The pandemic has not spared Uzbekistan. But the Central Asian country has been going through a deep reform process in the past few years and, despite the pandemic, has managed to keep investment flowing in.
Uzbekistan is now looking beyond Covid-19, and at its vision of creating both a regional market and a regional investment promotion platform as the region as a whole is more attractive to investors than its single markets, argues the country’s deputy minister of investments and foreign trade, Laziz Kudratov.
Q: What has been the impact of Covid-19 on the Uzbek economy and business environment?
A: Of course, the pandemic affected Uzbekistan as it did any other country, which is why we have been focusing on making life easier for businesses. We reduced the tax burden; suspended tax auditing for one year, as well as the penalties for those that didn’t pay taxes; and also introduced a moratorium on bankruptcy for companies experiencing troubles because of Covid-19. Plus, we lifted and cancelled 70 licences and 35 types of permits to allow businesses to conduct entrepreneurial activity without needing either from the government.
We are now working with the World Bank to revise the tax system. We are also working to reform the banking system. We have invited the Asian Development Bank and the European Bank for Reconstruction and Development to help us transform and restructure state-owned banks and prepare them for future privatisation. We are also focusing on developing a capital market — we established an anti-monopoly agency and an anti-corruption committee.
Q: Has foreign direct investment halted this year?
A: FDI has not necessarily stopped. We have managed to keep investment activities and FDI inflows. According to our estimates, the volume of FDI amounted to almost $5bn between January and September, which represents a growth of 101% from a year earlier. The majority of this investment went into metallurgy and mining, then IT and chemicals. We are also seeing an increase in building and construction material projects as construction is booming. Energy is also attracting much investment, and we started developing solar and wind energy projects with foreign investors.
Q: How have you been adjusting your investment proposition in the midst of the pandemic?
A: It showed us that to be competitive, we should focus on high-added-value manufacturing. Uzbekistan is a double-landlocked country and transport costs affect our competitiveness. To be more competitive we should focus on adding value to our raw materials and export finished products. In this context, we have to attract western technology to insure we are more efficient, and increase the level of productivity of the economy and the industry.
Q: For example?
A: Think of natural gas. The majority of our production is exported as fuel, while we should focus on perfecting it inside the country by producing polymers, plastics, fertilisers and so on. The same applies across the sectors — textile, building materials and agriculture, among others. We want to bring technology and inventors in to process raw materials and produce high-added-value products.
Q: Do you believe Central Asia as a regional market will become more prominent?
A: Developing the region as a single economic zone is of utmost priority, and we are focusing on building good political relations with our neighbours aimed at cooperation on industrial and value chain development.
Q: Are you also supporting a regional platform for investment promotion?
A: Yes — attracting investment to one big regional market is more attractive than attracting it to the region’s single markets. If we unite and sell Central Asia as one market and one product, it’s going to be more attractive to the eyes of foreign investors.
This article first appeared in the December/January print edition of fDi Intelligence. View a digital edition of the magazine here.