The heyday of the yurts is long over, but the round tents of the nomads of Central Asia still play a role as a symbol of culture and history. In the Dasmia leisure complex in the Kyrgyz capital Bishkek, the world's largest yurt with a dome height of 22 meters and a diameter of 30 meters was recently built as an event hall, as well as a restaurant and fitness studio with a yurt-style swimming pool. A major project - also for the Viennese fittings manufacturer Herz. The company installed state-of-the-art heating technology and thus ensures that even the harshest Kyrgyz winter cannot harm the visitors. The project earned Herz a nomination for this year Silk Road Biz Award – with which the Außenwirtschaftscenter in Almaty, Kazakhstan, brings success stories of Austrian companies in Central Asia to the curtain every year.  

Economic delegate Clemens Machal explains that such impulses are sometimes still needed, since many Austrian companies do not yet have Central Asia on their radar. Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Tajikistan still have a touch of “very far away” - it is no coincidence that travel documentation available on the Internet is called “the most central end of the world”. "It feels very different here on site, however," says Machal and emphasizes: "There is really great potential for Austrian companies in the region." For Herz, for example, Central Asia is "a very important market," emphasizes Akper Saryyev, who is responsible for business development in the region.

Central Asia is not a unit

Central Asia can by no means be viewed as a homogeneous region. What unites the former Soviet republics is the influence of Soviet communism - for example in terms of state influence on economic issues. After the collapse of the Soviet Union, political relations between the young nation-states were shaped for years by border and resource conflicts, especially with regard to water use. And even if the signs have been pointing to relaxation for a few years now, there is still hardly any economic cooperation. Kazakhstan and Kyrgyzstan meet at least in the Eurasian Economic Union, which is dominated by Russia. “Anyone who does business in Russia can also bring goods into circulation in these countries without new customs clearance. In the other three countries, on the other hand, you have to look carefully every time: How high are the customs, what import requirements are there?”, explains Machal. 

In the project business are the World Bank, the Asian Development Bank and the European Bank for Reconstruction and Development important players. They finance major projects such as the modernization of old power plants. “The international financial institutions IFI prepare a large number of projects very professionally. This also offers Austrian companies easier and, above all, lower-risk access to the region,” affirms the economic delegate. Especially with projects on the subject of sustainability - water, sewage, waste processing and renewable energies - it is worth knowing the diverse programs of the IFI and applying for projects with local and foreign partners. 

DATA & FACTS

The most central end of the world

The five Central Asian countries show major differences in the key figures. Kazakhstan is the region's economic engine - and Austria's favorite trading partner. The other states have a lot more catching up to do. Uzbekistan in particular is seen as an attractive growth market.

Graphic of economic indicators in Central Asia

Kazakhstan: First address in Central Asia

Kazakhstan is not only by far the largest country in terms of area, but also the strongest economically in the region and thus also the biggest magnet for foreign direct investment (around 25 billion US dollars in 2019). The good business climate is obviously paying off: According to the World Bank Ease of Doing Business Index from the previous year, Kazakhstan ranks 25th out of 190 countries.  

For Austria, too, Kazakhstan is the central economic partner in the region, with trade currently still consisting of around 90 percent of the import of Kazakh oil. In 2019, crude oil worth almost 1,5 billion euros was exported to Austria. And around eight percent of the EU's total oil imports come from Kazakhstan. Machal emphasizes, however, that the country has much more to offer: “In terms of economic power, Kazakhstan is comparable to Turkey and has numerous exciting industries. Large parts of the industry are currently being modernized. Foreign technologies are of course in demand. ”400 Austrian companies are active in the country, around 40 are represented with branches, and the main export goods are pharmaceuticals. 

The Viennese fittings company Herz has also selected Kazakhstan as a location for business in Central Asia and operates offices in Almaty and the capital Nur-Sultan. As part of the construction offensive, Herz equipped the tallest building in Central Asia with more than 100.000 fittings - and thus carried out one of the largest projects in the company's history. "With its innovative city projects, Kazakhstan opens up many new opportunities," reports Saryyev. He is now expecting orders in Schymkent in the south of the country. The elevation of Schymkent to a "city of national importance" in 2018 is a guarantee for a boom in the construction industry. 

