Uzbekistan Update: March 16 - 31, 2024
Biweekly update on key developments in Uzbekistan
Notable Quotes
“The desire to become professionals destroys gender stereotypes” - Saida Mirziyoyeva Presidents Assistant
UPCOMING EVENTS
April 23, 2024 - Open Round Table of the EUROUZ Committee on ESG & Compliance Committee: Partnership potential between Uzbekistan and European countries in the field of ecology and environment
April 23, 2024 – Uzbekistan Outsourcing Conference
Organized by EUROUZ partners IT-Park Uzbekistan in Berlin, GermanyMay 1, 2024 - EUROUZ Annual General Meeting (!)
May 2-3, 2024 - Third Tashkent International Investment Forum
May 3, 2024, 08:00 – 09:00 am Official event of TIIF agenda hosted by EUROUZ: Breakfast with business leaders - Fostering EU-Uzbekistan Economic Alliances
May 14 – 16, 2024 - Uzbekistan Energy Forum 2024 (organized by Iteca Exhibitions)
EUROUZ and its partners’ members can benefit from special rates and promotions for all upcoming events organized by Iteca Exhibitions. For the Uzbekistan Energy Forum, special rates are available for participation in the exhibition, sponsorship packages, and attendance at the forum itself. Interested parties should contact the Secretariat at info@eurouz.com for more information.May 27-31, 2024 - Multisectoral Trade mission to Uzbekistan
a. Brussels & Wallonia (AWEX) - registration
b. Fladers (FIT) - registration
EUROUZ & MEMBER NEWS
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1. INTERNATIONAL COOPERATION
1.1 EUROPE
Uzbekistan and Belarus Explore Educational Cooperation
Officials from the involved states committed to expediting progress toward their educational collaboration objectives, with plans to assess advancements in their "Roadmap" and Cooperation Program. They agreed to explore opening Belarusian university branches in Uzbekistan, initiate vocational education pilots, and facilitate professional internships and exchanges in preschool education. A detailed review of these initiatives by the respective countries' authorities was agreed upon.
Uzbekistan and Hungary expanding interparliamentary cooperation
Ambassador of Uzbekistan to Hungary met with the Hungarian Vice-Speaker and co-chair of the Hungary-Uzbekistan friendship group to enhance practical cooperation between the two nations. The Hungarian side acknowledged the growth in bilateral relations, citing frequent high-level interactions. The Vice-Speaker expressed a desire to strengthen legislative ties and stressed the importance of cultural and humanitarian connections. Following the Uzbek ambassador's credential presentation to the Hungarian President, agreements were made to organize joint events in various sectors.
Germany Seeks Labor Force from Uzbekistan
The Minister of Employment and Poverty Reduction of Uzbekistan discussed with representatives from Mangold Consulting Gmbh the recruitment and training of Uzbek workers for jobs in Germany, highlighting a specific need for medical personnel due to staff shortages in Uzbek hospitals and demographic challenges in Germany. Proposals include easing German language requirements to facilitate faster integration. The interest extends to sectors like metallurgy, logistics, and transport. Both parties are working on a legal framework to efficiently implement these agreements.
1.2 CENTRAL ASIA & CAUCUSES
Uzbekistan and Kazakhstan Discuss Broadening Multifaceted Cooperation
On March 15, Uzbekistan's President received the Kazakh government delegation, led by the new Prime Minister. The meeting, which conveyed reciprocal presidential greetings, focused on deepening industry, transport, logistics, and strategic cooperation between the two nations. They aimed to create a new practical interaction agenda, enhance trade, and foster investment in key sectors and regional infrastructure. The significance of continuous governmental communication to strengthen bilateral relations was emphasized.
Uzbekistan and Kyrgyzstan discuss issues of enhancing interregional cooperation
Employees from the Uzbek Consulate General in Osh and the Kyrgyz Presidential Representative in Jalalabad reviewed the "Road Map" for enhancing Namangan-Jalalabad regional cooperation. The economic potential and ongoing collaboration in various sectors were highlighted, with achievements including $10 million in contracts from biannual business forums and a surge in tourism, evidenced by over 10,000 Uzbek visitors to Jalalabad last year. It was agreed to further promote regional ties through continued business forums, information tours, and joint cultural events.
