Uzbekistan Update: February 1 - 16, 2024
Biweekly update on key developments in Uzbekistan
Notable Quotes
“In order to take our economy to a new level, we need to increase exports by at least 30% per year”
The President of Uzbekistan Sh.Mirziyoyev
UPCOMING EVENTS
February 21st, EUROUZ is supporting the Mazovia-Uzbek Economic Forum in Warsaw. / Click here to register.
March19th (tentative), Uzbekistan 2024: Economic & Investment Update
EUROUZ's annual event will review Uzbekistan's development progress, reforms, and economic results in 2023 and the expected outlook for 2024.March 1st - EY Webinar on “Answers to hot transfer pricing questions in Uzbekistan."
The first-of-its-kind event aims to provide attendees with the opportunity to receive answers to their questions from representatives of the Tax Committee and to gain recommendations from EY experts on practical approaches to transfer pricing.
March 12th - EUROUZ HR & Capacity Building Committee Meeting
EUROUZ & MEMBER NEWS
1 - EUROUZ held Healthcare & Life Sciences Committee Meeting
On February 16th, EUROUZ held the Healthcare & Life Sciences Committee Meeting for EUROUZ members. Representatives of Vakhidov & Partners, AstraZeneca, Stada, Polpharma Group, Bavaria Reha Group, Adamed, and the EU delegation to Uzbekistan attended the meeting.
In the meeting's first session, Committee Chairman Zafar Vakhidov presented on Uzbekistan's healthcare legislative and structural updates. The second session established 2024 work targets, informed by the December 2023 roundtable, and members prioritized vital areas for future initiatives and regulatory collaboration to advance the committee's goals effectively.
2 - EUROUZ held a coordination call with The Foreign Investors Council (FIC) under the President of Uzbekistan
The next plenary session of the Foreign Investors Council (FIC) under the President of Uzbekistan is scheduled for May 2nd, 2024. EUROUZ is actively facilitating European companies in preparing their proposals, recommendations, and concerns. The EUROUZ Secretariat held a coordination meeting with the FIC Secretariat on February 8th to initiate the preparation process for EUROUZ members.
3 - EUROUZ Featured member - Bavaria Reha Group
Bavaria Reha Group opened the Bavaria Reha Tashkent Clinic in November 2023. The Clinic specialises in Sports Medicine and Physical therapy, treating patients after surgeries and injuries and managing acute and chronic pain. The Clinic works with companies and individuals, offering a wide range of services within their speciality. For more information, click here.
4 - EUROUZ welcomes a new member - Clever Logistic Sp. z o.o.
Established in 2009 in Warsaw, Clever Logistic Sp. z o.o. is an expert in export-import transportation between the EU, Central Asia, the Caucasus, Ukraine, and Moldova. The company specializes in multimodal, road, sea, air transport, warehousing logistics, and customs services. Click here for more information.
Saneg, a prominent private oil and gas firm, has acquired CGC Lubricants Italy S.P.A., creating SANEG OIL ITALY S.P.A. This acquisition aims to obtain European safety certifications for Federal Refinery base oils and bolster European market presence. It also partners with SEG Motol to strengthen technological capabilities in Uzbekistan and Central Asia. SANEG OIL ITALY S.P.A. will enhance Uzbekistan's lubricant production and facilitate market access across Italy and Europe with its broad distribution channels.
6 - EUROUZ member Korzinka receives gender equality certification
Following an independent audit, Korzinka, the largest retail chain in Uzbekistan, was awarded a certificate of compliance with EDGE ASSESS gender equality standards - the first company in Central Asia to achieve this recognition. Korzinka also chairs the EUROUZ ESG & Compliance (ESG-C) Committee.
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1. INTERNATIONAL COOPERATION
1.1 EUROPE
Uzbekistan and Belarus aim to Surpass $1 Billion in Trade Turnover
During the Belarusian President's state visit to Uzbekistan, the two countries signed agreements for collaboration in agriculture, industry, pharmaceuticals, and urban development. Targeted sectors will see working groups forming to propel these partnerships forward. Other key outcomes included establishing a joint foreign trade company, introducing an electronic product certification system, and enhancing the transportation infrastructure.
Uzbekistan and the UK to boost inter-parliamentary cooperation.
