Embassy of India

Tashkent

No.TAS/201/1/2017 March 08 , 2018.

Economic & Commercial Report for the

Month of January, 2018.

BILATERAL

Bilateral Trade – INDIA- UZBEKISTAN

Year
(Jan- Dec) / Imports from India(in US$ million) / Exports to India(in US$ million) / Total trade turnover(in US$ million)
2012 / 163.4 / 37.8 / 201.2
2013 / 217.4 / 42.2 / 259.6
2014 / 249.0 / 67.0 / 316.0
2015 / 260.6 / 58.7 / 319.3
2016 / 318.1 / 51.9 / 370.0
2017 / 291.0 / 32.6 / 323.6

(Source: Uzbekistan’s State Statistics Committee)

India is at 21st place among countries to which Uzbekistan exported and at 8th place, from which Uzbekistan imported during January- December, 2017.

The Government of Uzbekistan is sending a 25-member delegation led by Uzbek Deputy Minister for Development to the “International Engineering Sourcing Show” exhibition to be held on 8-10 March, 2018 in Chennai.

INTERNAL

Strategy action for 2017-21: Uzbek President signed a decree on state program for Implementation of the Strategy of Action for the five priority development directions of the Republic of Uzbekistan in 2017-2021 in the Year of Support of Active Business, Innovative Ideas and Technologies. Uzbekistan will increase the volume of construction of affordable houses by 1.5-2 times in 2018.

State Development Programme –Uzbek Deputy Prime Minister stated that now Uzbekistan will develop state development programs with long-term ideas and investment objectives for 10-15 years. The practice of developing annual investment programs is abandoned.

Power/ Energy Sector

Uzbek President Shavkat Mirziyoyev said that Uzbekistan plans to build the first nuclear power plant (NPP) in cooperation with Russia. Over the next five years, 32% of electricity in Uzbekistan will be generated by new hydroelectric power stations.

President Shavkat Mirziyoyev proposed to introduce the practice of implementing projects using energy-efficient, modern building materials and light structures as an experiment and thereby achieve a 20-30 percent reduction in their cost.

Big gas condensate reserves: Uzbekneftegaz reported that big gas condensate reserves were discovered in the Lower Surgil of the Ustyurt plateau in Karakalpakstan.

Mining & Metallurgical Sector (including Chemicals, Pharmaceutical & Fertilizers)

Uzbek President approved the proposal for implementation of the investment project “Construction of a mining and metallurgical complex based on the Tebinbulak deposit”. The project will produce up to 1 million tonnes of steel products per year. It is expected to be put into operation in 2024.

Navoi Mining and Metallurgical Combinat is one of the flagships of the domestic industry. Uzbek President has determined a number of measures on further enhancing the plants’ potential, modernizing existing and organizing new enterprises. In particular, work has begun on implementation of 27 investment projects worth $3 billion, until 2026.

Medicaments and medical products: Uzbek President signed a resolution “On measures on further ordering production and importing medicaments and medical products”. The document introduced clarification to some terms. Medicaments and medical products are recognized as local production if it is produced on full or non-full technological cycle of production.

Supply of materials and raw materials to industries: Uzbek President signed a resolution “On measures to ensure stable provision of the country’s economy with demanded types of products and raw materials”. It introduced an order on selling 27 high-liquidity products, manufactured by monopoly enterprises, on the basis of market principles exclusively through exchange trades. The State Committee on Geology and Mineral Resources has been authorised to issue licenses for right to use subsoil plots containing nonmetallic minerals by abolishing the Commission of the Cabinet of Ministers of Uzbekistan for issuing licenses for the same.

Production by Uzkimyosanoat:Enterprises of Uzkimyosanoat (Chemicals) produced 1.14 million tonnes of mineral fertilizers. In particular, the enterprises produced 854,810 tonnes of nitrogen fertilizers, 119,090 tonnes of phosphate fertilizers, 168,000 tonnes of potassium fertilizers. The forecast of export of products was exceeded by 29%.

Production of aluminum profiles: Green Line Profile implemented a project on production of various types and sizes of aluminum profiles at free economic zone “Navoi”. The cost of the project is US$32.5 million with FDI of US$5 million.

Commerce and Industry

Import of food products: President of Uzbekistan abolished individual customs, tax and other benefits, as well as other preferences granted to certain economic entities for import of food products into Uzbekistan from 1 February 2018. It is also planned to prohibit granting such preferences. No wholesale trade license will be required to purchase and sell food products at e-trades of commodity exchanges. Detailed information on the planned purchases of food products, income and expenditure of the fund is published monthly on the Portal for Public Services.

