Experts from the Asian Development Bank (ADB) have identified four sectors capable of attracting a new generation of foreign direct investment to Central Asia and the Caucasus region: green energy, transport and logistics, digital connectivity, and agricultural value chains.
According to experts, Uzbekistan is the regional leader in attracting foreign direct investment in the green energy sector. To realize this potential into real projects, it is proposed to create a unified regional investment ecosystem. This was reported by the Council of Foreign Investors under the President of the Republic of Uzbekistan, citing the experts' analysis.
The study was published on November 6, 2026. The authors are Rolando Avendano, Senior Economist of the ADB's Department of Economic Research and Impact; Khalid Omar, Regional Cooperation Specialist of the Department of Central and West Asia; consultant Angelica Beatriz Natividad, and Loveli Tolin, Specialist in Regional Cooperation and Integration. Their goal was to identify the concentration of investment opportunities and determine what is needed to transform them into bankable projects.
Central Asia and the Caucasus are at a strategic crossroads between Asia and Europe, possess significant natural resources, and are developing their innovative potential. Over the last two decades, foreign direct investment has supported industrialization and structural transformation in the region. However, capital remains concentrated in traditional resource-intensive industries such as mining, coal, and gas. The transition to more complex value chains opens up new opportunities.
Green Energy
International interest in green energy in the region is growing. The need for investments in the energy sector within the Central Asian Regional Economic Cooperation (CAREC) program is estimated to be between $2.9 and $3.8 trillion by 2030.
In 2024, energy transition projects accounted for up to 90% of all strategic foreign direct investments in Central Asia and the Caucasus. Most of the capital came from China, Europe, and the Middle East. Uzbekistan attracted the largest share of such investments, followed by Azerbaijan and Kyrgyzstan.
According to experts, large projects such as the Kambarat-1 hydroelectric power plant, the Rogun hydroelectric power plant, and CASA-1000 demonstrate investment potential that could strengthen regional energy interconnection.
Transport and Logistics
The region's location between Asia and Europe allows it to maintain diversification of trade routes and supply chains. It is projected that the Middle Corridor will transport 11 million tons of cargo annually by 2030. The authors note that the China–Kyrgyzstan–Uzbekistan railway and the deep-sea port of Anaklia can further strengthen the region's role as a transit hub.
Digital Connectivity
Experts see significant investment potential in the digital sector, driven by both growing demand and structural gaps in infrastructure. Most countries in the region are landlocked and lack direct access to submarine cables, while internet traffic passes through a limited number of transit routes. This limits their capabilities amid the rapid growth in demand for cloud services, data processing, and artificial intelligence.
The total volume of mutual digital investments between countries in the region reached about $1.2 billion, with over 90% of this amount directed towards digital services and solutions, including $1.1 billion in financial services.
A feasibility study for the CAREC Digital Corridor in 10 countries is currently underway. The preliminary design envisages the creation of a new southern digital gateway connecting Central Asian countries to global submarine cables in the Arabian Sea. Strengthening national trunk networks, creating a regional data center ecosystem, and implementing a federated internet traffic exchange model are also planned.
Agriculture
The authors also highlight agriculture as an area for diversification. This sector accounts for 10–20% of the region's GDP and provides employment for 30–40%. Investments can be directed towards storage, logistics, processing, and other infrastructure to increase the export of high value-added agricultural products.
Barriers to Investment
At the same time, investors face significant obstacles across the region. Investment legislation, licensing regimes, rules on foreign ownership, and business procedures vary substantially from one country to another.
According to the OECD's Index of Regulatory Constraints on Foreign Direct Investment, the region as a whole remains more restrictive to investment than OECD countries. Restrictions are higher in certain sectors of Kyrgyzstan, Tajikistan, and Uzbekistan. Among the most significant barriers in many countries are restrictions on the participation of foreign equity capital.
A recent survey of the region's foreign investor councils also revealed key limitations: complex regulatory norms, limited legal predictability, restricted access to financing, infrastructure shortages, as well as trade and customs barriers. These factors, combined with a lack of information on project viability, limit the ability of multinational companies to expand their operations in the region. Large infrastructure projects are also hampered by a lack of long-term financing and underdeveloped capital markets.
Expert Recommendations
The authors believe that the region needs to move beyond individual projects and transition to an integrated investment ecosystem. They define five priorities.
The first is bringing investment regimes closer together. This will require greater harmonization in investor protection, public-private partnership rules, business registration, licensing, and specific standards. Such measures should reduce compliance costs and make cross-border investments more predictable. Experts also believe that countries in the region adopting international practices for resolving investment disputes will strengthen their investment regimes.
The second priority is creating an open registry of cross-border projects that provides clear information on their readiness, regulatory status, financing structures, and investment needs.
The third priority is expanding access to long-term and innovative financing through public-private partnership mechanisms, sustainable debt financing, green bonds, and other instruments. This can make projects more attractive to banks and help mobilize private and foreign capital.
The fourth priority is improving regional connectivity and promoting trade through investments in transport, logistics, digital infrastructure, and agricultural value chains. Harmonizing customs procedures, standards, and digital systems will also help reduce border delays.
The fifth priority is strengthening the coordination of investment policy. The Regional Alliance of Foreign Investor Councils of Central Asia and the Caucasus (RAIC-CAC) can serve as a platform for such cooperation. According to the authors, this alliance will allow countries to exchange experiences in reform implementation, track progress in aligning regulations, maintain a regional register of investment projects, and coordinate their interaction with international investors and development partners.
ADB experts conclude that the countries of Central Asia and the Caucasus possess the resources, geographical advantages, and emerging opportunities necessary to attract investment. Currently, they say, the priority is to create the political, financial, and cooperative mechanisms needed to turn these opportunities into viable projects and drive greater volumes of foreign direct investment toward diversified and sustainable growth.
