INFORMATION DIGEST OF PRESS OF UZBEKISTAN # 232

economy.. 2

National Goods with Global Brands. 2

BUSINESS CLIMATE.. 5

Legal framework for conducting tenders in the Republic of Uzbekistan. 5

International cooperation.. 7

Uzbek-Korean business forum takes place in Tashkent 7

 

economy

National Goods with Global Brands

There is hardly any family in Uzbekistan that could do without nationally manufactured appliances of new generation, which have entered almost every household today owing to the program of localization of production of finished goods, components and materials on the basis of industrial cooperation in the country.

A contest at a media organization in the late ‘80s of the past century comes to mind. The winners were presented with … electric spiral ovens. Those days, even those primitive contraptions were hard to come by. No one could imagine that the country would produce its own microwave ovens capable of warming up dinner in just a few minutes.

Our mothers and grandmothers could only dream of stores laden with vacuum cleaners that remove dust and stains and can wash carpets, as well as automatic washing machines. Yesterday’s luxury has turned into a mundane commodity.

It is noteworthy that national enterprises have developed the production of most household appliances. The system of O’zeltehsanoat Company brings together 43 enterprises of various forms of ownership – 19 companies manufacture TVs, refrigerators, washing machines (automatic, semi-automatic), air conditioners, microwaves, gas and electric cookers, vacuum cleaners, mobile phones under the brands of Shivaki, Samsung, Artel, Sino, Midea, Panda, and TCL among others.

For instance, Artel gas stoves are manufactured by Eko Elektron subsidiary and Martensit Investment Company in Tashkent. The products are represented by several models – Comida, Solana, Fresco, Gusto, Appetito, Maestro, Dolce and Comarella, which differ in colors and technical configurations.

There was a time when the Uzbek market was filled solely with air conditioners made at a Baku plant. They were not affordable to everybody. To boot, they guzzled energy and were very noisy. Today, Artel and Samsung silent conditioners are manufactured at Dream Production Company, and their range is represented by an elegant series of Samsung, Shivaki, Montana, Gloria, Aurora, Registon, Shahrisabz and Sherdor. The production line of Samsung vacuum cleaners has been set up at the Uzbek-British joint venture White Machine Technology, and Artel LCD TVs are produced by Sky Wind Systems Co.Ltd.

“High demand for home appliances triggers an increase in their production,” comments the Deputy Head of Department for Coordination of Production, Marketing and Exports at O’zeltehsanoat Company, Ibrokhim Habibullayev. “Since the beginning of 2015, domestic enterprises have supplied the internal market with 92,000 refrigerators, 123,000 LED TVs, over 81,000 automatic and semi-automatic washing machines, 72,000 air conditioners, more than 170,000 Artel mobile phones, 64,000 vacuum cleaners, and 150,000 items of various kitchen appliances. The increase in supply is attributed to the fact that Uzbek consumers have been increasingly turning toward local producers, as their products are not inferior to foreign counterparts in quality and design, but are much more affordable.

Zenith Electronics Co. Ltd has launched the production of television receivers with light-activated filtering screens based on light LEDs, or D-LED. As of 2015, the team has embarked on the manufacture computer system units. As part of the activities related to the further streamlining of the system of foreign language learning, the company signed a contract with the Center of Secondary Special and Vocational Education for the supply of computer equipment foreign language learning to multimedia classrooms at 150 colleges and lyceums.

Each classroom, in addition to personal computers, will be additionally equipped with technical devices to be combined with modern education technologies. Teachers will be able to use multimedia projectors and audio speakers. Besides, it is envisaged to install specialized Language Laboratory software on personal computers. The company ranks among the biggest manufacturers of household appliances. In addition to PC system units, the product range includes television sets, washing machines, air-conditioners.

“We have received the opportunity to develop a new kind of high-tech products after the implementation of promising investment projects in the last two years,” says Director General of Zenit Electronics Farid Abdrshin. “In South Korea, we purchased an automated robotic line on the production of electronic circuit boards by surface mount technology and a set of additional equipment for the manufacture of electronic products. The production of a new kind of hardware would enhance import substitution in the context of equipping various institutions and organizations with computers.

Programmer Ulugbek Akhmedjanov is now working at an assembly shop. He has mastered a profession of an operator. The young specialist has been working at the company for a second year after the graduation from a vocational college of computer technologies. Many young people at the assembly shop have secondary special vocational education.

