Uzbekistan is on Way to Radically Improving the Investment Environment

Investments are an important capital that launches and ensures the development of the economy of any country, since it directly depends on the flow of investments. Capital does not come on its own. To do this, it is necessary to improve the environment, strengthen the legal framework, and carry out consistent reforms aimed at protecting the interests of investors. Uzbekistan, which has opened up to the world, has already taken a step in this direction.

A platform for fruitful cooperation

The regular holding of the Tashkent International Investment Forum, the prestige and scale of which is constantly growing, is proof of this. As President Shavkat Mirziyoyev emphasized during the presentation of preparations for the third Tashkent International Investment Forum, if the first one in 2022 was attended by more than a thousand foreign guests from 56 countries, this year more than 2,500 people from more than 90 countries are participating. Among them are government representatives, heads of large companies, high-ranking guests from international organizations – the UN, EBRD, OPEC, SCO.

The forum is a convenient platform for demonstrating the economic capabilities of our country and agreeing on mutually beneficial projects. More than 40 events take place within its framework, including sectional sessions, round tables, presentations, and meetings of intergovernmental commissions. Launch ceremonies for a number of projects in our country are also planned. The event serves as a presentation platform for promising projects needed by the economy of Uzbekistan, provides foreign investors with opportunities, created conditions and attractive directions.

Assessing the investment attractiveness of a state and taking into account its capabilities is an important task for an investor. In Uzbekistan, the priority task is to constantly improve the investment environment, as the country is interested in attracting foreign investment into the national economy. This requires any state to develop its own investment policy. It defines unique areas for attracting foreign investment, a system for stimulating them and establishes legal norms for investment activity.

World experience shows that those countries that pursue an active investment policy achieve sustainable economic growth. Because investments are its driver. By actively attracting capital and launching new production facilities, we can achieve rapid development of our economy. Positive results, in turn, create opportunities for a systematic solution to accumulated problems in the social sphere.

On the other hand, attracting foreign investment has a positive effect on the growth of labor productivity in the recipient country. They promote the introduction of new goods, services, technologies that were not previously available in the country and that are intended for sale on the domestic or foreign market. This has a positive impact on capital funds, since national producers often do not have the necessary knowledge, technical equipment and technology to produce such goods or provide such services. Another important significance of international capital is that it helps strengthen foreign economic and political relations, increases production and foreign trade, accelerates economic development, increases the competitiveness of manufactured products on the world market, expands the technical capabilities of importing countries and increases employment in the country. Foreign investment also increases the ability to introduce new technologies and know-how.

The world is undergoing a process of globalization. Joining it means cooperation with leading countries, coordination of the economic, political and social policies of the state on a mutually beneficial basis with the policies of these countries. From this point of view, Uzbekistan plays an important role in the world community due to the level of socio-economic development, geographical location, composition and reserves of natural resources, government investment policy, and other factors. This indicates the need to create a favorable environment for attracting foreign capital.

The basis for success is a favorable business climate

In order to increase the attractiveness of the investment climate, on August 1, 2018, the President signed the Decree “On measures to radically improve the investment climate in the Republic of Uzbekistan.” According to the document, foreign citizens and stateless persons investing in Uzbekistan received the right to a multiple-entry visa for three years with the possibility of unlimited extension of validity without the need to leave the country. The minimum required amount of foreign investment in the authorized capital of companies with foreign investment has also been reduced from 30 to 15 percent. In addition, the requirement for the participation of a foreign legal entity as a participant in a company with foreign investment was canceled.

The Law “On Investments and Investment Activities” reflects measures to reduce the tax burden for investors and simplify the tax system, as well as reforms of tax policy and tariff management aimed at supporting a healthy competitive environment, which are being carried out at high speed in Uzbekistan.

There is an intense international struggle in the world to attract foreign capital. In developed countries, every year a variety of innovative tools are created that help increase the attractiveness of the investment environment, which is due to the volume of foreign investments, their quality and the use of favorable conditions.

Uzbekistan is also actively creating favorable conditions: foreign investors are provided with financial preferences and rights, and market infrastructure is being formed. In this context, it is worth mentioning that we first adopted an Action Strategy for the development of the country, then a Development Strategy, within the framework of which the path of large-scale democratic reforms was chosen. The programs of these transformations cover all spheres of the state and society and include ensuring the rule of law, developing competition, and fighting corruption. In particular, in 2017, free conversion of the national currency, the soum, was introduced, and all restrictions on the repatriation of profits by foreign investors were lifted. Our banks and large companies received international ratings for the first time and entered global financial markets, where international bonds were issued in national currency.