Uzbekistan to cooperate with Azerbaijan in the energy sector
The President of Uzbekistan ratified an international treaty to enhance energy collaboration with Azerbaijan, signed in Baku on August 22, 2023. This agreement aims to foster development in the energy sector, with the Uzbek Ministry of Energy overseeing its implementation. The Cabinet of Ministers and relevant agencies are tasked with ensuring compliance, signifying a major step in strengthening energy ties between the two nations.
1.3 RUSSIA & CHINA
Chinese CITIC to build toll roads in Uzbekistan
CITIC Construction, a Chinese company, expressed interest in Uzbekistan's road construction, particularly in reconstructing the Pungan—Namangan and Tashkent—Chinaz roads and developing new toll roads. In discussions with Uzbekistan's Minister of Transport on March 27, the focus was on improving the national road network. The importance of these projects, especially for the Fergana Valley, was highlighted, with the resumption of the "Fergana Ring" road section's reconstruction, supported by a $220 million budget from the Asian Development Bank, targeting completion by end of 2025.
Uzbekistan's President Highlights Opportunities for Interregional Cooperation with China
The President of Uzbekistan discussed interregional cooperation with a Chinese delegation from Xinjiang, focusing on strengthening trade relations, which account for 10% of their bilateral trade. Xinjiang Uygur Autonomous Region plans a $3.5 billion investment in Uzbekistan, targeting green energy, infrastructure, and innovative technologies. The discussions also covered cultural exchanges and the potential "Uzbekistan-Kyrgyzstan-China" railway project to boost regional connectivity. Additionally, the China Energy Construction Group is advancing the Rochi Energy Storage Project in Uzbekistan, with plans for a 150-megawatt power station by December 2024, enhancing the country's energy sector.
1.4 MIDDLE EAST, EAST ASIA & SOUTH-EAST ASIA
Uzbek Foreign Minister meets with Vietnam's Prime Minister
During a visit to Hanoi, Uzbekistan's Foreign Minister met with the Vietnamese Prime Minister, committing to a comprehensive partnership emphasizing trade-economic and investment cooperation. This meeting underscores Uzbekistan's recognition of Vietnam's dynamic growth in Southeast Asia. Starting March 18, the visit featured high-level negotiations and participation in the Uzbek-Vietnamese business forum, aiming to strengthen bilateral relations.
Uzbek and South Korean Foreign Ministers Plan High-Level Talks in Seoul
Uzbekistan's Foreign Minister met with South Korea's Foreign Minister in Seoul, discussing the expansion of their special strategic partnership. They reviewed plans for future high-level contacts and ongoing cooperation under the Strategic Dialogue format initiated the previous year. This meeting highlights the mutual commitment to enhancing the bilateral relationship, following the Uzbek minister's recent visit to Vietnam.
Pakistani companies plan to purchase leather from Uzbekistan
In Tashkent, officials from the Uzcharmsanoat Association and a Pakistani delegation led by the head of the Leading Edge Alliance discussed exporting Uzbek leather goods to Pakistan. With the facilitation of the Uzbek embassy in Pakistan, the discussions were positive, highlighting the achievements of Uzbekistan's leather industry and a readiness for cooperation. The talks included potential partnerships, quality, and standards, with plans to send leather samples to Pakistan for testing, aiming to establish firm export contracts.
1.5 NORTH & SOUTH AMERICA
Canada Offers 5,000 Jobs to Uzbekistan Citizens
The Ministry of Employment of Uzbekistan has launched a program to place 5,000 Uzbek nationals in Canadian jobs, targeting 18 to 45-year-olds proficient in English, French, or Spanish, with construction expertise. Jobs, offering $12.50 to $30 per hour, include roles like carpenters, welders, and electricians. This follows an agreement with Canadian employers to address labor shortages in construction and other sectors. Applicants must provide language proficiency evidence, relevant educational credentials, and passport copies. Selection includes document review and a language interview conducted by employer representatives.
President Mirziyoyev receives delegation from the US Parliament
They reviewed the robust bilateral cooperation, underscored by the inaugural Central Asian and US summit in the C5+1 format in New York City. Notable was the 30% growth in mutual trade by the end of 2023 and the expansion of American businesses in Uzbekistan, with Air Products making significant investments. Plans were made to organize business missions from these American regions to Uzbekistan, with discussions also touching on international and regional matters, including Afghanistan.
