Uzbekistan Update: February 16 - 29, 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
March 12, 2024 -EUROUZ HR & Capacity Building Committee Members Meeting
March 14, 2024 - Joint Chamber of Commerce Switzerland-Eastern Europe, Central Asia, South Caucasus (JCC) Artificial Intelligence (AI) Webinar
March 15, 2024 - PwC Webinar Uzbekistan Market Entry 2024: Navigating Tax, Legal, and Regulatory Landscapes
March 19, 2024 - EUROUZ Uzbekistan 2024: Annual Economic Update -
March 12-14, 2024 - 19th International Exhibition on Agriculture - AgroWorld Uzbekistan 2024
March 26-28, 2024 - 23rd International Exhibition on Food, Ingredients and Food Technologies - UzFood 2024,
March 26-28, 2024 - 24th International Exhibition on Packaging. Equipment and Materials - OZuPACK 2024,
May 27-31, 2024 - Multisectoral Trade mission to Uzbekistan and Kazakhstan by:
a. AWEX
b. FITMay 2-3, 2024 - 3rd Tashkent International Investment Forum (TIIF-2024)
EUROUZ & MEMBER NEWS
1 - EUROUZ supported the visit of the Uzbekistan delegation to Poland
The EUROUZ held a mission to Poland this month with bilateral meetings with the Polish Chambers of Commerce jointly with the Chairman of Uzbekistan's Chamber of Commerce and Industry. During the same visit, EUROUZ facilitated strategic engagements for its members Gerber Architekten & Polpharma, supported Uzbekistan-Mazovia Region Economic Forum in warsaw and awarded membership certificates to two of our our members, including new member, Clever Logistics.
2 - EUROUZ welcomes new member - POLPHARMA GROUP BV
Polpharma Group is one of the leading European healthcare companies in CEE, CIS and Central Asia, focused on delivering high-quality and affordable pharmaceuticals. For over 80 years, trusted by patients, healthcare professionals, and business partners alike, offering modern medicines, substances, and innovative solutions for patients and business partners from all over the world.
3 - EUROUZ member Voltalia has launched its 100 MV PV plant in Uzbekistan
Voltalia commences construction of a 100 MW solar power facility in Uzbekistan
February 29th marked a new milestone for renewable energy in Uzbekistan as Voltalia broke ground on its first-ever project in the country. The ceremony in Khorezm’s Tuprakkala district was held by Voltalia’s CEO, Sebastien Clerc and Uzbekistan’s President, Shavkat Mirziyoyev.
Voltalia’s 100-megawatt PV Plant will be the first of its kind in Khorezm, poised to produce 254 million kilowatt-hours of green energy annually, accounting for 11% of this region’s electricity needs, which is home to close to 2 million people. It is planned to integrate the station into the national grid already by the end of this year, indicating a substantial impact on Uzbekistan’s energy landscape
4 - EUROUZ supported the launch of Women in Tech Uzbekistan
The Women in Tech Uzbekistan aims to empower Uzbek women by addressing gender equality and providing opportunities in STEAM sectors. The initiative featured speakers from the Ministry of Digital Technologies, UN Women Uzbekistan, Webster University, ITCOMMS, and was highlighted by Ayumi Moore Aoki of Women in Tech Global. Discussions focused on combating gender bias and stereotypes, and enhancing education and job prospects for women. This move signifies a major step towards bridging the gender gap in Uzbekistan's technology landscape.
CEFO is quickly establishing itself as a dynamic force in Uzbekistan, marked by its recent business mixer on February 22nd, 2024, focusing on "Recent changes in the Uzbek tax legislation." Specialists from PricewaterhouseCoopers Uzbekistan (PwC) led the presentation, offering insights into updated tax laws and engaging in discussions on real-case scenarios. CEFO's support for the Women in Tech initiative also underscores its commitment to fostering inclusive growth. EUROUZ has an excellent partnership and cooperation, which can be an outstanding example of collaboration between the European national chambers in Uzbekistan and EUROUZ.
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1. INTERNATIONAL COOPERATION
1.1 EUROPE
Switzerland facilitates water resource sharing between Uzbekistan and Tajikistan
This collaborative effort aims to improve water resource efficiency and strengthen trust between the two countries through real-time data sharing. The project reflects a broader regional commitment to addressing the critical need for sustainable water management in Central Asia, where water resources are essential for the livelihoods of approximately 75 million people.
Meeting of EU – CA Special Representatives for Afghanistan
The fifth EU-Central Asian meeting on Afghanistan took place on 13-14 February 2024 in Bishkek, Kyrgyzstan, involving the UN Special Representative and the Head of the UN Assistance Mission in Afghanistan. Discussions focused on the latest developments in Afghanistan, the UN-led process for the upcoming second Doha meeting, and included an online discussion with the United Nations Office on Drugs and Crime, as well as diplomatic missions from Central Asia and Kabul.
