Factors of business attractiveness of Uzbekistan

Дата публикации: Oct 12, 2015 3:24:42 PM

Factors of business attractiveness of Uzbekistan

Improving business attractiveness is an important component of economic advancement of each country. It is a major contributing factor, which attracts foreign investments into the national economy, and in turn, if acquires great significance in the creation of high-tech industries, saturation of domestic market with high-quality, marketable products, and broadening the product mix of national exports.

From early days of independence, leadership of the Republic of Uzbekistan adopted a policy on attracting the most advanced technologies and foreign investments in the country. To this end, regular and systemic work is carried out to improve business environment and enhance the country’s investment attractiveness.

Thanks to the improvement of legal framework, 160 licensing procedures and requirements for obtaining a license for 19 types of business activities have been canceled, statistical and tax reporting has been reduced in the last few years.

Measures on improving the investment climate contribute to the growth of attracted direct foreign investments into the national economy. For example, in 2014 the volume of attracted foreign capital has exceeded 4.5 billion US dollars.

Today, nearly a thousand enterprises established with participation of foreign investments, including the world famous corporations, such as "General Motors", "MAN", "Knauf", "Itochu", "Rieter", "Klaas", "Nestle", "Coca-Cola", "Kogas", "Sasol", "Ariston", "CNPC", "Indorama", "Gazprom", "Lukoil", "Algie", "Lotte", "Sumitomo", "Korea Telecom" and others have already appreciated the competitive advantages of Uzbekistan and favorable investment climate of our country.

With the participation of foreign partners numerous investment projects on high-tech industries producing demanded and competitive production for foreign markets have been realized and implemented. Projects such as the production of cars and engines together with "General Motors", trucks with "MAN", the construction of Ustyurt Gas Chemical Complex at Surgil deposit on gas processing and production of polyethylene and polypropylene, plant for the production of synthetic liquid fuel based on GTL technology in Kashkadarya region, organization of full-scale production of modern textile equipment from the Swiss company "Rieter" and many others are the models of successful cooperation with foreign partners.

What attracts foreign investors to Uzbekistan?

First, it is political and macroeconomic stability. Comprehensive measures taken by the government ensure sustainable economic growth in the country and contribute to dynamic advancement of sectors of the national economy.

Despite global financial downturn, annual GDP growth of Uzbekistan exceeds 8% over the last 10 years, which is one of the highest rates in the world. Over the past decade, the economy of Uzbekistan has doubled.

Since 2005, Uzbekistan maintains a positive trade balance, government budget surplus and balance of payments.

According to the forecasts of leading international organizations and financial economic institutions, the high growth trend will remain in the future.

Second, an important advantage of our country is that Uzbekistan is one of the few countries in the world economy with absolute energy independence.

Uzbekistan possesses huge reserves of minerals and natural resources. The country occupies leading positions in the world in terms of gold, uranium, copper, silver, lead, zinc, tungsten, rare metals and other resources.

The country is among the top ten countries on reserves of oil and gas, coal and uranium. The electricity price is 4 times lower than the average price paid by industrial customers in developed countries.

Third, the country has the most diversified economy in Central Asia. Uzbekistan is the only Central Asian state producing a wide range of modern cars, trucks, high-quality agricultural machinery from the mini-tractors to harvesters, the region's largest producer of chemical, textile, food, building materials, electronics and electrical engineering products.

Fourth, the presence of significant human and intellectual potential meeting modern international standards of education. More than half of the population of our country is young people who take the mandatory 12-year education and receive in-depth knowledge of at least 2 modern professions, information technologies, and learn at least two foreign languages.

Uzbekistan created a number of branches of leading European, Asian and Russian universities, in particular the British Westminster University and Singapore Institute of Management and Development, Turin Polytechnic University, Moscow State University and others.

Fifth, the advantageous geographical location and proximity to major markets is another attractive factor of Uzbekistan for foreign investors. The country possesses the largest consumer market in the region with more than 30 million people. It is about half of the total population of Central Asia.

Thanks to well-developed transport infrastructure, enterprises of Uzbekistan have the opportunity to enter the largest and fastest-growing markets in Central Asia and Afghanistan (with a population of over 90 million people), CIS countries (with a population of over 300 million people), West and East Asia, as well as Europe.

Free trade agreements on with 11 CIS countries provide duty-free importation of Uzbek producers’ goods to these markets.

Uzbekistan also has agreements with 45 countries on providing Most Favored Nation treatment, which improves the competitiveness of Uzbek products on foreign markets.

Sixth, banking and financial sectors of Uzbekistan also serve as an important link in the implementation of active investment policy for realization of strategically important projects aimed at modernization, technical and technological renewal of leading sectors of the economy, the financial support of small business and private entrepreneurship, providing high quality banking services to individuals.

Consolidation of banking system has created prerequisites for reducing the Central Bank refinancing rate from 12% to 10% in 2014, and corresponding reduction in interest rate on loans of commercial banks.

In recent years, the leading rating agencies such "Moody's", "Standard & Poor's" and "Fitch rating" evaluated the activities of Uzbekistan’s banking system as "stable". If in 2011, 13 commercial banks received the highest rating scores, at present, all 26 banks of the country have been awarded such an assessment.

Seventh, unprecedented benefits and preferences provided to investors in "Navoi" Free Industrial Economic Zone and Special Industrial Zones "Angren" and "Jizzakh". Residents of these areas are exempt from almost all types of taxes, depending on the amount of investments - from 3 to 15 years (FIEZ "Navoi"), and from 3 to 7 years (SIZ "Angren" and "Jizzakh").

Today, Uzbekistan’s most promising areas for foreign direct investment are oil and gas sector, first and foremost it is in-depth processing of hydrocarbon raw materials and production of high value added products; chemical industry, in particular, the production of polyvinyl chloride, plastics, new types of chemical fertilizers; mechanical engineering; electrotechnical field; production of construction materials; textile industry; mastering of mineral resources, including search and joint development of new deposits of natural resources; introduction of alternative energy sources; information technologies.

In general, Uzbekistan may offer foreign investors not only rich natural resources but also other benefits, such as political and economic stability, conducive business climate, significant human and intellectual potential, favorable geographic location and advanced infrastructure.