Manufacturing - The Times Of Central Asia

Viewing results 1 - 6 of 11

Oil and Gas

Kazakh Oil Service Providers Urge Government to Curb Chinese Dumping

The Oil and Gas Council of Kazakhstan (PetroCouncil) has appealed to Prime Minister Olzhas Bektenov to address what it describes as unfair pricing practices by Chinese subcontractors in the oil and gas chemical industry. PetroCouncil, an association representing around 150 Kazakh oil service providers, engineering firms, and manufacturers, published an open letter to the prime minister on its Telegram channel. The letter highlights growing concern over the involvement of foreign companies, particularly from China, in major industrial and oil and gas chemical projects across Kazakhstan. “By offering services at prices up to 70% below market rates, they are effectively driving out domestic companies,” the council stated. “This creates risks of reduced Kazakhstani content, loss of tax revenue, job cuts, a decline in engineering expertise, and potential threats to quality and industrial safety.” PetroCouncil argues that the current situation demands systematic government intervention. The organization has proposed several measures aimed at restoring fair competition and supporting domestic industry players. Among its recommendations is a cap on price dumping in tenders, setting a minimum price threshold no more than 20% below the average market rate. The council also suggests strengthening the weight of the “Kazakh content” criterion when evaluating bids and introducing a “second-best price” principle, favoring local companies when cost differences with foreign bidders are minimal. Further proposals include stricter oversight of foreign worker permits, enhanced enforcement of labor laws, and the establishment of a national registry of domestic producers involved in oil and gas chemical projects. As previously reported by The Times of Central Asia, Russian energy giant Lukoil has announced plans to divest its international assets in response to Western sanctions. Kazakh authorities are assessing potential implications for the projects in which Lukoil is currently involved within the country.

Foreign Investment

Climbing the Value Chain: Uzbekistan’s Textile Transformation Through Chinese Investment

As relations between China and Uzbekistan deepen, cooperation is no longer confined to the traditional pillars of energy and infrastructure. The partnership has begun to branch into new and diverse areas, adding layers of complexity and opportunity to their bilateral ties. Emerging sectors such as pharmaceuticals and waste-to-energy are gaining traction, signaling a shift toward a more multidimensional relationship. At the same time, the textile industry has become an increasingly important bridge between the two countries, offering fresh avenues for collaboration. Recent agreements highlight this momentum. In the upstream segment of Uzbekistan’s textile sector, China Hi-Tech Holding has committed to a major investment in synthetic fiber and viscose yarn production. This move is particularly significant for Uzbekistan, as it reduces reliance on cotton and secures inputs essential for modern mixed-fabric production. Midstream, cooperation is expanding as well. An agreement between Uzbekistan and China’s Fong Group to develop dyeing and finishing facilities for mixed fabrics underscores the practical steps being taken to create a more integrated textile supply chain. These developments also reflect a broader trend of growing Chinese interest in Uzbekistan’s domestic market and its strategic location at the crossroads of the Middle East and Europe. With its young population and export potential, Uzbekistan is increasingly attractive to Chinese textile companies. The Red Dragonfly Group’s plan to establish a manufacturing base in Uzbekistan by 2026 is a clear example of how Chinese firms see the country not only as a production hub but as a gateway to wider regional markets. One of the main reasons Uzbekistan is emerging as a crucial destination for Chinese companies is the shifting incentive structure that encourages the relocation of manufacturing capacity abroad. Rising labor costs in China, particularly in the labor-intensive textile sector, are placing companies under pressure amid fierce domestic competition. In contrast, Uzbekistan offers an appealing alternative where the average monthly wage for a skilled worker is around 200-400 dollars, and energy costs are just 0.04 dollars per kilowatt-hour. Together, these factors significantly lower production costs and make the country highly attractive for firms seeking to maintain competitiveness. Equally important are Uzbekistan’s proactive regulatory policies, which create a favorable business climate for foreign investors. The government has relied heavily on Special Economic Zones and Small Industrial Zones and offers tiered incentive packages that reward higher commitments. Investors contributing between 3 and 5 million dollars receive three years of income tax holidays, while investments of 5 to 15 million dollars are rewarded with a five-year exemption. Those exceeding 15 million dollars benefit from an unprecedented ten-year tax holiday. Moreover, starting in September 2025, the social tax rate for textile companies and clusters will be cut to 1% for three years. At the same time, imports of blended fabrics and raw materials for the leather and sericulture industries will be exempt from customs duties. These measures provide Chinese companies with tangible cost advantages that rival opportunities in Southeast Asia. Another powerful driver is geopolitics. Growing trade tensions between China and the West, particularly the...

