Uzbekistan becomes top destination for foreign investors
An Interview with Ambassador of Uzbekistan in Pakistan Furqat Sidiqov
Islamabad, Pakistan: “Pakistan and Uzbekistan enjoy exceptional bilateral relationship Uzbekistan can be an excellent destination for Pakistani investors, traders and industrialists as more than 4200 foreign enterprises including world famous companies such as General Motors, MAN, Mercedes-Benz, Isuzu Motors, CNPC, Petronas, LG, Gazprom, Lukoil, Nestle, Coca-Cola, British-American Tobacco, Carlsberg and many others are present in Uzbekistan by establishing huge industries.
Pakistani entrepreneurs and farmers should explore possibilities of importing manufactured in Uzbekistan high quality tractors, agriculture machinery, heavy duty trucks and buses that would help in improving agriculture productivity and transportation facilities in Pakistan. Uzbek tourism is fastest growing industry in the region and Pakistan can invest in any sector of tourism industry of Uzbekistan”. These views were expressed by His Excellency the Ambassador of Uzbekistan in Pakistan Furqat Sidiqov in an exclusive interview with the Chief Editor of Dispatch News Desk (DND) news agency Agha Iqrar Haroon here on Wednesday.
Ambassador Extraordinary and Plenipotentiary of the Republic of Uzbekistan to the Islamic Republic of Pakistan was of the view that Uzbekistan is maintaining 8% growth rates over the last 11 years and investing a huge amount for human development also as 59.1% of total State budget expenditure are allocated for social sphere, including 33.7% for education during current fiscal year. “At the same time the costs of current maintenance and development of education sector will be increased against the previous year by 16.3%”, he emphasized.
Talking about Pak-Uzbek relations he said that Uzbekistan and Pakistan tied with deep historical, religious and cultural bonds and Uzbekistan is keen to promote cooperation with Pakistan on regional security and combating against transnational threats. He added that Uzbekistan attached great importance to the expansion of the mutually beneficial relations, including trade and economic, investment and other areas.
“As you know the Prime Minister of the Islamic Republic of Pakistan, H.E. Mr. Muhammad Nawaz Sharif, had paid an official visit to the Republic of Uzbekistan on 17-18 November 2015, which was very successful and has opened a new page on Uzbekistan-Pakistan brotherly relations. The President of Uzbekistan and the Prime Minister of Pakistan had a friendly, substantive and constructive exchange of views and reached common understanding on a wide range of issues to further deepen Uzbekistan-Pakistan relations in various fields and on international and regional issues of mutual interest”, he maintained.
He also mentioned that Pak-Uzbek Forum was established in Pakistan in year 2016 by group of prominent people in Pakistan, including business, academic and artistic communities with the support Uzbekistan and Pakistan relations.
He was of the view that the improving business attractiveness is an important component of economic advancement of each country Uzbekistan is among the top ten countries in gold reserves, natural gas, uranium, silver, copper, molybdenum and other rare metals and is a net exporter of these natural materials. While telling natural resources of Uzbekistan, he stated that his country has more than 100 types of mineral resources and more than 2800 deposits and prospective shows of minerals are exposed.
When asked to mention name of international groups investing in Uzbekistan, he said that numerous investment projects on high-tech industries producing demanded and competitive production for foreign markets have been realized and implemented. “Projects such as the production of cars and engines together with “General Motors”, trucks with “MAN”, the construction of Ustyurt Gas Chemical Complex at Surgil deposit on gas processing and production of polyethylene and polypropylene, plant for the production of synthetic liquid fuel based on GTL technology in Kashkadarya region, organization of full-scale production of modern textile equipment from the Swiss company “Rieter” and many others are the models of successful cooperation with foreign partners”, he added
Detail interview of the Ambassador of Uzbekistan in Pakistan Furqat Sidiqov is being produced hereunder:
Q: Would you please tell us about successes of Uzbekistan during the years of Independence, also about those political and economic reforms undertaken by the government of Uzbekistan?
A: On September 2016 y. we will celebrate the anniversary a quarter of a century of independents of Uzbekistan. From the very day of Independence, Uzbekistan selected own course of development, own, Uzbek Model of transition to socially oriented market economy.
The basis of this model of building a democratic state and civil society have laid down five principles of transition to a market economy, initiated by the President of Uzbekistan H.E. Islam Karimov at the beginning of Independence. Priority of economy over politics, placing the state as main reformer, rule of law, strong social policy, phased and evolutionary reforms are among them.
