Uzbekistan Update: January 15 - 31, 2024
Uzbekistan Update: January 15 - 31, 2024
Biweekly update on key developments in Uzbekistan
Notable Quotes
“Together, we strive to achieve a faster, more reliable connection between Europe and Central Asia, fostering stronger ties and opening new avenues for cooperation and trade. ”
Valdis Dombrovskis, European Executive Vice President of the European Commission for An Economy and Commissioner for Trade
UPCOMING EVENTS
February 8th - EUROUZ will organise a meeting between its members and the Secretariat of the Foreign Investors Council under the President of Uzbekistan to obtain more information on the upcoming FIC Plenary. Members can contact the secretariat to join.
February 21st - EUROUZ is supporting the Mazovia-Uzbek Economic Forum in Warsaw. Event registration and more information here
February 29th - The EUROUZ HR & Capacity Building Committee will hold a meeting open to all its members. Members can contact the secretariat to join.
EUROUZ & MEMBER NEWS
1 - On February 2nd, EUROUZ held the “Central Asia economic roundtable: looking into the future of cooperation with the EU” event in Brussels, Belgium, in partnership with ENC & UNDP Brussels
Discussions revolved around developing Central Asia's partnership with the EU, enhancing the efficiency of the Middle Corridor, and leveraging EU private sector investments for transitioning Central Asian economies to greener frameworks.
This is the first event organized by the non-profit sector to gather Central Asia's Ambassadors to discuss EU - Central Asia relations in Brussels publicly. Other speakers included Camilla Brückner, Director of UNDP Brussels Representation Office; Dmitry Mariyasin, Deputy Executive Secretary at UN Economic Commission for Europe; Emmanuel Dupuy, President of Institut Prospective et Securité en Europe (IPSE) and Katarzyna Wawiernia, Resident Representative of the United Nations Development Programme in Kazakhstan discussing Middle Corridor & Central Asia’s role in the framework of EU global engagement, business, and human development. Recording of the event
2 - On January 29th, EUROUZ co-host Uzbekistan’s National Session Global Gateway Investors Forum in Brussels, titled “Improving Regional Connectivity: Uzbekistan's Strategic Role in the Central Asia-Europe Middle Corridor”
The event was organised in collaboration with the Mission of Uzbekistan to the EU and the Ministry of Investments, Industry & Trade of Uzbekistan. In a discussion moderated by Mr. Oybek Shaykhov, Secretary-General at EUROUZ, between First Deputy Minister of Transport Mamanbiy Omarov, Zsuzsanna Hargitai, Managing Director for Central Asia of EBRD, William Tompson, Head of the Eurasia Division at OECD, and Eugene Seah Chief Operating Officer at the Port of Baku, centred around the progress achieved by Uzbekistan in past years in terms of transport infrastructure development and the future outlook of next steps that would be required to sustain the progress achieved. Event recording is available via this link.
3 - On January 25th EUROUZ held ESG & Compliance Committee Meeting.
The first meeting of a EUROUZ committee for the year convened representatives from committee members and expert guests. This session spotlighted discussions on the Environment, emphasising recent updates to local environmental legislation & new international standards. A representative of KPMG presented local legislative changes, while Korzinka and SEG Enera Group presented vital issues faced by businesses in Uzbekistan relative to the discussion subject and emerging updates to global standards following DAVOS 2024. The gathering, attended by 15 organisations, discussed common strategies and the agenda for upcoming engagements with government regulatory authorities within the committee's scope. Attendees included Korzinka, Asakabank, PwC, SEG Enera Group, KPMG, Montfort Eurasia, EY, the Economic Chamber France-Uzbekistan (CEFO), the National Association of Investment Institutions, Akfa Group, Voltalia, the Fintech Association of Uzbekistan, Eckstein & Partner and others.
4 - EUROUZ member BMB Holding receives USDA certificate for saffron
BMB Holding announced the completion of work to obtain a USDA organic certificate for BMB Zafaron saffron products grown in Uzbekistan. The certification was carried out in collaboration with Euro Cert and Control Union Certifications (Netherlands). The product has successfully passed tests in European laboratories and received a quality certificate of category I for colour, smell and taste. BMB Zafaron now has the opportunity to export to the US and North American markets and is also developing new prospects in this direction.
