Uzbekistan Update: April 1 - 15, 2024
Biweekly update on key developments in Uzbekistan
UPCOMING EUROUZ EVENTS
April 16, 2024 - Open Round Table of the EUROUZ Committee on
April 23, 2024 - Open Round Table of the EUROUZ Committee on ESG & Compliance Committee: Partnership potential between Uzbekistan and European countries in the field of ecology and environment
May 1, 2024 - EUROUZ Annual General Meeting
May 3, 2024 - Breakfast With Business Leaders – Fostering EU-Uzbekistan Economic Alliances
UPCOMING MEMBER EVENTS
April 17, 2024 EUROUZ member EY Presentation of the Report of Compensation and Benefits Survey in Uzbekistan 2023/2024
April 19, 2024 - Introduction to Financial Reporting and IFRS
This free training program offered by EUROUZ members MAZARS is pivotal for advancing professional skills in the accounting sector of Uzbekistan. It focuses on implementing International Financial Reporting Standards (IFRS). The training will provide a comprehensive understanding of IFRS reporting requirements and aims to enhance the professional standards of accountants nationally, ensuring significant benefits and professional growth for all attendees.
For registration, please visit the link.April 23, 2024 – Uzbekistan Outsourcing Conference
Organized by EUROUZ partners IT-Park Uzbekistan in Berlin, GermanyMay 2-3, 2024 - Third Tashkent International Investment Forum
May 3, 2024, 08:00 – 09:00 am Official event of TIIF agenda hosted by EUROUZ: Breakfast with business leaders - Fostering EU-Uzbekistan Economic Alliances
May 14 – 16, 2024 - Uzbekistan Energy Forum 2024 (organized by Iteca Exhibitions)
EUROUZ and its partners’ members can benefit from special rates and promotions for all upcoming events organized by Iteca Exhibitions. For the Uzbekistan Energy Forum, special rates are available for participation in the exhibition, sponsorship packages, and attendance at the forum itself. Interested parties should contact the Secretariat at info@eurouz.com for more information.
May 27-31, 2024 - Multisectoral Trade Mission to Uzbekistan
a. Brussels & Wallonia (AWEX) - registration
b. Fladers (FIT) - registration
EUROUZ & MEMBER NEWS
President Shavkat Mirziyoyev Visited the Agro-logistics Complex of EUROUZ member BMB Holding
President Mirziyoev visited BMB-NRC Agrologistics complex in Jizzakh, inspecting high-quality agricultural products under the BMB Zafaron brand. The complex offers various services for agricultural products and facilitates direct export to 119 countries. The BMB Opera Zafferano joint venture aims to increase its project value to 80 million euros in three years, with saffron cultivation volume rising from 1.8 to 20 tons. The President emphasized the importance of such complexes in other regions to support entrepreneurship and instructed to expand saffron cultivation areas and increase exports.
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1. INTERNATIONAL COOPERATION
1.1 EUROPE
Uzbekistan, EU Sign Critical Raw Materials Memorandum
The Memorandum aimed at diversifying and securing sustainable supplies for green and digital technologies. The agreement, endorsed by European Commission Executive Vice-President and Uzbekistan's Minister of Investment, Industry and Trade, emphasizes cooperation in areas like sustainable CRM value chains, resilience of supply chains, and joint research and innovation. Action Plan for CRMs and Global Gateway strategy, which plans to mobilize up to €300 billion in sustainable investments by 2027.
EU Launches Grants to Empower Uzbek Civil Society
The EU has allocated over EUR 3.5 million to eight initiatives, reflecting a collaborative effort with both local and international civil society organizations. The projects, which will run from 2024 to 2026, aim to enhance the capabilities of civil society organizations in areas like gender equality, the Green Agenda, and sustainable water management.
Surkhandarya Delegation Secures €37 Million in Agreements with Hungary
During the visit parties conducted negotiations with Hungarian companies, culminating in the signing of agreements worth 37 million euros. These agreements are focused on projects in the fisheries and plastic processing sectors.
