INFORMATION DIGEST OF PRESS OF UZBEKISTAN # 38

February 22, 2017

INVESTMENTS
There are plans afoot to launch a new major project on the establishment of confectionery and pasta manufacturing in Uzbekistan

BUSINESS CLIMATE
Factors of Business Attractiveness of Uzbekistan

TECHNOLOGIES
Interbank Payment System UZCARD intends to develop a system of goods and services payment via QR-code

2017 YEAR - THE YEAR OF DIALOGUE WITH THE PEOPLE AND HUMAN INTERESTS
Human Interests in Priority

THEATER
The Return of Le Corsaire

INVESTMENTS

There are plans afoot to launch a new major project on the establishment of confectionery and pasta manufacturing in Uzbekistan
Negotiations are currently underway with the headmost equipment manufacturers of Germany, Denmark, Switzerland, Austria and Italy. That would not just ensure the highest quality on the domestic market, but also allow competing with international manufacturers.
All equipment and technologies will be procured in Europe. Over a thousand new jobs will be created. To date, Uzbekistan has reached an agreement with the Kommunarka Company of Belarus. It is known for considerable experience and a long history in the production of chocolate and candy products, and has a strong commitment to provide technological support in the organization of confectionery production, where the whole range of goods will be purely an organic product that meets the consumer demand.
Representatives of companies are currently staying in Europe, conducting negotiations and presentations, seeking and involving foreign partners in the project on the establishment of a joint venture and drawing investments into the country’s economy. They are also negotiating with the leading banks of the republic on their possible participation in the project.
The new facility is anticipated to be the largest not only in Central Asia, but also on the CIS space. The first batch is expected for 2018.
(Source: «Uzbekistan Today» newspaper)