1.6 INTERNATIONAL ORGANIZATIONS
Tanzila Narbayeva meets with António Guterres in New York
The Chairman of the Senate of the Oliy Majlis of Uzbekistan met with the UN Secretary-General in New York, discussing Uzbekistan's cooperation with the UN, with a focus on Sustainable Development Goals, gender equality, and environmental challenges, notably the Aral Sea disaster. The meeting acknowledged Uzbekistan's significant achievements in sectors like economy, healthcare, and education through its engagement with the UN. They also discussed bolstering Uzbekistan's international initiatives, supporting domestic reforms, expanding regional cooperation, and the success of the Women Leaders of Central Asia Dialogue initiated by Uzbekistan.
2. PUBLIC POLICY
Partial Management of Uzbekistan’s Gas Pipelines to Shift to Private Sector
Uzbekistan plans to end its state monopoly on natural and liquefied gas distribution, opening the market to private companies in its 2024 state program. The relevant ministries must define the privatization process by April's end. The strategy begins with selecting pilot regions for 2024-2025 privatization, then negotiating with companies to transfer networks by July, under set conditions. This move, aimed at improving gas distribution efficiency and reliability, is part of larger energy reforms, including tariff adjustments and promoting private investment in the sector.
Uzbekistan Aims to Boost Investment and Exports in Agriculture and Food Sector"
President conducted a videoconference addressing the underperformance in Uzbekistan's agricultural and food exports, which hit $2 billion, falling short of the $5 billion potential. Measures to boost exports include accessing new international markets, setting up private quality control labs, and offering financial incentives to exporters. A commission, headed by the Prime Minister, will craft a three-year program to enhance the production and export processes, with the goal of significantly increasing the sector's exports.
Operational activities can now be carried out using ICT
The President of Uzbekistan has signed a law amending various legislative acts to improve operational and investigative activities. The amendments enable the use of information and communication technologies, including cyberspace, for operational purposes. The law on administrative arrest procedures has been updated to allow operational-search activities in special reception centers, aiding in crime prevention, detection, and investigation. Furthermore, modifications to the law on internal affairs specify the use of media in crime investigations and suspect location. These amendments take effect immediately upon official publication.
A special industrial zone "Yangi Avlod" to be created
The President of Uzbekistan has inaugurated the “Yangi Avlod” special industrial zone in Tashkent's Yangikhayot district, slated for a 30-year operation, offering tax and customs incentives to participants. Managed by Yangi Avlod LLC, this initiative seeks to draw up to $1.5 billion in foreign direct investment by 2025 and is expected to generate over 2,500 jobs. Land plots for investment projects in the zone will be distributed through the E-auksion electronic platform.
‘Car-Free Day' initiative to be launched
3. LEGISLATION
3.1. LEGISLATIVE CHANGES
Restrictions on export of sunflower and vegetable oil are lifted
The Uzbekistan government has removed restrictions on exporting sunflower and vegetable oil, now permitting companies to export oil produced from imported sunflower and cotton seeds. Under a new decree, factories can export up to 50% of such processed oil. Export limits are set at 35% for sunflower seeds and 17% for other oilseeds and soybeans.
3.2. NOTABLE APPOINTMENTS
Director of the Atomic Energy Development Agency under the Ministry of Energy of the Republic of Uzbekistan
Appointed - Azim Ahmedkhadzhayev
Previously served as - First Deputy Minister of Energy of the Republic of UzbekistanFirst Deputy Minister of Energy
Appointed - Bakhtiyar MamatkarimovDeputy Minister of Energy
Appointed - Azizkhoja KabilovActing chairman of the Uzcharmsanoat association
Appointed - Fakhriddin Boboev
Previously served as - Deputy chairman of the UzcharmsanoatAmbassador of Uzbekistan to the Saudi Arabia
Appointed - Nodirjon Turgunov
4. ECONOMY
4.1 KEY ECONOMIC INDICATORS, LOANS, & PUBLIC FINANCE
The AIIB to Allocate $670 Million for Uzbekistan’s Economic Reforms
The Asian Infrastructure Investment Bank (AIIB) has pledged $670 million to support Uzbekistan's transition to an inclusive market economy. This funding, allocated to the Ministry of Economy and Finance, will help in market formation, fiscal risk management, social inclusion, and environmental sustainability. Expected benefits include improved efficiency in healthcare and enhanced government services. The World Bank will also contribute financially, emphasizing a collaborative approach to Uzbekistan's development goals.
