Azernews.Az

By Kamila Aliyeva

Uzbekistan is keen to implement numerous projects in Free Economic Zones which are aimed at formation of favorable conditions for attracting foreign and domestic investments.

Uzbekistan’s State Customs Committee hosted a press conference on "The role of customs privileges in enhancing the efficiency of new Free Economic Zones, Technoparks and Small Industrial Zones of the Republic," according to the information published on the website of Uzbek Foreign Ministry.

The creation of free economic zones provides for such goals as the comprehensive development of economic territories that facilitate the integration of the national market into the world market, attraction of foreign and domestic capital, saturation of the domestic market with quality goods, employment for the population and new forms of labor market management.

To date, 14 free economic zones (FEZ) operate in 10 territories of Uzbekistan. As many as 62 projects have already been implemented while 87 projects are still underway.

A system of broad tax and customs privileges and preferences that facilitates the attraction of foreign and domestic investments for the development of the FEZ has been created in Uzbekistan. By now, participants in free economic zones have used privileges for 260.9 billion soums, which is 8.4 times more than in the previous year.

Special attention is also paid to the organization of technoparks and small industrial zones, 90 of which are currently operating in the country.

The participants in the technoparks were exempt from land, income taxes, corporate property tax, a single tax payment for the improvement and development of the social infrastructure as well as mandatory contributions to state trust funds. They were granted preferences for customs payments for imports of equipment, raw materials, components for their own production and construction needs.

In late October 2016, the Uzbek president adopted a decree on the unification of customs and tax privileges and preferences for the participants of free economic zones, which are operating and being created in the country.

In accordance with the document, the benefits for the participants of the free economic zones will be provided for a period of 3-10 years depending on the amount of the investments made.

The overall investment climate demonstrated some improvement in recent years in Uzbekistan – the government simplified business registration procedures, introduced some additional tax incentives for investors, improved private property protection legislation and streamlined customs regulations.

The cumulative inflow of FDIs is still relatively low in Uzbekistan due to a range of factors, such as an underdeveloped and overregulated banking sector and trade restrictions. According to official statistics, the share of companies with participation of foreign capital is only 1.8 percent (or about 5,135) of the total number of entities operating in the country.

There are several official limits to foreign investment. Foreign ownership and control are prohibited for airlines, railways, power generation, long-distance telecommunication networks, and other sectors deemed to be related to national security. Foreign nationals cannot obtain a license or tax permission for individual entrepreneurship in Uzbekistan.

Restrictions also apply to media, finance, and insurance. Foreign investment in media enterprises is limited to 30 percent. In finance, foreign investors may operate only as joint venture partners with Uzbek firms, and banks with foreign participation face minimum fixed charter funding requirements ($10.7 million for commercial banks, $5.3 million for private banks, and $1.6-$6.4 million for insurance companies), while the required size of charter funds for Uzbek firms is set on a case-by-case basis.

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Kamila Aliyeva is AzerNews’ staff journalist, follow her on Twitter: @Kami_Aliyeva

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