Today as a result of a consistent and well-thought-out economic policy, Uzbekistan has achieved high and sustained rates of economic development. It’s the state, where representatives of more than a hundred ethnic groups and dozens of religions live in peace and concord.
The country has achieved dramatic changes in dynamics and structure of economy, development of production and export capacity, social sphere, level and quality of life. Suffice it to say that between 1990 and 2014 republic‘s GDP at purchasing power parity increased by 6.3 times – from 27.1 up to 171.416 billion US dollars, and its growth rates over 11 years remain at around 8%.
According to President’s report on the results of socio-economic development in 2015 and the major priorities for 2016, in current year 59.1% of total State budget expenditure will be allocated for social sphere, including for education – 33.7%, for healthcare – 14%. At the same time the costs of current maintenance and development of education sector will be increased against the previous year by 16.3%, healthcare – at 16%.
Today, another strategic priority for the modern development of Uzbekistan is to ensure the formation of even more favorable investment climate and business environment for doing business.
In addition, based on experience of developed countries and entrepreneurship, handicrafts traditions inherent to our people, the state is focusing on the development of small business and private entrepreneurship. This rapidly developing sector, which in 2015 ensured the production of 56.7% of GDP, is playing rightly a leading role in dynamic development of Uzbekistan.
Thus, in 2015 investments in equivalent of 15.8 billion US dollars has been drawn and disbursed from all financing sources, which demonstrated an increase of 9.5% against 2014. At the same time more than 3.3 billion US dollars, or over 21% of all investments – were foreign investments, of which foreign direct investments amounted to 73%.
Q: What do you think that how Pakistan can take advantage of Pak-Uzbek bilateral relation and vice versa?
The partnership relations between Uzbekistan and Pakistan tied with deep historical, religious and cultural bonds. Uzbekistan is keen to promote cooperation with Pakistan on regional security and combating against transnational threats.
Uzbekistan attach great importance to the expansion of the mutually beneficial relations, including trade and economic, investment and other areas.
As you know the Prime Minister of the Islamic Republic of Pakistan, H.E. Mr. Muhammad Nawaz Sharif, had paid an official visit to the Republic of Uzbekistan on 17-18 November 2015, which was very successful and has opened a new page on Uzbekistan-Pakistan brotherly relations.
The President of Uzbekistan and the Prime Minister of Pakistan had a friendly, substantive and constructive exchange of views and reached common understanding on a wide range of issues to further deepen Uzbekistan-Pakistan relations in various fields, and on international and regional issues of mutual interest.
The Republic of Uzbekistan and the Islamic Republic of Pakistan reaffirmed their interest in expanding and further strengthening long-term, mutually beneficial bilateral cooperation through sustained dialogue and engagement at all levels in areas such as, security and counter-terrorism, trade and investment, education, science and cultural relations.
Uzbekistan and Pakistan acknowledged the further development of mutually beneficial trade and economic cooperation as one of the key priorities in the bilateral relations. They highlighted the importance of taking joint measures to increase and diversify the range and quantum of mutual trade.
The prospects of the agricultural-machinery market in Uzbekistan are very promising, with the possibilities of exporting the output to contiguous countries expanding from year to year.
Evolving relations in cultural and humanitarian sphere are of great significance in strengthening of Uzbek-Pakistani cooperation. “Uzbekistan-Pakistan” Community has been successfully acting since 1991.
Centers for the study of Urdu and Uzbek languages are running both in Uzbekistan and Pakistan. In 2003 the first “Urdu-Uzbek Dictionary” compiled by the Tashkent State Institute of Oriental Studies was published in Pakistan. In 2009 “The Cabinet of Urdu language and literature” was opened in this Institute.
In 2016 Pak-Uzbek Forum was established in Pakistan by group of prominent people in Pakistan, including business, academic and artistic communities with the support Uzbekistan and Pakistan relations..
Representatives of science, culture and art of the two countries regularly participate in scientific conferences, festivals and other events. In particular, the Pakistani artists are traditional participants of the International Music Festival “Sharq taronalari” in Samarkand.
Q: Could you tell us about Uzbekistan’s tourism potential?
Our country represents a rich world for tourists. A unique location at the crossroads of the Silk Road is an important factor in the dynamic development of this sector in Uzbekistan, as well as the fact that the country has more than 7,000 monuments of different epochs and civilizations, many of which are included in UNESCO World Heritage List.
Only in one of Samarkand – the capital of the great state of Amir Temur – focused a lot of attractions, which are famous today around the world. Architectural ensemble Registan, Ulugbek observatory, famous mausoleum of Amir Temur, Bibi Khanum Mosque have become city’s decoration. This mausoleum was built by the order of Amir Temur, who is considered one of the finest examples of medieval architecture of the East.
