Uzbekistan: Economy

From the first days of independence, the Government of Uzbekistan has pursued a target to create socially oriented market economy.

  • priority of economy over the policy
  • state is the main reformer
  • superiority of law in all aspects of life and business activity
  • reforms can not be separated from effective measures of social protection
  • consistent and gradual implementation of market principles subject to economic and social conditions

The market transformations carried out by the Republic's Government created all the pre-requisites for effecting a long-term economic revival plan and for achieving a consistent growth of the economy.

The first stage of reforms laid down legislative base suitable for a market economy, with main principles:

  • liberty and equality of all forms of ownership
  • liberty of entrepreneurship

In 1994, economic reforms in Uzbekistan moved onto another stage to implement wide structural transformations, creation of competitive environment and increased use of economic tools for regulation.

The main results that the Republic has succeeded in achieving are the stabilization of the economy, a decrease in inflation to an acceptable level, a favorable investment climate, grain and oil self-sufficiency of the state and the establishment of a legal and institutional framework for the efficient functioning of market economy.

Nominal GDP560 146,7 m. soums (about USD 13 951,3 m.)
Share of manufacturing industry in GDP 17,4 %
Share of agriculture in GDP 22,5 %
GDP per capita 24 115, 6 soums (about USD 600)
Average monthly inflation 4,2 %
Foreign trade turnover USD 9,31 bn.
Export USD 4,59 bn.
Import USD 4,72 bn.
 

1996 year end results

In early 1997 Uzbekistan was given the status of a preferred gold and silver supplier to The London Association of Precious Metals. This enabled Uzbek gold and silverto increase their competitiveness on the global markets, proving their high quality and unique carat. The refined gold, silver and palladium produced by member companies of "Kyzyikumredmed-zoloto" concern are exceeding the international standards of quality.

Uzbekistan's gradual approach to reforms is based on five key principles that have been put forward by President Islam Karimov.

Uzbekistan is the main producer and supplier of cotton, strategic product with huge export potential. The Republic occupies fifth place in the world in production of cotton-fibre.

Nowadays only two countries, namely the USA and Uzbekistanhave companies producing complete set of field machinery and cotton processing machinery. A state owned "Uzselkhozmashholding" has the intention to replace old agricultural machinery with more modern equipment.

There is an Uzbek-American joint venture "Uz-Case Mash", which will assemble agricultural machinery in Uzbekistan.

One of the largest aircraft building corporations of the CIS is situated in Uzbekistan. The plant produces different types of aircraft and is close to launching serial production of a new passenger aircraft "Il-114" and a cargo plane "Il-114T"

In terms of independence the land, its deposits and other natural resources,economic, scientific, technical and intellectual potential that have been developed over the centuries by many generations became a national property and a guarantee of human well being.

In its core, the Uzbek land is plenty for reserves of unique mineral resources that have not as yet been fully exploited. So far, 95 types of mineral resources have been identified throughout 700 deposits in the Republic. Literally, these resources represent the whole Mendeleyev table.

Nowadays, Uzbekistan operates 370 mines with total output of more than 200 m. tonnes of minerals a year.

Uzbekistan possesses significant energy resources, such as oil, gas, coal and hydro resources that contribute to the development of its economy. Of the whole Central Asian region, Uzbekistan has 74% of all condensed gas, 31% of all oil, 40% of all natural gas and 55% of all coal deposits.

Explored deposits of natural gas represent 3 trillion cubic meters, gas deposits account for 2 billion tonnes and oil reserves - 350 million tonnes. The Republic occupies third place in gas output amongst the former Soviet Union states and is included in the top ten gas producers of the world.

Natural gas is not only an energy resource, it is also a valuable raw material for manufacture of fertilizers, synthetic fibbers, polypropylene, polystirole and other products needed for the Republic itself or exported abroad.

Also, the Republic has a high concentration of hydro energetic resources

Uzbekistan possesses 14% of the hydro resources of Central Asia that are potentially available for use.

For a long time, fuel and energy sector of Uzbekistan has responded to growing needs of the local economy and those of neighboring and other foreign countries.

New oil and gas fields that have been identified recently (Mingbulak and Kokdumalak deposits) will be sufficient for future needs of the Republic and will enable to achieve an increase in the export of energy products.

Uzbekistan is famous for its gold and rare metal deposits - high carat gold, silver, uranium and others. There are 30 gold deposits explored in Uzbekistan, with an aggregate tonnage of four thousand. In terms of gold production, Uzbekistan is second in CIS, eighth in the world and takes fifth place in production per capita.

For the last few years, Uzbek gold has been given three international awards for quality.

Also, there are a number of non-ferrous and rare strategic metals which will be of importance for the Republic's growth - copper, molybdenum, lead, zinc, wolfram, lithium and others.

Adding to the above, Uzbekistan possesses non metal resources, which are the raw materials used in manufacturing fertilizers and porcelain amongst others.

Those resources include kaolin, spar, quartz glass and quartz spar sands, phosphorus, bentonite clay. Many of the deposits of mineral resources will satisfy the Republic's needs beyond the next century and they are considered to be unique in the whole Eurasian region.

 

The open door policy of the Uzbekistan Government pursued in favor of foreign investments facilitated foreign trade and attraction of foreign capital in the local economy.

MAIN PRIORITIES OF UZBEKISTAN'S FOREIGN ECONOMIC RELATIONS:

  • promotion of the Republic's export potential establishment of export oriented economy
  • development of joint venture companies to produce ready-to-use goods
  • target policy of import substitution
  • further liberalization of foreign trade
  • wide attraction of foreign investments
  • creation, of modern infrastructure for foreign trade
  • preparation of highly experienced labour force

There are now largeinvestment projects that have been made possible by FDI - Bukhara oil refinery with a total foreign investment of USD 221 million, development of Kokdumalak oil & gas field (USD 142 million), trade and exhibition center (USD 100 million), rehabilitation of Tashkent airport along with purchase of new aircraft (USD 173 million), Uzbek smelter producing heat resistant and refractory metals (USD 32 million), Namangan silk processing Association (USD 31 million) and others.

