AUGUST 15-31, 2023: Uzbekistan Market Update
EUROUZ.EU & Uzbek.Review present the biweekly update on key developments in Uzbekistan for August 15-30, 2023.
Notable Quotes
“We cannot ensure high economic growth by selling oil and gas resources, like some countries. We don't have such resources. And we need those that exist since the population is increasing. We can't sell. We are doing a lot in this direction. God willing, the population will feel the work done by this winter.”
The President of Uzbekistan on decreasing energy exports during an open dialogue with entrepreneurs.
UPCOMING EVENTS
I. Save the date: The tentative date for the 1st EU-Uzbekistan Economic Forum to be Held in Brussels is October 24, 2023
We expect a high-level delegation from Uzbekistan and a large business delegation to participate in the planned one-day event. Preliminary registration is now open, and the website is now online, which will be updated regularly.
Contact EUROUZ for sponsorship & speaking opportunities at info@eurouz.com
II. EUROUZ is organizing an online presentation on the country’s largest international exhibition organizer - ITECA Exhibitions Uzbekistan, on September 8 at 12:00 CET (15:00 Tashkent time).
With 27 years of experience, ITECA Exhibitions Uzbekistan is the primary organizer of major annual exhibition events such as Oil & Gas, Energy Uzbekistan, and UzBuild, among others.
Participants of the open event will gain insights into:
Whether they should participate in Uzbekistan’s leading industry events
How to make the most of exhibition participation in Uzbekistan
Upcoming scheduled events in the country
We invite you to join us online for Iteca's presentation designed for European companies. ITECA also offers special rates for EUROUZ members, their affiliated companies, and partners, which will be discussed during the call.
Register via this link.
III. The first meeting of the ESG & Compliance Committee (ESG&C) will take place on September 15.
The committee aims to support the EUROUZ Members’ ongoing commitment to environmental stewardship, health and safety, corporate social responsibility, corporate governance, sustainability, and international best practices in corporate compliance as relevant to the Members’ business activities and the business environment in Uzbekistan.
IV. Conference "Day of the German Economy in Uzbekistan" on September 14.
The Representative Office of the German Economy in Central Asia (AHK), in collaboration with the German Industry and Commerce in Uzbekistan and with the support of EUROUZ, will host the "Day of the German Economy in Uzbekistan". The conference aims to review the outcomes of German-Uzbek economic cooperation and focus on promising avenues for further expansion.
A high-level economic delegation from Germany is anticipated to participate in the event, led by the Head of Foreign Economic Activity and a member of the Board of Directors of the Federal Association of German Chambers of Commerce and Industry (DIHK), Dr. Volker Trayer. The delegation encompasses nearly 50 leaders and board members of German companies and German chambers of commerce and industry.
If interested, register via this link.
V. IT-Park to hold “Uzbekistan IT Days”, Amsterdam - September 26-27.
IT Park Uzbekistan, a EUROUZ partner and Uzbekistan's primary IT ecosystem builder, participates in the Digital Transformation Week Europe event from September 26 to 27 in Amsterdam. You can come and meet IT Park’s representatives at Stand No. 260.
As part of participation in the events and its global roadshow in 2023,
IT Park will also hold a one-day conference focused on Uzbekistan’s IT ecosystem: Uzbekistan IT Days. You can register your participation at this event via the following link.
EUROUZ & MEMBER NEWS
I. EUROUZ welcomes a new Association member - Asakabank.
Asakabank has maintained its dominant position in the financial services market of Uzbekistan for 27 years. The bank was established in 1995 by the decision of the Cabinet of Ministers of the Republic of Uzbekistan. With over 20 branches, serving 2.2 million individual customers and 66 thousand corporate customers, it remains one of the leading banks in Uzbekistan in terms of capital and assets.
Read more about the bank and its achievements here.
We look forward to supporting Asakabank in Uzbekistan and Europe.
II. EUROUZ Secretariat & members participated in the Interim Session of Uzbekistan’s Foreign Foreign Investors Council (FIC).
On August 29, the FIC Interim Session, co-chaired by Alkis Drakinos, EBRD Country Director, and Laziz Kudratov, Uzbekistan's Minister of Investment, Industry, and Trade, convened 150 experts, including EUROUZ members EDF, PwC & KPMG and others to discuss the county’s current investment climate.
EUROUZ highlights in particular the contribution of Mr. Abdulkhamid Muminov, Managing Director of PwC Uzbekistan, for his presentation on tax administration improvements and government regulatory streamlining initiatives during the Council's discussions.
