April 22, 2014
President Karimov Discusses Bilateral Cooperation with Spain’s Foreign Minister. 2
Uzbekistan’s GDP makes up 25.764 trln. soums in 1Q.. 3
A Strategy of Development of the economy of Uzbekistan.. 3
Press-service of MFA of the Republic of Uzbekistan
POLICY
President Karimov Discusses Bilateral Cooperation with Spain’s Foreign Minister
President of the Republic of Uzbekistan Islam Karimov at the Oqsaroy on April 21 met with Jose Manuel Garcia-Margallo, Minister for Foreign Affairs and Cooperation of the Kingdom of Spain, who is in our country with an official visit.
Greeting the guest, the head of our state expressed satisfaction with the established level of multifaceted Uzbek-Spanish dialogue and gave a high appraisal to Spain’s role and place in tackling the pressing international and regional issues.
The conversation has served as a good opportunity to discuss in detail the current state and priority dimensions of bilateral cooperation and international affairs, including regional security and stability in the context of the situation in Afghanistan.
It was noted in particular that Uzbekistan attaches a considerable significance to the promotion of comprehensive interaction with Spain, regarding the latter as one of its priority and reliable partners in the European Union.
As it was pointed out, the dynamic and sustainable rates of economic growth in Uzbekistan and the favorable environment created in the country for foreign investors constitutes a robust bedrock for the enhancement of trade-economic and investment interaction.
The successful mutually advantageous cooperation can be seen as an example in the enthusiastic activities of leading Spanish companies like Talgo, Maxam, Initek Energy in the Uzbek market.
The mounting reciprocal interest in the realization of new joint projects across economic sectors is indicative by the regular contacts among business circles of our two nations. Islam Karimov wished good luck to the business forum underway currently in Tashkent and which has been represented by an impressive delegation of Spanish entrepreneurs from the sphere of infrastructure projects and high technologies.
Also, a range of other issues in the mutual agenda has been addressed at the meeting at the Oqsaroy.
Jose Manuel Garcia-Margallo sincerely thanked the President of Uzbekistan for a warm welcome and handed the invitation by Prime Minister Mariano Rajoy Brey to travel to Spain with an official visit. The guest also confirmed the willingness of the Spanish leadership to continue with the consolidation of open political dialogue and bilateral cooperation in all areas of shared interest.
(Source: Press Service of the President of the Republic of Uzbekistan)
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On April 21, 2014, the Foreign Minister of Uzbekistan Abdulaziz Kamilov met with the Minister of Foreign Affairs and Cooperation of Spain José Manuel García-Margallo, who arrived in our country on an official visit.
During the meeting, the sides noted that they consider this meeting as the continuation of the fruitful dialogue at foreign ministries level that started in November 2013 during the official visit of Uzbek delegation to Spain.
The sides confirmed their mutual interest in further strengthening the Uzbek- Spanish cooperation in political, trade, economic, investment, cultural, humanitarian and other areas.
The foreign ministers also exchanged views on topical international and regional agenda.
After the talks, the ministers signed the Program of Cooperation between the Ministry of Foreign Affairs of the Republic of Uzbekistan and the Ministry of Foreign Affairs and Cooperation of the Kingdom of Spain for the years 2014-2016, and held a press conference for Uzbek and foreign media.
In the meeting was also present the Ambassador of Spain José Ignacio Carbajal.
(Source: MFA.UZ)
economy
Uzbekistan’s GDP makes up 25.764 trln. soums in 1Q
The volume of gross domestic product (GDP) of Uzbekistan made up about 25.764 trillion soums in the first quarter of 2014, or grew by 7.5% year-on-year, according to preliminary data.
According to the State Statistics Committee of Uzbekistan, the industrial production rose by 9.9% in the reporting period and reached 16.288 trillion soums.
In the first quarter of 2013, the volume of production of agriculture goods rose by 6.2% year-on-year and reached 2.669 trillion soums. The investments into fixed capital reached 5.616 trillion soums or grew by 10.1% year-on-year.
The volume of constructions works increased by 15.5% year-on-year in January-March 2014 and reached 2.83 trillion soums.
About 264.7 million tonnes of freight were transported in Uzbekistan in the first quarter of 2014, which rose by 4.4% year-on-year. The freight turnover reached 9.79 billion tonnes-km (+2.6%).
