Interview: Uzbekistan an active player in the global trade system

New Europe in an exclusive interview during the first Tashkent International Investment Forum, spoke to Laziz Kudratov, Uzbek first deputy minister for investment and trade, about the cooperation with important partners like Europe, US, UK and the WTO.

New Europe: Can you talk to me about the relations with the EU? Uzbekistan is benefiting from the GSP + but there are also discussions about other agreements.

Laziz Kudratov: Last year in April my country became a beneficiary from the GSP + system, it opened great opportunities for us, first it provided us with the access to the very large European consumer market and of course this will help us to increase our export and allow us to diverse our export to new premium markets.

Of course, this requires to our exporters to adjust and to our manufacturers to elevate their production manufacturing to a new level so that their product could meet the expectations standards and demands of the EU consumers. This is a big opportunity but it is also a big responsibility that’s why we have started to implement special programs that are tailored to our manufacturers and exporters, it is key to train them so that they understand the requirements of the EU access to the market but also about what standards are needed in term of labeling and quality. We already see that the export from Uzbekistan to Europe is growing specifically: textile, agriculture, chemical and some metal products. Uzbekistan have then with GSP the obligation to meet with the international conventions on human right, free society and this is exactly what the policy of my country is about.

During the plenary session of the Tashkent International Investment Forum the President of Uzbekistan Shavkat Mirziyoyev made a strong message and committed to develop a free society, he declared that the main idea behind all his reforms is to “ensure the owner and respect of human being”, this is the main motto of our President. With the EU my country is also discussing and finalizing the enhanced partnership cooperation agreement (EPCA) we expect soon hopefully a final round of discussions and negotiations about the document, we are very optimistic for the final signing.

As soon we are ready for that, we are also planning to organize a visit of our President to Brussels to initial this document. EU is one of the largest export destination and source of investments, technologies and know-how that is allowing our economy to be more competitive. We are committed to enhance our cooperation with EU and bring more companies from the EU to do business and operate in our country.

NE: There is also the accession to WTO among your priorities. Can you give me an update?

LK:We have a Deputy Minister dedicated only to our accession to the WTO, when President Mirziyoyev came he understood the need of Uzbekistan economy to be integrated into the global trade system, he then tasked the government to ensure the accession of our country to this organization soon. We are expecting to have the next round of working group for our accession hopefully in April then in parallel discussions started with all WTO members, the main goal of these discussions is get their consent. I think we need a year or two to finalize the process. Of course, this path should not harm our economy that why we are negotiating that our manufactures could benefit from the WTO membership.

NE: Which are the new tools that could attract investors to Uzbekistan? Are there specific tax benefits?

LK:We are designing a business friendly tax system, this is the task set by the President to the relevant authority, he instructed them to be friends and supporters of entrepreneurs and not to punish them for their mistakes but rather guiding them. If our tax officer sees that they are doing mistakes they should not put penalties on them, they should just guide them to be more efficient. A change of mentality of our taxation is needed.

The Doing Business report of the World Bank was relevant two or three years ago but at that time Uzbekistan was among the 10 top countries in terms of ease in establishing of a business. You can do it on-line and in 15 minutes you can go with your passport to the single window which you can find in every place. Another mechanism that we have is the Free Economic Zones, industrial zones in each region, residents of the zones they enjoy tax customs benefits. They get land, plugging infrastructure, they get connected to all the utilities. We had good results and there was a growth of foreign companies in free economic zones, then in order to support the set up of large scale projects we put in place the Uzbek Direct Investments Fund that covers risks of investors in our country. They provide equity and they co-invest up to 49%, we understand the difficulties of first time investors, this fund was established a year ago to bring confidence to foreign investors, the state can be a partner and share the risk together.

My country wants the increase the free economic zones (FEZ) because we see the need of it, we have recently built one in Tashkent and another is under construction next to the border with Afghanistan. Now we have connectivity issues with Pakistan and there is a big demand for products from Uzbekistan.

NE: You are then part of the “Silk road”, do you have any update?

LK: We are trying to revive this ancient route pushing on new infrastructure projects, one project is the railway which will connect China with Uzbekistan, now with the new government in Kyrgyzstan they are also committed, we will soon move to practical phase with a feasibility study and hopefully we will mobilize also international financing to construct this new railway. Another big infrastructure project is between Termez and the border with Pakistan, a 700-km railway which will connect huge markets of south Asia including India, Bangladesh and Pakistan with central Asia and Europe. For example, goods from India will be able to reach Europe two weeks faster and it will be 20-30% less expensive.

NE: Do you think that in the future it would be possible to start talking about a Uzbekistan-EU free trade agreement?

LK: Yes, why not, Uzbekistan wants to be part of the global trade system, we started negotiation for a FTA with Korea last month and we have concluded an agreement on preferential trade with Pakistan. An FTA with the EU won’t be an easy task but I think it might be interesting to explore it at least. First we will have to research and do some analyses and then move to a decision.

NE: What do you think about the trade relations with US and UK?

LK:With the UK we managed to be the first country to sign an enhanced GSP, with US market of course the geographical location negatively impact on trade but nevertheless we see greater interest in terms of sourcing textile products in Uzbekistan. We then don’t want to limit our-self to textile, we have already supplies on chemical products, materials and food. We are interested to have more US companies here, few weeks ago we visited the US and talked to companies, banks, they are learning about our country. Now it is key to inform more aggressively investors in Europe and US about the opportunities my country can offer, we understand that there is a lack of proper information about Uzbekistan that why media support is needed now.

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