Doing Business in Central Asia: Partner of Choice?
Ben Thompson
Key Takeaways:
Central Asia is an established node in global trade, energy, and minerals markets, offering diversified opportunities beyond its Soviet legacy.
Strategic shifts—reduced dependence on Russia, growing Chinese influence, and proactive national reforms—have increased engagement opportunities from international actors across Asia, Africa, Europe, and the Gulf.
Understanding each of the five national markets is critical: Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Turkmenistan follow distinct development strategies, regulatory frameworks, and sector priorities.
Projects and partnerships in the region often combine capital, technical expertise, and local knowledge, which can help navigate operational complexity and regional dynamics.
Introduction: Why Central Asia Matters Now
Central Asia is no longer just a transit corridor. With ambitious national development strategies and structural reforms, the region has established itself as a prominent node for trade, energy, and critical minerals. Markets are expanding in infrastructure, green energy, logistics, and digital services, as governments pursue domestic modernisation objectives. Effective engagement requires understanding both local priorities and sector-specific demands to build credible, long-term partnerships.
The war in Ukraine and the collapse of EU–Russia trade have accelerated the region’s strategic importance. EU–Russia trade has fallen by approximately 80% since 2022, particularly in energy and strategic materials, prompting European and global actors to diversify supply chains. Central Asia is increasingly being considered as an alternative partner for these needs. At the 2025 EU–Central Asia Summit, European Commission President Ursula von der Leyen described the region as a ‘partner of choice’, reflecting growing confidence in the region’s integration with the global economy and emerging opportunities in growth sectors.
The region’s political strategies are also shifting—Kazakhstan’s Zhana Kazakhstan and Uzbekistan’s New Uzbekistan—highlight reform priorities such as political and economic modernisation, workforce development, and institutional reform. Understanding these agendas is essential for designing projects aligned with national objectives while ensuring sustainable, long-term business viability. As these five markets assert greater autonomy, Central Asia is becoming a competitive arena requiring careful navigation of local priorities, governance models, and the broader regional landscape, including China, Russia, Iran, and Gulf actors.
Strategic Context: Realignment and Opportunities
Central Asian countries are recalibrating foreign partnerships. While Russia retains influence through the Eurasian Economic Union (EEU) and Collective Security Treaty Organisation (CSTO)—notably during Kazakhstan’s 2022 “Bloody January” unrest—both institutions face challenges, as sanctions and selective enforcement have constrained Moscow’s leverage. In Kazakhstan, a significant number Russian-owned firms have scaled back operations since 2022.
China has emerged as the dominant external player through the Belt and Road Initiative (BRI), financing pipelines, railways, and transportation hubs like the Khorgos Gateway, a major dry port facilitating China–Europe trade. In 2023, China–Kazakhstan trade reached approximately USD 41 billion, slightly exceeding EU–Kazakhstan trade flows and underscoring Beijing’s commercial influence.
Other international actors—including Gulf states, Turkey, South Korea, and emerging African investors—are participating in infrastructure, energy, and industrial projects. European engagement often emphasises regulatory alignment, sustainability standards, and capacity-building approaches, appealing to governments seeking both capital and credibility. Central Asian governments are leveraging this competition through market reforms and governance improvements, with Kazakhstan and Uzbekistan leading efforts to diversify economies and attract international partnerships.
Market Overview: The Five Distinct Markets
Kazakhstan
Kazakhstan stands out in Central Asia for its resource wealth and infrastructure potential. Not just the world’s largest uranium producer, Kazakhstan maintains ~30 billion barrels of proven oil reserves and significant deposits of copper, and rare earth metals like niobium. The country is a critical supplier for global energy and advanced manufacturing sectors. Global partnerships are deepening, particularly in hydrocarbons and critical minerals, though non-Chinese and non-Russian firms have historically been less represented, the recent retreat of Russian businesses has opened new space for international investors to gain a stronger foothold.
Infrastructure development is reshaping Kazakhstan’s regional role. The Middle Corridor and Trans-Caspian International Transport Route connect China and Europe via Kazakhstan, bypassing Russia and boosting the country’s logistics capability. Large-scale projects, including pipelines, dry ports like Khorgos, and digitised customs systems, support this ambition. EU-backed connectivity programmes are also enhancing digital networks for schools, villages, and businesses, strengthening the foundations for regional trade.
