Tashkent, Uzbekistan – August 29, 2023
The highly anticipated Interim Session of the Foreign Investors Council (FIC) under the President of the Republic of Uzbekistan, took place on August 29, 2023, at the International Hotel in Tashkent. Attended by around 150 participants, including foreign businesses, diplomats, representatives of international financial institutions (IFIs), notable Uzbek government officials, and key stakeholders, the event not only marked a significant moment on the economic calendar but also redefined international investment discussions.
Founded in 2019 through a partnership between the Ministry of Investments and EBRD, the Foreign Investors Council under the President of the Republic of Uzbekistan operates with clear goals. It serves as a platform for facilitating meaningful dialogue between the government and private sector, addressing critical aspects of private sector growth, business environment improvement, and investment promotion. A central aim is to identify and address obstacles that hinder investment attraction. By suggesting effective intervention strategies, the council aims to create an optimal business environment for investment. This effort involves thorough reviews of legislative and regulatory proposals, aligning regulations with the broader objective of promoting private sector expansion. The council's active role in forming recommendations, often in the form of draft resolutions and decrees, backed by comprehensive assessment reports, showcases its dedication to achieving tangible outcomes. Overall, the Foreign Investors Council exemplifies Uzbekistan's commitment to collaborative efforts that aim to boost the private sector, refine the business landscape, and foster an environment that encourages robust investment activities.
The session featured crucial discussions that delved into the heart of the topics shaping Uzbekistan's investment landscape. Guided by experts in their fields, these conversations underscored the nation's dedication to driving economic growth, fostering development, and promoting global cooperation.
Against the backdrop of a changing global landscape, this session stood as a testament to Uzbekistan's determination to advance economically and encourage international collaboration. Amid a growing lack of investment in developing countries, Uzbekistan's ongoing reforms, favorable investment climate, and forward-looking trade policies have positioned it as an attractive destination for discerning investors.
In recent years, Uzbekistan's story has been marked by transformative changes that have created an environment conducive to investment and innovation. The establishment of the Ministry of Investment, Industry, and Trade signifies the nation's commitment, further supported by embracing liberalization, introducing progressive investment laws, and launching proactive privatization efforts. These combined efforts have created a dynamic and lively economic landscape.
The decision to resume Uzbekistan's pursuit of accession to the World Trade Organization (WTO) is significant, demonstrating its unwavering dedication to global standards and international cooperation. The continued efforts to enhance trade preferences and develop economic alliances depict a nation moving towards a diverse, resilient, and sustainable economic future.
The session also highlighted Uzbekistan's active steps in reforming investment legislation, promoting privatization, fostering public-private collaborations, and driving green economy initiatives. The resolute commitment of the Foreign Investors Council's working groups played a pivotal role in creating an environment that attracts investment, promotes transparency, and resolves challenges.
As the event concluded, Uzbekistan warmly invites both domestic and international investors to explore the range of opportunities the nation offers. With a shared goal, the collective effort aims to steer towards sustainable economic growth, strengthen global partnerships, and shape a common destiny that transcends borders.
The event commenced with Alkis Drakinos from EBRD shedding light on the session's path. Minister Laziz Kudratov shared insights into Uzbekistan's investment climate. Timur Abdulazizov from IFC unveiled the nuanced implications of the new Investment Law. The topic of tax administration efficiency was discussed by Abdulkhamid Muminov of PwC Uzbekistan. The introduction of the streamlined Single E-Window platform was eloquently presented by Khamidulla Narmuratov from EBRD. International finance expert Alena Dolgova provided insights into the Tashkent International Financial Center project. A significant moment came with the signing of the Cooperation Agreement with IFC, symbolizing mutual growth and enduring cooperation.
The following activities were announced during the meeting:
1. VAT Reduction: In 2023, the VAT tax rate was reduced to 12%. This resulted in a significant expansion of value chain participants by 26 thousand entities and helped in transitioning their activities out of the shadows.
2. Elimination of Tax-Gap: From October 1, 2023, the practice of applying the tax deduction coefficient, i.e., the "tax-gap", will be eliminated when refunding value-added tax.
3. Open Entrepreneur Rating: Starting from January 1, 2024, the Chamber of Commerce and Industry and the Business-Ombudsman, in collaboration with industry representatives, will introduce an open entrepreneur rating. Those with high ratings will be exempt from all forms of tax audits, and any excess value-added tax will be returned to them within a day.
4. Abolishing Temporary Suspension: The practice of temporarily suspending value-added taxpayer certificates will be abolished.
5. Industrial Development Fund: To propel prospective projects in pivotal sectors, the Industrial Development Fund has been established, initially endowed with $200 million. Starting from September 1, credits for new projects will be provided from the fund in foreign currency at a 5% interest rate for a 10-year term.
6. Foreign Investors Council: Under the leadership of the President, the Foreign Investors Council has established six working groups focusing on key areas such as financial markets, digitization, privatization, public-private partnerships, green economy, priority sectors, and cross-border investments. These working groups have deliberated on proposals to reform specific economic sectors through 18 meetings.
7. Working Groups Activities: The working groups are diligently working towards enhancing investment legislation, privatization laws, developing public-private partnerships, improving tax administration, implementing modern solutions and innovative financial products, and introducing market-based regulatory principles to enhance the efficiency of various industries.
8. Investment Legislation: A draft law on "Investments and Investment Activities" has been prepared in a new edition, consolidating all investment agreements (bilateral investment agreements, public-private partnership agreements, etc.) in Uzbekistan under one unified law. This revision aligns the conceptual framework and includes a chapter on "Rights and Guarantees of Foreign Investors" in accordance with international standards. Moreover, the procedural part of the law is being reviewed, introducing a two-tier interaction principle (front and back offices) to support investors and resolve disputes.
9. Special Economic Zones: New draft law on "Special Economic Zones" is being created, which will serve as a legal foundation for the implementation of innovative types of economic zones, considering advanced international experience. These economic zones will be characterized by the presence of residential and social facilities alongside industrial ones, private operators managing the zones, and comprehensive services provided by the administration to the zone residents.
10. Tashkent International Financial Center: Collaboratively with international experts and financial institutions, a working group is also actively engaged in establishing the Tashkent International Financial Center, developing legal frameworks for Islamic financing, and establishing a national asset-based financing platform.
11. Single-Window Platform: In partnership with the European Bank for Reconstruction and Development, an online single-window platform is being developed to provide foreign investors with services through the "one-stop" principle.
After the event concluded, the Protocol of the Interim Session of the Foreign Investors Council was signed. This incorporated systematic proposals for enhancing the investment environment in Uzbekistan. Additionally, a Cooperation Agreement with the International Finance Corporation was adopted, with the aim of providing technical and consulting support to improve national legislation.
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