5 -EUROUZ member Korzinka continues to lead corporate sector development progress in Uzbekistan
IFC World Bank Group awarded Korzinka a Gender EDGE certificate and the best project award for supporting women in Uzbekistan. Korzinka also received a new award from Visa following a successful marketing campaign in 2023, following being recognized with the “Driving Cashless Together" award in 2022.
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1. INTERNATIONAL COOPERATION
1.1 EUROPE
EU to invest €10 billion in Trans Caspian Transport Corridor connecting Europe and Central Asia.
The Global Gateway Investors Forum for EU-Central Asia Transport Connectivity was held in Brussels on 29-30 January 2024, focusing on enhancing sustainable transport links between Europe and Central Asia. European and international financial institutions pledged a significant €10 billion investment. The forum discussed transforming the Trans-Caspian Transport Corridor into an efficient route. Commitments included substantial loans from the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) to support this initiative, reflecting a broader effort to establish direct transport connections and leverage the Global Gateway strategy for global development. The event, in which EUROUZ took part, was attended by over 500 people, according to the European Commission.
The President of Uzbekistan received the European-Comission Vice-President.
On January 16, President of the Republic of Uzbekistan Shavkat Mirziyoyev received a delegation of the European Union headed by Vice-President of the European Commission Margaritis Schinas. Trade between Uzbekistan and the EU increased by 30% last year. The visit was part of the EC VP’s tour of the Central Asia region and marks the first high-level visit of EU officials in 2024. This year, the EU and Uzbekistan celebrate the 30th anniversary of diplomatic relations.
Special Representative of Uzbekistan's President on Foreign Policy meets President of the European Council in Brussels.
The discussion in early January focused on further developing relations between Uzbekistan and European countries in political, trade, economic, investment, cultural and humanitarian aspects. European Council President Charles Michel praised Uzbekistan's constructive policy in Central Asia.
The EU plans to allocate 76 million euros to Uzbekistan for the first four years (2021-2024) of its 7-year Multi-Annual Indicative Programme (MIP) 2021-2027. Additional funds are earmarked for human rights support (the tentative allocation is 3.6 million euros for 2021–2024) and civil society organizations (3.4 million euros for 2021–2024).
Uzbekistan and the European Commission also expressed interest in signing the enhanced partnership and cooperation agreement, initiated on July 6, 2022, as soon as possible.
1.2 CENTRAL ASIA & CAUCUSES
Kazakhstan Ratifies 30-Day Stay Registration Free Agreement for Uzbekistan
Kazakhstan and Uzbekistan are increasing the mutual period of stay of their citizens in the territory of a neighbouring country without registration from 5 to 30 days.
1.3 MIDDLE EAST, EAST ASIA, SOUTH-EAST ASIA & AFRICA
Uzbekistan and S.Korea Approve Mutual Customs Assistance Agreement
A presidential decree (PD No. 27 of January 17, 2024) has been issued, approving the protocol amending the agreement between Uzbekistan and the Republic of Korea on mutual assistance in customs matters. This protocol was signed on September 22, 2023, in Tashkent. The Customs Committee under the Ministry of Economy and Finance is designated as the responsible authority for implementing this international treaty.
UAE introduces visa-free regime for citizens of Uzbekistan
Uzbek citizens will no longer require visas for stays in the UAE for up to 30 days, according to a cooperation protocol signed on January 16, 2024, by the Ambassador of Uzbekistan to the UAE and the Undersecretary of the UAE Ministry of Foreign Affairs. This protocol will officially take effect on February 16, 2024. In 2023, 119,454 Uzbek citizens visited the UAE, spending $9.2 million on visa processing.
Uzbekistan established diplomatic relations with Uganda.
