Uzbekistan Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

One of the most important trading partners of the UZ in 2021 was the European Union with a 15.2% share of imports (total volume of imports in 2021 – EUR 1 billion) and a 2.1% share of exports of the UZ (total volume of exports in 2021 – EUR 2 billion). Poland, Lithuania, Latvia, the Czech Republic and Germany have a significant share in mutual EU-UZ trade. Exports from EU countries to the EU mainly consist of machinery, transport equipment, chemical and pharmaceutical products, consumer goods, etc. EU exports to the EU mainly consist of cotton and products made of cotton, copper, plastic, as well as dried fruit, nuts, etc.

A turning point in UZ-EU relations in 2021 was the EU’s decision on April 9, 2021 to grant UZ access to the EU’s special system of preferences for sustainable development and good governance (GSP+), which allows it to use the export of goods to the European market unilateral tariff preferences.

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 1,652.90 2,245.60 2,494.30 2,224.00 2,291.80
Imports into the EU (million EUR) 218.5 168.1 189.8 199.7 476.5
Balance with the EU (million EUR) -1,434.4 -2,077.5 -2,304.5 -2,024.3 -1,815.3

Source: European Commission

Trade relations with the Czech Republic

Uzbekistan is the second most important trading partner of the Czech Republic in the Central Asian region (after Kazakhstan). Czech exports to Uzbekistan continued to grow in 2020, and data for 2021 show that the trend should remain unchanged.

The Covid-19 pandemic thus affected the mutual relationship only minimally. The commodity structure of Czech exports is dominated by: medicines and pharmaceutical products, telephone devices, live beef cattle, automatic data processing units, machines for the production of pulp, motor vehicle parts. The commodity structure of Czech imports is dominated by: fabrics and cotton yarns, textiles, vegetables and fruits, polymers and ethylene in primary forms.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.2 1 1.6 1.8 1.5
Imports to the Czech Republic (billion CZK) 1.7 0.1 0.1 0.2 0.2
Balance with the Czech Republic (billion CZK) 2 -0.8 -1.5 -1.6 -1.3

Source: businesscarriers.com

Trade relations with countries outside the EU

Uzbekistan trades with 179 countries of the world. For the period January-September 2021, the turnover of foreign trade (according to Uzbekistan statistics) reached the value of 28.22 billion USD, which is an increase of 680.4 million USD (by 2.5%) compared to the same period of 2020. Of the total volume, exports amounted to USD 10.33 billion (which is a decrease of 17.2% compared to the same period in 2020) and imports – USD 17.88 billion (an increase of 18.7%). As a result, the foreign trade balance reached a passive balance of USD 7.55 billion. The value of exports decreased mainly due to the decrease in gold exports. In 2020, due to high “pandemic” prices, Uzbekistan exported 100 tons of gold abroad. This year there was a drop in the prices of precious metals, which was one of the factors in the drop in sales volumes.

The most important trading partners of Uzbekistan (outside the EU) are: PRC (19.1%), Russian Federation (18.1%), Kazakhstan (9.9%), Turkey (8.6%), Republic of Korea (4.9%) ), Kyrgyzstan (2.4%). Among the 20 main partner countries, Uzbekistan has an active foreign trade balance with only four countries (with Afghanistan, Kyrgyzstan, Tajikistan and Turkey).

The export structure is dominated by industrial goods (30.3%), food products and live animals (8.9%), chemicals and similar products (7.2%), gold and precious metals (19.7%), services (16.1%). The import structure is dominated by machinery and equipment, food, chemicals, services and others.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 6,984.4 7,432.2 9,319.5 8,683.4 10,033.2
Imports to countries outside the EU (million EUR) 10,011.4 14,547.4 16,894.0 15 157.4 17 179.7
Balance with non-EU countries (million EUR) -3,027.1 -7 115.2 -7,574.4 -6,474.1 -7 146.5

Source: EIU, Eurostat

Foreign direct investment

The total volume of utilized investments in 2021 amounted to 254 trillion sums with a growth rate of 109% compared to 2020, of which foreign direct investments amounted to 8.6 billion USD (data from the Ministry of Investment and Foreign Trade of the UZ). In the monitored period, 318 large investment projects worth USD billion were implemented as part of the state investment program and 15,710 projects worth USD 7.4 billion were implemented as part of regional investment programs.