BUSINESS CLIMATE

Factors of Business Attractiveness of Uzbekistan
Implementation of five basic principles of transition to a socially-oriented free market economy during the years of independence has enabled the country to achieve desired results, provide sustainable economic growth and improve national welfare in a short historical period.
As a result of reforms, the structure of the economy was radically changed, a reliable legal framework for dynamic economic development and favourable investment climate were created.
This is supported by such macroeconomic indicators as annual Gross Domestic Product (GDP) growth of Uzbekistan exceeds 8% over the last 11 years, which is one of the highest rates in the world. The gross domestic product of the country increased by 7,8% in 2016. Generally, the GDP has increased by 5.5 times during the years of independence, while GDP per capita (PPP) has risen by 4 times. Since 2005, state budget execution reached annual surplus contributing to the strengthening of macroeconomic stability.
Based on deep analysis of trends in global economy and realistic assessment of our resources and capabilities, Uzbekistan had set a target by 2030 to increase GDP of the country by at least 2-fold. Due to drastic structural reforms the country intends to achieve accelerated growth of industry by bringing its share in GDP to 40% against 34% in 2016. Since 2005, Uzbekistan maintains a positive trade balance, government budget surplus and balance of payments.
From early days of independence, leadership of the Republic of Uzbekistan adopted a policy on attracting the most advanced technologies and foreign investments in the country. To this end, regular and systemic work is carried out to improve business environment and enhance the country’s investment attractiveness.
Effective from 1 October 2001, a new simplified procedure that provides a one-window registration of enterprises for state registration applies in respect to enterprises operating in the Republic of Uzbekistan. On the other words, all correspondence by newly established enterprises is carried out within the framework of one instance that registers enterprises in accordance with legislation of the Republic of Uzbekistan. It also should be noted that the authorized state bodies come to a decision on the state registration of a business entity as a legal entity or refusal in registration within 3 working days.
Favourable investment climate and stimulating measures, as well as guaranteed protection of the rights of investors, contributed to the increase in the volume of accumulated investments to $190 billion, including almost $70 billion of foreign investments. Only in 2016 the volume of attracted foreign capital has exceeded 3.7 billion US dollars.
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; electro-technical 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.
What attracts foreign investors to Uzbekistan?
First, 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.
Second, the country has the most diversified economy in Central Asia. Uzbekistan is the only Central Asian state producing a wide range of modern cars with General Motors, trucks with MAN, high-quality agricultural machinery from the mini-tractors to harvesters jointly with German CLAAS and LEMKEN, South Korean LS Mtron, the region’s largest producer of chemical, textile, food, building materials, electronics and electrical engineering products.
Third, the presence of significant human and intellectual potential meets 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, Inha University in Tashkent and others.
Fourth, 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 32 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.
Fifth, transport and communication sector and foreign trade cargo routes diversification are of primary importance for Uzbekistan, which is a land lock country.
Uzbek railways, whose international goods transportation share is 93% are playing special role in transport sector in Uzbekistan. Total developed railways length is 6 479.65 km, including operational length of 229.7 km, station tracks of 1 883.05 km. Railways average density in Uzbekistan is 13.5 km per 1000 sq. km. of country’s area. In the total cargo turnover by all types of transport modes the share of rail transport reaches 53.0% (excluding pipelines), and in passenger traffic – 3.8%.
123.1 km «Angren-Pap» railway line has completed the formation of a unified network of railways in Uzbekistan, creation of a new international transit railway corridor China-Central Asia to Europe.
Road transport is a key element in the country’s transport system, connecting major industrial centers, cities, regions and rural areas. The roads total length in Uzbekistan is over 180 thousand kilometers including 3.2 thousand kilometers of roads of international importance.
The Uzbekistan Airways National Airline is the flag carrier of the Republic of Uzbekistan that meets the demand of the national economy and population for air transportation services (cargo, passenger and special aviation tasks). The airline regularly flies to over 40 cities of the world in Europe and Asia, the US and Japan. It has its representative offices in 25 countries of the world. Uzbekistan Airways’ fleet consists of Boeing 757 and 767, Airbus 320, and Airbus 300-600 cargo aircrafts.
Sixth, Implementation of structural transformation and diversification of the economy is supported by steady growth of banks’ resource base, expansion of the share of long-term funding sources and increase of commercial banks role in these processes. If in 1990 loans exceeding three years constituted about 24% of the total loan portfolio, now their share is 80%.
Thanks to the sustainable growth of aggregated capital of the commercial banks in Uzbekistan and balanced management policy of assets portfolio, current capital adequacy ratio is ensured and three times higher than international standards of the Basel Committee on Banking Supervision.
For the fifth consecutive year, Moody’s international rating agency assesses the prospects of the banking system of Uzbekistan as “stable”. Now, all commercial banks of the Republic are rated with a stable outlook from leading international rating companies, as Standard & Poor’s, Moody’s and Fitch Ratings.
Seventh, Uzbekistan Fund for Reconstruction and Development (UFRD), created in 2006, plays an important role in the implementation of modernization and effective investment policy in the Republic. Its assets reached $25 billion this year.
The active participation of the UFRD in implementation of new infrastructure projects has been served to attract more than $10 billion of foreign investment and loans in the form of co-financing from the World Bank, Asian Development Bank, Islamic Development Bank, financial institutions of Japan, South Korea, China and other foreign banks and investors.
Eights, Uzbekistan’s achievements and milestones are widely recognized by the world community. In particular, our country occupies the 5th place in the Fast Growing Economies ranking of the World Economic Forum. According to the “World Happiness Report” conducted by sociologists at the Columbia University (USA), with the assistance of the United Nations, Uzbekistan took 44th place out of 158 countries and the first place among the CIS countries.
Last October the World Bank published the rating of «Doing Business 2017», with the fact that Uzbekistan has risen to 16 positions from 2015 and ranked as 87th. According to the report, Uzbekistan improved its position in ranking on such criteria as property registration (75th place, +6 positions), protecting minority investors (70th place, +8 positions), paying taxes (138 place, +1) and trading across border (165th place, +1 position).
The report added that four procedures required in Uzbekistan to register enterprise, which is lower than average in the Europe and Central Asia (4.8) and OECD member states (4.9). The registration term is 5.5 days in Uzbekistan against 10.2 days in Europe and Central Asia and 8.3 days in the OECD countries.
(Source: “Uzbekistan profile” - Information bulletin of Embassy of Uzbekistan in Belgium)

TECHNOLOGIES

Interbank Payment System UZCARD intends to develop a system of goods and services payment via QR-code
As reported by specialists of the Unified National Processing Center, the innovation can already be tested in trade and service enterprises that have introduced the QR-code payment mechanism.
QR-code is a black and white image of a square with inconsistent figures of rectangles and squares inside. The small squares can be found on the labels of goods, utility payment receipts, or on web pages. This is a two-dimensional bar code to encode visual information, which is increasingly used in various fields.
QR-code images can facilitate the process of choosing a product or service, because a small square on the package or promotional poster may contain up to 4,296 characters that provide the information that is inconvenient or expensive to place in text form. They optimize the communication process too. For example, the icon on the business card often encrypts a phone number, which can be added to the contact list just by click. QR-code also helps to follow a link, send an e-mail, SMS, find a location, and much more.
The idea of the QR-project in Uzbekistan comes to binding a bank payment card to the app on a smartphone, and then using the application for payments in stores. This payment method is more convenient for sellers and customers rather than the usual plastic card.
For example, a seller does not need a trading terminal for receiving cards. And the customer will have the opportunity to give up the purse with cards, and replace it with the smartphone. The innovation would also increase the level of security of card data: there is no need to pass the card to the seller or register it in websites. The use of QR-codes in everyday life opens up new opportunities, creating another link between the virtual world and reality.
(Source: «Uzbekistan Today» newspaper)

