INFORMATION DIGEST № 194
21 Septembert, 2012
POLITICS ......................................................................................................................................................................................... 1
UZBEKISTAN, SOUTH KOREA TO ENHANCE COOPERATION BUILT ON LONGER-TERM INTERESTS ................................................. 1
INTERNATIONAL CONFERENCE "ON THE ROLE AND IMPORTANCE OF SMALL BUSINESS AND PRIVATE
ENTREPRENEURSHIP IN THE IMPLEMENTATION OF SOCIO-ECONOMIC POLICY IN UZBEKISTAN ............... 1
CENTER OF GRAVITY ..................................................................................................................................................................... 1
CULTURE ........................................................................................................................................................................................ 6
GRANDIOSE EVENT UPCOMING ..................................................................................................................................................... 6
POLITICS
Uzbekistan, South Korea to Enhance Cooperation Built on Longer-Term Interests
President of the Republic of Uzbekistan Islam Karimov has arrived in the Republic of Korea
September 19 on the invitation of President Lee Myung-Bak with a state visit.
As reported earlier, President of the Republic of Uzbekistan Islam Karimov arrived in Seoul on
September 19 with a state visit at the invitation of President of the Republic of Korea Lee Myung-Bak.
The second day of the visit started with a trip to the National Memorial Complex, a burial site of the
remains of nearly 170 thousand people who sacrificed their lives for the freedom and independence of the
native land.
The leader of Uzbekistan paid tribute to the memory of the fallen and laid a wreath to the Memorial
Column.
The official ceremony of our two presidents’ meeting took place in the Cheong Wa Dae (Blue
Palace) historical complex and office of the President of the Republic of Korea.
In an atmosphere of openness and willingness to step up cooperation, Islam Karimov and Lee
Myung-Bak discussed issues across the extensive bilateral agenda, including the interaction in political and
diplomatic, trade and economic, investment, cultural and humanitarian areas as well as those in regional and
international affairs.
It has been stressed that the current meeting – an event in the year the two sides mark the twentieth
anniversary of diplomatic relations – constitutes a logical extension of the intensive and mutually
confidential Uzbek-South Korean dialogue. One of the practical outcomes of last year’s Tashkent summit
was the stone-laying ceremony into the construction of an impressive joint project, Ustyurt Gas and
Chemical Complex at the Surgil Deposit in western Uzbekistan, with the participation of the heads of our
two states. The scheme has come to be one of the brightest symbols of the mutually rewarding cooperation
between Uzbekistan and South Korea.
Following the meeting, Presidents Karimov and Lee adopted a joint declaration which contains the
evaluation of the current state of multilayered cooperation between our two nations and the priority aspects
of the enhancement of bilateral relations for the future.
An agreement on legal assistance in civil and economic issues, a tourism cooperation agreement,
along with a package of documents in lending and finance area and other spheres have been signed at the
presence of the heads of state.
Later that day, in an office residence allocated to him, the President of Uzbekistan met with leaders
of eminent South Korean businesses; namely, the Chief Executive Officer of POSCO Corporation Chung
Joon-Yang, the Chairman and CEO of Korean Air and Hanjin Group of Companies Cho Yangho. These
meetings served to discuss issues pertinent to bolstering the longer-term mutually advantageous interaction
and searching for opportunities to elaborate and implement new joint schemes. President Islam Karimov
exchanged views on shoring up cooperation in information technologies and communications systems with
Maeng Hyung-kyu, Minister of Public Administration and Security of the Republic of Korea.
Other events envisioned within President Islam Karimov’s state visit to the Republic of Korea are
due September 21. (Press-service of President of the Republic of Uzbekistan)
INTERNATIONAL CONFERENCE "ON THE ROLE AND IMPORTANCE OF SMALL
BUSINESS AND PRIVATE ENTREPRENEURSHIP IN THE IMPLEMENTATION OF
SOCIO-ECONOMIC POLICY IN UZBEKISTAN
Center of Gravity
Some 4.2 thousand enterprises with foreign investment are currently operating in Uzbekistan
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The notion that Asia has long become the focal point for investors has been the mainstream idea
among prominent international experts and specialists. Today anyone would say about this region’s good
economic prospects. However, only a few decades ago, when the new Central Asian states appeared on the
world map, expert community hardly believed that they would be able, in the nearest future, to enter the
club of countries with fastest growing economies. These newly emerged countries inherited too difficult
problems from the previous government, they said. However, Uzbekistan of today and Uzbekistan of the
early 90's are two opposite points that stay across a huge way that the country has made during this short
term, short not just by historical, but also by any standards. The principle of three I’s – "Investment,
Innovation, Integration" – enabled Uzbekistan to take its place under the sun at the global economic market.
