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Uzbekistan Update: November 6-15, 2023
Biweekly update on key developments in Uzbekistan
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EUROUZ Tashkent Inauguration: Celebrating Europe-Uzbekistan Economic Partnerships & Networking Evening (invitation & members only)
Date and Time: December 5, 2023, 19:00-22:00
Location: Tashkent, Uzbekistan
If you are a EUROUZ member and have yet to receive an invitation for this event by email, you may use [this link] to register for this in-person event.
Round table “Uzbekistan-Europe Partnership for Healthcare Development
EUROUZ is organising a discussion between representatives of European pharmaceutical companies and companies in the healthcare sector with representatives of government organisations of Uzbekistan in the healthcare sector to develop plans for interaction for 2024.
Date: Wednesday, December 6, 2023
Location: Tashkent, Uzbekistan
[ Registration Link ]
PWC seminar "IFRS 1 (IFRS): First application of the standard"
The seminar program will focus on the purpose and applicability of IFRS 1 standard, detailing the future transition date and comparative period, accounting policy, and aspects of recognition and evaluation. It will include examples of assets such as fixed and financial assets, and liabilities like contingent liabilities. The program is also set to cover the impact of future adjustments on deferred tax, discuss mandatory and optional exceptions from the IFRS 1 standard, and conclude with guidelines on the presentation and disclosure of information.
Date and Time: November 23, 2023, 19.30-20:30
Location: in person at the PwC office in Tashkent
[ Registration Link ]
"Uzbekistan - The New Outsourcing Hub" Conference in the Netherlands
IT Park Uzbekistan provides tax incentives and customized programs to facilitate international, IT Outsourcing companies. Want to explore the government initiatives, 0% tax-rate preferences, smooth entrance to the Central Asian market, and many more? Fill this application out, and IT Park will get back to you, within 24 hours.
Date: November 24, 2023, 10:00 am - 1:00 pm (CET)
Location: Hilton Amsterdam, Netherlands
[ Registration Link ]
Uzbekistan IT Day - United Kingdom
IT Park Uzbekistan announces this exclusive event specifically for IT Outsourcing and BPO companies in the UK. Our mission is to highlight the tremendous potential of Uzbekistan's Outsourcing market. Join us for an unparalleled gathering where you'll meet esteemed executives from British and Uzbek IT and BPO companies, alongside leading experts and passionate tech enthusiasts from the Outsourcing field.
Date: November 29, 2023
Location: Embassy of Uzbekistan, London
[ Registration Link ]
Human Capital Days in Uzbekistan
On November 23rd, in Tashkent, the 1st International Forum and Exhibition, "Human Capital Days in Uzbekistan," will take place.
This event brings together CEOs of major companies, industry experts, HR directors, representatives from recruitment and consulting firms. Human Capital Days encompass:
Trends and innovations in human resource development.
Interactive discussion formats.
Valuable networking opportunities.
Cross-industry knowledge exchange.
The chance to make an international impact.
Date: November 23 , 2023
Location: Tashkent, Uzbekistan
EUROUZ & MEMBER NEWS
Voltalia has secured agreements with the Uzbekistan government for two green energy projects, as reported by Energy Storage News. The projects, signed during the Uzbek-French business forum, include energy storage systems. The first project, located in Shurkul near Navoi, is a hybrid power plant with a total capacity of 400 MW, combining a 200 MW wind farm and a 200 MW solar photo panel farm. The complex will feature a 60 MW battery system and is expected to be commissioned in 2026, representing Central Asia's first facility of its kind. The second plant in Sarymay, Khorezm region, initially planned for a 100 MW solar power plant, has increased to 123 MW.
EUROUZ welcomes a new Association member - National Association of Investment Institutions
The National Association of Investment Institutions (NAII) of Uzbekistan is working on a diverse set of objectives focused on enhancing the country's capital market. Its goals include protecting the rights and interests of its members in dealings with government and international bodies, influencing the strategic development of the capital market, and keeping members informed about industry developments. The NAII is also involved in shaping financial market legislation, providing technical and methodological support to market professionals, and fostering education and skill development among capital market specialists. It actively works to improve market operations, foster a competitive and trustworthy investment environment, ensure transparent financial disclosures, and establish international collaborations with similar organizations and foreign entities.
For more information please visit the link
Not a EUROUZ member yet?
1. INTERNATIONAL COOPERATION
Bilateral talks focused on implementing agreements from Mirziyoyev's June visit to Italy, with plans for a 2024 Strategic Dialogue and continued collaboration in the "Central Asia – Italy" dialogue. Economic cooperation saw a 30% increase in goods exchange last year, with joint projects valued at €9 billion.
