In the first days of January, the President of Uzbekistan got acquainted with the presentation of the work carried out in 2023 and the measures planned for 2024 to implement the investment policy and increase the share of renewable energy sources. The President noted that more than $22 billion in foreign investment was attracted last year, which is 1.8 times more than the previous year, and stressed the importance of increasing the volume of foreign investment in the current year.

Ensuring further growth of the national economy, as defined in the New Development Strategy of Uzbekistan, requires investment of huge funds, the latest innovative developments, technologies and equipment. And, as the experience of practically all countries shows, in modern conditions this can only be achieved with the active participation of foreign investors.

The desire to convince investors that it is profitable to invest capital in our country has been manifested practically since Uzbekistan gained independence. However, for both objective and subjective reasons, the volume of investment has been far from the desired level.
 
Every detail counts in business

According to experts, a real investor carefully studies official and other information about the country before making a decision to invest. No detail can be overlooked.

For many years, financial investors have been paying attention to the attractive aspects of our country's investment potential, in particular, favorable climatic conditions, natural resources, low prices for electricity and natural gas, and cheap labour.

At the same time, investors were aware that as a result of imperfect legislation on foreign investment, the lack of transparent, clear and equal "rules of the game" for all, the implementation of some large investment projects, such as the Asaka Automobile Plant, the Dehkanabad Potash Fertilizer Plant, the Kungrad Soda Plant, the Shurtan Gas Chemical Complex, was rather exceptional. A number of investment projects under the guarantees of the country's leadership had special conditions with "personal" benefits and preferences.

Another example. It is now difficult to calculate how many billions of dollars, including investments, Uzbekistan has lost due to the boycott of Uzbek cotton, justified by the use of forced labour, including child labour, in our country during the harvest. Years of refusal by foreign companies and world-famous brands to buy Uzbek cotton and textile products made from it has caused enormous damage not only to the relevant industries, the national economy as a whole and exports, but also, to some extent, to the international profile of the country, which is the most important factor for investment and is closely studied by foreign investors.

There have been cases where investors have walked away because one party or the other has violated the terms of the agreement. Some did so quietly, others with scandal, which did not go unnoticed by potential foreign investors.

In addition, investors thoroughly studied issues related to state regulation of the economy, tax, customs and currency legislation, business conditions, problems with privatization and the introduction of market mechanisms. And often the choice was not made in favour of Uzbekistan.
 
A massive result-oriented work effort

President Shavkat Mirziyoyev changed the situation by identifying the special role of attracting foreign investment among the many priority issues of the country's socio-economic development. It may be recalled that on December 14, 2016, Shavkat Mirziyoyev, speaking at a joint session of the Chambers of the Oliy Majlis upon assuming the office of the President of Uzbekistan, stressed that foreign investment, advanced technologies, including ICT, must be more actively attracted in all spheres in order to modernize industries and regions, increase their competitiveness and develop export potential. It is on this basis that it will be possible to double GDP by 2030.

Almost immediately, the development of concrete steps in this direction and the adoption of relevant decisions began. The Presidential Decree "On Priority Measures for the Liberalization of Foreign Exchange Policy" of September 2, 2017 is just one of many. The document clearly states that excessive administrative regulation in the sphere of currency circulation has become, among other things, a factor hindering the attraction of foreign investment. Foreign investors who had invested capital in the Uzbek economy did not understand why they could not use their foreign currency freely. Their businesses suffered because it was almost impossible to conduct currency transactions with partners in other countries in a timely manner. How were foreign investors, who invested mainly in the production of export-oriented products, supposed to react to the obligation to sell part of the foreign exchange earnings from exports back into the country? And how should they have reacted to restrictions on taking their own money abroad in foreign currency?

Therefore, the possibility provided by the Decree for legal entities to acquire foreign currency in commercial banks without any restrictions for payment of current international transactions, import of goods, labour and services, repatriation of profits, repayment of loans, payment of business travel expenses and other non-trade transfers, as well as the abolition of the obligation to sell the proceeds of exporters' activities in foreign currency regardless of their form of ownership and other measures were positively received by foreign investors and some even called them truly revolutionary.

