ECONOMIC POTENTIAL & INVESTMENT ECONOMIC POTENTIAL & INVESTMENT ENVIRONMENTENVIRONMENT

OF THE REPUBLIC OF UZBEKISTANOF THE REPUBLIC OF UZBEKISTANElyor GanievElyor Ganiev

Minister of Foreign Economic Relations, Minister of Foreign Economic Relations, Investments and TradeInvestments and Trade

ECONOMIC POTENTIAL & INVESTMENT ECONOMIC POTENTIAL & INVESTMENT ENVIRONMENTENVIRONMENT

OF THE REPUBLIC OF UZBEKISTANOF THE REPUBLIC OF UZBEKISTANElyor GanievElyor Ganiev

Minister of Foreign Economic Relations, Minister of Foreign Economic Relations, Investments and TradeInvestments and Trade

[2]

Great Silk RoadGreat Silk Road

[3]

MODERN MODERN UZBEKISTANUZBEKISTAN

The leading industrial countryin CA.

The leading industrial countryin CA.

Favorable investment climate Favorable investment climate

System of privileges and incentives System of privileges and incentives

Attracted more than Attracted more than 21.5 bln USD 21.5 bln USD of Foreign investments so far.of Foreign investments so far. Attracted more than Attracted more than 21.5 bln USD 21.5 bln USD of Foreign investments so far.of Foreign investments so far.

“Open doors” Policy “Open doors” Policy

[4]

GDPGDP

4,2 4,4

7,77,0 7,3

9,1

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

10,0

2002 2003 2004 2005 2006 Q1 2007

(Growth, %)

[5]

EXPORT EXPORT TRENDTREND

3264,7 3170,4 2988,4

3725

48535400

6384,5

0

1000

2000

3000

4000

5000

6000

7000

2000 2001 2002 2003 2004 2005 2006

(mln USD)

[6]

TRADE TRADE TURNOVERTURNOVER

Turnover growth by Turnover growth by 13.5 %13.5 % Turnover growth by Turnover growth by 13.5 %13.5 %

Balance Balance 2 bln USD2 bln USD Balance Balance 2 bln USD2 bln USD

Export growth by Export growth by 18.1 %18.1 % Export growth by Export growth by 18.1 %18.1 %

Import growth by Import growth by 77.4 %.4 % Import growth by Import growth by 77.4 %.4 %

4456,46212,1

949010786

02000400060008000

1000012000

1992 2000 2005 2006

(mln USD)

The volume of the productsThe volume of the productswith high value added,with high value added,the share of which in totalthe share of which in totalexports increased fromexports increased from22% in 1991 up to 60%22% in 1991 up to 60%in 2006.in 2006.

The volume of the productsThe volume of the productswith high value added,with high value added,the share of which in totalthe share of which in totalexports increased fromexports increased from22% in 1991 up to 60%22% in 1991 up to 60%in 2006.in 2006.

[7]

INFLATION RATEINFLATION RATE

2,8

6,87,8

3,73,8

21,6

26,6

0

5

10

15

20

25

30

2001 2002 2003 2004 2005 2006 Q1 2007

Effective mEffective moderately rigid oderately rigid monetary and monetary and fiscalfiscal policy policy in in the the last last 4 y4 yrsrs hahaveve allowed to support inflation allowed to support inflation rate rate at at rather rather low levellow level..

Effective mEffective moderately rigid oderately rigid monetary and monetary and fiscalfiscal policy policy in in the the last last 4 y4 yrsrs hahaveve allowed to support inflation allowed to support inflation rate rate at at rather rather low levellow level..

(%)

[8]

38% 36%35% 33%

31%

24%20%

18%15%

12%10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

1996 1997 1998 1999 2000 2002 2003 2004 2005 2006 2007(est)

UZBEK TAX UZBEK TAX SYSTEMSYSTEM

Income Tax RateIncome Tax Rate

Unified tax for micro-firms and small enterprises from Unified tax for micro-firms and small enterprises from the volumes of sale of goods the volumes of sale of goods ((worksworks, , servicesservices) – 13%,) – 13%, including mandatory payments to the state, target and including mandatory payments to the state, target and off-budget fundsoff-budget funds..

Unified tax for micro-firms and small enterprises from Unified tax for micro-firms and small enterprises from the volumes of sale of goods the volumes of sale of goods ((worksworks, , servicesservices) – 13%,) – 13%, including mandatory payments to the state, target and including mandatory payments to the state, target and off-budget fundsoff-budget funds..