Ministry of Economy reports $5 billion budget deficit for 2023
The 2023 consolidated budget deficit reached $5 billion, exceeding the initial 3% GDP limit and culminating at 5.5% of GDP. This increase marks a continued rise in deficits over the past five years, with escalating state spending outpacing revenue growth. The 2023 budget law was amended to accommodate this spike, adjusting the deficit ceiling and external debt limit to $5.5 billion. Early 2024 reports indicate a continued trend, with a budget approved to allow a 10.3 trillion UZS deficit, aligning with a broader fiscal strategy managing a 4% GDP deficit cap.
CERR: Uzbekistan’s GDP growth to be 5.6% in the first quarter of 2024
This growth spans industry, services, construction, and agriculture, with a full-year target of 6% GDP growth, reaching $100 billion. Despite a dip in foreign trade, there's been significant progress in industry, services, construction, and retail since early 2024. The positive trend, especially in manufacturing and construction, and upbeat economic search trends, support this projection. International forecasts, ranging from 5.2% to 5.6%, echo CERR’s predictions, attributing growth to state policies on efficiency, cost reduction, and digitalization.
Top contributors to Uzbekistan's $4.2 billion trade in January 2024
Uzbekistan's Foreign Trade Hits $9.9 Billion in January-February
The Statistics Agency of Uzbekistan reported that in January-February 2024, Uzbekistan's foreign trade turnover (FTT) reached US$9.9 billion, marking a significant increase of US$940.3 million or 10.5% compared to the same period in 2023.
4.2 BANKING & FINANCE
The IMF mission holds negotiations at the Central Bank of Uzbekistan
During the International Monetary Fund's (IMF) visit to Uzbekistan, discussions with the Central Bank emphasized enhancing risk-based internal audit skills. The positive effects of the Central Bank's initiatives, supported by the IMF, were acknowledged. The agenda included mapping key business processes, risk assessment, and broadening the audit scope. Both entities showed commitment to continued cooperation, stressing the significance of adhering to international recommendations.
ADB advised on a $1.5 billion project to revamp Tashkent's heating system
Tashkent's outdated heating system, designed for 1 million people, is insufficient for its current 3 million residents, causing inefficiencies. To rectify this, the Asian Development Bank (ADB) plans to invest $1.5 billion in modernizing the system using eco-friendly technologies. The project intends to enhance service quality, lower carbon emissions, and support environmental sustainability and economic growth. With the adoption of energy-conscious practices, the shift to a closed heat supply system is anticipated to result in substantial energy savings.
Central Bank and IFC Conduct Seminar on Financing Development for SMEs
The Central Bank of Uzbekistan and the International Finance Corporation hosted a seminar on sustainable financing for micro, small, and medium-sized enterprises (MSMEs). The event saw participation from financial institutions, international banks, and development organizations. Topics discussed included regulatory frameworks, market analysis, innovative financing solutions, and strategies to transform MSMEs into banks. The seminar aimed to share global best practices, tackle challenges in the Uzbek MSME sector, and develop a roadmap for enhancing financing opportunities for MSMEs in Uzbekistan.
4.3 TRADE AND BUSINESS
Uzbekistan’s first unicorn: e-commerce startup Uzum
Uzum, Uzbekistan's inaugural unicorn, has raised $114 million, reaching a $1.16 billion valuation. This e-commerce startup, tapping into a market with high smartphone usage but limited e-commerce services, boasts over 8 million monthly active users and provides a platform with over 600,000 SKUs, notably facilitating 45-50% of its transactions through a buy now, pay later (BNPL) service. Uzum is looking to expand in fintech, particularly Sharia-compliant lending, and explore food delivery and digital banking. The Series A funding round, led by FinSight Ventures, will be followed by a Series B round aiming for $200 million to support expansion. Uzum's strategy includes developing two super apps, enhancing its logistics, and increasing its credit portfolio, leveraging its unique market position in Uzbekistan.
Hyundai Rotem High-Speed Electric Trains to Serve Tashkent-Khiva route
President Shavkat Mirziyoyev visited a Tashkent plant where plans for a high-speed train between Tashkent and Khiva were presented. The project involves acquiring a Hyundai Rotem electric train capable of speeds up to 250 kilometers per hour, accommodating 351 passengers across 7 cars. The President emphasized the need for design changes to improve passenger comfort and instructed them to expand railway electrification. Additionally, plans include building and repairing hundreds of cars, producing special cars for industrial use, and exploring new types of compartments. Another project presented was the organization of electric and metro train production.
