Uzbekistan is a resource-rich, most populated country, strategically located in the heart of Central Asia. The nominal Gross Domestic Product per capita in Uzbekistan was last recorded at 50 billion US dollars with 250 billion purchasing power parity (PPP).
It should be noted that President of Uzbekistan Shavkat Mirziyoyev by his decree has approved the action strategy on priority areas of the country’s development for 2017-2021. The action strategy will be implemented in five stages, and each stage provides for approval of a separate annual state program on the strategy’s implementation in Uzbekistan, according to the decree. There is five key legal and institutional reforms: state governance, rule of law and legal reforms, liberalization of the economy, social sphere, security, religious tolerance and interethnic harmony, foreign policy.
Currently, according to the United Nations Educational, Scientific and Cultural Organization (UNESCO), the literacy rate is 97%, comparable to Singapore and other developed countries. Additionally, there are 93 local universities and 21 branches of foreign universities.
Indeed, about 67% of the population of 33.5 million people aged 15 to 64 years, the average age is 29 years, which is an important advantage. By 2035, the population is forecasted at 44 million people (an increase of 33% by 2019); the level of urbanization is at least 59% (currently 50%).
Currently, the Republic of Uzbekistan has the largest able-bodied population, which is about 19 million people, which exceeds the number of able-bodied populations of Central Asian countries combined.
Currently, the Republic’s economy is the second fastest growing in the CIS, with an indicator of 5.1%, according to the results of 9 months of this year, growth accelerated to 5.7%. According to the Asian Development Bank, GDP growth in 2020-2021 will be about 6%.
As of the beginning of 2019, the country has sufficient gold and foreign exchange reserves of $ 28 billion (55% of GDP), and government debt of $ 17.3 billion (34% of GDP). Reserves more than cover the volume of external debt, which is an important stabilizing factor. For comparison, the indicator of reserves to GDP in Kyrgyzstan is 28%; the level of external debt to GDP is 48%, in Georgia 20% and 110%, in Tajikistan 18% and 39%, in Kazakhstan 16% and 93%, respectively.
It is noteworthy that in 2019 Uzbekistan entered the top 20 countries in the world that achieved the greatest results in improving the business environment. It is worth noting that in the “Doing Business” 2012 ranking, Uzbekistan was in 166th place (an increase of 97 positions). In the 2020 ranking, the country achieved the best results in protecting minority investors, paying taxes, enforcing contracts and international trade. In fact, the republic moved up from 76th to 69th place in “Doing Business 2020” ranking among 190 countries;
In accordance with the Decree of the President of the Republic of Uzbekistan “On measures to further improve the mechanisms for attracting foreign direct investment in the economy of the republic” dated April 29, 2019 № PD-4300 foreign investors are offered state shares in 29 large enterprises, including 4 financial institutions, 2 from energy sector, 6 oil and gas, 3 chemical and other industries. In addition, the shares of Uzpromstroybank, Asia Alliance Bank and Jizzakh Plastic are put up for an initial public offering (IPO), the shares of Quartz, Alokabank and the Uzbek Republican Commodity and Raw Materials Exchange for a secondary public offer of shares (SPO).
It is significant that the decision of the Head of State decided to introduce a visa-free regime for the entry of tourists from 86 countries of the world. In this regard, Uzbekistan is becoming the most open country for tourists among the CIS countries. For comparison, in 2017, citizens of only nine countries had a similar opportunity. In case, the number of countries with visa-free entry has been increased from 9 in 2017 to 86 in 2020 (an increase of 9.5 times).
The above measures have allowed a sharp increase in the flow of foreign citizens from 1.9 million to 5.4 million people, and by 2022-2023, it is forecasted to receive 10 million foreign citizens. It is worth noting that, according to the Gallup rating “Global Law and Order” and “Individual Report on Travel Safety”, Uzbekistan is on the 5th place in the list of the safest countries in the world for personal safety, law enforcement and travel, along with Switzerland and other developed countries.
Moreover, an “Investors’ Visa” has been introduced for investors who have contributed at least 200,000 US dollars.
The introduction of free conversion of the national currency, the reduction of trade barriers and customs payments allowed to significantly increase the volume of trade, namely by 37% compared to 9 months of 2018, while exports grew by 45.5% and imports by 31.5%.
Uzbekistan conducts an open, mutually beneficial and constructive foreign policy based on the national interests of the country. Current foreign policy of Uzbekistan is formed considering the dynamic changes in the world and the region as well as large-scale reforms within the country. Main turnover partners are China, Korea, Turkey, Germany and CIS countries.
