The government has published a draft Resolution of the Cabinet of Ministers “On approval of the Strategy of the investment policy of the Republic of Uzbekistan until 2025”. In the project, the Ministry of Economy and Industry of the Republic indicated 15 key problems in attracting foreign capital to Uzbekistan.
In particular, it was noted that in 2018, gross fixed capital formation amounted to $ 13.3 billion or 26% of the republic’s GDP. The per capita indicator is 20% of the average world level and 25% of the level of the CIS countries, among which Uzbekistan occupies the penultimate place, ahead of only Kyrgyzstan. During this period, $ 3.9 billion of foreign investment was disbursed, which according to analysts of the Ministry of Economy, indicates a low activity of attracting funds in the economy due to the insufficiently favorable investment climate in the country. With an optimal level of investment of 7-10% of GDP last year, the figure was only 3.6%. For comparison: on average in the CIS per capita accounts for $ 100-120 of foreign investment, in Uzbekistan it is $ 77. Moreover, the republic has only two major investors: Russia (74.5%) and China (11.5%), the share of other countries does not exceed 3%.
A negative factor is the dominance of the state in leading sectors of the economy, such as mining, chemical industry, transport, communications, mechanical engineering and so on. Of the 603 joint-stock companies operating in Uzbekistan, today 486 have a state share worth 52 trillion soums ($ 6.2 billion). “The significant role of state-owned enterprises in the economy inhibits the formation of a full-fledged competitive environment, reduces the efficiency and transparency of the functioning of economic sectors, and also leads to a conflict of state and commercial interests,” the Ministry of Economy believes.
At the end of last year, it was reported that in 2019, Uzbekistan intends to absorb a total of $ 7.83 billion as part of industry investment projects. Most of all – $ 4.15 billion – will be spent on the construction of new facilities, another $ 1.45 billion – on the modernization and reconstruction of existing buildings and structures. At the same time, the leadership of the republic planned to receive $ 2.31 billion of foreign direct investment and loans, as well as $ 2.68 billion in the form of loans from foreign organizations, issued under a state guarantee.
Based on the analysis of international experience, trends and problems of development of investment processes, the economy of the republic, its industries and regions, and based on the goals, objectives and priorities of the development of the country, the goals and objectives of the Investment Policy Strategy of the Republic are formulated according to the Concept of Integrated Social and Economic Development of the Republic of Uzbekistan Uzbekistan priority areas of investment for the medium term.
The goal of the investment policy strategy until 2025 is to create conditions for the successful implementation of the country’s socio-economic development priorities, identifying sources and mechanisms for attracting funding for the implementation of measures and measures to ensure sustainable economic growth, increase the competitiveness of the national economy, strengthen industrial potential and develop territories.
In the implementation of investment policy in the medium and long term, it is necessary to focus on two areas:
– expansion of investment potential with possible growth of investments per year at least 1.2–1.3 times;
– improving the efficiency of use of investment resources with the possibility of reducing the capital intensity of GDP growth to 1.5–2%.
Achieving the goal of the investment policy strategy until 2025 is determined by solving problems in three areas.
The first direction. Improving the investment climate of the Republic of Uzbekistan:
– organizing information support for reforms and promoting the image of Uzbekistan in the international arena;
– increasing the level of transparency of the conditions of activity in the country and the creation of favorable conditions for attracting investments;
– increasing the level of investor protection;
– improvement of trade logistics and development of production and marketing links between foreign investors and local companies;
– increasing the role of local authorities for the formation of a favorable investment climate and business environment.
The second direction. Enhancing domestic sources of investment and improving the efficiency of use of investment resources:
– expansion of investment opportunities of enterprises, incl. by improving the quality of management and strengthening the financial condition of enterprises;
– active involvement of public funds in investment activities in the country;
– the formation of principles for the effective allocation of public funds and increased control over the effectiveness of their use;
– expansion of the investment potential of commercial banks.
Third direction. Implementing effective operational measures and developing new approaches to attracting foreign investment:
– improvement of institutional mechanisms for attracting, accompanying and supporting foreign investors;
– formation of proactive approaches to attracting and retaining foreign investments;
– ensuring compliance with the directions of foreign investment inflow to sectoral and regional development programs.
The priority of the investment policy is the reorientation from financing traditional, mainly extractive industries, to investing high-tech industries, introducing modern technologies to produce high-quality and competitive products on world markets for products and services.