The Joint Communiqué on this establishment was signed in Kampala, Uganda, by the First Deputy Minister of Foreign Affairs of Uzbekistan and the Minister of Foreign Affairs of Uganda.
1.4 RUSSIA & CHINA
President of Uzbekistan visits China
Uzbektan’s President visited China to boost economic ties. Trade between the two countries surged by 50% to $14 billion in 2023, with plans to reach $20 billion. Chinese investments in Uzbekistan exceeded $14 billion. Key agreements were reached during the visit, including opening a regional Eximbank branch in Tashkent to facilitate joint projects. More than 15 documents were signed between the governments and ministries of the two countries in areas such as energy, infrastructure, agriculture, and education.
In an article signed by Mirziyoev that appeared in Chinese state media ahead of the trip, the Uzbek leader praised China’s model of economic development and said relations between the two countries are experiencing “new historical heights”, which allows him to use the January 23-25 trip to “develop a new long-term agenda” for the two countries that will last for “decades.”
China launches a cargo transportation route to Uzbekistan from Qingdao.
This route, accessible with a TIR Carnet document, starts in Qingdao, crosses China from east to west to reach Khorgos, and then goes through Kazakhstan, facilitating faster and door-to-door delivery of goods between Uzbekistan and the Yellow Sea ports. The Ministry of Transport pledges support for carriers using this corridor, including visa issuance for truckers, providing international permit forms, and assisting with customs control issues.
1.5 NORTH & SOUTH AMERICA
U.S. Donates 131 Tons of Food to Uzbekistan for Medical & Social Institutions
This aid will supply 6.5 million meals to vulnerable individuals, including those with tuberculosis, psychiatric diseases, children with disabilities, and the elderly in 120+ health and social care facilities. Since 2010, USAID has provided over 1,500 tons of food aid worth $4.4 million to Uzbekistan through its International Food Assistance Partnership Program. This delivery is part of the $122 million U.S. investment in Uzbekistan's healthcare and over $1 billion in assistance over two decades.
1.6 INTERNATIONAL ORGANIZATIONS
Uzbekistan Seeks AIIB Support for Strategic Raw Materials Processing Projects
As part of the business programme of his state visit to China, the President of the Republic of Uzbekistan Shavkat Mirziyoyev met with Jin Liqun, the President of the Asian Infrastructure Investment Bank, at the Bank's headquarters to discuss expanding strategic partnership, with over $3 billion in joint projects and $1 billion in investments in 2023. AIIB's involvement in Uzbekistan covers energy, water supply, infrastructure, and entrepreneurship projects. President emphasized the need for increased funding for strategic raw materials processing projects and essential social programs through public-private partnerships.
JICA to allocate loan of $200 million to Uzbekistan for livestock farming
A delegation from Uzbekistan visited Tokyo to discuss financing the "Livestock Development in Uzbekistan" project. JICA is allocating $200 million for this project, with $40 million designated for the leather industry, covering both leather processing and finished product manufacturing. These funds will support new investment projects, boosting leather goods production and high-value exports.
EBRD approves new country strategy for Uzbekistan
The EBRD has adopted a new country strategy for Uzbekistan, focusing on promoting decarbonization, water efficiency, renewable energy, supporting private sector growth, and enhancing economic governance and business environment over the next five years. This approach aims to facilitate Uzbekistan's transition to a greener, more sustainable economy, bolster private entrepreneurship, and improve infrastructure connectivity, reinforcing its role as a significant beneficiary of EBRD investments in Central Asia. Uzbekistan has been the top recipient of EBRD financing for four consecutive years, receiving over $760 million in 2023.
2. PUBLIC POLICY
Expansion of State-Owned Facilities Privatization Announced
The government aims to raise $1.6 billion for Uzbekistan's 2024 budget through privatisation. President Shavkat Mirziyoyev emphasized accelerating Uzbekistan's privatization efforts during a meeting on macroeconomic stability and development, highlighting the sale of grain enterprises and other state facilities. He criticized the slow pace of privatization and set forth tasks to increase efficiency, including land sales and district planning. The government aims to boost the state budget through these sales while addressing inefficiencies that previously led to revenue losses.