2017 YEAR - THE YEAR OF DIALOGUE WITH THE PEOPLE AND HUMAN INTERESTS

Human Interests in Priority
A national program on the implementation of Strategy of Actions on Five Priority Areas of the Development of Republic of Uzbekistan for 2017-2021 in the Year of Dialogue with the People and Human Interests has been approved. 37.7 trillion soums (currency rates of CB RU from 22.02.2017, 1$= 3356.87 soums) and 8.3 billion US dollars will be allocated to its implementation.
As previously reported, the Actions Strategy on Five Priority Areas for 2017-2021 was developed and approved in Uzbekistan. The roadmap of the country’s development for the next five years envisages a package of large-scale measures to streamline the state and public construction, ensure the rule of law and further reform the judicial system. The priorities also include the development and liberalization of the economy and social sector. Provision of security, inter-ethnic harmony and religious tolerance, implementation of balanced, mutually beneficial and constructive foreign policy are among the pivotal tracks of development of Uzbekistan.
A commission on the implementation of the Action Strategy is headed by President Shavkat Mirziyoyev. It incorporates sub-commissions on each direction of the Strategy. They are entrusted with the fulfillment of the objectives, as well as with direct development of the drafts relating to annual state programs.
The Action Strategy will be implemented in five stages, each of which will imply a certain annual national program in accordance with a title of the year. The adoption of the Year of the Dialogue with the People and Human Interests has become the first step of the Strategy.
The Action Strategy and the National Program are built on conceptual issues of socio-political, socio-economic, cultural and humanitarian development of the country, as decflared by the President of Uzbekistan Shavkat Mirziyoyev during the election campaign, numerous meetings with the public, business community and government agencies.
Entitled as ‘Streamlining State and Public Construction’, the first direction of the national program envisages strengthening of the role of the Oliy Majlis in the state power system, radical improvement of legislative activity, and scale up of the role of political parties in public life.
In 2017, it is planned to develop important bills on parliamentary control and business ombudsman, and discuss them in the Oliy Majlis. That would significantly strengthen the role of the Oliy Majlis in the system of state power, expand its powers in addressing urgent problems of internal and foreign policy, as well as in the implementation of parliamentary control over the executive power. Amendments and additions to the Law on Ombudsman will be the follow-up of this work. There are plans to streamline the Law ‘On political parties’. The changes are called to further improve the performance of their regional, municipal and district branches, thereby enabling them to be deeper involved in addressing pressing problems of the electorate and in public life.
The reforms will introduce some new posts. The Cabinet of Ministers of Uzbekistan will appoint its permanent representative in the Oliy Majlis, and factions of political parties will delegate secretaries to the Legislative Chamber to enforce the decisions made.
An E-Parliament will further intensify the communication of the population with senators and members of the Oliy Majlis.
It is planned to improve state governance, primarily reform the civil service, reduce state regulation of the economy, develop modern forms of mutually beneficial cooperation between the public and private sector, and the Electronic Government system.
Ensuring of effective dialogue with the people is one of the primary and urgent objectives of the national program. It envisages the improvement of public control, further development of NGOs, the media, as well as strengthening of the role of local communities in the society.
Important steps were made in this direction last week - the President approved a Decree ‘On further improvement of the institution of mahalla’. It aims at making the performance of self-government bodies more effective, at the transformation of the institution of mahalla into the people’s structure that would be optimally close to the population, exercising the right for incorporating into an association that would represent the common interests of citizens’ assemblies, strengthening their logistical capacity, as well as at the further expansion of their interaction with state authorities and civil society institutions.
The second direction of the national program is aimed at ensuring the rule of law and true independence of courts. It is planned to establish a Supreme Judicial Council to ensure the independence of judicial decision-making, establishment of a professional judiciary corps, and take measures to protect the rights and lawful interests of judges.
In this context, it is planned to implement a range of measures to raise the status, the level of financial incentives and social security for judges and court staff, strengthen the logistical capacity of courts. Under specific regulations, the judges will be elected for five years at the first appointment, with the possibility of re-election for another ten years in case of impeccable performance.
There is a need to take effective measures to prevent improper influence on judges through the institution of specialist rotation.
Certain attention will be paid to the full implementation of the principles of independence and impartiality of the court, adversarial and equal trial. Expansion of application of the institution of Habeas Corpus will be continued, and judicial control over the investigation will be enforced.
It is planned to further differentiate courts and strengthen their administration by establishing administrative courts, regional appellate courts in the system of economic courts, and institute a post of assistant judge.
There are plans to streamline the procedural legislation in order to avoid red tape and unjustified delays in consideration of court cases, expand powers of higher courts in terms of elimination of shortcomings and making a final decision for subordinate courts.
In this context, it is envisaged to take measures and build a direct dialogue between the people and executives of all law enforcement and regulatory agencies, state and economic management bodies, local authorities, ensure their availability to the public, timely reception of complaints and appeals on violations of rights and freedoms of individuals and legal entities.
Special attention will be paid to the crime prevention system, fundamental improvement of work of internal affairs agencies to combat crime and maintain public order. The authorities rank the enhancement of effectiveness of cordination of combating crime and crime prevention among key priorities. Much needs to be done to improve the performance of the Ministry of Internal Affairs and its territorial divisions. It is planned to adopt a target program on the improvement of the ministry.
An action plan to combat extremism, terrorism and criminal offenses will also be a guide to action.
