Tajikistan Business Economy - The Times Of Central Asia

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SCO Opens Foreign Exchange Alliance for Yuan, Tenge, and Ruble

The Shanghai Cooperation Organization (SCO) has instigated an Alliance of Currency Transactions to increase the share of settlements in national currencies—the Kazakh tenge, the Russian ruble, and the Chinese yuan—in mutual trade between SCO member states. The main goal of the initiative, launched in Qingdao based on the Demonstration Zone of Regional Trade and Economic Cooperation within the framework of the SCO Capital Park, is to reduce dependence on the US dollar and the euro in international settlements and in turn, strengthen the economic independence of the organization's member countries and increase the stability of their financial systems. In addition, the Alliance will help simplify currency transactions, accelerate cross-border payments, and create a more transparent and efficient financial infrastructure between the SCO member countries. The initiative reflects the general move towards strengthening economic cooperation within the organization, including China, Russia, Kazakhstan, Tajikistan, Kyrgyzstan, Uzbekistan, India, Pakistan, Iran, and Belarus. As previously reported, the SCO states are increasing the use of national currencies in mutual settlements. The creation of the Alliance was a step in the development of regional financial integration, and its launch underscores the growing interest of SCO countries in using their currencies in foreign economic activity.

Kyrgyzstan and Tajikistan to Test Facilities Prior to Launch of CASA-1000

On August 9, Ministers of Energy of Kyrgyzstan and Tajikistan agreed to a plan to test overhead lines, transformers, and substations prior to launching the Central Asia-South Asia (CASA-1000) electricity transmission project, scheduled for completion by the end of 2024. The construction of a 500 kV transmission line with a length of 456 kilometers is now nearing completion in Kyrgyzstan. All of the supports have been installed and 428 km of the 456 km of the transmission line have been strung. The remaining section will be finished before the end of August 2024. The CASA-1000 project aims to connect the energy systems Kyrgyzstan and Tajikistan with those of Afghanistan and Pakistan and through the new infrastructure, transport 1,300 megawatts of surplus electricity from Central Asia to high-demand electricity markets in South Asia. With spring and summer rainfall and significant water flow from the mountains, hydropower-rich Kyrgyzstan and Tajikistan produce surplus electricity during the summer. At the same time, neighboring South Asia, Afghanistan and Pakistan experience chronic electricity shortages, especially during the summer months. By connecting the four countries through a shared electricity transmission system, Kyrgyzstan and Tajikistan can sell clean hydropower-produced surplus electricity in the summer months to Afghanistan and Pakistan.

Japanese PM Cancels Attendance at Central Asia + Japan Summit.

A visit to Kazakhstan, Uzbekistan, and Mongolia by Japanese Prime Minister Fumio Kishida scheduled for August 9-12, has been cancelled. According to the publication Kyodo, the trip was cancelled in response to a warning issued by the Japan Meteorological Agency on the possibility of a strong earthquake and tsunami in Japan. In an apology made at a press conference today, the prime minister who was due to participate in the summit of Japan and the Central Asian countries in Astana, stated, “As the top official in charge of the nation's crisis management, as an extra precaution, I should remain in Japan for at least about a week." Confirming the decision, official representative of the Ministry of Foreign Affairs Aibek Smadiyarov announced, "According to the information of the Embassy of Japan, in connection with the earthquake in their country, a decision was made to cancel the visit of Prime Minister Fumio Kishida to Kazakhstan." On August 8, a 7.1-magnitude earthquake occurred in Miyazaki prefecture in southwestern Japan and the Japan Meteorological Agency recorded earthquakes at a depth of 30 km. The Japanese government also issued a tsunami warning for Kochi and Miyazaki prefectures. The Times of Central Asia previously reported on the Prime Minister of Japan's intention to announce a package of economic assistance to Central Asia. According to the Japanese government, the initiative which Kishida planned to outline at the summit, will reduce the heavy influence of both Russia and China on the region and afford Central Asia economic independence.

Tajikistan Proposes Afghan Border Logistics Zone to Enhance Trade

According to Bakhriddin Sirojiddinzoda, Head of the Tajikistan Export Agency, Tajikistan has plans to establish a large logistics zone on the border with Afghanistan. Based on national interests in using existing production and export opportunities, the aim of the export zone is to increase trade turnover, create a modern infrastructure for transporting goods and products, and regulate transportation costs. Referencing the proposal submitted to the government of Tajikistan for consideration, Sirojiddinzoda stated that the large logistics centre should be established in the neutral zone or near the Pyanj-Sher Khan Bandar border crossing and explained, “Experience shows that drivers need a visa to pay road taxes and other fees in Afghanistan to cross only 500 meters of road when exporting products to Afghanistan." He also stressed that establishing such a centre and developing business was unconnected to the country's official relations with the Taliban, stating: “No country has officially recognized the Taliban government, but their trade cooperation with the country continues. Some have even opened a ‘Trading House’ and a commercial representative office in Kabul. Tajik goods are transported through Afghanistan to Pakistan, and goods are also transported from there to us, the security of which is still ensured by Afghanistan." In the first half of 2024, the volume of sales of Tajikistan's agricultural products to Afghanistan amounted to $82.7 thousand; an 85% increase compared to the same period in 2023 when it barely reached $22.7 thousand. According to the Tajikistan Export Agency, nothing was imported from Afghanistan, and goods leaked into the republic from its territory were in transit from Pakistan and other countries.

