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Country Focus of Uzbekistan

Monthly Economic & Commercial Report of Uzbekistan

The Gross Domestic Product of the country during 2009 amounted to US$ 31.96 billion which is 8.1% higher compared to the same period of previous year. Uzbekistan has witnessed a growth rate of 8% in its GDP in the first half of 2010 (January – June) over the same period last year.

Main Macroeconomic Indicators of Economic Development:


Main indicators of economic growth of Uzbekistan for 2009 and first half of 2010 as compared to the same period of previous year are as follows:-

Sectors Growth Rate 2009 (% increase over 2008) Growth Rate in the first Half of 2010 over corresponding period in 2009
GDP 8.1 8.0
Industrial output 9.0 8.0
Agricultural output 5.7 6.9
Production of consumer goods 13.9 11.8
Construction work 33.1 11.5
Investments in fixed capital 24.8 0.0
External Trade 0.1 (-)0.8
Exports 2.4 14.3
Imports (-)2.7 (-)18.9
Inflation 7.4 4


(Source: State Committee on Statistics, Republic of Uzbekistan)

High level visits/Intergovernmental Commission Meetings:

Uzbekistan seeks Indian collaboration in textiles

Mr. I. Khaydarov, Chairman, Light Industry (Minister) met Mr. Dayanidhi Maran, Minister of Textile. This meeting was organized by PHD Chamber in New Delhi on 27 September. The visiting Uzbek Minister requested Indian co-operation for development of Textile industry in Uzbekistan. He said, "We are in discussion with Ginni International who has plans to invest in Uzbekistan to develop some projects. Another company, the Textile Development Company, is also planning to introduce weaving production in our country. We are about to have discussions with two silk producers in Bangalore as well".  "Eventually during this visit, I am planning to take with me at least five or six Indian companies to Uzbekistan," he added. When asked what kind of projects these Indian companies are planning to set up in Uzbekistan, Khaydarov mentioned: "They are targeting spinning, weaving, dyeing and finishing segments." Further, he said, there can be some kind of joint ventures or else it can be a 100% individual set up by the Indian textile companies in Uzbekistan. He also mentioned about Spentex which is an Indian textile company working successfully in the Uzbekistan for four years.

Uzbekistan-Azerbaijan intergovernmental commission meets

The session of the Uzbekistan-Azerbaijan intergovernmental joint commission on cooperation took place on 23 September in Tashkent. Representatives of ministries and companies related to foreign economic relations, trade, investments, science, IT, tourism, transport and agriculture participated in the meetings. Delegations of the two countries considered issues of increasing mutual trade and the number of joint ventures in various sectors. They also discussed issues of cooperation in the banking and finance, small business and other areas. More than 30 joint ventures with Azerbaijani capital operate in Uzbekistan. They work in sectors like energy, light industry, machinery building, metals processing, insurance, science and education, food industry, construction and others.

Uzbek-Polish intergovernmental commission

A press conference dedicated to the results of 3rd Uzbek-Polish intergovernmental commission that took place on 6-7 September in Warsaw was held in Tashkent. The agenda of the event focused on the current state of Uzbek-Polish trade and economic relations and perspectives of their development in future. According to the Polish statistics for January-July 2010, the bilateral trade between the countries stood at $69.5 million that exceeds the figure for the same period of 2009 by 17%. To Exports from Uzbekistan to Poland grew twice versus the same period of the last year. Exports of textile products from Uzbekistan grew 1.5 times, while exports of chemical products grew 2.8 times. Polish exports to Uzbekistan in transport, mechanical engineering, furniture industry, wood manufacture, mineral products, goods of chemical, fragrance industries also grew. Supply of equipment, technological lines, chemical, oil and gas products, construction and finishing materials retain leading positions in Polish-Uzbek trade.

