Role and importance of foreign capital in economic development of Uzbekistan

Uzbekistan is the largest of the five Central Asian republics with a population of more than 30 million people. Uzbekistan borders on Kazakhstan, Turkmenistan, Tajikistan, Kyrgyzstan and Afghanistan.

With the attainment of independence in 1991, Uzbekistan inherited the economy in a difficult situation - the growing rates of hyperinflation, a sharp decline in the production of industrial and agricultural goods, and as a consequence - one of the lowest living standards among the countries of the former USSR.

From the very first days of independence, among other important problems, on which the destiny and future of Uzbekistan depended, priority was given to the issues of reforming property relations, reducing the influence and participation of the state in the economy.

The economic reforms carried out on the basis of their own model of transition to a market economy in a short period of time undoubtedly yielded tangible positive results. Despite the fact that 25 years have passed since independence, Uzbekistan has become a country with a stable economy, stable economic growth, a liberal currency market, low inflation rates, the dominant place for finished goods not of a commodity orientation in the export structure. And this assessment is given not by local analysts, but by authoritative international organizations.

An important role in achieving these successes is undoubtedly played by the ongoing reforms in the sphere of property, the basis of which is the large-scale privatization carried out in the country - the transfer of state property to the hands of real investors.

Today, Uzbekistan opens up new horizons for investment - the most favorable conditions for business have been created, including political and macroeconomic stability, strong guarantees have been established to protect the rights of foreign investors, and they have an extensive system of benefits. In addition, foreign investors are attracted by low prices compared to neighboring countries for raw materials, materials, energy resources and highly skilled labor that are vital for production.

The Government of the Republic of Uzbekistan is pursuing an active policy in order to create the most favorable conditions for foreign investors. The introduction of the convertibility of the national currency on current international operations and the strategy of reforms in Uzbekistan create a solid basis for further liberalization of the economy and the implementation of projects involving foreign capital.

The republic has created a wide system of legal guarantees and benefits for foreign investors, which is based on the Laws On Foreign Investments, On Investment Activities, On Guarantees and Measures to Protect the Rights of Foreign Investors, On Protection of the Rights of Foreign Investors in the Securities Market ". These legal acts provide fair and equitable treatment, protection and security to foreign investors. In addition, an integrated system of additional measures to stimulate the activities of enterprises with foreign investment, including tax incentives and preferences, has been developed.

As noted above, in the process of reforming the economy, a significant role belongs to the process of privatization of state property, designed to facilitate the formation of a class of owners by transferring property rights from the state to the private sector.

To date, foreign investors are offered share packages of enterprises, objects of unfinished construction and social infrastructure, which are fully subject to transfer to private ownership through their sale on the exchange market. So, state shares of large enterprises of oil and gas, electrical, chemical, and textile industries are offered in private ownership.

Also, investors can take part in competitive tenders for the sale of state assets in socially significant facilities and enterprises of various industries at zero redemption value with the condition of fulfilling investment obligations. The practice of realizing such objects has shown that they have not been realized at the exchange auctions because of their high appraised value, they are in demand among potential investors at competitive tenders where the main criterion is an effective business plan and investment commitments.

In addition, in open tender tenders, foreign investors are offered shares in large strategically important enterprises in the energy, oil and gas, chemical industries and railway transport enterprises. Currently, open tenders have been announced for the implementation of the state share in chemical industry enterprises, thermal and hydroelectric power plants, hotel complexes, postal service, and fat-and-oil plants.

A common characteristic feature of privatization of enterprises and facilities in Uzbekistan is the transparency, clarity and simplicity of the mechanisms under which any investor has equal access to information and the purchase of these facilities.

Speaking about the forms of participation of foreign investors in the process of privatization in Uzbekistan, the following can be noted. Foreign investors can participate in the privatization process by acquiring the state share of property realized by the above methods. Basically, investors are interested in creating an enterprise with foreign investments, since such enterprises are provided with large tax incentives. An enterprise with foreign investment is an enterprise in which the share of a foreign investor in the authorized capital is at least 30%, and the amount of the statutory fund is at least $ 150 thousand. Such a share of 30% can be redeemed in a privatized enterprise from among those blocks of shares that are sold on the stock market, then re-register this enterprise in the Ministry of Justice of the Republic of Uzbekistan as an enterprise with foreign investments. The process of attracting foreign investments into the economy of the republic is also carried out in the form of joint ventures with the participation of foreign capital (JV). Moreover, this is one of the most modern forms of organization of production in Uzbekistan.

If we talk in more detail about the advantages, then those investments that are made by investors in the process of privatization in the form of importation of spare parts and components to the technological equipment into the territory of the Republic of Uzbekistan as a result of investment obligations of foreign investors for technical re-equipment and production modernization are exempted from customs payments (except for Fees for customs clearance) for the investment period from the moment the investor accepts investment obligations. In this regard, many investors prefer to conclude contracts with the adoption of investment obligations.

In addition, in order to increase the investment attractiveness of privatized enterprises, create additional incentives for attracting foreign investors, investors who acquire not controlling stakes in shares but make significant investments in enterprises, the decision of the State Tender Commission may be granted the right to manage the state share of shares intended for transfer In the management of professional management companies, out of competition. This allows the investor to obtain additional guarantees, control the management and cash flows.

Used sources:

• 1.    The report of the President of Uzbekistan. I.A. Karimova at the meeting of the Cabinet of Ministers, dedicated to the results of the country's socioeconomic development in 2012 and the most important priority areas of the economic program for 2013.

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