One could endlessly recount the efforts of the Uzbek leadership to create a favourable investment climate in the country and attract foreign capital to the domestic economy. One could cite many examples of improving legislation, reducing trade barriers, lowering the tax burden, simplifying customs procedures, removing restrictions and providing a wide range of benefits and preferences for foreign investors. But it is the result that counts. And the main result of the investment policy pursued in our country is the increase in the inflow of foreign investment into the Uzbek economy from $3.3 billion in 2017 to $9.8 billion in 2022, i.e. almost three times. Importantly, the upward trend is steadily increasing. For example, more than 160 investment agreements and contracts worth $11 billion were signed at the second Tashkent International Investment Forum, while 105 investment documents worth $7.8 billion were signed at the previous forum in 2022.

We can confidently say that Uzbekistan is carrying out massive result-oriented work, and foreign investment is given the green light because the country's leadership has a clear understanding that without foreign investment we cannot ensure the growth of the national economy and we will not be able to solve the tasks set for the future. In February 2023, at a meeting on investment attraction and industrial development, the President noted that in recent years, $31 billion worth of foreign direct investment had been attracted as part of industrial programmes. According to their development over the past five years, the volume of industrial production has increased by 1.4 times and exports by 1.5 times. However, in order to ensure stable economic growth rates in the next five years, industrial production must increase by a further 1.5 times and exports by up to $30 billion. This will require huge investment, including $70 billion of foreign investment.
 
A time of great opportunities

It is obvious that the first and foremost thing that any foreign investor expects is to make a profit on his or her investment. And if we are not talking about adventurers and speculators, but professional investors, they prefer to minimize the risks in their business and do not take anyone's word for it. They weigh up every offer carefully and only then make a decision.

In this respect, Uzbekistan has certain advantages over other countries. Recently, these advantages have increased due to global developments.

Several important factors can be cited to support this claim.

First, Uzbekistan is attractive because of its peaceful policies and the absence of tensions, armed conflicts and social unrest.

Second, despite numerous challenges affecting economic growth in many countries, including Uzbekistan, the domestic economy is developing at a relatively high pace.

Thirdly, our country is less vulnerable to sharp increases in energy prices, which negatively affect business operations and the competitiveness of manufactured goods in many other countries.

There are also favourable natural and climatic conditions, a well-developed infrastructure, the presence of valuable minerals, where Uzbekistan is a world leader, relatively low labour costs, an improving business climate and other factors.

However, the main factor attracting many investors to Uzbekistan is the country's clear development programme, which focuses on transforming the economy as a whole.

A notable example is the stated commitment to transition to a 'green' economy, particularly the use of renewable energy sources. In a speech at the Second Tashkent International Investment Forum, the President of Uzbekistan highlighted that the programme for the construction of solar and wind power plants, and the production of components for them, offers foreign companies the opportunity to invest $8 billion in this industry. Some of the world's leading companies are already taking advantage of these opportunities.

Among other projects in Uzbekistan, the Saudi company 'ACWA Power' is implementing projects to build wind power plants in Bukhara and Karakalpakstan, and solar power plants in the Samarkand and Tashkent regions. At the end of November last year, President Shavkat Mirziyoyev attended the groundbreaking ceremony for a pilot 'green' hydrogen production plant in the Tashkent region, which is being implemented in partnership with ACWA Power. In total, the company's involvement in Uzbekistan includes the successful implementation of major energy projects worth $7.5 billion.

A few days before the New Year 2024, the head of state attended the commissioning ceremony of five solar power plants and one wind power plant in six regions of the country. The UAE company Masdar has completed the implementation of projects to build three modern photovoltaic stations in the regions of Jizzakh, Samarkand and Surkhandarya with a total capacity of 900 megawatts. In the Tamdyn district of the Navoi region, the first phase of a 500 megawatt wind power plant was completed. In the Bukhara and Kashkadarya regions, the Chinese company China Gezhouba Group completed the first stage of two solar power plants with a total capacity of 1,000 megawatts.