Inflation

Experts Say Kazakhstan Must Boost Manufacturing to Tame Inflation

Inflation is steadily eroding incomes in Kazakhstan, depleting savings and undermining government efforts in the social sector. The Times of Central Asia previously noted that surging economic growth could be a contributing factor to Kazakhstan’s inflation problem. But despite rising prices, the government has no plans to apply the brakes. On the contrary, officials point to promising GDP growth driven by sectors beyond oil. Meanwhile, independent experts argue that only large-scale industrial development can provide a lasting solution to inflation. Persistent Price Pressures Inflation continues to outpace official projections. In August, annual inflation hit 12.2%, and by the end of 2025 it is expected to reach 14%, well above the National Bank of Kazakhstan’s target range of 5-6%. Economists say the country’s dependence on imports is a key driver. Kazakhstan imports large volumes of food, fuel, medicine, equipment, and consumer goods. Wage and pension increases are failing to keep pace with the surge in prices. President Kassym-Jomart Tokayev has acknowledged that high inflation poses a serious challenge, warning it is “eating away at economic growth and household incomes.” Government efforts to stabilize prices have yet to show meaningful results. On September 23, Minister of Trade and Integration Arman Shakkaliev announced that Kazakhstan will gradually phase out price controls on socially significant food products (SZPT) in favor of targeted digital support for consumers. The SZPT list currently includes 19 essential items. At the same time, Prime Minister Olzhas Bektenov instructed agencies to crack down on unjustified price hikes for basic goods, ordering strict enforcement of available price control tools. Growth at a Cost Inflation, according to Deputy Prime Minister and Minister of National Economy Serik Zhumangarin, is being fueled by economic expansion. He warned that efforts to restrain inflation could hinder growth. “Since 2023, GDP has grown by 5%, and in 2024 we grew without the contribution of oil. This year is a turning point. From 2026, oil will no longer influence GDP growth,” Zhumangarin said. Although Kazakhstan’s economy has long relied on oil revenues, the minister believes this trend is now shifting. “Economic growth is always accompanied by high inflation,” he said. “More than $12 billion in investments have already been attracted, and the target for the year is $24 billion. The government will soon announce a new strategy for economic growth. We must follow the path of Asian countries but with modern technologies.” Call for Industrialization Independent analysts argue that real progress against inflation requires mass domestic production across a wide range of goods. Political analyst Gaziz Abishev stressed the urgency of moving beyond megaprojects toward practical, infrastructure-linked industry. “Kazakhstan needs real production, not fairy-tale megaprojects. Industry tied to infrastructure, logistics, human resources, and markets solves many issues,” he wrote. “It creates well-paid jobs, stimulates small and medium-sized businesses, reduces reliance on imports, supports the tenge, and addresses budget deficits.” Abishev also called for openness to foreign industrial investment, regardless of origin. His comments appear to push back against public concerns over the influence of Russia, China, and Western...

Electric Vehicles

South Korean Firm to Launch EV Charging Station Production in Kyrgyzstan

A new partnership between Kyrgyz and South Korean stakeholders aims to bring electric vehicle (EV) charging station manufacturing to Kyrgyzstan. The Public-Private Partnership Center under the National Investment Agency of Kyrgyzstan, OJSC Chakan HPP, and South Korea’s BLUE NETWORKS CO., LTD., a company specializing in EV charging infrastructure, have signed a memorandum of cooperation to jointly implement the project. The agreement, reached under a public-private partnership (PPP) framework, outlines plans to establish a local manufacturing facility and roll out a nationwide EV charging network in major cities and regions across the country. According to the PPP Center, the initiative is designed to support sustainable and environmentally friendly transport infrastructure, localize high-tech production, and create new employment opportunities. It also reflects Kyrgyzstan’s broader goals of modernizing its energy and transport sectors and strengthening international cooperation in green technologies. In a related move, Kyrgyzstan’s Ministry of Economy and Commerce signed a memorandum of understanding in June with South Korean firms EVSIS, NGS, and the Korea Automobile Environment Association. That agreement focuses on developing EV charging infrastructure in Bishkek. The broader partnership also includes plans to collaborate with the Kyrgyz State Technical University to offer technical training and internship programs. Emphasis will be placed on building local expertise through industry-academic cooperation, particularly in the operation and maintenance of EV charging networks. The aim is to support the employment of young professionals and foster sustainable growth in the green tech sector. These initiatives are aligned with the Kyrgyz government’s strategy to promote eco-friendly transport alternatives and reduce air pollution in Bishkek and other major urban centers.

