December10, 2014
Russian President to Visit Uzbekistan. 2
CEC issues mandates to CIS observers. 2
Reaping Daily Rewards in Aquaculture. 2
Legislation of the Republic of Uzbekistan in the field of investment3
POLICY
Russian President to Visit Uzbekistan
On the invitation of President of the Republic of Uzbekistan Islam Karimov, President of the Russian Federation Vladimir Putin is to pay an official visit to Uzbekistan on 10 December.
During the meetings and talks due in Tashkent, the heads of our two states are expected to discuss the current state and prospects of the Uzbek-Russian relations and exchange views on pressing regional and international issues.
A number of documents dedicated to the enhancement of bilateral cooperation across various spheres are anticipated to be signed during the visit.
(Source: Press-service of the President of the Republic of Uzbekistan)
elections to the oliy majlis of the republic of uzbekistan and local Kengashes of people’s deputies
CEC issues mandates to CIS observers
A long-term group of the observers of the Executive Committee of the Commonwealth of Independent States (CIS) led by first deputy chairperson of the CIS Executive Committee Vladmir Garkun arrived in Uzbekistan.
The mission was invited by the Central Election Commission of Uzbekistan to observe preparation and holding of parliamentary elections in Uzbekistan.
The mission was received by the chairperson of the Central Election Commission Mirzo-Ulugbek Abdusalomov. He briefed the mission on election legislation in Uzbekistan and preparations to elections to the Legislative Chamber of Oliy Majlis of Uzbekistan.
The mission also received information on pre-election agitation of the political parties and candidates to the MPs.
The staff of the mission was launched in Tashkent, which will gather, process and analyze materials, received during election process. The mission will also monitor mass media of Uzbekistan. The CIS observers received mandates.
The CEC said that three more international organizations – Shanghai Cooperation Organization, World Association of Election Bodies and Organization of Islamic Cooperation – will arrive in Uzbekistan to observe elections in Uzbekistan.
Representatives of about 40 Asian, European, African, American and CIS states also expressed wish to observe the elections in Uzbekistan.
(Source: UzDaily.com)
economy
Reaping Daily Rewards in Aquaculture
The Uzbek agriculture is moving toward diversification. Some two decades ago, huge fields of ‘white’ gold were a natural thing to see, while today they have been replaced by cereals, fruits and vegetable crops, as well as innovative trends for Uzbekistan like fishing, beekeeping and poultry farms. Moreover, domestic farmers do not hesitate to take risks and start a business in previously unknown fields. Fish farming is one such area.
Nearly 50% of global human grade fish accounts for aquaculture, which currently ranks among the fastest growing food industries. According to the Food and Agriculture Organization of the United Nations, fish farming has grown from zero since its inception in 1950 to 66.5 million tons in 2012.
This is huge and time-consuming work, where a single miscalculation, for example, a drop in water temperature even by one degree can lead to the death of the fry. Therefore, it is important to support farmers in their initiatives through preferential loans and professional advice. Uzbekistan has been pursuing this very policy. There are numerous ongoing projects on enhancing the industry’s efficiency with a focus on the streamlining of the system of its organization and support of fish farms, strengthening their forage reserves, allocation of lands and ensuring water supply.
In the first ten months of the current year the country has procured 32,800 tons of fish. Fish farms were supported with 23,000 tons of mixed fodder. Around 1.6 thousand hectares of land and new artificial ponds were allocated to about 420 farms. In addition, about 130 small reservoirs have been engaged in fish production.
“Today, we are applying interesting know-how to reduce the cost of fish,” says Zoir Kimsanov, an expert of Fishery Economy Department of the Ministry of Agriculture and Water Resources of Uzbekistan. “In artificial reservoirs we breed species of the fish feeding not on mixed fodder but on algae. The traditional fodder capacity is concurrently getting strengthened. There are specialized enterprises procuring fish forage. For example, the Yildiz Company procures 30-40 tons of feed monthly and supplies it to fish farms. We are currently doing research on the production of high-quality protein out of silkworm larvae, an additive in fish fodder.”