Improvement of organizational and legal mechanisms for combating corruption and enhancement of effectiveness of anti-corruption measures is considered as an independent direction. It is planned to adopt the whole range of regulations to streamline this sector.
The improvement of the legal culture and legal awareness of the population, organization of effective interaction between state structures, civil society institutions, and the media was defined as a separate area of action.
There is a need to develop a concept of further improvement of criminal and criminal procedural law for 2018-2021, streamline the education system, select and arrange the staff at judiciary and law enforcement supervisory bodies, constantly analyze complaints and regularly publish the results of the monitoring, develop barrister system, and reform notary and registry office system.
Development and liberalization of the economy is a pivotal section of the national program. It is envisaged to ensure stability of the national currency and prices, gradually introduce modern market of currency regulation mechanisms, expand the revenue capacity of local budgets, expand foreign economic relations, introduce advanced technologies of production of export-oriented products, develop transport and logistics infrastructure, increase the investment appeal of entrepreneurship, improve tax administration, introduce modern principles and mechanisms of regulation of banking, develop diversified farms, as well as rapidly develop the tourism industry.
In pursuance of the objectives that have been set, the banking sector was assigned to seek for the ways to introduce various loan products with the use of plastic cards in purchasing goods (works, services) for consumer needs.
Banks will also be engaged in expanding the practice of introduction of a variety of bonus, discount and promotional programs jointly with trade and service organizations in order to promote and catalyze interest among plastic cards holders.
The President has already issued several regulations aiming at protecting the interests of private property and entrepreneurship. The acts introduce a new form of business registration through the ‘single window’ system, allowing document processing within few minutes. Meanwhile, there are new solutions to come to strengthen the protection of private property, financial market, to modernize agriculture, develop the jewelry industry, and prepare certain national companies for initial public offering (IPO) on reputable foreign stock exchanges.
In 2017-2021, it is planned to implement sectoral programs that envisage 649 investment projects totaling $40 billion. As a result, the production of industrial goods will increase 1.5 times, its share in GDP will grow from 33.6% to 36% , and share of processing industry - from 80% to 85% over the next five years.
Development of the social sector provides for the increase in employment, improvement of social protection and public health protection system, development and modernization of road transport, engineering, communications and social infrastructure, improvement of electricity and gas supply, quality of social assistance to vulnerable groups, rise of the status of women in public and political life, healthcare reformation, provision of availability of pre-school educational institutions, improvement of quality of secondary, specialized and higher education.
Employment programs should be unconditionally implemented through the creation of 256,400 jobs under 25,000 investment projects on integrated development of territories. It is planned to create 46,800 jobs and allocate loans to 10,000 graduates of educational institutions for starting a business in the regions with the highest unemployment rate.
The document provides for support of the older generation, and streamlining the procedure of allocation of social allowances. The priority will be given to the improvement of health of veterans. Previous privileges will be supplemented with new ones.
In particular, the veterans of the war of 1941-1945 will have a right for compensation for unused opportunity of resort therapy once a year. A network of health resorts providing service to the elderly will be expanded for their convenience: it is planned to build three new resorts.
The reformation of the health sector will be continued. It is planned to revamp 78 regional medical associations, seven municipal and two regional diversified medical centers. Development of emergency medical services will be of special focus. The service will be supplied with 1,200 specialized vehicles, and each district will receive two reanimobiles.
15,000 affordable houses, 415 km of water ways, 316 km of gas pipelines, and 291 km of internal roads will be built in rural areas. 86 new bus routes will be introduced, and 537 modern buses will be purchased as part of improvement of quality of public transport services.
Education sector also expects a broad range of activities on reconstruction, refurbishment and equipping of all educational institutions. The emphasis will be placed on the development of pre-school education, which is a focus of the recent national program.
From now and on, construction and installation works will be funded by the Fund for Reconstruction, Overhaul and Equipping of Schools, Colleges, Lyceums and Medical Facilities. A new five-year program will be the follow-up of the completed program on higher education development.
The fifth direction comes to ‘Ensuring Security, Inter-Ethnic Concord and Religious Tolerance’, and pursuance of balanced, mutually beneficial and constructive foreign policy. It envisages measures on protecting constitutional system, sovereignty, territorial integrity, improvement of information systems, legal and regulatory framework in the field of cyber-safety. A large range of measures is aimed at the organization and development of the public emergency alert system, and mitigation of the Aral Sea disaster.
President Shavkat Mirziyoyev approved the national program ‘On the development of the Aral Sea region for 2017-2021’, which envisages measures on improvement of environmental and socio-economic situation, living conditions of the population, and effective implementation of investment projects on mitigating the environmental disaster. In particular, more than 8.4 trillion soums has been allocated for the recently adopted national program ‘On the development of the Aral Sea region’.
In addition to the tax benefits, residents of the Aral Sea area have been provided with a new kind of social allowance in the form of one-time financial assistance from two to five times the minimum wage. It is appointed by the decision of the Commission of Rural (Mahalla) of Citizens’ Assemblies to needy families, especially lonely citizens, pensioners, families with disabled breadwinner and other low-income categories of the population.
There are plans afoot to develop a concept of policy priorities in the field of international relations, and a concept of public policy in religious sector. It is also planned to draft road maps for the development of cooperation with foreign partners in politics and diplomacy, drastic development and expansion of trade, economic, investment, technological, financial and technical cooperation with foreign partners of Uzbekistan for 2017.
(Source: «Uzbekistan Today» newspaper)