Main export structure consists of gold, tourism energy and textile products. While machinery and chemical products are base sectors to import.
One of the greatest advantages for attracting international capital is the fact that we have significant reserves of mineral resources, more than 2,000 deposits. Annually gold production counted as 90 tons.
One of the key benefits of opening business is low cost of energy. In compare to neighbour countries Uzbekistan has one of the lowest prices for gas and electricity.
Obviously, The Republic of Uzbekistan has tremendous potential for energy development. There are more than 310 sunny days a year in the country, the technical potential of solar energy exceeds 2 trillion kW*h, wind energy 1 trillion kW*h and hydropower 27 billion kW*h. It is also important that in terms of low cost of energy (cost per kWh of electricity and m3 of gas). We are in second place among the CIS.
Moreover, country has developed infrastructure, namely the total length of roads exceeds 184 thousand km, electric networks 237 thousand km, railways 4.7 thousand km, gas pipelines 13.7 thousand km, 11 international airports, the construction of the “Dry Port Navoi” is under consideration.
Currently, our Government is implementing Program for development and modernization of engineering communications and road infrastructure, which provides for the elaboration of a single complex development strategy for the national transport industry, which meets high international standards, and ensures its broad integration into international transport communications, taking into account the long-term needs of domestic manufacturers in promoting their products to the regional and world markets.
It should be considered that today in the country all the necessary conditions have been created for the further development of the transport and transit potential.
The country is making efforts to increase the capacity of the transport system, remove existing barriers to unimpeded transit through the territory of Uzbekistan, which plays great importance for the development of international transport corridors in Central Asia.
Uzbekistan has been involved in CIS Free trade zone with 275 total market access.
Over the past 2 years, large-scale reforms have been carried out in the tax system, the rates of a single tax payment, VAT, property tax, social payment have been reduced, a flat taxation scale has been introduced for personal income, and some types of taxes and obligatory payments have been cancelled. Moreover, the VAT rate has been reduced from 20% to 15%.
The tax burden on business entities is gradually reduced.
It has been established that tax and customs are provided exclusively by laws and acts of the President of the Republic of Uzbekistan as a whole for industries, fields of activity, territories;
The measures taken to radically improve the country’s investment climate and simplify the business environment over the past 3 years have led to a sharp increase in the number of enterprises with foreign capital, namely from 5370 in 2017 to 9730 by October of this year (an increase of 81%).
Share of capital investments by private domestic investments is 45%. According to FDI statistics of the country in 2018, mining and manufacturing industries was most attractive in this year. In addition, Russia and China are key dominant foreign investing countries in 2018.
Presidential Decree №PD-4300 provides for the provision of investment residency in Uzbekistan – “Uzbekistan My Second Home”.
It is planned to introduce a procedure for providing residence permits to foreign investors, subject to investment in the Republic of Uzbekistan. In case of acquisition of real estate in:
– Tashkent region and Tashkent city – at least $ 400,000;
– Samarkand, Bukhara, Namangan, Andijan, Ferghana and Khorezm regions – at least $ 200,000;
– The Republic of Karakalpakstan and other areas of the country – not less than $ 100,000.
In the case of other types of investments (for example, in shares, replenishment of the authorized capital or acquisition of shares in enterprises), the amount of investments made must be at least $ 400,000.
To actively attract foreign capital, there are currently tax and customs incentives, 21 free economic zones (7 pharmaceutical, 12 industrial, 1 agricultural and 1 tourism), a business ombudsman institution has been introduced, the Tashkent International Arbitration Centre has been established, and a draft unified law on investments has been developed and investment activity”, which aims to combine the norms of 3 laws and about 100 by-laws regarding investments.
Today, a solid foundation had been laid for increasing FDI in the economy of the republic. In particular:
– Received sovereign credit ratings Standard & POOR’S, Fitch Ratings;
– Uzbekistan has risen from the 6th to the 5th group in terms of the OECD country credit risk classification;
I should admit fact that Uzbekistan sold 1 billion Eurobonds in 1st entry into international debt market.
Finally, yet importantly, there are more than 50 international companies with FDI in Uzbekistan.
New Silk Road connectivity, tax incentives and comprehensive structural and regulatory reform make Uzbekistan an attractive Central Asian powerhouse. Over the last few years, Uzbekistan has made significant strides to attract more international business and investment, overhauling virtually every facet of doing business in the country to facilitate and increase foreign direct investment (FDI). The nation’s strategic location as the main land corridor with developed infrastructure helps in booming market with high growth. There is no doubt that ongoing reforms will help to provide great opportunity to each of investors.