During a diplomatic visit, several key agreements were signed to strengthen bilateral relations. These included a intergovernmental deal allowing diplomatic passport holders to bypass visa procedures, Memoranda of Understanding (MoUs) for collaboration between diplomatic academies, development of public education, and cooperation in science, technology, and innovation. Additionally, an MoU was signed to foster collaboration in physical education and sports.
A handicraft contest and art exhibition in Uzbekistan marked the 20th anniversary of the EU programs BOMCA and CADAP. Over 100 partners participated, celebrating the programs' role in fostering cooperation and development in Central Asia. CADAP has been instrumental in drug policy development and collaboration, contributing to prevention and treatment efforts. The EU Ambassador highlighted the milestone's significance. BOMCA, launched in 2003, has evolved to address trade facilitation, migration management, and community-focused initiatives in its 10th phase. The anniversary was acknowledged by program managers, emphasizing the importance of continued cooperation in the EU-Central Asia relationship.
1.2 CENTRAL ASIA & CAUCASUS
Minister Finance of Uzbekistan participated in a trilateral meeting with Azerbaijan and Kazakhstan in Baku, focusing on electricity production and export. The discussion centered on a project to transfer electricity from alternative sources across the region to third-party consumers. The ministers highlighted the project's importance for energy partnership and infrastructure development, foreseeing positive economic impacts. Uzbekistan reaffirmed plans to increase the share of renewable energy to 40% by 2030.
Uzbekistan and Kazakhstan signed an Agreement on regulating the activities of the International Center for Industrial Cooperation “Central Asia”
During the 16th Summit of the Economic Cooperation Organization in Tashkent, the governments of Uzbekistan and Kazakhstan signed an agreement to regulate the activities of the International Center for Industrial Cooperation "Central Asia." The center aims to foster interstate cooperation, enhance international value chains, optimize production processes, modernize industrial enterprises, and promote industrial cooperation between the two countries, including the production of import-substituting products.
Uzbekistan will repair the railway in Afghanistan
Uzbekistan and Afghanistan have agreed to repair the Hayratan-Naibabad-Mazar-i-Sharif railway section, with "Uzbekiston temir yo'llari" undertaking the reconstruction. The collaboration is seen as opening new opportunities for railway development and strengthening trade ties between the two countries. Damage to the railway prompted Afghanistan to invite UTY for prompt and cost-effective repairs, with a 50% discount offered. A high-level Uzbekistani delegation visited Afghanistan, expressing intentions to boost annual trade to $3 billion, and the Taliban requested reduced transit fees.
1.3 RUSSIA & CHINA
Uzbekistan-China: agreements were signed on the implementation of joint investment projects and trade contracts
Tashkent hosted a Uzbek-Chinese business forum aimed at enhancing business communication and fostering investment and trade between the two countries. The event included presentations of various joint project proposals, covering diverse sectors. Participants engaged in detailed discussions through B2B and G2B negotiations. The forum resulted in the signing of agreements for the implementation of joint investment projects and trade contracts.
1.4 MIDDLE EAST, EAST ASIA, & SOUTH-EAST ASIA
Source: Presidents Press Service
President met with the former Prime Minister of Qatar, to discuss prospective investment projects in Uzbekistan. These projects span various sectors, including hospitality, logistics, trade, infrastructure, energy, metallurgy, textiles, and agriculture. Plans for a joint fund to support these projects were also discussed, following a joint "road map."
An international corridor will be established, connecting Uzbekistan, Turkmenistan, Iran, and Türkiye
In Tashkent, a protocol establishing an international multimodal corridor between Asia and Europe through "Uzbekistan – Turkmenistan – Iran – Turkey" was signed. Ministries of transport from Uzbekistan, Turkmenistan, Iran, and Turkey agreed to facilitate cargo transportation from Asia-Pacific countries to the European Union through their territories.
1.5 NORTH & SOUTH AMERICAS
Minister of Foreign Affairs of the Republic of Uzbekistan held a meeting with the US delegation led by the US Assistant Secretary of State for South and Central Asian Affairs. During the negotiations, the parties discussed a broad agenda of bilateral cooperation and identified priority areas, especially aimed at regional economic prosperity.
Uzbekistan and the United States signed an agreement on cultural heritage
An agreement on import restrictions for archaeological and ethnological materials of Uzbekistan was signed between the governments of Uzbekistan and the United States in Tashkent. The agreement, signed by Director of the Cultural Heritage Agency, and US Ambassador, outlines restrictions on the import of culturally significant items into the United States to prevent looting. The agreement also includes provisions for training specialists in the field and facilitates joint exhibitions to promote cultural heritage between the two countries.