As a result of the full implementation of these projects, which will cost a total of $2 billion, two million households will have uninterrupted access to electricity and two billion cubic metres of natural gas will be saved.

Inviting the participants of the investment forum to implement projects in the field of green economy, Shavkat Mirziyoyev said that Uzbekistan is ready to create all necessary conditions for successful work of investors.

The same approach is planned for investors in other sectors of the Uzbek economy.
 
Actions Speak Louder than Words

The task of attracting foreign investment is carried out at various levels, involving the Government, sectoral ministries and agencies, regional authorities, diplomatic missions abroad, manufacturing companies and relevant organizations.

The President pays attention to this work. During the Second Tashkent International Investment Forum, Shavkat Mirziyoyev explicitly stated his readiness to meet with any new investor and personally guarantee the success of their business in Uzbekistan.

In early December last year, the President of Uzbekistan attended the United Nations Climate Change Conference (COP28) in Dubai. In addition to addressing the plenary session of the global climate summit, Shavkat Mirziyoyev met with the heads of several major companies during his working visit to the UAE to discuss investment cooperation.

At a meeting with the CEO of Tadweer, Ali al-Daheri, the Emirati company's plans to implement power generation projects in Uzbekistan based on advanced technological solutions were discussed.

Discussions were held with Safi Ghasemi, Chairman of the Board of Directors of Air Products, on the practical aspects of further developing cooperation with the company, particularly in high-tech industries. In May this year, an investment agreement was signed between the Government of Uzbekistan, Air Products and Uzbekneftegaz for Air Products to acquire and operate a $1 billion natural gas processing plant in the Kashkadarya region. The initiators of the agreement noted that the use of Air Products' expertise at the Uzbek GTL plant in the production of high value-added products through deep processing of natural gas will contribute to increased production efficiency, lower end product costs, and a reduction in harmful emissions.

During the meeting with SWS CEO Ahmed Al-Shamsi, the Emirati company's plans to support and implement water supply and treatment projects in the regions of the republic were reviewed, including the involvement of international partners such as France's SUEZ and Japan's Marubeni.

The President discussed the prospects of implementing joint investment projects with the Chairman of Amea Power, Hussein Al Nowais, focusing on the development of green energy and tourism infrastructure in the country. Support was expressed for the company's plans to operate in Uzbekistan.

The President also received a delegation of leading companies from the United Arab Emirates, led by the Minister of Investment and CEO of ADQ Holdings, Muhammad Hassan Al Suwaidi. The issues of supporting and promoting joint projects, including investment cooperation in the energy sector, were discussed. A strategic partnership agreement with Masdar was signed during the visit.

In recent years, a clear investment policy has been implemented and an effective mechanism for attracting foreign capital has been created. The Council of Foreign Investors, under the presidency, is in place to provide investors with a direct link to the head of state and to quickly resolve issues related to investment activities. The Ministry of Investment, Industry and Trade has established a system to assist investors at all stages, from project initiation to launch, under the "one-stop-shop" principle. Opportunities for developing investment cooperation are actively used through major international events, intergovernmental commission meetings, business forums, business trips and meetings, where, in addition to negotiations and discussions, presentations of Uzbekistan's investment potential and its economic sectors, specific projects, 'B2B' and 'G2B' contacts, direct visits to production enterprises and regions proposed for project implementation are conducted.

Such a business-oriented approach positively influences the conclusion of agreements and the subsequent transition to concrete joint actions.
 
All Flags in Business Are Flying Towards Us…

Paraphrasing the famous lines of Pushkin, it can be said that the geography of investment in Uzbekistan is constantly expanding. At one of the meetings held last year on further expansion of investment attraction, the President announced that over the past two years a number of agreements had been reached as a result of high-level meetings with Saudi Arabia, France, Hungary, Singapore, Egypt and other countries. Positive changes in cooperation with Pakistan, Thailand, the Czech Republic and Japan were noted.

