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IFC mission studies chemical industry potential

This week, the Foreign Investment Promotion Agency organized two meetings with the mission of the International Finance Corporation IFC, led by private sector development specialist Tarik Sahovich. The topic of discussion was the study of the potential of the chemical industry and increasing the attractiveness of the sphere for foreign investors.

In an interview with UZIPA Deputy Director Oybek Elmuratov, Tarik Sahovich noted that IFC today considers the chemical industry in Uzbekistan as one of the most promising for the development of cooperation, and negotiations with the Dekhkanabad chemical fertilizer plant are already underway.

In particular, at the first meeting, we talked about a possible development, by IFC, a project of consulting services in the chemical sector, where the Agency could act as an indicator, bringing clarity to the current situation in the market and in the industry.
IFC, which focuses on providing advisory, technical and financial services to the private sector and government organizations, has a wide portfolio of innovative solutions to stimulate complex sectors of the economy.

During the first meeting, the parties discussed in detail the existing problems of the industry, as the need to reconstruct chemical plants, replace obsolete equipment and introduce new technologies, with an energy and resource saving regime, and also measures taken by the government to reform the chemical industry as part of the approved State program for the development of the chemical industry.

It was emphasized that during the events of recent years in pursuing an open investment policy in Uzbekistan, introducing fundamental changes to existing legislation and providing comprehensive support to investors and entrepreneurs, many economic sectors have a high potential for development where foreign capital is possible.

Over the course of a week, the IFC mission examined and analyzed in detail the capabilities and “pain points” of the chemical industry and presented the primary results of the study on January 24 at the second meeting at the UZIPA.
Tarik Sahovich emphasized several problems that reduce the attractiveness of the chemical industry for foreign investors. First of all, these are:

  • The process of obtaining a building permit, which must be obtained from local authorities whose requirements are outdated and ineffective. Adapting to international building standards makes it easier to build and will attract great interest in foreign investors in the development of the chemical sector.
  • Existing tax policy on customs duties. It is noted that additional taxation of imported products, equipment or services, with the existence of an analogue in the Republic of Uzbekistan, can significantly limit investors in obtaining and producing better and newer products and technologies.
  • The process of registering new fertilizers and pesticides. The conclusion of an agreement between Uzbekistan would allow the Republic to use the EU registration standards for new complex fertilizers. This would allow local farmers to access more complex and new products that are widely used on the world market. IFC studies have shown that it takes about a year to register a new compound fertilizer.

Summing up, the IFC mission noted that it would continue the research and was ready to share the results with the UZIPA for the development of cooperation.

In response, Oybek Elmuratov said that such studies were needed in order to further develop a positive dialogue, including with the participation of other ministries and departments to promote ideas and opportunities and applied use for the development of economic sectors of Uzbekistan.