NEWS AND EVENTS
August 7, 2008
Perspective Directions of Attracting Foreign
Investments into the Economy of Uzbekistan
Uzbekistan has been implementing considerable reforms in all spheres of public life. In particular, the course of economic reforms in the country assumed consistent and sustainable nature. The growth of local production and high investment activeness provide for continuous consolidation of market processes in the country.
It can be witnessed in a significant increase of foreign investments and stable growth of production. Consumer market became more saturated while the real income of population has grown for several times.
It is noteworthy that for over the last years the amount of foreign investments and loans attracted into the economy of Uzbekistan has been continuing to grow while the number of projects financed under the Government\'s guarantee has been decreasing.
Thus, last year the amount of investments attracted into the economy of Uzbekistan grew by 23 percent and totaled US$ 1285.9 million. More than 700 new enterprises have been established with participation of foreign investments. On the outcomes of social and economic development of the country in the first half of 2008 the measures on implementation of Investment program, programs of localization of industries, modernization and technical re-equipment of the most important sectors of economy provided for 19.8 percent of growth, including the growth of direct foreign investments by 29.4 percent. One hundred and eighty five new production facilities have been established.
In 2007 the amount of assimilated direct foreign investments increased two-fold compare to 2005 while their share in the structure of gross volume of assimilated foreign capital grew from 73 to 79 percent.
Analysis of geography of incoming foreign investments shows that in 2007 36.3 percent of investments were attracted from CIS countries, 21.9 percent – from European countries and 18.2 percent - from Southeast Asia and Asia. In the framework of Investment Program about 40 countries invested into the economy of Uzbekistan. Russia with a 36.3-percent and Switzerland with a 12.7-percent of total amount of investments are among the top investing countries to the Uzbek economy. Investments attracted from China increased 1.7 times compare to 2006 and totaled US$ 67 million, while the amount of Japanese investments grew three-fold and accounted for US$ 67.31 million. Malaysia, the UK, Germany and Turkey are also among the large investors.
Loans of such financial institutions as ADB, IBD and IBRD enjoy a significant share in financing projects.
Germany is also one of the countries which channeled the largest amount of investments into the economy of Uzbekistan. Nearly 100 investment projects worth more than 1 billion euros have been implemented with participation of German investors.
The UAE companies are planning to partake in implementation of US$ 3.5 billion-worth joint projects in Uzbekistan in 2008-2012. The largest part of investments – US$ 1.38 billion is supposed to be channeled to projects of fuel and energy sector. In the framework of financial cooperation the Emirates credit organizations will allocate to Uzbekistan US$ 288 million-worth of credits for implementation of three projects in the field of land reclamation.
The sector-based orientation of direct foreign investment attraction is significantly expanding. The investment activity in fuel and energy sector, telecommunications and light industry is remaining high.
Thus, in 2007 the largest amount of foreign investments was channeled to:
- Oil and gas sector – 43.9 percent of assimilated funds (US$ 565.45 million);
- Information systems and telecommunications – 16.9 percent (US$ 217.51 million);
- Textile sector – 5.8 percent (US$ 75.10 million);
- Social sphere 4.3 percent (US$ 55.81 million);
- Agriculture and water economy 3.4 percent (US$ 44.85 million).
In 2007 the volume of investments channeled to processing sector of economy increased. Thus, if in 2005 processing sector accounted for only 40 percent of total amount of foreign investments, then in 2007 it reached 57 percent.
At the same time, the share of direct foreign investments to fuel and energy sector grew from 12.3 percent in 2005 to 45.3 percent in 2007. Seventeen investment projects in this particular sector are being implemented in the framework of Program set for 2008. This year it is expected to assimilate US$ 689 million-worth of investments which is 49 percent of all investments, including the projects on developing deposits and conducting exploration with participation of several foreign companies in terms of accomplishing the joint work on polyethylene and polypropylene production.
The implementation of 22 projects was finished last year in textile sector, where more than 9.000 new jobs were created. After reaching estimated production capacity their export potential will account for US$ 120 million per year.
A number of enterprises established with participation of investors from Germany Italy, South Korea, Turkey, the U.S., India, Singapore, Austria and other countries are already operating in Uzbekistan\'s textile sector.
Foreign companies manifest yet more interest in local textile manufacturers. At the same time, other sectors account for 35 percent of assimilated foreign investments. For example, the share of construction sector and industry of construction materials account for 0.5 percent of total amount of assimilated foreign investments in 2007. The Government of Uzbekistan is taking measures aimed at increasing the flow of investments into this sphere. The Program of modernization and technical re-equipment of enterprises of sector until 2011 has been adopted as a result of those measures.
Integration into the world economy and securing the trust of foreign investors is impossible without creating favorable legal conditions. At this stage of development of economy the flow capital can be ensured by state guarantees in the form of intergovernmental and international agreements. However, investors believe that most importantly is the guarantee of consistent and sustainable course of economic reforms in Uzbekistan. Thus, in 2005-2007 31 legal acts which regulate the activity of direct foreign investments were adopted in Uzbekistan. Four of those documents are the laws of the Republic of Uzbekistan, 5 decrees of President, 7 resolutions of President and Cabinet of Ministers.
In February 2007 the “Uzinfoinvest” Agency for information support and promotion of foreign investments was established on the initiative of President of Uzbekistan.
Uzbekistan is open for foreign investments, its legislative basis, mineral riches, political and economic stability, high educational level of population, good will and hospitality of Uzbek people give an excellent opportunity for cooperation.