Sacred Bukhara is not inferior to Samarkand’s abundance and importance of historical monuments and places of worship.
Majestic minarets, mosques and madrassas, bazaars and shopping domes, havuz-pools and areas are witnessing 2500 year history of Bukhara. Along with it Khiva, Shakhrisabz, Termez with equally rich centuries-old history and unique architectural masterpieces, has roused the admiration of ancestors and contemporaries.
Since independence Uzbekistan has developed radically new principles of state policy in the sphere of tourism. Thus, July 27, 1992 according to Resolution of the President Islam Karimov, National Company “Uzbektourism” has been created. This company was entrusted with the task of implementing state policy in this direction, formation of a national model of tourism development.
In the country many new luxury hotels have been built, including nation-wide network of type B&B, which can provide high level of service for foreign guests. Along with major hotels, providing services under the world-renowned brands such as Radisson, Lotte, Ramada, Wyndham, in the capital and regions of Uzbekistan created a network of private institutions for small groups and family tourists.
In 2011 between Tashkent and Samarkand started to run high-speed train Afrosiyob produced by Spanish company PATENTES TALGO S.L. In 2015 Afrosiyob started going to Karshi – administrative center of Kashkadarya region. Convenience and comfort of this train is noted both by foreign guests and local passengers.
Uzbekistan has created favorable conditions for businesses involved in the provision of tourism services. According to 2015 data, there are 1279 tourist organizations in the country, in particular, 548 hotels, hostels and campgrounds, 731 travel companies.
Q: Uzbekistan is advance in automated agricultural. How can Uzbekistan and Pakistan can corporate in this field?
In this case, Pakistani entrepreneurs and farmers should explore possibilities of importing manufactured in Uzbekistan high quality tractors, agriculture machinery, heavy duty trucks and buses that would help in improving agriculture productivity and transportation facilities in Pakistan.
Today Joint venture «Uz CLAAS Agro», which produces combine harvesters Dominator 130, Tucano 430, arable tractor under brands Axos 340, Arion 630S, Axion 850, forage harvester Jaguar 850, balers Markant 55 was established at “Tashkent Tractor Plant” OJSC (“TTP” OJSC) together with «CLAAS» and «CLAAS Central Asia Investment GmbH» Company (Germany) in February 2010.
– «LEMKEN Chirchiq» JV was established at «Chirchiqqishloqmash» OJSC together with «LEMKEN GmbH & Co. KG» (Germany) in December 2011 to produce tillage machinery and other LEMKEN agricultural machinery.
Q: How is investment potential of Uzbekistan and what Republic offers to businessman community of Pakistan to invest in Uzbekistan?
Improving business attractiveness is an important component of economic advancement of each country. It is a major contributing factor, which attracts foreign investments into the national economy, and in turn, if acquires great significance in the creation of high-tech industries, saturation of domestic market with high-quality, marketable products, and broadening the product mix of national exports.
Nowadays, more than 4200 enterprises with foreign investments, including world famous TNCs operate on the Uzbek market. They are General Motors, MAN, Mercedes-Benz, Isuzu Motors, CNPC, Petronas, LG, Gazprom, Lukoil, Nestle, Coca-Cola, British-American Tobacco, Carlsberg and many others.
Uzbekistan is among the top ten countries in gold reserves, natural gas, uranium, silver, copper, molybdenum and other rare metals and is a net exporter of these natural materials. In Uzbekistan more than 100 types of mineral resources, more than 2800 deposits and prospective shows of minerals are exposed.
The total energy reserves of Uzbekistan are sufficient for the coverage of the needs of the economy at least for 100 years. Generated electricity capacities fully cover domestic needs, but also allow export of electricity to other countries.
Foreign companies, investing in Uzbekistan, get an opportunity to enter the largest and most dynamically growing markets among CIS countries, Asia and Europe. Agreements on Most favored nations treatment with 45 countries, including USA, Japan, China, Korea, EU countries, and Free trade area between CIS countries, significantly enhance the competitiveness of goods, produced in Uzbekistan on external markets.
Due to intellectual capacity, Uzbekistan is one country in Central Asia manufacturing a wide range of modern sedans and trucks, high quality agricultural machinery, chemical goods, textile, food products and building materials.
