More than 270 investment projects will be implemented in Uzbekistan during the next five years.

Manufacturing industry requires a special approach. It is impossible to be competitive in today\'s world without having a strong policy and strategic vision of the situation, especially in times of economic globalization and open markets. Energy efficiency and research intensity run the show on the global industrial market, and domestic producers have all chance to gain a foothold on it. The ground for this has already been prepared. It is mainly about rightly chosen development strategy, based on import substitution, localization and modern technologies. The next step will be to boost one\'s position on the global economic arena and to continue dynamic progress.

PRIORITIES

Uzbekistan\'s industry faces new challenges in current conditions; if they will not be overcome the economy could lose its competitive advantage. All major domestic enter¬prises and factories of the country have undergone technical audit last year. During the audit, 37,000 equipment and outfits were characterized as \"did not meet international criteria\", and it was decided to replace them by modern ones. Exactly these tasks made the basis of Uzbekistan\'s 2012 Investment Program.

This document was developed to ensure the implementation of strategically important investment projects on construction of new state-of-the-art facilities, modernization, technical and technological renovation of enterprises, accelerated development of modern network of transport, engineering, communications and social infra¬structure, and on this basis to create new jobs and provide sustain¬able and dynamic development of the economy. In tote, 23.6 trillion soums (Exchange rate of CB 1USD-1846,65 soums) of capital investment are planned to be drawn in the country under the program, more than 5.74 billion soums of them are centralized funds, and 17.9 trillion soums are non-centralized investments. Also, Uzbekistan plans to attract 1.7 trillion soums of foreign investment and loans under state guarantee. Some more 4.3 trillion soums will be attracted as direct foreign investment and loans.

According to experts the domestic economy has large untapped reserves for future growth, because the industry is still too material consumptive and energy intensive. Resolving this issue is the main task set by the head of state at the meeting of the government on results of 2011. The main emphasis in the near future will be done on the introduction of energy-saving technologies, alternative energy and advanced products quality control systems.

The country has developed a set of measures for this year, aimed at reducing the costs in the industry for 11.2%. This document will become the basis of Uzbek economic strategy to reach, during medium term, the level of developed countries. Of course, all that is just the first step in this direction. Tremendous amount of work have to be done by domestic enterprises, and in no time. This is due to the instability of the global economy, reduced demand for raw materials and rising competition on the market of finished products. Alongside, the economy should be structurally diversified; the share of high-tech and knowledge-intensive industries must increase in it.

It is also important in this regard, that there was established a program of top priority measures to improve production and development of new types of competitive products in the country. It is planned to implement under the document more than 270 investment projects worth $6.2 billion during 2012-2016. It should be noted that over 100 of them will be implemented in an expeditious manner due to reduced time on preparation and implementation of construction and commissioning.

The construction of Ustyurt Gas-Chemical Complex and capacity expansion operations at potash fertilizer plant Dehqonobod are among the major projects.

The construction of Ustyurt Gas-Chemical Complex is the largest joint project between Uzbekistan and South Korea. The presidents of the two countries made official launch of the construction works in late August last year in Tashkent. It is planned that after commissioning the gas-chemical complex will produce annually up to 400,000 tons of polyethylene and 100,000 tons of polypropylene. With these figures it will be the largest of such complexes among the CIS countries. And Karakalpakstan, where the project is being created, will become one of the largest industrial centers of the country. Beside this, new related industrial enterprises could be opened in other regions of Uzbekistan; it will add new job seats.

With regard to capacity extension at Dehqonobod plant, the Chinese CITIC International Cooperation Co. Ltd will build a processing complex, which will produce 400,000 tons of potash per year for $116.3 million. While Russian ZUMK-engineering will build a mining complex for the extraction of 1.4 million tons of sylvinite ore, a freight cableways for transport of 2.1 million tons of ore per year, and objects of external power supply for a total of $122.3 million. It is scheduled that all works will be completed before the end of 2013.

Important role in financing the modernization projects is fulfilled by the Reconstruction and Development Fund of Uzbekistan. This year alone, the Fund will send more than $758 million on financing of 29 strategic investment projects; it is 38.2% more than was spend last year. The authorized capital of the Fund will be increased by 50% within the next five years in order to expand the role and scope of the Fund in the projects of modernization and technical re-equipment of production facilities in the country, as well as to strength its resource base. Today, the Fund\'s authorized capital is $10 billion; by 2016 it is projected to reach $15 billion.