Reference point
The last years of the previous century clearly demonstrated that the world has entered new era of
development. Barriers, the "iron curtain" and similar economic and political barriers have collapsed under
the pressure of fast-growing global market, international integration and cooperation. The policy of denying
the development of entrepreneurship and private sector, reluctance to integrate with the global economy,
disregard to foreign investment and technology have proved to be inexpedient.
From the beginning of its independent existence Uzbekistan adopted the principles of market
economy. Privatization of state property, especially in industrial sector, laid the basis for this process.
Uzbekistan’s new economic system’s driving force were modernization, foreign capital and technology, the
development of small and private businesses on the accumulated international experience and national
mentality.
Alongside, local experts together with lawmakers studied business conditions created in other
countries, and the guarantees that investors have there and how good is entire business environment in those
countries. The best of the world experience has been adapted to local conditions and to the specificity of the
country. In step by step mode Uzbekistan has created favorable investment climate and now provides
business opportunities that are now being analyzed today by other countries. The system of privileges and
preferences, established in Uzbekistan, drastically increased the volume of foreign investments. Thus, in
2011 the volume of foreign investments and loans to the economy grew by 16% to over $3.3 billion; 70% of
them, which is more than $2.3 billion, are direct foreign investments. Today, about 4,200 companies with
foreign capital operate in Uzbekistan.
Integration component
Initially, in order to facilitate communication and improve interaction between investors and the
state, government has adopted a policy of maximum transparency and structured investment policy. When
investors understood the goals and tasks set by the state to the joint projects the process of negotiations and
signing of long-term contracts went easier. In the early 90's, when the process of privatization and
divestment of state property started out, Uzbekistan made a bid for the development of effective publicprivate partnership. Such approach has fully justified itself. As no large investment project can be
implemented without the combination of comprehensive development of resource potential, human capital,
and active generation and introduction of new findings and technologies. That could be achieved only
though good interaction between the state and investors.
That’s why it became an ordinary practice in Uzbekistan to adopt annual investment programs. For
example, this year, country plans to develop 23.6 trillion sums of capital investment. The government plans
to attract 1.7 trillion soums in foreign investments and loans under the state guarantee. Additional 4.3
trillion soums will be composed of direct foreign investments and loans. To increase the amount of foreign
direct investments into promising industries of the regions of the country, the government introduces special
annual regional investment programs. Under those programs, last year, Uzbekistan attracted $841.2 million
in investments for 1226 projects and thus created 22.1 thousand jobs. However, experts note that today there
is still considerable untouched potential for growth in this area. Regional and sectoral structure of attracted
foreign investments does not fully correspond to the regions’ potential. The main inflow of foreign
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investments - more than 76.5% of the total – come to Tashkent city, and to Andijon, Farghona and Tashkent
regions.
In early April of this year, the country adopted a new document that outlines horizons of investment
policy. Presidential decree gave foreign investors new incentives and preferences, especially for investing
and bringing advanced technologies to the regions of the country.
In particular, it has been greatly expanded the list of industries and sectors of the economy whose
enterprises with foreign investments from the second quarter of 2012 are subject to the tax incentives
established by the Decree of the President on additional measures to stimulate the attraction of direct foreign
investment. These enterprises are released from paying income (profit) tax, property tax, improvement and
development of social infrastructure tax, single tax for microfirms and small enterprises, as well as from
mandatory contributions to the National Road Fund. Except for companies located in the city of Tashkent
and Tashkent region.
In addition, the Government has introduced an order according to which if an investment projects
worth over $50 million and the share of foreign capital within it makes at least 50%, in this case, the
construction of necessary external, outside the production site, engineering and communication networks are
done at the expense of state budget funds. It was an important decision to allow foreign investors to buy
law-profitable factories for zero prices and without competition but under certain investment commitments to build modern enterprise.