Lithuanian Companies Start Hiring Migrant Workers from Uzbekistan
1.2 CENTRAL ASIA & CAUCUSES
President of Kazakhstan arrives in Uzbekistan
The Presidents of Uzbekistan and Kazakhstan, recently convened in Khiva to discuss strengthening their strategic partnership and broadening their cooperation across various sectors. The meeting focused on accelerating joint cooperation projects and implementing existing investment agreements and trade contracts. Areas of collaboration highlighted included machinery, energy, transport and logistics, mining, textiles, and the food industry. Specific directions were given to increase trade turnover, develop long-term industrial cooperation programs, and advance infrastructure projects in transport and energy.
The leaders also discussed establishing an International Industrial Cooperation Center and expanding a joint external trade company. Additionally, they talked about enhancing humanitarian and tourism relations, the prudent use of water resources, and regional issues, including developments in Afghanistan. The discussions were described by the presidential press service as open, sincere, and friendly.
Joint Uzbekistan-Turkmenistan Demarcation Commission Working Groups Convene
Discussions included preparations for an upcoming joint meeting of the Intergovernmental Commission focused on this demarcation. Characterized by an atmosphere of friendship and mutual understanding, the meeting concluded with the signing of a protocol. The next session is scheduled to take place in Turkmenistan.
Uzbekistan, Kyrgyzstan Discuss Enhancing Regional Transport Logistics
1.3 RUSSIA & CHINA
President of Uzbekistan Receives Chinese Delegation
The meeting focused on deepening practical cooperation and coordination to combat modern security threats, with discussions on enhancing inter-agency collaboration in law enforcement. President Mirziyoyev noted the strong friendship and strategic partnership with China and emphasized the potential for sharing expertise and adopting innovative technologies in public security, cybercrime prevention, and specialist training. The discussion also covered broader regional cooperation issues.
1.4 INTERNATIONAL ORGANIZATIONS
Uzbek FM receives coordinator of OSCE projects
Yesterday, Uzbekistan's Foreign Minister met with OSCE (Organization for Security and Cooperation in Europe) Project Coordinator in Uzbekistan. Saidov highlighted their discussions on developing joint projects across the three dimensions of the OSCE, with a particular focus on economic and environmental initiatives.
Uzbek FM Bolsters Global Ties through Strategic Diplomatic Engagements
Recently, Uzbekistan's Foreign Minister Bakhtiyor Saidov engaged in a series of diplomatic meetings to strengthen international relations. He discussed bilateral cooperation and strategic developments with counterparts from Azerbaijan, Kyrgyzstan, Tajikistan, the UAE, Oman, and Kuwait. These discussions focused on enhancing economic ties, cultural exchanges and regional cooperation, including signing cooperation programs with Kuwait and Oman for 2024-2026, aimed at boosting investment and legal frameworks.
Uzbek FM Participates in CIS Council of Foreign Ministers Meeting
The meeting focuses on several critical areas including current international issues and cooperation within the CIS framework. Discussions are set to cover the creation of an anniversary medal commemorating the 80th anniversary of Victory in the Great Patriotic War, establishing the legal status of delegations within the CIS, and designating the sports capitals for 2025 and 2026. Additional topics include advancing military security research, university sports, and training programs for the judicial systems of member states. The meeting will also review the progress of the 2023 action program aimed at enhancing partnerships between the foreign ministries of the CIS countries and is expected to result in several joint statements.
2. PUBLIC POLICY
Uzbekistan Commits to International Convention on Workers' Family Rights
Senators in Uzbekistan have approved the ratification of the International Labour Organization (ILO) Convention No. 156, focusing on the equal treatment and opportunities for workers with family responsibilities. Originating from Geneva in 1981, this Convention protects against discrimination in employment concerning the balance of professional and family duties. It safeguards against the termination of employment based on family responsibilities, covering both children and other dependent relatives. The Convention mandates that signatory states implement measures facilitating the entry or continuity of employment for those with family responsibilities, including the right to return to their jobs after an absence. It also supports the creation of institutions for childcare and family assistance and involves employer and worker organizations in its implementation.