EUROUZ keeps track of major trade and investment changes and events in both Uzbekistan and the EU to provide its members and partners with the advantage of exclusive information on the Uzbekistan market.
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Join EUROUZ to access exclusive market support for your business activities in the country.
1. INTERNATIONAL COOPERATION
1.1. EUROPE
On August 19-20, the President of Uzbekistan visited Hungary.
Source: The Presidential Administration of Uzbekistan
During the visit, the President engaged in a bilateral meeting with the President of Hungary, during which they discussed the enhancement of the Uzbek-Hungarian strategic partnership.
Additionally, the countries have initiated direct flights and reached an agreement to establish a joint fund of USD 100 million, Hungarian pharmaceutical companies are planning to expand production into Uzbekistan, and an industrial zone for Hungarian investors is scheduled to be launched by the end of 2023. Furthermore, the countries agreed to collaborate on the implementation of Hungarian dry cooling technology for the planned nuclear power plant in Uzbekistan.
The President also attended the 19th World Athletics Championships, where he had meetings with leaders from various other countries, including the Turkish President.
1.2 CENTRAL ASIA & CAUCASUS
On August 22-23, The President of Uzbekistan visited Azerbaijan.
Source: The Presidential Administration of Uzbekistan
During the visit, the President held a bilateral meeting with the President of Azerbaijan, during which, most notably, the sides agreed on the creation of the Supreme Interstate Council between Uzbekistan and Azerbaijan.
In addition, 15 more documents were signed at the different government levels of the two countries. These agreements encompass a “Roadmap” for deepening a comprehensive strategic partnership for 2023–2024, deepening cooperation in the energy sector, the development of industrial cooperation and logistics infrastructure, and more. To support mutual projects, a joint Investment Fund and the Uzbek-Azerbaijani Investment Company have been created.
On the eve of the state visit, a business forum was held in Baku with the participation of heads of key ministries and departments and over 250 representatives of leading companies of the two countries. At the forum, Uzbekneftegaz and SOCAR, the state oil and gas company of Azerbaijan, signed an agreement for the execution of collaborative projects in both countries.
Throughout the meeting, the representatives deliberated matters concerning electricity supply for the forthcoming autumn-winter season, arriving at various mutual agreements and defining the volumes and terms of supply. They also reached a consensus to investigate the feasibility of implementing a mechanism for maintaining hourly electricity metering, finalizing agreements for addressing unscheduled flows between economic entities and reviewing the existing terms of agreements for managing unscheduled flows.
On September 14-15, the President of Uzbekistan will participate in a consultative meeting of the heads of five Central Asian states in Dushanbe.
Source: The Presidential Administration of Uzbekistan
1.3. RUSSIA & CHINA
This train will traverse the Khorgos land port in the northwest region of China's Xinjiang Uyghur Autonomous Region, completing its journey to Tashkent in approximately 15 days.
1.4 NORTH & SOUTH AMERICAS
Joe Biden invited Shavkat Mirziyoyev to the inaugural C5+1 summit in the USA.
Scheduled for September 19 or 20, the first summit of the Central Asia-US format (C5+1) will occur during the initial days of the UN General Assembly session in New York.
1.5 MIDDLE EAST & SOUTH-EAST ASIA
Economic cooperation agreements have been signed with Qatar.
The governments of Uzbekistan and Qatar have approved resolutions regarding mutual encouragement and protection of investments, the elimination of double taxation concerning income taxes, and the prevention of tax evasion.
2. PUBLIC POLICY
On August 18, the President of Uzbekistan engaged in an open dialogue with entrepreneurs to propose new initiatives aimed at improving business conditions.
Source: The Presidential Administration of Uzbekistan
The new initiatives included:
Some key findings include:
12% of respondents expressed dissatisfaction with the performance of economic courts.
11% of respondents are not content with the services provided by electricity supply enterprises.
45% of entrepreneurs reported experiencing disruptions in their electricity supply.
30−45% of respondents agreed to a proposed 1.2-fold increase in prices for electricity, gas, and water.
62% of respondents stated that tax reforms have positively influenced their business activities, while 8% felt a negative impact.
3% of complaints were linked to fines resulting from the actions of business partners.
8% of entrepreneurs encountered challenges in obtaining VAT refunds.
73% of respondents reported encountering high-interest rates on loans.