Moreover, Uzbekistan was a pioneer state in the entire Central Asian region when in late 2008 it
opened first Free Industrial Economic Zone in Navoi. It offers fundamentally new business environment for
foreign and domestic companies. Few years after zone’s launching there are already more that 17 various
high-tech projects. Construction and installation works have been fully completed at 12 of them. The
success of Navoi Free Industrial Economic Zone proved that the chosen model of interaction with investors
is effective. Therefore, this year, Uzbekistan began to create a new business area - Special Industrial Zone
Angren. It is now only in its infancy state, but a number of agreements on the establishment of large
industries there has already been signed.
Speaking last week in Tashkent to foreign experts and representatives of business, President Islam
Karimov noted that Uzbekistan has spend about $100 million in the construction of engineering networks,
logistics and support systems at Navoi Industrial Zone. This, according to the President, enabled to actively
attract foreign investors to the creation of dozens modern productions there. This year, the government has
already worked out and implements a special program on creating production infrastructure and
communications in industrial zone “Angren,” that costs over $60 million.
Productive outcome
Strong legal framework, tax privileges and preferences, good investment climate, along with other
factors enabled Uzbekistan to become one of the leading countries in the world by the number of high-tech
projects implemented on its territory. A large number of these projects are carried out with partners from the
Asia-Pacific region.
A package of loan and project agreements to finance construction of Ustyurt gas chemical complex
at Surgil deposit was signed in May of this year in Tashkent. The new gas chemical complex, that will be
opened in 2016, will produce annually 4.5 billion cubic meters of natural gas, 400 tons of high density
polyethylene, 100 thousand tons of polypropylene, 110 thousand tons of pyrolysis gasoline, and will created
more than a thousand new jobs places directly on the plant.
The total project cost is about $4 billion. Sources of funding - direct investment of Korean
companies KOGAS, Honam, CTX Energy and the National Holding Company Uzbekneftegaz for a total of
$1.4 billion and $2 54 billion of credit loans raised on project financing.
As First Deputy Prime Minister Rustam Azimov noted, this project is a good example of successful
policy to rationally use the country’s rich resources through establishing productions with high added value,
cardinal modernization of production facilities, increasing export potential by raising the exports of finished
products and creating new high-tech production facilities and job places.
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Another high-tech project started this year in the oil and gas industry is the construction of a unique
plant to produce synthetic liquid fuel GTL from methane produced at Shurtan Gas Chemical Complex. The
new plant will operate under the brand Oltin yo'l GTL (Golden Path GTL). This project will bring to the
country high-tech, innovative production, that has no analogues in the CIS and Europe. The new plant will
produce clean synthetic liquid fuels, primarily diesel fuel and aviation kerosene of Euro-IV and Euro-V
standards. The project is developed by Uzbekneftegaz together with the South African Sasol Synfuels
International Limited and the Malaysian Petronas International Corporation LTD. Foreign partners act not
just as investors, but also as intellectual component of the project. Sasol provides its own next-generation
technology on the basis of which the synthetic liquid fuels will be produced in Uzbekistan.
Fundamentally new types of industries are also being created in the country. Together with South
Korean companies it is planned to launch two modern productions of technical silicon, which subsequently
will be used as the basis for establishing the production of microelectronic components. In late August,
Navoi Uzbek-South Korean joint venture Uz-Kor Silicon had already started the first production of
technical silicon. The second factory - JV Uz-Shindong Silicon - will be built in Angren.
Principal goal to improve public wellbeing
Xiaoyu Zhao, Vice President of the Asian Development Bank:
Uzbekistan has successfully overcome negative impacts of the global economic crisis, and achieved
sustained high economic growth and continues structural reforms. The country made substantial
achievements in social development and significantly improves the welfare each year.
The Country Partnership Strategy with Uzbekistan for 2012-2016, approved last week, states that
Uzbekistan has one of fastest growing economy in Central Asia, with a per capita income that increased
three times over the past 7 years, and aspiring to become in 2020 a country with incomes above the average
level.