Openness in action

The flow of investment also depends on the openness of the country. To ensure a policy of openness, the possibility of visa-free entry into Uzbekistan was created for citizens of more than 90 foreign countries. Citizens of dozens of other countries are given the opportunity to obtain a visa using a simplified procedure. According to these indicators, Uzbekistan ranks as the most open country in the region.

Investors do not go to a state where corruption is entrenched. The fight against this phenomenon has become one of the priority areas of state policy in our country. A special agency has been created to strengthen the fight against corruption.

Investors are also wary of investing in a country where human rights are violated and fear that their funds will be stolen. Therefore, ensuring and protecting human rights and freedoms is also a priority. The National Human Rights Strategy was adopted four years ago. For the first time in history, Uzbekistan was elected a member of the United Nations Human Rights Council.

The transformation of Uzbekistan into a democratic state where law and justice prevail, the formation of an independent and strong judicial system were identified as one of the main goals. Measures are being implemented to develop civil society, ensure freedom of speech, create a democratic media space, transform the media into the “fourth estate,” and increase the responsibility of government bodies to society, which has already led to noticeable results.

To guarantee fundamental human rights and freedoms, a new version of the Constitution has been developed. Forced labor, including children’s, was finally banned, which for many years was the reason for Uzbekistan’s inclusion in blacklists. In recognition of this, the international coalition of non-governmental non-profit organizations “Cotton Campaign” and famous world brands canceled the boycott of Uzbek cotton and textile products and again began to establish cooperation with our country.

All conditions for doing business

Tax benefits are also an attractive factor for investors. In Uzbekistan, the value added tax rate has been reduced to 12 percent. Dividends from shares of foreign investors are exempt from income tax for three years. No new or tougher penalties are introduced into tax and customs laws.

Foreign trade is being liberalized. In particular, customs duties have been abolished on more than 7 thousand types of raw materials and goods needed by investors. A simplified procedure for processing in the customs zone has been introduced. The process of Uzbekistan’s accession to the World Trade Organization is accelerating in order to enter new markets, and laws are being adopted in this direction.

The executive system has also been reformed and the bureaucracy has been reduced. 500 government functions regulating business were abolished, 70 of them were transferred to the private sector on the basis of public-private partnerships and outsourcing. As of today, 132 licenses and permits have been cancelled, and a notification procedure has been introduced for 33 species.

As part of the ongoing reforms, a unified system of working with investors has been introduced. The Ministry of Investment, Industry and Trade has established a one-stop system that helps investors at all stages – from project initiation to its launch. To quickly resolve the problems of investors, their proposals and recommendations, and to organize a direct dialogue with the head of state, the Council of Foreign Investors under the President was created. Its next meeting is scheduled for May 3.

Protection of the rights of entrepreneurs has also been strengthened. The conditions for purchasing real estate, coming to Uzbekistan and living for foreign investors have been significantly simplified. Administrative courts are given significant powers to protect the rights of investors. An entrepreneur and investor does not need to prove the correctness of their claims in court. The state body is obliged to prove the legality of its decision. Any ambiguities that arise are now resolved in favor of investors. This year the activities of the International Commercial Court will be launched in the country for the first time. Such economic opportunities and guarantees produce results. Almost one hundred thousand enterprises were created last year alone. The volume of attracted foreign investment reached $10 billion, which is three times more than in 2017.

For the first time in the history of New Uzbekistan, the fight against poverty became one of the main goals of state policy. This is no coincidence. The investor is interested in selling his products and, therefore, is interested in purchasing power in the country where he invests. From this point of view, a separate strategy has been adopted. In a short period, more than two million people were removed from the category of needy. The reforms are producing positive results.

Priority areas for investment

There are many areas and areas that may be of interest to investors.

The first direction is the green economy. Uzbekistan strives to improve the environment and increase economic efficiency by reducing the use of traditional energy sources and introducing the potential of alternative energy. In this direction, the world’s leading companies are already implementing projects to create solar and wind power plants. More than two thousand megawatts of capacity were put into operation in 2023, and this year it is planned to launch eight thousand megawatts of capacity. The green economy is also stimulating new industrial trends. This makes it possible to invest eight billion dollars in the area.

