Tag Archives: business

Institutional loans

DEC. 23 2016 (The Conway Bulletin) — It’s been a good couple of weeks for inter-governmental banks’ Central Asia and South Caucasus portfolios. They have lent heavily in the region, supporting infrastructure projects from gas pipelines in Azerbaijan to solar and wind power projects in Kazakhstan.

It’s a win-win situation. The institutional banks want to lend the money that their shareholders – nation states – and their constitutions require. Demand may be a better way of putting it.

For Kazakhstan and Azerbaijan, the funds are a welcome source of cash at a time of economic constraint. Their economies are under huge pressure at the moment from the sustained low oil prices. Azerbaijan’s GDP has shrunk this year and Kazakhstan’s is stagnant.

They were once attractive options to lend to for commercial banks looking for decent exposure in Emerging Markets. Now they would find it difficult to raise the cash without paying prohibitively expensive interest rates.

That’s where the loans from intergovernmental banks come in. They are cheap and chunky.

The latest round of loans came with the involvement for the first time of the Asian Infrastructure Investment Bank (AIIB).

This it the China-based bank that was set up on Christmas day last year but only started operations in January this year. It has now invested $600m in a loan to Azerbaijan’s Southern Gas Corridor company which is helping to build the TANAP gas pipeline from the Caspian Sea to Europe.

The AIIB has put down a major marker, then, and potentially set itself up as a challenger to the traditionally West-based intergovernmental banks that have previously dominated.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Qatar starts flying to Georgian capital

DEC. 20 2016 (The Conway Bulletin) — Qatar Airways said that it was starting up a new four-times-per- week direct flight between Doha and Tbilisi. Qatar already flies direct from Doha to both Yerevan and Baku. Linking Tbilisi directly to the Qatar Airways network is important as it should increase Tbilisi’s ability to pull in international investment and tourism.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Comment: Kazakhstan wants to stimulate mortgages, explains Toleukhanova

DEC. 23 2016 (The Conway Bulletin) — Land has been an emotional issue in Kazakhstan.

In the spring, Kazakhstan saw some of its biggest ever protests with thousands of people demonstrating over plans to give foreigners more rights to land. The protests worried the government and also drew attention to existing laws which granted 1kmsq of free land to every Kazakh. Land is cheap in Kazakhstan, the ninth largest country in the world with a population of just 17m.

Since then hundreds of thousands of people have applied to receive their free slice of Kazakh steppe. This is rough land with no infrastructure, exposed to some of the harshest weather conditions south of the Arctic.

Faced with a sharp economic downturn, Kazakh President Nursultan Nazarbayev has been eager to please. He’s promised to build the infrastructure needed to make the land liveable. The problem is the Kazakh government doesn’t have much money.

Instead, the Kazakh government wants to attract private investment. Primarily, it aims to encourage private construction companies to stimulate construction with affordable loans and to trigger a house-buying boom by subsidising mortgages.

The new government program is called Nurly Zher, which means Bright Land in Kazakh.

Economy minister Kuandyk Bishimbayev has said that the government expects GDP to increase by 7.7% during the whole period of the programme and create annually 25,000 jobs.

But experts are doubtful. Kazakhstan needs comprehensive structural economic reforms rather than government handouts.

Representatives from business and the economy say people can’t even afford subsidised mortgages. Commercial banks are also wary of handing out mortgages. A 50% devaluation of the tenge has triggered a lack of confidence. Bad debt levels are approaching danger levels. This is coupled to a lack of political will. Ministers usually implement government programmes initiated by the President but rarely initiate something of their own. The price of failure would be too great. The unwillingness to dig deep into problems and concentrate only on surface issues is typical of the Kazakh government and reflect a political stagnation .

