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1.What does the Investment Promotion Agency under the Ministry of Investments and Foreign Trade of the Republic of Uzbekistan do?

The Investment Promotion Agency under the Ministry of Investments and Foreign Trade of the Republic of Uzbekistan (hereinafter referred to as UzIPA) was established in accordance with the Decree of the President of the Republic of Uzbekistan dated January 28, 2019 No. 11-4135 “On the Organization of the Ministry of Investments and Foreign Trade of the Republic of Uzbekistan”.

UzIPA implements following main strategic objectives and directions:

  • participation in the implementation of a unified state investment policy aimed at attracting foreign investment into the economy of the Republic, creating favorable conditions for foreign investors, taking into account the country’s economic, social and environmental interests;
  • informational, legal and other support to foreign investors, as well as assistance in organizing interaction with government bodies and organizations, domestic entrepreneurs in the field of investment activity;
  • formation and maintenance of an information database of promising and ongoing investment projects with the participation of foreign investments, conducting system monitoring of the status of their implementation;
  • organizing wide propaganda and promoting the economic, resource and investment potential of the republic, conducting outreach to foreign business circles, including through the media, about the created favorable conditions, guarantees, benefits and preferences provided to foreign investors;
  • comprehensive assistance in the formation and maintenance of a positive international image of the Republic of Uzbekistan
2.What privileges and preferences have potential foreign investors when invest in Uzbekistan?

In accordance with Article 51 of the Law “On Investments and Investment Activities” of the Republic of Uzbekistan, benefits and preferences used for state support of investments may include:

  • transfer to the investor of state-owned objects or property rights to investors on a preferential or free basis;
  • providing the investor with tax and customs privileges (except for customs clearance fees) and other obligatory payments;
  • reimbursement of investor expenses for engineering communications;
  • providing investors with loans at preferential rates for the implementation of an investment project;
  • subsidizing interest rates on loans received by the investor for the implementation of the investment project;
  • other measures of state support to investors in the form of benefits and preferences provided by the law.

For reference:

Benefits and preferences are provided depending on the volume of investments, conditions of the area where implementation of the investment project is planned, the scope and industry of the investment project.

The procedure for providing benefits and preferences is approved by the President of the Republic of Uzbekistan.

3.What relevant projects in the field of PPP (public-private partnership) are proposed by the Government of the Republic of Uzbekistan for foreign investors today?

In Uzbekistan, during the first half of 2019, significant steps have been taken in the field of public-private partnerships. Particularly, there was adopted the Law of the Republic of Uzbekistan “On Public-Private Partnership”, which meets international standards. Also, created the Agency for the Development of PPP, in accordance with the Decree of the President of the Republic of Uzbekistan dd. October 20th, 2018. Implementation of 15 approved projects are planned for the end of 2019.

Nowadays, the priority areas of public-private partnerships are electricity generation, transport (airports, roads, etc.), the social sphere (healthcare, education and preschool education, sports), telecommunications, utilities (water supply, sewage systems and heat supply, as well as municipal solid waste), agriculture and water management, tourism. Work is underway to attract foreign direct investment in 17 public-private partnership projects worth more than $ 10 billion.

The full list of projects proposed for implementation in PPP sphere can be found on the website of the PPP Development Agency:  https://www.pppda.uz/ru/projects/

4.How is the inviolability of private property of foreign investors protected? Is there any regulatory framework for protecting the rights of foreign investors?

The protection of the rights of foreign investors is guaranteed by the state of the Republic of Uzbekistan (the law of the Republic of Uzbekistan “On guarantees and measures to protect the rights of foreign investors”, approved by the Resolution of Cabinet of  Ministers of the Republic of Uzbekistan dd. August 2nd, 2005, No. 180.). In particular, along with general guarantees and protection measures to foreign investors, additional guarantees and protective measures may be provided by the law, including ensuring the unconditional fulfillment by partners of their obligations to foreign investors.

In some cases, foreign investors may be provided with additional guarantees and measures on the basis of investment agreements concluded to protect their rights when investing in:

  • priority sectors ensuring sustainable economic growth, progressive structural changes in the country’s economy;
  • priority projects that ensure the strengthening and expansion of the export potential of the republic, its integration into world economic relations;
  • projects of small business, the implementation of which is aimed at the processing of raw materials, production of consumer goods and services, and provision of employment.
5.We’ve heard about the newly created free economic zones (FEZ) in Uzbekistan. Can you tell us about the benefits and preferences of projects located in the territory of these zones?

Over the past two years, 18 free economic zones have been created in Uzbekistan. The first free economic zones were created during 2008-2013 – in Navoi, Angren and Jizzakh. Overall, there are 21 free economic zones on territory of the Republic of Uzbekistan, including 9 industrial, 7 pharmaceutical, 2 agricultural, as well as tourism, transport and logistics, and the production of sports equipment.

The period of functioning of the economic zones will be 30 years with the possibility of its subsequent extension. During all this time, special tax, customs and currency regimes will be operating.

