Mehmood Ul Hassan Khan
Foreign investors and businessmen are like migratory birds that are always in search of safe haven in shape of political stability, skilled man power, macro-economic stability, legal guarantee, energy self-reliance, sound banking system and the last but not the least, better law and order. Foreign investors are also in search of investment and business policies, deregulation, and liberalization of economy, decentralization, and active private sector. The Republic of Uzbekistan stands for these above mentioned qualities and is now safe haven for all kinds of FDIs, FPIs and JVSs.
The Republic of Uzbekistan is an ideal hub for Foreign Direct Investments (FDIs) and Joint Ventures (JVs). It always encourages public-private sector investments for further speeding of macro-economy in the country. It has firm belief in rigorous commercial diplomacy. It has already built so many economic free zones for the further strengthening of bilateral socio-economic relations and massive industrialization. It offers unlimited incentives for the local as well as international investors to make investments in its country. Its government is investment-business friendly.
Right from the beginning, Uzbekistan has introduced many short and long terms meaningful economic and financial reforms to make the country an investment and business friendly country. It promotes high tech industries. It introduces high quality input in the domestic market. It broadens the product mix of national exports. Ultimately it enhances country’s overall attractiveness.
Uzbekistan’s legal framework always supports FDIs. It guarantees FDIs. Government has already cancelled 160 licensing procedures and requirements for obtaining a license for 19 types of business activities. Moreover, statistical and tax reporting has been reduced in the last few years. Easy and speedy framework of licensing makes it an ideal hub of all kinds of FDIs, FPIs and JVs. According to National figure (2014), it attracted more than 4.5 billion US dollars FDIs in different sectors of the country.
Due to Uzbekistan’s most friendly investments and business conditions there are more than thousand enterprises have established with participation of foreign investments, including the world famous corporations, such as “General Motors”, “MAN”, “Knauf”, “Itochu”, “Rieter”, “Klaas”, “Nestle”, “Coca-Cola”, “Kogas”, “Sasol”, “Ariston”, “CNPC”, “Indorama”, “Gazprom”, “Lukoil”, “Algie”, “Lotte”, “Sumitomo and “Korea Telecom”. They all appreciated the competitive advantages of Uzbekistan and favorable investment climate.
It is the blessings of high inflows of FDIs that numerous investment projects of high-tech industries are now producing further enhancing its comparative advantage in so many diversified but integrated products. Mega projects of cars & engines by “General Motors”, trucks with “MAN”, the construction of Ustyurt Gas Chemical Complex at Surgil deposit of gas processing and production of polyethylene and polypropylene, plant for the production of synthetic liquid fuel based on GTL technology in Kashkadarya region, organization of full-scale production of modern textile equipment from the Swiss company “Rieter” and many others have already made inroads in its national markets. They are the successful by-products and models of its successful policies of FDIs.
The Republic of Uzbekistan has tremendous potentials to offer unlimited opportunities for the interested investors and businessmen in different sectors in the country. Its macro-economic analysis reveals the elements of stability and sustainability which are essential ingredients for attracting more and more FDIs and JVs.
Its skilled and motivated human resources are the real assets of its country which make decisions and things easy for the interested investors and businessmen.
Its high education level is a blessing and one of the main contributors for the FDIs and encourages more and more foreign investors, businessmen and public-private partnership to investments in the country. It has one of the highest education rates in the CIS.
More than half of the population of Uzbekistan is young people who take the mandatory 12-year education and receive in-depth knowledge of at least 2 modern professions, information technologies, and learn at least two foreign languages. It provides real value-addition to all the investors and businessmen.
Leading European, Asian and Russian universities and especially the British Westminster University and Singapore Institute of Management and Development, Turin Polytechnic University, Moscow State University and others have their campuses in different parts of Uzbekistan.
Political stability is one of the key factors in attracting FDIs. It brightens the chances of attracting high inflows of FDIs and JVs. It showcases government’s writ to safeguard the commercial, legal, business and investments vested interests of the interested investors and businessmen in the country.
It promotes senses of security and safety among the investors and businessmen. It reduces sentiments of uncertainty. It marginalizes political risks which are anti-investments and businesses. Long spell of unprecedented political stability is the trademark of Uzbekistan’s leadership and its people. It further cements stability and sustainability in macro-economy. It revolutionizes socio-economic prosperity in the country.