Kazakhstan is positioning itself as a potential investment node for green energy, most notably through the proposed USD 58 billion Svevind Energy Group hydrogen project. If realised, it would be among the world’s largest hydrogen initiatives, designed to supply Germany with clean fuel and support Kazakhstan’s decarbonisation agenda. While still at the planning stage, the project underscores both the country’s renewable energy ambitions and the scale of investment required to translate them into reality.
Larger reforms under President Tokayev’s Zhana Kazakhstan agenda reflect a determined push for political and economic modernisation. Measures to strengthen civil society engagement, enhance regulatory frameworks, and promote transparency are designed to attract capital, expertise, and innovation. These reforms aim to create a more predictable environment, encourage knowledge transfer, and facilitate durable local partnerships, positioning Kazakhstan as a leading destination for sustainable investment in Central Asia.
Kazakhstan presents a range of sectors where international investment has been growing, including energy infrastructure, renewable energy, mining, logistics, and digital connectivity. With its resource base, strategic trade routes, and reform-driven growth agenda, the country is well-positioned to become a central partner in European energy and supply chain diversification.
Uzbekistan
Uzbekistan has positioned itself as a diversified growth economy in Central Asia, leveraging its substantial resource base and expanding infrastructure to support modernisation. The country is a leading regional producer of gold, copper, and uranium, while lithium deposits under exploration and development could play a growing role in global battery and clean technology supply chains. Alongside strong agricultural output, Uzbekistan is investing heavily in transport corridors, including the Uzbekistan–Turkmenistan route, which links Tashkent to Turkmenbashi and onward across the Caspian to Baku, enhancing its role in the wider trans-Caspian trade network.
In energy and industry, Uzbekistan is prioritising renewable power sources, such as hydropower and solar, to reduce reliance on traditional fuels and increase long-term energy security. Notably, Masdar’s 100 MW Navoi solar plant – the first large-scale renewable project of its kind in Central Asia – has set a benchmark for foreign investment in clean energy, with further projects under development. Industrial advancement remains central to the country’s strategy, with efforts to upgrade legacy sectors like chemicals, textiles, and agribusiness, while encouraging new investment in value-added production and technology-driven manufacturing.
The government’s New Uzbekistan programme highlights an ambitious reform agenda, focused on strengthening workforce development, education systems, and institutional capacity. These reforms aim to create a more transparent, efficient, and internationally competitive business environment, while gradually increasing opportunities for private sector participation and foreign investment.
Uzbekistan is developing a diversified economy with activity across manufacturing, infrastructure, energy, digital services, and education. Industrial upgrades and transport expansion are central to the country’s development plans, alongside initiatives supporting renewable energy. Growth in digital services and education partnerships reflects an emphasis on skills development and innovation. With its strategic location, young population, and ongoing development efforts, Uzbekistan is positioned as an important player in regional industrial and technological collaboration in Central Asia.
Turkmenistan
Turkmenistan holds some of the world’s largest natural gas reserves, with proven deposits estimated at around 400 trillion cubic feet. This resource wealth underpins state-led efforts to expand petrochemical and gas-chemical industries, aimed at increasing value-added processing rather than reliance on raw exports. At present, Turkmen gas exports flow overwhelmingly to China, with limited volumes to Russia. While discussions of westward diversification through the Trans-Caspian corridor have periodically resurfaced, practical progress remains limited, and Turkmenistan’s role in European energy security is still more potential than reality.
The government has begun a gradual and tightly managed process of market liberalisation, engaging cautiously with international partners to modernise infrastructure and diversify the economy while maintaining strict state oversight. Unlike Kazakhstan and Uzbekistan, reforms are less extensive, reflecting a prioritisation of stability and control over rapid transformation.
Turkmenistan’s economy is centered on gas extraction and processing, alongside infrastructure development aimed at supporting trade routes and industrial modernisation. Turkmenistan has also signaled interest in science and technology partnerships, particularly those that facilitate knowledge transfer without challenging state sovereignty. While renewable energy and digital services are emerging areas, they remain small in scale. The energy sector remains the primary driver of economic activity, with downstream petrochemicals and connectivity projects representing additional areas of commercial engagement and long-term economic development.
Turkmenistan’s political environment is highly centralised, with strict legal restrictions on foreign participation, particularly in onshore gas exploration and production. While recent laws suggest selective openings, risk remains elevated, requiring careful assessment and long-term strategic planning.