Foreign direct investment inflows in 2020 were around $billion, compared to $9.3 billion in 2019 – no doubt the result of pre-pandemic reforms. As of January 1, 2021, more than 11,780 foreign-owned companies were operating in Uzbekistan, including 1,399 created in 2020. While the government encouraged investors to develop manufacturing industries to support its import substitution and export diversification policies, there was a notable increase in FDI in service, retail and banking sectors. In November 2021, Uzbekistan successfully placed $750 million in two-tranche sovereign international bonds denominated in both US dollars and Uzbek sums on the London Stock Exchange.

The government of Uzbekistan has made attracting foreign direct investment (FDI) one of its top policy priorities, recognizing that greater involvement of the private sector is critical to economic growth and solving social problems caused by relatively high levels of unemployment and poverty. In 2020, the Government of Uzbekistan improved the business environment by creating additional tax incentives for businesses affected by the pandemic, reducing government involvement in the economy, supporting public-private partnership projects, announcing plans to reorganize and privatize state-owned enterprises, and introducing other anti-corruption measures. The new tax code, which entered into force on January 1, 2020, reduced corporate and personal income taxes by almost 50% and significantly simplified tax procedures for private entrepreneurs. President Mirziyoyev called on all regional administrations to increase the attractiveness of their territories for foreign investors and to provide reports on the development of foreign direct investment once every 4 years. The Law on Investments and Investment Activities, which entered into force on January 27, 2020, guarantees the unrestricted movement of funds outside Uzbekistan and the protection of investments from nationalization.

FTAs and treaties

Treaties with the EU

The Partnership and Cooperation Agreement establishing a partnership between the European Communities and their Member States, on the one hand, and the Republic of Uzbekistan, on the other, dated 21 June 1996, covers a wide range of issues, such as trade in goods, economic cooperation, including the support and protection of investments, energy, the environment, transport, tourism, in addition to financial cooperation, cross-border provision of services and others.

Interim Agreement on trade and supplementary measures of 14.11.1996

Agreement on trade in textile products from 18.6.1996

From April 10, 2021, the EU started applying preferential tariffs to products imported from Uzbekistan (GSP+).

Contracts with the Czech Republic

To date, the following agreements and government contracts are valid between the Czech Republic and the Republic of Uzbekistan:

Agreement between the Czech Republic and the Republic of Uzbekistan on mutual support and protection of investments dated 15 January 1997.

Agreement between the Government of the Czech Republic and the Government of the Republic of Uzbekistan on cooperation in the fight against criminal activity of 17 June 1998.

Agreement between the Government of the Czech Republic and the Government of the Republic of Uzbekistan on international transport of passengers and cargo by road from 20 April 1999.

Agreement between the government of the Czech Republic and the Republic of Uzbekistan on the prevention of double taxation and the prevention of tax evasion in the field of income and property taxes dated March 2, 2000.

Agreement between the Czech Republic and the Republic of Uzbekistan on legal assistance and legal relations in civil and criminal matters dated 1/18/2002.

Agreement between the Government of the Czech Republic and the Government of the Republic of Uzbekistan on Economic, Industrial and Scientific-Technical Cooperation dated 28 June 2004. It also includes the establishment of a joint Intergovernmental Commission for Economic, Industrial and Scientific-Technical Cooperation.

Agreement between the government of the Czech Republic and the government of the Republic of Uzbekistan on air services of 8 November 2011.

Developmental cooperation

The EU provides Central Asian countries with development aid focused mainly on the implementation of programs to support rural areas and water resources, improving living standards. Uzbekistan was also included in the European higher education support program ERASMUS+, the implementation costs of which represent a total of EUR 115 million. In July 2017, the EU and Uzbekistan signed an agreement on the implementation of a fruit growing development project worth almost EUR 22 million. The mentioned project is part of a wider fruit growing development program financed by the Uzbek government (US$70 million) and the World Bank (US$150 million). The main motive of the program is the gradual replacement of suppressed cotton cultivation with fruit production with the main focus on export. In addition, the project Improvement of the solid waste disposal system in the city of Samarkand for the period 2014-2021 with a total value of EUR 3million is being implemented. The project envisages the modernization of the solid waste disposal system and waste landfilling, the construction of new landfills. The annual volume of waste in Samarkand is 6 million tons.