A more complete picture of the geography of foreign investment can be drawn using data from the Presidential Statistics Office. According to these data, as of December 1, 2002, 18,278 companies with foreign investments were registered in our country, which is 2,323 more than on the same date of the previous year. The number of active companies with foreign investment has increased by 1.3 times in the last five years. At the beginning of December last year, there were 2,889 companies with partial or 100% capital from Russia, 2,125 from China, 1,802 from Turkiye, 994 from Kazakhstan, 703 from South Korea and 293 from the USA. Investment cooperation with neighbouring countries in Central Asia is growing, with mutual investment between them increasing 5.6 times compared to 2017. In January-November alone, 158 joint ventures and foreign companies with partners from Kazakhstan, 62 with capital from Tajikistan, 59 from Turkmenistan, and 46 from Kyrgyzstan were registered in our country. The number of joint ventures and foreign companies with partial or 100% capital from Europe, South Asia, the Persian Gulf and other regions of the world is increasing.

Moreover, interest in projects in Uzbekistan is shown not only by potential investors from various countries, but also by those who have already invested in the Uzbek economy and plan to increase the volume of these investments.

For example, the Singaporean company "Indorama Corporation" is an important investor and technological partner in the chemical, textile and agricultural sectors of our country. The company plans to participate in the implementation of new projects and increase its direct investments from the current $600 million to $850 million.

The Turkish company "AKSA Enerji" has signed an investment agreement with the Uzbek side under which it will invest $250 million in the construction of a 400 MW gas piston power plant in the Nishan district of the Kashkadarya region as part of a public-private partnership.

At the German Business Day in Uzbekistan held in September, it was noted that the total volume of German investments in our country over the past two years amounted to almost two billion euros, and more than 100 joint projects with German partners are being implemented with a total volume of over $10 billion.

At the regular meeting of the deputy prime ministers of Uzbekistan and the Republic of Korea, the parties noted that the total volume of South Korean direct investment in the Uzbek economy exceeded $7 billion and stressed the importance of further expanding investment cooperation.

During the visit to Uzbekistan, the delegation of the Egyptian company 'Orascom Construction' explored the possibilities of implementing a project for the creation of an industrial zone in the Navoi region for the settlement of enterprises for the production of finished electrical, textile and pharmaceutical products. Representatives of the Egyptian company also shared plans to participate in the management of new industrial parks specializing in the production of finished textile products in the regions of Tashkent, Andijan, Kashkadarya and Namangan.

During the bilateral business forum held in Rome last June, it was noted that over the past four years the volume of attracted Italian investments in Uzbekistan has increased sevenfold, and the number of companies operating in our country with Italian capital has doubled. The forum was followed by the signing of a package of new investment and trade agreements in the fields of energy, agriculture, chemicals, leather and footwear, textiles, engineering, ecology, transport and logistics, and banking.

The management of the Indian company "Siroya Jewellers" expressed its intention to develop cooperation with jewellery producers in Uzbekistan and to invest in a joint project for the production of jewellery in our country.

In May 2023, a business forum was held in the Chinese city of Xi'an, where, in addition to our country's long-standing partners, more than 400 large Chinese companies took part and showed interest in establishing cooperation with Uzbekistan. The total volume of Chinese investments in our country has increased fivefold since 2017, reaching $11 billion. Last year alone, investments from China amounted to $2.2 billion. The number of joint ventures in Uzbekistan has tripled in the last five years. During the forum, Uzbekistan presented new concrete project proposals and initiatives for Chinese investors in the most promising sectors, such as the automotive industry, "green" energy, agriculture and fruit and vegetable processing, electrical engineering, chemicals, pharmaceuticals and several others.

There are many such examples. Different countries, companies of different sizes and activities, different investment volumes. However, they all have one thing in common - the intention to invest in the economy of our country. We welcome mutually beneficial cooperation with all of them, because foreign investments not only bring profits to the investors, but also contribute to the development of the national economy, its modernization, the establishment of numerous modern high-tech industries, the production of export-oriented and import-substituting products, the creation of tens of thousands of jobs, and ultimately to the further socio-economic development of the country, the growth of the well-being of the population.

 
 
 

Sobir Aliyev,
Correspondent of the newspaper 'Narodnoye Slovo'"