A STARTING POINT FOR GROWTH

Energy efficiency becomes one of the main factors of successful\' business development in the current market conditions. Domestic manufacturers are actively introducing new technologies and started to modernize their production. International partnership with leading global financial and credit institutions, such as the World Bank and the Asian Development Bank will play important role in this process. The Board of Directors of the World Bank has approved last year a $25 million worth soft loan to Uzbekistan on the project to improve energy efficiency of industrial enterprises. This project will be implemented within 5 years. The funds will be provided in the form of credit lines to Uzsanoatqurilishbank, Asaka Bank, Hamkorbank to finance investment projects of industrial enterprises for acquiring modern equipment and introduction of energy saving technologies. Here is another important feature of the project. Some part of the funds will be directed on the development of conception of energy efficiency in industry as well as on professional development of workers of various industrial enterprises in matters of advanced energy-saving technologies based on modern approaches to the selection and implementation of investment projects.

Another sector of the economy which has started recently to actively improve its energy efficiency is the power industry. Uzbekenergo in conjunction with the ADB plans to establish modern, precise and reliable digital devices, with high level of protection, in homes of mil¬lions of consumers in Bukhoro, Samarqand and Jizzakh. The meters will work under automated control system, which will reduce excessive use of electricity and will increase the income of energy providing companies. According to experts from the Asian Development Bank, the advanced metering system will significantly reduce commercial losses of Uzbekistan\'s electricity sector. As result, its energy efficiency and financial sustainability will rise.

Also, Uzbekenergo is implementing a project aimed at reducing distribution losses of electricity and introduces automated control systems and electric power calculation, as well as a billing system in Navoi region. In the frameworks of this project, the governments of South Korea and Uzbekistan have signed an Agreement on allocation of $2.5 million grant by the Korean side.

REASONABLE APPROACH

Today, Uzbekistan\'s economic model is justly ranked as one of the most stable and fastest growing in the whole world. Over the past five years, the GDP growth of Uzbekistan made up 8.5%, which is higher than average growth in CIS. If in 2000 the share of industrial production in the total GDP accounted for only 14.2%, in 2011 however it reached 24.1%. This fact is a strong indicator of serious structural and quality changes in national economy.

Emphasis on import substitution and localization of production has become the key for success. It accelerated the domestic industry, allowed to reduce the dependency of the economy on external factors, and enabled full use of domestic production reserves and raw materials.

However, these results could not be achieved without strategic vision of the situation in the early years of independence. Uzbekistan followed step by step, systematic and evolutionary approach, with no abrupt changes, in creating new industrial enterprises and raising the localization of production. The Program of Intensifying Production Localization of Finished Goods, Components and Materials for 2011-2013 has become a benchmark at the present stage of industrial development. It has provided a number of customs and tax privileges to the enterprises engaged in localization projects. The released funds will be directed on the creation of new facilities, as well as on expansion, renovation, modernization, technical and technological re-equipment of existing ones. Some money will also go on the introduction of quality management systems, financial incentives to engineering and technical personnel of the enterprises, funding of research and development activities, and on reduction of production costs.

Just last year, dozens of modern enterprise, specializing in the production of import-substituting products, were commissioned in the country. Here are some of them: the plant of Automobile engines - General Motors Powertrain Uzbekistan; three new companies producing energy saving lamps; commercial production of Samsung\'s washing machines by the joint venture Zenith Electronics; the production of domestic gas cookers, air conditioners and household cleaners under the world\'s leading marks is set up at a number of enterprises in Uzbekistan. 832 localization projects will be implemented by enterprises of the country this year.

Cooperation among related industries is an important component in deepening the process of localization. International Industrial Fair and Cooperation Exchange are annually held in the country; the number of their participants is rapidly growing.

FIEZ Navoi has turned into an important additional element of the industrial potential of the country. The companies of the special zone have released products on 35.9 billion soums during the last year. The implementation of 17 different high-tech projects continues in Navoi today. Construction works have been completed at 12 projects. In the future, this high-tech heart of the domestic industry could become not only regional but also global center of high-tech industry.

Increased support to export-producers could be another good incentive for further industrial growth. Now the companies, that export their products, are provided with a range of measures in support of their activities. Thanks to this, the volume of exports in 2011 has increased by almost 15.4% compared to 2010, and totaled more than $15 billion, or increased 4.6 times if compared with 2000. Positive balance of foreign trade exceeded $4.5 billion. The share of finished goods in to $4.5 billion. The share of finished goods in total exports rose to 60%, whereas it amounted to about 46% in 2000.(Source: Uzbekistan Today Newspaper)