Uzbekistan Update: March 1 - 15, 2024
Biweekly update on key developments in Uzbekistan
Notable Quotes
“Goal is to use the fertile land, to make the domestic production, increase services and make the income ”
The President of Uzbekistan Sh. Mirziyoyev
UPCOMING EVENTS
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 14 – 16, 2024 - Uzbekistan Energy Forum 2024
The forum is held with the support of the Ministry of Energy of the Republic of Uzbekistan, JSC Uzbekneftegaz and other relevant agencies.
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 2-3, 2024 - 3rd Tashkent International Investment Forum (TIIF-2024)
May 27-31, 2024 - Multisectoral Trade mission to Uzbekistan
a. Brussels & Wallonia (AWEX) - registration
b. Fladers (FIT) - registration
EUROUZ & MEMBER NEWS
1 - EUROUZ held its annual “Uzbekistan 2024: Economic Update” webinar
On Tuesday, March 19th, EUROUZ, in collaboration with the Ministry of Economy and Finance of the Republic of Uzbekistan, the Joint Chamber of Commerce Switzerland-Eastern Europe, Central Asia, South Caucasus (JCC), Wallonia Export & Investment Agency (AWEX), Flanders Investment & Trade (FIT), Association of European Businesses (AEB), Switzerland Global Enterprise, and the France-Uzbekistan Economic Chamber (CEFO), held an online webinar titled “Uzbekistan 2024: Economic Update”. The event attracted an audience exceeding 200 people throughout the event. We want to thank our speakers: Ambassador Gairat Fozilov, First Deputy Minister of Economy and Finance of Uzbekistan Ilhom Norqulov, Mirshohid Aslanov, Eric Bletard, Ludmila Dyakonova, Joanna Golas, Odilbek Isakov, Karen Srapionov, Eric Livny, Dorit Sallis, and Tadzio Schilling.
You can watch the recording of the event via the link
2 - EUROUZ hosted HR & Capacity Building Committee meeting
The EUROUZ HR & Capacity Building Committee hosted a meeting with the participation of LavoroSolutions, France-Uzbekistan Economic Chamber (CEFO), Beeline Uzbekistan, Vakhidov & Partners, Korzinka, Veolia, PwC Uzbekistan, ENERSOK, KPMG, Asakabank, SEG Enera, Mazars Advisory, Montfort Eurasia, Fersol, EY, AWEX, BMB Trade Group, and International Beverages Tashkent. The hybrid-format discussion, facilitated by Anna Burova, the Chairwoman of the HR&CB Committee, Head of HR Consulting at LavoroSolutions, featured presentations by Joanna Golas, the Chairwoman of CEFO and Sofiya Gaynutdinova, the Chief People Officer at Beeline.
3 - Uzbekistan Market Entry 2024: Navigating Tax, Legal, and Regulatory Landscapes webinar
EUROUZ in collaboration with PwC Uzbekistan hosted a "Uzbekistan Market Entry 2024: Navigating Tax, Legal, and Regulatory Landscapes" webinar. With over 75 unique online viewers, the webinar provided key updates and developments in taxation, labor laws, and financial compliance in Uzbekistan tailored for companies considering market entry.
You can download the presentations from the webinar via the link.
JCC is the leading private sector organization in Switzerland that promotes bilateral business between Switzerland and Eastern Europe (non-EU), Central Asia and the South Caucasus -- 11 countries in total. Uzbekistan is a priority market in the JCC portfolio and we focus on strengthening bilateral trade and investment between Switzerland and Uzbekistan. JCC members are from a cross-section of industries, including manufacturing, infrastructure, logistics, pharma/healthcare, ITC, financial and legal services.
5 - EUROUZ welcomes a new Association member - Center for Progressive Reforms (CPR)
Progressive Reforms (CPR), founded in 2023, is an independent think tank dedicated to addressing existing challenges in Uzbekistan through innovative research and policy analysis. The Center's goal is to assist Uzbek citizens and #government in making informed decisions, promoting public discussions, providing reliable information, encouraging critical thinking, and increasing civic engagement. CPR has 18 in-house experts in various areas, as well as over 40 non-resident fellows who participate in the Center's activities. The Center carries out medium and large-scale research and social projects in collaboration with both local and international organizations.
6 - EUROUZ new member - Henley & Partners
Henley & Partners is the global leader in residence and citizenship by investment. Each year, hundreds of wealthy individuals and their advisors rely on our expertise and experience in this area. Our highly qualified professionals work together as one team in over 45 offices worldwide.
Not a member yet?
Join EUROUZ to access exclusive market support for your business activities in the country.