The Uzbek government has implemented a series of reforms that streamlined the process of business
registration through one-stop-shop method; new tax code was adopted in the country; rates of business
taxation significantly reduced. In the frameworks of some programs the government continues providing
targeted credit lines to financial institutions for on-lending to small business and entrepreneurship in order
to improve their access to finance, and to resolve the key issues that contribute to the development.
Expanding bilateral cooperation
Fahd Al-Mekrad, general manager at the Institute for Development and Management
Consulting (Kuwait):
Observing high results of the work done in Uzbekistan to develop small business and private
entrepreneurship, and analyzing the processes in world economy, I am pleased to note that cooperation
between our countries is expanding. Economic cooperation is the priority, as well as the expansion of
cooperation in the areas of small business and private entrepreneurship, science, education, information
technology and agriculture. Favorable business conditions along with benefits and opportunities created in
Uzbekistan for foreign investors raise interest of Kuwaiti businessmen in opening and expanding their
business in Uzbekistan.
I would like to especially note that due to its high effectiveness the Uzbek model of development has
gained wide acknowledgement in the world today. Another great achievement of Uzbekistan is high
intellectual potential of its population.
Focus on education
Keys Ladaz, professor at Fontis University (Netherlands):
I work in education and at the same time I have my own company Interwine Consultancy. As a
specialist with theoretical and practical experience in business, I want to emphasize that the opportunities
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established in Uzbekistan for foreign investors and for entrepreneurs engaged in small business represent the
positive results of the economic reforms.
In the Netherlands as in Uzbekistan, government pays great attention to the development of this
sphere. 60% of gross domestic product accounts for small businesses and private entrepreneurship. Because,
small companies unlike large enterprises are more dependent on assistance, incentives and practical support.
It is noteworthy that Uzbekistan formed an orderly banking system that provides soft loans to new
companies.
It is pleasing that there has been established a system that ensures youth with work places; graduates
of professional colleges get employed at enterprises; young people are being provided with comprehensive
support for their professional development and for opening their own business. This augments the interest of
young entrepreneurs in business activity.
Your own path of economic reforms
Janamitra Devan, Vice President of the World Bank and the International Finance
Corporation:
Each country adopts its own model of development. Yet the success stories of modern economies
have an important thing in common which is a targeted approach to investment in specific sectors and the
creation of ecosystems that bring together industry, innovators and investors. It should not be surprising that
governments facing the current global recession, intensively move toward direct cooperation with private
sector. In Uzbekistan, where significant efforts have already been made, people search for answers to these
questions.
We pay tribute to the important steps taken by the government of Uzbekistan in many areas. For
example, the recent decrees of the President of Uzbekistan laid direction for further development of business
environment in the country, so to conform it to international standards. We hope that in the future it will
bring significant results.
The reforms implemented in Uzbekistan reflect the desire of Uzbek government to actively pursue
economic diversification as the key to sustainable growth. This will be the foundation for efforts to attain
the status of a middle-income country in the top group.
Appealing market
Noriyuki Yonemura, Secretary General, Intellectual Collaboration Group to Promote MarketOriented Economy, Tokyo :
The transformations that are going on now in Uzbekistan in economy, science, education, culture,
tourism and telecommunications deserve to be mentioned. The development of urban infrastructure and
entire country is just awesome.
The rising interest of world well-known companies to directly invest in Uzbekistan is the results of
this country’s growing prestige in the international arena. The ever-increasing demand for cars produced
here proves that all sectors of Uzbek economy, including industrial sector, are actively developing.
I think we should learn a lot from Uzbekistan in matters such as making stable financial sector,
support to small business and private entrepreneurship, modernization, technical and technological reequipment of productions, diversification of economy, cost reduction and boosting products’ international
competitiveness.
Success story of phased reforms
Parviz Morewedge, Professor, New York State University, Director of Global Scholarly
Publications (USA):
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All areas, including the economy, are dynamically developing in Uzbekistan every year. During the
years of independence, this country has taken a worthy place in the world community. The country’s
prestige is growing. Uzbekistan makes more and more achievements through step by step reforms in the
market economy, which were already recognized by international community, in particular, by the Asian
Development Bank, the World Bank, the International Finance Corporation, and by many other major
financial institutions.
