August 25, 2014
President Xi Jinping: Sino-Uzbek Relations Are at a Record High. 2
A Window to a New Dimension. 4
free industrial zone “Jizzakh”. 4
Privileges and preferences granted to foreign investors. 5
Additional train launched on route Tashkent-Samarkand-Tashkent8
Politics
President Xi Jinping: Sino-Uzbek Relations Are at a Record High
Today, the interaction between Beijing and Tashkent is quite transparent and predictable, with no obstacles to their gradual and consistent progress. Few would argue against the fact that Uzbekistan and China are currently cooperating as equal partners respecting each other’s interests and supporting one another in the international arena.
This state of Uzbek-Chinese relations has been well underpinned by the state visit of President Islam Karimov to the People’s Republic of China. The recent two-day visit resulted in signing a joint declaration and a number of agreements that are beneficial for both countries. On the first day alone, a few dozen interagency deals and agreements were concluded – all of them aiming long-term prospects. Besides, experts from the two countries worked out a road map to carry out the Beijing agreements signed during the summit. During the meeting of the two presidents, President of the PRC Xi Jinping noted that “currently the Sino-Uzbek relations are at a record high.” He added that “today the action plan for the further evolution of strategic partnership between Uzbekistan and China for the next five years is to be signed. Our countries must catch the opportunity of bringing our cooperation to an even higher level of performance to achieve even better results.”
The solid framework for the long-lasting and reliable cooperation between the two states at a higher level of performance was built by signing the Joint Declaration on the Further Development and Enhancement of Bilateral Relations of Strategic Partnership and the Treaty on Friendship and Cooperation during the official visit of President of the Republic of Uzbekistan Islam Karimov to China in June 2012 and the state visit of President of the PRC Xi Jinping to Uzbekistan in September 2013. Undoubtedly, a major factor in developing such close partnership is the mutual complementary nature of the national economies and the convenient geographical location of the two countries.
Concerning the Uzbek-Chinese official meetings, President Islam Karimov noted that “Uzbekistan highly appreciates every meeting with Chinese leaders . . . In September last year, Xi Jinping paid a historic visit to Uzbekistan, which was highly significant for the development of our bilateral relations. The current negotiations are a logical continuation of our highest-level dialogue.”
TRUST IS A PREREQUISITE FOR FRIENDSHIP
International experts on Central Asia and the Middle East forecast that cooperation with China will remain one of the major priorities in Uzbekistan’s foreign policy for the foreseeable future. Today, the two countries demonstrate another new qualitative stage of active and dynamic development in their relations, cherishing the traditional friendship between our two nations. The trust that the two leaders have in each other enhances the close and friendly interaction between Uzbekistan and China. Islam Karimov said he highly values the friendship and the high degree of mutual confidence with Xi Jinping and expressed intention to continue with the steadfast progress in the bilateral relations with China.
Following the talks, the parties vowed to reinforce the mutual political trust and continue with the reciprocal support and coordination of their actions in the international arena and cooperation in the sphere of security. Xi Jinping emphasized that China considers Uzbekistan as a reliable long-term partner and that the cooperation with it is based on mutual interests. The trade turnover between the two countries has increased almost six times within the last six years. In 2013, it reached $5.2 billion.
Experts and analysts highlight that Uzbekistan has a great influence on the situation in the region. Both countries support each other in their core interests. This includes the political and security cooperation at the regional and international levels. Uzbekistan supports China’s policy of combating the ‘three evils’ – terrorism, separatism and religious extremism. The two countries cooperate on a bilateral basis, and within international and regional organizations, including the Shanghai Cooperation Organisation. The leaders of the two nations have agreed to strengthen the cooperation in the sphere of economy and security within the SCO.
TIMELY SUCCESS
Experts suggest that Uzbekistan should use the Chinese expertise in creating special economic zones, for China has gained a lot of it for the two decades of carrying out its own reforms. China used all the available resources, considered the political realities and so succeeded in achieving its goals to become a world power. China proved that a rapid and dynamic economic development of a country is achievable if market mechanisms are used for it. Lawrence Klein, an American economist, who was awarded the Nobel Prize in Economics for his work in creating computer models to forecast economic trends, said that Chinese economic development is a remarkable experience to be studied by many countries.