President of Uzbekistan holds talks with heads of US companies


President of Uzbekistan Mr. Islam Karimov held negotiations with high-level representatives of General Motors, Sikorsky Aircraft and Honeywell companies in New York, US on 20 September. At the talks with deputy chairman of General Motors Mr. Thomas Stephens, Islam Karimov said that Uzbekistan was dynamically developing the car industry, and the cooperation with the GM had a great importance in this aspect. Over the short span of time since GM entered the automobile industry of Uzbekistan, several new models of cars were launched at the plant in Asaka, Andijan region. From August, GM Uzbekistan started production of a new model called Spark. The annual capacity is 50,000 cars, almost half of which will be exported. The President of Uzbekistan also met Jeffrey Pino, President of Sikorsky Aircraft Corp. Mr. Pino said his company was interested in cooperation with Uzbekistan. President Islam Karimov who then received David Cote, Chairman and CEO of Honeywell said that Uzbekistan could become a link for the American corporation in entering new markets. David Cote said that Uzbekistan is a country with high intellectual potential and rich mineral resources, and Honeywell saw broad perspectives for cooperation with the country. Honeywell is a Fortune 100 company with a workforce of approximately 128,000, of which approximately 58,000 are employed in the United States. 

***
Para-wise Report


i) According to the data of the State Statistics Committee of Uzbekistan, the Gross Domestic Product of the country during 2009 amounted to US$ 31.96 billion which is 8.1% higher compared to the same period of previous year.

ii) According to the official statistics the inflation rate in the country in 2009 constituted 7.4%.

iii) In 2009, total foreign trade of Uzbekistan reached US$ 21.21 billion including US$ 11.77 billion exports and US$ 9.44 billion imports and the trade balance was in favour by US$ 2.33 billion.

iv) Bilateral Trade (Source: State Committee on Statistics)

a) According to the State Statistics Committee of the Republic of Uzbekistan, total trade turnover between India and Uzbekistan in 2009 was US$ 124.9 million and rose by 37.3% compared to the same period of previous year.

*India’s trade with Uzbekistan year-wise:

Year Imports from India

(in US$ million)
Exports to India

(in US$ million)
Total trade turnover

(in US$ million)

2001

15.9

17.5

33.4

2002 15.4 25.1 40.5
2003 18.2 90.4** 108.6
2004 27.2 122.9** 150.1
2005 36.0 25.0 61.0
2006 46.7 12.7 59.4
2007 64.0 9.5 73.5
2008 67.2 11.1 78.3
2009 101.8 23.1 124.9

*Source of data: State Statistics Committee of the Republic of Uzbekistan.

**This includes payment for purchase of IL-76 & 78 planes by India.
  1. India’s trade with Uzbekistan commodity-wise: As per trade statistics, major items of India’s exports to Uzbekistan include drugs, pharmaceuticals, machinery & instruments, metal products, paper & wood products, meat & preparations. Raw cotton and non-ferrous metals constitute the largest item of Indian imports from Uzbekistan. Other principal items of import are petroleum, hide and skin, pulses, raw silk and services.

Exports from India in US$ million :


Commodity
2007-2008 2008-2009 Growth rate %
Drugs, pharmaceuticals and fine chemicals 22.6 25.08 11
Machinery and Instruments 8.0 12.84 60.5
Metal products 1.6 4.67 192
Paper, wood products 1.5 0.26 (-) 83
Meat & preparations 0.84 1.25 49
Others 6.02 2.09 (-) 65
Total 40.56 46.50 15

* Source of data: DGCIS, Ministry of Commerce & Industry, Government of India

Imports to India in US$ million :

Commodity
2007-2008 2008-2009 Growth rate %
Non–ferrous metals 13.8 28.68 108
Raw cotton 0.67 39.22 5754
Petroleum, crude & products 0.62 2.86 361
Hide & Skin
1.43 **
Pulses 0.35 0.51 46
Raw silk 0.29 0.29 0
Others 0.47 0.17 (-) 64
Total 16.2 73.16 352

* Source of data: DGCIS, Ministry of Commerce & Industry, Government of India

** Earlier this product was included in others category

v)
Share of services sector in Uzbek economy in 2009

Service In US$ million % increase over January-September 2008 % share in total rendered services
Transport 4356.5 8.2 31.8
Trade and catering 2375.6 19.5 17.3
Communal 1824.9 2.1 13.3
Communication and information, including services of information and resource centres

1027.5


32.6


7.5
Financial, including micro credit granting
1030.9

21.1

7.5
Tourism 32.2 34.7 0.3
Hotel 45.4 11.3 0.3
Personal 231.0 22.1 1.7
Repair of cars and other equipment 125.5 28.5 0.9
Other services 2650.1 26.1 19.4
Total 13699.6 15.8 100


v
i) In 2009, investments used to increase fixed capital in Uzbekistan reached US$ 8.33 billion. Foreign direct investments and credits constitute 32.4% of this amount i.e. US$ 2.70 billion.