With the participation of foreign partners numerous investment projects on high-tech industries producing demanded and competitive production for foreign markets have been realized and implemented. Projects such as the production of cars and engines together with “General Motors”, trucks with “MAN”, the construction of Ustyurt Gas Chemical Complex at Surgil deposit on gas processing and production of polyethylene and polypropylene, plant for the production of synthetic liquid fuel based on GTL technology in Kashkadarya region, organization of full-scale production of modern textile equipment from the Swiss company “Rieter” and many others are the models of successful cooperation with foreign partners.
What attracts foreign investors to Uzbekistan?
First, it is political and macroeconomic stability. Comprehensive measures taken by the government ensure sustainable economic growth in the country and contribute to dynamic advancement of sectors of the national economy.
Despite global financial downturn, annual GDP growth of Uzbekistan exceeds 8% over the last 10 years, which is one of the highest rates in the world. Over the past decade, the economy of Uzbekistan has doubled.
Since 2005, Uzbekistan maintains a positive trade balance, government budget surplus and balance of payments.
According to the forecasts of leading international organizations and financial economic institutions, the high growth trend will remain in the future.
Second, an important advantage of our country is that Uzbekistan is one of the few countries in the world economy with absolute energy independence.
Uzbekistan possesses huge reserves of minerals and natural resources. The country occupies leading positions in the world in terms of gold, uranium, copper, silver, lead, zinc, tungsten, rare metals and other resources.
The country is among the top ten countries on reserves of oil and gas, coal and uranium. The electricity price is 4 times lower than the average price paid by industrial customers in developed countries.
Third, the country has the most diversified economy in Central Asia. Uzbekistan is the only Central Asian state producing a wide range of modern cars, trucks, high-quality agricultural machinery from the mini-tractors to harvesters, the region’s largest producer of chemical, textile, food, building materials, electronics and electrical engineering products.
Fourth, the presence of significant human and intellectual potential meeting modern international standards of education. More than half of the population of our country is young people who take the mandatory 12-year education and receive in-depth knowledge of at least 2 modern professions, information technologies, and learn at least two foreign languages.
Uzbekistan created a number of branches of leading European, Asian and Russian universities, in particular the British Westminster University and Singapore Institute of Management and Development, Turin Polytechnic University, Moscow State University and others.
Fifth, the advantageous geographical location and proximity to major markets is another attractive factor of Uzbekistan for foreign investors. The country possesses the largest consumer market in the region with more than 30 million people. It is about half of the total population of Central Asia.
Thanks to well-developed transport infrastructure, enterprises of Uzbekistan have the opportunity to enter the largest and fastest-growing markets in Central Asia and Afghanistan (with a population of over 90 million people), CIS countries (with a population of over 300 million people), West and East Asia, as well as Europe.
Free trade agreements on with 11 CIS countries provide duty-free importation of Uzbek producers’ goods to these markets.
Uzbekistan also has agreements with 45 countries on providing Most Favored Nation treatment, which improves the competitiveness of Uzbek products on foreign markets.
Sixth, banking and financial sectors of Uzbekistan also serve as an important link in the implementation of active investment policy for realization of strategically important projects aimed at modernization, technical and technological renewal of leading sectors of the economy, the financial support of small business and private entrepreneurship, providing high quality banking services to individuals.
Consolidation of banking system has created prerequisites for reducing the Central Bank refinancing rate from 12% to 10% in 2014, and corresponding reduction in interest rate on loans of commercial banks.
In recent years, the leading rating agencies such “Moody’s”, “Standard & Poor’s” and “Fitch rating” evaluated the activities of Uzbekistan’s banking system as “stable”. If in 2011, 13 commercial banks received the highest rating scores, at present, all 26 banks of the country have been awarded such an assessment.
Seventh, unprecedented benefits and preferences provided to investors in “Navoi” Free Industrial Economic Zone and Special Industrial Zones “Angren” and “Jizzakh”. Residents of these areas are exempt from almost all types of taxes, depending on the amount of investments – from 3 to 15 years (FIEZ “Navoi”), and from 3 to 7 years (SIZ “Angren” and “Jizzakh”).
Today, Uzbekistan’s most promising areas for foreign direct investment are oil and gas sector, first and foremost it is in-depth processing of hydrocarbon raw materials and production of high value added products; chemical industry, in particular, the production of polyvinyl chloride, plastics, new types of chemical fertilizers; mechanical engineering; electrotechnical field; production of construction materials; textile industry; mastering of mineral resources, including search and joint development of new deposits of natural resources; introduction of alternative energy sources; information technologies.
In general, Uzbekistan may offer foreign investors not only rich natural resources but also other benefits, such as political and economic stability, conducive business climate, significant human and intellectual potential, favorable geographic location and advanced infrastructure.