Foreign Direct Investment Policy in Uzbekistan: The Case of Three Industries

서지정보

· 발행기관 : 아시아.유럽미래학회
· 수록지 정보 : 유라시아연구 / 8권 / 3호 / 1 ~ 21페이지
· 저자명 : 라드자보브 우미드존, 권영철

초록

The main goal of this paper is to analyze the role and significance of foreign direct investments in the three selected industries of Uzbekistan, such as the oil and gas, automobile production and textile industries. These industries currently contribute much to the GDP, exports and employment of the country. Therefore, it was obvious that the Government has a particular program for each selected industry to develop it. Each program involves all aspects in order to develop a selected industry, including foreign direct investment activities. In this regard, this paper particularly attempts to assesses the priority directions of the Uzbekistan government's foreign direct investment policy towards these three industries.
The Government of Uzbekistan wants to further localize the production of cars in the country. It, with open arms, welcomes foreign investors who intend to manufacture necessary car inputs and details. Currently, the share of local inputs and details in the whole production of cars has reached 60%. The other main aim attracting foreign investments into the car industry is of course to increase competitiveness of production, as well as to raise the country's exports potential. Foreign investors, in addition to the incentives and guarantees, are granted exemption from the taxes such as income tax on primary activity tax, property tax, ecological tax and some other types of taxes. To boost the volume of automobile output, the President of the Republic of Uzbekistan signed a resolution “On program of modernization and technical re-equipment of enterprises of car industry for 2008~2009”. The program exempts all enterprises of Uzavtosanoat from any custom duties, except registration fees to imported spare parts and materials. As the fully state-owned company Uzavtosanoat is the only regulator of the industry, it is highly recommended to foreign investors to enter the country with a strategy to set up an enterprise as the form of a joint-venture with Uzavtosanoat.
At present, the textile industry of Uzbekistan is able to further process only nearly 30% of all the cotton fiber produced in the country. Indeed, the Government considers that the current volume of textile production is very small and the sector needs to be expanded. With a view to stimulating the investment activity in this industry, the Government provides a number of inducements and preferences for foreign investors who plan to devote their assets to the development of textile industry in the Republic. The production and export of ready-made garments are top priorities for the nation. As the textile industry of Uzbekistan has a solid raw-material basis to manufacture high quality and low cost products, all foreign direct investment projects, regardless of their size, have a great chance to succeed in the nation. Furthermore, existing privatization program of large state enterprises in the textile industry encourages upcoming foreign investors who hold needed modern technology and modern management methods. In this regard, foreign companies can have an access to a relatively big regional market and export their products to any country having a number of tax incentives given by the Government of Uzbekistan.
As only 5 percent of the extracted raw oil and gas stuff is presently being processed within the country, in fact the Government intends to increase the value-added in the fuel sector. To expand manufacture of finished oil and gas products as well as exploration and extraction of natural gas and oil, the Government offers a number of joint projects to foreign investors. It also aims to increase the share of ready-made oil and gas products in the total exports of the country while decreasing the share of raw stuff. Therefore, foreign investments in all fields of oil and gas industry (exploration, extraction, transportation, storage and processing of gas and oil) are encouraged by the Government. Investment projects, which aim to further process extracted oil and gas and manufacture finished goods like polyethylene, polypropylene, liquefied gas and others, are well supported by the government with a number of privileges and incentives. For instance, foreign companies to accomplish oil and gas prospecting and exploration works are granted exemption from not only all types of taxes and payments in force on the territory of the Republic of Uzbekistan for the period of prospecting and exploration works, but also customs duties on imported equipment, material and technological resources and services needed for carrying out prospecting, exploration and other associated works. Another kind of tax break is given to joint ventures with foreign participation in the oil and gas sector. They have a seven year tax holiday from income tax starting from the first extraction day and thereafter a 50% reduction, exemptions from property taxes and dividend taxes after carrying out exploration works.
Economic relations between Korea and Uzbekistan are growing very fast and South Korea is currently one of Uzbekistan's largest foreign investment and trade partners. To date South Korean companies have invested around 1.5 billion USD. 138 joint ventures created in partnership with South Korean investors operate in Uzbekistan, as well as representative offices of 37 South Korean companies. To take advantages of the economic growth of Uzbekistan and its recent liberalization policy toward foreign investors, Korean companies need to devote their FDIs in Uzbekistan, particularly in such industries as automobile, textile, and oil and gas. Therefore, the result of this study will provide Korean firms an investment guidance in Uzbekistan.

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