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Central Asia: Potential and Opportunities of Investment

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Central Asia is a heart of the world and in order to control the world, the region should be under the control of a power. Historically, it is tied with its nomadic and silk route. It is a crossroad for the movement of people, goods, and ideas between Muslims land and Europe, China and India. In the 19thcentury, there was a competition between Britain and Imperial Russia to establish influence in the region and it might have been an effort for global balancing. The influence of British gradually rose while Russia declined with the humiliating defeat by Japan in1905. After the World War I, Imperial Russia collapsed ironically and was able to re-infuse itself as USSR with Central Asia as five provinces. From the World War II, USSR controlled Caucuses and Central Asia and was able to preserve its dominance in the region until 1991.Post disintegration of USSR, Central Asia appeared in to five autonomous states Kazakhstan, Kyrgyzstan, Turkmenistan, Uzbekistan, and Tajikistan that are land-locked and require the cooperation of neighboring countries for accessing world markets. The region, which is located in Eurasia and heartland, increased its geopolitical importance. The Region is volatile in nature with Kazakhstan and Turkmenistan only having relative stability. Although they have shown some economic growth, the other Central Asian economies are slim and petite.

Governance in the regional states has been continuously showing elitist pattern with being less responsive to popular aspirations. There is a constant factor in their foreign policies, which is the quest for security and for economic advantage. At the social level, the influential criminal groups have grown across the region, with rampant corruption, narcotics, poverty, and terrorism threatens all five states in Central Asia. Much of the state apparatuses are inherited from socialism- literacy, workers, infrastructure etc. The force structures and military thinking, inherited from soviet, is not compatible with modern Western systems. Contemporary Central Asian leadership has three primary concerns: maintaining power, fighting internal resistance and of development of autonomous economy..From the strategic prospect, the region is significant for geopolitical interest to China, Russia and United States. The region of estimated proven natural gas reserves are 232 trillion cubic feet comparable to Saudi Arabia. Kazakhstan and Turkmenistan possess about 100 trillion cubic feet and Uzbekistan 65 trillion cubic feet, Region’s oil reserves are 17.49 billion barrels. Kazakhstan has regions ‘largest proven oil reserves.

Central Asia states are seeking investment but the international community is more focusing on geopolitics than investment. The regional sates are pursuing cooperation and opportunities among themselves. The improved political cooperation and stability among Central Asian states also has opened opportunities of investment growing economies particularly for China and India. The region has two trump cards of educated youth and abundance of natural resources with stale and secure environment for foreign investors. The two rapid growing markets China and India are interested in the regional energy and mineral resources. Both the countries have developed close relationship with Central Asian states. Post reforms era, China has made progress in investment driven model for the manufacturing and investment beyond the border. Therefore, China has vast scope of investment in Central Asia. ‘OBOR’ project is a game changer investment of China in the region has introduced the region as a transit corridor for the Asia, Europe and Russia.

The region has promising investment potential in the fields of petrochemical, agriculture and tourism. These three sectors have low-level of foreign direct investment but with the great determination and priority of governments, it may be boasted. The region has a verity of petrochemical and agriculture commodities and raw material for processing to value the regional economy. The region also has potential to serve in both domestic and international meat market. Italy has invested in beef industry of Kazakhstan and has been earning much from several years. Another area of investment is a textile industry, which has immense opportunities of cotton and wool production. The Central Asian states have the same Soviet past but follow different directions for development aspirations.

Tajikistan is a more attractive country for the cross border investors due to its favorable environment for investment. The government is directing foreign investment to install new industries and modernize old industries. Aluminum, cotton, energy and tourism reveal potential of investment and attract foreign investors toward Tajikistan. The foreign direct investment in Tajikistan has increased from $270 to 317 million in 2018. According to the report of United Nations Conference on Trade and Development, Foreign Direct Investment stock in the country was 42.7 billion in 2018.The major investors are China, Russia United Kingdome and America have invested in energy and banking sectors. Chinese companies are investing in agro, tourism, hydropower and steel production sectors of Tajikistan. From the last two years, it has invested more than $3 billion in the country. According to the report of Chamber of Commerce of Tajikistan, China wants to create industrial enterprise with progressive technology and equipment.