Previously, fish farms needed 4-4.5 kg of feed for gaining one kilogram of weight. Now, 1-1.2 kg will be enough owing to the increased caloric value,” explained Ilyos Qosimov, the Chairman of the company. “We are working on that jointly with several academic institutions, including the Institute of the Gene Pool of Flora and Fauna, Research and Production Enterprise Physics-Sun, the Research Institute of Animal Husbandry, Tashkent State Agrarian University, and others.”
Domestic farmers are not limited to fish farming. There is an ongoing project on crayfish breeding. That would allow for providing the domestic market with delicacies and useful products, as well as also exporting them.
(Source: “Uzbekistan Today” newspaper)
investments
Legislation of the Republic of Uzbekistan in the field of investment
“Adopting fundamental legal documents in the field of investment is of particular importance for the future of Uzbekistan. As well as regulating the attraction of foreign investments to the national economy, they ensure both the enforcement of all the rights and guarantees granted to foreign investors and the protection of their interests. Foreign investments provide a vibrant link with the outside world. In addition, they constitute a powerful source of radical structural and systemic reforms, without which the building of a novel society is unconceivable”. (Islam Karimov. “The Motherland Is Sacred for All”. “Uzbekistan on the Road of Economic Reform Intensification” Vol.3, Uzbekistan, 1996.)
The sources of investment law represent the outward expression of the norms regulating a whole spectrum of relationships in the investment-activity domain.
For now, Uzbekistan boasts a comprehensive system of legislative-legal documents that underlies the regulation of investment activity, including foreign investments. Their list is presented below: the Constitution of the Republic of Uzbekistan as of 8th December 1992; the Labour Code of the Republic of Uzbekistan as of 21st December 1995 (as amended); the Civil Code of the Republic of Uzbekistan as of 29th August 1996 (as amended); the Tax Code of the Republic of Uzbekistan as of 24th April 1997 (as amended and supplemented); Laws “ On property in the Republic of Uzbekistan” as of 31st October 1990 (as amended), “On foreign economic activity of the Republic of Uzbekistan” as of 26th May 2000 (a new wording), “On re-establishment of state ownership rights and privatization “ as of 19th November 1991 (as amended and supplemented), “On foreign exchange regulation” as of 7th May 1993 (as amended and supplemented), “On the customs tariff” as of 27th August 1997, “On foreign investments” as of 30th April 1998 (as amended), “On guarantees and measures to protect the rights of foreign investors” as of 30th April 1998, “On bankruptcy” as of 28th August 1998 (a new wording), “On investment activity” as of 24th December 1998, “On guarantees for entrepreneurial activity” as of 25th March 2000 and others.
In addition, there are a number of Presidential decrees and resolutions of the Cabinet of Ministers of the Republic of Uzbekistan, which are aimed at encouraging the country’s foreign economic activity, attracting foreign capital and reinforcing indigenous entrepreneurship.
Articles 53-55 of the Constitution of the Republic of Uzbekistan lay down the foundations of investment activity. In particular, Art. 53 of the Constitution declares that the market-oriented national economy is based on all types of property. The state guarantees the freedom of economic activity, entrepreneurship and labour with due regard for the priority of consumer rights, equality and legal protection of all types of property.
The provisions referred to above are concretized in a variety of normative-legal documents.
Consolidating the principles of private law is one of the peculiarities of the Civil Code of the Republic of Uzbekistan. These include the equality of the legal regime for all subjects of civil relationships governed by law (Art.1), inviolability of private property (Art. 166,231), inadmissibility of the state’s arbitrary interference in the economic life of society, guarantees of the unimpeded realization of the right of ownership (Art. 171) and guarantees of getting one’s violated rights restored (Art. 11).