Automotive

Why Kazakhstan is Tightening Requirements for Importing Foreign Cars

The Bureau of National Statistics (BNS) of Kazakhstan predicts a significant decline in domestic motor vehicle production in 2024, with the largest drops—over 14%—in the car and truck sectors. Experts attribute this downturn to challenges in sourcing components and the prevalence of "gray" car imports. In response, the government will implement stricter regulations on importing foreign cars starting December 1. In 2023, Kazakhstan’s official car sales market surged by 61% compared to the previous year. Official dealers reported 198,686 cars sold, with 70.7% (approximately 150,000 vehicles) produced domestically. However, by late 2023, experts were forecasting a sharp slowdown in domestic production growth. “Production declines reflect short-term logistical issues, such as securing equipment, raw materials, and components from neighboring countries. To address this, manufacturers are already committing to deepening technological processes for small-unit production. This involves investments in new equipment, expanded facilities, and workforce training,” said Anar Makasheva, President of the Kazakhstan Automobile Union (KAU). “By July 1, 2024, all new production facilities must produce at least one model using this method, while existing ones face the same requirement from January 1, 2026.” Artur Miskaryan, General Director of Kazakhstan's Automobile Market Monitoring and Analysis Agency (KAMMAA), agreed that localization requirements are affecting production rates. “Tougher localization demands mean enterprises are investing in infrastructure and training, which temporarily slows production,” he said. Miskaryan also cited logistical challenges at the Kazakhstan-China border, particularly with the delivery of components from China. While logistical issues may be resolved over time through domestic manufacturing of components, the problem of "gray" imports requires government intervention. “The issue of ‘gray’ imports has existed for a long time but escalated after customs policy adjustments in 2022 allowed for the legalization of such vehicles imported from EAEU countries,” Miskaryan explained. These vehicles are sourced from various countries—cargo vehicles primarily from China and cars from South Korea, China, the U.S., and the UAE. Such imports often involve falsified environmental compliance documents, counterfeit exhaust system components, or violations of design safety certifications. Miskaryan emphasized the need for stricter controls on the technical and environmental standards of imported vehicles. He noted, “Reducing government leniency toward imports could follow the example set by neighboring countries, addressing these issues effectively.” Last year alone, gray imports accounted for 345,000 vehicles—three out of every five cars imported. This undermines domestic manufacturers and poses risks to consumers, as these vehicles often fail to meet Kazakhstan’s environmental and safety standards or adapt to local fuel and climate conditions. Prime Minister Olzhas Bektenov has called for decisive action against gray imports. “This is a serious issue, creating unfair competition for domestic automakers. Customs authorities, the Standardization Committee, and law enforcement must address it,” Bektenov said at a government meeting. “Manufacturers cannot compete with vehicles labeled Euro5 but meeting only Euro2 standards. This situation demands stricter oversight.” The government’s first step has been to limit individual car imports. Starting December 1, an individual can import only one vehicle per year. Additional vehicles registered by the same person within the same year...

Employment Manufacturing International investment Electric Vehicles

First Electric Vehicles Roll Off China’s BYD Assembly Line in Uzbekistan

On June 27, Uzbekistan President Shavkat Mirziyoyev joined his Chinese partners in witnessing the start of production of electric vehicles at the BYD Uzbekistan Factory in Jizzakh. The visit marked the completion of first phase of the project which will have the capacity to manufacture 50,000 electric vehicles per year. Costing $160 million, the plant is furnished with modern equipment and robotic systems from China, as well as a laboratory for high-precision testing of the geometric dimensions of electric vehicles. The plant currently manufactures the Chazor and Song Plus Champion and President Mirziyoyev left his signature on the first electric car that rolled off the assembly line. In the coming years, the range of models will expand. During the second phase, costing $300 million, manufacture will increase to up to 200 thousand electric vehicles per year, and in the third stage, at a further cost of $500 million, up to 500 thousand vehicles. In tandem with the rising volume of vehicles produced at the plant, local production of related parts will also increase. Starting with bumpers, glass, varnished and plastic parts, plans are in place to establish new enterprises to produce batteries, electric motors, aluminium parts, tires, and seats. The plant currently employs 1.2 thousand people and once all three stages are complete, the number of jobs will reach 10 thousand.