Passenger transportation hit 1.473 billion people in January-March 2014. The growth rate made up 4.9% year-on-year. The passenger turnover rose by 5.5% to 19.757 million passenger-km.
Retail trade turnover of Uzbekistan made up 11.739 trillion soums in the first quarter of 2014, which grew by 14.3% year-on-year. The volume of paid services rose by 9.1% year-on-year to 4.935 trillion soums in January-March 2014.
Macroeconomic indicators in January-March 2014
| billion soums | As % of January-March 2013 | |
| Gross domestic product | 25763.9 | +7.5 |
| Industrial output | 16288.5 | +8.9 |
| Agricultural output | 2669.5 | +6.2 |
| Investments in fixed capital | 5615.9 | +10.1 |
| Construction work | 2830.6 | +15.5 |
| Cargo transportation (excluding pipeline transport). mln. t | 264.7 | +4.4 |
| Freight turnover (excluding pipeline transport). mln. t-km | 9789.7 | +2.6 |
| Passenger transportation. mln. persons | 1473.3 | +4.9 |
| Passenger turnover. mln. pas-km | 19757.2 | +5.5 |
| Retail trade turnover | 11739.4 | +14.3 |
| Paid services | 4935.4 | +9.1 |
Data of State Statistics Comittee of Uzbekistan
(Source: UzDaily.com)
A Strategy of Development of the economy of Uzbekistan
The vector of investment flows in the global marketplace has been rapidly changing its landmarks. A couple of years ago, emerging markets used to be in priority. Today, the funds are forwarded to the world’s advanced economies. As a result, the competition for investment has heated up; the economies seek new ways to attract foreign companies – through benefits and preferences. Uzbekistan ranks among leaders: this year the country is planning to draw more than $3.9 billion in foreign investment and loans with 29% growth YOY.
Speaking about the unique Uzbek economic development model it is appropriate to mention one basic fact. The government initially preferred integrated modernization of the manufacturing industry, privatization and denationalization, foreign investment and innovation. As a result of socio-economic reforms and privatization of state property, a significant part of the industry was owned by private domestic and foreign companies. This allowed not just complete technological reequipping of key industries in a short time, but made the economy less energy-intensive, and therefore competitive and efficient.
The rapidly changing environment on the global market is clearly proving that diversified economy is bound to succeed. Today, even export giants like China, Japan, Germany and the United States tend to the expansion of domestic demand, which should not just compensate for lost export revenues, but turn into a full-fledged basis for further growth. In this context, it is very important to focus on the country’s domestic producers, motivate them for import-substitution and cooperation. Uzbekistan has long accentuated these two fundamental directions. Rich natural resources, a highly skilled workforce, good transport infrastructure and a favorable investment climate have allowed domestic companies to promptly build the manufacture of many industrial goods and components that were previously imported from abroad with additional transportation and currency costs.
The national strategy of industrial development is featured by gradual progress without spikes. It has largely conditioned the success of a significant part of domestic industrial manufactures, and helped the country to overcome the negative impact of the global economic crisis without much loss. Attraction of domestic and foreign investment in the real economy is a key pillar of this strategy, which, in turn, drew innovation, advanced equipment, IT-technologies, international quality standards, and much more like a magnet. Unique industrial objects were established in a short time; many of them are based on foreign capital.
All of them focus on the manufacture of competitive products under the import-substitution and localization programs. It is worth noting the annually approved investment program, the major ‘road map’ of investment in Uzbekistan, which reflects the most important projects for the state. The document ensures implementation of strategically important initiatives aimed at construction of new facilities, modernization, technical and technological extension of enterprises, accelerated development of transport, engineering, communication and social infrastructure, creation of new jobs and achievement of sustainable and dynamic progress of the economy.
All abovementioned measures have strengthened the economy of Uzbekistan, made it more dynamic and sustainable, reduced the dependence of the domestic real sector on external factors, accelerated introduction of new and efficient technologies in production processes. Besides, they have entailed a greater engagement of local raw materials and production resources, manufacture of modern competitive goods, safe and efficient use of foreign exchange resources, and creation of new jobs. The volume of domestic localized production has increased almost twice over the past three years. Last year alone 455 companies carried out more than 1,140 localization projects, thus increasing the production volume by 1.2 times and ensuring the estimated effect of import-substitution in the amount of $5.3 billion.