The Ambassador of Uzbekistan to the UK discussed enhancing inter-parliamentary ties with representatives of the British Group in the Inter-Parliamentary Union (BGIPU) and British MPs. The meeting highlighted Uzbekistan's comprehensive parliamentary, human rights, and civil society reforms, reflecting the dynamic evolution towards a "New Uzbekistan."
Uzbekistan and Switzerland Enhance Road Transport Agreement
On February 8, 2024, an amendment to the 2002 intergovernmental agreement on international road transport between Uzbekistan and Switzerland, signed on June 23, 2023, came into effect. This protocol aims to streamline bilateral road transport of passengers and goods by eliminating the need for special permits, thereby reducing bureaucratic hurdles and fostering more favourable conditions for carriers between the two nations.
Inter-Parliamentary Negotiations Between Uzbekistan and Poland Held in Warsaw
In strategic inter-parliamentary talks in Warsaw, Uzbekistan and Poland focused on enhancing bilateral relations, emphasizing trade, transport, and environmental sustainability. Key outcomes include the promotion of Uzbekistani exports and the launch of a direct Tashkent-Warsaw flight, expected to strengthen socio-economic and cultural connections. The Polish delegation further noted that Uzbek goods hold a competitive edge due to their low energy costs and the EU’s climate initiatives.
“School of Technologists” is launched in cooperation with Germany
Uztekstilprom, Gesamtmasche associations of Germany, and Hochschule Albstadt-Sigmaringen University organized a workshop for industry representatives at TeamDress and Fazman enterprises in Uzbekistan. Experts highlighted techniques to optimize sewing processes for enhanced production and cost reduction. Additionally, the workshop also announced the launching of the "School of Technologists" project at Namangan Textile Institute, aiming to introduce the German education system for for textile industry enterprises in the textile industry across multiple regions across Uzbekistan.
1.2 CENTRAL ASIA & CAUCUSES
Kazakhstan to build a new railway on the border with Uzbekistan
The railroad spans 152 km along the Uzbekistan border to alleviate congestion at the "Saryagash" border crossing and enhance cargo transportation. With cargo volumes between Kazakhstan and Uzbekistan reaching 25.8 million tons this year, the new line aims to redistribute traffic and boost export flows towards Uzbekistan, potentially increasing bilateral cargo traffic to 31 million tons by year's end. The project, comprising of two stages, focuses on improving regional connectivity and reducing congestion, particularly benefiting cargo destined for Afghanistan, Iran, Tajikistan, and Uzbekistan.
Uzbekistan and Kazakhstan enhance water cooperation
During the Eurasian Intergovernmental Council meeting in Almaty, the Prime Ministers of Uzbekistan and Kazakhstan held discussions focusing on strengthening the management and utilization of transboundary water resources. This conversation highlighted the importance of cooperation in water basin management for both nations' prosperity and ecological well-being. Additionally, they explored ways to enhance bilateral relations across various sectors, including trade, agriculture, transport, and energy, with a special focus on increasing mutual trade and advancing cooperative industrial initiatives.
Kazakhstan and Uzbekistan To Build ‘Central Asia’ Industrial Center
Kazakhstan and Uzbekistan are collaborating on the construction of the 'Central Asia' international center for industrial cooperation near their shared border, facilitated by the Kazakh Ministry of Trade and Integration. Expected to commence operations by the fourth quarter of 2026 and officially open in the first half of 2027, the center aims to bolster business ties and increase trade turnover between the two countries, which surpassed $4.6 billion in 2023, with a target of reaching $10 billion in the near future.
Uzbekistan and Tajikistan to create industrial-trade zones
The discussions, conducted by deputy ministers from both countries, were dedicated to evaluating the existing conditions and future possibilities of bilateral relations, emphasizing trade, economic collaboration, and the strengthening of inter-regional relationships and industrial partnerships. Special attention was given to the strategic development of industrial-trade zones along the border and the modernization of border checkpoints to facilitate smoother transit of goods and people.
1.3 RUSSIA & CHINA
Russian Prime Minister signs an order on the opening of the Consulate General in Samarkand
The Russian Prime Minister has officially authorized the establishment of a Consulate General in Samarkand, Uzbekistan, with a directive for the Russian Ministry of Foreign Affairs to finalize the staffing details. This move aims to enhance consular services for Russian nationals in Samarkand, acknowledging the significant Russian community in the area.
