INVESTMENT POTENTIAL OF UZBEKISTAN



First of all, Uzbekistan is political stability, confidence in tomorrow and consistency of reforms in all fields of public and political life. It’s the state, where representatives of more than a hundred ethnic groups and dozens of religions live in peace and concord.

From the very day of Independence, Uzbekistan selected own course of development, own, Uzbek Model of transition to socially oriented market economy based on five key principles: the priority of economics over politics; the state is the main reformer; the rule of law in all areas of life of the society; strong social policy; step-by-step transition to market relations.

Thanks to successful implementation of this model, today, Uzbekistan has achieved and provided:

– macroeconomic stability, equilibrium of domestic and foreign sectors of economy, growth of currency reserves;

– framework for maintaining steady high rates of annual economic growth by 8% at average, predominantly, thanks to internal factors;

-reduction of aggregate tax burden almost 3 times, while the State is providing additional packages of concessions and preferences to exporting enterprises, small businesses and entities, making investments and introducing new production;

– creation of sustainable banking and finance systems with strict observance of Basel principles of banking supervision. In particular, the degree of sufficiency of banking capital is more than 23%, which is almost 3 times higher of international standards;

– development of new high tech industries through intensive investment policy, technological modernization of industrial facilities and production infrastructures.

The issued strategy of struggle against crisis and neutralization of its consequences allowed the country among few states of the world to ensure for the past period steady growth rates of economic development. Growth rate of GDP in 2008 comprised 9%, in 2009 – 8.1%, in 2010- 8.5%, which is according IFIs is one of the highest indicators in the world.

For the years of Independence, Uzbekistan created broad spectrum of legal guarantees and preferences for foreign investors, developed integral system of measures on encouragement of activity of enterprises with foreign investments.

The state guarantees and protects the rights of foreign investors which carry out investment activity within the Republic of Uzbekistan. In the event, the consequent legislation of Uzbekistan makes investment environment less favorable, then, within 10 years from the moment of investment, foreign investors will apply the legislation, which was in effect as of the date of investment. Upon its discretion, after notifying the authorities, the foreign investor is entitled to apply those provisions of new legislation which make the investment environment more favorable.

Moreover, in some cases, foreign investors could be provided with additional guarantees and measures of protection of rights in case of investment into priority industries or projects, which ensure sustainable economic growth, strengthening and enhancing export potential of the country, projects in the field of small enterprises.

The List of Guarantees, Privilege and Rights Provided for Foreign Investors and Enterprises with Foreign Investments by Legislation of the Republic of Uzbekistan you can download here.

 
Investment Program of the Republic of Uzbekistan

 Every year the Government of the Republic of Uzbekistan reviews, updating and approves the Investment Program, developed by the Ministry of Finance, Ministry of Economy and Ministry of Foreign Economic Relations, Investment and Trade. This document will ensure implementation of strategically important investment projects including construction of new facilities, modernization and technological renovation of enterprises, accelerated development of transportation, engineering, communications and social infrastructure, aimed at improving employment rates and sustained economic development.

As President of Uzbekistan noted, the priority of fastening and expanding the scales of modernization, technical and technological renewal of economy and its main fields, diversification of production should play an important role in the realization of investment programs in 2016 and nearest future.

In 2016, the republic plans to attract over 4.5 trillion soums of foreign direct investment and loans, as well as 1.7 trillion soums of investments and loans guaranteed by the government.

To download Investment Program of Uzbekistan in English –  please click here.


INDUSTRY

Heavy Industry

The Tashkent Province, in the north-eastern “peninsula” adjacent to the Fergana Valley, accounts for about one-third of the industrial output of Uzbekistan, with agricultural machinery the most important product.

Uzbekistan’s most productive heavy industries have been extraction of natural gas and oil; oil refining; mining and mineral processing; machine building, especially equipment for cotton cultivation and the textile industry; coal mining; and the ferrous metallurgy, chemical, and electrical power industries. The chemical manufacturing industry focuses primarily on the production of fertilizer.