Martensit Investment has been engaged in the production of components for household appliances and electric ovens. This year, domestic enterprises have been developing the production of new TV set models like 24, 32, 42-inch TV LEDs. Their cumulative production is estimated at 107,100 items per year. Oniks Tashkent Co. Ltd has implemented a project on the production of glassware and other goods out of soda-lime glass, as well as household lighting fixtures. Sino Eko Plast Co. Ltd has been expanding its product range through the production of beverage coolers, air-conditioning devices with motor-driven fan, as well as tools for changing temperature and humidity. Thermo Water Electric Co. Ltd has been implementing a project on the production of electric storage water heaters.

“I have completely equipped my house with Artel appliances,” says a Tashkent resident, Sunnat Yuldashev. “The company runs a network of service centers, and provides a three-year warranty. Imported appliances would be costly to repair in case of damage. The more so, I have read that the products under the Artel trademark have taken the lead in sales among domestic manufacturers.”

The manufacture of Samsung air conditioners has been launched in the second half of the current year. They will be sold in all CIS countries with the label ‘Made in Uzbekistan’ for the next three years. A project on the production of LED-computer monitors has been implemented.

“An uncompleted motor plant has been occupying a huge area on the capital’s outskirts for a long time,” says O’zeltehsanoat Chief for Coordination of Investment, Modernization and Localization of Production Abdurashid Mirdjalilov. “Supported by the authorities, we have decided to establish a Center for Production and Marketing of Electrical Appliances on its territory. It is called to promote the development of the national sales network. A permanent exhibition and a home appliances service center were created under the first phase of the project on the basis of idle production premises of the Motor Plant. $1.29 million of investments was channeled for the implementation of the project in 2014. Three manufactures worth $14.6 million of investments will be built on the same territory by the end of next year.

Small businesses have been actively involved in the development of electrical industry. For instance, a businessman of Khiva Kudrat Allaberganov has established the Khiva Maishiy Tehnika Co.Ltd for the production of Osiyo-branded home appliances, as part of the implementation of the Presidential Resolution ‘On the Program of Development of Industrial Capacity of Khorezm Region for 2013-2015’ of November 22, 2012. The company manufactures refrigerators and freezers for food stores. They cost cheaper than their foreign counterparts, they are easy to use and have a modern design. The company’s employees have been trained abroad and in Samarkand. So far, the production capacity of the production line makes up 10,000 refrigerators and freezers per year. The company produces 30% of spare parts for household tools. By 2016, the index is estimated to exceed 60%. New kinds of products will be produced, thus providing new jobs.

The domestically produced household appliances are available in specialized stores, in the markets and permanent high-tech equipment fairs. It is worth noting that the goods can be purchased online. For example, www.artelmarket.uz offers a wide range of household appliances, providing an opportunity to order items and pay for them after the delivery without leaving home.

A network of electronics shopping centers Media Park is an official partner of the world manufacturers of electronics like Philips, Samsung, LG, Kenwood, Indesit, Tefal, Braun, the leading domestic manufacturer Artel, and is guided by international trade standards. The project strategy is focused on the development of a unified network of shopping centers for electronics and household appliances in all regions of the country.

Enterprises of the industry produce hundreds items of high-tech products, as well as provide a variety of services ranging from the development of new individual designs, based on the wishes of a customer, to the installation and subsequent maintenance of the equipment,” said Deputy Head of Department for Coordination of Production, Marketing and Exports at O’zeltehsanoat Company Ibrokhim Habibullayev. “A wide range of products includes a variety of cable and wiring products, low-voltage equipment, switching panels, transformers, as well as electronic devices, instruments, communication tools. We have also developed the production of special communication devices under the renowned brand of Motorola. Our companies have been tangibly contributing in saturating the market of consumer products. For instance, Uzkabel has launched the production of paints and varnishes, dry mixes for construction industry, Elholding RPA manufactures educational and laboratory equipment and motorcycles, Oniks Tashkent specializes in glassware.

The state’s leader approved a Program of Measures for Structural Reforms, Modernization and Diversification of Production for 2015-2019 on March 4, 2015. The program envisages the accelerated establishment and development of high-tech manufactures of electrical equipment, establishment of new production capacities for hardware and accessories for information and communication technology, and a wide range of environmentally friendly construction materials. The joint stock company O’zeltehsanoat is intending to launch the production of automotive cables for European technologies at Andijankabel Company, establish the production of integrated circuits, low power photovoltaic power plants, electric motors of different capacity for electrical appliances, expansion of production of refrigerators, household gas and combined ovens, and other products. In general, the company is planning to implement 39 new investment projects worth $268.5 million.

The production of household appliances for the population promises to be a priority in the coming years. The government has set a goal to increase the production of television sets by five times over the next five years, mobile phones – by four times, and refrigerators – by 2,5 times. $153 million has been invested in the modernization and development of manufactures. By 2020, Uzbekistan is scheduled to produce nearly one million mobile phones a year, more than 600,000 TV sets and the same number of refrigerators. In general, the output should grow to 1.5 trillion soums (about $530 million) a year (currency rates of CB RU from 24.11.2015   1$= 2735.74 soums).