Kyrgyzstan & Tajikistan
Kyrgyzstan and Tajikistan are smaller yet strategically significant economies in Central Asia, characterised by complex operating environments. Both countries are rich in hydropower potential, with vast untapped water resources capable of supporting renewable energy generation for domestic use and regional exports. Mineral reserves are more limited than in Kazakhstan or Uzbekistan, but select gold, silver, and copper projects are developing, albeit with elevated political and regulatory risks. Infrastructure is underdeveloped, highlighting the importance of transport networks, energy grids, and digital connectivity for broader economic growth.
Market reform efforts in both states are gradual but notable. Governments prioritise small and medium enterprise development, sustainable water management, and digital services as drivers of economic diversification. These initiatives aim to empower local entrepreneurs, improve resource stewardship, and expand participation in regional trade networks. Efforts to digitise government services and promote cross-border e-commerce are also emerging, although they remain at an early stage.
Kyrgyzstan and Tajikistan have notable potential in renewable energy—particularly hydropower—alongside water management, small-scale manufacturing, and IT/telecom services. These sectors correspond with domestic priorities and regional development objectives, and are increasingly the focus of collaboration with international development institutions.
Strategic Takeaway: Kyrgyzstan and Tajikistan are integral to the broader Central Asian context but remain distinct markets with unique political, regulatory, and social dynamics. Their energy, digital, and industrial sectors are developing under conditions that require careful navigation of local governance and market structures. These markets are emerging as areas where targeted, sustainable, and technically informed initiatives can have meaningful impact in energy and digitally enabled development.
Investment Landscape
Since the early 2020s, energy and minerals have remained the backbone of Central Asia’s investment proposition. Oil, gas, uranium, lithium, and copper continue to anchor state revenues and attract foreign capital. At the same time, governments are deliberately linking hydrocarbons to their green transition—channeling fossil-fuel rents into large-scale renewable projects. Hydropower and utility-scale solar now represent some of the region’s highest-return, regionally tradeable investments. This dual-track strategy allows states to modernise grids while positioning themselves as long-term suppliers of both traditional and clean energy.
Mining is entering a new phase. While earlier decades were dominated by large foreign concessions, new projects prioritise joint ventures, technology transfer, and community benefits. In Kyrgyzstan, the Solton-Sary gold project at the Buchuk site—launched in 2024 with Chinese and Kyrgyzaltyn participation—is designed to produce around 2 tonnes of gold annually, creating several hundred jobs and funding local development. Similar patterns are emerging in Uzbekistan’s lithium and copper industries, where joint ventures increasingly focus on downstream processing and local participation to maximise domestic value creation.
Transport infrastructure is equally central. The Trans-Caspian International Transport Route (Middle Corridor)—linking China to Europe via Kazakhstan, the Caspian Sea, Azerbaijan, and Georgia—has become the region’s strategic spine. Investment in dry ports, railway upgrades, and digitised customs systems is reducing bottlenecks and improving connectivity. Logistics hubs such as Khorgos and Aktau are expanding rapidly as firms seek alternative, Russia-free trade corridors.
Across the region, engagement models vary. Gulf-backed ventures often prioritise rapid deployment and scale, while European initiatives emphasise regulatory alignment, ESG standards, and capacity-building. Chinese financing remains influential, particularly in infrastructure, though competition is rising. Long-term outcomes tend to reflect combinations of patient capital, technical expertise, enforceable local partnerships, and approaches adapted to each country’s political and regulatory environment.
Strategic Considerations
Central Asia presents significant opportunities, but success depends on more than capital deployment—it requires alignment with national priorities, local governance, and regional geopolitical realities. Rapid-deployment actors, including China and Gulf states, often deliver large-scale projects quickly, focusing on speed and scale. In contrast, European and UK approaches emphasise long-term capacity building, workforce development, and regulatory alignment, creating durable networks and reducing operational risk. Emerging African and Asian investors are targeting niche sectors, leveraging specialised expertise for first-mover advantages in areas such as renewables, digital services, and industrial equipment.
Alignment with national strategies remains a key factor in shaping economic outcomes. Governments prioritise energy diversification, green transition, and infrastructure, presenting opportunities in lithium, copper, rare earths, hydropower, and transport corridors such as the Middle Corridor. Central Asian states favour collaborative partnerships that combine capital with skills transfer, capacity building, and measurable outcomes, rather than passive investment.