Uzbekistan Exempts Customs Duty on Some Imported Goods
Uzbekistan aims to boost tourism by exempting entrepreneurs from customs duties on imported goods that are not locally produced in Uzbekistan for the construction & retrofitting of facilities in tourism sector from March 1, 2024, to March 1, 2026, and offering discounts of 50% on air tickets for young people under 23, retirees, and individuals with disabilities for flights to regional centres of Muynak (Karakalpakistan) and Zaamin (Jizzakh region) airports. The new categories of zero customs rule:
Price of waste services to be applied VAT from April 1
Uzbekistan cancelled the zero-rate taxation previously applied to waste collection and removal services, implementing a 12% value-added tax (VAT) for residents and entrepreneurs. This change comes as part of the country's tax and budget policy for 2024. Waste collection service prices in Tashkent previously increased in November 2023.
Uzbekistan to Reduce senior staff in the economic bloc of government by 15%
The President of Uzbekistan has announced plans to reduce the number of senior staff within the government's economic bloc, citing a lack of "modern thinking and efficiency in decision-making" among current deputy heads of state ministries and agencies. The economic complex, led by the Deputy Prime Minister and Minister of Economy and Finance, includes various ministries and departments related to financial governance. The move aims to streamline decision-making and accountability within the economic bloc. Furthermore, according to the President, a KPI system is to be introduced, with managers' salaries tied to their performance.
A moratorium might be implemented on the construction of new cement factories in Uzbekistan.
Approximately 90% of the 25 cement manufacturers in the country violated environmental requirements during a recent study. The Ecology Minister noted that the cement factories' capacities in Uzbekistan exceed the country's needs, leading to a decision to halt the construction of new plants. The minister emphasized the importance of installing modern dust and gas cleaning equipment and introduced plans for a minimum fine of $0.8 million for environmental violations by such enterprises.
Uzbekistan Approves Measures for Barrier-Free Tourism Infrastructure Development
The resolution seeks to create conditions for the free movement of persons with disabilities at tourist sites and cultural heritage organizations, including museums, theatres, and accommodation facilities. It also incentivizes tourism sector entities to provide amenities and support for persons with disabilities during travel. Various programs and subsidies are outlined to support these initiatives, including installing ramps and elevators at cultural heritage sites and offering subsidies to businesses that equip hotel rooms for persons with disabilities.
Uzbekistan to abandon production of AI-80 gasoline from 2025
3. LEGISLATION
3.1. LEGISLATIVE CHANGES
Uzbekistan Implements Legal Measures Against Unauthorized Crypto Asset Trading and Mining
Administrative measures include arrest for up to 15 days and fines of up to 100 minimal salaries (BRV). Repeated violations can result in up to 5 years in prison. These measures aim to regulate and monitor cryptocurrency activities in the country more strictly, with the law set to take effect on April 19, 2024.
3.2. NOTABLE APPOINTMENTS
Chairperson of “Adolat” party
Appointed - Robakhon Makhmudova
Previously served as - the First Deputy Chairman of the Supreme Court of Uzbekistan – Chairperson of the Judicial Collegium for Administrative CasesAmbassador Extraordinary and Plenipotentiary of Uzbekistan to Kuwait
Appointed - Ayubkhon Yunusov
Previously served in - Consulate General of the Republic of Uzbekistan in the city of Jeddah.Ambassador Extraordinary and Plenipotentiary of Uzbekistan to Qatar
Appointed - Ashraf Khodjayev
Previously served as - the head of the Main Department of Foreign Economic Cooperation (GUVES) of the Ministry of Foreign Affairs.Ambassador Extraordinary and Plenipotentiary of Uzbekistan to India
Appointed - Sardor Rustamboyev
Previously served in - Embassy of Uzbekistan in Great Britain and the Secretariat of the Shanghai Cooperation OrganizationConsul General of Uzbekistan in Dubai
Appointed - Kamol Ikromov
Previously served as - Consul General of Uzbekistan in New YorkChairman of the Accounts Chamber of Uzbekistan.