[9]

Income taxIncome tax10%10%

Income taxIncome tax10%10%

Single social taxSingle social tax24%24%

Single social taxSingle social tax24%24%

VATVAT20%20%VATVAT20%20%

Mandatory payments, target and off-budget fundsMandatory payments, target and off-budget funds::• Road Fund Road Fund – – 11..5%5%;;• Secondary School EducationSecondary School Education Development FundDevelopment Fund– – 1%1%;;• Pension Fund Pension Fund – – 00..7%7% of the volumes of sale of products of the volumes of sale of productswith deduction of VAT and excise taxeswith deduction of VAT and excise taxes..

Mandatory payments, target and off-budget fundsMandatory payments, target and off-budget funds::• Road Fund Road Fund – – 11..5%5%;;• Secondary School EducationSecondary School Education Development FundDevelopment Fund– – 1%1%;;• Pension Fund Pension Fund – – 00..7%7% of the volumes of sale of products of the volumes of sale of productswith deduction of VAT and excise taxeswith deduction of VAT and excise taxes..

Tax on incomeTax on incomeof individualsof individuals((maxmax..raterate) ) 25%25%

Tax on incomeTax on incomeof individualsof individuals((maxmax..raterate) ) 25%25%

Property taxProperty tax3,5%3,5%

to residual costto residual cost

Property taxProperty tax3,5%3,5%

to residual costto residual cost

Land tax Land tax – – on the rateson the rates,,set depending on locationset depending on location

land plots.land plots.

Land tax Land tax – – on the rateson the rates,,set depending on locationset depending on location

land plots.land plots.MAIN TAXESMAIN TAXES

ANDANDPAYMENTSPAYMENTS

MAIN TAXESMAIN TAXESANDAND

PAYMENTSPAYMENTS

UZBEK TAX UZBEK TAX SYSTEMSYSTEM

[10]

1,50%

29,10%

31,50%

33,80%

34,60%

35,00%

35,60%

38,20%

42,10%

1992

1999

2000

2001

2002

2003

2004

2005

2006

SMALL AND PRIVATE SMALL AND PRIVATE BUSINESSBUSINESS

(Share in GDP)(Share in GDP)

[11]

ESSENTIAL ESSENTIAL CONDITIONSCONDITIONS

Appropriate legislationAppropriate legislationAppropriate legislationAppropriate legislation

Developed infrastructureDeveloped infrastructureDeveloped infrastructureDeveloped infrastructure

Cheap energy suppliesCheap energy suppliesCheap energy suppliesCheap energy supplies

Necessary production spacesNecessary production spacesNecessary production spacesNecessary production spaces

Skilled labor forceSkilled labor forceSkilled labor forceSkilled labor force

[12]

18%28%

44%

73% 76%

82%72%

56%

27% 24%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006

FDI Foreign investments under Government Guarantee

FOREIGN FOREIGN INVESTMENTSINVESTMENTS

ININ UZBEKISTANUZBEKISTAN

FDI inflow for the last FDI inflow for the last 6 yrs increased by 6 yrs increased by 10 10 times making times making 2.5 bln 2.5 bln USDUSD..

FDI inflow for the last FDI inflow for the last 6 yrs increased by 6 yrs increased by 10 10 times making times making 2.5 bln 2.5 bln USDUSD..

More than 3500 enterprises with foreign investments, including More than 3500 enterprises with foreign investments, including world-famous TNCs, in the Uzbek market.world-famous TNCs, in the Uzbek market.

More than 3500 enterprises with foreign investments, including More than 3500 enterprises with foreign investments, including world-famous TNCs, in the Uzbek market.world-famous TNCs, in the Uzbek market.