Uzbekistan also follows the similar principle, believing that reforms are a powerful driving force for economic and social development. Islam Karimov emphasized that Uzbekistan praised the development of China and commended China’s active and constructive role in the area of international affairs and believed that China’s future is bright, with no power able to stop its forward movement. In accordance with the concept of foreign policy, approved by the Legislative Chamber of the Oliy Majlis in 2012, Uzbekistan strengthens the cooperation and bilateral agreement with China by implementation of more than 60 projects totalling more than $20 billion. Experts find these projects ambitious and far-reaching, bringing huge investments into the Uzbek economy.
China has a great experience in creating special economic zones and developing high technology intensive industries, and it actively invests in setting up joint ventures in Uzbekistan.
Chinese investors have assisted in the creation of a high-tech industrial park in Jizzakh special industrial zone. Mobile phones, building materials and other goods are produced there. Xi Jinping, during the Uzbek-Chinese talks in an extended format, stated that China encourages its enterprises to expand investment in Uzbekistan and participate in the construction of industrial parks in Uzbekistan.
The strategic partnership between Tashkent and Beijing is also based on cooperation in the energy sector. Chinese companies are actively involved in exploration and development of new mineral deposits in Uzbekistan. Thus, China National Petroleum Corporation is involved in a number of such exploration and development projects as well as in natural gas processing in Muborak Gas Chemical Complex.
Another ambitious project is the construction of China-Kyrgyzstan-Uzbekistan railway line of 124 kilometers, with an electrified line between Angren and Pop. The project started in 2013, after the $455 million agreement was signed between Uzbekistan Railways and the Chinese company China Railway Tunnel Group on the construction of the corresponding railroad. At this moment, a 60-kilometer sector of that railway has been built. Xi Jinping stressed that both sides should continuously expand the scale of trade and investments, shore up the cooperation in the fields of energy, finance, agriculture and transportation infrastructure construction, jointly build the Economic Belt of the Silk Road, attach priority to the construction and operation of the line D of Central Asia-China natural gas pipeline, and actively push forward the China-Kyrgyzstan-Uzbekistan railway project.
CULTURAL AND EDUCATIONAL EXCHANGE
Both Beijing and Tashkent highly value culture and cultural exchange as an essential factor in the development of bilateral relationships between two nations. Xi Jinping stated that as ancient civilizations, China and Uzbekistan should enhance exchanges in the spheres of culture, education, healthcare and tourism, and deliberate on establishing cultural centers and holding tourism years in each other, to carry forward the friendship and spirit of the Silk Road.
The exchange of students and trainees between the two countries is another area of cooperation. According to the bilateral agreement and within the SCO, the PRC government allocated grants for 120 students and trainees from Uzbekistan for 2013/2014 academic years. About seventy Uzbek students are enrolled at the University of Lanzhou with the help of Confucius Institute. Last year, an academic agreement on establishing the Confucius Institute in Samarqand was signed, which greatly contributed to the cooperation in the field of education.
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The results of the state visit of Islam Karimov to China are impressive, according to experts. Both leaders are satisfied with the results of the summit. Islam Karimov and Xi Jinping stressed that the agreements reached during it would further the development of relations between the two countries and hence the advancement of their economies. The two countries are firmly committed to the enhancement of bilateral ties, which is in the interests of both nations. It is now evident that the interaction between Uzbekistan and China has been maturing from one year to another, proving productive and mutually beneficial. However, the depth and strength of these relations will depend on the further persistent efforts made to boost the friendship and comprehensive cooperation between our two countries.
(Source: «Uzbekistan Today» newspaper)
economy
A Window to a New Dimension
Uzbek enterprises continue developing modern manufactures of electrical goods. They are partnered by the world’s leading brands that not just invest financial resources, but also bring in modern technologies and equipment. New LED backlight TV manufacturing capacities are to be launched this September as a present on the occasion of the 23rd anniversary of Uzbekistan’s independence.
Zenith Electronics, one of the leading domestic manufacturers of electrical equipment, intends to clear a new bar. Under the agreement with South Korea’s Samsung Electronics, the production of modern LED TVs will be commissioned in the plant’s premises in Tashkent.
