INFORMATION DIGEST OF PRESS OF UZBEKISTAN - January 25, 2016

posted 26 Jan 2016, 04:00 by Webmaster Ambasciata
ECONOMY: 2016
Counter-Crisis Innovations
Production of building materials in Uzbekistan increases by 14.1%

ANGREN SPECIAL INDUSTRIAL ZONE
Investors Look at Scale

INFRASTRUCTURE
Uzbekistan to spend US$108.8m to external infrastructure of Kandym gas processing plant

INTERNATIONAL COOPERATION
Uzbekistan sign contracts and agreements worth over $91.2 million at "Green week 2016"


economy: 2016

Counter-Crisis Innovations

No country can move forward without a strategic development program and clearly defined landmarks. This is vital not just in terms of where to move, but how to do that. The speeches of the President early each year, when he summarizes the past year and outlines the current year, have become a kind of a road map for Uzbekistan.

This year’s speech of the state’s leader differed much from previous ones. Firstly, because the country has been facing serious global geopolitical and, the second reason is economic challenges, the right solution to which would largely determine the future.

“Setting key priorities of social and economic development of our country for 2016,” emphasized the President, “we cannot ignore the serious problems entailed by the ongoing global crisis, sharp decline of demand, uncertainty and notably toughened competition in world markets, decreased production rates and the consequences that have affected the majority of states in the world.”

Continuous technological extension of manufactures and search for internal reserves, implementation of enhanced structural reformations in the economy, modernization and diversification of industry and introduction of innovations are seen as a solution to the global challenges.

The key objective for the state today is to increase the gross domestic product at least twice by 2030 is. How can we achieve that? Through radical structural reforms, accelerated industrial growth, bringing the share of industry in GDP to 40% against 33.5% in 2015, while the share of agriculture should be reduced from 16.6% to 10.8%, and energy intensity of GDP should be cut twice at the result of the widespread introduction of up-to-date energy saving technologies.

This leads to a fair question: How feasible this task is? The analyst research shows that it is not just feasible for our country, but also tends to increase. For example, according to estimations, it is sufficient to provide an average annual growth rate of 4.8% in order to double the GDP growth by 2030. Over the past 11 years, the annual GDP growth in Uzbekistan made up at least 8%, and even in the challenging 2016 we are planning to achieve the 7.8 percent growth, while many of the CIS countries predict freezing performance of their economies.

The goal has been set, but its effective implementation requires specific mechanisms like the traditionally adopted annual investment programs, as well as holistic program measures on deep processing of raw materials and semi-finished products with high export potential.

The abovementioned documents will focus on multi-step sequential cycles of raw material processing into globally popular products. The scheme is simple: the domestically obtained raw materials undergo the primary processing, turning into semi-finished products. These operations can be implemented on the basis of the mining flagships Almalyk and Navoi Mining and Smelting Plants, and the Uzbek Metalurgical Indistrial Complex. Thereupon, the semi-finished products are transformed into finished materials for industrial production and are forwarded to a manufacturer to be turned into finished products.

Experts predict that as a result of producing goods with high value-added, the production volumes of petrochemical products might grow with the development of new kinds of products by 3.2 times, nonferrous metal products - by 2.2 times, ferrous metal products - by 2.3 times, chemical products, including fertilizers - 3.2 times by 2030.

Deep processing of cotton fiber, fruits and vegetables by means of up-to-date technologies would increase the production volumes of domestically and globally popular and environmentally friendly finished products of textile and light industry by 5.6 times, fruit and vegetables - 5.7 times by 2030.

In general, in 2016 it is planned to channel a total of $17.3 billion of investments with a 9.3 growth rate in the development, modernization and structural reformation, more than $4 billion of which are foreign investment, with a 20.8 percent increase YOY.

The President pointed out the need to increase the liability of the executives, regardless of their departmental status, for the delivery and installation of machinery and equipment meeting all modern requirements.

In order to control this process, last year the government of Uzbekistan instituted the agency for expert assessment of feasibility study of projects of the newly constructed and reconstructed production facilities, equipment and technologies. Along with that, the President highlighted the need to introduce specific articles that would strengthen the responsibility of a customer for the delivery and commissioning of outdated equipment in the Administrative Responsibility Code and the Criminal Code.