Small business units: As of 1 January 2018, the number of operating small businesses in Uzbekistan was over 229,600 units (9.1 % more than the previous year). – in Tashkent city (22.8%), Tashkent region (9.4%), Andijan region (8.9%), Ferghana region (8.8%). The number of newly created small businesses was 38,100 units, which is 22.0% more than in 2016. 8.2% of small businesses are small enterprises and 91.8% are microfirms. Major areas pertain to industry (38.6%), accommodation and food services (20.2%), trade (15.4% ) agriculture, forestry and fisheries (12.0%).Of the total number of existing family businesses 11679, about 1,640 family enterprises operate in industry sector. (Uzbekistan’s State Statistics Committee)

Uzbekistan will purchase 5,770 units of machineries (tractors, grain harvesters, seeders, sprayers, plows, cultivators etc) for agriculture in the first half of 2018.

Production of recycled products: Production of roll wrapping paper, cones for yarn, and egg trays has been started from recycled paper with innovative ideas and technologies, in Surkhandarya region (Termez).

Improving business climate: Uzbekistan took the second place among the CIS countries after Ukraine among all post-Soviet countries on improving the business climate. The rating is based on the World Bank’s Doing Business report.

Investments Portal in 2018: Uzbekistan plans to launch the “Portal of Investments” in 2018 within the framework of the State Program “Year of active entrepreneurship, innovative ideas and technologies”. The Internet portal will provide statistics and information on the created conditions for business in Uzbekistan. It will start functioning starting from 1 July 2018.

Peugeot carsunder “Made in Uzbekistan” brand: Uzbekistan Peugeot Citroen Automotive” plant, which was established as JV between “Uzavtosanoat” JSC and Peugeot group in July 2017, will produce 16,000 “Peugeot Expert” and “Peugeot Boxer” commercial vehicles from 2019.

Information Technology and Communication (ICT) sector

Uzbek President chaireda meeting for measures to be taken on further development of information and communication technologies and ensuring information security. It was attended by the Prime Minister of the Republic of Uzbekistan, his deputies, heads of relevant ministries and departments. The President noted that much remains to be done in the sphere of information technologies, the achieved results are noticeably lagging behind the indicators of other countries.Uzbekistan is at 95th place among 176 countries in the index of information and communication development.

Tourism Sector

Number of tourists, who visited Uzbekistan in 2017, exceeded 2.52 million, which is 24.3% higher than in 2016. At the same time, export of tourist services increased by 24% compared to 2016 to US$1.557 billion.At a press conference, Chairman of the State Committee on Development of Tourism informed about the ongoing work on enhancing the tourism potential of Uzbekistan, implementation of a unified state policy in this sphere, wide publicity of historical and cultural heritage of Uzbekistan, implementation of “Safe tourism” concept and introduction of national tourism products and brands on the world market.

MoU with UNWTO: The State Committee for Tourism Development of the Republic of Uzbekistan and the United Nations World Tourism Organization (UNWTO) signed a memorandum of understanding in Madrid. The sides intend to implement several projects in the field of tourism.

Smart tourism: The State Committee for Tourism Development is initiating the development of a concept for smart technologies at cultural heritage sites and in state museums. In this regard a project is implemented on providing QR codes to 50 historic sites of Bukhara, which allows tourists to receive information on sites with help of their smart devices.

State Tourism Committee of Uzbekistan developed state standards for hotels in the country, which is directed at improving service quality

QR codes: Two regions of Uzbekistan, Samarkand and Kashkadarya started introducing QR-codes at historical sites. With QR code, tourists can receive information about each of the objects with help of their smart devices.

E-Visa system: The Government of Uzbekistan plans to introduce a system of issuing electronic entry visas (E-Visa) at the airports. The issuance of electronic visas to citizens will be carried out at the airports of the country in accordance with written applications filed by foreign citizens in the process of processing documents for obtaining entry visas. All payments for obtaining an electronic visa can be made with the help of international payment systems Visa and MasterCard.

Textile Industry (Cotton & Silk)

Cotton Industry: Cotton and related processing industries occupies important places in the Uzbekistan’s economy. The government carried out large-scale economic reforms, including the modernization and technical upgrading of industries, radically changed the approach to the cultivation, processing of raw cotton and the production of a fiber that meets international standards. In this area, the government has created a transparent mechanism for the implementation of the export of Uzbek cotton fiber, high quality is recognized throughout the world, and therefore every year it increases the need for the international market.