Employing over 250 people and dominated by young specialists, the company produces a wide range of home appliances including air conditioning systems, flat-panel TVs and washing machines. The company has been moving towards this more than a decade. In 2004, it was first included in the national localization program, which clearly demonstrated the need for its goods. The privileges granted by the state helped to manufacture more than 500,000 items of various household appliances. The commitment to the implementation of international quality standards has been one of contributors to the success. The production is certified for compliance with ISO 9001quality management system.
Development of the LED TVs manufacture is a new stage in the company’s development strategy by 2015. LED is a liquid-crystal display with light-emitting diodes as a backlight. According to experts, a significant increase in image quality is one of their major advantages.
The equipment was updated and new technologies for plastic casting and manufacture of printed circuit boards were introduced in the course of the production development. The total cost of the project exceeded $2.9 million. Already in 2014, the company is planning to produce about 9.9 thousand TVs, ten thousand in 2015, and reach a maximum production capacity of 75 thousand TVs by 2017. In the near future it is also planned to raise the localization level to 49%. In order to reduce the cost a part of the components will be manufactured at the plant and related enterprises.
(Source: “Uzbekistan today” newspaper)
free industrial zone “Jizzakh”
New enterprise launches
One of enterprises, registered at special industrial zone Jizzakh, has been commission, Golos Uzbekistan newspaper said.
The newspaper said that soon another project will be completed. Over 100 jobs were created at the enterprise, which will produce import-replacing and export-oriented products.
Director of the state unitary enterprise “Directorate of special industrial zone Jizzakh” Alijon Abdullaev said that it is planned to complete work on two projects out of ten by the end of 2014. He said that additionally 120 jobs.
He said that within the programme of speeding up development of transport, production and engineering-communication infrastructure of the special industrial zone Jizzakh for 2013-2015, it is planned to use capital investments for US$29.5 million.
Abdullaev said that automobile roads were reconstructed and constructed. New railroads with the length of 50 meters were constructed. The water supply system was created. Substation Sanoat-1 was reconstructed to provide electricity to enterprises.
President of Uzbekistan Islam Karimov signed a decree for creation of new special industrial zone Jizzakh on 18 March 2013. The branch of the zone will be in Syrdarya region.
The zone was created in line with a memorandum of understanding on implementation of project on creation of Uzbek-Chinese industrial park in Uzbekistan. It was created to form favourable conditions for attracting foreign and local investments to creation of high technologic industrial capacities, production of competitive products with high added price, complex and effective use production and resource potential of Jizzakh and Syrdarya regions.
The special zone was created for 30 years with possibility of extension. The decree set tax and customs preferences for enterprises, operating in the zone. The enterprises, located in the zone, will be exempted from payment of income tax, property tax, tax for accomplishment and social infrastructure, single tax, and mandatory payments to Road Fund.
They will be also exempted from payment of customs duties for imported materials, equipment and spare parts, which are not produced in Uzbekistan.
(Source: UzDaily.com)
investments
Privileges and preferences granted to foreign investors
Over the years of independence, laborious work has been done in the Republic of Uzbekistan to create a propitious investment environment. As well as undertaking obligations under the basic conventions and other international agreements, the country elaborated and passed a number of legislative documents intended to solidify the fundamental principles of its own foreign economic policy.
Amenably to the Law of the Republic of Uzbekistan, ”On foreign investments”, one of the basic legal documents in a given field, the state guarantees and protects all the rights enjoyed by overseas investors, carrying out their investment activity on the territory of the Republic of Uzbekistan. Foreign investors and foreign investments are offered a just regime, where all participants are equal in rights, as well as full protection and security. Such a regime may not be less favorable than that specified in the international agreements, to which the Republic of Uzbekistan is a signatory.
At the same time, the legal environment for foreign investments may not be less favorable than a corresponding environment for investments made by legal entities and physical persons of the Republic of Uzbekistan.
Moreover, with a view to protecting the rights and interests of foreign investors, another important document, the Law of the Republic of Uzbekistan, “On guarantees and measures to protect the rights of foreign investors” was passed. A given regulatory legal statute establishes, among many other things, that the country’s legislative documents, including departmental normative ones, may not apply retrospectively, if their implementation causes damage to foreign investors or foreign investments.
