JAN. 25 2016 (The Conway Bulletin) — Scottish distiller Inver House, which produces a range of alcoholic drinks from whisky to gin to beer, said it would target Kazakhstan, among other countries, after a 20% increase in production following a £10m ($14.3m) investment in its manufacturing site in Scotland.
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(News report from Issue No. 265, published on Jan. 29 2016)
JAN. 21 2016 (The Conway Bulletin) – Kazakhstan’s Central Bank increased interest rates on tenge held bank deposits by four percentage points to 14% in an attempt to defend the value of its currency. The Central Bank has maintained different interest rates on tenge and US dollar deposits for several years. US dollar deposits now earn interest of 2%, down from 3%.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 20 2016, BISHKEK (The Conway Bulletin) — Kyrgyz police raided the China-run Junda oil refinery in the north of the country and accused it of evading 54.5m som ($716,000) in taxes, charges that will strain Kyrgyzstan-China relations.
During the raid, police detained the company’s deputy director Lin Yu-shan and placed its accountant, Lyudmila Marchenko, under house arrest.
Baktybek Ashirov, head of the Kyrgyz state service for combating economic crimes, told Parliament that the Junda refinery had paid 30m som ($400,000) in taxes but that was far below what it should have paid.
“The inspections showed that they should have paid twice as much, that is, there was hiding of information and an underestimation of production,” he was quoted as saying by local media.
Junda hasn’t commented.
For foreign investors in Kyrgyzstan, the charges are a worry. They have previously complained that local elite and the authorities have colluded to pressure various businesses into paying more tax, fines or giving up equity stakes in projects.
And the Junda refinery, built by the China Petrol Company for $430m, has seemingly had to deal with a large dose of misfortune since opening in January 2014.
First, protests by locals complaining of poor air quality forced it to stop production, then crude oil supplies dropped so low that it had to limit output.
The authorities said that despite the raid and the arrests, the Junda oil refinery, one of two in Kyrgyzstan, was operating as normal.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 17 2016 (The Conway Bulletin) — Italian beef processing company Inalca and Kazakh company Aktep signed a deal to create a joint venture and build new factories in the country. The new company will increase Aktep’s current production five-fold to 12,000 tonnes per year of meat products. Inalca Eurasia, Inalca’s daughter company, said it will invest €100m ($109m) in the project.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 20 2016, DUSHANBE (The Conway Bulletin) — Hundreds of migrant workers are returning to Tajikistan everyday from Russia where an economic recession has destroyed once solid jobs.
At the international airport, flights from Russia were packed full of swathy, downcast young men dejectedly carrying their belongings in bags.
They told the same story.
They had moved to Moscow, or St Petersburg, or Yekaterinburg, or a host of other Russian cities, in search of work. The usual seasonal jobs, working in factories, on construction sites, cleaning roads. These jobs had seemed safe but a recession in Russia, triggered by a collapse in oil prices and sanctions imposed by the West, have wiped these out.
According to the Russian Federal Migration Service, there are now only 863,000 Tajik workers in Russia, down by nearly 30% from the 1.2m employed this time last year.
Idibek, a 24-year-old man, was standing outside the airport’s terminal building waiting for a friend to pick him up. He had just left his job in a St Petersburg chocolate factory.
“The money I earn is enough only for my living expenses in Russia,” he said.
“I used to make 30,000 roubles, which was around $800, and that was enough for me and my family in Tajikistan. Nowadays, the money I earn is a little bit more than $300.”
He didn’t know whether he would find any work now that he had returned to Tajikistan.
Russia’s economy is so important to Central Asia and the South Caucasus that its woes have hit its near-abroad like a tsunami and wreaked havoc.
Most currencies in the region have fallen by a third or half. Economic forecasts are down and Central Banks and governments are scrambling to rework budgets.
Tajikistan, with its reliance on remittances, is one of the countries hardest hit by the economic downturn in Russia. Its Central Bank has said remittances have dropped by around 40%, a heavy burden for the rest of the economy to shoulder.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 22 2016 (The Conway Bulletin) – When it comes to worker remittances from abroad, Tajikistan is the most heavily reliant country in the world.
Transfers from migrant workers, mostly residing in Russia, made up 42% of the country’s GDP in 2014.
But the economic downturn in Russia, which sent the rouble to its historical lowest against the dollar this week, and tougher border controls and regulations have made the life of many Tajiks impossible in Russian cities. Their return en masse to Tajikistan will undoubtedly put pressure on the local job market, which isn’t flourishing either, and also strain the Tajik somoni.
This week, Georgia also published remittances data, highlighting a 39% fall in transfers from Russia.