[13]

INVESTMENTINVESTMENTLEGISLATIONLEGISLATION

On Foreign Investments,On Foreign Investments,

The following laws form the basis of investment environment in Uzbekistan:

On Investment Activities,On Investment Activities,

On Guarantees and Measures of Protection On Guarantees and Measures of Protection of Rights of Foreign Investors,of Rights of Foreign Investors,

On Protection of Rights of Investors on On Protection of Rights of Investors on Securities’ MarketSecurities’ Market

[14]

Stable legislature during 10 yrs,Stable legislature during 10 yrs,

Foreign investments and other foreign assets are not subject to nationalization,

Foreign investments and other foreign assets are not subject to nationalization,

GUARANTEESGUARANTEES & & RIGHTSRIGHTS

OF FOREIGN INVESTORSOF FOREIGN INVESTORS

Free transfer of money resources in a foreign currency into Uzbekistan and from it without any restrictions,

Free transfer of money resources in a foreign currency into Uzbekistan and from it without any restrictions,

[15]

Foreign investors’ incomes derived in Uzbekistan can be re-invested in the territory of the Republic of Uzbekistan or used in any other way at the discretion of a foreign investor,

Foreign investors’ incomes derived in Uzbekistan can be re-invested in the territory of the Republic of Uzbekistan or used in any other way at the discretion of a foreign investor,

GUARANTEESGUARANTEES & & RIGHTSRIGHTS

OF FOREIGN INVESTORSOF FOREIGN INVESTORS

[16]

Return of foreign investments due to the discontinuance of an investment activity,

Return of foreign investments due to the discontinuance of an investment activity,

Insurance protection and guarantees against political and other risks.Insurance protection and guarantees against political and other risks.

GUARANTEESGUARANTEES & & RIGHTSRIGHTS

OF FOREIGN INVESTORSOF FOREIGN INVESTORS

[17]

INCENTIVES FORINCENTIVES FORFOREIGN INVESTORSFOREIGN INVESTORS

Unprecedented tax incentives, in particular, interest rate reduction and full exemption from tax for 7 yrs depending on the volume of investments,

Unprecedented tax incentives, in particular, interest rate reduction and full exemption from tax for 7 yrs depending on the volume of investments,

Exemption from VAT payment and custom charges for imported equipments,

Exemption from VAT payment and custom charges for imported equipments,

[18]

Exemption from Land tax payment for a specified time,Exemption from Land tax payment for a specified time,

More incentives available for export-oriented enterprises.More incentives available for export-oriented enterprises.

INCENTIVES FORINCENTIVES FORFOREIGN INVESTORSFOREIGN INVESTORS

[19]

On March 14, 2007 a special Decree was signed by the On March 14, 2007 a special Decree was signed by the President in order to stimulate upgrading and re-President in order to stimulate upgrading and re-

equipment.equipment.

Tax base reductionTax base reduction for the sum for the sum equivalent to the expenditures spent for equivalent to the expenditures spent for upgrading and re-equipment upgrading and re-equipment for 3 yrsfor 3 yrs,,

Tax exemptionTax exemption from the Property tax to from the Property tax to re-equipments re-equipments for 5 yrsfor 5 yrs..

INCENTIVES FORINCENTIVES FORFOREIGN INVESTORSFOREIGN INVESTORS

[20]

PROSPECTIVE PROSPECTIVE SECTORS FOR SECTORS FOR INVESTMENTINVESTMENT

PROSPECTIVE PROSPECTIVE SECTORS FOR SECTORS FOR INVESTMENTINVESTMENT

[21]

OIL & GAS OIL & GAS INDUSTRYINDUSTRY

GasGasGasGas

• Explored reserves Explored reserves – – more than 2 more than 2 trln m3 trln m3

• Explored reserves Explored reserves – – more than 2 more than 2 trln m3 trln m3

• ExtractionExtraction – – about about 6655 bln m3bln m3• ExtractionExtraction – – about about 6655 bln m3bln m3

Uzbek share in Central AsiaUzbek share in Central Asia::

• 40% - 40% - natural gasnatural gas

• 55% - 55% - coalcoal

• Coal reservesCoal reserves – 2 – 2 bln tons bln tons

Uzbek share in Central AsiaUzbek share in Central Asia::

• 40% - 40% - natural gasnatural gas

• 55% - 55% - coalcoal

• Coal reservesCoal reserves – 2 – 2 bln tons bln tons

• Uzbek gas transportation system Uzbek gas transportation system - - 9 9 main gas pipes with 12 main gas pipes with 12 thousand km lengththousand km length

• Uzbek gas transportation system Uzbek gas transportation system - - 9 9 main gas pipes with 12 main gas pipes with 12 thousand km lengththousand km length

Sector Investment CapacitySector Investment Capacity 5 Bln USD5 Bln USD

[22]

MINING & QUARRYINGMINING & QUARRYING

Explored ReservesExplored Reserves 3.3 trln USD3.3 trln USD

[23]

