Foreign Direct Investment Policy in Uzbekistan: The Case of Three Industries
Authors:   Asia-Europe Perspective Association, Raddjabov Umidjon Rokhirovich Raddjabov Umidjon Rokhirovich , Kwon Yung-Chul 
Published: June 2018

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.