British Stephen Simeon Limited to invest $10 million in Uzbekistan
1.2 CENTRAL ASIA & CAUCUSES
Kazakhstan’s President receives Uzbek Foreign Minister
During the meeting, both parties expressed a keen interest in leveraging their Foreign Ministries to spearhead the enhancement of the already robust Strategic Partnership and Alliance that exists between Kazakhstan and Uzbekistan. This move signifies a mutual commitment to fostering closer cooperation and advancing shared interests in the region.
Uzbekistan-Kazakhstan Industrial Cooperation Center Construction to Start in August
The center is expected to enhance bilateral trade, potentially doubling it to $10 billion, and contribute to regional economic growth, targeting a full launch by 2030. This project aims to become a significant logistics hub while promoting industrial collaboration and the development of cooperative ties and value chains within Central Asia and Middle Corridor.
Kazakhstan's Majilis Ratifies Allied Relations Agreement with Uzbekistan
This agreement aims to maximize bilateral interaction, enhancing cooperation across various sectors such as trade, investment, industry, pharmaceuticals, agriculture, and logistics. It commits both nations to avoid alliances against each other, collaborate in military-technical areas to boost defense, and ensure economic cooperation and cultural ties. Additionally, it includes provisions for the sustainable use of transboundary rivers and addressing external threats.
1.3 RUSSIA & CHINA
President of Uzbekistan visits Russia
President of Uzbekistan visited Kazan on February 21, following an invitation from Russian President, to attend the opening ceremony of the "Future Games," an event that blended sports with technology. The "Future Games," a first of its kind, saw participation from 227 teams from 107 countries, including Uzbekistan. This engagement highlighted the growing diplomatic and economic relationship between the two nations, underscored by a significant trade increase to $9.8 billion in 2023.
China to supply electric ambulances to Uzbekistan
1.4 MIDDLE EAST, EAST ASIA & SOUTH-EAST ASIA
Japan Grants Uzbekistan $246 Million Loan for Economic Reforms, Social Programs
Signed by representatives from both nations, the loan terms include a 30-year repayment period with a 10-year grace period and an annual interest rate of 1.8%. Aimed at supporting market economy reforms, the funds will also benefit social inclusivity initiatives and assist vulnerable population segments. Since 1993, Uzbekistan has received about $1.5 billion from JICA, which continues to focus on economic infrastructure, rural development, and is expanding support into energy and healthcare sectors.
Uzbekistan Foreign Minister meets with the Prime Minister of Malaysia
Discussions during the meeting were comprehensive, covering a wide range of subjects with the aim of bolstering bilateral relations across various sectors. A focal point of the dialogue was exploring avenues to boost investment and industrial cooperation between Uzbekistani entities and Malaysian companies.
1.5 INTERNATIONAL ORGANIZATIONS
USAID Allocates $17.7 Million for New Business Support Project in Uzbekistan
The project, aiming to reduce private sector growth barriers and increase investments and financing access, has a budget of $17.7 million. It includes a co-financing program offering grants and financial support totaling $1.8 million. Additionally, 10 organizations will receive grants totaling $1.1 million under another USAID project to foster entrepreneurship and improve the business environment, with a focus on empowering women entrepreneurs, engaging youth in entrepreneurship, and further developing Uzbekistan's startup ecosystem.
Uzbekistan Finalizes WTO Accession Talks with 11 Countries
Uzbekistan made significant strides in its World Trade Organization (WTO) accession process, signing market access protocols with Japan, Israel, and the Dominican Republic, and concluding negotiations with Thailand during the 13th WTO Ministerial Conference in Abu Dhabi from February 26-29. These developments, as announced by the press service of Deputy Prime Minister , mark Uzbekistan's completion of negotiations with 11 WTO member countries, with agreements already in place with 9 of them.
2. PUBLIC POLICY
Uzbekistan to launch platform displaying product prices
A key component of this plan is the development of a Unified Interdepartmental National Information Platform by the end of 2025. This platform will support food safety and consumption by facilitating risk identification, assessment, management, and monitoring, alongside ensuring efficient information dissemination. Additionally, by March 1, 2025, the "Electronic Agro-Industrial Market" information system is expected to launch, integrating with the national platform to offer accurate data on agricultural and food products, including market prices.
Government Allocates $120 million for Industrial Zone Infrastructure Improvement
A significant initiative includes the development of 600 hectares in the Kashkadarya region for castor bean cultivation and oil production, expected to generate 1.4 thousand jobs, by improving irrigation through the Mirishkor canal. Additionally, to bolster energy efficiency, solar panels will be installed near industrial enterprises. The extension of tax and customs benefits has already positively impacted the cost reduction in textiles, leading to lower prices for knitted fabrics and clothing.