All enterprises located on the territory of the FEZ, will be exempted for different periods from paying land tax, income tax, property tax for legal entities, tax on improvement and development of social infrastructure, a single tax payment for microfirms and small enterprises, as well as mandatory contributions to target state funds (depending on the volume of investments).

As an example, if an investor investing from 300 thousand to 3 million dollars, he will receive benefits for three years, from 3 to 5 million dollars – for five years, from 5 to 10 million dollars – for seven years, from 10 million dollars for ten years.

Moreover, foreign investors will be exempted from paying customs duties on imported raw materials and components for the entire period of activity of the FEZ in case of products are sent for export.

6.What is the procedure for reviewing and approving the implementation of investment projects in the territory of FEZs?

The selection of investment projects for placement in FEZs is carried out in accordance with the Regulation on the procedure for the selection of investment projects for placement on the territory of the FEZ and registration of participants in the FEZ, approved by the Cabinet of Ministers of January 16th, 2018. №29.

The opinion of the Center on the business plan or feasibility studies of projects will not exceed twenty calendar days.

The Administrative Council considers the submitted investment applications and business plans and, based on the results, makes a decision on the possibility of implementing the project in the territory of the FEZ or the need to finalize the submitted documents or the inappropriateness of the implementation of the investment project in the territory of the FEZ.

7.What are the guarantees from the government’s side in terms of protection the rights of foreign investors?

The state guarantees and protects the rights of foreign investors engaged in investment activities in the Republic of Uzbekistan.

Discrimination against foreign investors due to their citizenship, place of residence, religion, place of business, and also depending on the country of origin of investors or investments is not allowed.

In case if subsequent legislation of the Republic of Uzbekistan worsens the conditions for investments, then the legislation applicable to foreign investors applies on the date of investment for ten years from the date of investment.

A foreign investor has the right (at his discretion) to apply those provisions of the new legislation that improve the conditions for his investment.

The worsening of investment conditions is considered to be the introduction of amendments and additions to the legislation, as well as the adoption of new acts of legislation of the Republic of Uzbekistan, providing:

  • increase in the size (rate) of income tax on income received in the form of dividends paid to a foreign investor;
  • quantitative restrictions on the volume of investments and other additional requirements for the size of investments, including in the form of an increase in the minimum size of foreign investments in enterprises with foreign investments;
  • restrictions on the equity participation of a foreign investor in the authorized capital (authorized capital) of enterprises;
  • additional procedures for issuing and renewing visas of foreign investors – individuals, as well as other additional requirements for foreign investments.
8.Can you tell us about projects currently under consideration by the Agency today that might interest us?

To date, Investment Promotion Agency is considering about 70 projects that are actively being proposed for financing by potential investors.

Priority areas are:

  • Tourism and hotel business
  • Agriculture
  • Heavy industry
  • Textile and light industry
  • Renewable energy and energy efficiency projects

More detailed information on the projects can be obtained on the UZIPA website by following the link: http://uzafi.brand.uz/ru/investor-taxonomy/investitsionnye-predlozheniya/

9.Are there any state-owned companies that have put up for sale their shares and bonds?

According to the Decree of the President of the Republic of Uzbekistan dd. April 29th, 2019. № PP-4300 “On Measures for Further Improvement of the Mechanism of Attracting FDI in the Economy of the Republic”, a List of state blocks of shares (stakes) in the authorized capital of business entities proposed for sale to investors was formed.

This list contains 29 state organizations, representatives of various fields, such as:

  • Financial institutions
  • Construction industry
  • Oil and fat industry
  • Production of alcoholic beverages
  • Food industry
  • Chemical industry
  • Electricity industry
  • Oil and gas industry
10.Is there any possibility of conducting Due Diligence of Uzbek companies? As well as acquaintance with financial reports of Big4 companies? (EY, Deloitte, KPMG, PWC)

Currently, many big Uzbek organizations are widely practicing the procedure of conducting and signing Due Diligence, which is the idea of ​​the investment object, including an assessment of investment risks, an independent assessment of the investment object, a comprehensive feasibility study of the company’s activities, check of its financial condition and market position.

Particularly, representatives of international audit companies of BIG4 such as Deloitte & Touche, PricewaterhouseCoopers, Ernst & Young, and KPMG are located on the financial market of Uzbekistan.

11.Is there any special visa support for foreign investors?

The concept of “Investment visa” was introduced in Uzbekistan by the Decree of the President (№UP–5833, dd. 09.19.2019).

Also, citizens of foreign countries, including founders (participants) of enterprises with foreign investments that have contributed funds to the organization of enterprises for the production of goods and services in the amount of at least $ 3 million in the Republic of Uzbekistan, will be provided with a simplified procedure a residence permit for a period of 10 years. The validity of the visa itself will be three years.

Foreign investors that have the residence permit in Uzbekistan or an “investment visa” with members of their families, are entitled to use medical and educational services on the conditions provided for citizens of the Republic of Uzbekistan.