Uzbekistan President presented his government 3 main priorities for this year as proactive investment lurement activation, export activation by manufacturing promotion, and last but not least tourism industry’s activation, according to Mr. Edward Kim, president of the Uzbekistan Trade Representative in Korea.

As part of such ambitious aggressive initiatives, The Uzbekistan Trade Representative in Korea was launched last Friday, holding its opening ceremony in Songdo World Trade Center while Diplomatic Corps. and business men involving in their trade with Uzbekistan were on hand in large numbers.

Expressing his sincere thanks to all participants for their attending despite of long distance from Seoul, Mr. Edward Kim who was appointed as the first-resident president of the Representative, asked to pay attention to Uzbek market even more which is emerging as a new emerging market in Central Asia.

Reflecting such huge interest, Azerbaijan Amb. Ramzi Teymurov, Belarus Amb. Andrei Popkov, Turkmenistan Amb. Myrat Mammetalyyev from Central Asia & Eastern Europe in addition to Russia Amb., South Africa Amb., Costa Rica Amb., Honduras Amb. etc. joined the ceremony.

Mr. Mukhsinkhuja, deputy governor of Fergana Region from Uzbekistan who was on hand, said he sincerely hopes bilateral friendly relations between Korea & Uzbekistan would be facilitated even more with the launch of the Uzbekistan Trade Representative in Korea as a momentum, adding today’s launch regarding the Uzbekistan Trade Representative in Korea was possible thanks to Uzbekek President’s aggressive initiates.

It is significant that The Uzbekistan Trade Representative in Korea was launched for the first time outside of Seoul among foreign Embassy Trade Representatives, said Commissinor Kim Jin-yong from IFEZ during the ceremony.

The following is The Investment Policy Review for Uzbekistan, provided by the Embassy of Uzbekistan. –Ed.

Since its independence in 1991, Uzbekistan has made careful progress in the transition from a centrally-planned to a market economy. Recognizing that foreign direct investment (FDI) can contribute to Uzbekistan’s growth and development, and also ease the country’s transition to a market-based economy and integration in the world economy, the country

has welcomed foreign investors. Foreign direct investment increases the levels of fixed capital formation and also, by constituting an inflow of foreign capital, has a beneficial effect on the balance of payments. Investors have shown particular interest in Uzbekistan’s manufacturing sector, which it is hoped will increase the standard of these facilities. Most importantly, an FDI package brings scientific, technical and managerial skills into the country, vital in the transformation of Uzbekistan’s industrial sectors. The combined benefits of FDI would allow the country’s industrial sector to gain international competitiveness, increase employment opportunities of higher remuneration and, through forward and

backward linkages, develop Uzbekistan’s small and medium enterprise (SME) sector.

Uzbekistan has indeed had some high profile successes in attracting FDI, especially from a small core of internationally well-known strategic investors. However, on a broader basis the country appears to be underperforming, both in terms of other comparable member countries of the Commonwealth of Independent States (CIS) and in terms of its own potential.

Uzbekistan has innate strengths as an investment destination, although these are

not unique for the Central Asian region. At the same time, the country currently shows several economic and investment policy weaknesses that appear to have led to investment levels well below the country’s potential. For the future, Uzbekistan is therefore confronted with both a danger and an opportunity. The opportunity is to take full advantage of the country’s abundant natural and human resource endowments and to become the preferred investment stination in the region for industries and services which serve the domestic and regional markets and beyond. The danger is that Uzbekistan might fall behind, rather

than move ahead of, regional competitors in improving the investment climate and might be increasingly passed over in terms of future FDI inflows into the region. This is further accentuated by the fact that even the current low absolute levels of FDI inflows appear fragile due to the high historic share of FDI coming from Asia, where a number of home countries are facing economic difficulties.

Uzbekistan’s foreign investment law is liberal. Foreign direct investment is welcomed and by law most businesses are open to FDI. For the most part, foreign investors are treated at least as well as national investors both under the law and in practice. Uzbekistan has established a legal framework to provide important rights and assurances to foreign investors and has avoided serious disputes with investors of the kind which have occasionally soured the investment climate elsewhere in the region. Indeed, Uzbekistan has introduced taxation incentives to encourage FDI.

To some extent, the present modest levels of FDI are due to Uzbekistan’s deliberate choice of a transition policy of economic reform that has so far recluded fundamental privatization of the utilities and major State enterprises. As a transition economy, Uzbekistan has embraced the market system more ambivalently. This is reflected in pervasive government intervention in foreign exchange and trade management as well as in the country’s approach

to negotiating commercial terms with foreign investors.

Despite the liberal foreign investment law, prospective foreign investors find it arduous and time-consuming to establish acceptable commercial terms with State enterprises and ministries. There are likely to be inconsistent and non-transparent outcomes. Some investors believe that more coordination of the Government machinery would improve the investment process.