Navigating regulatory frameworks, informal networks, and regional geopolitical balances—including the influence of Russia, China, and Gulf states—is a critical dimension of the operating environment. Success in these contexts is often associated with approaches that combine local insight, technical expertise, and adaptive strategies, enabling engagement with evolving opportunities while supporting broader development and sustainability objectives.
Case Studies of Market Engagement
In Kazakhstan, the Swedish-German JV Svevind Energy green hydrogen project, valued at USD 58 billion, exemplifies large-scale investment in renewable energy, integrating commercial opportunity with the country’s green transition goals. Uzbekistan has pursued industrial modernisation programs alongside education and digitalisation initiatives, demonstrating how investments can strengthen workforce capacity while supporting broader economic reforms. Tajikistan’s USD 6.4 billion Rogun Dam project highlights opportunities in hydropower, expanding regional energy capacity and contributing to energy security across Central Asia.
Transport infrastructure also presents strategic investment avenues. The Trans-Caspian Transport Corridor connects China to Europe while bypassing Russia, offering European logistics companies a critical route that enhances trade efficiency and regional integration.
Recent developments further illustrate a renewed U.S. focus on the region. In September 2025, Kazakhstan signed a USD 4.2 billion agreement with Wabtec for 300 freight locomotives, enhancing regional transport infrastructure and supporting American jobs. Uzbekistan Airlines committed to purchasing 22 Boeing aircraft, valued at USD 8 billion, as part of its aviation modernisation strategy. The U.S. has also deepened multilateral engagement through the C5+1 Secretariat meeting in Dushanbe, focusing on critical minerals and regional economic cooperation. Meanwhile, the Zangezur Corridor agreement between Armenia and Azerbaijan underscores Washington’s interest in supporting key transit corridors that improve connectivity while diversifying routes away from traditional regional powers.
Collectively, these examples show how investors can combine commercial, technical, and governance contributions to align with local priorities, creating projects that are scalable, sustainable, and mutually beneficial.
Risk and Opportunity Management
Central Asia presents a complex operating environment shaped by political centralisation, regulatory variation, legal uncertainty, and regional volatility. According to Transparency International’s Corruption Perceptions Index and the World Bank’s Worldwide Governance Indicators, Kyrgyzstan and Tajikistan rank lower on governance and regulatory performance, reflecting the operational complexity that investors must navigate.
At the same time, reforms in Kazakhstan, Uzbekistan, and Kyrgyzstan have steadily improved market access, modernised tax systems, and strengthened regulatory frameworks. These advances transform, rather than eliminate, risk. Political transitions, shifting regulations, and external pressures remain significant, but their impacts can be anticipated and managed through scenario-based planning and forward-looking analysis.
Opportunities and challenges vary significantly by sector and market. Targeted, sector-specific insight that integrates local realities with investor objectives is often the key to identifying actionable avenues for engagement.
Persistent operational challenges—such as bureaucratic complexity, infrastructure bottlenecks, and currency volatility—are best mitigated through structured partnerships, phased stakeholder engagement, and contingency planning. Stress-testing strategies against multiple political, regulatory, and regional scenarios allows investors to anticipate disruptions and adapt quickly.
A combination of foresight, adaptability, and grounded local understanding supports resilience and informed decision-making, enabling stakeholders to engage effectively with the evolving economic and policy landscape of Central Asia.
Conclusion: Capturing Central Asia’s Strategic Value
Central Asia is no longer merely a peripheral transit zone; it has become a competitive, self-directed arena increasingly integrated with global supply chains, energy networks, and regional trade. The region’s growth trajectories in critical minerals, renewable energy, logistics, and digital services illustrate both its strategic potential and the complexity of engagement.
Effective participation requires understanding national development strategies, anticipating political and regulatory trends, and maintaining flexibility in operational approaches. Scenario-based planning and partnerships that combine local expertise with technical knowledge can help stakeholders navigate the region’s diverse markets.
Central Asian governments are prioritising collaborations that integrate technical support, institutional capacity building, and knowledge transfer, reflecting a preference for multi-dimensional engagement rather than passive capital flows. This perspective aligns with the EU’s framing at the 2025 EU–Central Asia Summit, where the region was described as a ‘partner of choice,’ capturing both Europe’s diversification objectives and Central Asia’s aim to cultivate multiple high-quality international partnerships while retaining strategic autonomy.