NUWA Robotics to open an office in Uzbekistan
This agreement, signed during the Offshore Outsourcing Tour 2024, focuses on collaboration in IT, robotics, and outsourcing, including establishing a NUWA branch in Uzbekistan and acquiring IT Park resident status. Since its inception in 2016, NUWA Robotics has specialized in creating robots capable of advanced human interaction, integrating artificial intelligence, and excelling in software and hardware development, manufacturing, and robot UX design.
4.4 AGRICULTURE, MINING, & MANUFACTURING
Uzbekistan plans to produce up to 500,000 hybrid and electric vehicles
The initiative aims to establish a production capacity of up to 500,000 electric and hybrid vehicles per year, targeting a 60% localization level and creating 10,000 jobs. The plan also includes expanding the list of countries from which Uzbekistan can import electric and hybrid vehicles, emphasizing consumer rights, product quality, safety, and warranty services. Additionally, the government will ensure equal conditions and state benefits for all automakers in Uzbekistan.
Uzbekistan and Italy Launch Joint Agricultural Breeding Cluster
Uzbekistan's Ambassador to Italy met with leaders from the Italian Association of Livestock Breeders and the Italian National Association of Rabbit Breeding to discuss a large rabbit breeding complex in Uzbekistan. Using Italian technology in the Tashkent region, the facility can produce 2 million rabbits, 2 thousand tons of meat, and 80 thousand tons of feed annually, operating waste-free and producing natural fertilizers. Benefiting from Italian expertise, the complex successfully breeds purebred rabbits and is exploring export possibilities in neighboring markets, with negotiations underway for expanding to new importing countries.
4.5 ENERGY & PETROCHEMICALS
Stock Exchange to Update Oil and LPG Wholesale Prices on April 1
Uzbekneftegaz has declared price modifications for oil products starting April 1, 2024, due to changes in excise tax rates. These adjustments will affect AI-80 gasoline, jet kerosene, diesel fuel, ECO diesel fuel, and the sale of petroleum products and liquefied gas to consumers. Consequently, Uzbekneftegaz JSC will revise the starting prices for these products in stock trading from the beginning of April to align with the updated tax rates.
Masdar to Construct 300 MW Solar Plant in Kashkadarya, Uzbekistan
In Uzbekistan's Kashkadarya region, a $250.5 million investment has been made to develop a 300 MW solar power plant and a 75 MW electrical energy storage system, under a public-private partnership. The project is being carried out by Masdar's subsidiary, Nur Kashkadarya Solar PV LLC. JSC National Electric Networks of Uzbekistan will buy the generated electrical energy for 25 years at fixed rates of $0.03 per kW/h for solar power and $6.33 per MWh for the storage system. Additionally, to ensure unobstructed sunlight, construction is prohibited within a 500-meter radius of the solar plant.
President Inaugurates $1 Billion Construction of Three Power Plants in Namangan
The President of Uzbekistan launched construction for three new power stations in Namangan, representing an investment exceeding $1 billion. These developments will increase the region's power generation to 2,000 megawatts, satisfying local energy needs. Uzbekhydroenergo is set to construct a six-station hydropower complex on the Naryn River, employing domestic equipment and technology and generating 4,000 construction jobs. Additionally, two solar power stations with a total capacity of 1,000 megawatts will be built by Hyper Partners GmbH and Tepelen Group Holding Limited. These projects, aimed for completion by year-end, will create 120 permanent positions and facilitate electricity surplus distribution to adjacent areas.
Uzbekistan produces 7.7 billion cubic meters of gas in January-February
In January-February 2024, Uzbekistan's natural gas production decreased by 5.58% compared to the same period in 2023, totaling 7.7 billion cubic meters. Oil production also saw a decline of 6.92%, amounting to 118.5 thousand tons. However, gas condensate production experienced a slight increase of 2.58%, reaching 214.7 thousand tons. Coal production decreased by 3.38% compared to January-February 2023, with enterprises producing 659 thousand tons during the period.
Uzbekistan plans to triple gas imports from Russia in 2024
Uzbekistan is set to significantly boost its gas imports from Russia via Kazakhstan in 2024, with an anticipated increase to 3.8 billion cubic meters, nearly three times the 1.28 billion cubic meters imported in 2023. This surge follows a strategic cooperation pact between Gazprom and Kazakhstan's government, aiming for daily supplies of 9 million cubic meters, totaling 2.8 billion cubic meters annually.