Such indicators could not but affect the expansion of the export flow. There is a clear and stable upward trend in sales of finished products in its structure. For example, in 2013 over 72% of total exports fell to non-commodity products, which is a prime example of diversification and competitiveness of the economy.
Despite this progress, the country is not going to stop its investment run-up, and is getting prepared to take new heights this year. Experts predict that in 2014 the total volume of capital investments from all sources of funding will make up $14.3 billion with a growth of 10.1% YOY, including $3.9 billion of foreign investments and loans (29% growth).
Why is Uzbekistan so attractive for foreign investors? Natural wealth, professional manpower, transport and engineering infrastructure, favorable business climate – each of these factors is able to interest investors. Meanwhile, a clear and well thought-out policy, based on mutual trust and benefit of the parties is perhaps the principal investment beacon of the country. In fact, big business is not about the immediate benefit but a long-term relationship based on confidence in the future, the adequacy and predictability of policy. Uzbekistan has been demonstrating this for two decades. It is also appropriate to keep in mind solely economic factors. Investment attractiveness of domestic industries is conditioned by a relatively low production costs, electricity and natural gas, a significant internal market.
Besides, Uzbekistan is currently taking serious steps to improve its business environment and is strategically intending to raise its rating in the World Bank Doing Business, which is very important for investors. In particular, according to the recent study, the rating of Uzbekistan has significantly grown in such categories as business and property registration, obtaining of building permits, loans and international trade. As experts say, this primarily indicates to the effectiveness of the legislation on support and stimulation of private enterprise and foreign investment. And this certainly is not the limit for our country. For further ascent in the rating list the state is taking specific steps: the further simplification, cheapening and reduction of the number of regulatory procedures, introduction of contact-free online forms of interaction, as based on contemporary international practice.
On the other hand, the number of foreign investors in any economy proves its accessibility for business. Our country has long made the expression ‘The fewer the barriers are, the more there are privileges and preferences’ as a key principle of relationships with the businesses. Last year alone, Uzbekistan canceled more than 80 kinds of licensing procedures, 15 licensed activities, reduced 65 types of statistical reporting, introduced 22 kinds of online tax services, and cut the terms of issuing the necessary permits twice. Meanwhile, the attitude of investors is the key indicator of the level of the business environment, unlike figures. Judging by the growing number of joint ventures and ongoing projects, this rate is higher than ever.
It is worth mentioning the unique investment initiatives of Uzbekistan, which was first in Central Asia to pioneer them. In 2008, Uzbekistan launched the first Free Industrial Economic Zone Navoi, which paved the way to integrated introduction of innovations, technologies, and financial resources. This practice justified itself a couple of years later: Navoi FIEZ concluded agreements on the establishment of dozens modern industries. 19 investment projects totaling over $100 million were implemented there over the years, including the manufacture of modems and set-top boxes, digital electricity meters, power cables, heating and hot water boilers, mobile and fixed telephones, medicines and other goods. In 2013, enterprises of Navoi FIEZ produced goods to more than 100 billion soums with 25.8% growth YOY. Namangan and Angren zones keep pace with them.
Despite the fact that creation of the transport, industrial and engineering infrastructure has not been completed in the first one, the first three projects were already implemented there involving $6 million of Chinese investment on the manufacture of mobile phones and processing of animal products, fodder production. The manufacture of high-tech products is underway in FIZ Angren under five projects worth nearly $44 million, including the production of energy-efficient LED lamps, copper pipes of different diameter, briquette coal. The construction of a new sugar plant, and some other companies has been completed. However, the huge number of foreign investors seeking for local partners and establishment of new tech businesses is perhaps the main indicator of the success of these zones, unlike finished projects.
There is another inspirational fact in terms of drawing both domestic and foreign investment: the country has an effectively operating banking system, a kind of circulatory system serving the entire national economy. It not only provides stability and protection in the face of global market fluctuations, but also actively supports the real sector of the economy through loaning. Today, long-term investment loans for more than three years make up a considerable share of investments in commercial banks. In general, bank lending to the real sector of the national economy increased seven times over the past decade. In particular, the total amount of loans to the real sector of the economy grew by 30.1 % last year as compared with 2012 and exceeded the 26.5 trillion soums. The volume of loans for investment purposes increased almost 1.3 times and amounted to 7.2 trillion soums.
(Source: «Uzbekistan today» newspaper)