The United States confirmed support for Uzbekistan’s accession to the WTO
The United States expressed support for Uzbekistan's accession to the WTO and applauded ongoing economic reforms during the third Strategic Partnership Dialogue. In a joint statement, Deputy Minister of Foreign Affairs of Uzbekistan Gairat Fozilov and US Assistant Secretary of State for South and Central Asian Affairs Donald Lu affirmed their commitment to increasing and diversifying trade and investment between the two countries. The meeting took place on November 7 in Tashkent, and the joint statement was released by the US State Department.
1.6 INTERNATIONAL ORGANIZATIONS
Uzbekistan Hosts 16th ECO Summit Under the Chairmanship of H.E. President of the Republic of Uzbekistan. Key highlights include:
Sectoral Progress: The summit reviewed post-pandemic activities, emphasizing progress in trade, transport, energy, tourism, and agriculture. Member countries were urged to actively support ECO’s sectoral initiatives for shared and sustainable progress.
Uzbekistan's Initiatives: Uzbekistan's proposals for joint action plans, including an International Industrial Exhibition in 2024, received commendation for accelerating regional economic integration.
Positive Trends: The importance of year-wise conceptual themes and ECO Tourism Capitals was highlighted as positive trends supporting the organization's multifaceted agenda.
International Cooperation: Leaders stressed the need for enhanced international cooperation to address geopolitical challenges and acknowledged ECO's efforts to increase global visibility through partnerships.
Parliamentary Diplomacy: The growing role of the Parliamentary Assembly of ECO Member States (PAECO) was recognized, underlining the significance of parliamentary engagement in global relations.
Humanitarian Issues: The summit addressed the situation in Afghanistan, calling for increased humanitarian assistance, and urged a more serious international response to escalating tensions in Palestine and deteriorating conditions in Gaza.
ECO Award Winners: Individuals were recognized for scientific and educational contributions through the announcement of ECO Award Winners.
In summary, the ECO summit showcased a commitment to regional unity and global cooperation, addressing economic integration, humanitarian concerns, and fostering partnerships for shared progress.
Joint initiatives with the United Nations in the area of climate change.
Chairman of the Senate of the Oliy Majlis, met with Assistant Secretary-General of the UN and Director of the Global Forum on Greening and Forests, during her working visit to Uzbekistan. Discussions focused on developing multilateral cooperation, particularly in healthcare, ecology, and climate change. The meeting concluded with an agreement to systematically continue the dialogue, focusing on sustainable development, human rights protection, and expanding jointly implemented projects.
Uzbekistan offers ECO countries to simplify trade
Uzbekistan has proposed the adoption of an Agreement on Trade Facilitation within the Economic Cooperation Organization (ECO) during the ECO Summit in Tashkent. President emphasized the need for a fresh approach to overcome restrictions and issues hindering trade within ECO countries. The proposed agreement focuses on facilitating trade in goods and services, addressing technical and non-tariff barriers, promoting digitalization of customs, and developing e-commerce.
2. PUBLIC POLICY
The 13th district will appear in Tashkent - project
A draft resolution proposes changing the boundaries of the Yukorichirchik and Urtachirchik districts in the Tashkent region, as well as the Tashkent region and the city of Tashkent. The resolution suggests forming the New Tashkent district within the city. The Cabinet of Ministers decided to transfer 19,729.41 hectares from the Tashkent region to the city, including land from the Yukorichirchik and Urtachirchik districts.
NAPP: a license was issued to operate a crypto exchange
The National Agency for Prospective Projects of Uzbekistan has issued a license for crypto-asset activities to COINPAY, making it the second licensed crypto exchange in the country. This licensing aligns with regulations on the procedure for licensing service providers in the circulation of crypto-assets. The information about the license has been added to the electronic register of licenses, accessible on the agency's official website.
Heating tariffs for legal entities are being increased in the capital
Heat supply prices in Tashkent, Uzbekistan, have increased by 67.3%, attributed to the introduction of market mechanisms. The basic tariff from Veolia Energy Tashkent is now 664,465 soums per gigacalorie (Gcal). Legal entities will pay 212,606 soums for 1 Gcal, a 1.5-fold increase. Budgetary institutions will pay 801,963 soums per Gcal, reflecting a 59.7% increase. The tariff for the population remains unchanged at 91,960 soums per Gcal. The state budget subsidizes the difference between the base and retail prices.
