Caspian Business Journal

Weekly Round-Up: October 26 – October 30

A weekly review of events in the Caspian region.

This week: Growth in Kazakhstan’s retail sector is leading to speculation that consumer spending may replace oil as the driver of growth in the country. The Uzbek government plans to create almost a million jobs in 2010. Tajikistan announces an international tender and the Armenian government looks set to unveil substantial tax breaks for real estate developers.

Kazakhstan: Growth of the retail sector and a strengthening Turkish alliance

As SRI reports, German retailer Metro Cash and Carry plan to open between 10 and 15 stores in Astana, Kazakhstan with an estimated investment of $15 million to $20 million in each.

As Yekaterina Syrtsova, associate account manager of The PNB Company noted in her blog last month, the retail sector in Kazakhstan appears to be under going a considerable transformation. She highlights research published in the newspaper Panorama, which puts the annual turnover of the Kazakh retail sector at $10.5 billion. These recent developments and the enthusiasm of Kazakh consumers is even leading some economists to wonder whether consumer spending will take over from oil and metals as the driver of growth.

Economic relations between Turkey and Kazakhstan have been further strengthened following Kazakh President Nursultan Nazarbayev visit to Ankara last week. According to Today’s Zaman, the primary goal of the two countries is to double the annual trade volume to $5 billion from the current $2.5 billion.

As the Jamestown Foundation reports, Astana’s support for the Samsun-Ceyhan Pipeline is central to the new strategic agreement. Nazarbayev expressed his willingness to transport Kazakh oil and gas via Turkey, solidifying Turkey’s role as a transit hub for oil and gas. There are concerns that this could lead to even greater control by Moscow of oil companies working in the region, given that oil would be transported through routes controlled by Russia.

As SRI reports, the Karachaganaik consortium, a joint venture led by British BG Group and Italian ENI, is suspending legal proceedings against the Kazakh government. BG Group CEO Frank Chapman told reporters on a conference call. “I’m optimistic that we will not have to go through a [legal] process.” In the Caspian Business Journal this week, Aziz Burkhanov examines the motivation behind the Kazakh governments recent contractual revisions in the oil and gas sector.

Uzbekistan: A million jobs and gas debt repayment

Uzbekistan’s legislative chamber has announced the country’s 2010 employment plan, in accordance with investment, industrial localization, technical modernization and the anti-crisis programs, according to an announcement by the Ministry of Foreign Affairs. The document plans for the creation of 950,000 new workplaces over the coming year.

Kyrgyzstan has promised to pay off its remaining gas debt to Uzbekistan by December 1st, reports ferghana.ru. Akylbek Djaparov, first deputy prime minister of Kyrgyzstan, added that the consumption of natural gas in the country is shrinking. In a view of more expensive natural gas the industries prefer using solid fuel.

Tajikistan: Announcement of international tender

The Tajik Ministry of Transport and Communications have announced an international tender for the rehabilitation of the Obigarm-Nourobod section of the Dushanbe-Kyrgyz Border Road, ASIA-Plus reports. The tender has been announced as part of a larger multi-phase strategy aimed at improving infrastructure in the republic.

Armenia: Tax breaks for real estate investors

According to a post on huliq.com, the Armenian government is soon to unveil a new investment plan, according to which investors who invest 2.6 million or more dollars in the real estate and construction industries in Armenia will receive their taxes back in three years. The country’s real estate and construction sector were badly hit by the global financial crisis, but have seen modest growth in the past couple of months.

Director of the Armenian Center for National and International Studies (ACNIS), Richard Giragosian has suggested that Armenia would significantly benefit from the reopening of its border with Turkey are ‘somewhat exaggerated’ reports Trend news, citing ARKA news agency.

Georgia’s former Minister of Economy Vladimir Papava agrees, stating that until the problem of Nagorno-Karabakh have been resolved energy transportation through Armenia remains unlikely.

The views contradict IMF and World Bank predictions, cited by panarmenian.net, that the opening of the borders will necessarily stimulate economic growth in the two countries.