Uzbekistan Plans Nationwide Vehicle Eco-Sticker System by 2030
Starting in Tashkent, the system will classify vehicles based on emission levels and issue stickers accordingly, with the program expanding nationwide by 2030. Vehicle diagnostics and sticker issuance will initially be free, supporting easy transition into the system, which categorizes regions into "green," "yellow," and "red" ecological zones based on air quality. This initiative includes restrictions on more polluting vehicles entering cleaner zones, with phased implementation ensuring broader coverage and environmental impact.
Uzbekistan seeks to halt individual imports of cars for commerce
|This draft government resolution, reintroduced after prior criticism, aims to enforce vehicle type approval processes which were previously circumvented by importers registering cars under various individual names for resale. This policy change will mandate that only legal entities can import vehicles, which must pass a conformity assessment ensuring their suitability for Uzbek conditions. The Technical Regulation Agency emphasized that the goal is to ensure the safety and technical compliance of vehicles in Uzbekistan, with a system that aligns with international norms but was previously undermined by regulatory workarounds.
Migrant Workers to Receive Partial Compensation for Visa and Ticket Costs
Uzbekistan is enhancing its support for labor migrants with a series of comprehensive measures. The government will pay employers a monthly subsidy of 500 thousand soums for each former migrant hired, part of a broader effort to reintegrate these workers into the local economy. This initiative is backed by a 100 billion soums funding in 2024, aimed at covering various supportive measures including partial reimbursement for visa costs, travel, and training expenses for labor migrants.
Businesses Eligible for Subsidies for Exhibition Expenses Based on Sustainability Rating Category
Uzbekistan has adopted a presidential decree to enhance its agricultural and food export sectors. The decree allocates up to 1.5 trillion soums for activities ranging from cultivation to export of agricultural products. It also introduces subsidies for participation in international exhibitions based on a business's Sustainability Rating, with the highest-rated receiving full coverage. Furthermore, from April 1, 2024, minor currency shortfalls in export contracts won't be considered overdue, and until 2026, individuals can register as self-employed to sell agricultural products to domestic exporters.
3. LEGISLATION
3.1. NOTABLE APPOINTMENTS
First deputy minister of higher education, science and innovation
Appointed - Shokhrukh Daliyev
Previously served in - Cabinet of MinistersDeputy Minister of Higher Education, Science and Innovation
Appointed - Otabek Makhkamov
Previously served in - Administration of the President of UzbekistanAdviser Minister of Higher Education
Appointed - Jenisbek Piyazov
Previously served as - Public advisor to the Minister of Preschool Education on the issues of culture and art developmentDirector of Pharmaceutical Safety Center
Appointed - Alisher Temirov
Previously served as - Head of the Department for Regulation of Pharmaceutical Sector and Determination of the Need for Medicines under the Ministry of HealthVice-President of the Academy of Sciences of Uzbekistan
Appointed - Shahlo Turdikulova
Previously served as - Deputy Minister of Higher EducationGovernor of Tashkent city
Appointed - Shavkat Umurzakov
Previously served as - First Deputy Minister of Energy of the Republic of UzbekistanDeputy Governor of Tashkent city
Appointed - Shahnoza Sultanova
Previously served as - Executive Director of the Belarusian-Uzbek Intersectoral Institute of Applied Technical Qualifications in TashkentFirst deputy Governor of Navoi region
Appointed - Rustam Sulaimanov
Previously served as - Deputy Chairman of the Board of Joint-Stock Commercial Bank Microcreditbank
4. ECONOMY
4.1 KEY ECONOMIC INDICATORS, LOANS, & PUBLIC FINANCE
IsDB Funds for Comprehensive Rural Development in Uzbekistan
Uzbekistan is set to enhance the infrastructure in villages across 21 districts in the Samarkand, Surkhandarya, and Kashkadarya regions, by a $260 million preferential loan from the Islamic Development Bank. The President has signed a decree for the "Integrated development of rural areas" project's second phase, which will unfold from 2024 to 2028. The project includes constructing 20 schools, 14 kindergartens, 10 family doctor offices, extending 200 km of drinking water networks, 368 km of electrical networks, and installing 53 transformers. Additionally, 330 kilometers of roads will be improved at a cost of 717 billion soums.