Kazakhstan is the largest economy of Central Asia, which shares 70% of total investment in the region. According to National Bank of Kazakhstan, the foreign direct investment has increased by 9.8% with the amount of $4.1billion in 2018. The main areas of investment are transport, mining, trade finance, information technology, communication and insurance. Last year, 17.2% investment in fixed asset has increased. A significant growth in industry 27.1%, construction 20.6%, real estate 20.1% and agriculture 14.2% is also calculated. The government has arranged a list of $10.6 billion projects and has made legislation in permit system, taxation and custom system to attract investment in the country. The migration and visa process has been relaxed and the citizens of 62 countries can and travel Kazakhstan easily.

Uzbekistan has introduced visa for three years sin march 2019 for the participant of foreign investment companies. Furthermore, the foreign investors who invest more than $3billion can get residence permit for ten years. Within a one day, a certificate of origin of goods will be issued to foreign traders. With the participant of international financial institutions, 89 projects were launched in 2019. Then 31 project of more than $3billion are also planned with the help of World Bank and Asian Development Bank. Banks are able to open account for those who are Uzbek residents and businessperson with the requirement of FATF.

Turkmenistan is isolated country of six million people with rich natural gas reservoirs. The government tightly controls any foreign activities monitoring very closely. Visa system is very complicated but the businesspersons and investors are frequent. The business environment does not support foreigners because Turkmen language has long been in isolation. Therefore, businesspersons have to rely on English language for the business activities in Turkmenistan. However, international investors have shown their interest in investment and trade with Turkmenistan. The country has potential of investment in the sectors of agriculture, energy, construction and transport. The Foreign Direct Investment stock was $36 billion in 2018 of 81.6% of GDP. China, Russia, Uzbekistan and Kazakhstan are the main investors in Turkmenistan. Due to development of market economy, Turkmenistan has planned to raise investment in fixed assets $65.72 billion by 2025, which will facilitate manufacturing sector and will create many jobs in the country.

Kyrgyzstan is the landlocked, mountainous with an economy of agriculture, minerals and reliance on workforce abroad. Cotton, wool and meat are main agricultural products. Other sources of income are gold, mercury, uranium and natural gas. The country attracts foreign investment in construction of dames, mining, gas production and agriculture sectors but most of the investment goes to mining industry but due to conflicts between local population and investors in few districts of Kyrgyzstan the flow of investment decreased. The country is facing few challenges to the Foreign Direct Investment, the economy minister Oleg Pankartov has stated, “main problem is the lack of land plots to implement investment project due to limited resources”. He further added, “there are difficulties of land transformation and limited energy capacity and poor infrastructure”. That is why; the Foreign Direct Investment flow decreased 31.5% in 2018. The main investors in Kyrgyzstan are Britain, China, Canada, Kazakhstan and Russia. In 2019, the World Bank reported the rank of the country is 70th out of 190 countries. Kyrgyzstan is among those who have made progress in terms of investment and protection. The trade with neighbor countries has boasted. However, the country has wide potential in investment, to make contract and of payments.

In short, Central Asia is a top investment destination in the world. The most investment is in the natural gas, hydrocarbon and metal sector to extraction, processing to transportation. The other destinations for Foreign Direct Investment in the region are service sectors real estate development, agriculture, trade, communications, labor, expertise, technology, manufacturing and infrastructure development. China, European Union and Russia are major investors in the regional countries. Chinese investment is growing quickly in all economies of the region. Other key factor of investment inflow is the rate of return on investment that seems positive. In other words, to get long-term benefit from the investment, Central Asian countries must allow investors to benefit too.

PhD Scholar (Political Science) The Islamia University, Bahawalpur Lecturer at Heritage International College Arifwala

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No let-up in Indian farmers’ protest due to subconscious fear of “crony capitalism”

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The writer has analysed why the farmers `now or never’ protest has persisted despite heavy odds. He is of the view that the farmers have the subconscious fear that the “crony capitalism” would eliminate traditional markets, abolish market support price and grab their landholdings. Already the farmers have been committing suicides owing to debt burden, poor monthly income (Rs. 1666 a month) and so on.”Crony capitalism” implies nexus between government and businesses that thrives on sweetheart deals, licences and permits eked through tweaking rules and regulations.

