UZBEKISTAN'S  YEAR OF PRIVATIZATION'

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**March 1999**
by Umida Khaknazar and Kelly Raftery
This year promises to bring the privatization of a number of Uzbekistan's key industries and enterprisesas part of President Karimov's two-year privatization plan. January began with the announcement of a tenderto privatize the Almalyk Mining and Metallurgical Combine. According to the tender announcement, 46.5percent of the shares in the Joint-Stock Company Almalyk MMC will be sold. Indications of interest frombidders were due at the Uzbek Tender Commission by January 15, and bid documents are due by March 15,1999. 
The Almalyk sale is the first in a series of tenders to be conducted by the Government of Uzbekistan thisyear. Other well-known enterprises Uzbekneftegaz's Fergana Refinery, Uzkhimprom, Uzbekiston HavoYullari (Uzbekistan Airlines), the Bukhara Hotel (as part of Uzbektourizm), Uzjeldormash (part ofrailway infrastructure), parts of the Uzbek post and telecommunications agency, and many others are slatedfor privatization over the coming 24 months. In all, more than 200 enterprises are to be sold off. Most of theenterprises will be converted to joint-stock companies. Foreign investors will be able to purchase between25 and 95 percent of the shares in an enterprise, depending on the project.
This new push to privatize follows a two-year slowdown in the privatization process in Uzbekistanand recent government statements insisting that the oil and gas sector would not be privatized, pending areorganization of local firms' financial records. However, recent documents indicate that Uzbekneftegazis scheduled to privatize a couple of subsidiaries in late 1999 and 2000. These tenders, and the privatizationprocess as a whole, are a welcome sign of possible reform on the part of the Government of Uzbekistan. 
The current privatization program offers a unique opportunity for U.S. companies to invest directlyin some of Uzbekistan's most prized holdings, many of which have been unavailable to foreign investorsuntil now. 
The executive director of the American-Uzbekistan Chamber of Commerce, Robert Pace,commented that "This is an encouraging step, providing further confirmation of the Government ofUzbekistan's commitment to the development of a free market economy. In addition, these measures shouldhelp stimulate the growth of a dynamic sector of small- and medium-sized enterprises: a major goal ofPresident Karimov's reform program."
**Bureau on Post-Privatization Support**
In an effort to ensure the success of the privatization process, the Uzbek State Property Committeehas established a special assistance bureau. The Bureau on Post-Privatization Support of Enterprises,funded with an US$18 million credit from the World Bank, will provide support to enterprises after theyhave undergone the privatization process. 
Services to be provided by the bureau will include: 
- Full evaluations of the financial soundness and business potential of the enterprise;  Assistance in preparing business plans; 
Assistance in attracting foreign investors;
Implementing government resolutions on restructuring and modernizing privatized enterprises; 
Rendering consulting services aimed at increasing the liquidity of enterprises and obtaining credit lines   and investments; 
Introducing modern accounting systems, financial, and commercial management; and 
Developing marketing strategies and quality control systems. 

   When the need arises to invite specialists from international institutions to assist with these   services, the bureau will cover (in hard currency) 100 percent of the cost of services rendered. The   enterprise receiving the services will then reimburse the bureau (in soums) for 25 percent of the cost   of services rendered, according to the Central Bank exchange rate. 
   Privatized enterprises interested in using the bureau's services must meet the following criteria:
- The state share of the company must not exceed 50 percent; The foreign investor's share must not be less than 30 percent; and
Restructuring the enterprise should have a positive impact on other enterprises and industries.   
   For updates and tender announcements for Uzbekistan, visit BISNIS Online at   www.mac.doc.gov/bisnis. 
**Other sources of information:**
       American Business Center in Tashkent