Together with shrinking trade turnover data, low remittances volumes are a barometer of the worsening economic environment across the entire former Soviet Union. They also underscore Russia’s role as the engine-room of economies in the former Soviet Union.
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(Editorial from Issue No. 264, published on Jan. 22 2016)
JAN. 22 2016 (The Conway Bulletin) – There is much excitement in our region over the emergence of Iran after over a decade of US-imposed sanctions.
New flight connections, new pipelines, new transmission lines and more is what a sanctions-free Iran could bring to the South Caucasus and Central Asia.
Iran has struck a deal with Air Astana to open the Almaty-Tehran air route. It has also revived talks with Turkmenistan about gas fields and pipelines around the Caspian.
Potentially, a new network to the east of the Caspian Sea could facilitate the European Union’s plans to import gas from the region. Azerbaijan may well be interested in such deals as well. In addition, Iran could become an important supplier of gas to both Armenia and Georgia.
On the flip side, Iran’s accession to the global oil market will undoubtedly drive the price of oil further down, it has huge oil reserves and production capacity, increasing the pressure on the budgets of oil-exporting economies in the region.
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Copyright ©The Conway Bulletin — all rights reserved
Editorial from Issue No. 264, published on Jan. 22 2016)
JAN. 21 2016 (The Conway Bulletin) – Inflation in Kazakhstan in 2015 measured 13.6%, nearly double the rate of 2014, media reported quoting the state statistics agency. The final tally confirms that prices increased rapidly after a tenge devaluation in August. The tenge has lost around 55% of its value since Feb. 2014.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 22 2016 (The Conway Bulletin) — At the end of December, Berik Otemurat, a senior official at Kazakhstan’s Central Bank, picked up the phone and called several newspapers to speak out against the way the sovereign wealth fund was being managed.
He was promptly sacked after his quotes started populating articles. He had said that Kazakhstan’s sovereign wealth fund to be doomed.
Mr Otemurat’s argument was that the sovereign wealth fund was risk averse and that it was pilfering away its cash on low yield investments making low returns.
Low oil prices and the economic slump would combine, he said, to wipe away the fund’s reserves in 6 to 7 years.
Timur Kulibayev, President Nursultan Nazarbayev’s son-in-law and powerful businessman, spoke out against Kazakh money managers to but he’s not in any real danger of losing his job.
He has criticised for months the behaviour of the Central Bank and, effectively, said their management of the economic crisis has been poor.
Mr Kulibayev repeated his criticism last week. His bottom line was: “The government cannot continue spending its reserves to prop up the tenge or the reserves will be extinguished in three years.”
Of course, Mr Kulibayev, the second-richest man in Kazakhstan, is in a much stronger position than Mr Otemurat, so his words will not make him a pariah of the elite. This parallel goes to show that there are only few people who can speak out against Kazakhstan’s economic policy and face no consequences.
The managers of the sovereign wealth fund have said they will change their policy this year. Let’s see if they can stop the drain.
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(News report from Issue No. 264, published on Jan. 22 2016)
JAN. 16 2016, TBILISI (The Conway Bulletin) — Georgian PM Giorgi Kvirikashvili gave $185,000 to the Georgian Orthodox Church the day after taking office at the end of last year, local media reported by quoting official documents, attracting derision from opponents.
The donation was taken from the President’s Reserve Fund, a cash stockpile used for natural disasters and other emergencies such as the Tbilisi flood in 2015.
The President’s Reserve Fund totals $2m, meaning that the amount donated to the Church measured nearly 10% of its total value.
“The money-flow from the state to the Church is unstructured and we need to support the Church’s educational infrastructure,” the PM’s office said in a statement.
His opponents, though, have accused him of using funds ear- marked to save lives and rebuild homes and businesses after emergencies for his own political needs.
Eka Chitanava, Director of the Tolerance and Diversity Institute, an NGO working on religious freedom in Georgia, said: “The latest $185,000 donated by the PM is significant. The money was taken from the natural disaster budget, a fund they are not supposed to use for this.”
The Georgian Orthodox Church is one of the most powerful institutions in Georgia and its support would be useful to Mr Kvirikashvili and his Georgian Dream coalition in helping to win a parliamentary election scheduled for October.
It holds great sway over Georgia’s traditionally conservative society.
There was also frustration among ordinary Georgians over Mr Kvirikashvili’s donation.
“I understand the church is important,” Khatuna Gvelesiani, 30, said. “But to take it from a fund which should cover natural disaster, like the flood we had in June, can’t be justified. I am outraged.”
The Georgian Dream was the first political party ever to be endorsed by the Church in 2012 although this support has waned. It faces a tough battle to win the October election.
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(News report from Issue No. 264, published on Jan. 22 2016)