3.1. LEGISLATIVE CHANGES
Amendments have been made to the Regulations “On the procedure for monitoring and carrying out foreign trade operations”
The Uzbekistan Electronic Information System for the Formation and Maintenance of the State Register of Foreign Trade Operations (UEISVO) now requires information on the export and import of services to be entered no later than the 20th day of the month following the month in which the relevant act was drawn up. Previously, there was a one-day deadline for submitting these acts.
The procedure for concluding cooperation agreements with entrepreneurs has been changed
Amendments and additions were made to the Program "20 thousand entrepreneurs - 500 thousand qualified specialists." The changes grant the right to conclude cooperation agreements with business entities creating over 200 jobs under the program to the First Deputy Minister of Poverty Reduction and Employment and the Minister of Economy and Finance, expanding the scope beyond ministers. The resolution came into force on November 6, 2023.
A number of legislative acts will be brought into line with the new Constitution
The President of Uzbekistan issued a decree introducing amendments and additions to 14 acts in connection with the adoption of the Constitution of Uzbekistan in a new edition. The changes include determining the procedure for electing key officials, abolishing restrictions related to public service, and addressing the minimum wage to ensure a decent standard of living.
The list of activities for the self-employed has expanded by 19 points
President has signed a decree expanding the list of activities for self-employed individuals in Uzbekistan. Nineteen new types of activities have been added, bringing the total to 101. The newly included activities range from making clothes and beehives to growing mushrooms and producing handmade carpets.
3.2. GOVERNMENT APPOINTMENTS
Uzbekistan’s Ambassador to Canada with headquarters in Washington.
Appointed - Furkat Sidikov Ambassador of Uzbekistan to the USA
Ubekistan’s Ambassador to the UK
Appointed - Ravshan Usmanov
Previous position - Uzbekistan’s Ambassador to Malaysia (2018-23)
4.1 KEY ECONOMIC INDICATORS, LOANS, & PUBLIC FINANCE
Uzbekistan's national debt exceeded $31 billion.
In H1 2023, Uzbekistan's public debt increased by $2.3 billion, reaching $31.5 billion. The external public debt remained at $25.9 billion, while internal debt rose to $5.6 billion, resulting in a debt-to-GDP ratio of 36.6%. Funds raised were allocated across various sectors. Major creditors included China, Japan, South Korea, France, and Russia, along with institutions like the Asian Development Bank and the World Bank. Uzbekistan plans to allocate 8.2 trillion soums for interest payments in 2023, with a projected gradual increase in the debt-to-GDP ratio in the coming years.
The maximum size of microloans is increased to 100 million soums
The program for increasing microfinance service accessibility from 2024 to 2026 aims to achieve various targets, including a fivefold increase in the microfinance market volume and coverage for over 1 million business entities. Notable changes include doubling the maximum size of microloans, permitting microfinance organizations to attract funds in foreign currency, and easing requirements for acquiring shares in non-bank credit organizations. Additionally, a new microfinance organization specializing in microfinance services will be established.
How much has the number of enterprises with foreign investment increased over the past five years?
As of October 1, 2023, the number of registered enterprises with foreign investment in the republic amounted to 17,782 units, and compared to the corresponding period in 2022, it increased by 1.2 times. Their dynamics over the past few years are as follows:
In 2019 – 10,080 units.
In 2020 – 11,903 units.
In 2021 – 13,693 units.
In 2022 – 15,245 units.
In 2023 - 17,782 units.
Mortgage subsidies resumed in Uzbekistan.
Uzbekistan is resuming state subsidies for mortgage loans, as announced by the Unified Portal of Interactive Public Services. The subsidies target low-income families seeking better housing conditions, based on social criteria set by the government in March 2020. Eligibility varies based on location and income, with specific income ranges set for rural areas, cities in Karakalpakstan and regions, and Tashkent.
4.2 TRADE AND BUSINESS
Uzbekistan exports textile products to 58 countries
In January-September 2023, Uzbekistan exported textile products worth $2.33 billion, the Statistics Agency of Uzbekistan reports. This figure amounted to 13.2% of total exports in the current period. The main share in exported textile products was occupied by finished textile products (41.4%) and yarn (40.4%). Since the beginning of the year, 582 types of textile products have been exported to 58 countries.
Turkish company investing $250 million for construction of power plant in Kashkadarya
AKSA Enerji is set to invest $250 million in constructing a 400 MW gas piston power plant in the Nishan district (Kashkadarya region) under a public-private partnership (PPP) framework. The Turkish company will handle the design, financing, construction, and operation of the power plant for 25 years. Construction is scheduled to commence in December 2023, with the plant expected to be operational by the end of 2024. A separate agreement for the guaranteed purchase of electricity for 25 years was also signed between JSC National Electric Networks of Uzbekistan and AKSA Enerji.