Uzbekistan and Russia agree on cargo transportation through Turkmenistan
During the inaugural Transport Forum for SCO member countries on November 1, Uzbekistan's Transport Minister put forward proposals aimed at enhancing regional transport and logistics collaboration. The forum saw the signing of agreements to develop international multimodal transport corridors that would connect Russia, the Caspian Sea, Turkmenistan, Uzbekistan, Kyrgyzstan, and extend to link Belarus, Russia, Kazakhstan, Uzbekistan, Afghanistan, and Pakistan.
China becomes Uzbekistan’s largest trading partner
In 2023 China surpassed Russia as Uzbekistan’s top trading partner, reflecting a 1.5-fold increase in trade turnover with China to $13.7 billion. Trade with Russia grew by 5.3%, reaching $9.88 billion, maintaining its significant. Meanwhile, trade with neighboring Kazakhstan and Kyrgyzstan declined, highlighting a regional shift. Additionally, Uzbekistan experienced a diversification in its trade relations, expanding connections with European countries and others like the UAE and Brazil, indicating a broader strategy to diversify its economic partnerships and reduce dependency on traditional markets.
1.4 NORTH & SOUTH AMERICA
Uzbekistan in talks to import fiber from the USA amidst growing demand in textile sector
Uzbekistan is considering importing cotton fiber from the United States to support its booming textile industry. This development follows discussions between the Uztekstilprom Association and a representative from Cotton Council International, focusing on the benefits of American cotton, import logistics, and financing. Cotton Council International is expanding its cooperation with Uzbekistan by opening a representative office in the country. This move aims to support the local textile industry's growth and includes plans for Uzbek delegations to visit the U.S. for further learning about cotton cultivation and marketing strategies.
1.5 INTERNATIONAL ORGANIZATIONS
President of Uzbekistan Backs Plans to Expand Strategic Partnership with Hungarian 'OTP' Group
The President of Uzbekistan convened with the Chairman of Hungarian OTP Bank to review advancements in banking and finance cooperation, notably the sale of a state share in "Ipoteka-bank" to OTP. The dialogue focused on improving banking services via digital transformation, introducing innovative financial solutions for small and family enterprises, and staff training in European standards. Further discussions explored expanded collaboration in agriculture, winemaking, irrigation, chemistry, and pharmaceuticals, including the establishment of a special economic zone in Tashkent for Hungarian firms.
Samarkand hosts CMS COP14 opening ceremony
At the COP14 to the CMS in Samarkand, Uzbekistan's Ecology Minister, stressed the importance of regional cooperation and ecological connectivity for the conservation of migratory species. The Minster called for global engagement with Central Asia and underscored Uzbekistan's commitment to environmental diplomacy. The conference, the first of its kind in Central Asia, operates under the theme "Nature Knows No Borders," advocating for international cooperation in conserving migratory species. This highlights Uzbekistan's leadership in fostering cross-border environmental collaboration.
GEF to Provide $26 Million Grants for Central Asian Ecosystem Restoration Cooperation
The Uzbek Minister of Ecology, Environmental Protection, and Climate Change met with the head of the Global Environment Facility (GEF). The meeting highlighted the successful execution of the GEF's 66th council meeting and the allocation of $26 million towards five projects aimed at ecosystem restoration, natural resource management, and sustainability in Central Asia, with Uzbekistan playing a significant role in four of these projects.
Uzbekistan and IFC discuss the implementation of joint projects
Deputy Prime Minister and Minister of Economy and Finance, held discussions with a delegation from the International Finance Corporation (IFC). They reviewed achievements and ongoing projects from 2023 and outlined priorities for 2024, focusing on healthcare, water supply, and PPP projects in education. Emphasis was placed on enhancing cooperation to foster Uzbekistan's development, with both parties expressing commitment to sustained collaboration for mutual goals and economic growth.
2. PUBLIC POLICY
President Mirziyoyev Issues Additional Instructions to Regulate Pharmaceutical Industry
A decree was issued mandating manufacturers and sellers to ensure product quality and safety, implementing a swift risk detection system for drug consumption, including a "Necessary Pharmacological Control Practice - GVP" standard and an electronic database for tracking side effects. Further measures will align customs and warehouses with "Necessary Storage Practice - GSP" standards and regulate drug advertising through a specialized council.