Additionally, if new laws of the Republic of Uzbekistan create less favorable conditions for investment activity and investments than those prevailing at the time of investment, foreign investors remain subject to the legislation in force at that time, within 10 years since the time of investment. Foreign investors are entitled to apply, using their own discretion, those provisions of new legislation that improve the conditions of their investment activity.
At the same time, the guarantee to be subject, in the course of 10 years, to the laws in force at the time of investment, if the subsequent legislation worsens the investment environment, is applicable in the following cases:
An increase in the rate (tariff) of tax on receipts in the form of dividends paid to foreign investors;
Introduction of additional requirements, which complicate the repatriation of receipts or reduce the amount of income (profit) earned by foreign investors in the Republic of Uzbekistan and transferred abroad, with the exception of cases, where the state holds up the repatriation of the foreign investor’s funds, on condition of the non-discriminative application of legislative documents in cases where an enterprise with foreign investments is insolvent or goes bankrupt, or where it is necessary to protect the creditor’s rights, or when it comes to criminal deeds or administrative delinquencies committed by the foreign investor, a physical person, or if there is any other necessity to hold up such a repatriation following a court verdict or arbitration decision;
Introduction of quantitative restrictions on investment volumes and other additional requirements on the size of investment, including an increase in the minimal amount of foreign capital due to be invested in enterprises with foreign investments;
Introduction of restrictions on the foreign investor’s share participation in the charter capital of the Republic’s enterprises;
Introduction of additional procedures for registration and extension of visas for foreign investors, as well as other additional requirements imposed on foreign investment activity.
At the same time, in cases where ministries, departments or local state authorities pass a resolution or decision that infringes the rights of foreign investors, as well as in cases where ministries, departments or local authorities unlawfully interfere in the foreign investor’s economic activity, they indemnify in legal form for whatever losses that may be incurred as a result by the foreign investor.
Foreign capital and other assets belonging to foreign investors are not subject to nationalization in the Republic of Uzbekistan. In addition, foreign investments and other investors’ assets are not subject to requisition, except for the cases of force major circumstances, natural calamities, accidents, epidemics and epizootics.
In order to improve the foreign investor’s financial position, the following provision was legally established: the receipts earned by the foreign investor in the Republic of Uzbekistan may be re-invested on the territory of the Republic of Uzbekistan or used in any other way at the foreign investor’s discretion.
In this connection, foreign investors are guaranteed a free transfer of their currency funds to and from the Republic of Uzbekistan, provided that they have paid all taxes and other obligatory payments established by the legislation of the Republic of Uzbekistan.
Enterprises with foreign investments independently transect their export-import operations, on condition that all the requirements of the Uzbek law are strictly observed. The exportation of their produce is subject neither to licensing nor to quotation.
Enterprises with foreign investments have the right to import foreign goods required for their own production needs without any licence, in accordance with the legislation of the Republic of Uzbekistan.
Beyond this, the legislation of the Republic of Uzbekistan contains a broad range of tax and customs privileges intended for enterprises with foreign investments.
For instance, pursuant to Article 33 of the Law of the Republic of Uzbekistan, “On the customs tariff”, the exemption from customs duties is granted to:
Property imported onto the customs territory of the Republic of Uzbekistan by enterprises with foreign investments, with the share of foreign investments in their charter capital being no less than 33 per cent, to meet their own production needs, within 2 years from the date of their official registration;
Property imported onto the customs territory of the Republic of Uzbekistan to meet the personal needs of foreign investors and foreign citizens staying in the Republic of Uzbekistan under the labor agreements signed with foreign investors;
Goods imported by foreign legal entities, which make direct investments to the economy of the Republic of Uzbekistan to the tune of more than US $50 million, provided that these imported goods are their own output;
Technological equipment imported onto the territory of the Republic of Uzbekistan, in keeping with a list approved in accordance with the national legislation, as well as components and spare parts, on condition that their delivery is stipulated by a corresponding contract for the delivery of technological equipment.
Enterprises operating in the priority sectors of the national economy and attracting direct private foreign investments are exempt, starting 1 July 2005, from profit tax imposed on legal entities, property tax, tax imposed on the improvement of services and utilities and the development of social infrastructure, unified tax payment intended for micro-firms and small enterprises and obligatory deductions to the Republican Road Fund.