Uzbekistan benefits from several regional programs such as higher education and TVET, regional dialogue on water and energy, cooperation on climate change and disaster risk reduction, rule of law and regional trade in Central Asia and with Afghanistan. Thematic programs support, among other things, the stability and rehabilitation of older uranium sites. Uzbekistan is involved in the Central Asia Investment Facility, which provides grants to attract financial resources from financial institutions and other public and private partners for investment, technical assistance or venture capital operations.

In the period 2014-2020, EU financial assistance to Uzbekistan reached EUR 168 million, which is 124% more than in the period 2007-2013. As part of the Multiannual Indicative Programme, the EU’s development assistance to Uzbekistan between 2014 and 2020 focused on rural development. This support included projects in sustainable water management and irrigation, horticulture, livestock, vocational training and local government reform.

The European Union has allocated EUR 76 million for the first four years (2021-2024) of its seven-year Multi-Annual Indicative Program 2021-2027 (Multi-Annual Indicative Program MIP 2021-2027). Additional funds are earmarked for human rights support (preliminary allocation is EUR million for the period 2021-2024) and Civil Society Organizations (EUR million for the period 2021-2024).

MIP 2021-2027 has three main priorities:

  • Effective management and digital transformation.
  • Inclusive, digital and green growth.
  • Development of an intelligent, environmentally friendly agri-food sector.

Priorities in the program will focus on budgetary support for agricultural reform (including public finance management reform) and transfer of know-how through technical assistance or twinning projects with EU member states.

At the level of the Czech Republic:

The Czech Republic implemented in Uzbekistan in 2021 as part of foreign development cooperation “Small local project – equipping ambulances with means for temporary immobilization of patients with musculoskeletal injuries during transport” in cooperation with the company EGO Zlín.

For the year 2022, the implementation of a B2B project to support local farmers to improve the efficiency of cattle insemination (with the participation of the Czech company ISB Genetics) is approved in cooperation with the Czech Republic.

Prospective fields of study (MOP)

Transport industry and infrastructure

The development of transport infrastructure and public transport is one of the priorities of the Uzbek government. A growing population and increasing urbanization increase the demands for effective solutions in this field. Currently, public transport in Tashkent serves almost 1 million passengers every day. The concept of the development of transport infrastructure envisages the purchase of ecological means of transport, the construction of new routes and roads, an increase in road safety and the introduction of modern technologies in the years 2022-25. All of this offers possibilities for the application of Czech companies.

Energy industry

The energy industry offers applications in all sectors from nuclear energy to renewable sources. Considering that in 2030 Uzbekistan will have to produce twice the amount of energy to ensure domestic consumption, a major reform of this industry and the entire market is necessary. In addition to opportunities in traditional areas such as nuclear energy, thermal power plants, etc., Uzbekistan also wants to focus on the production of energy from renewable sources – wind and solar power plants.

Healthcare and pharmaceutical industry

Uzbekistan seeks to accelerate the development of the pharmaceutical industry and expand the production base. Over the next five years, he wants to triple the domestic production of drugs and ensure that 80% of the drugs available on the Uzbek market are produced on the territory of Uzbekistan. The interest is in foreign technology and experience. The overall development of the healthcare sector and increased demands on the healthcare system also bring opportunities for the supply of medical equipment.

Agricultural and food industry

Agriculture is a key sector of the economy in Uzbekistan, producing 28% of GDP. The country is interested in increasing the productivity of livestock production with the use of new technologies as well as improving the gene pool of beef cattle, in which Czech companies are already participating. Due to the popularity of poultry meat and low domestic production, there is room for importing hatching eggs. Supplies of agricultural machinery, packaging machines, lines for food processing, canning and others are promising.

Defense industry

So far, the Uzbek army and security forces of the state are mainly equipped with outdated Soviet equipment. A gradual modernization of all levels of the components is underway in connection with the strengthening of the country’s external and internal security. In the last two years, Uzbekistan has restored about 30-35% of military equipment, and the state program expects to continue. In 2021, Uzbekistan’s defense spending will reach $billion.

Mining, mining and oil industry

Opportunities are offered primarily in the field of geological exploration, its intensification and the processing of mineral resources with the aim of increasing the added value of exports. By 2024, Uzbekistan plans to carry out large-scale geological work, the construction of a copper and limestone processing plant. Surface mining equipment, crushers, welding equipment, harvesters, mixers, screening machines, cranes, excavators, pipelines and trucks are in high demand.

Uzbekistan Trade