President Mirziyoyev approves expansion of Urgut Free Economic Zone
The Urgut Free Economic Zone is set to expand with the approval to incorporate an additional 40 hectares of vacant non-agricultural land from the Nurabad district. This decision follows a previous expansion in November 2021, which added 580.8 hectares to the zone. This move aims to encourage the development of high-tech export and import substitution enterprises within the zone, aligning with efforts to bolster economic growth and innovation.
Uzbekistan permits women to drive large-capacity buses
A recent regulatory change reported by the Ministry of Transport has lifted the ban on women driving cargo vehicles heavier than 2.5 tons and buses capable of carrying more than 14 passengers. This reform establishes a legal framework supporting women's participation in these specific transport sectors. The move is aimed at promoting gender equality within the transportation industry and encouraging the involvement of women in operating large-capacity and electric buses.
The management of the Free Economic Zones will transferred to the private sector
The government is moving to enhance public-private partnerships (PPP) in key sectors like roads, water, education, and healthcare, aiming to shift the management of free economic zones to the private sector. This includes privatizing airport operations and promoting infrastructure development to accommodate urban expansion and population growth. With a focus on reducing infrastructure costs and conserving agricultural land, the plan includes initiating 122 major investment projects worth $50 billion to ensure stable energy supplies and improve efficiency.
Uzbekistan Establishes International Center for Digital Technologies
Starting June 1, the center will offer a special legal regime to foreign companies for up to five years, covering various operational aspects like innovation testing, customs, taxation, labor relations, and more. This initiative seeks to elevate Uzbekistan's IT exports to $5 billion, create 100,000 jobs, and attract foreign companies by enhancing the IT park's appeal, aiming to increase the number of their representative offices to 1,000.
Subsidies Planned for Soil Productivity Enhancement Efforts
From 2024 to 2025, land users will receive budget subsidies of 1 million soums per hectare to support efforts in boosting land productivity and fertility. This subsidy will be distributed via the "Agrosubsidy" online platform of the Ministry of Agriculture, with 70% of the funds provided in the first year and the remainder in 2025 based on achieving a minimum 10% increase in average yield. A temporary regulation will be established for these subsidies, and specific districts for the experiment's application will be identified.
The monopoly on an external Internet channel in Uzbekistan may finally be abolished
Over the past decade, telecom services have grown significantly, with mobile internet coverage reaching 98%. The goal is to attract $1 billion in investments by year-end and double the digital economy's share of the GDP from 3% to 6%. Reforms include submitting a new draft law "On Telecommunications" to the Oliy Majlis by July 1 and providing providers with direct access to the international internet channel by April 1. The main aim is to liberalize the sector, fostering competition and private sector involvement. Currently, Uzbektelecom holds a monopoly on external internet access, a situation criticized for limiting access speed and hindering the digital economy's development.
3. LEGISLATION
3.1. LEGISLATIVE CHANGES
Senators of the Oliy Majlis will be reduced to 65
Uzbekistan's upper house of parliament, the Oliy Majlis, has approved a law to reduce its number of senators from 100 to 65. Under the new law, each region of the republic will elect four senators, while the president will appoint nine. Additionally, the number of deputy speakers will be decreased from seven to two, with the stipulation that deputy speakers must suspend their party membership. The reform also introduces the right for both the Legislative Assembly and the Senate to self-dissolve, with subsequent elections for the lower house to be held within two months and the upper house to be reformed within a month.
The law “On the Privatization of State Property” is signed
It outlines the privatization process for state-owned assets, including real estate, shares, and enterprises. State property can be privatized wholly or partially, except where prohibited by state property management laws. The State Assets Management Agency is tasked with overseeing privatization, setting starting prices for assets, and managing the process, which includes auctions, competitive bidding, and lease agreements with eventual privatization. The law will take effect three months after its official publication.
Uzbekistan Approves Law on Children's Ombudsman
The Senate of Uzbekistan has officially approved the law "On the Commissioner of the Oliy Majlis of the Republic of Uzbekistan for Children’s Rights (Children’s Ombudsman)," establishing a dedicated ombudsman to oversee children's rights and interests. This position requires candidates to be at least 25 years old and have resided in Uzbekistan for a minimum of five years. The law outlines the ombudsman's principles, including legality, independence, and non-discrimination, and mandates that draft legislation affecting children's rights be coordinated with the ombudsman.