The share of foreign investments and credits in different branches of Uzbek economy during 2009 are shown in the diagram below:

as % of total volume

VII) India’s investment interests/Related events:

ICVL looks for coal assets in Uzbekistan, Indonesia and Australia

International Coal Ventures Limited or ICVL, the special purpose vehicle floated by five state owned firms to scout for coal assets abroad, is talking to mine owners in Uzbekistan, Indonesia and Australia.

(A) Japan & Uzbekistan

Japan allocates $4m for the development of Uzbek customs service

Uzbekistan and Japan signed Exchange Notes within the framework of the program of Grants of Japanese government in the sphere of antiterrorism and safety for the implementation of the "Project on the establishment of X-ray scanning equipment at customs points on border of Uzbekistan with neighboring countries, Phase II" on 16 September. The total sum of grants comprises 360 million yen (approx. $4 million). The notes were signed by Tsutomu Hiraoka, Ambassador of Japan in Uzbekistan and Elyor Ganiev, Deputy Prime-Minister, Minister of Foreign Economic Relations, Investments and Trade. In the first phase of the project, Japanese government rendered X-Ray scanning mobile equipment to Ayrit customs point in Surkhandarya region that borders with Afghanistan and to Oybek in Tashkent region bordering with Tajikistan. Japan also organized training on the use of X-Ray scanning equipment and on increase of technological skills required for the control of the equipment that will prevent the flow of drugs and weapons. The second phase is meant to prevent high risk of drug and illegal goods turnover. In that phase, the equipment for railroad cargo will be rendered to Galaba bordering with Afghanistan and Tajikistan. 

B
) China & Uzbekistan

Central Asia to send 17 bcm gas to China in 2011 – report

China and Central Asian countries have agreed to pump 17 billion cubic metres (bcm) of natural gas via pipelines in 2011.  The volume is equivalent to 20% of China's total domestic gas output. A coordination committee of the Central Asia gas pipeline between Turkmenistan, Uzbekistan, Kazakhstan and China had made specific plans in terms of monthly gas supplies to China and with regard to the maintenance schedule for the winter of 2010 and full-year 2011 as reported by China Petroleum Daily. CNPC, operator of the trans-border pipeline that runs nearly 2,000 km through Central Asia before entering Chinese territory in the northwestern Xinjiang region, recently raised the capacity of the line to 24.5 million cubic metres per day or about 9 bcm per year. The pipeline's capacity is scheduled to grow to 15 bcm by the end of this year and 30 bcm by the end of 2011. 

China Southern Airlines begins nonstop Beijing-Tashkent flights

China Southern Airlines began nonstop Beijing-Tashkent flights from 2nd September. They are scheduled for Thursdays and Sundays aboard Airbus 330-200's. The direct flight is a response to increasing economic co-operation between the countries. Previously, only Uzbekistan Airways flew on the route.

C
) Azerbaijan and Uzbekistan

Uzbekistan, Azerbaijan agree on tax data exchange and multimodal carriages

Meeting of Azerbaijan-Uzbekistan Intergovernmental Commission on Economic Co-operation took place in Tashkent on 23 September. Within its framework the two sides signed a package of intergovernmental agreements. They provide collaboration and exchange of information in tax matters, humanitarian sphere, further development of trade and economic, scientific-technical cooperation, development of combined (multi-modal) rail transport. The package also included inter-department agreements in the area of environment and information-communication technologies. During the meeting they also discussed issues of increasing mutual trade turnover, increasing the number of joint ventures and types of products. Uzbekistan has more than 30 joint ventures with Azerbaijani partners. They specialize in energy, light industry, mechanical engineering, metalworking, insurance, science and education, food industry, construction, trade and service sectors.