1. INTERNATIONAL COOPERATION
1.1 EUROPE
LOT Polish Airlines Initiates Direct Warsaw-Tashkent Flights
The service, beginning with three weekly flights in March and increasing to four in April, was celebrated for enhancing connectivity and convenience for both transit and direct passengers. Michał Fijoł, CEO of LOT, highlighted the strategic benefits of the route for travelers across Scandinavia, Western, and Central Europe, offering seamless connections through Warsaw. This new connection is expected to boost trade, tourism, and cultural exchanges, enriching the travel opportunities between the two nations.
1.2 CENTRAL ASIA & CAUCUSES
Tajikistan's President Welcomes Uzbek Prime Minister
The parties emphasized the importance of executing projects in trade, investment, energy, and agriculture for mutual benefit. Additionally, the intergovernmental commission on trade-economic cooperation reported a trade volume of $757 million between the two countries, with plans to increase it to $1 billion.
Uzbekistan-Turkmenistan free trade zone to be established
Initiated from an agreement between Uzbekistan and Turkmenistan in October 2022, this zone will focus on selling products made exclusively in the two countries, with a "free customs zone" regime for 30 years, extendable. The zone will feature modern infrastructures for storage, sorting, sales, and transport, and include facilities like banking, medical services, and hotels. A "Single Window" center will streamline processes for entrepreneurs. Set for completion within two years, the project aims to enhance trade, reduce logistics costs, and create jobs, building on the significant increase in trade volume and business tourism between the countries since 2017.
Uzbekistan and Kyrgyzstan discuss demarcation of state borders
The discussions aimed to review 2023's accomplishments, plan for 2024, and tackle specifics regarding border demarcation, including the creation of demarcation maps and geodetic networks. The meeting concluded with a protocol signing, setting the stage for the next gathering in Uzbekistan, emphasizing ongoing cooperation and efforts to precisely define the boundary between the two nations.
Uzbek-Turkmen Border Demarcation Commission Meeting conducted
Kyrgyzstan to buy 100 buses made in Uzbekistan
1.3 RUSSIA & CHINA
Chinese Shenzhen Neptune Firm to Develop A+ Class Warehouses in Uzbekistan
A $10 million to $15 million initiative was discussed during a meeting between representatives from Uztemiryulkonteyner and Shenzhen Neptune's Commercial Director. Discussions included the joint use of logistics capacities by Uzbekistan Railways' subsidiary, as well as wagon and container fleet utilization. Shenzhen Neptune Logistics also proposed the development of modern A+ class warehouses in Uzbekistan, focusing on organizing container transfers along the China-Kyrgyzstan-Uzbekistan multimodal route, aiming to facilitate cargo delivery from Chinese provinces to Türkiye and the EU.
China Nuclear Uranium to Participate in Uzbek Uranium Mine Development
This collaboration was highlighted during discussions on March 11 between Navoiyuran's general director, and representatives from the Chinese company, focusing on the “Jantuar” and “Madanli” deposits. The partnership reflects Uzbekistan's strategic intent to enhance its uranium mining and processing capabilities, as evidenced by President of Uzbekistan’s directive to double uranium production by 2030, targeting 7,100 tons.
1.4 MIDDLE EAST, EAST ASIA & SOUTH-EAST ASIA
Egyptian Firm Arab Nihol to Construct $100 Million Tourist Complex near Samarkand
This ambitious project will be executed in three phases, beginning with an $18 million cable car, followed by a $32 million 100-bed hotel, and culminating in a $50 million 100-bed sanatorium, expected to create 500 permanent jobs. The initiative aligns with Uzbekistan's broader strategy to enhance its tourism sector, highlighted by a recent presidential decree to establish a major tourist and recreational zone in the Samarkand region.
Japan’s PM hosts FM of Uzbekistan
The delegation from Uzbekistan, headed by the Foreign Minister, engaged in discussions covering multiple facets of bilateral ties, with a focus on advancing political dialogue and cultural exchanges. There was a unanimous commitment to strengthening strategic collaboration via sustained diplomatic efforts. This underscored the pivotal role that the Foreign Ministries of Uzbekistan and Japan play in nurturing the relationship between the two nations.
FM Bakhtiyor Saidov meets with officials of interim Afghan government
Discussion revolved around a broad range of mutual cooperation issues, with a particular emphasis on improving economic relations and business interactions. Highlighting the shared history and potential for collaboration, Saidov's visit underscores the commitment to strengthen the partnership between Uzbekistan and Afghanistan. Additionally, Saidov visited Doha on March 10 to meet with Qatar's Prime Minister and Foreign Minister, Mohammed bin Abdulrahman bin Jassim Al Thani, further indicating Uzbekistan's active diplomatic engagement in the region.
