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flag Uzbekistan Uzbekistan: Investing

In this page: FDI in Figures | Why You Should Choose to Invest in Uzbekistan | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution. 
 
After the sharp decrease of the FDI in 2011 (-35%), Tachkent decided to review its very restrictive commercial policy (temporary closure of the border, increase of customs tariffs, heavy importation bureaucracy), implementing new rules (fiscal exemptions, administration reforms). More than 58 mixed companies work in the capital Tashkent. In 2013 FDI reached USD 1 billion.

Cooperation with China has acquired a new momentum in 2011 with the launch of the construction project to build a pipeline extension linking the country to the Central Asia-China gas pipeline. The new extension will have a capacity of 25 billion cubic meters annually. China also pledged to invest USD 5 billion in infrastructure and the mining sector. South Korea has also been a strong presence since 2011, particularly in the construction of a chemical plant mobilizing an investment of over 2.6 billion USD.

Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).

 

Country Comparison For the Protection of Investors

  Uzbekistan Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 4.0 7.0 7.0 5.0
Index of Manager’s Responsibility** 1.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 9.0 5.0
Index of Investor Protection**** 4.0 5.9 8.3 5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

 
Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 1,6516741,077
FDI Stock (million USD) 7,0097,4358,512
Performance Index*, Ranking on 181 Economies 78--
Potential Index**, Ranking on 177 Economies 67--
Number of Greenfield Investments*** 161310
FDI Inwards (in % of GFCF****) 11.74.26.2
FDI Stock (in % of GDP) 15.414.515.1

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Uzbekistan

Strong Points
Uzbekistan is the most populated country in central Asia with 27.73 million inhabitants. Moreover, its population is young, with an average age of 24.7 years. The country is rich in raw materials (copper, zinc, gold, silver, tungsten, lead and natural gas). In terms of consumption, it is potentially the largest market in the region. It is also the world's fourth biggest producer of cotton and the second biggest exporter after the United States.

 

This country is a regional power in progress, even if the government is long in creating favorable conditions to attract foreign investments. A foreign-investor favorable taxation policy is to be noted and a will to modernize the main sectors of the economy. Also, the Uzbek State had been careful to strengthen the commercial banks, especially eight of the most important ones, before the financial crisis.

Weak Points
Despite government statements confirming their will to encourage foreign investments, the regulatory environment and the legal conditions remain erratic and the guarantees offered in order to benefit from these investments are ambiguous.
Even though outwardly, it gives the impression of good will by putting forward privatization efforts, corruption, the likelihood of a humanitarian crisis due to persistent economic difficulties, as well as the continued State seizures in the key sectors (cotton, gold, hydrocarbons and raw materials), are amongst many of the weak points.
One of the controversial political factors of the current government remains working school children in cotton fields, a fact which gave rise to the boycott of the Uzbek "white gold" by western companies.
Government Measures to Motivate or Restrict FDI
According to Uzbek legislation, the State must guarantee and protect the rights of foreign investors in the country. Investment programs were launched in order to encourage big investments in the priority sectors. Programs include 86 foreign direct investment projects totaling 1.8 billion dollars, of which more than half is for the energy sector. Amongst the investors, China with the CNPC (en anglais) company, is expected to participate in the construction of a section of an oil pipeline. South Korea is involved in a chemical-gas complex and the Russian company Lukoil, in putting into operation gas wells.

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Procedures Relative to Foreign Investment

Freedom of Establishment
In principle, it is guaranteed.
Acquisition of Holdings
A majority holding interest in the capital of a local company is legal. Minimum is fixed at a 10% and there is no maximal limitation.
Obligation to Declare
The Agency for the Promotion of Foreign Investment in Uzbekistan provides information on the authorizations required for setting up a company.

The compulsory systematic registration of all import contracts with the Ministry of Foreign Relations, Investments and Trade has been abolished. Only certain import contracts are subjected to it especially if it involves financing from the State budget. However, other import contracts still need to be registered with authorized banks or with the customs authorities.

Requests For Specific Authorizations
It is to be noted that a company receiving foreign investments and a company funded with foreign capital is not treated in the same way, the former having a special status.

Learn more about Foreign Investment in Uzbekistan on Globaltrade.net, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
Uzbekistan investment Guide
Uzinfoinvest, Agency for the promotion of Investments
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Uzbekistan
Globaltenders, Tenders & Projects from Uzbekistan
Asian Development Bank, Proposed Projects in Asia
DgMarket, Tenders Worldwide
 
 

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Learn more about Investing in Uzbekistan on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: January 2015