25% noted excessive documentation requirements for loan applications.
19% of respondents indicated undervaluing their collateral.
As per a Presidential decree, the state shares of enterprises slated for reform and operational enhancement during 2023-2025 have been transferred back from the Agency for Strategic Reforms to the ministry. Furthermore, the President has directed the Fund for Reconstruction and Development of Uzbekistan (FRUD) to convey the functions of shareholder and managerial oversight of shares owned by the fund in nine banks and Uzmetkombinat to the ministry. These banks include Agrobank, Asakabank, Uzpromstroybank, People's Bank, Turonbank, Qishloq Qurilish Bank, Aloqabank, NBU, and Microcreditbank.
The President approved amendments to harmonize current legislation with WTO agreements.
The presidential decree introduces legislative changes prompted by complaints from several countries currently in negotiations for WTO accession. To access the complete list of legislative changes, click here.
3. LEGISLATION
3.1. LEGISLATIVE CHANGES
A registry for mandatory requirements in the field of entrepreneurship is underway.
According to the Resolution of the Cabinet of Ministers, starting from December 1, 2023, a unified electronic registry of mandatory requirements in the field of entrepreneurship will begin its operation on a trial basis (the "Registry").
The Registry will encompass all regulations governing entrepreneurial activities, their deadlines, associated financial expenditures, documents confirming compliance with requirements, regulatory authorities, inspection procedures, and liability measures.
Digitalization of agriculture.
The President has signed a Resolution outlining measures for the implementation of advanced digital technologies in the agricultural sector. Thus, starting from September 1, 2023, the "Agroplatform" information system (the "Information System") will be introduced.
The new Information System will facilitate the transition to a digital format for providing preferential loans for the cultivation of cotton, grains, fruits, and vegetables, as well as for delivering agricultural services.
3.2. GOVERNMENT APPOINTMENTS
The new structure of the Administration of the President of Uzbekistan.
Assistant to the President.
Appointed - Saida Mirziyoyeva.
Previously served as - Head of the Communications and Information Policy Sector of the Executive Office of the Presidential Administration.
Assistant to the President.
Appointed - Aziz Magrupov.
Previously served as - Assistant to the President - First Deputy Head of the Presidential Administration.
Advisor to the President on Economic Revitalization Issues.
Appointed - Ravshan Gulyamov.
Previously served as - Adviser to the President on the Development of Economic Sectors, Implementation of Investment and Foreign Trade Policies.
Advisor to the President on Energy Security Issues.
Appointed - Alisher Sultanov.
Previously served as - Advisor to the President on Oil and Gas, Chemical, and Energy Issues.
Advisor to the President on Agrarian Development Issues.
Appointed - Shukhrat Ganiev.
Previously served as - Deputy Advisor to the President on the Development of Economic Sectors, Investments, and the Implementation of Foreign Trade Policy.
Advisor to the President on Issues of Religion and Inter-Ethnic Relations.
Appointed - Muzaffar Kamilov.
Previously served as - Advisor to the President on Issues of Interaction with Public and Religious Organizations.
Advisor to the President on Personnel Policy Issues.
Appointed - Gofurjon Mirzaev.
Previously served as - Advisor to the President on Issues of Public Service, Dialogue with the Population, and Coordination of Local Government Activities.
Advisor to the President on Issues of Coordination of Activities of Law Enforcement and Control Bodies.
Appointed - Doniyor Kadirov.
Previously served as - Deputy Advisor to the President on Issues of Coordination of Activities of Law Enforcement and Control Bodies.
Head of the Information Policy Department of the Presidential Administration.
Appointed - Kamil Allamjonov.
Previously served as - Deputy Head of the Administration, Responsible for Studying Public Opinion and Information Policy.
Head of the Department of Social Development of the Presidential Administration.
Appointed - Odil Abdurakhmanov.
Previously served as - Advisor to the President on Youth, Science, Education, Health, Culture and Sports.
Head of the Department of Youth Policy of the Presidential Administration.
Appointed - Kakhramon Kuranbaev.
Previously served as - First Deputy Advisor to the President on Civil Service, Dialogue with the Population, and Coordination of Activities of Local Authorities.
Head of the Department of Foreign Relations of the Presidential Administration.
Appointed - Alisherbek Paygamov.
Previously served as - Deputy Head of the Presidential Administration.
Head of the Department of Interaction with Regions and Preparation of Analytical Materials of the Presidential Administration.
Appointed - Utkirzhon Kodirov.