Article 11 of the Labour Code of the Republic of Uzbekistan, “The application of labour laws to non-citizens of the Republic of Uzbekistan” points out that the labour laws apply to foreign citizens and persons without citizenship, working on the territory of the Republic of Uzbekistan under a labour contract signed with an employer.
The Tax Code of the Republic of Uzbekistan stipulates a number of privileges granted to foreign investors.
The Law “On property in the Republic of Uzbekistan” permits the existence of any types of property, provided they are conducive to the efficient performance of the national economy and a rise in the population’s welfare. This Law guarantees the inviolability of all types of property and equal conditions for their development. The Republic of Uzbekistan creates all necessary conditions to ensure the safety and multiplication of property.
The Law “On foreign economic activity of the Republic of Uzbekistan” is designed to regulate the relationships stemming from the execution of foreign economic activity. Its major tasks are: to ensure the economic safety, to protect the economic sovereignty and economic interests of the Republic of Uzbekistan when carrying out foreign economic activity, to foster the development of the national economy and to create conditions needed for integration of the country’s economy with the world economic system.
The Law “On the re-establishment of state ownership rights and privatization” specifies the organizational-legal principles on which to transform the public property in the Republic of Uzbekistan in order to create an effective, socially-oriented market economy.
The Law “On foreign exchange regulation” specifies the principles underlying the execution of currency transactions in domestic economic turnover and international credit-settlement relationships; the powers of state authorities in the field of foreign exchange regulation and currency-resource management; the rights and obligations of legal entities, physical persons and foreign states in regard to the ownership, use and disposal of currency values; the principles of control and responsibility for the infringement of foreign-exchange regulation laws in the Republic of Uzbekistan.
The Law “On competition and limitation of monopolistic activity in commodity markets” specifies the organizational and legal principles of prevention, limitation and suppression of monopolistic activity and unfair competition. The document aims to provide the conditions needed for the formation and effective functioning of competitive relationships in commodity markets.
The Law “On foreign investments” is one of the main sources of law in this field of relationships. This appears from the title of the Law itself and from a wide range of regulated relationships outlined there. The Law considers a broad range of issues surrounding the definition of foreign investments (Art. 3), foreign investors (Art. 4), ways to implement foreign investments (Art. 5), enterprises set up with a share of foreign investments (Art. 6), branch establishments, subsidiaries and representative offices of enterprises with foreign investments (Art. 7) and economic associations of enterprises (Art. 8). The following notions are also specified there: the legal regime of foreign investments on the territory of the Republic of Uzbekistan (Art. 9), the rights granted to foreign investors (Art. 10), the obligations of foreign investors (Art. 12), concessive agreements (Art. 13), the attraction of foreign employees (Art. 14), the freedom of movement (Art. 15), insurance of foreign investments (Art. 16), securing of obligations (Art. 17), re-organization or liquidation of enterprises with foreign investments (Art. 18), the state’s obligations in respect of foreign investments (Art. 19), the functions of authorities involved in the attraction of foreign investments (Art. 20), the powers of state authorities in controlling the activities of foreign investors (Art. 21) and dispute-related provisions (Art. 22).
The Law “On foreign investments” stipulates various forms of cooperation with foreign partners and attraction of foreign resources.
The Law “On foreign economic activity of the Republic of Uzbekistan” contains a special article (Art. 12) called “The attraction of foreign investments”, which determines that the following values are regarded as foreign investments on the territory of the Republic of Uzbekistan: all kinds of material and non-material values and the rights to possess them, including the right to own intellectual property, as well as any profit generated from foreign investments, which is re-invested by foreign investors in entrepreneurship and other lines of activity, not banned by the legislation. Both the form and procedure for implementing foreign investments on the territory of the Republic of Uzbekistan are specified in Uzbek law.
The Law “On guarantees and measures to protect the rights of foreign investors” comprises 13 articles, detailing all the procedures that are designed to secure and protect foreign investors’ rights.