CHEMICAL INDUSTRYCHEMICAL INDUSTRY

Sector Investment CapacitySector Investment Capacity 800 mln USD800 mln USD

[24]

ELECTRICALELECTRICALENGINEERING ENGINEERING

INDUSTRYINDUSTRY

Sector Investment CapacitySector Investment Capacity 250 mln USD250 mln USD

[25]

CONSTRUCTION CONSTRUCTION PRODUCTS PRODUCTS INDUSTRYINDUSTRY

Sector Investment CapacitySector Investment Capacity 500 mln USD500 mln USD

[26]

FRUITS AND FRUITS AND VEGETABLES VEGETABLES PROCESSING PROCESSING

INDUSTRYINDUSTRY

Sector Investment CapacitySector Investment Capacity 300 mln USD300 mln USD

Uzbekistan possesses a significant potential for development of processing of agricultural products.

UZBEKISTAN:

Uzbekistan possesses a significant potential for development of processing of agricultural products.

UZBEKISTAN:• one of the largestone of the largest producersproducers of raisin of raisin and dried fruits in the worldand dried fruits in the world

• one of the largestone of the largest producersproducers of raisin of raisin and dried fruits in the worldand dried fruits in the world

• one of the top-five producersone of the top-five producers of of tomato-paste in the worldtomato-paste in the world

• one of the top-five producersone of the top-five producers of of tomato-paste in the worldtomato-paste in the world

• capable to cultivate more than capable to cultivate more than 10 10 mln tn mln tn of fruit-and-vegetable products p.a.of fruit-and-vegetable products p.a.

• capable to cultivate more than capable to cultivate more than 10 10 mln tn mln tn of fruit-and-vegetable products p.a.of fruit-and-vegetable products p.a.

[27]

PRIVATIZATIONPRIVATIZATIONPRIVATIZATIONPRIVATIZATION

• The Privatization PThe Privatization Program rogram for 2006-2008 for 2006-2008 has started.has started.

• The Privatization PThe Privatization Program rogram for 2006-2008 for 2006-2008 has started.has started.

• 110505 state enterprises are offered on so- state enterprises are offered on so-called “zero value” with investment called “zero value” with investment obligations.obligations.

• 110505 state enterprises are offered on so- state enterprises are offered on so-called “zero value” with investment called “zero value” with investment obligations.obligations.

• Share holdings of Share holdings of 14951495 state enterprises state enterprises are offered for sale to private sector, are offered for sale to private sector, including 12including 126969 enterprises would be fully enterprises would be fully delivered to private ownership.delivered to private ownership.

• Share holdings of Share holdings of 14951495 state enterprises state enterprises are offered for sale to private sector, are offered for sale to private sector, including 12including 126969 enterprises would be fully enterprises would be fully delivered to private ownership.delivered to private ownership.

[28]

AndijanAndijan OshOsh

GuljaGulja

SarytashSarytashIrkeshtamIrkeshtam KashgarKashgar

Building the automobile road between Uzbekistan Building the automobile road between Uzbekistan and China will make a great contribution for the and China will make a great contribution for the strengthening bilateral trade and investmentsstrengthening bilateral trade and investments

Building the automobile road between Uzbekistan Building the automobile road between Uzbekistan and China will make a great contribution for the and China will make a great contribution for the strengthening bilateral trade and investmentsstrengthening bilateral trade and investments

[29]

UZINFOINVESUZINFOINVESTT AGENCYAGENCY

“UZINFOINVEST” Information Support & Foreign Investments Promotion Agency was established in February 2007 by the initiative of the President of the Republic of Uzbekistan Islam Karimov with the purpose of providing a one-window informational and all other possible support to foreign investors in Uzbekistan.

“UZINFOINVEST” Information Support & Foreign Investments Promotion Agency was established in February 2007 by the initiative of the President of the Republic of Uzbekistan Islam Karimov with the purpose of providing a one-window informational and all other possible support to foreign investors in Uzbekistan.

Agency is an independent institution (legal entity) under the Ministry of Foreign Economic Relations, Investments and Trade of the Republic of Uzbekistan.

UZBEKISTANUZBEKISTANIS OPEN FOR YOUIS OPEN FOR YOU!!

www.investuzbekistan.orgwww.investuzbekistan.org

THANK THANK YOUYOU!!