Silk Industry: Complying to Uzbek President’s resolution on measures to further develop the silk industry, five projects will be implemented for production of raw silk, silk wool, silk fabric and finished products from it. The total cost of projects is US$26 million. Bukhara Brilliant Silk is implementing a project in cooperation with Karoma Investment Limited (UAE).

TexWorld Exhibition: Manufacturers of textile products of Uzbekistan for the first time took part in international textile exhibition TexWorld USA in New York (USA) from 22 to 24 January 2018.

Reforms – Finance, banking, tax

As per President’s resolution, Uzbekistan introduces Commodity Nomenclature for Foreign Economic Activities (TN VED) of the 2017 version from January 1, 2018.The World Customs Organization has made changes and additions to the Harmonized System for Description and Coding of Goods, which entered into force in 2017.

Excise tax reduced on GM cars: The rate of the excise tax on cars of GM Uzbekistan (an Uzbek-US carmaker) in 2018 will be 5% compared to 29% at the beginning of 2017.

Loans to banks with liquidity deficit: The Central Bank of Uzbekistan has been given the right to lend to commercial banks with a liquidity deficit. Credit resources will be provided on the security of gold, currency values, government debt, commercial bills, etc.

Selling bankrupt enterprises to banks: Uzbek President abolished a practice of selling enterprises declared bankrupt or having outstanding loans to the commercial banks.

National Logistics Portal: Uzbekistan intends to develop and launch the National Logistics Portal to support national freight carriers and create additional amenities for business entities. With the help of the portal, business entities will be able to make online orders for transportation of their goods.

ATM for currency exchange: A single international processing center (payment system GlobUz) and Asia Alliance Bank launched the first ATM for currency exchange in Uzbekistan on 15 January 2018. It will allow users to make currency-exchange transactions without visiting banks’ branches.

Uzbekistan Havo Yollari (Uzbekistan Airways) will open regular flight on the route Tashkent-Barcelona-Tashkent from 24 May 2018.

Foreign Economic Activity and Trade

Foreign trade turnover: Foreign trade turnover of Uzbekistan in 2017 made up US$27 billion with exports US$14.0 billion & imports US13.0 billion. The balance of foreign trade was US$945.5 million, including with the CIS countries - US$809.5 million and with other countries US$136.0 million. The volume of exports of food products increased by 26.1%, due to increased exports of alcoholic beverages and non-alcoholic beverages by 61.1%, wheat by 32.2% and fruit and vegetable products and processed products by 15.6%. The increase in exports of ferrous and non-ferrous metals by 29.5% is observed due to the increase in zinc and its products by 45.4%, aluminum and its products by 80.0% and copper and its products by 34.7%. In the structure of imports, the bulk is occupied by 38.9% for machinery and equipment and 16.5% for chemical products and products. Share of services in total exports is 25.1%, of which transport services at 11.5% for, and travel services at 11.3%.

Among the CIS countries the main foreign trade partners are Russian Federation, Kazakhstan, Ukraine, Kyrgyzstan and Tajikistan, which account for 28.7% of the foreign trade turnover, among other countries—China, Turkey, the Republic of Korea, Germany, Afghanistan, Brazil, India, Iran, Latvia, Lithuania, France, the United States, Italy, which account for 41.6% of the total foreign trade turnover.

Turnover of retail trade: Turnover of retail trade in Uzbekistan is increased by 2.4% in 2017 compared to 2016 (State Statistics Committee). The increase in demand for goods such as consumer goods, tobacco products, gasoline and alcoholic beverages led to an increase in the growth rate for large enterprises by 14.5% compared to the previous year.

Macroeconomic Indicators

Consumer prices in December, 2017: Consumer prices for goods and services in Uzbekistan in December 2017 increased by an average of 2.7%. For food products it rose by an average of 4.4% and non-food products - by 1.8%, and services - by 0.8%.The main inflation factors were increases in tariffs for legal and banking services - by 15.0%, household services by 1.6%, education services by 1.2% and medical services by 1.1%.

Consumer prices inflation: The State Statistics Committee of Uzbekistan said that devaluation and liberalization of national currency led to acceleration in the rate of inflation and affected overall growth of prices for goods and services. In 2017, food products became more expensive by 15.9%, non-food - by 16.1% and services - by 8.6%. The retail prices for cars, produced in Uzbekistan, rose by 1.5 times on average. Non-food products for 2017 went up by 16.1%. The increase in gasoline prices in November 2017 by 39.7% led to an increase in the CPI also.