1.5 INTERNATIONAL ORGANIZATIONS
USAID Initiates $17.7 Million Business Support Project to Boost Uzbekistan's Economic Growth
The U.S. Agency for International Development (USAID) launched the Business Support Project on March 5, a five-year initiative aimed at promoting sustainable economic growth in Uzbekistan by enhancing the competitiveness of small and medium enterprises in ICT, tourism, textiles, and the green economy. With a $17.7 million budget, the project seeks to reduce private sector growth barriers and boost investment and financial access. It includes a $1.8 million funding opportunity for local initiatives and has already announced $1.1 million in grants through the Future Growth Initiative to support women entrepreneurs, youth, and the startup ecosystem.
Uzbekistan, International Islamic Trade Finance Corporation Ink $600 Million Partnership Deal
This deal aims to enhance trade, support agriculture and food security, aid state-owned enterprises, and encourage investments in key sectors like pharmaceuticals, food, agriculture, and textiles. The meeting focused on evaluating the progress of existing collaborations and exploring new projects in vital economic areas, with ongoing support for local banks through technical assistance planned for 2024.
2. PUBLIC POLICY
Uzbekistan to introduce state registration for high-risk products
Starting October 1, Uzbekistan will require importers to pre-register high-risk products through a "single window" customs system before customs entry, aligning with a presidential decree to bolster technical regulation and transparency. Penalties for non-compliance with technical standards include fines and potential suspension of certification.
New type of visa to be introduced to enter Khorezm
A 3-year tourism development program will be adopted as a key growth driver, with the region's tourism support fund income retained for three years. However, the region faces a shortage of hotel accommodations, prompting measures such as providing loans at an 18% interest rate for hotel and resort construction, with a 2-year grace period.
Uzbekistan to Establish Green Hydrogen Center with United States Support
Initiative aims to enhance expertise in the energy sector and support Uzbekistan's goals for a 25% renewable energy share by 2030 and carbon neutrality by 2050. The partnership has already introduced a green hydrogen curriculum at Tashkent State Technical University with the University of Delaware. With a total budget of $39 million for five years, the USAID project seeks to improve energy sector performance and facilitate $2.2 billion in clean energy investments across Central Asia.
Review of Progress on "Uzbekistan 2030" Strategy's Priority Initiatives
3. LEGISLATION
3.1. LEGISLATIVE CHANGES
Uzbekistan ratifies Protection of Wages Convention
President Shavkat Mirziyoyev signed into law the ratification of the International Labor Organization (ILO) Convention No. 95 on the Protection of Wages, as of March 12, 2024. This convention, dating back to July 1, 1949, mandates that wages be paid in the legally circulating currency of the country, explicitly prohibiting payment in debentures, receipts, coupons, or any form that aims to substitute for legal currency, ensuring the protection of workers' wage rights in Uzbekistan.
3.2. NOTABLE APPOINTMENTS
Advisor to the President on Legal Due Diligence and Comprehensive Analysis
Appointed - Bekzot Mavlonov
Previously served as - Head of the Department of Legal Expertise and Comprehensive Analysis of the Presidential AdministrationPermanent Representative of Uzbekistan to the UN Office
Appointed - Eldiyor Toshmatov
Previously served as - Head of the Secretariat of the Chairman of the Senate of the Oliy Majlis of UzbekistanDeputy Minister of Investment, Industry and Trade
Appointed - Ilzat KasymovAmbassador Extraordinary and Plenipotentiary of Uzbekistan to Hungary
Appointed - Aybek Shakhavdinov
Previously served as - Head of the Department for Cooperation with European Countries and European Union Institutions of the Ministry of Foreign AffairsAmbassador Extraordinary and Plenipotentiary of Uzbekistan to Latvia
Appointed - Timur Rakhmanov
4. ECONOMY
4.1 KEY ECONOMIC INDICATORS, LOANS, & PUBLIC FINANCE
Inflation rate for February announced, annual inflation slowed down to 8.35%
In February 2024, Uzbekistan reported a record low monthly inflation rate of 0.32%, the lowest since 2016, with annual inflation slowing to 8.35%. Price decreases were noted in key food items, while certain goods like milk and rice saw annual price increases of 12.2% and 31.3%, respectively. Some fruits and vegetables experienced price hikes, while others like potatoes and onions saw decreases.
$1.8 billion will be allocated to finance mortgages
Government has allocated $1.8 billions for housing development in Uzbekistan, including significant funds for mortgage lending and support for low-income families. The initiative also provides financial support for contractors and extends customs benefits for importing construction equipment, while removing the insurance requirement for mortgage housing. Efforts to protect consumers from unscrupulous developers will be strengthened, including setting financial stability criteria for construction firms participating in land auctions.