In the context of increasingly toughening competition in world markets the radical enhancement of competitiveness of the Uzbek economy, increasing support for export enterprises, integrated promotion of full participation of farms, small businesses and private enterprises in exports has been gaining relevance.

These sectors, according to the President, posses a huge and untapped potential. First, there is a need to critically review the system of benefits for exporters, take additional measures to further simplify customs procedures, reduce their terms, and cut tariffs for foreign trade operations. It is important to expand electronic processing of all documents and licensing procedures, related to exports of products.

Another point in which Uzbekistan still has to catch up with the international community is about the introduction of information and communication technologies in the economy and the public sector. As noted by the President, despite the fact that the sector has been developing at an advanced pace over the recent years, we have to recognize that we are just at the initial stage, as only about 2% of GDP accounts for ICT. For comparison: the ICT sector in the GDP of the Republic of Korea exceeds 11.8%, in Sweden - 7%, and the USA - 6.8%.

At the same time, Uzbekistan has all the resources and opportunities for more rapid development of the sector, including the growing professional human resources that are currently educated by foreign and local universities in Tashkent.

There is also a need to drastically accelerate the introduction of the E-government system.

“The world experience has been demonstrating the increasing role and importance of information and communication technologies in the global economy, including the manufacture of computer and telecommunication technologies, software development and consequent provision of a wide range of interactive services. We should keep in mind that ICT development has a direct impact on the level of the country’s competitiveness, allowing to collect and summarize huge arrays of information, and providing vast opportunities for management at the strategic level,” underlined the President of Uzbekistan.

The follow-up enhancement of reforms and structural transformations in agriculture, and effective use of land and water resources is another important field of action for the near future.

According to Islam Karimov, by the end of 2020 Uzbekistan is intending to significantly reduce the amount of raw cotton production. Within this period, it is planned to reduce production and public procurement of raw cotton from 3.35 million tons to 3 million tons.

Experts say that such a radical solution for the country, which ranks the world’s sixth in cotton production, and the fifth largest exporter of cotton, is conditioned by a sharp fall in prices in recent years and demand for cotton in the world market.

Nonetheless, according to the data provided by Islam Karimov, the volume of produced raw cotton will allow, on the one hand, to fully meet the needs of the textile and light industry in raw materials taking into account its enhanced processing, and, on the other hand, to maintain a strong position of the country as a supplier of cotton fiber and its derivatives to the global markets.

“Nearly 170,500 hectares of irrigated land is released by means of reducing cotton production by 350,000 tons. As a rule, they are lands with low yield class where cotton yield does not exceed 12-15 quintals per hectare, opposed by the average yields of 26.1 metric centners per hectare in Uzbekistan. The agrarians release mainly saline lands, and the lands in the foothill areas that are unsuitable for cultivation of cotton,” stressed the leader of Uzbekistan.

Many analysts attribute this decision to the fairly successful exports of Uzbek fruit and vegetables to Russia in the last two years. In 9 months of 2015 alone, the volume of deliveries of Uzbek fruit and vegetables increased by 78.4%.

In addition, the parties agreed to consider the opportunity of establishment of the Russian-Uzbek working group on agriculture as an effective mechanism for cooperation between the ministries, and a factor for further expansion of cooperation in the field of agriculture.

Benefits for Uzbekistan are quite obvious: unlike cotton, fruits and vegetables require less water and have a stable demand.

Therefore, according to the head of state, the areas released from cotton will be primarily occupied by vegetables, including potatoes, fodder, oil cultures, planting gardens and vineyards.

“We expect that the optimization of crop areas and introduction of modern agricultural technologies by 2020 would increase production volumes of cereals to 8.5 million tons with an increase of 16.4%, increase the production of potatoes by 35%, other vegetables – by 30%, fruits and grapes - by 21.5%, meat - by 26.2%, milk - by 47.3%, eggs - by 74.5%, and fish - by 2.5 times,” said Islam Karimov. The head of state stressed that, according to the estimates, these types of products promise a considerable growth in exports. 

