Reasons to do business in Uzbekistan
REASONS TO DO BUSINESS IN UZBEKISTAN
Political and Economic stability
First of all, Uzbekistan is political stability, confidence in tomorrow and consistency of reforms in all fields of public and political life. It’s the state, where representatives of more than a hundred ethnic groups and dozens of religions live in peace and concord.
From the very day of Independence, Uzbekistan selected own course of development, own, Uzbek Model of transition to socially oriented market economy based on five key principles developed by the President of Uzbekistan H.E. Islam Karimov at the beginning of Independence of our state: the priority of economics over politics; the state is the main reformer; the rule of law in all areas of life of the society; strong social policy; step-by-step transition to market relations.
Thanks to successful implementation of this model, today, Uzbekistan has achieved and provided:
- macroeconomic stability, equilibrium of domestic and foreign sectors of economy, growth of currency reserves;
- framework for maintaining steady high rates of annual economic growth by 8% at average, predominantly, thanks to internal factors;
-reduction of aggregate tax burden almost 3 times, while the State is providing additional packages of concessions and preferences to exporting enterprises, small businesses and entities, making investments and introducing new production;
- creation of sustainable banking and finance systems with strict observance of Basel principles of banking supervision. In particular, the degree of sufficiency of banking capital is more than 23%, which is almost 3 times higher of international standards;
- development of new high tech industries through intensive investment policy, technological modernization of industrial facilities and production infrastructures.
The issued strategy of struggle against crisis and neutralization of its consequences allowed the country among few states of the world to ensure for the past period steady growth rates of economic development. Growth rate of GDP in 2014 comprised 8.1%, which is according IFIs is one of the highest indicators in the world. The volume of industrial production grew by 8.3%, agricultural production - by 6.9%, capital construction - 10.9%, retail trade turnover - by 14.3 percent. About 70 percent of the production are finished goods with high added value.
Structural transformations taking place in the economy of Uzbekistan deserve special attention.
Thus, if in 2000 the share of industrial production in GDP of the country comprised 14%, in 2014 this indicator reached 25%, share of services increased from 37 up to 54%, while share of agriculture reduced from 30 down to 17%. Active implementation of State Investment and Localization Programs is facilitating steady growth of industrial production.
Raising share of small business and private enterprise in GDP and its role in development of economy of the country became serious achievement. While in 2000, share of this actively developing sector of economy in GDP was about 31%, in 2010 it comprised 56%.
The investment increased by 10.9% and amounted to the equivalent of $14.6 billion and more than 21.2% of all capital investments amounted to foreign investments and loans, of which three quarters are foreign direct investments.
Favourable Investment Environment and Tax Policy
For the years of Independence, Uzbekistan created broad spectrum of legal guarantees and preferences for foreign investors, developed integral system of measures on encouragement of activity of enterprises with foreign investments.
The state guarantees and protects the rights of foreign investors which carry out investment activity within the Republic of Uzbekistan. In the event, the consequent legislation of Uzbekistan makes investment environment less favourable, then, within 10 years from the moment of investment, foreign investors will apply the legislation, which was in effect as of the date of investment. Upon its discretion, after notifying the authorities, the foreign investor is entitled to apply those provisions of new legislation which make the investment environment more favorable.
Moreover, in some cases, foreign investors could be provided with additional guarantees and measures of protection of rights in case of investment into priority industries or projects, which ensure sustainable economic growth, strengthening and enhancing export potential of the country, projects in the field of small enterprises.
On 1 October, 2001, the country established «one stop shop», simplified system of state registration of legal entities. In other words, for the newly established enterprises, all approval procedures are provided with only one instance within 3 business days.
For the last years, the Government has pursued consistent policy on significant reduction of tax burden for both legal entities and individuals. In particular, versus 1992, income tax rate imposed on legal entities reduced 5 times and is now 9%.
Representatives of small businesses and private enterprises are provided with the series of advantages and preferences on taxation and loans. Tax rates for small businesses and private enterprises reduced from 38% down to 7%, i.e. 5.4 times. In compliance with the Tax Code of the Republic of Uzbekistan, micro-firms and small enterprises are entitled to choose simplified system of taxation, which entitles to pay unified tax instead of generally established taxes and other mandatory charges.
Unprecedented tax incentives are provided to enterprises which carry out production activity within Navoi Free Industrial Economic Zone, recently established upon the initiative of the President of the Republic of Uzbekistan, provided, they are registered as the participants of this Zone. These incentives include exemption practically from all types of taxes and customs duties imposed in the Republic of Uzbekistan, which makes Free Industrial Economic Zone in Navoi province one of the most liberal and attractive free economic zones in the world.
Measures, introduced by the Government for improvement of investment environment fostered significant increase of FDI attracted to the economy of the country.
For years of independent development, the economy of the country attracted more than US$ 100 billion of investments, out of which more than US$ 35 billion are resources of foreign investors.
Rich Minerals and Natural Resources Base and Energy Self-Sufficiency
Uzbekistan is one of the TOP 10 countries in the world on reserves of gold, uranium, copper, silver, zinc, tungsten, rare metals, natural gas, coal and fossil minerals. Aggregate reserves of energy carriers of Uzbekistan are sufficient to satisfy demands of the economy at least for 100 years.
