The Case for a Digital Central Asia: Financing the Region’s Most Undervalued Growth Story

The Quest for Capacity

• Growing pains are beginning to settle in for the AI hyperscalers, with capital expenditure costs having increased 89% year-on-year in 2025 (Bloomberg, 2025). A significant proportion of that investment is going towards digital infrastructure and data centres, as the race to develop the latest model is now in full swing.

• However, building out enormous campuses within reach of the head office may not be feasible anymore. In America, the site of most developments, $64 billion worth of data centre projects have been blocked or delayed due to complaints by local communities in the last year (Data Centre Watch, 2025). Therefore, more creative solutions are needed.

• A potential solution has emerged: offshoring to developing economies, yearning for foreign direct investment. In a survey, 61% of organisations planned to maintain or increase their reliance on external providers of digital infrastructure (Data Centre Solutions, 2025).

• Central Asia has the potential to provide that capacity: vast open spaces and cheap energy costs provide geographic advantages. After all, AI is projected to drive 165% increase in power demand from data centres by 2030 (Goldman Sachs, 2025). Moreover, local governments are increasingly open to this kind of investment. However, is this kind of investment into the region a sustainable strategy for Big Tech?

Digitalisation in practice

• Access to cheap energy is one of the most significant reasons to why the region is attractive for building data centres which need to be cooled round the clock. The accessibility of fossil fuels is obvious, but what is less known is the ongoing push for clean energy in the region. Solar power has been emerging as a notable FDI magnet, especially in the last decade. As a result, electricity generation from solar energy in Kazakhstan has increased more than 1000% from 2018 to 2023 whilst between 2019 and 2023 generation in Uzbekistan rose from 0.01 to 0.45 terawatt hours (Freshfields, 2025).

• Government policy has also been increasingly favouring investment into digital infrastructure. For example, Uzbekistan has set up a tax-free zone for AI and data centre projects in its western region of Karakalpakstan; foreign companies willing to invest $100 million or more will receive a full exemption from taxes and duties until 2040, with the government promising to build up infrastructure to support investments (Reuters, 2025).

• Kazakhstan, since the fall of the USSR, has been a leader in the digital transformation. Going beyond data centres, the government is stepping up digitalisation efforts. Under the “Smart Astana” project in Nur-Sultan, technologies aimed at improving urban management and enhancing quality of life have been implemented (Caspian-Alpine Society, 2024). Moreover, since 2017 the “Sergek” video surveillance system has made Astana’s roads the safest in the country. This represents significant investments in core-plus infrastructure, which signals to potential investors into data centres that their developments will be supplemented with a modern grid and safe roads.

External Drivers

• Chinese Foreign Direct Investment has, for a long time, been a key driver in digital infrastructure development in the region. The “Digital Silk Road”, launched in 2015, aims to provide emerging economies with vital infrastructure, obviously considering significant reliance on the provider. Huawei, a Chinese network provider, now serves nearly nine million local wireless users in Tajikistan, or over 70% of the market (Carnegie Endowment for International Peace, 2025).

• Looking Westwards has also been a relatively successful strategy. Recently, Under the Enhanced Partnership and Cooperation Agreement (EPCA) with the European Union has marked its tenth anniversary; the new roadmap now explicitly includes ‘green and digital transformation’ in the shared priorities section (Euractiv, 2025).

• Central Asia’s first Tier IV facility – The Akashi Data Centre in Astana – is under construction, projected to house 4,000 server racks and deliver 43 MW of power for hyperscale, cloud and AI workloads. This certification implies less than 26 minutes of downtime annually, which is a “critical benchmark” for financial services, e-government systems and multinational clients (Euractiv, 2025).

Risks to keep in mind

• Capital controls remain an obstacle for potential investors in the region. Challenges remain even in the most financially open country in the region, Kazakhstan, which retains control particularly in services trade, but also in certain network sectors (OECD, 2025).  Broadly, large infrastructure projects are still subject to political approval, and thus require extensive negotiations (ARIA, 2023).

• Regional disparity also presents a barrier, especially if investors are looking to diversify away from Kazakhstan: Tajikistan faces one of the lowest internet speeds in the world due to high connection costs and lack of relevant infrastructure. In 2010, an excise tax on mobile operators and internet providers was introduced at 3%, which was increased to 7% in 2022, further complicating access to the internet (Caspian-Alpine Society, 2024).

The Cordoba View

• Central Asia is quietly emerging as a legitimate destination for offshore digital infrastructure projects. Ongoing developments in the sector have confirmed investor appetite, but they remain few and small in comparison to North American mega-projects.

• The region still has some way to go in terms of viability of hyper-scale projects necessary for Big Tech investors: regional disparity and capital controls remain an issue. We expect a consolidation of the effort by the entire bloc to promote infrastructure investment, both public and private, to meet the demand by larger investors.