Analysts expect that the domestically produced household appliances will be in demand both at home and abroad. Various types of electrical goods have been already exported in Kazakhstan, Kyrgyzstan, Turkmenistan and Russia. The products enjoy the demand owing to high quality, durability and competitive price. Last year, the volume of the industry’s exports amounted to 33% of total production.

(Source: «Uzbekistan Today» newspaper)

BUSINESS CLIMATE

Legal framework for conducting tenders in the Republic of Uzbekistan

A tender is a competitive form used for selecting proposals to supply goods, to render services and to fulfill works in accordance with the terms specified in appropriate tender documentation beforehand, by the time fixed there, on the principles of competition, justice and efficiency. A contract is concluded with a tender winner or a participant that has submitted a tender proposal fully meeting the requirements specified in tender documentation, which offers the best conditions.

The procedure for conducting tenders and auctions in the Republic of Uzbekistan is reflected, among other legislative documents, in Articles 379-381 of the Civil Code of the Republic of Uzbekistan, which specify, in particular, that a contract (agreement) may be concluded by means of tenders. In this case a contract is signed with a tender winner.

The tender may be organized by an object’s owner, a person possessing the property right or a specialized organization. The latter acts on the basis of an agreement signed with an object’s owner or a person possessing the property right, and speak on their behalf or on its own behalf.

Actions and competitions may be open and closed. Any entity may take part in an open auction and open competition. As for a closed auction or a closed competition, only entities specifically invited for this purpose may participate.

The main documents designed to regulate state purchases include:

– Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 456, “On measures to improve the organization of tenders” dated 21st November, 2000;

– Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 302, “On measures to improve the system of tenders in the field of major construction” dated 3rd July, 2003;

– Resolution of the President of the Republic of Uzbekistan  No ПП-1475, “On optimization of the state purchases system and greater attraction of small businesses to the field” dated 7th February, 2011;

– Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 100, “On measures to improve the regulatory-legal framework for the organization of state purchases” dated 1st April, 2011.

With a view to effectively tackling the tasks set in the field of tender (competition) organization, a special agency was established at the Ministry of Foreign Economic Relations, Investment and Trade of the Republic of Uzbekistan, amenably to the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 454 as of 26th September 1997. Called Uzbektenderconsulting, the Agency is engaged in conducting tenders.

So, not only a comprehensive legal mechanism was formed, but the entire institute of state support was created to assist indigenous enterprises in realizing their import-related plans and intentions.

In this connection, one should mention the Regulations No 456, “On the conduct of tenders to purchase raw materials, components and equipment” as one of the main documents designed to raise the efficiency, with which foreign credit lines and grants are used, to facilitate the development of competition between domestic and overseas suppliers, to ensure the attraction of more small and medium-sized businesses to the state purchases sector as well as to improve the organization and conduct of tenders to purchase raw stuff, materials, components and equipment.  A given document was put into effect by the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 456 dated 21st November, 2000.

In particular, Regulations in question stipulate the following:

– Purchases of imported and local raw stuff, materials, components and equipment, to the tune in excess of US 100,000 under a single contract, which are financed out of the state budget, non-budget funds of budgetary organizations, state purpose-oriented and other non-budget foundations, set up in keeping with Presidential Decrees or Resolutions of the government of the Republic of Uzbekistan, and foreign grants that are provided within the framework of agreements signed by the President and the government of the Republic of Uzbekistan with donating countries, international, foreign governments and non-governmental organizations, and foreign credit lines allocated against the guarantee of the Republic of Uzbekistan;

– The selection of transport-forwarding companies to convey goods under tender contracts concluded with foreign suppliers.

Tenders are not conducted in the following cases:

– Purchases of goods (works, services) are carried out in accordance with Presidential Decrees and resolutions of the Cabinet of Ministers of the Republic of Uzbekistan;

– Donating countries, corresponding international, foreign governmental and non-government organizations have other procedures for purchasing goods (works, services) or other terms on which foreign credits are given under the guarantee of the Republic of Uzbekistan.

At the same time, the Regulations, “On the conduct of tenders to purchase raw materials, components and equipment “deal with the following issues:

– Financial responsibility for the initiation of purchases;

– The organizational model of purchasing procedures, with a focus on tender commissions and working bodies of such commissions;

– Advantages of open tenders and terms for using closed tenders;

– Tender initiation procedures;

– Preparation of tender documentation;

– Evaluation of qualification characteristics of tender participants;

– The schedule and the terms fixed for different tender stages;

– Submission of applications , procedures for their receipt, unsealing and estimation, guarantees, supporting tender proposals;

– The procedure for registering contracts and the responsibility borne by state authorities and tender participants for any infringements.

