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Uzbekistan bets on manufacturing

11 February 2015

TASHKENT – Uzbekistan is striving to promote industry-driven economic growth with an ambitious plan for 2015-2019.

The cabinet plans to increase industrial production 1.5-fold by attracting investment and renovating facilities. It is stressing seven principles for the economy in the next five years, with the top one being far-reaching renovation of all leading industries.

"We'll increase their efficiency," said cabinet spokesperson Bakhtiyer Turabekov. "We'll implement international management standards and modern information technology. It will make our industry competitive overseas."

Other government priorities include eliminating obstacles to private enterprise, reducing the economic role of government, and learning to manufacture goods that Uzbekistan presently has to import, Turabekov said.

Prime Minister Shavkat Mirziyoyev runs the project.

"We've set specific goals," said Economy Ministry spokesperson Mamadali Fattakhov. "They include mastering the technology to manufacture about 1,000 new goods, increasing production 1.5-fold, and increasing industry's share of GDP to 27%."

"One indirect result will be the creation of more than 50,000 jobs ... Almost 500 factories will be modernised and about 400 factories will be built from scratch," he said.

Uzbekistan set a promising tempo in 2014, when its gross domestic product (GDP) grew 8.1% and industrial production 8.3%.

Learning from past efforts

The government is trying to benefit from past experience by focusing efforts on manufacturing only competitive goods.

"The main difference between this programme and all previous [ones] is that we drew up a list of goods to manufacture," Fattakhov said. "We'll make only those that can be competitive overseas, like consumer goods, hydrocarbon products, textiles, etc."

Officials are also hoping to continue to lure investors by offering tax breaks and establishing special economic zones.

"We plan to raise US $38 billion (93 trillion UZS) in investments [during the plan]," said Abdullo Kakhkhorov, a spokesperson for the Ministry of Foreign Economic Relations, Investments and Trade.

"Investment in the Uzbek economy grew 10.9% last year [compared to 2013] and exceeded US $14.6 billion (35.7 trillion UZS) in 2014," he said. "Investors preferred high-tech manufacturing over exports of raw materials. Last year, 154 enterprises built with investors' capital began operation."

The fruits of last year's economic push include an auto assembly plant in Khorezm Province, a cement plant in Jizzakh Province and a textile plant in Karakalpakstan.

"The Angren, Navoi and Jizzakh special industrial zones have become centres of industrial development," Fattakhov said. "We're offering investors there a wide variety of tax breaks. They'll have a ready-made transport and engineering infrastructure waiting for them."

Easing the way for private business

Another top priority is enabling private business to flourish.

"Any unwarranted interference in small businesses' affairs by government agencies will be eliminated," Turabekov, the cabinet spokesperson, said. "We'll lift various restrictions. Small businesses must have easy access to lines of credit and other resources."

The government also intends to reduce the difficulty of obtaining government services, like approval of permits, by opening single-window service centres for business owners in every city and district, he said.

Some business owners already can see the changes.

"I am very satisfied with the way reforms benefitted small business last year," Tashkent furniture factory owner Anton Magai said. "First, we entrepreneurs gained the opportunity to register companies via ... the e-government website. The most important thing is that we can file our taxes electronically. We used to have to do that in person, piling up excess paperwork."

Government officials expect another strong year of growth, forecasting 8% GDP growth in 2015.