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NEWS

2014 Presentation on Uzbekistan Economy

www.uzbekistan.org
31 January 2014

On Friday, January 31, 2014, Ambassador Bakhtiyar Gulyamov held a lunch briefing on "Uzbekistan's Economic Development in 2013 and Priorities for 2014. Mr. Laziz Kudratov, Trade and Economic Counselor, made a presentation on the country's economic transformations and 2014 investment projects in the energy, infrastructure, chemical, machine building and other sectors. The participants welcomed the Embassy's initiative to keep US businesses informed of the Uzbek government priorities and expressed their support for the country's path to industrial modernization and further improvement of its' investment and business climate.

 

[Remarks by Mr. Laziz Kudratov]

 

Dear Ladies and Gentlemen:

 

2013 was fruitful for the Uzbek economy. Despite the serious impact of the ongoing global financial and economic crisis, the annual GDP growth in 2007-2013 exceeded 8%.

Industrial output in 2013 grew by 8.8%. The main increases were recorded in machine building (21%), construction materials sector (13,6%), light industry (13%) and food sector (9%). As a result, the share of industry in GDP accounts today for about 25% compared to 14,2% in the year of 2000.

Last year the volume of agricultural production increased by 2.3 times compared with the year of 2000. Along with consistently high growth of agriculture, its share in the total GDP tends to decrease: from 30% in 2000 to 16.8% in 2013. This, above all, the evidence of deep structural changes and progressive transformation of our country from an agrarian to a modern industrialized state.

The Service sector is playing an increasingly large role in the sustainable development of our economy. The volume of services increased by 13,5% last year and its share in the GDP reached 53% compared to 37% in the year of 2000. Now we have every reason to say that in the Service sector we are approaching the levels of developed countries.

We enjoy budget surpluses for the last 9 years. In 2013 the surplus was 0,3% despite the fact that the tax burden on the economy last year declined from 21.5 to 20.5%, and the minimum tax rate on personal income has been reduced from 9 to 8%. I would like to draw your attention that about 60% of the state budget expenses go to social sector: healthcare and education.

We do believe that investing in education is the key to Uzbekistan's future success.          Inflation rate in 2013 as you can see was 6.8%. This figure is actually lower than the government predicted.

One of the key factor of the stability of Uzbek economy is that the external debt of the country does not exceed 17% of GDP. Our internal debt is equal to zero. This is the result of thoughtful and measured approach to attract foreign loans and foreign investments.

But at the same time, we understand that without investment there is no progress, no modernization of our industry, economy and the whole country.

In 2013, an equivalent of 13 billion US dollars was invested in Uzbekistan. Last year total investments increased by 11,3% compared with 2012.

Almost half of the total volume of capital investments (47%) were private investment. Foreign Direct Investments amounted at 2,2 billion US dollars.

Here I would like to mention that the Fund for Reconstruction and Development of Uzbekistan plays a key role in implementation of investment projects in the country. In short period of time of its activities, the Fund turned into powerful financial institute, which holds assets of over 15 billion US dollars. Today the Fund cofinances 86 startegic large-scale projects in the total amount of 29 billion US dollars.

Last year alone, we launched 150 manufacturing facilities in the total amount of 2,7 billion US dollars.

The clear evidence of progressive changes in our economy is in the growth of small business and entrepreneurship. In 2013 the share of small business in the GDP reached 55,8% compared to 31% in the year of 2000. Today small enterprises account for 23% of total manufactured goods, almost hundred % of services, 18% of exports, and 75% of jobs. This shows that Small business plays great role in sustainable development of Uzbek economy, creating jobs and ensuring well-being of population.

The main objectives and priorities of promoting the economy in 2014 are primarily dictated by the program goals of the country's long-term development, the adopted strategy ensuring the consistent high rates of the economic growth, mobilization of available resources and opportunities.

The government will put all its efforts to ensure the growth of GDP by 8.1% in 2014, industrial production - by 8.3%, agricultural production - by 6%.

2014 will be the year of commissioning the most important high-tech and modern industrial facilities, growth and improvement of the investment process.

The total amount of capital investments in all sources of financing will hit 14.3 billion US dollars with a 10.1% increase compared to the last year and maintaining the share of investments in the GDP at the level of 23%.

It is planned to complete several large projects in chemical sector, establish production of automobiles in the western part of the country, complete third branch of Uzbekistan - China gas pipeline, and continue construction of two gas chemical complexes.

Several projects are being implemented in power engineering. Among them are the projects to install combined cycle systems in power stations in Tashkent, Navoi and Talimardjan cities.

The large-scale program goals and objectives for 2014 require the mobilization of all available sources of growth, the formation of a full-fledged competitive environment, which is a key factor in technical and technological renovation and modernization.

Our government admits that there is still old stereotype of thinking which we should get rid of and break away from planned economy system. It is wrong to think that protection measures and endless tax preferences will ensure survival in competitive environment.

We also admit that the current state of business environment and conditions for doing business in Uzbekistan do not fully meet requirements and principles of free market economy and international standards. In this regard, creation a favorable business climate, support and stimulation of private businesses will become an important priority for us in 2014.

In particular, we plan to further decrease expenses for businesses, as well as simplify permission procedures and eliminate red tape. We will speed up work on transition to online form of registration, permission and licensing procedures, interactive forms of providing utility services, services on taxation and customs registration. Serious steps will be taken to ensure development of e-commerce.