D
) Hungary and Uzbekistan

Uzbekistan-Hungary: bilateral relations developing in all spheres

In the course of New York visits, the President of Uzbekistan Islam Karimov met the President of Hungary, Pal Schmitt. Both states signed a number of documents on trade economic and scientific cooperation, mutual protection and investment stimulation, double taxation avoidance. The Ministry of Foreign Economic relations, Investments and Trade of Uzbekistan cooperates with Hungarian Agency on Development of Trade and Investments and Eutoter Kft, an investment company. It is planned to conduct a number of business forums within this framework in Budapest. The Eximbank of Hungary made a decision to extend $50 million credit to Uzbekistan. This credit will be mainly used for the finance of projects aimed at equipping polyclinics, introduction of energy saving technologies into city infrastructure, reconstruction of sewage disposal plants at petroleum refineries. As for the humanitarian sphere, the Academy of Science and Health Ministry of Uzbekistan cooperate with number of Hungarian organizations in the sphere of science of materials, microelectronics, instrument-making industry, pharmaceuticals

E) Ukraine and Uzbekistan

Ukraine hopes to strengthen cooperation with Uzbekistan

Ukrainian Charge d'Affaires to Uzbekistan Stanislav Nebrat stressed the need to develop ties with the country at a press conference dedicated to Ukraine's Independence Day. He also noted that the Ukrainian and Uzbek prime ministers will meet this year to discuss plans to increase Ukrainian-Uzbek trade and economic cooperation in 2010-2012. Ukraine is particularly interested in establishing a Ukrainian-Uzbek bank to support Ukrainian business, Nebrat said. According to the Uzbek State Statistics Committee, Ukrainian-Uzbek trade turnover in 2009 increased 1.5 times to $1.53 billion. Some 1,952 joint ventures are registered in Uzbekistan in the trade, pharmaceutical and medicine, and chemical industries. According to Nebrat, Ukraine recently managed to develop balanced relations with strategic partners, such as the EU, Russia, the United States and Central Asia, thanks to the foreign policies of the current government.

F) UZBEK DEVELOPMENTS:

ADB predicts 8.5% GDP growth for Uzbekistan in 2010, 9% - in 2011

Asian Development Bank (ADB) released its publication “Asian Development Outlook 2010 Update” on 28 September, saying that developing Asia's robust recovery from the global crisis is gaining further momentum. The economy of Uzbekistan grew by 8% in the first half of 2010, with construction and services providing the main impetus to growth. Favorable weather boosted agricultural growth to 6.9%. Construction benefited from increased public infrastructure investment undertaken as part of the anti-crisis program. Foreign direct investment was buoyant in the first half of 2010, amounting to a record $1.6 billion – a 150% year-on-year increase. A one-third increase in bank lending, mainly to industrial enterprises and small and medium-sized enterprises, helped to underpin the expansion. With the economy running according to plan, the Update maintains growth forecasts of 8.5% for 2010 and 9% for 2011. The government reported inflation for the first half of 2010 at 4%, significantly lower than its announced target of 9% for the year, which has not been revised. Lower import prices of consumer goods and a government cap on utilities prices were major contributing factors containing inflation pressures.

IFC helps improve business environment in Uzbekistan

International Finance Corporation (IFC) has successfully completed its Uzbekistan Investment Climate project and released the results of its nine-year program on improving the business environment in the country on 17 September. Since 2001, the project has been working with the government of Uzbekistan to improve the business environment in the country, including reforms in business registration, voluntary liquidation, permit issuing, inspections, and the tax reporting system. On the basis of annual surveys of small and medium businesses, IFC's experts developed more than 200 recommendations for the government of Uzbekistan on further improvement of the business climate in the country. During the last two years, the project focused on helping the Uzbek government in its efforts to improve tax administration and reporting. As part of that work, the project conducted a full-scale tax compliance cost survey and provided the government with recommendations on further improvement of local tax administrations.

Gazprom discovers large natural gas reserves in Uzbekistan


Russian Gazprom's Zarubezhneftegaz subsidiary has discovered large natural gas reserves in the course of exploration works on Uzbekistan's Ust-Urt Plateau. In future, the annual gas production may account for some 500,000 cubic meters, according to the report. Zarubezhneftegaz is Gazprom's 100% subsidiary, implementing a number of investment projects on hydrocarbon exploration and development in Uzbekistan, Tajikistan, Kyrgyzstan, Vietnam and India.

