internet access and open Wi-Fi in major cities across the country.

Digitalization

Uzbekistan Sets Digital Performance Targets for Ministers and Khokims

Uzbek President Shavkat Mirziyoyev has instructed the government to establish individual key performance indicators (KPIs) for each minister and khokim (local governor) to accelerate digitalization reforms. According to presidential spokesperson Sherzod Asadov, officials will not only be assigned specific KPIs but will also be required to meet strict deadlines for task completion. As an example, Mirziyoyev directed the State Committee for Tourism to develop a unified digital platform integrating hotel reservations, airline and rail tickets, museum and theater visits, and services for guides and interpreters. Another priority is expediting the issuance of electronic visas - the Ministries of Foreign Affairs and Justice have been tasked with reducing processing time to three days. The president emphasized that competitiveness in the service sector is directly linked to the level of digitalization across industries. However, not all agencies are meeting their targets. For instance, the Ministry of Transport has failed to launch an online ticketing system for all types of passenger transport, despite more than six months of efforts. Similarly, the Cadastral Agency has been slow in developing a unified register of real estate addresses. “Any leader who postpones digitalization acts against our policy of openness,” Mirziyoyev stated. A key topic at the meeting was the optimization of state services. The president noted that, over the past three years, some functions have been transferred to the private sector, including conducting exams and awarding qualification categories to realtors and appraisers, issuing certificates to tour guides, and performing mandatory technical inspections of specialized and agricultural equipment. This privatization trend will continue. By March 1 this year, 11 additional state services are expected to be handed over to private enterprises, followed by 18 more by October 1.