Uzbekistan Enhances Environmental Reforms with Waste Management, Forest Restoration Initiative
Uzbekistan is set to build a $13 million power plant in Andijan, capable of producing 2 million kWh of electricity from waste and a fertilizer production facility with a 100,000-ton annual capacity. Furthermore, a $205 million reforestation project, supported by the International Development Association, aims to expand forests and develop forestry, alongside promoting ecotourism through ecological trails.
Aviation Sector Transformation Process Under Review
The sector saw a modest 11.6% growth last year, with plans to reach an annual growth rate of at least 20%. Initiatives include modernizing and privatizing airports such as Bukhara and Namangan, enhancing services, and increasing flight numbers by 20% this year. Measures to reduce industry costs by 20%, optimize flight routes, and sell unprofitable assets were also discussed, alongside efforts to attract foreign expertise and improve personnel training to boost the sector's competitiveness and efficiency.
Uzbekistan to introduce Social Cards starting October 1
3. LEGISLATION
3.1. NOTABLE APPOINTMENTS
First Deputy Minister of Water Resources of Uzbekistan
Appointed - Timur Butunbaev
Previously served - Presidential AdministrationDeputy Minister of Water Resources of Uzbekistan
Appointed - Habibulla KuvondikovDirector of the Uzbek Agency for Technical Regulation
Appointed - Jumanazarov Akmal
4. ECONOMY
4.1 KEY ECONOMIC INDICATORS, LOANS, & PUBLIC FINANCE
Statistics Agency Identifies Key Contributors to Uzbekistan's $4.2 Billion January 2024 Trade
In January 2024, Uzbekistan's foreign trade turnover reached $4.2 billion, with Russia ($240.6 million) and China ($185 million) leading in exports. Major import sources included China ($956.8 million) and Russia ($526 million). Other significant trade partners ranged from Turkey, Kazakhstan, and France in exports to Korea, Turkey, and Germany in imports.
Fitch Affirms Uzbekistans Long-Term Foreign-Currency IDR at 'BB-'
According to Fitch Uzbekistan's credit ratings are supported by strong external and fiscal reserves, low government debt, and consistent high growth, but are challenged by a high reliance on commodities, structural economic issues, including a low GDP per capita and a significant yet declining state presence in the economy, alongside gradually improving governance. The government is advancing with critical economic reforms, including significant reductions in energy subsidies for households starting May 2024, building on the liberalization of industrial tariffs in October 2023. Fitch views these reforms as positive steps towards enhancing long-term public finances and mitigating risks associated with state-owned electricity firms.
Consumer price index (CPI) in the Republic of Uzbekistan
CPI dynamics for December 2017-2023 (compared to December of the previous year)
Uzbekistan Targets $7.15 Billion in Foreign Investments for Q1 2024
The planned investments include $6.52 billion in foreign direct investment and $630 million in loans backed by government guarantees. Key sectors such as the Ministry of Energy, AGMK, Uzbekneftegaz JSC, and NGMK are highlighted beneficiaries, receiving significant portions of the investment, amounting to $1.68 billion, $331 million, $254.1 million, and $220 million respectively.
4.2 TRADE AND BUSINESS
Uzbekistan Records $4.2 Billion Foreign Trade Turnover in January
In January 2024, Uzbekistan's foreign trade turnover (FTT) amounted to $4.2 billion, marking a decrease of $870.1 million or 17.2% compared to the same period in 2023. The country engaged in trade with 137 countries, with China being its largest trading partner, accounting for 27.2% of the FTT, followed by Russia (18.3%), Kazakhstan (6.5%), Türkiye (5.1%), and the Republic of Korea (4.3%). The breakdown of the trade figures shows that exports stood at $1.1 billion, while imports were significantly higher at $3.1 billion.
German Rhenus to invest €20 million in Uzbekistan.
Following a partnership between Uzbekistan Railways and Rhenus, the joint venture UzContargo Andijan was established. This venture intends to develop a logistics center with a planned investment of €20 million extending to 2026. Aimed at handling 250-300 thousand tons of cargo each year, the center will provide a range of services including multimodal transportation, container loading and unloading, and features both open and enclosed customs warehouses for the management of heavy cargo.
Afghanistan - Uzbekistan railroad line reconstruction starts
Reconstruction efforts for the 75km railway line connecting Afghanistan and Uzbekistan, which has been damaged due to regional conflict, commenced on February 21. Initially constructed over a decade ago, this cross-border line is set to be repaired within three months at a cost of $6.3 million. Additionally, last year marked the signing of a joint protocol by the governments of Uzbekistan, Afghanistan, and Pakistan to establish a 760km UAP Railway, aiming for completion in 2027. This new railway is projected to facilitate the transport of 15 million tonnes of freight annually by 2030.