Movement can also be felt in the leisure sector. For instance, the Salzburg-based planning company Masterconcept is involved in the development and expansion of Kazakh ski resorts. "We have implemented more than 30 projects in Central Asia in the past five years," reports founder and CEO Gernot Leitner, who has also chosen Almaty as a mainstay for his company. In the previous year, Masterconcept played a leading role in the expansion of the Oi Qaragi ski area not far from the economic metropolis. New ski slopes, lift stations, restaurants and viewing platforms were built. In Leitner's eyes, the region's high tourist potential is just waiting to be increasingly developed.  

7.000 kilometers overland
Gebrüder Weiss transported 35 dredgers to Kerki in eastern Turkmenistan. Eight trucks were required per dredger.
Alpine ambitions
The Salzburg planning company Masterconcept carried out the planning and implementation of this Kazakh ski area.
Modern weaving machines
The Viennese plant manufacturer Starlinger completed the largest single order in the company's history in Uzbekistan - the customer is now the market leader for packaging fabrics in the region.
Yurt 2.0
Herz Armaturen equipped this Kyrgyz event hall in yurt style with the latest technology.
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Uzbekistan: Central Asia's whiz kid

Uzbekistan, the most populous country in the region with 34 million inhabitants, is also growing impressively. After the death of President Islom Karimov, who had been repressive for many years, in 2016, his successor Shavkat Mirziyoyev is opening up the country. He approached neighboring countries, liberalized the foreign exchange market, abolished the visa requirement for foreigners and decidedly invited foreign companies to support the restructuring of the state-dominated economy. The reform course earned Uzbekistan, among other things, the title “Country of the year 2019” from the business magazine The Economist. In the Ease of Doing Business Index, Uzbekistan ranks 69th today - 97 places better than eight years ago. German and Austrian companies and their technologies enjoy a particularly good reputation. After Russian, German is the most widely spoken foreign language in the country. 

“The country is modernizing itself very much thanks to the reform course. And despite the corona crisis, the Uzbek economy grew by 1,6 percent last year. Accordingly, there are currently many foreign companies taking a closer look at the country, including some from Austria, ”says the economic delegate Machal. The Uzbek electrical and chemical industry as well as the textile and food sector are considered attractive industries. As in Kazakhstan, the modernization of outdated industrial equipment, the expansion of infrastructure and tourism offer opportunities for Austrian companies. 

The Viennese plant manufacturer Starlinger can attest to this, having completed the largest single order in its company history in Uzbekistan. The Uzbek customer became the market leader for packaging fabrics in the region in one fell swoop - and Starlinger the winner of the Silk Road Biz Award 2020. Starlinger has been working on Central Asia for a long time. The company opened a representative office in Uzbekistan twelve years ago, and in the previous year they ventured to Turkmenistan "in order to have better access to business people in this country, which is known to be very self-sufficient," explains Volker Berger, regional sales manager Starlinger, the expansion. 

Interview with Clemens Machal, economic delegate in Almaty

Clemens Machal, economic delegate in Central Asia

Closer look

The economic delegate Clemens Machal recommends Austrian companies separate strategies for the Central Asian states - and does not consider the Chinese competition to be overwhelming.

Turkmenistan: Central Asian special case

Turkmenistan falls out of place even in this heterogeneous region: politically repressive and closed, economically complex (no WTO member, difficult access, lack of legal certainty). Nevertheless, the country is recognized as having potential - mainly because it has the fourth largest natural gas reserve in the world, at 19,5 trillion cubic meters. So far, this has mainly been exported to China - almost 90 percent of Turkmen exports go there. Austrian exports, on the other hand, have been on the decline since the record year 2014, in which goods worth EUR 128,7 million were delivered to Turkmenistan, while imports only came to a marginal EUR 14.000 in the previous year. But some companies are defying the trend, such as the Vorarlberg logistics group Gebrüder Weiss. 