The same Law also envisages additional protection measures and guarantees granted to foreign investors (Art. 4), guarantees against nationalization, terms of requisition (Art. 5), guarantees of funds usage (Art. 6), guarantees of funds transfer (Art. 7) and guarantees of foreign investment repayment in connection with the termination of investment activity.
The Law “On investment activity” is designed to regulate investment activity. A given document deals with such notions as “investment”, “investment activity”, “investor” and the like. Besides, the Law specifies the objects and subjects of investment activity, as well as the types and forms in which to implement investments.
There are also other normative-legal documents regulating the entire complex of investment relationships.
The Presidential Decree, “On measures to stimulate foreign economic activity, to attract and protect foreign investments in the Republic of Uzbekistan”, issued on 24th July 1992, orders to work out and publish, within two months, an investment program of the Republic of Uzbekistan, with a view to creating the necessary conditions for the nation’s onward socio-economic development, stirring up its foreign economic activity, satiating the home market with vital commodities, attracting additional capital investments, advanced equipment and management experience, providing reliable guarantees for the protection of foreign investors’ rights, and ensuring the efficient exploitation of the country’s export potential. Apart from a list of the most significant investment projects in the priority sectors of the national economy, which are expected to ensure the resolution of topical problems of the Republic’s life, a given Program will detail the technical-economic characteristics of these projects.
What’s more, the Presidential Decree in question stipulates:
The granting to foreign investors and their partners on the territory of the Republic of Uzbekistan of the right to redeem, on a tender basis and exclusively for investment purposes, industrial premises, buildings, equipment and dwelling quarters, as well as the right to long-term lease of land plots;
Exemption from taxation of the portion of profits earned by enterprises set up with the participation of foreign capital, which is re-invested in the expansion of production, technological modernization and realization of social programs.
The Presidential Decree “On additional measures to encourage the establishment and functioning of enterprises with foreign investments” as of 31st May 1996 is intended to create a favorable environment for the establishment and efficient performance in the Republic of Uzbekistan of industrial enterprises with foreign investments and for the achievement of an increase in their contribution to strengthening the country’s economic potentialities and facilitating the national economy’s integration with the world economic system.
The Presidential Decree stipulates the following objectives: to stimulate the creation and efficient functioning of enterprises with foreign investments, which turn out export-oriented and import-substituting produce; to ban the issuance of departmental documents, complicating the procedures for the establishment, registration and performance of enterprises with foreign investments and requiring the presentation of additional documents and certificates that are not stipulated in governmental resolutions; to work out regulations on the relationships between enterprises with foreign investments and industrial enterprises manufacturing export-oriented output.
The Order of the President of the Republic of Uzbekistan No P-638 “On measures to intensify control over the efficient use of foreign investments” as of 20th June 1996 provides for (a) setting up, within the framework of the Control Inspection at the Administration of the President of the Republic of Uzbekistan, a special service of control over the efficient use of foreign investments; and (b) approving regulations on the service of control over the efficient use of foreign investments, operating as part of the Control Inspection at the Administration of the President of the Republic of Uzbekistan.
Issued on 30th November 1996, the Presidential Decree “On additional incentives and privileges granted to enterprises with foreign investments” (as amended) specifies the terms of official registration of enterprises with foreign investments, in a move to foster the creation and efficient performance of industrial enterprises with foreign investments. Additionally, the document stipulates the introduction, since 1st January 1997, of the following tax breaks: to extend the period of profit-tax exemption from 5 years to 7 years – for industrial enterprises with foreign investments; to reduce the current rates of profit tax; to exempt enterprises with foreign investments from profit tax for 5 years since the start of production.
