Central Asia region -- An area to watch

October 18, 2006

The Business Development Forum of the Central Asian Regional Economic Cooperation (CAREC) was held yesterday, sponsored by China, the European Bank for Reconstruction and Development (EBRD), and the International Development Bank (IDB). More than 200 attendees identified steps to support growth in the member countries, which include Afghanistan, Azerbaijan, China, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, and Uzbekistan. These are the same countries that are in the Shanghai Cooperation Council (SCO).

Around $2-3 billion is needed annually to:

• Develop regional infrastructure, including roads, railways, oil and gas pipelines, and electric power lines.
• Make foreign investment more attractive by coordinating trade policy, creating regionally-based trade agreements, and modernizing customs to facilitate travel and trade between countries.

What It Means:

The Central Asian region has huge untapped reserves of oil, coal and natural gas, and is wedged between Europe and Asia, two of the world’s largest markets. The Central Asian countries are landlocked and in mountainous infertile terrain, making exporting and even development arduous. In addition, they are sparsely populated and low-income, making development of a domestic market difficult. Finally, most of these countries are former members of the Soviet Union, and are only now building market-based economies.

Without development, these countries are susceptible to drug trade, corrupt governments and terrorism. China is particularly concerned, since they border its westernmost and least developed regions, Mongolia and Xinjiang Uygur.

Action Steps:
Be aware of how these countries develop over the next 20 years. It is too soon to take specific action today, but their growth and alliances will affect your retirement portfolio in the long term.

Source: Asian Development Bank web site