3.2. NOTABLE APPOINTMENTS
Minister of Higher Education, Science and Innovation of Uzbekistan
Appointed - Kongratbay SharipovCenter for Spirituality and Enlightenment
Appointed - Otabek Khasanov
Previous Appointments - First Deputy Director of the Agency for Civil Service Development under the President of Uzbekistan.Head of the Prime Minister's Secretariat
Appointed - Sadikov Shukhrat
Previous Appointments - Deputy head of the Prime Minister's Secretariat.Chairman of MTRK
Appointed - Abdurashid Juraboyev
Previous Appointments- Chairman of the Committee on ICT under the Legislative Chamber of the Oliy Majlis.Ambassador of Uzbekistan to Belarus
Appointed - Rahmatulla Nazarov
Previous Appointments - Advisor to the Minister of Foreign Affairs.Ambassador of Uzbekistan to Oman
Appointed - Abdusalom Khatamov
Previous Appointments- The General Consulate of Uzbekistan in Yekaterinburg, Russia.Ambassador of Uzbekistan to Kuwait
Appointed - Ayubkhon Yunusov
Previous Appointments- Head of the Consular-Legal Department at the Ministry of Foreign AffairsConsul General in St. Petersburg
Appointed - Abdurakhmon Makhmudov
Previous Appointments - First secretary and then counsellor at the Embassy of Uzbekistan in Ukraine.Chairman of the Supervisory Board of the “Uzsanoatqurilish” Bank
Appointed - Odilbek Isakov
4. ECONOMY
4.1 KEY ECONOMIC INDICATORS, LOANS, & PUBLIC FINANCE
Uzbekistan experiences lowest inflation rate since August 2016
In January 2024, Uzbekistan experienced a 0.6% rise in consumer prices, bringing the annual inflation rate down to 8.6%, the lowest since August 2016.
Central Bank projects Uzbekistan’s GDP growth at 5.5 - 6% for 2024
Export revenues, particularly from non-gold sectors, are projected to rise by 10-12%, while import costs may slow, especially in machinery and equipment. Global commodity prices, including oil, gas, and metals, could fluctuate due to various factors, but gold prices are anticipated to stabilize around $2,000 per troy ounce.
Development of the Service Sphere
4.2 TRADE AND BUSINESS
Uzbekistan to launch projects worth US$18 billion in 2024
In 2024, Uzbekistan plans to launch 309 investment projects totaling US$18 billion. This is stated in the draft decree of the President of Uzbekistan on the state program for 2024. The document notes that economic growth in Uzbekistan in 2024 will be 6%, and inflation will be no more than 9%. As part of the state program, 275 trillion soums will be allocated to stimulate the economy, including 41 trillion soums for microfinance services.
Uzbekistan boosts its global trade volume by 23.9%, engaging with 198 countries
In 2023, Uzbekistan's foreign trade turnover reached $62.6 billion, marking a 23.9% increase from the previous year, with trade relations spanning 198 countries. China, Russia, Kazakhstan, Türkiye, and the Republic of Korea were the major trading partners, contributing significantly to the trade volume. Exports from Uzbekistan totalled $24.4 billion, showing a 23.8% rise, while imports increased by 24% to $38.1 billion.
Uzbekistan's Vehicle Imports in 2023: Dominance of Chinese and South Korean Cars
In 2023, Uzbekistan's vehicle imports involved transactions with 31 countries, with China as the leading supplier, delivering 58,076 units to the nation, as reported by the Statistics Agency.
4.3 BANKING & FINANCE
Central Bank expects inflation slowdown to target 5% in two years
The Central Bank of Uzbekistan targets a 5% inflation rate by 2025, with projections indicating 9% inflation by mid-year, stabilizing at 8-9% by year-end due to state-regulated price increases and VAT changes. Core inflation is expected to start high and decline to 7-8% by year-end, aiming for 4% in 2025.