The creation of new and expansion of existing transportation routes has been playing a special role for economic growth. For instance, it is planned to complete the construction and reconstruction of 513 km of roads this year alone. The further development of the railway network, guaranteed electrification of Samarkand-Bukhara section, and continued works on the electrification of the Karshi-Termez section is a key focus of the rail transport for this year. The completion of the construction of the 19-kilometer rail tunnel through the Kamchik pass and the launch of railway traffic on the Angren-Pap line promise to be central events of the current year, allowing cargo transportation by rail between the regions of the Ferghana Valley and other regions of the country.

In 2016, the government will retain its focus on the development of the social sector, and further improvement of the level and quality of people’s life. This year, the government budget will allocate 59.1% of its total expenditures in the social sector, including 33.7% of funds for education, and 14% - for health care. The expenses for the maintenance and development of education will increase by 16.3% YOY, and health care – by 16%.

Uzbekistan will continue pursuing the policfy of further decrease of the level of social stratification. For example, the ratio of income of 10% of the most well-to-do population and 10% of the least well-to-do population, the so-called ‘decile coefficient’ has been showing a steady downward trend, and makde up 7.7 percentage points last year against 8.5 points in 2010. The established international indicator of the separation of income, or the Gini index, was 0.28 in 2015 against 0.39 in 2000, which is significantly lower than in many developed and developing countries.

The structure and level of availability of durable goods has undergone some qualitative changes. Uzbekistan produces most of the durable goods. In particular, the availability of cars in families has reached 42 out of 100 families, which is 1.5 times more than five years ago, and personal computer - 47 out of 100 with the 3.9 times growth, air-conditioners - 31 or 1.7 times growth respectively, mobile phones - 234, or 1.6 times.

In 2016, there are plans afoot to channel a total of $17.3 billion in investments with a 3.9 growth rate into the development, modernization and structural reformation, more than $4 billion of which are foreign investments, with a 20.8 percent increase year on year.

(Source: «Uzbekistan Today» newspaper)

Production of building materials in Uzbekistan increases by 14.1%

Enterprises of construction materials industry of Uzbekistan over the past year produced goods worth 4.6 trillion soums, or 114.1% against the corresponding period last year. The share of industry in the total industry of the Republic amounted to 5%. (currency rates of CB RU from 25.01.2016, 1$= 2826.48 soums)

Compared with the previous year, large enterprises of the industry increased their production of kaolin – by 4.7 times, glass sheet - by 25.8%, marble, travertine, alabaster and products made from them - by 17.1%, ceramic roof tiles - by 16.7%, building ceramic bricks (non-refractory) – by 16.5% .

At the same time, large enterprises increased production of mortars and mixes – by twice, lime - by 46.8%, portlandcement - by 12.3%, gypsum – by 5.4%.

The largest volume of production of construction materials was observed in Tashkent (20.9% of the total industry), Navoi (20.1%) and Fergana regions (12.5%) regions and the Tashkent city (11.2%).

Implemented measures to further improve the business environment and support the development of small business and private entrepreneurship has contributed to the increase in their volume of production and in the industry. As a result, the growth rate of the volume of products produced by small businesses last year comprised 124.4%, while their production share in the total industry reached 52%.

Currently, in the Republic, there are 5065 enterprises specialized in building materials, of which 720 were newly created in 2015.

(Source: UzReport.uz)

Angren special industrial zone

Investors Look at Scale

A JV Insulators and Fittings Plant was the first company with Russian capital, which was established in the Angren special industrial zone in 2015.

The share of Russian investors in the authorized capital of the joint venture was 53%. In the short term it is planning to establish several more joint ventures with investors from Russia. They will be promoted by an ongoing program of economic cooperation between the governments of the two countries for 2013-2017, focusing not only on the oil and gas industry, but also on mechanical engineering, construction materials, chemical, electrical, food and light industries.

For example, in the first 9 months of 2015, Uzbekistan increased exports of vegetables and fruits to Russia by 78.4%.