Previously served as - Deputy Governor of the Kashkadarya region.
Head of the Presidential Protocol.
Appointed - Ulugbek Kurbanov.
Previously served as - Deputy Head of the Presidential Administration - Head of the Presidential Protocol.
Press Secretary of the President.
Appointed - Sherzod Asadov.
Previously served as - Deputy Head of the Presidential Administration - Press Secretary of the President.
Head of the Control Inspectorate of the Presidential Administration.
Appointed - Saidlaziz Saidkarimov.
Previously served as - Head of the Control Inspectorate of the Presidential Administration.
Deputy Prosecutor General of the Republic of Uzbekistan.
Appointed - Sherzod Tukhtabaev.
Previously served as - Head of the Prosecutor General's Office
Deputy Prosecutor General of the Republic of Uzbekistan.
Appointed - Jahongir Khatamov.
Previously served as - Prosecutor of the Samarkand region.
Acting Chairman of the Board of Uztransgaz.
Appointed - Askar Isakov.
Previously served as - Deputy Head of the Inspectorate for Control Over the Use of Electricity, Oil Products and Gas under the Ministry of Energy of Uzbekistan.
Consultant-Advisor to the Minister of Economy and Finance on Public Debt, Work with International Ratings, and Public-Private Partnerships.
Appointed - Odilbek Isakov.
Previously served as - Deputy Minister of Finance of the Republic of Uzbekistan
4. ECONOMY
4.1. KEY ECONOMIC INDICATORS, LOANS, & PUBLIC FINANCE
Source: Statistics Agency
Source: Statistics Agency
4.2. TRADE AND BUSINESS
Gold exports have already surpassed the total figure for the entirety of 2022, which amounted to USD 4.11 billion, and now constitute 37.7% of the country's export portfolio.
Uzbekistan wants to expand transit cargo transportation to Pakistan via Afghanistan.
On August 26-27, a Uzbek delegation visited Kabul and engaged in discussions regarding increased investments in Afghanistan. They deliberated the removal of transit restrictions through the country's territory, the reduction of transit fees for goods transportation to Pakistan, the implementation of 24/7 operations for customs services, and other related matters.
By the end of 2023, Uzbekistan and Pakistan plan to sign an agreement between their respective "single window" systems, facilitating an online exchange of customs data.
More on Afghanistan, Uzbekistan has agreed to provide medicines and vitamins to the country. The parties are also in the process of developing a draft agreement for the implementation of a mutually simplified system for state drug registration, with a timeframe of up to 25 days.
Ozon intends to open a logistics center in Uzbekistan.
The Russian marketplace plans to offer domestically produced textiles, footwear, and leather goods.
4.3. BANKING & FINANCE
Kapitalbank and UzNEX crypto exchange launched the first cryptocurrency card in Uzbekistan.
The crypto card will make it possible to automatically convert cryptocurrency into payment currency and make payments worldwide, like a regular Mastercard.
Fitch Affirms Uzbekistan 'BB-'; Outlook Stable.
The rating agency has affirmed Uzbekistan's Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at 'BB-' with a Stable Outlook. Click on the link to learn more about the key rating drivers and rating sensitivities.
Uzbektelecom will receive a loan of EUR 400 million from Deutsche Bank.
The funds will increase the liquidity of the state-owned telecom operator and replenish its working capital. It is allocated for five years with a two-year grace period, at 4.8% per annum plus Euribor for six months (interbank rate in euros, now 3.944%).
4.4. AGRICULTURE, MINING, & MANUFACTURING
Cotton producers will be given the right to pay VAT in installments.
The Cabinet of Ministers has approved a resolution stipulating that cotton raw materials from the 2023 harvest will be accepted by cotton-textile clusters exclusively through electronic scales. Furthermore, the resolution introduces new procedures for settlements between cotton textile clusters and agricultural enterprises (farms), as well as VAT accounting. For a more detailed overview of the legislation, click here.
An agro-logistic complex is set to open in the Jizzakh region.
Representatives from the economic ministries of Uzbekistan and Russia have deliberated on the prospects of the Agroexpress project. Notably, the parties have agreed to enhance mutual product supplies through expedited rail transportation, along with cost optimization measures. A planned opening for the agrological complex in Jizzakh is scheduled for October, with a projected capacity of handling up to 810 thousand tons of products annually.
The government will allocate USD 60 million in loans to create livestock clusters.