Uzbekistan's agriculture development

A scientific conference dedicated to selection of rice and leguminous plants, development of seed-farming and agrotechnological system, was held in Tashkent. The event attended by deputies of the Legislative chamber of Oliy Majlis, experts of Ministry of Agriculture and Water Resources of Uzbekistan and other experts focused on the importance of development of rice and leguminous plants for the population with high-quality food products. This year, the area of rice fields comprised of 90,000 hectares. Over 300,000 tonnes of rice is harvested annually in the country.  

Uzmetkombinat seeking to build own ferroalloy facilities


Uzbekistan based steel producer Uzmetkombinat is planning to begin producing ferroalloys based on the Dautash ferromanganese ore deposit in Kashkadarya region and is currently looking for a strategic investment partner. The project will include the organization of an open pit for manganese ore mining, the construction of facilities for primary ore dressing directly on the site as well as the construction of ore dressing capacities at Uzmetkombinat for the production of ferromanganese, silicomanganese and ferrosilicomanganese. The Dautash deposit holds 1.25 million tonnes of ore resources with up to 20% manganese content, a report by Steel Guru website said.

According to the estimations of experts, the annual ore extraction of approx. 40,000 tons will allow Uzmetkombinat to produce 15,000 tons of commercial grade manganese ore of which 8,000 tons will be used to cover domestic needs while the rest will be exported. According to experts' preliminary calculations, project investment is estimated at $40 million and is expected to be implemented within three years up to 2013.

Petronas interested in developing investment cooperation with Uzbekistan


President of Uzbekistan Mr. Islam Karimov received Datuk Shamsul Azhar Abbas, president of Malaysian company Petronas, in Tashkent on 16th September. Founded in 1974, Petronas today occupies a prominent position in the world oil and gas sector. In Uzbekistan, the Malaysian company is conducting geological survey works in several investment blocks in Ustyurt plateau and Surkhandarya region. Jointly with South Africa's Sasol, Petronas is participating in the large project of creating a synthetic fuel plant in Uzbekistan, which will produce diesel fuel, aviation kerosene and liquefied gas. During the visit of Petronas management to Uzbekistan, a production-sharing agreement was signed on development of Gadjak deposit in Baisun district of Surkhandarya. Datuk Shamsul Azhar Abbas said Petronas was interested in developing investment cooperation with Uzbekistan. 

VIII) The principal five export destinations of Uzbekistan for overall

2009:


Country Volume % of total volume of exports*
  1. Russia US$ 2257.2 million 19.2%
  2. Switzerland US$ 1586.1 million 13.5%
  3. Afghanistan US$ 703.8 million 6.0%
  4. Ukraine US$ 691.1 million 5.9%
  5. Iran US$ 538.0 million 4.6%
*Total volume of exports for overall 2009 was US$ 11771.3 million

IX
) The principal five import sources of Uzbekistan for overall 2008:

Country Volume % of total volume of imports*

  1. Russia US$ 2186.3 million 23.2%
  2. China US$ 1562.4 million 16.6%
  3. Republic of Korea US$ 1125.8 million 12.0%
  4. Kazakhstan US$ 793.5 million 8.4%
  5. Germany US$ 420.4 million 4.5%
*Total volume of imports for overall 2009 was US$ 9438.3 million

X) The principal five export commodities in 2009 (in million US$):

Commodity Volume % of total volume

of exports*

  1. Energy & Oil products 4025.9 34.2%
  2. Services 1035.9 8.8%
  3. Cotton fibre 1012.4 8.6%
  4. Food products 706.3 6.0%
  5. Ferrous and non-ferrous metals 588.6 5.0%
5. Chemical products and articles thereof 588.6 5.0%

*
Total volume of exports in 2009 was US$ 11771.3 million

XI
) The principal five import items in 2009 (in million US$):

Commodity Volume % of total volume of exports

  1. Machinery and equipments 5332.7 56.5%
  2. Chemical products 1047.7 11.1%
  3. Food products 849.5 9.0%
  4. Ferrous and non ferrous metals 532.7 6.3%
  5. Services 415.3 4.4%
*Total volume of imports in 2009 was US$ 9438.3 million

Source: Commercial Section, Embassy of India, Tashkent