Russia has been the largest investment partners of Uzbekistan: Russian companies have invested more than $6 billion in the Uzbek economy in recent years alone. There are nearly 900 Uzbek-Russian joint ventures in Uzbekistan, and there are more than 500 enterprises with Uzbek capital in Russia.

(Source: «Uzbekistan Today» newspaper)

INFRASTRUCTURE

Uzbekistan to spend US$108.8m to external infrastructure of Kandym gas processing plant

Uzbekistan will direct US$108.8 million to creation of external infrastructure of Kandym Gas processing plant (GPP).

In particular, Uzbekistan Temir Yollari will complete construction railway to the plant. The length of the railroad will make up 48.7 km. The cost of the project is US$50 million.

Uzbekenergo will construct external electricity supply for the plant for US$58.8 million, including 220 kV electricity supply line with the length of 90 km.

LUKOIL has been implementing the Kandym project in partnership with the National Holding Company Uzbekneftegaz since 2004 as part of the Kandym-Khauzak-Shady-Kungrad PSA. The Kandym group consists of 6 gas condensate fields – Kandym, Kuvachi-Alat, Akkum, Parsankul, Khoji and West Khoji.

The first phase of the project envisages mining and preparing 2.1 billion cubic meters of gas a year from Kuvachi-Alat field and Northern Shady area at Khauzak-Shady field with supply of gas to Mubarak gas processing plant.

The project envisages construction of Kandym gas processing complex. The capacity of Kandym gas processing plant will make up 8 billion cubic meters. The volume of investments estimated at US$3 billion. Kandym group includes six gas condensate fields. It is also planned to construct over 120 wells, gas compressor stations, points for collecting gas, terminals for loading liquid hydrocarbons and granulated brimstone, camp, electricity line, etc.

LUKOIL and a consortium headed by Hyundai Engineering (South Korea) signed a contract for procurement and construction of the Kandym Gas Processing Plant in Uzbekistan in February 2015. The contract cost is US$2.662 billion and envisages supply of equipment and construction of the complex.

(Source: UzDaily.com)

International cooperation

Uzbekistan sign contracts and agreements worth over $91.2 million at "Green week 2016"

From 15 to 24 January, Berlin hosts the world's largest annual international agricultural fair "Green week 2016", as well as the Summit of agriculture ministers of countries of the world.

This year the exhibition saw more than 1730 companies and farms from 68 countries, including Uzbekistan. The Summit was attended by high-ranking officials, including 65 ministers of agriculture of foreign countries and 655 CEOs of the agricultural sector and the food industry.

Green week is the largest platform for demonstration of the latest achievements of agriculture, animal husbandry, horticulture and food production.

Traditionally, the participants of the events within the week hold workshops, seminars, forums and many other events, which are attended by industry experts, top managers of leading corporations, companies and management controls in agriculture and the food industry. This year the exhibition was visited by over 400 thousand people.

Uzbekistan at the prestigious international fair was presented by the Association of food industry enterprises, HC "Uzvinsanoat-holding", JSC "Uzdonmahsulot", a number of foreign trade companies, as well as representatives of the Council of farmers and farms.

The delegation of Uzbekistan headed by the Minister of foreign economic relations, investments and trade E.Ganiev held meetings with the ministers of agriculture and companies of different countries and participated in conferences and seminars on current topics in the field of agriculture.

A detailed exposition of Uzbekistan with a total area of 180 sq. m. aroused great interest of specialists and exhibition visitors. The exposition presented a wide range of fresh fruits, vegetables and melons, dried fruits, oil and wine products, spices & condiments, processed products of fruit and vegetables, various canned goods, and textiles.

Our delegation, in the framework of participation in the exhibition held a presentation of economic and agriculture potential of Uzbekistan with the participation of over 120 representatives of German companies. The participants were informed about the current economic development of the country, measures on modernization and technological re-equipment of industrial enterprises, further improvement of the business climate, priority areas of investment cooperation, including in the framework of established special industrial zones.

Following the exhibition, our delegation signed contracts and agreements for export to European countries of horticultural and textile products totaling over $ 91.2 million.

(Source: UzReport.uz) 

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