The Presidential Decree “On additional measures to stimulate the development and investment activity of enterprises with foreign investments” as of 13th December 1996 allows the National Bank of Foreign Economic Activity of the Republic of Uzbekistan and commercial banks, licensed to execute currency transactions, to allot credits in freely convertible currency towards the costs of investment projects (from their own funds and attracted credit resources), and to independently fix the interest rates on the investment foreign exchange credits they allot. All these measures are intended to incentivize the development of industrial enterprises with foreign investments and to encourage their investment activity.
Issued on 31st January 1997, the Presidential Decree “On additional measures to stimulate the development of small and medium-sized entrepreneurship” determines a package measures to use credit lines allotted by international organizations for encouraging the development of small and medium-sized businesses in Uzbekistan. The document stipulates that the equipment used to implement investment projects should be fully exempt from customs duties.
The Presidential Decree “On additional measures to stimulate the export of produce manufactured by enterprises with foreign investments” as of 26th August 1997 is designed to create an auspicious environment for enterprises with foreign investments to swell the amount of profit they derive from their performance and to increase production of competitive goods.
What’s more, in order to ensure the structural transformation of the national economy, the Presidential Decree “On additional measures to stimulate and implement projects” was issued on 19th January 1998. The document specifies a series of concrete measures to achieve the indicated purpose, including the exemption from value-added tax of technological equipment imported to the Republic of Uzbekistan etc. These measures are expected to enhance the inflow of foreign capital to the country.
Issued on 24th October 1998, the Presidential Decree No УП-2143 “On subsequent measures to stimulate the production of children’s footwear by enterprises with foreign investments” specifies measures to exempt enterprises with foreign investments, specializing in the production of children’s footwear, from value-added tax on imported raw stuff, materials and uppers, which are used in their production.
The 27th March 1998 Presidential Decree partially amended the Presidential Decree “On additional incentives and privileges provided to enterprises with foreign investments” as of 30th November 1996. In accordance with the new Decree, intended to boost the creation of small and medium-sized enterprises with foreign investments, it is stated that, starting 1st January 1998, the enterprise, whose charter capital contains no less than US $250,000 worth of foreign investment (in equivalent), is categorized as an enterprise with foreign investments; one of the enterprise’s participants should be a foreign legal entity; and foreign investments account for no less than 30 per cent of the enterprise’s charter capital.
The 28th April 2000 Presidential Decree No УП-2598 “On measures to attract foreign direct investments to the reconnaissance and extraction of oil and gas” is designed to raise the efficiency of prospecting and reconnaissance works, to increase the volume of explored reserves of hydrocarbons and to create propitious conditions for the attraction of foreign investments to the Republic’s oil and gas sector.
Moreover, it is established in a given document that foreign companies, whose cooperation is enlisted when it comes for reconnaissance and prospecting for oil and gas, are offered the most-favoured-nation treatment; the exclusive right to carry out prospecting and reconnaissance works on a certain territory, with the subsequent development of any deposit discovered on the indicated territory by setting up a joint venture or on terms of concession; the right of priority to receive a new territory in order to continue their prospecting and reconnaissance works in cases where no resource of industrial scale is discovered on the territory specified in the corresponding contract; the right to own property and to freely export the portion of extracted hydrocarbons and products of their processing on the tolling basis stipulated in the joint venture’s constitutive documents or the concessive agreement.
The Presidential Decree under discussion provides a list of privileges granted to foreign companies involved in geological prospecting. These privileges also apply to joint venture enterprises extracting oil and gas.
The Decrees and Resolutions of the President of the Republic of Uzbekistan referred to above are fundamental normative documents regulating investment law relationships.
On 6th January 1998, the Cabinet of Ministers of the Republic of Uzbekistan passed the Resolution “On measures to improve the information support of the efforts to attract foreign investments”. The document provides for the creation, within the structure of the State Property Committee, the Ministry of Macroeconomics and Statistics and the Ministry of Foreign Economic Relations of the Republic of Uzbekistan, of special groups that specialize in providing the information support of the efforts to attract foreign investments.