4.2 TRADE AND BUSINESS
Turkish Layki ready to invest $1 million in production of footwear products
This initiative will take place in a specialized small industrial zone focused on leather, footwear, and fur products. This follows an announcement of a $50 million investment by another Turkish company, Warboots, for military boot production in the same zone. Additionally, a 16-hectare leather and footwear cluster in the Tashkent region will accommodate 26 projects worth $30 million, further bolstering the region's manufacturing capabilities.
Uzbekistan to significantly increase export volume of local industry in 2024
Despite last year's 665 billion soums in aid to exporting enterprises, leading to $3 billion 200 million in exports, inefficiencies were noted, particularly in the electrical, agriculture, pharmaceutical, and jewelry sectors. A comprehensive system combining production, industrial zones, and exports is proposed, including the integration of sectoral associations into the Chamber of Commerce and Industry to streamline entrepreneur support.
Uzbekistan's polyethylene exports surge to over $17 million
In January 2024, Uzbekistan's polyethylene exports reached 21,900 tons, amounting to $17.3 million, marking a significant increase of 4,800 tons from the same period in 2023. The country successfully distributed its polyethylene across nine countries, with major shares going to the following countries :
Türkiye – 12,500 tons
China – 2,300 tons
Russia – 2,300 tons
Latvia – 2,200 tons
Kazakhstan – 1,800 tons
Uzbekistan plans to launch production of electronic chips
4.3 BANKING & FINANCE
Uzbek officials meet with the World Bank Regional Director for Central Asia
The discussion revolved around macroeconomic reforms under the Uzbekistan 2030 strategy Topics included energy, transport, telecommunications reforms, enhancing the business environment, and transforming state-owned enterprises. The meeting highlighted progress in the 2022-2026 partnership program with the World Bank, aimed at reducing poverty, fostering the private sector, developing human capital, and creating a green economy.
EBRD promotes inclusive and green lending in Uzbekistan
The European Bank for Reconstruction and Development (EBRD) is providing Ipoteka Bank in Uzbekistan with a $20 million financing package to promote green lending and women's entrepreneurship. Split into two equal loans, the funds will support green technology access for households and SMEs under the Uzbekistan Green Economy Financing Facility II, and bolster women’s entrepreneurship via the Central Asian Women in Business program. With significant backing from international grants and the Women Entrepreneurs Finance Initiative, this initiative reinforces Uzbekistan's position as a leading recipient of EBRD support in Central Asia, with over €4.28 billion invested in 147 projects aimed at fostering private entrepreneurship.
4.4 AGRICULTURE, MINING, & MANUFACTURING
Minimum export prices to be introduced for export of fruits and vegetables
The Uzbekistan government has implemented measures to oversee fruit and vegetable exports, aimed at preventing artificially low export prices and tackling the shadow economy. A resolution issued on February 29 mandates the creation of a product list for monitoring and establishing a pricing oversight system by the 1st of May. The Chamber of Commerce, in collaboration with various agencies, will set minimum recommended export prices based on global market data and domestic costs. Export contracts can offer prices up to 20% below these recommendations. Violations will prompt investigations by the Customs Committee, Tax Committee, and the PGO Department for Combating Economic Crimes, ensuring compliance and promoting fair trade practices.
Government to Provide Up to 100 Million Soums for Collateral-Free Fruit and Vegetable Cultivation
This includes the development of seedlings, cultivation, processing, and the establishment of exemplary training sites in 54 districts for new crop care. Projects on shock freezing of fruits and vegetables will be launched across 51 districts. Financial support includes unsecured loans up to 100 million soums for non-planting agricultural projects, leasing of agricultural facilities to the populace, and targeted loans at rates 4% above the Central Bank's base rate for various farming activities, with repayment periods varying between 3 to 7 years. Additionally, import duties for agricultural machinery will be eliminated until 2027 to further support this initiative.
4.5 CONSTRUCTION & REAL ESTATE
Chinese Firms to Invest $360 Million in Shaykhantakhur District Housing Renovation
This initiative, part of a renovation project in the mahalla named after Olim Khuzhaev, will proceed without using state budget or bank funds. The project aligns with President announcement of simplified procedures for public-private partnerships and renovations under a "life cycle contract." The capital has identified 500 hectares for renovation, including areas with outdated and temporary housing.
