Chinese Shenzhen Neptune Logistics Co. Ltd. plans to invest about $10-$15m to build a transport and logistics center in Uzbekistan.

The company held talks with JSC Uztemiryulcontainer, which is the operator of the container park of state railway company JSC Uzbekistan Temir Yollari. During the meeting the parties discussed cooperation on joint use of existing logistics centers, the creation of new ones, establishment of distribution services, and joint use of railcars and containers. Shenzhen Neptune Logistics offered to create modern warehouses of the “A+” category in Uzbekistan. The parties also discussed cooperation on transportation from the Xi’an, Chengdu, and Shenzhen provinces along the China-Kyrgyzstan-Uzbekistan multimodal route, and along existing transport corridors, to Turkey and Europe.

Shenzhen Neptune Logistics was founded in 2002 and has its own logistics centers in more than 10 provinces in China, plus Europe, Central Asia, and Singapore. In 2023 the company launched about 100 container trains from China to Europe and on China-Central Asia routes from Xi’an, Chengdu, Shenzhen provinces. The company specializes in multimodal transportation and owns 25,000 of its own containers.

By modernizing and expanding logistics infrastructure, Uzbekistan and China are laying the foundation for a reliable logistics network that will link Central Asia and European markets.

Earlier, Chinese logistics company Zhengzhou Hongyi Transportation launched road-freight transportation from Shenzhen to Tashkent. The 6,500-kilometer route reduced the previous travel time of 20 days down to seven. As experts note, new projects focusing on development of rail and road lines will compensate for the deficit of legacy trunkline infrastructure in Central Asia — which will favorably affect both the economy of the country itself and its partners.

According to the Statistics Agency of Uzbekistan, the volume of cargo that transited Uzbekistan in 2023 amounted to 11.3 million tons — 22.8% more than in 2022.

The Kyrgyz Stock Exchange (KYSE) in Bishkek has expanded its list of verifiers to include S&P Global Ratings, who will conduct an independent assessment of sustainable finance instruments. The audit is centered on the evaluation of bonds aimed at green, social and sustainability (GSS) initiatives, according to a report on the KYSE website.

According to KYSE stakeholders, the participation of the high-profile rating agency gives investors who want to help GSS projects in Kyrgyzstan an opportunity to get an independent analysis and guarantees of sustainability of financial instruments on the exchange. The so-called Second Party Opinion will serve as a guarantee that investors’ money will be spent on environmental, climate, social and other projects related to sustainable development.

“The participation of a world-famous American company in KYSE activities will help attract the attention of international investors to Kyrgyz companies placing their green bonds. It will also create an incentive for Kyrgyz businesses to participate in these projects,” Irina Ivanova, head of KYSE’s sustainable development department, told the Times of Central Asia.

In addition to the U.S. rating agency, KYSE’s list of international appraisers includes several companies from Russia and Kazakhstan.

Earlier this year, the Kyrgyz Stock Exchange created a portal for issuing green bonds on its platform, so that foreign investors could participate in financing environmental projects in the country on market terms. According to participants of the exchange, large global companies are now changing their strategies in favor of socially responsible policy and investing in green projects — and an instrument like green bonds can serve as a driver for attracting foreign investment in the country.

For example, in Kazakhstan the total market value of sustainable finance is $257m, of which the market value of green finance is $188m — and green bonds comprise 65% of that amount. The advantages of such bonds are increased demand and trust from investors, which also has a positive impact on the rating of the issuer.

Several commercial banks in Kyrgyzstan have already placed the first so-called gender bonds on the KYSE at a total amount of 114 million Kyrgyz som ($1.3m) to finance women’s entrepreneurship projects in the country.

Kazakhstan’s Ministry of Industry and Construction says that the Obukhovskoye deposit, which is located in the North Kazakhstan region, has been put up for auction. The sale of the titanium-zirconium deposit will be held electronically on May 15th. All three sections of the deposit will go on the auction block.

The Obukhovskoye deposit may prove to be a very valuable asset due to its high-percentage concentration of minerals in the ore.

Until 2021 the location belonged to a company called Tioline, which ended up losing its license due to violations of its financial and investment obligations. In February this year one of the co-owners of the Obukhovskoye mine, Viktor Dolgalev, was arrested — he is accused of misuse of subsoil resources, tax evasion and illegal receipt of funds in excess of 26bn tenge (~$58m).

These events have led to the current situation, in which the project needs a new investor who can prove their ability to execute a sustainable ore extraction and processing plan at the site. The Ministry of Industry and Construction has already disclosed that the size of the minimum bid for the signing bonus -is 1.85m tenge ($4,132).

The company who submits the winning bid will be obliged to supply raw materials from the deposit to local producers at reduced prices — to restore the project after the substandard work of the past license holder — and to comply with environmental regulations. It will also be obliged to support the Kazakhstani market by using at least 60% locally-sourced goods and services in its work.

The International Monetary Fund (IMF) has published a Kyrgyzstan country report, according to which the country’s economy grew steadily in 2023, mainly due to expansion of construction and trade. Collection of tax revenues has also improved, and inflation has decreased.

The IMF highlighted that due to the Covid-19 pandemic, rising global food and energy prices, exacerbated by the war in Ukraine, drove inflation in Kyrgyzstan to surge in 2022. From February 2020 to February 2023 inflation rose by 10 percentage points to 16.2%, which represented a ten-year peak for the republic.

However, authorities have now managed to tame the situation. “Inflation in Kyrgyzstan almost halved from 14.7 percent in December 2022 to 7.3 percent in December 2023, thanks to which food and fuel prices fell markedly,” the IMF said in its report.

The IMF expects production to grow in Kyrgyzstan in the near future — which will also have a positive impact on inflation. In the medium term, according to their data, the volume of production in the republic will grow by 4% per year. Despite weak performance in the sectors of agriculture and gold mining, the country’s economy continues to grow — and showed a growth rate of 5% at the end of 2023. The leading industries were trade and construction, followed by transportation and communications.

“An unexpected inflow of labor and income from Russia, as well as a significant increase in trade with that country — mainly re-exports of goods from China to Russia — has boosted domestic development and increased domestic demand for goods and services,” the IMF stressed.

Still, core inflation in the country remains high, which is one of the main drivers of poverty. According to official data, a third of the country’s population lives below the poverty line. Despite a strong recovery from the pandemic, poverty and inequality remain significant challenges for the Kyrgyz economy, which remains vulnerable to shocks, according to the IMF. Without higher and more inclusive growth, it will take decades for the republic to reach the income levels of Europe’s emerging economies, IMF specialists warned.

Meanwhile, IMF experts see headline risks for the Kyrgyz economy in further escalation of the war in Ukraine. Russia is currently Kyrgyzstan’s largest trade partner, alongside China. Exports of Kyrgyz goods to Russia account for half of the country’s foreign trade, and the Kyrgyz economy is heavily dependent on remittances from migrants working there. However, due to Western sanctions, the Russian economy may weaken, which will affect both remittances to Kyrgyzstan and bilateral trade — therefore delivering a harsh and broad impact to the entire Kyrgyz economy.