Central Asia Countries Focused on Attracting Foreign Investment

The Central Asia countries have a great potential for attracting foreign investors due to rich natural resources, low labor cost and growing population. According to the estimates of the Boston Consulting Group, the Central Asia countries, primarily Kazakhstan and Uzbekistan, will be able to attract about $40 billion–$70 billion of foreign direct investment (FDI) in the non-primary sector in the future.


Kazakhstan, the region’s largest economy, is a leader in FDI attraction in Central Asia. According to the Ministry of Industry and Infrastructure Development of Kazakhstan, the country’s share is about 70% of total direct investment in Central Asia.

The FDI inflow increased by 9.8% and amounted to $4.1 billion in 2018, the National Bank of Kazakhstan said. The main source of inflow was the reinvestment of income of non-residents in the capital of Kazakhstan’s enterprises.

Investments are growing in the mining industry, transport, trade, financial and insurance activities, and information and communications sector. Investment in fixed assets increased 17.2% last year. A significant increase was in the industrial sector (27.1%), construction (20.6%), real estate transactions (20.1%), and agriculture (14.2%).

Kazakhstan’s Government formed a list of projects with the participation of transnational companies worth about $10.6 billion. To attract investments to the country, changes were made to the legislation, permit system, taxation and customs control. The migration and visa regime were simplified. The list of countries whose citizens can stay in Kazakhstan within the visa-free regime was expanded to 62 countries including all OECD countries.

Since July 2018, a new Subsoil Code has entered into force in Kazakhstan, which simplified administrative procedures in the subsoil use, thereby allowing an increase in the investments attracted to geological exploration. As a result, Kazakhstan improved its position by 49 points and ranked 24th in the Fraser Institute’s subsoil use investment attractiveness rating.


From March 1, 2019, three-year investment visas will be introduced for founders and participants of enterprises with foreign investments and their family members. Visas will be valid for three years with the possibility of extension without leaving the country. This was stated by the presidential decree of January 17, which approved the State Program “The Year of Active Investments and Social Development,” Gazeta.uz reports.

Citizens of foreign countries, including the founders (participants) of enterprises with foreign investments who have invested in enterprises producing goods and providing services in the amount of not less than $3 million in Uzbekistan, can obtain simplified residence permits for ten years.

This year, Uzbekistan intends to absorb $4.1 billion of foreign investment, Podrobno.uz reports. According to the Uzbek State Investment Agency, this will be achieved through projects signed during high level international visits and business forums. In addition to the traditional oil and gas sector, major investments are planned in the metallurgy, agro-industrial sector, food industry and textile industry.

According to preliminary data, about $2.4 billion FDI were used in 2018.

Currently, 89 projects with the participation of international financial institutions are being implemented in the country. This year, it is planned to sign 31 projects for more than $3 billion. The World Bank and the Asian Development Bank are the largest donors.

From March 1, Uzbekistan will greatly simplify business conditions. The State’s measures are aimed at improving Uzbekistan’s position in the World Bank’s Doing Business rating.

Banks will be able to remotely open bank accounts for legal entities whose founders are Uzbekistan’s residents and individual entrepreneurs in accordance with the requirements of the Financial Action Task Force on Money Laundering (FATF).

Economic sanctions will be applied for unauthorized disconnection of consumers from the power supply.

In the international trade, issuance of certificates of origin of goods will be issued within one working day. In the enforcing contracts, the new order allows for a pre-trial hearing in the economic court to resolve disputes.


According to the Statistics Agency under the President of Tajikistan, FDI in this country reached $645 million in 2018, $326 million of which was directed to the development of industry, construction, exploration and development of mineral deposits.

In 2017, about $500 million was invested in Tajikistan’s economy.

To increase FDI, potential investors need state guarantees but Tajikistan cannot provide them so far, President Emomali Rakhmon said. He ordered the National Bank of Tajikistan to take urgent measures to attract domestic and foreign investment in the country.

In total, 69 investment projects are currently being implemented in the country, and Russia and China are the major investors.

China is ready to invest in the creation of large industrial enterprises with a full cycle of progressive technologies and equipment, the Chamber of Commerce and Industry of Tajikistan reports.

Chinese companies are actively investing in Tajikistan’s tourism, agro-industrial and hydropower sectors, and the production of steel products, tobacco, and non-ferrous and ferrous metals. China participates in the implementation of over 50 investment projects in Tajikistan. There are about 70 enterprises with Chinese capital and more than two hundred Chinese companies in the Tajik market.

China has invested more than $3 billion in the country’s economy over the past two years.

According to the National Development Strategy of Tajikistan until 2030, the country plans to increase the gross domestic product 2.6-fold in the next eleven years.


Due to the market economy development, Turkmenistan plans to raise total investments in fixed assets to 229.3 billion manat (about $65.57 billion) by 2025, of which 91.3% will be directed to the manufacturing sector to facilitate the opening of new enterprises and additional jobs. This is stated in the Socio-economic Development Program of Turkmenistan for 2019-2025.

Turkmenistan’s foreign trade is projected to reach $135.2 billion, of which exports will exceed imports by almost twice, Turkmenistan Today daily reports.

According to World Bank forecasts, Turkmenistan’s economy will grow by 5.6% by the end of 2019.


The Social Democratic Party of Kyrgyzstan (SDPK) parliamentary faction recognized the Government’s work on attracting investment as unsatisfactory. Some Parliament deputies proposed to liquidate the Investment Promotion and Protection Agency as non-performing. MPs have given the agency and the Economy Ministry three months to improve the situation.

The FDI inflow in Kyrgyzstan decreased by 31.5% in the first nine months of 2018 compared to the same period of 2017 amounting to $344.8 million.

Economy Minister Oleg Pankratov told about “certain obstacles to the FDI attraction”. The main problem is the lack of land plots to implement investment projects due to limited land resources, he said. There are also difficulties with the land transformation and limited energy capacity and poor infrastructure, Pankratov added.

Among the factors that hinder the FDI inflow the Minister also named the decline in profitability, tense situation in trade and sanctions against Russia, as well as unresolved international disputes in which Kyrgyzstan acts as a defendant.

Most of the foreign investment goes to the mining industry of Kyrgyzstan. But the recent conflicts between local residents and investors at the Makmal-Altyn factory in the Toguz-Torou district, the Shambesai deposit and in the mines in the Chatkal region in the south of the country had a negative impact on the investment climate in the country.

The process of returning investments from developing countries to donor countries is underway all over the world, the Minister added.


Source: timesca.com
Published: 16 February 2019

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