Uzbekistan, Russia to build a gas chemical complex in Bukhara
During discussions on February 19, President of Uzbekistan and Russian Minister noted a 6.6% increase in trade turnover for 2023, with ongoing joint projects in industry, energy, transport, and other sectors. Also parties signed a development roadmap by Uzbekistan Railways and Russian Railways, and plans to construct a gas chemical complex in Bukhara. Russian Minister highlighted the strong interest in the upcoming “INNOPROM. Central Asia” in Tashkent, with over 90% of sites already booked, indicating robust engagement and future collaborations between the two nations.
Azerbaijani Pasha Holding Subsidiary to Build $200M Ritz-Carlton Hotel in Uzbekistan
Pasha Holding, through its subsidiary PD Estates, plans to construct a $200 million Ritz-Carlton hotel in Tashkent. Slated for completion in 2026, the luxury 5-star hotel will feature 150 rooms, with $7 million in initial funding to be disbursed by the quarter's end.
4.3 BANKING & FINANCE
Uzbekistan, World Bank discuss strengthening cooperation in waste management
Parties acknowledged their aligned goals in municipal waste handling and support for entrepreneurs in the sector. Uzbekistan's ambition to implement effective waste management, adopt a circular economy, and foster a "zero waste" society, emphasizing the transformation of waste into a valuable economic resource. The meeting also touched upon the establishment of six transboundary protected areas to boost ecotourism and wildlife conservation, concluding with an agreement to attract leading companies and World Bank investments to Uzbekistan's waste sector.
Uzbekistan Obtains $180M Loan to Modernize Urban Transport Fleet
According to a government decree for the first quarter of 2024's investment program, the funds will facilitate the purchase of 1,000 natural gas-powered and 200 electric buses for "Toshshahartransxizmat". Specifically, $120 million will be allocated for acquiring 1,000 large-capacity buses fueled by compressed natural gas, intended for Nukus and other regional centers, while the remaining $60 million will update "Toshshahartransxizmat"'s fleet with 200 high-capacity electric buses and corresponding charging infrastructure.
4.4 AGRICULTURE, MINING, & MANUFACTURING
$220 million to be allocated for food industry projects in Andijan region
Investments include $130 million for agricultural equipment and infrastructure improvements, alongside a significant push to increase fish production and establish new dairy and poultry farms. Additionally, $220 million is earmarked for food industry projects with foreign collaboration, aiming to enhance local processing capabilities.
Uzbekistan increases fruit and vegetable exports
The figure has increased by 2.2 times or 78.8 thousand tons compared to the same period in 2023. According to the Statistics Agency, in January 2024, Uzbekistan exported 146.3 thousand tons of fruits and vegetables amounting to $75.4 million. During the reporting period, the main export markets for Uzbek fruits and vegetables were Russia (27.2%), Pakistan (21.2%), China (13.4%), and Kazakhstan (9.2%). Last month, fruit and vegetable exports accounted for 6.8% of the total export volume.
4.5 ENERGY & PETROCHEMICALS
Uzbekistan Allocates $470 Million for Pipeline Upgrades to Increase Russian Gas Imports
Uztransgaz, Uzbekistan's national gas company, is set to invest $470 million in gas pipeline upgrades to boost Russian natural gas imports, a plan endorsed by the Cabinet of Ministers. Slated for 2024-2030, this initiative will be financed through foreign bank loans. It follows a deal for a two-year supply of 2.8 billion cubic meters of Russian gas to Uzbekistan via the Central Asia.
Uzbekistan plans to launch 28 “green” power plants by 2027
Uzbekistan plans to invest $150 million in installing solar panels on residential buildings as part of its ambitious renewable energy initiatives. It is aimed to harness its significant "green" energy potential, which surpasses its needs by 10-12 times, with current investments totaling $2.1 billion and ongoing projects worth $13 billion. Already operational are nine solar and wind power plants, contributing an additional 5 billion kWh of electricity, and saving 1.5 billion cubic meters of gas. By 2024, renewable energy is expected to constitute 15% of Uzbekistan's energy mix.
Russian Inter RAO to begin exporting electricity to Uzbekistan
Inter RAO aims to expand its energy export directions and volumes, targeting to maintain a supply level of 10 billion kWh this year. The project faces challenges due to the need for transit through Kazakhstan to reach Uzbekistan, a route already in use for supplies to Kyrgyzstan, complicating volume allocation.
USEFUL LINKS AND NOTABLE PUBLICATIONS
The EU imposed sanctions against another company from Uzbekistan
Uzbekistan urges China to enhance multimodal transportation across Central Asia
Uzbekistan to Host 2024 AIIB Annual Meeting, Handover Held in Egypt