In order to back indigenous producers, a number of amendments concerning the provision of price-related preferences are inserted in the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 456 as of 21st November, 2000.

As well as that, Article 14 of the Law of the Republic of Uzbekistan, “On competition” stipulates a package of anti-trust requirements to the way tenders are conducted.

When conducting tenders, the following actions that lead or can lead to the limitation of competition are banned:

– any infringement of the procedure for conducting tenders specified by legislation;

– coordination by organizers and/or tender customers of the activity performed by tender participants;

– ungrounded refusal to accept documents from economic establishments required for their participation in tenders;

– ungrounded disqualification of tender participants;

– creation of preferential conditions for one or several tender participants making it easier for them to take part in tenders, including by providing access to information, with the exception of cases stipulated in legislation;

– indication of a concrete commodity producer, with the exception of cases where commodities fail to correspond to producers, and other cases stipulated in legislation.

The infringement of the anti-trust requirements specified in Part 1 of a given Article is viewed as the ground, on which tender decisions as well as agreements signed on their basis, may be declared invalid.

It is also directly relevant to mention here the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 264, “On measures to further improve the conduct of tenders” dated 14th September, 2015.

The document is intended to increase the efficiency and to ensure the rational use of funds provided to finance investment projects that are implemented in different industries of the national economy and in the social sphere; to speed up the realization of projects; and to improve the organization and conduct of tenders for the selection of suppliers of goods, works and services.

The Resolution under discussion has created sectoral interdepartmental tender commissions for the purchase of goods, works and services, and approved their members.

In addition, the document specifies that:

– the interdepartmental tender commission jointly conducts tenders and determines winners on the basis of tenders for the purchase of goods, works and services, within the framework of investment projects, which are realized in corresponding economic sectors and in the social sphere, and whose total value exceeds US $5 million under a single contract;

– tenders, whose total value under a single contract is less than US $5 million, are conducted by tender commissions, set up by customers in conformity with legislation;

– tenders, which have been started earlier and consisted of several stages, but not yet brought to completion, are conducted by the tender commissions that existed before the present Resolution comes into effect.

For the time being, the competent ministries and departments of the Republic of Uzbekistan are working on the introduction or approval of amendments and additions to a new version of the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 456 dated 21st November, 2000.

Passing a corresponding legislative document and bringing the entire regulatory-legal framework to a single format with a view to further optimizing and perfecting the mechanisms of tender purchases in the Republic of Uzbekistan will promote the development of legislation for the conduct of state purchases on a tender basis.

(Source: «Business partner.uz» newspaper)

International cooperation

Uzbek-Korean business forum takes place in Tashkent

Uzbek-Korean business forum took place today in Tashkent. The event was organized within the framework of the visit of the delegation of business circles of the Republic of Korea to Uzbekistan, headed by the Deputy Minister of Trade, Industry and Energy Woo Tae-hee.

The event was attended by heads of ministries and departments, representatives of over 40 Korean companies operating in the chemical and petrochemical, construction, electrical, engineering and pharmaceutical industries.

As was pointed out at the event, the Republic of Korea is one of the key economic, investment and technological partners of Uzbekistan. With the active participation of South Korean businesses in our country, a number of strategic projects in various sectors of the economy are being implemented.

One striking example of such cooperation is recently completed construction of Ustyurt Gas Chemical Complex at Surgil deposit worth about 4 billion dollars, carried out in conjunction with a consortium of leading Korean companies – Korea Gas Corporation (KOGAS) and “Lotte Chemical”.

Along with it there are many other examples of successful cooperation with leading Korean companies in various industries including automotive, mechanical engineering, power generation, oil and gas, electrical, textile, information technology, telecommunications and many other industries.

In trading sphere, preferential treatment was established between the two countries in 1992. There are 439 enterprises with Korean investments operating in Uzbekistan, including 75 – with 100 percent Korean capital, 72 accredited representative offices of South Korean companies. At the end of 2014 the volume of mutual trade between Uzbekistan and South Korea reached 2 billion dollars and over first 9 months of this year – 1.2 billion dollars.

During the business forum, the representatives of the South Korean delegation got acquainted with the investment potential of Uzbekistan and opportunities for investment cooperation, including in the framework of “Navoi” FIEZ and SIZ “Angren”.

They also discussed issues of further deepening trade-economic and investment cooperation between Uzbekistan and the Republic of Korea.

Considerable attention was paid to promising project proposals in the field of chemical and petrochemical, pharmaceutical, electrical industry, information and communication technologies.

Uzbek – Korean Cooperation Exchange took place the same day.

(Source: UzReport.uz)

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