Uzbekistan eyes $ 55 bn investment by 2014 for economic growth

May 04, 2010 02:00 AM

Uzbekistan plans investments totalling more than $ 55 bn by 2014 and expects to maintain annual economic growth in excess of 8 % after avoiding the worst of the global financial crisis, officials said. Uzbek Finance Minister Rustam Azimov said his government would welcome foreign investors to Central Asia's most populous nation, which holds large reserves of gas, oil and metals and says has kept annual inflation below 8 % in recent years.
"This year, we expect economic growth of 8.5 % and next year it will be 9.0 %," Azimov said during the Asian Development Bank's 43rd annual meeting in the Uzbek capital, Tashkent. The government says 2009 growth was 8.1 %.

Uzbekistan's economy has been run along Soviet-style command lines by President Islam Karimov since the country gained its independence two decades ago. Officials say these policies have allowed the economy to withstand the global financial crisis.
"We never allow uncontrolled growth of the banking sector and the financial market," Azimov said.

Every investor who subsequently addressed the event thanked Karimov, who did not attend, for welcoming their company to Uzbekistan. One investor mentioned the president at least five times in his speech.
Uzbekistan, with a population of around 28 mm, ranks among the world's top 10 producers of gold and uranium. China and other Asian economies vie with Soviet-era master Russia for influence in a country that also borders Afghanistan.

First Deputy Economy Minister Galina Saidova told the meeting that Uzbekistan had a programme of investment projects worth $ 55.4 bn between 2009 and 2014. Oil and gas projects worth $ 15.3 bn, or 27.6 % of the total investment, were the largest contributor, followed by petrochemicals, with $ 12.1 bn or 21.8 %, she said.
Foreign firms are supplying some of this funding. Foreign direct investment accounted for 27.8 % of all investment into Uzbekistan in 2009, compared with only 5.3 % in 2002.

At a meeting where politics were off the agenda, Saidova reeled off a succession of impressive figures to an audience of several hundred at the ADB meeting's Uzbekistan Day seminar.
"Tight monetary policy has kept inflation at no more than 7 % to 8 %," she said. Official inflation in Uzbekistan was 7.4 % in 2009 and 7.8 % in 2008.

Industrial production has grown by an average 10.3 % annually over the past five years, she said, while small businesses -- those employing less than 100 people -- have grown to contribute slightly over half of GDP.
The state budget has been in surplus since 2005, Saidova said, while gold and foreign exchange reserves grew over six times in the last five years.

Foreign investors
Uzbekistan exported goods worth $ 11.8 bn in 2009 and ended the year with a trade surplus of $ 2.3 bn.
"The annual growth rate for exports over the last five years has averaged 19 %," Saidova said. Uzbekistan also secured $ 1.2 bn in loans from the Asian Development Bank in a deal that doubled the total amount it has borrowed from the bank since joining in 1995. ADB President Haruhiko Kuroda said the funds would support projects to supply electricity and a rail link to Afghanistan, as well as construction of a gas turbine southwest of Tashkent.

Auto makers are among the most visible foreign investors in Uzbekistan. Chevrolet cars that roll off the production line at the General Motors Uzbekistan joint venture are now ubiquitous on the streets of Tashkent.
Michele Arcamone, president and chief executive of GM Daewoo Auto and Technology Company, told the joint venture was making about 200,000 vehicles per year, which would soon rise to 250,000 vehicles after the launch of the new Spark model. German truck maker MAN plans to produce 700 units this year at its 49 %-owned joint venture in the city of Samarkand. This will rise to 1,150 units by 2013, said Per Gustav Nilsson, general director of MAN Automobiles.

Saidova said the tax regime had helped to encourage investment. Corporate income tax in Uzbekistan has fallen to 9 % from 35 %in 1998, while personal income tax has fallen to 11 %-22 % from 25 %-45 % in the same period.
"The aggregate tax burden has decreased almost three times since independence," she said.

Natural resources have also attracted some investors, such as Malaysian state oil and gas firm Petronas and LUKoil, Russia's largest non-state oil producer.
Eelasegeran Nadarajah, who heads the Petronas representative office in Uzbekistan, said the company was leading a $ 2-$ 3 bn project to build a plant that will convert gas into diesel, naphtha, jet kerosene and liquefied petroleum gas. It is also exploring on the former bed of the retreating Aral Sea in a five-way project with state-run Uzbekneftegaz, China National Petroleum Corp, Korea National Oil Corp and LUKoil.

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