Three oil refineries in Uzbekistan, located at Farghona, Alty-Arik and the newest refinery is at Bukhara, have a combined capacity of 220,000 barrels per day. Other centres of the processing industries include Angren (for coal), Bekobod (steel), Olmaliq (copper, zinc, and molybdenum), Zarafshon (gold), and Yangiobod (uranium). The Uzbek fertilizer industry was established at Chirchiq, northeast of Tashkent, near Samarqand, and at several sites in the Fergana Basin. Uzbekistan is the largest producer of machinery for all phases of cotton cultivation and processing, as well as for irrigation, in the former Soviet Union. The machine building industry is centered at Tashkent, Chirchiq, Samarqand, and Andijon in the east, and at Nukus in Karakalpakstan.

Light Industry

The light and textile industry is significant in creating and extending the industrial complex of the country. It has a sufficient raw material base of around 1,000,000 tons annually. More than third of the total number of industrial companies in Uzbekistan are concentrated in the given sector, as well as make up the country’s basic funds and number of personnel engaged, huge share of the foreign trade balance, and currency revenues. Given the specific features of the country with its large farming practice, the diverse light industry was put in place incorporating production of the cotton-fibre, cotton and silk cloths, raw silk, ambary fibre, hosiery, upper and linen knitted wear, ready-made garments, footwear, and other. The making of carpets, haberdashery, and china-faience ware is considered to be a part of the country’s light industry.

The main centres of raw silk and silk cloth production are in Ferghana, Namangan, and Bukhara provinces. There are cloth factories now operating all around the nation. The city of Khiva is famous for its carpet making industry.
The cotton-cleaning sector is the dominant one in the industry. The enterprises in the sphere are usually based in the areas close to cotton sowing regions. However, the industry still lacks in such enterprises given there are new areas explored for cotton sowing practice.

Power Industry

Uzbekistan is the largest producer of the electric power energy in Central Asia. It has powerful thermoelectric power stations, which generate almost 90% of electric power in the country.

The Power Industry of Uzbekistan operates in the framework of the State Joint Stock Company ”Uzbekenergo”, established in the form of open joint stock company including the Coal Industry enterprises since 2001. The company structure includes 53 enterprises and organizations, including 39 open joint-stock companies, 11 unitary enterprises, 2 societies with limited liability and company branch-“Energosotish”. At present, all enterprises affiliated the company structure and being the subject for privatization already denationalized except two.

As for now, the company performs the centralized electric power supply of national economy and population, and also sale of thermal energy to industrial and domestic consumers in distinct cities of the Republic.

During the economic reform years, the Power Industry’s enterprises annually generate up to 48bln.kW/h of electric power and more than 10 mln. Gcal of thermal power that fully meet the economic and population demand of the country. The installed capacity of Power Plants of Uzbekistan exceeds 12,3 mln. kW equal to 50% of all generating capacities of the Interconnected Power System of Central Asia.

Metallurgical industry

Metallurgical industry is comprised of companies that extract, treat and process raw, ferrous and non-ferrous metals. This sector makes more than 10 percent out of the total of industrial production. There are many predicted reserves of gold, silver, copper, uranium, lead, zinc, tungsten, molybdenum, lithium, aluminium, and other rare metals and minerals in the country. Given that, the share of the metallurgy is expected to further rise in the total amount of industrial production. Products put out by the industry, especially those of non-ferrous and precious metals, are considered to be a rare at the world market, and will serve a good reason to extend their export with a view of enriching the country’s revenues.

Chemical Industry

The chemical industry is comprised of companies that make fertilizers, chemical fibres and filaments, synthetic washing tools, varnish and paints, plastic and synthetic pitch, and others. The oil and chemical industry produces more than 20 kinds of goods, 15 of which are now locally produced en lieu of being imported.

Enterprises of the chemical industry are incorporated into state stock company “Uzkhimprom”. By the end of 2006, the production growth of this industry was 14.8% and its export increased by 29%.  The companies in microbiological sector such as the Chirchik Electric and Chemical Enterprise, the Samarkand Super-phosphate Enterprise, and others, put out protein, various spirits, including table salt and ethyl.