State Enterprise Navoiuran and CNNC signed a memorandum of strategic cooperation in the uranium industry
The agreement was formalized during a visit by a delegation from Uzbekistan to Beijing for the first international forum on the development of the natural uranium industry. The memorandum outlines areas of strategic collaboration and investment projects in the uranium sector. The delegation from Uzbekistan also had discussions with CNNC Vice President Shen Yanfeng and visited facilities showcasing modern digital technologies in uranium mining and processing.
MIIT and KfW signed a number of bilateral documents
Minister of Investment, Industry, and Trade of Uzbekistan, and Manager of the German Development Bank KfW, Vitalis Ritter, signed several bilateral documents, including:
Grant agreement for the project "Support for vocational education in the Republic of Uzbekistan." This agreement allocates €16 million in grant funds for vocational training, with €14 million for the construction, repair, and equipment of single-center employment centers in Uzbekistan and €2 million to support the project.
Grant agreements for the project "Modernization of the system of training and advanced training of medical personnel in the city of Termez" and related measures. These agreements involve the creation of a simulation training center in Termez with €13 million and grant funds of €500 thousand for expert services and personnel skills improvement related to the project.
Wehrhahn will launch aerated concrete production in Namangan for 40 million euros
Wehrhahn GmbH, in partnership with Namangan Cement, will invest 40 million euros in aerated concrete production. German Bio Energy-Land plans a 14 million euro investment in closed vertical greenhouses, and Vollert Anlagenbau GmbH is interested in new construction projects in Namangan. Textima Export Import will establish a representative office in the region.
4.3 BANKING & FINANCE
“Tashkent-Central”, “Samarkand” and “Kokand” railway stations to be leased to entrepreneurs
In a move to digitize business processes and enhance the management of railway transportation, Uzbekistan's President issued a decision on the fundamental reform of the railway transport sector. Effective November, Uzbekistan Railways JSC will lease the "Tashkent-Central," "Samarkand," and "Kokand" railway stations, along with their vacant areas, to entrepreneurs through public-private partnerships and contracts. This initiative opens up opportunities for entrepreneurs to rent spaces and develop various businesses, such as offices, hotels, stores, service stations, and shopping centers, within the railway stations. The selection process for entrepreneurs interested in renting these spaces will be conducted through the E-auksion platform, as outlined by the Cabinet of Ministers.
ADB allocates $50 million to support privatization of state banks in Uzbekistan
Asian Development Bank (ADB) and Uzbekistan’s Sanoat Qurilish Bank (SQB) signed a senior convertible loan of $50 million to support the privatization of state-owned banks in Uzbekistan. The loan aims to strengthen the banking sector, promote economic growth, and create jobs. The ADB will provide technical assistance to support SQB in implementing its transformation roadmap. The privatization of state-owned banks is part of Uzbekistan's broader market reform agenda initiated in 2017. Access to financing for micro, small, and medium-sized enterprises is a key focus, given their significant role in Uzbekistan’s economy.
The Central Bank of Uzbekistan renewed the license for the Oson service
The Central Bank of Uzbekistan has renewed the license of the Oson payment service, which was suspended a month ago without specifying the reasons. Earlier, in August, the regulator fined Oson, after which this payment service and a number of others stopped conducting international transfers and paying for foreign services.
4.4 ENERGY & PETROCHEMICALS
Cengiz Energy San. ve Tic A.Ş. will build a power plant in Jizzakh region
Uzbek President approved a 550 MW steam gas power plant in Jizzakh, with Cengiz Enerji San. ve Tic A.Ş. as the investor. Originally planned for 400 MW, later adjusted to 450 MW and then 500 MW, the final decision is 550 MW. The project's investment exceeds $500 million, aiming for operation by 2025, generating 4 billion kWh annually, and saving 700 million cubic meters of gas. The President allocated funds for gas supply infrastructure and instructed relevant bodies to sign contracts for gas and water supply. The plant will be in Sharaf-Rashidov district, Jizzakh, with a 9.54-hectare land. The project company must provide a $2 million guarantee. The company commits to selling electricity to "National Electric Networks of Uzbekistan," with a 25-year fixed tariff purchase in foreign currency, paid in the national currency.
An energy market regulator is being created in Uzbekistan
Uzbekistan is setting up the "Agency for the Development and Regulation of the Energy Market" as an energy market regulator, according to a presidential decree from September 28. The agency will oversee the transition to a competitive electricity market by 2025, license market participants, and determine tariffs. While the initial plan involved three phases, adjustments aim for a clearer market-driven approach by 2023. However, these transitions are still in progress.
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