THEATER

The Return of Le Corsaire
Successful completion of the last week was the grand return of the beloved ballet Le Corsaire to the stage of the Alisher Navoi State Academic Grand Theater. The last performance of this production took place in 2010. And now, seven years later, the theater troupe presented to the audience this extraordinary and passionate love story.
The first performance of the ballet Le Corsaire by Adolphe Adam took place in 1968. Then the famous production choreographer Ibragim Yusupov took as a basis the choreography by Marius Petipa, who prepared the premiere of this ballet in the late 19th century. Even then, the play had a great success. Production directors of the Grand Theater retained Ibragim Yusupov’s version, only updating the costumes and stage decorations. Of course, after so many years the cast got changed as well - now it is promising young performers, the Honored Artist of Uzbekistan Tamila Mukhamedova, Nodira Khamraeva, Amina Babadjanova and leading soloists of the Theater.
The ballet Le Corsaire is a love story of the pirate Conrad to the slave girl Medora. On the way to happiness the heroes faced many challenges: their abduction, deceit of friends, and confinement in prison. As always, good and evil is always fighting, and the audience watches the process with great interest. The artists themselves have no time for boring, as the choreography in the ballet is quite complicated. But the reward for all the efforts is the audience’s loud applause.
“Performance is on stage for many years; occasionally it disappears from the repertoire for various reasons, but then returns. It is very interesting in itself, moreover, is the world famous ballet, which is played in all the major theaters of the world. Having this performance in the repertoire means that the theater maintains its reputation,” considers the Honored Artist of Uzbekistan, chief choreographer of the Alisher Navoi State Academic Grand Theater, Shavkat Tursunov.
The troupe faced a difficult task: along with daily performances it was necessary to work on the restoration of the Le Corsaire. A colossal work has been done, but still need to modify some of the inaccuracies in the play.
“In general, of course, we still have a lot of work. Of course, the biggest advantage is that the troupe consists of young artists with great potential. Each artist is personality and each is talented. But we need to develop a sense of unity and synchrony. It is wonderful, when the artist shows his potential and technique, but in the Le Corsaire there are a lot of crowd scenes in which the actors have to move like a single organism,” said the chief choreographer.
It is worth noting that to watch the ballet Le Corsaire is easy and interesting thanks to a balanced choreography of soloists and corps de ballet, easy-to-perceive music and, of course, exciting love story.
(Source: «Uzbekistan Today» newspaper)

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