Uzbekistan’s well thought-out model of the economy’s development could be an example for many
countries. In particular, the timely adopted and consistently implemented anti-crisis program has allowed
Uzbekistan to develop its economy stably. Due to rapid development and dominance of its small business
and private entrepreneurship sector, Uzbekistan managed to effectively cope with the negative impacts of
the global crisis. Constant attention to the development of this sector, wide foreign investments and everincreasing number of joint ventures yielded fruitful results.
Upholding family business
Kaspars Klavins, Professor of Riga Technical University (Latvia):
Uzbekistan’s actions on the development of small business and entrepreneurship, and in particular
family business sector are worth to be noticed. As the income of Uzbek families is increasing, they became
much stronger. Family is an important component of any society. It is encouraging that soft loans, grants
and practical assistance were given to support family businesses and to create opportunities for families, not
only in cities but also in rural areas. I know that in your country, you study social situation of each family,
and consider possibilities for employment for those women who want to work, bringing them to outwork
and family business.
Active and stable development of Uzbekistan’s economy confirms the viability and effectiveness of
the development model chosen by the country. These significant results are seen in high rates of economic
growth, macroeconomic stability, structural upgrading of the economy, and in the volume of attracted
foreign investments. All this is widely recognized by the international community. (Source: Uzbekistan
Today newspaper)
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CULTURE
Grandiose Event Upcoming
Ahead of the Style.Uz Art Week 2012
The most spectacular and scaled event in the cultural life of the country – traditional Style.Uz Art
Week 2012 is coming soon that brings together in the capital distinguished figures of culture and art, as well
as experts from across the globe. This year the project is going to be wider in scale and promises to rich in
events for connoisseurs of drama art, cinematography, fashion, music and others spheres.
Every year the major project of the Fund Forum the Style.Uz Art Week 2012 becomes the platform
for the international cultural dialog, demonstration of rich national culture of the Uzbek people,
development of various fields of the art, as well as provide the creative youth with the opportunity for
professional growth. Due to extensive program of this year Art Week the time-frame is to prolonged and
new grounds for conducting various events included, as well as additional places for talented youngsters
allocated.
Style.Uz Art Week 2012 is to include four major projects. Among them are the Golden Guepard
International Film Forum that is to open the project and lasts from 30 September to 5 October. The event
brings together film industry professionals, renowned actors, film makers and cinema critics from cross the
world. New ideas and creative experiments will be discussed. Modern cinema connoisseurs will have the
opportunity to see products by talented cinematographers both of Uzbekistan and abroad. In a word,
organization of the 2nd Golden Guepard International Film Forum becomes a significant step in the
development of the national cinema and cooperation in the field of world cinematography.
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Then, 1 - 7 October will be held the 3rd Theatre.UZ International Theater Festival in the format of
creative laboratory and will represent the creativity of the capital, regional and foreign theaters. Among
foreign theater troupes are representatives from Bulgaria, Israel, Kyrgyzstan, Russia and Tajikistan. Within
the theater festival will be conducted various workshops by leading national and foreign experts, as well as
awarding of the 2nd Gulenko Prize for stage designers.
Other spectacular event of the Art Week is the 6th TashkentAle International Tashkent Photo
Biennale 2012 that takes place 4 - 9 October and includes about twenty diverse exhibitions by famous
photographers from Azerbaijan, Argentina, Egypt, India, Spain, US, France, and other countries. It tote, the
event involves more than 200 masters of photography from 35 countries.
Moreover, the Style.Uz Art Week 2012 includes the Festival of National Dress that will be held in
tandem with the closing ceremony of the 3rd Theatre.UZ International Theater Festival 2012. The beauty of
the Eastern color, combination of national traditions with modern tendencies in works of young designers
makes the event especially enthralling. Another project in fashion turns Underground youth show, the best
participants of which will get the chance to parade their collections at the general fashion show.
The Style.Uz 2012 program also includes exhibitions of classics and modern painters of Uzbekistan,
as well as UK, France and Japan, conduct of workshops by representatives of the London and Birmingham
Fashion Colleges, fashion shows by distinguished world designers, exhibition of traditional art, fashion and
design, contest of hairstylists, charity gala-concert in support of women with breast cancer diagnosis, and
other charity auctions and concert of world-famous singers. In general, this year Art Week leaves none
indifferent. (Source: Uzbekistan Today newspaper)
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