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Central Asia: Islamic Countries Poised For Increased Economic Growth

Prague, 16 July 1998 (RFE/RL) -- Indonesia, suffering economic and social turmoil as a result of the financial crisis, is to receive more help from the International Monetary Fund. In a statement issued in Washington, the IMF said (on July 15) that it has secured commitments for another $6 billion to boost the already-huge rescue package for that country.

Indonesia, the Islamic world's most populous nation, is one of the countries hardest hit by the Asian crisis. Poverty levels and joblessness are rising, and despite optimistic predictions by President B.J. Habibie, few analysts expect quick improvement in the situation.

Across the narrow Strait of Malacca lies the mainland of Malaysia, another Islamic nation which was among the world's top performing economies until it too was caught up in the crisis.

During their rapid rise to economic prominence, Indonesia and particularly Malaysia were characterized by diversified economic bases, ranging from hi-tech electronic products to solidly-performing agricultural sectors. The flexibility of their populations was an important part of their success story, and their economic troubles are likely to be eventually overcome. But their present setback leaves open the question of what other countries of the Islamic world might be poised for increased economic growth in the years ahead.

The oil producing nations of the Middle East, led by Saudi Arabia, are the possessors of great wealth, but they have not made the sort of progress at economic diversification which is necessary to free themselves from dependence on oil revenues. Part of their problem relates to their desert environment and lack of basics such as water, which imposes restrictions which will be hard ever to overcome. Their oil revenues are currently sharply down because of the world glut of crude. With Asian consumer nations not expected to recover quickly, and with increasing supplies coming on stream from the Caspian oil basin, world prices are unlikely to rise anytime soon.

On the other hand nations such as Turkey and Egypt have been able to broaden their base of economic activity. Turkey, for instance, has textile, steel, food processing and mining industries, plus many agricultural exports, as well as wool, silk and wood, and mineral resources which include oil. But neither Turkey nor Egypt have reached a level of industrialization nor degree of technological expertise to make then competitive on the world markets.

Looking further, there are the five emergent republics of Central Asia -- Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Tajikistan. All are presently characterized by low living standards and all have been beset by acute organizational and economic problems since gaining independence from the Soviet Union. Another general characteristic is autocratic rule by heads of state, and bureaucratic inefficiency and corruption. So on face value the picture is not overly optimistic. But the potential of the region to be a focus for development is enormous.

One advantage they enjoy from Soviet days is a high overall standard of education. For instance, Kazakhstan has over a quarter of a million higher education students. That is almost three times the number of university students in Malaysia, which has as a larger population than Kazakhstan. And Malaysia is the country which has been striving with some success to cut a profile for itself in world-level hi-tech industries.

Uzbekistan, which has a population roughly comparable to Malaysia's (over 20 million) has over 300,000 higher students.

In the course of the Asian crisis, analysts have sometimes noted that one reason the South-East Asian economies started to become uncompetitive was because their populations were not sufficiently educated to move on to the next level of sophistication in manufacturing.

Kazakhstan also has vast oil reserves, by means of which it can finance future development, and Turkmenistan has big reserves of gas as well as viable oil deposits. Uzbekistan has gas and gold, and Kyrgyzstan and Tajikistan too have gold deposits.

Kazakhstan, by far the largest in area of the five republics, also has a well developed metal mining and smelting industry, including copper, zinc, lead, and many rarities such as berilium. It also has a shipyard which has again begun to build military vessels, and it's a big wheat exporter. Foreign investment into that country is running well, the mood is open to the world, and there is a return to moderate economic growth.

The smaller republics have a generally less diversified economic base. However analysts say the potential for rapid development is present in Central Asia. But the region needs more translucency in business dealings, more safeguards for foreign investment, more rational economic planning, and controls on corruption.