Uzbekistan discovered more than 2,800 deposits and prospective depositions of minerals, with total mineral-feed potential of the country to be about US$ 3.5 trillion.
On many categories, including non-ore and metallic minerals, agricultural commodities, Uzbekistan is one of the leading countries in the world. In particular, on copper reserves it’s 11th largest, on gold production – 7th, uranium – 7th, production of cotton fiber – 5th.
Access to broad spectrum of commodities maximum optimizes the production costs through significant reduction of transportation costs for commodities and raw materials, creates capabilities for deep processing with production of products with high value added and the level of localization of more than 50%.
The most important advantage of Uzbekistan under energy shortage, which many developed and developing countries are facing today, is that, Uzbekistan is one of small group of countries of the world, the economy of which is characterized by energy self-sufficiency.
Unlimited potential of alternative sources of energy creates additional capacities. This includes solar, wind, derived as a result of recycling of solid household wastes, which allows generation of more than 51 billion tons of oil equivalent p.a.
Uzbekistan is the crossroads of Central Asia, which creates favourable environment for development of regional cooperation, participation in regional and transnational projects on development of transport corridors. Uzbekistan is a part of CIS Free trade zone.
Proximity to broad customer markets and developed transport infrastructure of Uzbekistan, integrated into multimodal system of communications of Eurasia, predetermines perspectives of investment, trade and economic cooperation. Foreign companies investing in Uzbekistan, get access to the 5 largest and the most dynamically developing markets: CIS with the customer market of more than 300 million people, Central and Eastern Europe, South and South East Asia, Middle East.
Favorable geographic location on the intersection of all trade routes among above regions, developed multimodal network, covering the markets, located far outside of Central Asia, including Eastern part of the Middle East, Northern part of India and Western part of China, is an important competitive advantage, which allows to significantly reduce the time and costs of delivery of cargoes through the territory of Uzbekistan.
Today, Uzbekistan is creating all necessary conditions for further development and increase of transit potential. The country is constructing new main railway line and highway inside the country, renovating international main transit railway lines and highways, modernizing international airports, creating specialized international transport terminals, developing corresponding legal framework.
The treaties on creation of the MFN in trade with 45 countries of the world including Japan, China, USA, Korea, EU and Free Trade Zone established among the CIS signatory states, allows to significantly increase the competitiveness of Uzbekistan’s products on foreign markets.
100% literacy of population of Uzbekistan and the education system meeting modern international educational standards stand for significant intellectual potential. Unique in its essence and contents the National Human Resource Development Program envisages continuing education, permanent deepening and renewal of general educational and professional training.
Uzbekistan has 65 higher educational institutions, 139 academic lyceums, 1368 vocational colleges, which educate more than 300,000 students in 850 areas and specialties. In particular, in Uzbekistan there are branches of such leading European, Asian and Russian higher educational institutions as: Westminster International University, Singapore Management and Development School, Moscow State University, Institute of Oil and Gas named after Gubkin, Torino Polytechnic University, Inha University and others.
The Best Place for Living and Tourism
Uzbekistanis wonderful climate, natural scenery, hospitality, multiculturalism, tourism and recreation infrastructure (hotels and international class airports). It’s the country where high quality of life is provided by minimum costs of living.
Uzbekistan, which has huge potential in the field of tourism, has something to surprise and delight its guests. The Great Silk Road left rich legacy for this country.
Uzbekistan is the country of the greatest towns with hundreds of architectural monuments of different epochs. Samarqand, Bukhoro, Khiva, Shahrisabz, Termez and Quqon are known to the entire world. These towns are of the same age with Rome and Babylon, in old times, they were the largest centers of science and culture. They gathered the best brains and hands of that time. The world was amazed of magnificence and splendor of palaces, minarahs, mosques, mausoleums, created by the famous architects of the past. The world known monuments of ancient architecture still remember times of the conquests of the Alexander the Great and Genghiskhan.
The visitors get a chance to take a closer look at the motherland of outstanding statesman and the warlord Amir Temur (Tamerlane), the land glorified by the world known poet and the statesman Zahiriddin Muhammad Bobur, to walk across the flourishing oasis in steppe and in the expanses of the Golden Valley, to see ever-burning light of ancient fortresses and many other things. This, in return, will allow the visitors to get inspired of distinctiveness of every corner of our country and to see single wonderful image of this ancient and renovated land, to evaluate its contribution into development of world civilization. Of course, travel to Uzbekistan cannot be imagined without introducing to the national cuisine of our country, which will for sure leave with the visitors indelible impressions.
Great historical and cultural heritage, unique nature and climate of Uzbekistan represent inexhaustible potential for development of tourism. Moreover, recreational resources of Uzbekistan allow to welcome the visitors all-the-year-round. Uzbekistan can offer broad spectrum of services both for the lovers of cultural-cognitive, active recreation, and the lovers of extreme tourism. Today, Uzbekistan is developing business, eco, mountain, medical-sanitary, folk-ethnographic, historical-architectural, religious-pilgrimage and other types of tourism.