Stalemate between the government and the farmers’ unions is unchanged despite 11 rounds of talks. The farmers view the new farm laws as a ploy to dispossess them of their land holdings and give a free hand to tycoons to grab farmers’ holdings, though small.

Protesters allege the new laws were framed in secret understanding with tycoons. The farmers have a reason to abhor the rich businesses. According to an  a  January 2020 Oxfam India’s richest one  per cent hold over four times the wealth of 953 million people who make up the poorest 70 per cent  of the country’s population. India’s top nine billionaires’ Inc one is equivalent to wealth of the bottom 50 per cent of the population. The opposition has accused the government of “crony capitalism’.

Government has tried every tactic in its tool- kit to becloud the movement (sponsored y separatist Sikhs, desecrated Republic Day by hoisting religious flags at the Red ford, and so on). The government even shrugged off the protest by calling it miniscule and unrepresentative of 16.6 million farmers and 131,000 traders registered until May 2020. The government claims that it has planned to build 22,000 additional mandis (markets) 2021-22 in addition to already-available over 1,000 mandis.

Unruffled by government’s arguments, the opposition continues to accuse the government of being “suit-boot ki sarkar” and an ardent supporter of “crony capitalism” (Ambani and Adani). Modi did many favours to the duo. For instance they were facilitated to join hands with foreign companies to set up defence-equipment projects in India. BJP-ruled state governments facilitated the operation of mines in collaboration with the Ambani group  just years after the Supreme Court had cancelled the allotment of 214 coal blocks for captive mining (MS Nileema, `Coalgate 2.0’, The Caravan March 1, 2018). Modi used Adani’s aircraft in March, April and May 2014 for election campaigning across the country.

“Crony capitalism” is well defined in the English oxford Living Dictionaries, Cambridge and Merriam –Webster. Merriam-Webster defines “crony capitalism” as “an economic system in which individuals and businesses with political connections and influence are favored (as through tax breaks, grants, and other forms of government assistance) in ways seen as suppressing open competition in a free market

If there’s one”.

Cambridge dictionary defines the term as “ an economic system in which family members and friends of government officials and business leaders are given unfair advantages in the form of jobs, loans, etc.:government-owned firms engaged in crony capitalism”.

A common point in all the definitions is undue favours (sweetheart contracts, licences, etc) to select businesses. It is worse than nepotism as the nepotism has a limited scope and life cycle. But, “crony capitalism” becomes institutionalized.

Modi earned the title “suit-boot ki sarkar” when a non-resident Indian, Rameshkumar Bhikabhai virani gifted him a Rs. 10 lac suit. To save his face, Modi later auctioned the suit on February 20, 2015. The suit fetched price of Rs, 4, 31, 31311 or nearly four hundred times the original price. Modi donated the proceeds of auction to a fund meant for cleaning the River Ganges. `It was subsequently alleged that the Surat-based trader Laljibhai Patel who bought the suit had been favoured by being allotted government land for building  a private sports club (BJP returns ‘favour’, Modi suit buyer to get back land, Tribune June21, 2015).

Miffed by opposition’s vitriolic opposition, Ambani’s $174 billion conglomerate Reliance Industries Ltd. Categorically denied collusion with Modi’s government earlier this month. Reliance clarified that it had never done any contract farming or acquired farm land, and harboured no plans to do so in future. It also vowed to ensure its suppliers will pay government-mandated minimum prices to farmers. The Adani Group also had clarified last month that it did not buy food grains from farmers or influence their prices.

Modi-Ambani-Adani nexus

Like Modi, both Adani and Ambani hail from the western Indian state of Gujarat, just, who served as the state’s chief for over a decade. Both the tycoons are reputed to be Modi’s henchmen. Their industry quickly aligns its business strategies to Modi’s nation-building initiatives. For instance, Adani created a rival regional industry lobby and helped kick off a biannual global investment summit in Gujarat in 2003 that boosted Modi’s pro-business credentials. During 2020, Ambani raised record US$27 billion in equity investments for his technology and retail businesses from investors including Google and Face book Inc. He wants to convert these units into a powerful local e-commerce rival to Amazon.com Inc. and Wal-Mart Inc. The Adani group, which humbly started off as a commodities trader in 1988, has grown rapidly to become India’s top private-sector port operator and power generator.