Appointed - Adiz Boboyev
Previously served as - Deputy Minister of Economy and Finance.Chairman of the Association of Mahallas of Uzbekistan.
Appointed - Kakhramon Kuronboev
Previously served as - Head of the Youth Policy Department of the Presidential Administration.
4. ECONOMY
4.1 KEY ECONOMIC INDICATORS, LOANS, & PUBLIC FINANCE
Uzbekistan plans to increase GDP to $100 billion in 2024
During a videoconference meeting chaired by the President of Uzbekistan, priority tasks for the country's economic development in 2024 were defined. The goals include achieving a minimum 6% increase in the gross domestic product (GDP) and reaching a GDP of $100 billion. While the industry grew by 6% in the previous year, there was concern that the value added in production did not exceed 40%.
Real per capita income growth slowed threefold in Uzbekistan last year.
In 2023, Uzbekistan experienced a real growth in total per capita income of 2.4%, a significantly slower rate than the previous year, which saw a growth rate of 7.3%. The total revenue of the population in 2023 reached $58.46 billion, with nominal growth at 15% and real growth at 4.6%. On average, per capita total income amounted to $1,600. Tashkent had the highest per capita income at $3,562, while Karakalpakstan had the lowest at $1,163.
Uzbekistan to launch projects worth US$18 billion in 2024
4.2 TRADE AND BUSINESS
Projects worth $2 billion to be developed in leather industry
Initiatives include starting production of artificial leather for car and sports equipment covers by Uzcharmsanoat, and establishing complete leather product enterprises within livestock clusters, aiming for a $2 billion project valuation.
Shandong Port Logistics Group to establish container transportation to Uzbekistan
During a visit to the Chinese company's office in Jinan, discussions were held, and a memorandum was signed to establish collaboration and facilitate information exchange related to logistics processes based on port and logistics resources. This cooperation aims to enhance logistics capabilities and support trade between Uzbekistan and China.
Uzbekistan’s foreign trade turnover reached $62.6 billion in 2023
In 2023, Uzbekistan's foreign trade turnover (FTT) reached $62.6 billion, marking a significant increase of 23.9% compared to the previous year. Exports amounted to $24.4 billion, showing a growth of 23.8%, while imports reached $38.1 billion, a 24% increase compared to 2022. China was the largest trading partner, accounting for 21.9% of Uzbekistan's foreign trade, followed by Russia (15.8%), Kazakhstan (7%), Turkey (5%), and the Republic of Korea (3.7%). These figures reflect the growth and diversification of Uzbekistan's foreign trade relations.
Uzbek President and BYD CEO Launch Electric Vehicle Assembly Project in Jizzakh Region
During his state visit to China, the President of Uzbekistan visited the headquarters and technology centre of Chinese automaker BYD in Shenzhen. He participated in the launch ceremony of a project to assemble hybrid and electric cars in Uzbekistan's Jizzakh region, with an initial capacity of 50,000 units per year. President expressed the need to expand the model range to meet market demand and increase production capacity to 300,000 units annually. He also supported BYD's plans to assemble electric buses in Uzbekistan, including localizing spare parts and establishing engineering and service centres.
President instructs to increase exports by 30%
4.3 BANKING & FINANCE
EBRD adopts a new 5-year strategy for Uzbekistan
The EBRD aims to increase the share of renewable energy sources and support the modernization of utilities. It plans to boost the private sector through financing small and medium-sized enterprises, improving energy efficiency, and promoting digitalization. The bank will also assist with state-owned enterprise management and privatization, enhance transport links, facilitate regional energy trade, and remove trade barriers. Uzbekistan has been the top recipient of EBRD financing for four consecutive years, receiving over $760 million in 2023.
International Forum "New Uzbekistan: new opportunities, social partnership for development"
This event aimed to highlight partnerships and initiatives focused on women's entrepreneurship, employment, and gender equality in Uzbekistan, sharing best practices, challenges, and solutions. Discussions included women's financial inclusion, the role of financial institutions, global inclusive financial practices, support for women entrepreneurs, financial education, and fostering a supportive institutional environment.
