ArmInfo. Belarusian and Kyrgyz companies have few projects with FDI in countries of Eurasia and they are insignificant in terms of their value. The reason for this is that these EAEU economies lack major companies with competitive advantages that would make it possible to break into the markets of non-CIS countries, according to the findings of the report "EAEU and Eurasia: Monitoring and Analysis of Direct Investments" prepared by the Eurasian Development Bank (EDB) Centre for Integration Studies.
The report is based on unique "bottom-up" data on investment projects, which means that the authors use companies' reports and other primary information as their sources for analysis. This enables to define more precisely the ultimate beneficiaries of investment and factor in profit reinvestments.
The report says that the amount of outgoing direct investments by companies from the EAEU countries grew progressively until 2013 inclusively, but now it is in stagnation. Between 2008 and 2014, FDI
stock from the EAEU countries in Eurasia increased by $38 billion and amounted for $71 billion. EAEU companies concentrate their key FDI in European countries.
The EU countries are the main recipients of Russian FDI. In 2014, they accounted for almost 58% of Russian FDI stock in countries of Eurasia outside the CIS and Georgia. At the same time, Russian direct investors enhanced their presence in European countries by over 9%. The Russian capital is highly visible in Iraq, Bangladesh, Serbia, Democratic People's Republic of Korea, Estonia, Latvia, Bosnia and Herzegovina, Bulgaria, Turkey, and Pakistan.
Oil and gas companies continue to remain leaders among Russian TNCs in terms of FDI stock in countries of Eurasia outside the CIS and Georgia. LUKOIL is the largest investor. The top ten exporters of capital also include Gazprom, Rosneft, and Zarubezhneft. Overall, in 2014 the oil and gas sector accounted for 31.6% of Russian FDI stock in the region. Other sectors, which received significant Russian FDI, are telecommunications (21%), finance (13%), and transportation (7%).
According to monitoring data, the amount of Kazakh FDI stock in countries of Eurasia outside the CIS was growing steadily and reached $5.5 billion by the end of 2014. The main destination of Kazakhstan's
FDI were the EU countries. At the same time, Kazakh FDI are highly concentrated at the sectoral level. Kazakhstan's key sector of international specialization is oil and gas sector. As at the end of
2014, it accounted for approximately 60% of Kazakh FDI stock in countries of Eurasia outside the CIS and Georgia. The second most important sector is wholesale and retail trade (33%), followed by the
finance sector (6%).
As regards the incoming FDIs to the EAEU, in the same period, the surveyed countries that invest in the EAEU (Austria, the Netherlands, Turkey, China, Iran, India, Vietnam, the Republic of Korea, and
Japan) increased their FDI stock in EAEU countries to $82.8 billion. Asian FDI in the EAEU region continues to grow: as at the end of 2014, FDI of Turkey, China, Iran, India, Vietnam, the Republic of
Korea, and Japan reached $44 billion. The most attractive sectors for them at the moment are hydrocarbon production and transportation. At the same time, significant amounts are channelled into mechanical engineering, construction, and finance. The most dynamic infusions by important Asian (as well as European) investors were into Kazakhstan's economy. Chinese FDI in Kazakhstan increased by 4.3% and reached $23.6 billion in 2014.
Eurasian Development Bank (EDB) is an international financial institution founded by Russia and Kazakhstan in January 2006 with the mission to facilitate the development of market economies,
sustainable economic growth, and the expansion of mutual trade and other economic ties in its member states. The member states of the Bank are the Republic of Armenia, the Republic of Belarus, the Republic of Kazakhstan, the Kyrgyz Republic, the Russian Federation, and the Republic of Tajikistan.
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