By Aigerim Toleukhanova, the Bulletin’s Almaty correspondent

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

ABD gives ‘critical’ loan to Azerbaijan

DEC. 22 2016 (The Conway Bulletin) — The Asian Development Bank said that it had a approved a loan of $500m to help support Azerbaijan during the economic downturn that has hit the region. Azerbaijan has been particularly hard hit by the collapse in oil prices. Over 75% of the government’s revenues come from oil sales. Its economy has shrunk by 4% this year. The ADB described the loan as “critical”.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Kyrgyzstan buys buses from Russia

DEC. 22 2016 (The Conway Bulletin) — Russian truck and bus producer GAZ said that it sold 30 city buses to Kyrgyzstan for 2.7m euro. It said that the buses were destined for Osh and that they were designed to carry up to 104 passengers.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)f

Chinese win LNG contract in Kazakhstan

DEC. 20 2016 (The Conway Bulletin) — Wison Engineering, a Chinese construction company that specialises in the oil and chemical sectors, said it had been awarded a contract to build a liquefied natural gas (LNG) facility in the Zhambyl region of southern Kazakhstan by Astana Trans Oil, a Kazakh state- linked company. Wison said the deal was part of China’s Belt and Road economic policy to develop trade and transport links through Central Asia. It said the plant would be operational by 2018 but gave no financial details.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

FDI in Azerbaijan falls by 5.3%

DEC. 19 2016 (The Conway Bulletin) — Foreign direct investment into Azerbaijan fell by 5.3% in the first nine months of the year, the Azerbaijani central bank said, more evidence of the country’s sharp economic decline. Oil revenues form the backbone of the Azerbaijani economy. These have collapsed over the past couple of years, mirroring a sharp drop in prices. Oil majors have been less willing, too, to invest in Azerbaijan’s oil sector because of the price fall.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Seimens eyes up Turkmenistan

DEC. 19 2016 (The Conway Bulletin) — German manufacturer Seimens is reportedly eying up extending credit to Turkmenistan to build the TAPI gas pipeline that will run to India across Afghanistan and Pakistan. Media said that the $2.5b loan deal would hinge around Turkmenistan buying Seimens equipment for its compressor stations. Turkmenistan considers the TAPI pipeline deal to be vital for its future economic success.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

China may invest in Kyrgyz airline

DEC. 22 2016 (The Conway Bulletin) — China Southern Airline is considering buying a 49% stake in Air Kyrgyzstan, Kyrgyzstan’s minister of transport, Zhamshitbek Kalilov, told media. The Kyrgyz government had, earlier this year, failed to sell a stake in the company. Any partner would have to upgrade the Air Kyrgyzstan fleet and take on its debt. Kyrgyzstan is looking to raise cash to get it through a sustained economic downturn.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)

Kyrgyzstan scraps tourist registration requirements

BISHKEK, DEC. 19 2016 (The Conway Bulletin) — Kyrgyzstan cancelled the reintroduction of a law that required all tourists to register with an interior ministry unit within five days of arriving in the country.

The law had proved unpopular with tourists, who didn’t understand the system and felt vulnerable to extortion, and also with businesses whose revenues had been hit.

Kyrgyzstan reintroduced the rule on Nov. 5 but never properly explained why. It was also seen as a step backwards for Kyrgyzstan which had scrapped tourist visas in 2012.

In a direct plea to the government, tourism leaders in the Karakol region of east Kyrgyzstan, popular for skiing and hiking, posted a video explaining the impact on their businesses.

“Tourism in Karakol is one of the main economic activities of the city, owing to which we live and eat,” Jamilya, 29, a owner of local cafe said in the video. “Your law on registration is the absolute opposite to the development of Kyrgyzstan and development of tourism and I ask you to hear the voice of the people and cancel the registration.”

Kyrgyzstan, which is short on natural resources but is renowned for its Alpine scenery, has tried to market itself as an adventure tourism destination. Tourism now accounts for nearly 5% of the country’s GDP.

Azamat Aitbaev, a member of Karakol city parliament and the initiator of the video messages told The Conway Bulletin that tourist numbers were down 70-80% compared to last year.

“December is the most active month in winter tourism, and we have already lost it because of this mandatory registration,” he said.

Under the reinstated rules citizens of Western countries will be able to stay in Kyrgyzstan for 30 days without registering and citizens of other FSU states, and countries with special bilateral agreements, will be able to stay in Kyrgyzstan for up to 90 days without registering.

ENDS

(News report from Issue No. 310, published on Dec. 23 2016)