According to the IMF, inflation in the republic in 2018 will be 14.3%. The Central Bank of Uzbekistan forecasts inflation in the range of 11.5-13.5% in 2018.

Foreign exchange reserves: The volume of Uzbekistan’s net gold and foreign exchange reserves stood at US$26.6 billion in 2017.

Uzbekistan’s economy growth in 2017: GDP grew to249.17 trillion soums (approx. USD 36.76 billion) in current prices and grew by 5.3% compared to the corresponding period of 2016. GDP per capita was 7.692 million soums (approx. USD950), which is 3.6% more than in the previous year. Share of the primary sector (agriculture, forestry and fishing) in the GDP structure rose from 18.1% in 2016 to 19.2% in 2017, the secondary sector (industry and construction) - from 32.9% up to 33.5%. And the share of the tertiary sector (service sector) in the GDP structure decreased from 49.0% to 47.3%. The industrial production grew by 7%.

Share of services in GDP of Uzbekistan was 47.3% in January-December of 2017 (The State Statistics Committee of Uzbekistan).

In 2017 the number of newly created enterprises and organizations made up over 41,000 in Uzbekistan, which is 25.2% more than the same period last year.

As of 1 January 2018, the number of operating enterprises with the participation of foreign capital reached 5517 units in Uzbekistan, including 3087 - joint ventures and 2430 - foreign enterprises. Majority of enterprises with foreign investments operate in industry sector. Over 1,035 enterprises were created with Russian investments. At the same time, out of 3,905 companies created with foreign capital, 1035 created with the Russian capital, 812 with Chinese capital, 510 with Korean capital, 508 with Korea, 503 with Great Britain Capital, and 125 companies with Indian capital.

Uzbekistan exported goods and services worth US$13.9 billion in 2017, which is 15.4% higher than in 2016.The positive balance of foreign trade turnover amounted to US$945.5 million.

World Bank forecasts that Uzbekistan’s GDP will grow by 5.6% in 2018, 6.3% in 2019 and 6.5% in 2020. Earlier, it forecasted growth of Uzbekistan’s economy as 7.6% in 2017, and in 2018 - 7.8% and in 2019 - 7.8%.

Shadow economy: The First Deputy Economy Minister Mubin Mirzayev said that the size of Uzbekistan’s shadow economy is estimated at over 50% of GDP. He added that this hinders the economic growth and results in reduced revenues for the Statebudget. The first step towards solving this problem was the liberalization of the foreign exchange market, the next would be reforming the tax system.

Miscellaneous

Karshi-Termez Railway line: Uzbekistan Railways completed the electrification of 325 km of the railway section of Karshi-Termez. The project cost was US$327.6 million for which Japanese International Cooperation Agency (JICA) provided a loan of US$ 160 million.

Innovation Activity Support Funds: The bodies of economic management and large state enterprises implemented a set of measures aimed at providing the most favorable conditions for the practical implementation of the results of scientific research and innovative developments, envisaging since January 2018.Also, enterprises will create Funds to support innovation activities (without the formation of a legal entity).

Modernization of district heating sector: Over 240,000 residents in five cities across Uzbekistan are to benefit from improved efficiency and quality of heating and hot water services underDistrict Heating Energy Efficiency Projectfinanced with World Bank and IDA.

New Appointments:

Uzbekistan Airways appointed its first Deputy Director General Bakhtiyor Hakimov as new Director General in place of Ulugbek Roziqulov.

EXTERNAL

Uzbekistan- China:

  • China Railway Tunnel Group is implementing an investment project to modernize Shargunkumir coal mines. It is planned to clean up the old 10 mines with a total length of 1500 meters, to drill 2,227 meters of the tunnel for the extraction of additional volumes of coal. The total cost of the project is US$105.5 million. The project envisages introduction of modern high-efficient coal mining equipment, construction and reconstruction of railways and highways.
  • Construction of a new cement plant began in Pap district of Namangan under Uzbek-Chinese-Arabian joint venture. The project cost is US$50 million. It will produce up to 500,000 tonnes of cement a year.
  • Uzbekistan, Kyrgyzstan and China held a tripartite meeting in Tashkent from 24 to 25 January 2018 on implementation of the Agreement on international road transport.

Uzbekistan- CIS:

Russia: Uzbek Presidentapproved the Agreement between the Governments of Uzbekistan and Russia on cooperation in the field of using atomic energy for peaceful purposes.