Central Asia offers exciting opportunities for investors with a strategy

One quick look at the map shows that the long-term success of Beijing’s ambitious global economic strategy, the “Belt and Road Initiative”, will hinge, to an extent, on the buy-in of the countries in Central Asia.

Many “outsiders” unfamiliar with the region still tend to think of those nations as one bloc, harking back to the way things worked in the Soviet era.

Today, though, with their differing systems and geo-economic priorities, the landlocked countries of the Eurasian heartland are far from unified in terms of their plans, outlook and approaches to opportunities. For potential partners and investors based in Hong Kong, China or elsewhere, that is one of the first lessons to absorb.

“There is no one-size-fits-all investment pattern for Central Asia and the Caucasus,” says Alexey Kalinin, director of the SKOLKOVO (Moscow School of Management) Institute for Emerging Market Studies. “Therefore, investing requires a lot of local expertise, specifically to understand the business culture, political system and some of the peculiarities that are likely to come up. Generally, these countries are very open to international cooperation, but it is also important to remember that the people are very attached to their national culture, traditions, religion and relationships.”

In some cases, steps taken to improve the investment climate centre on opening up established sectors to greater external participation. For instance, the likes of Kazakhstan, Azerbaijan and Turkmenistan, with their wealth of natural resources, are at the forefront of these types of development.

In others, the objective in attracting overseas capital and expertise is to upgrade infrastructure, enhance services, or kick-start new industries.

Accordingly, right across the region, plans are in place to further develop the transport, energy, water, and telecommunications infrastructure. There is a new focus on sustainable agriculture and non-wood forestry in Kyrgyzstan and Uzbekistan. Regulations are being updated to promote software development and services, notably in Armenia, which some international companies are now sizing up as a regional hub. And the renewable energy sector is starting to take off with Kazakhstan, in particular, showing the way.