Parallel with the USA

Ambani and Adani are like America’s Rockefellers and Vanderbilt’s in the USA’s Gilded Age in the second half of the 19th century (James Crabtree, The Billionaire Raj: a Journey through India’s New Gilded Age).

Modi government’s tutelage of Ambanis and Adanis is an open secret. Kerala challenged Adani’s bid for an airport lease is. A state minister said last year that Adani winning the bid was “an act of brazen cronyism.”

Threat of elimination of traditional markets

Farmers who could earlier sell grains and other products only at neighbouring government-regulated wholesale markets can now sell them across the country, including the big food processing companies and retailers such as WalMart.

The farmers fear the government will eventually abolish the wholesale markets, where growers were assured of a minimum support price for staples like wheat and rice, leaving small farmers at the mercy of corporate agri-businesses.

Is farmers’ fear genuine?

The farmers have a logical point. Agriculture yield less profit than industry. As such, even the USA heavily subsidies its agriculture. US farmers got more than $22 billion in government payments in 2019, the highest level of farm subsidies in the last 14 years, and the corporate sector paid for it. The Indian government is reluctant to give a permanent legal guarantee for the MSP. In contrast, the US and Western Europe buy directly from the farmers and build their butter and cheese mountains. Even the prices of farm products at the retail and wholesale levels are controlled by the capitalist government. In short, not the principles of capitalization but well-worked-out welfare measures are adopted to sustain the farm sector in the advanced West.

Threat of monopsonic exploitation

The farmers would suffer double exploitation under a monopsony (more sellers less buyers) at the hands of corporate sharks.  They would pay less than the minimum support price to the producers. Likewise, consumers will have to pay more because the public distribution system is likely to be undermined as mandi (regulated wholesale market) procurement is would eventually cease to exist.

Plight of the Indian farmer

The heavily indebted Indian farmer has average income of only about Rs. 20000 a year (about Rs. 1666 a month). Thousands of farmers commit suicide by eating pesticides to get rid of their financial difficulties.

A study by India’s National Bank for Agriculture and Rural Development found that more than half of farmers in India are in debt. More than 20,000 people involved in the farming sector died by suicide from 2018-2019, with several studies suggesting that being in debt was a key factor.

More than 86 per cent of India’s cultivated farmland is owned by small farmers who own less than two hectares of land each (about two sports fields). These farmers lack acumen to bargain with bigger companies. Farmers fear the Market Support Price will disappear as corporations start buying their produce.

Concluding remarks

Modi sarkar is unwilling to yield to the farmers’ demand for fear of losing his strongman image and Domino Effect’. If he yields on say, the matter of the farm laws, he may have to give in on the Citizenship Amendment Act also. Fund collection in some foreign countries has started to sustain the movement. As such, the movement may not end anytime soon. Unless Modi yields early, he would suffer voter backlash in coming elections. The farm sector contributes only about 15 per cent of India’s $2.9 trillion economy. But, it employs around half its 1.3 billion people. 

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Brighter Future Waits Ahead

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Our footprints on the sands of time are about to be washed up by the next wave. We need to set out new paths, urgently, after all, the real power of wisdom not hidden in knowing it all; but in not knowing enough. Because whatever we may think of our mastery of our own crafts is in reality achieving ‘mastery’ as an acknowledgment of arriving at a point of not knowing enough therefore continuous hunger and craving to search for bigger answers. Otherwise, just a few experts would have been enough for the world. Observe how after two millennia passed, we still have not figured out achieving grassroots prosperity, diversity, tolerance and equalities.

Only if our new wisdom understood will we advance or else stay lost at the beaches. Our new world of today needs new words, new vocabulary, and new narratives to allow correctly knitting the tapestries of our miseries and equally weaving strong and fit enough sails for the coming stormy winds of tomorrow. Muffled in the old-fashioned terms of the past, the double-sided, agenda-centric language used today, already lost its authenticity. Today’s language mummified in bandages of political correctness, already tombed intellectualism and spoken words into deprivations, while whatever enunciated as rehearsed acts via teleprompters is still  undecipherable by the global populace. Realities now demand change to honest words to assemble new narratives, to calm restless citizenry to deliver its truthful meaning in bold progressions.