4.4 AGRICULTURE, MINING, & MANUFACTURING
Uzbekistan aims to further increase fruit and vegetable exports
With agricultural production up by 4.1% in 2023 and exports nearing $2 billion, Uzbekistan aims for a 75% export increase to $3.5 billion this year, positioning itself as a significant player in the global market. It was highlighted that 620 phytosanitary permits were issued for exporting to 80 countries. Efforts have included analyzing over a million hectares of agricultural land and aligning with international GSP+ requirements for 200,000 hectares. Additionally, modern standards and practices, including online pesticide monitoring and biological pest control, are being introduced.
UK planning to import 10,000 tons of mung beans from Uzbekistan
AGT Poortman, a British company with a focus on legume products, has shown interest in purchasing mung beans from Uzbekistan. The company's interest, sparked by a marketing study highlighting the quality of Uzbek legumes, could lead to importing 10,000 tons of mung beans from Uzbekistan.
Additional 60,000 hectares of land to be distributed to the population
The President has mandated to allocate 60,000 hectares for increased fruit and vegetable production, potentially raising exports by $200 million. The strategy includes a significant focus on youth farming education and employment, with the potential to generate an additional $1 billion in produce through industry and cooperation initiatives. To support this, 1 trillion UZS in credit resources will be provided, alongside leasing 10,000 units of farming machinery under favourable terms.
AMMC exported products worth $31.1 million in January
The Almalyk Mining and Metallurgical Combine has successfully met its production export targets for the beginning of 2024, exporting $31.1 million worth of products in January alone. This includes 24,000 tons of copper products, 964 tons of raw metal, and 72 tons of molybdenum products, among others, to over 20 countries. The combine's global market presence is growing, with recent expansions into new markets such as the United States, Mexico, and Finland, particularly for copper cathodes and copper sulfate exports.
$315 million will be allocated to expand the production of meat, milk and eggs in Uzbekistan
Uzbekistan plans to allocate $315 million to boost meat, milk, and egg production, with preferential loans available for livestock complexes and feed production. Additionally, $200 million in projects for milk and feed production will be developed in partnership with Belarus. The fishing industry aims to increase production to 1 million tons by 2024, while family entrepreneurship initiatives include larger loans for fish farming. Despite production increases in 2023, the prices of meat, milk, and eggs rose, prompting increased imports of these products.
4.5 CONSTRUCTION & REAL ESTATE
Uzbekhydroenergo re-announces a tender for construction of five new HPPs
Uzbekhydroenergo is initiating a tender for the construction of five new hydroelectric power plants, including the "Dukentsoy HPP" and the "Cascade of Kamchik HPP," among others. These projects aim to meet the rising demand for electricity in Uzbekistan and will be executed through a public-private partnership. Interested investors must submit their proposals by February 29 and their qualifications by April 1, with the total cost of the projects estimated at $106.9 million.
4.6 ENERGY & PETROCHEMICALS
Foreign player Condor Energies Acquires Gas Fields in Uzbekistan, Eyes Production Boost and Expansion in Kazakhstan
Condor Energies, a Canadian firm, has clinched a deal to take over eight gas-condensate fields in Uzbekistan from Uzbekneftegaz, aiming to boost production and efficiency. The agreement allows for increased output and enhanced recovery efforts starting Q1 2024, in exchange for a revenue share and covers rehabilitation costs. Focused on southwestern Uzbekistan, these fields will see new drilling, workover programs, and the application of 3D seismic technology to maximize reserves. Additionally, Condor Energies has entered into agreements in Kazakhstan to utilize modular technologies for gas production, supporting a new LNG facility.
Diesel fuel prices to drop by 15% in Uzbekistan
In 2024, Uzbekneftegaz JSC plans to supply farming enterprises with 680,000 tons of diesel fuel and reduce its market price by 15%, announced Chairman Bahodir Siddikov. This move, aimed at decreasing agricultural costs, includes increasing diesel production by 200,000 tons compared to the previous year. The initiative, driven by a presidential mandate to cut agricultural expenses, involves establishing new quality assurance and delivery procedures for diesel fuel to ensure efficient support to farmers, highlighting Uzbekneftegaz's commitment to both boosting supply and making diesel more affordable.
USEFUL LINKS AND NOTABLE PUBLICATIONS
“Central Asia plus” Format of Multilateral Cooperation and Uzbekistan’s Regional Policy
Huge EU Investment Program Looks To Expand Middle Corridor To Central Asia