Investment - The Times Of Central Asia

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Central Asia‐EU Summit

Samarkand Declaration Paves the Way for a Stronger Central Asia–EU Partnership

The inaugural Central Asia-European Union Summit, held in Samarkand on April 3-4, marked a significant milestone in strengthening ties between the two regions. According to Sherzod Asadov, press secretary to Uzbekistan's President Shavkat Mirziyoyev, the summit's most significant outcome is the adoption of the Samarkand Declaration, which is expected to provide strong momentum for expanding constructive dialogue and cooperation across all sectors. In a statement, the EU reaffirmed its "commitment to deeper cooperation in an evolving global and regional geopolitical landscape [and] upgrade relations between the European Union and Central Asia to a strategic partnership." The EU declaration also committed the bloc to respect the "sovereignty and territorial integrity of all states within the framework of all international and regional fora" and expressed readiness to "address common security challenges." Strengthening Economic Ties Economic cooperation featured prominently on the agenda. Since 2020, trade between Uzbekistan and the EU has doubled, now exceeding €6 billion. Uzbek exports to the EU have quadrupled, and the number of joint ventures has surpassed a thousand. European investment projects in Uzbekistan, meanwhile, are now valued at over €30 billion. A key development was the agreement to open a regional office of the European Investment Bank (EIB) in Tashkent. Established in 1958, the EIB is the EU’s primary financial institution, and its new office is expected to attract greater investment in green energy, modern infrastructure, and digitalization. The European Bank for Reconstruction and Development (EBRD) has also deepened its engagement in Uzbekistan, investing over €5 billion to date. “We must work together to simplify trade procedures and ensure that Central Asian products gain greater access to European markets. Only through joint efforts can we build a strong and resilient economic partnership,” Mirziyoyev told Euronews. "Over the past seven years, the trade turnover between Central Asian countries and the EU has quadrupled, amounting to 54 billion euros... The signing of the Samarkand Declaration will reflect the common aspiration of the parties to establish a strategic partnership and lay the foundation for deepening ties between our regions." During the summit, Mirziyoyev met with European Commission President Ursula von der Leyen and European Council President António Costa. Discussions focused on trade, investment, green energy, and digital development, with the EU’s "Global Gateway” strategy, a counterpart to China’s Belt and Road Initiative, a central topic. The initiative is seeking to enhance global infrastructure and connectivity while promoting sustainability and transparency. “The EU and Central Asia are becoming closer partners, and this summit marks the beginning of a new phase in our cooperation,” von der Leyen stated. An Enhanced Partnership and Cooperation Agreement between Uzbekistan and the EU is also under negotiation. Regional Dialogue Among Central Asian Leaders The Summit also offered a platform for Central Asian heads of state to hold bilateral discussions. Mirziyoyev met with his counterparts from Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan. Talks centered on increasing trade, improving border security, and advancing major infrastructure projects. A recent landmark border agreement between Uzbekistan and Kyrgyzstan was lauded as a breakthrough. Uzbekistan...

Investment

EBRD Finances Coffee-Processing Plant at Kazakh-Chinese Border

The European Bank for Reconstruction and Development (EBRD) has announced a loan of up to $10 million to Empire Manufacturing Kazakhstan (EMK) to support the construction of a coffee-processing facility in the Khorgos Free Economic Zone, located on Kazakhstan’s border with China. EMK is a subsidiary of Food Empire Holdings, a global food and beverage group listed on the Singapore Exchange. The new plant will enhance the company’s regional production capacity and is expected to set a new standard for food-processing technology and hygiene in Kazakhstan and Central Asia. Once operational, the facility will export up to 50 percent of its coffee products to markets across Central Asia and the South Caucasus, where demand for Food Empire’s instant beverages is on the rise. The investment aligns with the EBRD’s broader strategy to support private sector growth in Kazakhstan. To date, the Bank has invested more than €11 billion in 335 projects across the country, with a strong emphasis on fostering entrepreneurship and innovation.

Economy

Kazakhstan is Striving for Investment Amid “Resource Nationalism”