Steel Highways: The State of Central Asia’s Railways

Railways in Central Asia have always played an important political and economic role, but amid the current geopolitical turbulence, they have become a crucial means of transporting goods from China to Europe and the Middle East, bypassing sanctioned Russia. But what is the state of Central Asia's railway industry, and is it up to the new challenges? The history of rail transport in Central Asia dates back to the end of the 19th century. In 1874, a special commission of the Russian Empire recognized the need to construct a line from Orenburg to Tashkent. Later, however, strategic considerations forced a change of plan and to ensure a stable connection between the Turkestan and Caucasus regions, the first steel highway in Central Asia would be built to connect Tashkent with the eastern coast of the Caspian Sea. This was an active period of the so-called Great Game, when Russia and Great Britain competed in Central Asia. Since then, the geopolitical importance of railways in the region, which lacks access to oceans, has not decreased whatsoever. Indeed, amid armed conflicts in the Middle East and between Russia and Ukraine, railways have become even more important given their role in ensuring the movement of goods along the Trans-Caspian International Transport Route (TITR) and the International North-South Transport Corridor (INSTC). Against this backdrop, Kazakhstan's President Kassym-Jomart Tokayev has tasked the national railway company Kazakhstan Temir Zholy (KTZ) with leading the transformation of the country into a transport and logistics hub. Kazakhstan: A story of steady development The length of Kazakhstan's mainline rail network is over 16,000 km, with over 800 stations and crossing points. The freight car fleet exceeds 120,000 units, while locomotives number more than 1,700. Kazakhstan’s railways account for 70% of freight traffic, and 60% of passenger traffic in the country. Just under 1% of the country’s population is employed in the rail industry. According to the KTZ's annual report in 2023, container transit rose 14% year-over-year to 1.282 million TEU (twenty-foot equivalent units), which drove a 30.6% year-on-year rise in operating income to KZT1.934 trillion, while net profit came in at KZT136.8 billion ($286.8 million). The volume of freight transported between Kazakhstan and China was also up 22% to 28 million tons. In addition, KTZ reported the completion of large-scale track repairs in 2023, with 1,443 km of railway track repaired, double the figure achieved in 2022. The start of large infrastructure projects was also noted. In particular, construction was launched of the Darbaza–Maktaaral and Bakhty–Ayagoz lines (with a third border crossing with China set to be opened in 2027), while construction of the bypass line around Almaty also commenced. Over 300 km of the second track was laid on the Dostyk-Moyynty railway section. Finally, a Kazakh transport and logistics terminal was opened in the Chinese dry port of Xi'an. Uzbekistan: First high-speed rail in Central Asia O’zbekiston Temir Yo’llari (UTY), Uzbekistan's national rail carrier, was founded on November 7, 1994, taking over the lines of the Soviet-era Middle...

ADB Grants $21 Million to Modernize Hydropower Plant in Tajikistan

The Asian Development Bank (ADB) announced on August 6 that it had approved a $21 million grant as additional financing to modernize the Golovnaya hydropower plant in Tajikistan. The additional financing will replace the power generation unit 4 at the Golovnaya hydropower plant. Unit 4, which was not part of ADB’s original project approved in 2013, ceased operations in 2019 due to damage to its mechanical equipment. ADB’s original project provided a $136 million grant to replace five of the plant’s six power generation units. It also rehabilitated switchyards at the Golovnaya hydropower plant, modernized the Vose substation, and constructed the Rudaki substation and a transmission line connecting the Rudaki and Vose substations in southern Tajikistan. The hydropower plant’s modernization will increase its installed capacity from 240 megawatts in 2012 to 274 megawatts by 2026. ADB Director General for Central and West Asia, Yevgeniy Zhukov, commented: “The electricity from the Golovnaya hydropower plant goes to national and regional grids, benefiting Tajikistan and neighboring countries. ADB’s support improves regional energy security, contributing to inclusive, sustainable economic growth and balanced regional development.” Late in December 2023, Tajik president Emomali Rahmon stated that Tajikistan’s energy capacity exceeded 6,000 megawatts in 2023, and electricity production amounted to 22 billion kilowatt-hours, 4.8 billion kilowatt-hours or 28% more than in 2017. Rahmon also said that by 2032, electricity production in the country would be entirely from renewable sources; that is, 100% will be provided by “green energy, and Tajikistan will truly become a green country.”