The major tasks and functions of such groups include: the establishment of standards for the database of the Republic’s legislative-regulatory framework, which determines the legal terms, guarantees and privileges designed to create an auspicious investment climate for foreign investors, and the database of investment projects, including those in the process of realization and those planned; the provision of foreign investors with reference, information and analytical materials they may need; the organization of translation into the main foreign languages of the indicated information for foreign investors on how to invest in the economy of Uzbekistan; the establishment of contacts with international information agencies, in a move to ensure the dissemination abroad of information on the investment climate in Uzbekistan and on projects, in which foreign investors may participate; the dissemination of information on the Republic’s investment potentialities in the internet; the organization of seminars on concrete sectors and directions of investment activity with the attraction of foreign partners etc.
The creation of commercial enterprises with 100 per cent foreign capital has a certain role to play in the broad attraction of foreign investments. Today, foreign investors are interested not so much in the creation of partnerships with enterprises and organizations of Uzbekistan as in the acquisition of reliable elements of control over production. With this in mind, the Cabinet of Ministers of the Republic of Uzbekistan issued the Resolution No 477 ”On measures to stimulate the attraction of foreign capital when privatizing state property” (as amended) on 18th November 1998. This document enumerates the country’s most liquid enterprises, whose shares will be sold, completely or partially, to foreign investors. When purchasing shares of privatized enterprises, foreign investors sign buying-and-selling agreements with corresponding property foundations. At the same time, such agreements should contain the new owner’s obligation to retain the privatized enterprise’s personnel. Besides, it should be specified there that the state will impose sanctions on foreign investors for non-fulfillment of their obligations under the agreements signed.
The Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 548 “On the Program of measures to implement major-construction projects with the participation of foreign investments for 1999” as of 31st December 1998 envisages a package of measures that are aimed at ensuring the opportune implementation of investment projects with the participation of foreign investors and the efficient use of foreign investments. A given document approves a list of priority investment projects, launched in previous years and to be continued in 1999, which will be funded by attracted foreign investments and credits. In addition, this Resolution provides a list of priority investment projects to be realized with the participation of new foreign investments and credits etc.
The Procedure for applying the lowering coefficient to the rate of income (profit) tax for production enterprises with foreign investments was passed on 20th January 2000. The document details the application of the lowering coefficient to the rate of income (profit) tax depending on the proportion of local raw stuff, materials and components used in production.
At the same time, it is pointed out there that enterprises with foreign investments include foreign enterprises, branches and joint ventures, which meet the requirements established by the legislation for enterprises with foreign investments and whose own production and maintenance of manufactured output account for more than 60 per cent of the total volume of receipts they derive from their economic activity.
It is also established in the document under discussion that the lowering coefficients are applicable only to enterprises, with the cost of local raw stuff, materials and components amounting to or exceeding 70 per cent of the total cost of raw stuff, materials and components they use in their production. Local raw stuff, materials and components encompass the raw stuff, materials and components produced on the territory of the Republic of Uzbekistan. Enterprises entitled to apply the lowering coefficient should present, in addition to the calculations of income (profit) tax, a special certificate of the use in their production of local raw stuff, materials and components.
On 11th October 2000, the Cabinet of Ministers of the Republic of Uzbekistan issued the Resolution No 393 “On additional measures to attract foreign investments to the establishment of joint venture enterprises”. The document is aimed at encouraging the efforts to set up enterprises with foreign investments in the country’s regions. Moreover, the Resolution plans to set up an interdepartmental working group to coordinate the creation and performance of enterprises with foreign investments in the regions. Such enterprises are granted the exemption from income (profit) tax for the period of 3 years since the start of production; within the next two years, they will pay income (profit) tax at 50 per cent of the established rate.
To sum up, it can be said that the Republic of Uzbekistan continually devotes much attention to the improvement of investment activity in the country.
(Source: «Business partner.uz» newspaper)
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