The second direction is public-private partnership. As a result of reforms, previously closed sectors are now actively attracting private investment. For example, in the airline industry, which was previously entirely government owned, opportunities are now wide open for the private sector. In addition, fast-growing industries such as information technology, tourism, education, and medicine are turning Uzbekistan into a regional hub. In 2023, special programs were developed to introduce public-private partnerships worth $14 billion, covering key sectors for the state, such as transport, utilities, water supply, and healthcare.

The third direction is the privatization of state property. Last year, a program was adopted that provides for the public auction of state shares in a thousand enterprises, as well as thousands of state-owned real estate, and the launch of 40 strategic enterprises for IPO.

The fourth direction is industrial development. Today, Uzbekistan has a sufficient amount of raw materials and qualified personnel in the textile industry, leather and footwear industry, production of building materials, electrical engineering, and mechanical engineering. There is scope for doubling production and exports in these areas. This requires cooperation with major brands, access to foreign markets, innovation and modern technologies.

The fifth direction is cooperation with neighboring countries. Currently, joint investment funds have been created with Kyrgyzstan, Tajikistan, Kazakhstan and other countries and large regional projects are being implemented in the fields of industry, energy, transport, and water management.

Uzbekistan provides investors with legal guarantees, separate technology parks and industrial zones, additional preferences and is always ready to expand them. The desired peace and stability, a convenient investment environment and the necessary guarantees have been created for investors.

Irreversible nature of reforms

A significant and important achievement is the irreversible nature of reforms in Uzbekistan. It is especially important that the Development Strategy of New Uzbekistan, developed on the basis of the principle “Human interests above all,” is aimed at developing civil society and human capital, further stimulating entrepreneurial activity, protecting the rights of investors, the inviolability of private property and ensuring gender equality.

Economic and political sustainability in our country is achieved through the implementation of a strategy aimed at ensuring large-scale administrative reforms, improving the quality of life, creating more favorable conditions for business through the implementation of large-scale administrative reforms and digitalization. This helps improve the efficiency of the government system and helps entrepreneurs and investors create more convenient business conditions.

In this context, special attention is paid to the role and success of the state in the economy, focusing on its expansion and attracting investors. In particular, through the specialization of state assets with the help of international financial institutions and external consulting firms, it is planned to abolish exclusive rights to state assets until 2026, specialize state-owned enterprises in at least 25 sectors, close monopolies in more than 25 areas of activity, and continue the process of transformation in commercial banks , increase the share of special sectors in bank assets to 60 percent and reduce the number of state-owned enterprises by at least three times.

In order to develop public-private partnerships with foreign investors in energy, transport, healthcare, education, infrastructure development and road construction, it is planned to implement more than 200 projects with a total value of over $15 billion.

Expanding presence in global markets

Uzbekistan is striving to increase its share in world markets by producing significant volumes of export-oriented products. In this regard, it is important that the country becomes a full member of the World Trade Organization in the coming years. We have now begun to export products to regional markets of more than 280 million consumers through free trade zones. In addition, Uzbekistan has access to the European market for more than 6 thousand types of goods within the framework of the extended system of preferences of the European Union “GSP+” with special export conditions.

The state leadership has taken historic measures to ensure the interconnection and interdependence of Central and South Asia. By diversifying existing transport corridors in Uzbekistan, opportunities are created for the export of products produced in the country to South Asia through the Trans-Afghan Corridor, to the Asia-Pacific region through the Uzbekistan-Kyrgyzstan-China railway route, as well as through a multimodal transport corridor passing through the South Caucasus to European countries. All measures taken are aimed at strengthening the investment attractiveness of our country, improving the business environment and ensuring its stability.

As a result of ongoing reforms, domestic goods production is expected to increase to $100 billion and annual exports to $30 billion in the coming years, with 80 percent of the increase in production coming from special sectors. Uzbekistan sets itself the goal of achieving a high level of income for citizens by 2030, attracting the attention of investors from countries that are currently leaders in per capita income.

In the context of a difficult global situation, the interest and attractiveness of Uzbekistan as a safe and stable place to work among investors will only grow.