Machinery Building Industry

The basis of reequipping of all of the sectors of economy – saw the large-scale improvement, as well. The sector, which manufactures machines, used in farming, take the leading role in the sphere. There are more than 300 machine building and metal processing enterprises in the country.

The initial cotton processing and other activities related to it influenced much the development of the sector because it had begun to manufacture the machinery for harvesting, cotton cleaning, and textile industries. Other fields such as aviation, automobile, electronics, and heavy machine building are also developing.
Jointly with General Motors (GM) the JV “UzDaewooAuto” was built in the town of Asaka, the Ferghana Valley. The demand for these cars not only high in local market but also they are mainly exported to Russia and Central Asian states.

Also, “SamAuto” has concluded a contract with Japan partner – Isuzu Motors Limited regarding local production of light-duty buses in Uzbekistan and started its production. Thus, the creation of the new branch of economy – the automobile building – is under way.

In addition, there are associated enterprises are now launched based on production of assembly parts.

The food industry

The food industry is mostly based upon processing of local agricultural raw materials. The oil making with processing of cottonseeds is one of important sectors of the given industry. The flour grinding, production of dairy and meat, non-alcoholic drinks as well as bakery, and confectionary put in place nationwide. Country has the potential to produce 10,000,000 tons of fruit and vegetable annually.

Apples, peaches and pears, sweet cherry and plums, quince and grapes, melon and water-melons have been very famous for their sweet taste from ancient times. It is challenging to attract new investments to vegetable and fruit processing plants to produce competitive quality products for foreign markets.

Oil and Gas Industry

Uzbekistan has significant hydrocarbon resources and considered to be one of the few countries who is not dependant to outside energy supply.   There are 191 oil and gas fields, over 60% of which are in the Bukhara-Kiva region, which accounts for about 70% of Uzbekistan’s oil production. The second largest is the Fergana region, which contains about 20% of Uzbekistan’s oil fields. There are also oil deposits being developed in southwestern Uzbekistan at Kokdumalak, Shurtan, Olan, Urgin, and south-Tandirchi.

Oil exploration is also being pursued on the Ustyurt plateau and in the Aral Sea. It is the 8th producer of natural gas in the world. The explored natural gas reserves are estimated in 2.44 trillion cubic metres. According to British Petroleum statistics (2004), Uzbekistan also possesses about 600 million barrels of proven oil reserves, this was expected to rise.

Uzbekistan produces about 65 billion of cubic metre of gas and 6.7 million tons of liquefied hydrocarbons annually. Presently the export potential of total extracted gas makes USD 1.4 billion if processed into the finished articles (polyethylene, polypropylene and other petrochemical products) the gas resources allow to increase the cost of ready production by 10 times.

According to Uzbek Geology Committee, 60 percent of the territory of Uzbekistan have potential oil and gas deposits. The number of oil and gas rich regions within the country has reached five:

Ustyurt (with 105,100 square meters of perspective land);
Bukhara-Khiva (with 44,400 square meters of perspective land);
Southern-Western-Gissar (with 4,100 square meters of perspective land);
Surkhandarya (with 14,000 square meters of perspective land); and
Ferghana (with 17,000 square meters of perspective land).

Construction Material Industry

Uzbekistan has significant prospective investing in the construction business due to growing tendency in housing and industrial construction. Recently it has been approved by the government a program of modernisation, technical and technological re-equipment of construction material production worth USD 343 million for 2007-2011 which includes 36 projects implemented at 14 enterprises. The bulk of attracted investment is expected to be channelled into the implementation of projects for the modernization of cement production at three enterprises – “Kyzylkumcement” Open Joint-Stock Company, “Ahangarancement” Open Joint-Stock Company and “Bekabadcement” Open Joint-Stock Company. As a result of implementation of this investment program the production of cement is forecasted to rise 1.5 times up to 8.326 million tons; of asbestos roofing tiles – 1.3 times up to 545 million tiles; of ceramic tiles – 1.34 times up to 106.5 thousand tiles; of mineral wool items – 1.7 times up to 40 thousand cubic meters; of precast concrete – 10.3 times up to 40,000 tons. (Source: ITEUzbekistan)

 
More information is available at the Government Portal of the Republic of Uzbekistan.