The company has delivered 35 dredgers from a Dutch shipyard to Kerki in Eastern Turkmenistan, 7.000 kilometers away, so that the rivers and canals can be regularly cleared of sand and sediments from the nearby Karakum Desert with their help. This requires the 90-ton dredger ships that had to be dismantled into individual parts for delivery. In the end, eight trucks were required for each dredger. The last dredger reached its destination in spring 2020. For Thomas Moser, Regional Manager for Central Asia at Gebrüder Weiss, this is a special project simply because of its sheer size. 

The Vorarlbergers work the entire region, they have set up the logistics hub in Almaty and a representative office in Tashkent, Uzbekistan. "After successfully establishing our locations in Eastern Europe and China, it was a logical step to open up the markets in between," says Moser. 

Kyrgyzstan and Tajikistan: Central Asia's latecomers

Despite their rich resources, Kyrgyzstan and Tajikistan are the least economically developed and most indebted countries in the region. Both are extremely dependent on remittances from guest workers mostly working in Russia as well as foreign loans and investments, especially from China. 

Nevertheless, the two countries can be of interest to Austrian companies, for example because of their tourism potential. The construction of the Dasmia leisure complex in the yurt style in the capital of Kyrgyzstan shows that money is being invested in this. In Tajikistan, the expansion of hydropower is a cornerstone of the development strategy. With the help of the international development banks, 17 hydropower projects are to be implemented in the next few years - and the Styrian technology group Andritz has already been entrusted with the modernization of Central Asia's largest hydropower plant, Nurek (order value: around EUR 120 million). 

Oil field in Central Asia
Most important export: The team from the Almaty Foreign Trade Center on an oil field near Aktau, Kazakhstan

At the center of the flow of goods

The companies operating in Central Asia are optimistic that the five unequal countries will continue on their growth path. Volker Berger from Starlinger makes a prognosis: “The region will develop enormously in the next ten to 15 years. Due to further liberalization, the very young population and the Road and Belt Road, branches of industry such as construction, agriculture, pharmaceutical and medical technology will grow strongly. He also sees a high market potential in the field of plastics recycling. 

Within the Silk and Belt Road, to which he alludes, the mammoth infrastructure project of the Chinese government that connects Asia and Europe, the region can play a major role as a logistics hub. Geographically, Kazakhstan is at the center of the prestigious project - thousands of Chinese container trains are already rolling through the huge steppe state. While some voices in the country fear being overrun by China in several senses, others see opportunities in the major project above all: “For Central Asia, the Silk and Belt Road means an opportunity for the modernization of the economy as well as a gateway to many countries in the world. As a transit region, Central Asia will benefit enormously from the expansion of the infrastructure,” said Akper Saryyev from Herz. 

Through the crisis

The Central Asian countries were also badly hit by the corona crisis. Last but not least, remittances from guest workers working abroad were sorely lacking. In the meantime, however, mass vaccinations are also starting in this region. Kazakhstan not only uses the Russian vaccine Sputnik V, but also administers the QazVac vaccine it has produced itself (but has not been approved anywhere else so far). 

Even in times of strict travel restrictions, the country accommodated foreign entrepreneurs. Masterconcept CEO Gernot Leitner reports that he was given a one-year visa due to his time-critical work: “We were able to continue our projects at the desired pace.” Other companies such as Starlinger relied more on local technicians in combination with virtual support from Austria for customers on site.  

You can now travel to the region again with a negative test or a vaccination certificate in your luggage. The next good opportunity for this is in September: The Chamber of Commerce invites interested companies to attend an economic mission to Kazakhstan (21.-24.9.). A second trip is from November 8th to 12th to Uzbekistan. Economic missions follow to Turkmenistan (29.11.-3.12.) and Tajikistan and Kyrgyzstan (21.2.-25.2.22). Good ways to convince yourself that the most central part of the world isn't that far away.

Photos: Herz, Aussenwirtschaft Austria, Gebrüder Weiss, Masterconcept, Starlinger