One of the important developments in the attractiing investments was the establishment of joint venture companies. By the end of 1996, there were 3061 registered companies with foreign investments in Uzbekistan, from more than 80 countries.

In 1996, these joint ventures exported goods and services worth USD 213.7 million.

For 1996, the aggregate output of joint venture companies reached 41.6 billion Soums which was 6.7 billion more than the same indicator for 1995.

Good examples of such a fruitful cooperation are the joint ventures , successfully operating for a number of years and established with large companies from the USA, United Kingdom, Germany, South Korea, Russia, Turkey, Indonesia, Malaysia - Zarafshan-Newmont (1996 output 4.8 bn. Soums), Uz-BAT (2.4 bn. Soums), UzDaewooAuto (10.1 bn. Soums), Uz-Daewoo Electronics (2.6 bn. Soums), Uzdunrobita (1.2 bn. Soums), Coca-Cola (2.1 bn. Soums>

In addition there are over 400 other projects being prepared for potential foreign investment.

As well as being a prospective market for foreign investments, Uzbekistan is also a country with enormous capacities for the export of raw materials, goods and services. The total volume of exports for 1996 increased by 1.5 times compared with 1995. Newly established car manufacturing company "UzDaewooAuto", founded in co-operation with South Korean DAEWOO Corporation, has an annual production of 200 thousand cars, some of its products have been exported.

The energy system of Uzbekistan has 37 power plants with potential capacity of 60 billion kW/h per year, which completely covers domestic needs. Considering low usage of hydroenergetic potential rivers in the Central and South-Eastern Asia, China and other states, there is the potential of electric energy export to neighboring C15 countries.

Products of thechemical industry have significant export potential. Manufacturers in this sector produce fertilizers, chemical means for plants protection, chemical fibre and thread, plastics and synthetic rubber, household chemical goods, etc.

Uzbekistan is the only Republic in Central Asia being a producer of ferrous metals and rolled steel, kaprolaktam, engines, trailers for tractors, lifts, cut-glass goods, metal bars, water pumps, etc.

The food processing industry in Uzbekistan produces fruit and vegetables for export markets.

The country has well equipped large and medium sized companies focusing on tobacco, wine and spirits, canned food, vegetable and organic oil, dairy products, confectionery, bakery, fresh and dried fruits, vegetables and other products.

There is a great demand for silk cocoons, astrakhan, leather and wool products manufactured in the Republic.

Uzbekistan has a reliable transport routes with the Republic of Kazakhstan, which facilitates access to motorways of Russia, China and other countries of Asia and the Pacific region.

National Airline Uzbekistan Airways operates regular flights to 20 countries at the world. Tashkent is connected by direct flights with New York, London, Frankfurt, Beijing, Seoul and other cities. The flights are operated by modern aircraft, such as Boeing-767, A-310, 11-86. The Republic is a member of IKAO and IATA. The Tashkent Airport is deemed by IKAO as a first category airport and can host modern planes of all countries.
Foreign Trade Structure (aggregate for 1996,%)  

Main Trading partners of Uzbekistan
(Foreign Trade Structure)


Europian Community 21%
Russia 20%
South Korea 9%
Kazakhstan 7%
Turkmenistan 4%
Turkey 3%
USA 1%
UAE 1%
China 1%
Others 34%
Foreign Trade Turnover 100
Export 49.3
Import 50.7
Export 100
cotton fibre 38.1
Chemicals 2.4
ferrous and non-ferrous metals 3.5
machinery and equipment 2.8
foodstuff 4.5
energy products 6.0
services 8.3
miscellaneous 34.4
Import 100
Foodstuff 29.5
Chemicals 12.5
ferrous and non-ferrous metals 6.7
machinery and equipment 35.8
energy products 1.1
services 0.2
miscellaneous 14.3

Tere is a number of financial institutions which are supporting the realisation of infrastructure projects. They include banks, insurance companies, leasing and engineering companies as well as rating and consulting agencies.

According to existing legislation in Uzbekistan, all foreign investors and their interests are secured by by-laws and insurance protection in line with common international practice.
A major step has been taken by Uzbekistan towards integration to international law, when the Republic signed the Washington convention of 1965 "On settlement of investment disputes" and the Seoul convention of 1988 "On establishment of Multilateral Investment Guarantee Agency".

The right of foreign investors to obtain insurance protection along with residents is set forth in the "Law on Insurance" and the "Law on Foreign Investments and Guaranties for Foreign Investors' Activity".

Foreign investorscan protect themselves from various types of risks through the coverage offered by local insurance companies. They include Uzbekinvest National Export-Import Insurance Companywhich has been established under a Presidential Decree, as well as more than 60 other insurance companies, some of them having foreign capital.

As a result of the creation of appropriate financial structures, Uzbekistan managed to attract large direct investments by proving that the country has become a major center for investment and trade in this part of the world. Indeed, the most attractive attribute of Uzbekistan is that it keeps promises made to foreign investors.

This kind of approach was laid down and supported by the President and the Government of Uzbekistan , enabling our country to hold a preferred place among other CIS states in terms of investment attraction.

A stable socio-economic situation, an open economy, vast natural and labor resources, intellectual wealth and an intensively developing infrastructure is helping Uzbekistan to become a state with developed economy, complying with international standards and move alongside with other leading countries of the world. We believe in the great future of our country, we have an established strategy to achieve this goal.


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