The indicated tax breaks are granted in cases where the amount of direct private foreign investments varies:
From US $300,000 to US $3 million – for the term of 3 years;
From US $3 million to US $10million – for the term of 5 years;
Over US $10million – for the term of 7 years.
If the subsequent legislation impairs the investment environment, the privileges referred to above remain in effect within the entire period, for which they have been granted.
Exempt from the obligatory sale of foreign exchange receipts within 5 years since the date of their official registration are enterprises with foreign investments, which specialize in the production of consumer goods, provided that the share of foreign investments in their charter capital exceeds 50 per cent. Such enterprises are considered to be specializing in the production of consumer goods, if the consumer goods they manufacture themselves account for 60 per cent of the total volume of receipts they earn from their economic activity.
In a move to develop the national oil-and-gas industry and to boost the attraction to a given sector of advanced technologies, a number of tax concessions and customs privileges are granted by the 28 April 2000 Presidential Decree No УП-2598, «On measures to attract foreign direct investments to the reconnaissance and extraction of oil and gas”.
Foreign companies involved in prospecting and reconnaissance for oil and gas, as well as foreign contract and sub -contract organizations, whose servicers they enlist, are exempt from payment of:
all types of taxes and obligatory deductions to the off-budget funds for the entire period of geological exploration works;
customs duties (with the exception of duties charged for customs registration) due to be paid when importing equipment, material-technical resources and services required to carry out prospecting, reconnaissance and other attendant works.
At the same time, joint venture enterprises, set up with the participation of foreign companies and involved in geological exploration, reconnaissance and extraction of oil and gas, are exempt from profit tax for the term of 7 years since the date they start extracting oil and gas.
In addition to the tax and customs privileges specifically intended for them, enterprises with foreign investments also enjoy all the types of tax breaks and customs concessions granted to legal entities of the Republic of Uzbekistan. These are applicable, in particular, to the production of export-oriented and import-substituting goods, consumer commodities, which are much in demand, the export of goods (works or services), import of technological equipment, assignation of property as investment liabilities etc.
On April 7, 2014, the Presidential Decree No УП-4609, “On additional measures to further improve the investment climate and business environment in the Republic of Uzbekistan” has been passed, for the purpose of improving the business environment, creating the most auspicious investment climate , making the performance of state and economic authorities more transparent, perfecting on this basis the conditions for entrepreneurial activity, creating new jobs and increasing the population’s employment in the private sector of the national economy.
A given document has approved the Program of additional measures to further improve the investment climate and business environment and to raise the efficiency of steps taken to stimulate the development of entrepreneurship in the period 2014-2015. This Program is aimed at reducing the number, cost and duration of procedures for licensing several lines of activity and issuing permits.
Being guided by a given document, the ministries and departments of the Republic of Uzbekistan are now busy revising the conditions, requirements and duration of procedures for issuing permits.
(Source: “Business-partner.uz” newspaper)
tourism
Additional train launched on route Tashkent-Samarkand-Tashkent
State joint stock railway company Uzbekistan Temir Yollari launched additional train Afrosiyob on 21 August 2014 on route Tashkent-Samarkand-Tashkent, Uzjeldorpass (Uzbekistan Passenger Railway) said.
“Uzjeldorpass” OJSC said that due to growth of passenger flow, the company appointed additional high-speed train on route Tashkent-Samarkand-Tashkent from 21 August.
The train will leave Tashkent at 07:00 and Samarkand at 17:00 on Thursdays and Fridays.
Afrosiyob runs between Tashkent and Samarkand each day. The train leaves at 08:00. On Saturdays and Sundays, the train carries out additional trip between two cities at 07:00. From Samarkand, the train leaves at 17:00 each day, additional trip on Saturdays and Sundays – at 18:00.
High-speed train Afrosiyob started to carry out regular trips between two cities from 8 October 2011. From 13 February 2012, the train started to run between two cities each day.
Afrosiyob train, produced in Spain by Patentes Talgo S. A., runs at the speed of 250 kmh and passes the 344 km distance between Tashkent and Samarkand in two hours.
Total capacity of the train makes up 257 people. The electricity train consists of two locomotives, 8 passenger cars and one dining-car. The train has VIP, first class and economy class places. The trains can be used by people with limited abilities.
(Source: UzDaily.com)
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