The President signed a decree on the development of livestock farming in Uzbekistan. Among other things, it is planned to introduce a system for identifying farm animals to track them. Additionally, 25 livestock clusters are being created. Click here to learn in more detail about the reform in livestock farming.
During January-June, large enterprises produced 5.7 million tons of cement.
The volume of cement production saw a 10.2% increase compared to the corresponding period in 2022.
Uzbekistan and Azerbaijan plan to cooperate in the agricultural sector.
The Minister of Agriculture of Uzbekistan held a meeting with the President of Veyseloglu, an Azerbaijani company engaged in the production and distribution of consumer goods, to discuss the establishment of large supplies of fruits and dried fruits from Uzbekistan, and the joint cultivation of agricultural products.
4.5. ENERGY & PETROCHEMICALS
Gas, electricity, coal, and gasoline production since the beginning of the year.
Source: Statistics Agency
In January-July, gas production reached 27.47 billion cubic meters, marking a decrease of 9.5% compared to the previous year. Electricity production increased by 5.5%, equivalent to 2.35 billion kWh. Notably, over 85% of the generated electricity is derived from thermal power plants fueled by gas. Coal production surpassed last year's figures by 5.5%, reaching 3.1 million tons. Oil production exhibited a marginal increase of 0.8%, totaling 465 thousand tons. However, it is worth mentioning that thermal energy production witnessed a decline of 9.1%, while gas condensate production experienced a decrease of 6.6%.
That being said, the head of Uzbekneftegaz clarified that the decline in gas production is attributed to extensive repair work being conducted on compressor stations in preparation for the upcoming winter season.
Uzbekhydroenergo has announced a tender for the construction of 5 new hydroelectric power stations.
The estimated total cost for the construction of these hydroelectric power plants is USD 106.9 million. These plants are projected to generate 179 million kWh of electricity annually. For further details about the tender, click here.
Turkmenistan will provide Uzbekistan with up to 2 billion cubic meters of gas.
Uzbekistan's UzGasTrade and Turkmenistan's Turkmengaz have entered a short-term contract for the delivery of Turkmen gas. The parties are also contemplating a long-term contract, spanning extended periods and involving increased supply volumes.
The plant will produce up to 495 thousand tons of ammonia per year. Moreover, a further synthesis with carbon dioxide will be established, which will make it possible to obtain up to 594 thousand tons of urea granules. Furthermore, Enter Engineering will act as a partner and general contractor for the construction, whilst the design work will be carried out by the Swiss Casale S.A.
The Vietnamese company will begin geological exploration in the oil and gas fields of the Kossor, Shorchashmin, and Chukurkul blocks.
The projection for the transit of Russian oil to Uzbekistan has diminished.
Throughout the first half of the year, more than 48 thousand tons of Russian oil traversed the pipelines of KazTransOil. In 2022, Uzbekneftegaz and KazMunayGas reached an agreement to supply 300,000 tons of oil. However, in the spring of 2023, KazTransOil adjusted the estimate to 250 thousand tons, reflecting a decrease of around 28.4%.
In the first stage, the volume of gas storage in the Gazli UGS facility will be doubled from 3 to 6 billion cubic meters. In the second stage, by refining and expanding the gas storage facility, the capacity will be increased to 10 billion cubic meters. The total cost of the projects is estimated at USD 850 million.
Saudi Arabia’s Vision Industries to set up production of parts for wind turbines
The government and Vision Industries agreed to cooperate in implementing joint projects in the localization of components used for wind energy systems.
USEFUL LINKS AND NOTABLE PUBLICATIONS
Uzbekistan’s Ecosystem for Technology Startups (ADB)
Uzbek Leader Mirziyoyev Wins More Time For Reforms (Forbes)
Uzbekistan: Agenda for Change on Human Rights (Human Rights Watch)
Letter From One President To Another (Forbes)
Azerbaijan and Uzbekistan agree to strengthen bilateral relations (Anadolu Agency)
Uzbekistan's President Mirziyoyev appoints daughter as adviser (Reuters)
Rail link with Kyrgyzstan and Uzbekistan key to China raising Central Asia influence and skirting Russia sanctions (South China Morning Post)
Uzbekistan aims for environmental security, sustainable development through 'green' development (The Korea Times)
Uzbekistan’s remarkable resurgence is a tale of growth, reform, potential (NE Global)
ACWA power's bash wind farm project: A pioneering step towards renewable energy in Uzbekistan (Energy & Utilities)