Uzbekistan's Q1 State Budget Deficit Hits Nearly 20 Trillion UZS, Exceeding Annual Expectations
Uzbekistan's state budget deficit significantly exceeded projections in the first quarter of 2024, amounting to 19.8 trillion UZS, nearly double the annual forecasted deficit of 10.3 trillion UZS. In January, February, and March, the deficits were 5.7 trillion, 7.2 trillion, and 6.8 trillion UZS respectively, driven by expenditures that outpaced revenues each month. This escalation raises concerns about fiscal management and the sustainability of government spending, especially given the annual budget projection for revenues of 270.4 trillion UZS against expenditures of 280.7 trillion UZS. The law caps the consolidated budget deficit at 4% of GDP, or 52.6 trillion UZS.
Inflation in Uzbekistan was 1.7% in 1Q – Statistics Agency
In March 2024, Uzbekistan's consolidated Consumer Price Index (CPI) increased to 100.7%, with a quarterly increase reaching 101.7%. Annually, from March 2023, the CPI rose to 108.0%. The increase was largely influenced by food products, which saw a short-term CPI increase of 100.8% in March, while non-food products and services recorded increases of 100.5% and 100.7% respectively. Notably, the CPI for food products annually was 107.8%, with fruits and nuts marking a significant rise to 134.4%. Price adjustments in healthcare and transport also contributed notably to the CPI changes, with healthcare services rising to 103.4% in March for specific sectors like medical laboratory services.
4.2 BANKING & FINANCE
ADB: Economic growth of Uzbekistan to slow down to 5.5% in 2024
The Asian Development Bank (ADB) forecasts Uzbekistan's economic growth to decelerate to 5.5% in 2024, primarily due to increases in regulated prices impacting real household incomes and suppressing demand. The slowdown is expected to be pronounced in the service and agricultural sectors. However, a slight improvement is anticipated in 2025, with GDP growth projected at 5.6% driven by industrial expansion. Despite a tightening monetary policy aimed at controlling inflation, high inflation rates are expected to persist, influenced by structural reforms in the energy sector. Inflation is projected to remain at 10% in 2024 and decrease slightly to 9.5% in 2025.
4.3 AGRICULTURE, MINING, & MANUFACTURING
Uzbekistan Automotive Industry Manufactures 53,000+ Cars in First Two Months of 2024
In the first two months of 2024, Uzbekistan produced 53,367 passenger cars, as reported by the country's Statistics Agency. Alongside this, the production figures for other industrial products included 241.1 thousand tons of automotive gasoline, 659 thousand tons of coal, 118.5 thousand tons of oil, and 214.7 thousand tons of gas condensate. The production of vehicles also featured 61 buses, 466 trucks, and 41,518 car engines. These statistics highlight the scale of industrial manufacturing in Uzbekistan during January and February 2024.
4.4 CONSTRUCTION & REAL ESTATE
Projects worth US$6.1 billion are planned in Jizzakh
Over the last five years, the Jizzakh region of Uzbekistan has attracted investments exceeding US$4 billion, leading to an industrial production output worth 50 trillion soums and exports valued at US$861 million. Currently, the region is progressing with 400 projects valued at US$2 billion, expected to generate 11,000 new jobs. Additionally, plans for 50 new projects totaling US$6.1 billion in sectors such as mining, mechanical engineering, and pharmaceuticals were presented, which are projected to create nearly 20,000 jobs.
4.5 TRADE AND BUSINESS
Uzbekistan increases EV imports
In the first two months of 2024, Uzbekistan saw a significant surge in electric vehicle (EV) imports, with a fourfold increase compared to the same period last year. According to the Statistics Agency, the country imported 3,502 electric vehicles valued at $85.7 million. The majority of these imports came from China, totaling 3,479 units, followed by the UAE with 8 units, and Hong Kong with 5 units.