4.4 AGRICULTURE, MINING, & MANUFACTURING
A Turkish company plans to invest significantly in agricultural exports sector.
The Governor of the Syrdarya region and Yasin Kaplan, chairman of Turkish company Minessi, discussed a $500 million high-tech agricultural project. This complex will feature four blocks for growing strawberries, vegetables, fruits, and more, including processing and packaging facilities. It aims to employ 750 people and will use energy and water-saving technologies, planning for exports to Saudi Arabia and the UAE.
4.5 CONSTRUCTION & REAL ESTATE
Chinese investors commit to building the only private airfield in Central Asia.
During the Uzbek-Chinese business forum in China, a contract was signed for the construction of the only private airfield in Central Asia, which will be located in the Yangi Hayot mahalla of the Akhangaran district in the Tashkent region. This project, costing $380 million, will be fully funded by Chinese investors. Construction is set to commence in the second half of the year, marking a significant development in the region's infrastructure.
4.6 ENERGY & PETROCHEMICALS
Turkish company to invest $500 million in greenhouse farm in Syrdarya region
The Turkish company Minessi A.Ş. intends to construct a large greenhouse farm in Uzbekistan's Syrdarya region. The project includes four blocks for growing various agricultural products, including strawberries, vegetables, fruits, fruit tree seedlings, flowers, and flower seedlings, with areas for processing, sorting, and packaging. The total cost of the project is estimated at $500 million, and it is expected to provide employment for up to 750 people. The complex will implement modern energy and water-saving technologies and utilize renewable energy sources like solar panels and wind generators. Minessi plans to export the farm's products to Saudi Arabia and the UAE, with full support from the Uzbek side for the project.
550 thousand tons of Russian oil to be supplied to Uzbekistan through Kazakhstan in 2024
In 2024, the volume of transit for Russian oil passing through Kazakhstan to Uzbekistan will increase from the initially planned 500,000 tons to 550,000 tons, according to a report by KazTransOil JSC. This decision is based on an approved oil supply schedule by the Ministry of Energy of Kazakhstan. In January, KazTransOil JSC will facilitate the transfer of 25,000 tons of Russian oil through Kazakhstan to Uzbekistan. The transit of Russian oil to Uzbekistan through KazTransOil's main oil pipeline system began in 2017, and last year, the company transported 154,300 tons of Russian oil to Uzbekistan.
South Korean company to upgrade five HPPs that generate 30MW of energy
Tae-Chang NET, a South Korean company, has announced plans to upgrade five hydroelectric power stations in Uzbekistan. These power stations, with a collective capacity of 30 MW, are located in the Tashkent and Samarkand regions. The company intends to replace the power units at these hydroelectric plants, and a feasibility study for their comprehensive modernization is underway. The pilot project for one of the hydroelectric power stations will be funded with grant assistance from the Korea International Cooperation Agency (KOICA). This initiative aims to enhance Uzbekistan's renewable energy infrastructure and support the country's sustainable development goals.
EBRD mulls loan for 20-MW green H2 project in Uzbekistan
EBRD is considering extending up to USD 58.2 million (EUR 53.8m) in debt to ACWA Power Co for the construction of a 20-MW hydrogen plant in the Tashkent region of Uzbekistan.
The funding, planned to come in the form of a senior secured loan, is scheduled to be approved on March 6, the lender said in a disclosure on Monday.
An investor from Kuwait plans to implement a number of projects in Ferghana region
USEFUL LINKS AND NOTABLE PUBLICATIONS
Uzbekistan Eyes Deepened Economic, Energy, and Security Ties with China
Xiplomacy: With upgrade in ties, China, Uzbekistan ready for closer win-win cooperation
Uzbek President In China Seeking New Era Of Relations And Investments
Uzbekistan plans to attract over 10 million foreign tourists in 2024
International agencies forecast stable economic growth in 2024
With the US looking elsewhere, Uzbekistan and China quietly cement a regional alliance