Tajikistan: Chinese investors pivot from Kyrgyzstan

The most underdeveloped economies of Central Asia, Tajikistan and Kyrgyzstan, both have relied heavily on Chinese investment but throughout 2014 Chinese FDI throughout Kyrgyzstan has dropped some 35%. The main influencing factors have been the decision to join the EEU and the constantly changing political leadership in Bishkek. Although some good news has come out of Kyrgyzstan in the form of increased output from the Kumtor gold mine (up 25% in 2014). Despite the consensus that Kyrgyzstan has a more friendly and equitable business environment for FDI, Chinese Tajik projects have fared much better than their Kyrgyz holdings.

Zijin Mining Group, which has gold producing mines in both Tajikistan and Kyrgyzstan, said its Tajik assets outperformed the Kyrgyz ones by several degrees of magnitude. However, many analysts say that this could simply be a result of increasing interest in Tajikistan and not a result of waning interest in Kyrgyzstan. Most investors are apparently wary of how EEU trade regulations will affect their Kyrgyz holdings, and indeed, much of Kyrgyzstan’s export economy is based on re-exportation of retail and material goods from China into Kazakhstan and Russia.

Despite the uncertainty, railway construction is still proceeding, with President Almazbek Atambayev meeting with Chinese officials to discuss the implementation and planning.

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News Briefs:

  • Thirty have been killed in the bombardment of Mauripol in eastern Ukraine on Saturday. Some 102 people were injured in a shelling blamed squarely on pro-Russian separatists using Grad rocket systems, which was the same artillery system used to destroy a civilian bus two weeks ago. These Grad rocket systems, according to the Ukrainian Department of Interior, were likely distributed to the Donetsk People’s Republic by the Russian government. Whatever the case, the surge in the conflict has essentially completely derailed the nominal ceasefire that was agreed to back in September.
  • The World Bank is improving access to credit for Tajik companies to stimulate growth, according to a statement released after a conference between the World Bank’s Global Practice and Tajikistan’s National Bank last week. The World Bank is also advocating reform to improve transparency for foreign and local business operations. The initiative will focus on improving access to financial services for four key sectors: Health, Rule of Law, Drinking Water Supply & Sanitation, and Private Sector Development.
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