It experiences high rates of GDPs exceeding to 8 percent over the last 10 years, one of the highest rates in the world. Over the past decade, the economy of Uzbekistan has doubled which is because of political stability. According to official figure, since 2005, Uzbekistan maintains a positive trade balance, government budget surplus and balance of payments. Moreover, IMF, World Bank, Asian Development Bank and other international rating agencies predict its brighter socio-economic development in the future.
Its energy diversification and independence has already made it a safe haven for all the interested investors and businessmen. It national energy policy is investment-business friendly.
It secures the vested interests of all the investors. It is strategic cushion for all the investors. It has no darkness in shape of sever load-shedding, line losses or transformation failures in the country. Its energy self-reliance makes things easy for the investors.
It is among the top ten countries in terms of reserves of oil and gas, coal and uranium. Its electricity price is 4 times lower than the average price paid by industrial customers in developed countries.
Moreover, it is blessed with huge reserves of minerals and natural resources. It occupies leading positions in the world in terms of gold, uranium, copper, silver, lead, zinc, tungsten, rare metals and other resources which makes its case strong for attracting more and more high inflows of FDIs in the country.
Due to rigorous economic, financial, banking reforms and massive industrialization, Uzbekistan is now the most diversified economy in Central Asia.
Uzbekistan is the only Central Asian state producing a wide range of modern cars, trucks, high-quality agricultural machinery from the mini-tractors to harvesters, the region’s largest producer of chemical, textile, food, building materials, electronics and electrical engineering products. Its macro-economy’s diversification is the encouraging sign for all the investors and businessmen.
Uzbekistan has advantageous geographical location which is an indeed a comparative advantage. Its proximity to major markets is another attractive factor of Uzbekistan for foreign investors. It possesses the largest consumer market in the region with more than 30 million people. It is about half of the total population of Central Asia. More population means more consumer market which brightens the chances of inflows of FDIs and JVs.
It has well-developed transport infrastructure. Its enterprises have the opportunity to enter the largest and fastest-growing markets in Central Asia and Afghanistan (with a population of over 90 million people), CIS countries (with a population of over 300 million people), West and East Asia, as well as Europe. It enhances interconnectivity. It already signed Free Trade Agreements (FTAs) with 11 CIS countries provide duty-free importation of Uzbek producers’ goods to these markets which may be value-addition for all the interested investors.
Moreover, it has agreements with 45 countries on providing Most Favored Nation (MFN) treatment, which improves the competitiveness of Uzbek products on foreign markets.
It has stable and sound banking system. It serves as an important link in the implementation of active investment policy for realization of strategically important projects aimed at modernization, technical and technological renewal of leading sectors of the economy, the financial support of small business and private entrepreneurship, providing high quality banking services to individuals.
Moreover, consolidation of banking system has created prerequisites for reducing the Central Bank refinancing rate from 12 percent to 10 percent in 2014, and corresponding reduction in interest rate on loans of commercial banks.
The leading rating agencies such “Moody’s”, “Standard & Poor’s” and “Fitch rating” evaluated the activities of Uzbekistan’s banking system as “stable”. In 2011 its 13 domestic commercial banks received the highest rating scores, at present; all 26 banks of the country have been awarded such an assessment.
Uzbekistan has so many Free Economic Zones (FEZs) which are providing unprecedented benefits and preferences to investors in “Navoi” Free Industrial Economic Zone and Special Industrial Zones “Angren” and “Jizzakh”. Investors and businessmen of these areas are exempt from almost all types of taxes, depending on the amount of investments from 3 to 15 years (FIEZ “Navoi”), and from 3 to 7 years (SIZ “Angren” and “Jizzakh”).
The Republic of Uzbekistan has lots to offer to all the interested foreign investors and businessmen. There is great opportunity to invest in its oil & gas sector, hydrocarbon raw materials and production of high value added products; chemical industry, in particular, the production of polyvinyl chloride, plastics, new types of chemical fertilizers; mechanical engineering; electro-technical field; production of construction materials; textile industry; mastering of mineral resources, including search and joint development of new deposits of natural resources; introduction of alternative energy sources; information technologies.
Concluding Remarks
The Republic of Uzbekistan is a safe haven for all the foreign investors and businessmen alike. It offers rich natural resources as well as political and economic stability. Its investment-business friendly policies are there to attract more and more inflows of FDIs, FPIs and promote JVs. Its rich human resources, knowledge based economy, divarication of energy mix and production channels and the last but not the least, supportive geographic location and advanced infrastructure are blessings for all the interested investors and businessmen.