The Rising Importance Of Central Asia

Economy

The Rising Importance Of Central Asia

Central Asia is central to China's Belt & Road Initiative (BRI), and is thus gaining economic significance. The absence of any meaningful regional economic development has been seized by China as an opportunity to develop this region logistically, pledging huge investments in infrastructure development.

India too is contemplating expanding its economic footprints in Central Asia. For Indian business houses, Central Asian countries can be a promising market. For instance, Uzbekistan, to attract foreign investment, has created a number of Free Industrial Economic Zones (FIEZ). Its "Navoi" FIEZ offers wide range of opportunities for foreign investors - this territory is subject to special legislative regulations including for taxes, currency, customs and simplified order for entry, stay and departure for non-residents of Uzbekistan. To ensure the most comfortable conditions for investors, production sites in "Navoi" FIEZ are provided with high level infrastructure. FIEZ enterprises are provided with adequate transport and service infrastructure, labour security systems and comfortable living conditions, the Uzbek government claims.

India, Kazakhstan to increase co-operation in textiles

India and Kazakhstan are deliberating upon increasing co-operation in the textile sector and exploring export of raw cotton from South Kazakhstan to India. This was discussed by the Kazakh-Indian Joint Working Group for cooperation in textiles during April 20-21, 2017 in the Southern Kazakhstan city of Shymkent.

It was the fourth meeting of the joint working group on textiles.The two sides also exchanged views on the possibility of India's participation in strengthening and development of light industry in the region. The Indian delegation also interacted with businessmen of the South Kazakhstan region, the report said.

The five-member Indian delegation was led by Subrata Gupta, joint secretary in the ministry of textiles and co-chair of the JWG. The 11-member Kazakh side was led by B Jamalov, Deputy Akim (governor) of the South Kazakhstan region, and co-chairman of the JWG. (SV). South Kazakhstan is implementing industrial development programmes in the region, such as the investment programme "South" (free economic zone). The country's economic goal is development of manufacturing sector and import substitution. At present, the textile sector has a few state-owned textile companies.

Kazakhstan apparel exports on the rise

Kazakhstan's textile exports have shown a robust growth of over 20% over the last 2 to 3 years. In 2016, its textile export totaled US$ 108 million. Apparel exports in 2015 were worth US$ 23.6 million, increasing 26.6% over 2014, and in 2016, apparel exports more than doubled. The government has been consistently supporting local textile producers who try to enter foreign markets. BRI is expected to further boost exports of textiles and apparel from the region. Central Asian economies are looking at BRI as a means to reach the remote markets of the Persian Gulf and South Asia, namely through a potential extension of the China - Kyrgyzstan -Uzbekistan rail link to Afghanistan and further south.

China-Kazakhstan Cross-Border FTZ could be the central market Of BRI

Wade Shepard, a journalist and author of Ghost Cities of China, is currently travelling the New Silk Road, doing research for his new book. In a recent media article he has given a first-hand report of how Chinese investment is helping the economic growth of the region. According to him, the International Centre for Boundary Co-operation 'Khorgos' (ICBC) is one of the most important developments in the region.

In his article he states, "Nearly two years after my first visit, I returned to the ICBC, and I must report that even after a string of political, financial, and corruption mishaps, nobody has given up on the place. As the new Chinese city of Horgos blossoms into an urbanised area of 30-story high-rise towers and a new epicenter for robotics manufacturing, the Khorgos Gateway dry port - the catalyst for a "new Dubai" - on the Kazakh side of the border doubles its container volume each year, and the Western Europe-Western China Highway, which passes right through Khorgos on its way from the coast of China to the Baltic Sea at St. Petersburg, gets set to officially open, the ICBC seems to have worked out some of its kinks and kicked development into another gear the logistics advantage is obvious."

According to Shepard, the project has moved ahead at a quick pace over the last two years, attracting significant foreign investment. "There is now a large warehouse of Senko-Lancaster, a Japanese-Kazakh joint venture that's focused on distributing goods from China to other Silk Road countries that just opened three months ago. Around the corner is a new hotel that started being built last year by a Kazakh developer and a Chinese partner. A little ways away is a large trade centre that is being developed via a Turkish / Kazakh JV that was at a mid-point of construction. In the centre of it all is a massive new Kazakh-Chinese trade centre called Samruk Central Square, which opened for business last summer - the first substantial commercial operation to open on the Kazakh side in the five year history of the ICBC."

Shepard states that, the ICBC is a bi-national, quasi-extra territorial free trade zone that has its own legal, tax, and immigration regimes. Besides, the Kazakhstan government is finally putting in place policies and legislations to make this ambitious project a success. He further reports that in the two years since his first visit, the ICBC now has five large shopping centres, branches of all five of China's big banks, a large hotel, and a Jiangsu province-sponsored business centre. "I saw three more trade centres, a massive exhibition hall, another hotel, and what will soon become the Silk Road Tower - an iconic 300-metre-high observation tower - that were all at various stages of construction." More importantly, ICBC is encouraging the confluence of cultures and peoples.

When the ICBC was announced it was not only marketed as a cross-border, tax-free commercial zone, but as a hub for entertainment and inter-cultural exchange. It was to be a place where merchants and travelers from across China, Central Asia, Russia, Turkey, and Europe could meet in the middle and stay for 30 days visa-free to dine on each other's cuisine and share each other's entertainment, along with buying each other's products. The master plan called for hotels, restaurants, museums, amusement parks, an anthropological centre, casinos, spas, and a university for foreign languages. It was to become a modern caravanserai, a vibrant international hub where all of the countries of the revived Silk Road could join together. Such "people to people" exchanges have become a central theme of China's Belt and Road initiative, and at every station along the way where China has a major presence there are not only plans for logistics hubs, manufacturing zones, and warehouses, but cultural, shopping, & entertainment facilities as well.

According to Kazakh officials, 10,000 visitors from China and 3,000 visitors from Kazakhstan are currently coming to the ICBC each day - which is up from the 1,500 daily visitors two years ago. The ICBC may in fact be "too big to fail," and may potentially become the central market of the entire New Silk Road.