Amid the war in Ukraine, as well as various geopolitical turbulences that threaten to fundamentally change the current global order, Kazakhstan is aiming to attract more foreign investment. The war in Ukraine has so far had a relatively positive impact on the economies of most Central Asian nations, giving Astana room to achieve its ambitious goal of attracting $150 billion in foreign direct investment by 2029. Kazakhstan, along with other neighboring actors, used the Russian invasion of Ukraine to develop closer economic ties with the West, namely with the European Union. It is therefore no surprise that, in 2022 and 2023, the EU member Netherlands invested over $12 billion in the Kazakh economy, making it the leading foreign investor. The United States, according to the official statistics, is the second-largest investor, with Switzerland rounding out the top three. Although between 2005 and its total foreign direct investment (FDI) reached $402 billion, Kazakhstan’s innovation agenda aims to attract $150 billion of FDI in the next five years while doubling the country’s GDP. The problem is that in 2023 the inflow of foreign direct investment into Kazakhstan decreased by 32.3%, which suggests that Astana may have a hard time finding ways to attract more capital into the Kazakh economy. Experts claim that there is no comprehensive development strategy for both industries and regions in Kazakhstan, which limits investments in its economy. But the creation of platforms with tax preferences, an independent regulator, and a regulatory environment based on the principles of British law are believed to contribute to the active development of entrepreneurship. In other words, the authorities in Kazakhstan are using a model based on practices in Britain and the United Arab Emirates to attract investment, drawing inspiration from the British Common Law system, as well as the Dubai International Financial Center, which served as a reference for the Astana International Financial Center. Given that both Kazakhstan and the UAE are economies based on fossil fuel exports, it is unlikely to be a coincidence that Astana aims to use Abu Dhabi’s experiences to improve its existing arrangements with foreign corporations operating in Kazakhstan. "Large investments require a long-term planning horizon. Therefore, the government will have to intensify negotiations regarding the extension of production sharing agreements contracts on the updated terms, favorable to the country," Kazakhstan’s President Kassym-Jomart Tokayev said on January 28, as foreign companies reportedly claim that Astana is seeking to increase its shares in key oil and gas projects in what amounts to "resource nationalism". At the same time, the Kazakh government seeks to create a favorable investment climate for foreign companies by reducing bureaucratic obstacles, introducing tax breaks, eliminating financial audits, and ensuring the protection of the legal rights of investors. Kazakhstan has also recently introduced a Digital Nomad visa (also called a 'Neo Nomad' visa), which grants foreign nationals the right to reside in the country while working for a foreign employer. Such a move can be interpreted as another attempt to attract foreign investment in Kazakhstan. ...

Investment

Chinese Company to Develop Low-Altitude Technologies and Intelligent Manufacturing in Kazakhstan

Kazakh Invest, Kazakhstan’s national investment company, has signed a memorandum of understanding (MoU) with China's Polyking New Horizons Technology Industry Co. Ltd. The agreement focuses on collaboration in the emerging field of low-altitude economy and intelligent manufacturing. As part of the partnership, the companies plan to establish an industrial park in Kazakhstan, which will integrate drone technologies, smart city solutions, and advanced manufacturing systems. The $200 million project is expected to create 1,000 new jobs, according to Kazakh Invest. Expanding High-Tech Opportunities The MoU also includes provisions for developing projects in the chemical industry and innovative technologies. These initiatives aim to strengthen Kazakhstan's position as a hub for high-tech production and innovation in Central Asia. Azamat Kozhanov, Managing Director of Kazakh Invest, highlighted the vast potential for low-altitude technologies in various sectors, including agriculture, energy, construction, and infrastructure management. “The advanced technologies and expertise of Polyking will bring new momentum to the development of this field in Kazakhstan,” Kozhanov stated. He also noted the significant economic opportunity tied to this sector, adding: “By 2050, the global low-altitude economy market is expected to reach $8.8 trillion. Therefore, we are actively creating platforms to develop new industries and providing comprehensive support.” Broader Trends in Low-Altitude Technology Kazakhstan has already taken steps to integrate drone production into its economy. The Times of Central Asia recently reported on a $12 million project by Yesil Technology Company, a subsidiary of China’s Shaanxi Kaizhuo Electronic Technology Co. Ltd., to establish an industrial drone manufacturing facility in the country. This collaboration underscores Kazakhstan’s strategic focus on becoming a leader in the low-altitude economy, a field that includes drones, unmanned aerial vehicles (UAVs), and other advanced technologies that operate at low altitudes. The partnership between Kazakh Invest and Polyking New Horizons Technology marks another milestone in Kazakhstan’s push to diversify its economy through high-tech industries. The planned industrial park, along with complementary projects like drone manufacturing, positions Kazakhstan to capitalize on the growing global market for low-altitude technologies and intelligent manufacturing. If successfully implemented, these initiatives could transform the country into a regional leader in cutting-edge technology and innovation.

