Raising the level of attractiveness in terms of doing business is an important component of any country’s economic development. It is the main factor boosting the inflow to its economy of foreign investments, whose role in creating high-tech production facilities, satiating the domestic market with competitive goods of high quality and broadening the composition of national exports can hardly be overestimated.
Since the declaration of independence, the Government of the Republic of Uzbekistan has been working on attracting advanced technologies and foreign investments to developing the national economy. Consistent measures have been taken to improve both the country’s business environment and its attractiveness as an investment destination.
Following the improvement of Uzbekistan's regulatory-legal base, as many as 160 permitting procedures and license-related requirements have been abolished for 19 lines of entrepreneurial activity. What’s more, the number of statistical and tax records have notably been reduced.
Steps to ameliorate the investment climate in Uzbekistan are being taken to raise the volumes of FDI in the national economy. In 2014, for an example, the volume of attracted foreign direct investments has exceeded US $4.5 billion.
At the present day, Uzbekistan's competitive advantages, along with its very propitious investment climate, have already been highly characterized by some 5,000 enterprises set up with the participation of foreign investments. Among them are such world-renowned corporations as General Motors, MAN, Knauf, Itochu, Rieter, Klaas, Nestle, Coca-Cola, Kogaz, Sasol, Ariston, CNPC, Indorama, Gazprom, Lukoil, LG, Lotte, Sumitomo, Korea Telecom etc.
It should be pointed out that foreign partners have already implemented a lot of investment projects creating high-tech production facilities capable of manufacturing highly demanded and competitive commodities. Among successful projects with foreign partners are: production of automobiles and engines in conjunction with General Motors and trucks ? jointly with MAN, construction of the Ustyurt Gas-Chemical Complex to process gas and produce polypropylene and polyethylene on the basis of the Surgil gas field, construction in Kashkadaya province jointly with the Swiss company Rieter of a plant to produce synthetic liquid fuel using GTL technology, organization of full-scale production of modern textile equipment and other projects.
What attracts foreign investors in Uzbekistan?
First, it is the political and economic stability. The complex measures taken by the Uzbek government ensure a sustainable pace of economic growth in the country and dynamic development of all sectors of the national economy.
In the past 10 years, the annual GDP growth rate exceeds 8 per cent, one of the world’s highest figures. Thanks to such a rapid development dynamics, the economy of Uzbekistan has doubled in that period.
Since 2005 Uzbekistan has been maintaining the positive trade and payment balance.
According to recent forecasts of a number of international organizations and financial-economic institutions, current growth trend is expected to remain in Uzbekistan in the coming years.
Second, the country’s essential advantage is based on the fact that it is one of a handful of states in the world, whose economy is characterized by energy self-sufficiency. Uzbekistan has enormous reserves of natural resources and raw materials. It is one of the world’s leading producers of gold, uranium, copper, silver, lead, zinc, tungsten, rare metals etc.
Uzbekistan is one of the top ten countries in the world in terms of deposits of oil and gas, coal and uranium. The electric energy generated in the Republic is 4 times as cheap as an average price paid by industrial manufacturers in developed countries.
Third, Uzbekistan's economy is the most diversified one in Central Asia. The country is the region’s only manufacturer of a wide range of modern vehicles - cars, trucks, and high-quality agricultural equipment ? from tractors to combines, as well as the biggest producer of chemicals, textiles, foodstuffs, building materials, electronics and electrical equipment.
Fourth, the country possesses a substantial human and intellectual potential, which corresponds to the current international standards of education. Young people account for more than a half of Uzbekistan’s population. Owing to the obligatory 12-year education system, they acquire deep knowledge and at least 2 professions. Moreover, they are able to use latest information technology and speak 2 foreign languages.
Today, branches of several leading European, Asian and Russian higher educational establishments are functioning in the Uzbekistan, including Britain’s Westminster University, Singapore’s Institute of Management and Development, Korean Inha University, Turin Technological University, Moscow State University, etc.
Fifth, the advantageous geographic location and proximity to the world’s biggest markets constitute another factor of Uzbekistan’s attractiveness for foreign investors. Numbering over 30 million citizens, or about 50 per cent of the total population of Central Asia, the country is the biggest consumer market in the region.
A well-developed transport infrastructure enables domestic enterprises to export their produce to the largest dynamically developing markets of Central Asia and Afghanistan, whose total population exceeds 90 million, the CIS member states (with more than 300 million), West and East Asia and Europe.
The availability of free trade agreements with 11 CIS countries allows the Uzbek producers to export their goods to these markets on a duty-free basis.
The fact that the Republic of Uzbekistan has signed the favored-nation-treatment agreements with 45 countries makes it possible to raise competitiveness of national produce in foreign markets.
Sixth, the Republic’s banking-financial sector is also an important element in conducting an active investment policy regarding the implementation of strategically significant projects to modernize the leading industries of the national economy, provision of financial backing to small business and private entrepreneurs as well as rendering of quality banking services to physical persons.
The reinforcement of the national banking system has created all necessary prerequisites for the reduction in 2014 of a Central Bank refinancing rate from 12 per cent to 10 per cent and a credit interest rate for commercial banks.
In the last few years, the world’s leading rating agencies like Moody’s , Standard & Poors, and Fitch Ratings, have been assessing the performance of Uzbekistan’s banking system as “stable”. In 2011, only 13 commercial banks of the country enjoyed such a high rating; nowadays all 26 commercial banks operating in Uzbekistan are beneficiaries of their high ratings.
Seventh, unprecedented privileges and preferences are stipulated for investors in the Navoi Free Industrial-Economic Zone and the Angren and Djizak Special Industrial Zones. Their residents are exempt from almost all taxes for different periods, depending on investment volumes: from 3 years to 15 years (the Navoi FIEZ) and from 3 years to 7 years (the Angren and Djizak SIZs).
Currently, the following industries of the national economy are considered to be the most promising directions in terms of FDI attraction: the oil-and- gas sector ? deep reprocessing of hydrocarbons and production of goods with high value added; the chemical industry ? production of polyvinylchloride, plastics and new types of chemical fertilizers; mechanical engineering; electro-technical industry; production of building materials; textile industry, development of mineral resources, including the reconnaissance and joint development of new deposits; introduction of alternative sources of energy; and information technology.
By and large, the Republic of Uzbekistan can offer foreign investors not only a vast natural wealth, but other advantages, too, including the political and economic stability, a favorable business environment, a considerable personnel and intellectual potential, the beneficial geographic location and developed infrastructure.