Central Asia: A New Frontier for Business Opportunities
By Srimal Fernando, Global Editor, The Diplomatic Society
24 March 2016
Enormous strides made by Central Asian countries in recent years with sustained periods of economic growth, characterised by record levels of Foreign direct investment (FDI), is seen as the new frontier attracting worldwide attention. The five independent republics of Central Asia, Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan and Tajikistan are at crossroads.
Pictured (l-r) Pakistani Prime Minister Nawaz Sharif, Afghan President Ashraf Ghani, Turkmenistan President Gurbanguly Berdimohamedov and Indian Vice President Muhammad Hamid Ansari jointly performed the groundbreaking of the 10 billion dollar trans regional energy project.
Central Asia is seen as the new frontier for multi nationals, retailers and consumer goods around the world with a rapidly expanding middle class. Central Asia’s abundant and diverse natural resources attract high level of foreign investment. According to regional sources the confirmed Oil deposits in the region is estimated to be around 2.7 percent of all the confirmed deposits of the world. Pipeline politics is a unique mix of economic and political objectives. In the last decade new pipeline routes have emerged in Central Asia.
The 1814 kilometre Turkmenistan–Afghanistan–Pakistan–India (TAPI), gas pipeline is designed to cross four countries.The US$10 billion new pipe line project is implemented in accordance with the intergovernmental agreement made between the four participating countries.
Kazakhstan gained Independence from the Soviet Union on 16 December 1991. It is the miracle economy, one of the best performing in the region and is one of the fastest-growing countries in the world. The country has attracted over US$ 500 billion in Foreign Direct Investments (FDI). Foreign companies investing more than US$ 12 million in Kazakhstan will enjoy certain tax preferences including exemption for corporate tax for 10 years for specific investments. In the year 2000 Kazakhstan produced 35 252 million metric tons of oil. The most significant deposits of Kazakhstan are at Karchaganak (black hole) in the north west of the country. It has large uranium reserves and zinc reserves. In 2001 it produced 263,000 tons of metallic zinc. It currently has the world’s biggest reserves of tungsten. Kazakhstan increased its gold production by 26.6 percent in 2015 compared to the same period in 2014. Kazakhstan increased its uranium production to 23.8 million tons. The country has already joined the ranks of the world’s top 50 economies.
Turkmenistan’s economy outpaced all forecasts to grow at the fastest pace in the near future. Turkmenistan’s GDP growth amounted to 6.5 percent in 2015 and industrial growth was at 3.1 percent. One half of its irrigated land is planted with cotton. Turkmenistan has the fourth largest reservoir of gas in the world. The countries oil production exports increased by 24 percent in 2005 The country is capable of supplying natural gas through several gas pipelines in different directions . Turkmenistan’s government has diversified its economy into a host of other sectors.
Turkmen Foreign Minister Rashid Meredov, Kyrgyz Foreign Minister Erlan Abdyldaev, Kazak Foreign Minister Yerlan Idrissov, U.S. Secretary of State John Kerry, Uzbek Foreign Minister Abdulaziz Kamilov and Tajik Foreign Minister Sirodjidin Aslov take positions for a group photo before touring the Register in Samarkand November 1, 2015
Following Independence in December 1991 the entire economy of Uzbekistan has been transformed, spanning all sectors of the economy. Agriculture and Agro industrial sector contributes over 40 percent to the economy .According to ADB the external trade surplus for the first half of 2015 was US$ 83.4 million.
The Tajikistan’s economy is well placed and has grown at a stronger-than-expected pace. Agriculture employs over 30 percent of the economically active population. Over 400 mineral deposits and ore reserves that have been found in Tajikistan make it unique. The Bolshoi Konimanur is the world’s second largest deposit of silver and is likely to last for over 150 years.
Kyrgyzstan is a land locked county. More than half of it land mass is above 2500meters above sea land. The country has abundant hydroelectric capacity. The plant at Toktogul produces 1,200 MW s electric powers. More than 90 percent of the country’s electricity is generated by water. This clean energy capacity has created new and innovative growth opportunities for Kyrgyzstan where food processing accounts for15 percent of industrial production.
New surveys are showing a brighter future for the five countries in the region, with confidence increasing radically over the last few years. Central Asia’s oil boom has proven to be a great economic stabilizer. Central Asia has undergone enormous economic growth in the last 20 years, largely as a result of greatly increased international trade. Central Asia is on the rise and the revenue from oil, gas and extraction of natural resource has fuelled a series of economic booms.
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