Uzbekistan plans to build $10 billion chemicals plant
Uzbekistan aims to establish a significant chemicals plant in the Khorezm region by 2028, with an investment surpassing $10 billion, as announced by President Shavkat Mirziyoyev. The facility, whose investor remains unnamed, is expected to produce 2.5 million metric tons of products annually and generate 3,000 jobs. This initiative comes as the country's natural gas production, the primary feedstock for the plant, has declined to 46.7 billion cubic meters in 2023, prompting Uzbekistan to start importing Russian gas and plan for increased imports to support such industrial ventures.
Analysis of Tashkent Region's District and City Growth Points Conducted
4.6 ENERGY & PETROCHEMICALS
Uzbekneftegaz decreasing gas production rate
Uzbekneftegaz JSC is set to produce 29.3 billion cubic meters of natural gas in 2024, marking a continuation of the company's declining production trend over the past three years. From 33.9 billion cubic meters in 2021 to a projected 29.3 billion in 2024, this represents a 13.6% reduction in gas production.
Gas chemical complex worth $10 billion to be built in Khorezm
During his visit to the Khorezm region on February 29, President launched the Voltalia photovoltaic power plant construction and reviewed various upcoming investment projects totaling $1.5 billion across several sectors. Among the 18 initiatives worth $660 million, significant projects include truck production with Chinese and Bulgarian investors, nickel sulfate production for batteries, and the manufacturing of glass, building materials, and textiles. One notable project is a $80 million small truck production plant. Moreover, a meeting discussed a $10+ billion gas chemical complex project, expected to employ 3,000 individuals and produce 2.5 million tons of products annually by 2028.
Uzbekistan to quadruple imports of Russian gas
Uzbekistan plans to significantly boost its natural gas imports from Russia through Kazakhstan, with the transit volume set to increase from 3 to 11 billion cubic meters annually starting from 2026. Additionally, Uzbekistan's government has proposed an increase in daily gas imports from Russia from 9 to 32 million cubic meters by the first quarter of 2024. To support this expansion, Uztransgaz aims to invest $470 million by 2030 to upgrade the gas transportation system and double the Gazli gas storage facility's capacity.
Gazprom supplies Uzbekistan with gas at an approximate rate of $160 per thousand cubic meters
In 2023, Gazprom sold gas to Uzbekistan at $160 per thousand cubic meters, lower than to Türkiye or China, amidst halted European deliveries. Delivering 7.25 billion cubic meters to Kazakhstan, 1.22 billion to Uzbekistan, and 0.39 billion to Kyrgyzstan, Gazprom kept profitability despite lower prices compared to Türkiye and China. With Uzbekistan's gas production declining and a 10 billion cubic meter export obligation to China unfulfilled, imports from Russia are set to continue. Kazakhstan aims to boost Russian gas transit to Uzbekistan from 3 to 11 billion cubic meters by 2026.
Uzbekistan-2030: Six photovoltaic power plants to be inaugurated by year-end
Uzbekistan plans to allocate $22 billion for lending to enhance various sectors, including $3.28 billion for microfinance services, as part of its economic development strategy. This approach includes targeting a GDP growth of at least 6%, maintaining inflation below 9%, and initiating over 300 large-scale investment projects valued at $18 billion.
ACWA Power to build two more wind power plants in Uzbekistan
The President of Uzbekistan has approved the construction of two wind power plants with a combined capacity of 800 MW in Bukhara and Karakalpakstan, undertaken by ACWA Power at a cost of $1.085 billion. The Gijduvan district will host a 300 MW plant for $682 million, with the remaining funds allocated to a 500 MW plant in Kungrad. These projects, ensuring a 25-year electricity supply, are part of ACWA Power's wider renewable energy expansion in Uzbekistan, which includes wind, photovoltaic projects, and a green hydrogen plant in partnership with PowerChina in Chirchik.
Green energy projects underway at various stages of implementation in Uzbekistan
The President of Uzbekistan underscored the nation’s strides in renewable energy, attracting $2.1 billion in foreign investment. With solar and wind projects underway in most regions, green energy is becoming a pivotal economic factor. The country's vast solar and wind resources can fulfill its electricity demands over tenfold, spurred by recent legal and regulatory support for investors. To date, 9 significant solar and wind initiatives providing 1.6 GW, 6 hydro power plants totaling 183 MW in key regions, and 457 MW of solar panels in social and private sectors have been launched, demonstrating Uzbekistan's commitment to renewable energy expansion.
USEFUL LINKS AND NOTABLE PUBLICATIONS
Saudis make big wind power strides in Uzbekistan, Kazakhstan
The EU imposed sanctions against another company from Uzbekistan
Uzbekistan urges China to enhance multimodal transportation across Central Asia