Transport

Important Deal Signed for China-Kyrgyzstan-Uzbekistan Railway Project

On December 20, Bishkek hosted the signing of an investment agreement between Kyrgyzstan’s Cabinet of Ministers and China-Kyrgyzstan-Uzbekistan Railway Company LLC. The agreement encompasses the design, construction, financing, operation, and maintenance of the China-Kyrgyzstan-Uzbekistan railway. The announcement came shortly after Kyrgyz President Sadyr Japarov revealed that construction on the strategic railway, which will connect the three nations, is set to begin on December 27. The agreement was signed by Kyrgyzstan’s Minister of Transport and Communications, Absattar Syrgabaev, and Zhong Shenggui, Chairman of the Board of Directors of China-Kyrgyzstan-Uzbekistan Railway Company LLC. A Historic Milestone The signing ceremony was attended by Kyrgyz Deputy Chairman of the Cabinet of Ministers and Minister of Water Resources, Agriculture, and Processing Industry Bakyt Torobayev; Li Baojie, Charge d’Affaires of the Chinese Embassy in Kyrgyzstan; and Saidikram Iyazkhodjaev, Uzbekistan’s Ambassador to Kyrgyzstan. In his remarks, Torobayev called the agreement a historic achievement for the three nations, marking the conclusion of a lengthy negotiation process and the start of practical implementation. “This large-scale infrastructure project is of both regional and international significance,” he emphasized. Strategic Importance of the Railway The China-Kyrgyzstan-Uzbekistan railway is a pivotal development for the transport strategies of the participating countries. Currently, neither Kyrgyzstan nor Uzbekistan has a direct railway link with China, while Central Asia’s rail connection to China is limited to a route through Kazakhstan. Furthermore, Kyrgyzstan and Uzbekistan lack a direct railway link between them. The project’s significance was cemented on June 6, 2024, when China, Kyrgyzstan, and Uzbekistan signed an intergovernmental agreement in Beijing. The 523-kilometer railway will traverse Kashgar (China), Torugart, Makmal, Jalal-Abad (Kyrgyzstan), and Andijan (Uzbekistan). Transit and logistics infrastructure will be developed along the route to support its operations. Once completed, the railway is expected to transport up to 15 million tons of cargo annually, significantly enhancing trade and connectivity in the region.

Tourism

Uzbekistan Welcomes 6.5 Million Tourists in 10 Months of 2024, With China Leading Growth Outside CIS

Uzbekistan’s tourism industry is thriving, with 6.5 million foreign visitors from January to October 2024, fueled by a 17.2% year-on-year increase, or 951,300 more visitors compared to the same period last year. Among these tourists, 57,700 were from China, marking a 63.1% rise and making China the leading source of visitors outside the Commonwealth of Independent States (CIS). China's interest in landlocked Uzbekistan comes as no surprise. Rich in natural resources and brimming with untapped potential, Uzbekistan stands as a promising opportunity for growth and prosperity when strategic investments are managed effectively. For instance, China continues to dominate Uzbekistan’s trade scene, accounting for 18.8% of the country's total foreign trade turnover as of October 2024. Bilateral trade between the two nations reached $10.2bn, with Uzbekistan exporting $1.7bn worth of goods to China and importing $8.5bn in return. While this was a slight dip from the $10.8bn in 2023, China has maintained its position as Uzbekistan’s largest trade partner since 2020, thanks in part to strategic agreements like the Bilateral Investment Treaty (BIT) and the Agreement on Avoidance of Double Taxation (DTA). Additionally, China’s investment footprint in Uzbekistan is hard to miss. By the end of 2022, China had invested a total of $4.5bn, with over 2,000 Chinese enterprises operating in the country as of January 1, 2024. These businesses span a wide range of sectors, from oil and gas exploration to infrastructure development, automotive assembly, agriculture, and textiles. Projects include the Pengsheng Industrial Park, which focuses on construction materials and modern agriculture with a $129mn investment, and the Anjiyan Textile Park, which specializes in textile production, backed by more than $64mn. The Luoyang-Bukhara Agricultural Cooperation Zone takes this partnership to the next level, blending agricultural cultivation with industrial activities for a dynamic collaboration. Agriculture has blossomed as a key area of collaboration between Uzbekistan and China in recent years. Uzbek exports, such as cherries, apricots, and dried fruits are hitting the sweet spot in China, while Chinese investments in agri-tech are giving Uzbekistan’s productivity and export game a major boost. When it comes to green energy, Uzbekistan’s renewable ambitions are getting a powerful push from Chinese know-how. A standout project, a 1 GW solar power plant under the Belt and Road Initiative, is a shining example of both nations’ dedication to a greener, more sustainable future. In addition, on December 5, Uzbekistan's Uzatom and China National Nuclear Corporation Overseas (CNOS) signed a cooperation agreement, setting the stage for small nuclear power plants and improved uranium processing in Uzbekistan. This follows earlier talks about tapping into China's expertise to enhance the country’s nuclear energy capabilities. The digital transformation of Uzbekistan is another exciting frontier of opportunity. With plans to expand its digital infrastructure, Chinese companies are stepping in with cutting-edge technologies like 5G networks and e-commerce platforms. These innovations are set to supercharge Uzbekistan’s digital economy, making it more efficient and connected than ever before. It’s a win-win that promises to drive growth and elevate the country’s technological landscape. Two major...