Uzbekistan Advances Purchase of High-Speed Trains for Khiva Tourism
Uzbekistan has been working on extending its current high-speed rail line - a 600 km (373 mi) rail connection between Tashkent and Bukhara passing through Samarqand, by another 465 km (289 mi) up to the cities of Urgench & Khiva for the past five years. ADB financing of the modernization of the existing rail-line between Bukhara and Khiva in the amount of 162 million USD was approved in 2021 and AIIB financing for another 100 million USD was signed in 2022. In fall 2023 it was announced that Hyundai Rotem has been declared the winner for the supply of six new high speed trains for this section, with concessionary financing from the South Korean Exim (EDCF) loan amounting 185 million euros. This deal puts an end to Spain’s Talgo high speed trains supply monopoly in Uzbekistan after an intense competition between Spanish and Korean companies for several years.
Uzbekistan’s first trading house registered in South Korea
Uzbekistan has launched its first trading house in South Korea, marking a significant step to bolster trade and economic relations between the two countries. This initiative includes a showroom that will showcase a diverse array of products from Uzbek manufacturers, such as food, fruits, vegetables, silk items, ceramics, jewelry, textiles, and chemical products. The trading house aims to enhance Uzbekistan's export potential in the South Korean market through various activities, including advertising campaigns and support for Uzbek entrepreneurs participating in South Korean exhibitions.
Coca-Cola to Invest $165 Million in Two Factories in Samarkand and Namangan
Coca-Cola Ichimligi Uzbekiston, Ltd is set to invest $165 million to build two new factories in Uzbekistan. The first, a soft drink production facility in the Samarkand region, will cost $133 million with an annual output of 280 million liters and is expected to open in the second quarter of this year. The second factory, for carbonated drinks in the Namangan region, will produce 198 million liters annually, costing $50 million, and is scheduled to launch in early 2025. Both projects, heavily supported by Dutch company CCI International Holland B.V., will create a total of 500 jobs and incorporate energy and water-saving technologies. This investment follows Coca-Cola İçecek's acquisition of a majority stake in Coca-Cola Bottlers Uzbekistan in 2021 for $252 million.
4.6 ENERGY & PETROCHEMICALS
Chinese companies to build a solar power plant for $350 million in Jizzakh
This includes the launch of seven projects worth $500 million in the Gallaaral district's new industrial zone focused on metallurgy, which will create 5,000 jobs. The region saw significant industrial growth last year, with the establishment of 4,600 industrial enterprises and a 6% increase in industrial output to 656 trillion soums. Additionally, Uzbekistan is enhancing its energy sector with the construction of 31 power plants totaling 12 GW capacity due to $14 billion in foreign investments. This year, 2.6 GW of new capacity will be added, boosting the share of renewable energy to 30% of total generation. Notably, Chinese firms are building a 500 MW solar plant in Forish district, a $350 million investment expected to produce enough energy for 450,000 households. More thermal, wind, and solar plants with a combined capacity of 1.66 GW are planned in the coming years to further support economic and living standards improvements.
ACWA Power of Saudi Arabia Signs $263 Million Deal for Nukus 2 Wind Project in Uzbekistan
ACWA Power has finalized a $262.7 million power purchase agreement with Uzbekistan’s National Electric Grid for the 200-megawatt Nukus2 wind project, which includes a battery energy storage system and follows a 25-year build, own, operate, and transfer (BOOT) model. Additionally, ACWA Power began a green hydrogen project in Uzbekistan, aiming to produce 500,000 tonnes of green ammonia annually using 2.4 gigawatts of wind energy. This project complements ACWA's commitment to Uzbekistan, where it is their second-largest market with 12 projects, primarily in renewable energy.
Akgun Energy plans to build a solar power plant in Surkhandarya region
Turkish company Akgun Energy plans to construct a 100 MW solar power plant in the Surkhandarya region of Uzbekistan. During a meeting with Surkhandarya's khokim, Ulugbek Kasimov, the delegation led by Akgun Energy's General Director Kemal Gunay discussed the favorable sunny conditions of the region for renewable energy projects. Both parties acknowledged the strong cooperation between Uzbekistan and Türkiye and the supportive environment for mutual investments. The meeting concluded with a decision to further evaluate the project's technical and economic feasibility and initiate steps to enhance the project plan, with assurances of practical support from local authorities.