Loudly enunciated are our acceptances of our victory and defeats or we stay silent to our deceptions. There is a brighter future ahead, indeed, but firstly, if we only accept for a moment that our previous attempts on grassroots prosperity creation were failures of sorts, suddenly pandemic recovery appears meaningful. If we also accept our previous trajectory of economic development spanning the last decade was somewhat hit or miss on targets, suddenly, new horizons appear.  If we accept also that all our power-skills and rich-knowledge almost maxed out, suddenly brighter futures start to appear. Because, only when we discover a window, find some empty spaces tumble into voids, and chasms new things start to pour in, new ideas flourish, the processes start as enlightenment for new discoveries to commence. No matter where we stand on this earth, a new world has once again brought us on crossroads to face new transformation for brand new adventures

Our limitations on our performance are true measurements to qualify us to enter the cockpits.  Historians will recognize this pandemic recovery as a very special moment; declare this era as a small blip in the course of human endeavor and a glitch that ‘possibly’ corrected the role of government administration to allow far more talented and upskilled citizenry at helm to advance.  One: The corporate leaderships of technology companies acquired extraordinary smarts many times more powerful over what their own top national political leadership team displays and thus unable to tackle any technology sides of the economy.  Two: Digitized and technologically advanced vertical sectors across 200 nations and 10,000 cities shut out national political leaderships and local institutional administrators as obsolete and unprepared to deal with the required speed of response and execution and therefore losing future control of the national economic drivers of national economy in global jurisdictions. Frequent flyers know a lot about flying city to city but definitely are not certified and qualified pilots to fly jumbos around the world. The power play of the digital economy once enters the ocean of platform economies of the world will become extremely specialized, therefore, unless prepared, nation-by-nation, top political leadership and government agencies will lose grip on all such technology advancement games and become simply spectators. Study crypto-currency deployments, Space travel and satellite transportation, AI and trading games, Jack Ma and China over ruling financial sectors as a start.   

Our mobilization of hidden resources and talents are proof of what we just learned coming out of fog. For the first time in 100 years, globally speaking, a new world emerges; The pandemic has already prepared the humankind to rediscover “the meaning of life” the purpose of “co-existence” while to the poor of the world “re-learn to survive” and to the rich “re learn to create common good”.  Is pandemic germinating our entrepreneurial intellectualism? Is this the kind of transformation humankind has been waiting for over a century? Why is futurism calling for futuristic literacy?

Our billion hungry every night despite two millennia past, we must show our resolve or our negligence will destroy us. The poor of the world; in neglect, misery and almost buried alive, Millionaires anxiously digging their own graves,  now exhausted, Billionaires digging deeper to find their own legacy if any and Trillionaires buying up heavens in the clouds to block other voices.  The Towers of Babylon going half empty, displaying signs of ‘vacancy’ fires of hell at the base only provide gentle warmth to the upper celestial floors of luxury living. Where sweetness is missing in the bitter medicine of our times ignored but candies alone will never cure; the message in the bottle found on the bloody beaches tossed but the noise of fakery drowns us all. Imagine, if we compressed the last two millennia in two minutes. We just evaporated at the last second. Universe did not even notice.

Wondering, what was the possible message in that bottle, if any? 

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Kickstarting the U.S. Economy: A Rebound or Further Inequity?

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The global economy has seen its fair share of peculiarity in recent years; much attributed to the developing economies rather than the stable sovereigns of the world. However, the wave of the pandemic has toppled the conventional trend unlike ever before. Whilst the developing economies gain traction, the European economies are crumbling under the whelming pressure of the pandemic.

The US economy, however, is on its track to rebound at nothing but an accelerated pace that is optimistic as it is sinister. Forecasters have been predicting an economic boom post the pandemic for months yet the claims were rebuffed as overly quixotic. The economic boom is on cards that could contract the surging unemployment rates and could even push the economy towards a prolonged growth trajectory.

The economic recovery is evident from the jump in retail sales all over the US: levels anticipated to bloom further amidst speculations of a hefty aid package advocated by president Biden. Moreover, the FED has predicted a growth of 4.5% in the US output; the highest predicted level of GDP growth in over two decades. The optimism is matched by the leading economists, likes of Goldman Sachs putting a word in their perspective: ‘We [US] are very likely to get a very high growth rate’.

The budding confidence in the economy is majorly linked to the rollout of vaccines. Albeit slow-paced, the vaccination drives are striving hard to meet targets set by the authorities. Coupled with the shift in the government, the national focus is primarily etched in the campaigns to ensure timely inoculation before the virus strikes again.

However, the inoculation would grip over the country for most of the year 2021, keeping the natural order of the country at bay. The economy, thus, is bolstered by Federal aid packages; pouring trillions of dollars in rental packages and unemployment benefits. The resulting is a pile of surplus disposable income which awaits an opportunity to be expended. Given the mounding pressure of recession and health crisis cumulated over the yesteryear, the income would be sufficient enough to suffice under the newfound rental and mortgage reliefs purported by the federal government. Combined with free public transportation, the added monetary value could be utilized as soon as the country bounces back from lockdowns.

The surplus income could further expand if congress approves the magnanimous aid package proposed by the democrats under the plan of president Joe Biden. As vaccinations continue to immunize the population and income blooms within common households, approaching summers could prove to be a haven for the US economy to shine bright. Peak demand for hotels and transport is expected in the second and third quarter of 2021; unemployment is predicted to level down to 4.1% due to surging demand for labour in the HoReCa sector whilst simultaneously kickstarting the dormant business of airlines and smattering of other means of transit.

Even the most experienced economists, however, have pitched reservations to the envisioned rebound of the US economy. The prime facet impeding that prospect is the intermittent campaign of vaccination. The inoculation has been slower than expected and the adverse effects of the jabs have instilled a fear that threatens to further stall the efforts to vaccinate the population. With the ensue of new virus variants in California and irregular vaccination drives, the expected recovery could defer to late 2021 and even 2022. This could make the US vulnerable to the 3rd wave of Covid as per the pattern of cases observed last year.

The political standoff is another factor that could push economic prosperity into despair. The simmering tensions post the impeachment trial of Donald Trump have surfaced over the last two months. The demarcation in the senate is as clear as it has ever been over decades and even the split in the republicans has brewed post the acquittal of Trump. Both parties locking horns this early casts a confusion that stood out in the recent energy crisis in Texas; the federal and state governments bumping heads whilst the state drowned in stark darkness and bitter cold. This disparity paints a bleak picture for the United States given Mr. Trump could stir more instability with the prospect of running the election again in 2024.

The escalating oil prices also indicate a tough road for nearly the entirety of the manufacturing sector of the economy along with any lucrative opportunity to the airline industry in the forthcoming months. As the world still reels from the pandemic, the crush in the oil supply from the US has rendered the valuation at high levels; a contrast to the plummeting prices just last year. The Brent index has surged more than 28% since December 2020, pushing the prices up to as high as $66 per barrel. With the forecasts expecting Brent to further climb up the trajectory and the subsequent production crunch from Russia and OPEC members, oil prices could rise up and beyond $70 per barrel. This price surge, as a result, could convert the booming economy into hyperinflation since the US would continue to rely on imported petroleum until it regains the economic traction to be self-sufficient again. Thus, the pilling income could transition into sky-high prices post the pandemic.

Mirroring the recession of 2001, while the economy started to expand within a year, the unemployment rates remained high for the better part of the decade. Drawing parallels from that period, while the growth is projected to touch the 5.8% mark later in the fiscal year of 2021, a congruent projection could not be made on the front of economic recovery. Although high inflation has never been an issue for the US in the past, unlike the developing nations, sluggish recovery in employment, brimming tensions in the political arena, and irregular inoculation rates could widen the gap of wealth in the country. Inequity, thus, is inevitable as an opportunity cost of growth at the expense of an inflating economy. The affluent strata of the society would reap the benefits much more rapidly than the working class. Whether it would be of long-term virtue or despair: time is the deciding factor for the common citizens of America.

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