American-Uzbekistan Chamber of Commerce
BUSINESS NEWSLETTER
 
Week in Review:
October 19, 2012 - October 26, 2012

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In This Issue:
AUCC IN BRIEF
Uzbek government to reduce tax burden on economy in 2013
Economic Policy and Cotton in Uzbekistan: A Report from the Economic Research Service of USDA
Korean Kepco to construction of new thermal power plant
CAREC Ministers to Gather in PRC to Chart Way Forward for the Region
Uzbekistan to invest $8.5 billion into transport infrastructure till 2015
Uzbekistan gets $220 mln credit from China Development Bank

Established in 1993, the American-Uzbekistan Chamber of Commerce (AUCC) is a private, non-profit trade association representing interests of U.S. businesses ranging in size from small private enterprises to large, multinational corporations conducting business in Uzbekistan.

Our Mission: To advocate the views of the business community to ensure that private sector positions are considered during the development of key policies that impact American businesses and the future of U.S.-Uzbekistan relations.

Our Objective: To serve the needs of its members by strengthening commercial relations between the United States and Uzbekistan.

http://en.trend.az   

 

The Uzbek government plans to reduce the tax burden on the country's economy from 21.6 per cent expected in 2012, to 21.3 per cent of the GDP.
This was stated in the official report of the Uzbek National Information Agency (UzA) at the meeting of Cabinet of Ministers which approved the forecast of the main macroeconomic indicators, the concept of tax and budget policy, the draft of the state budget, and the job creation and employment programme for 2013.
The report does not present the main parameters of the government's budget, its income and expenditure.
'The concept of tax and budget policy and the draft state budget for 2013 provide for high and stable economic growth, strengthening of macroeconomic stability, as well as the development of the social sphere and growth of living standards through an increase in wages and providing targeted social support', the report says.
According to the report, the main directions of budget policy and the draft budget for 2013 maintain social spending priorities, a further rise in the level of income, strengthening the material and technical base and facilities, the education and health sectors, as well as the implementation of an active investment policy.
In total, the government plans to spend more than 59 per cent of the expenditure budget on financing the social area.

Reduction of the minimum tax rate on personal income from nine to eight per cent is also among the measures to reduce the tax burden.
Along with this, intangible assets such as patents, licenses, software and copyrights are excluded from taxation of entities which will be a motivating factor for the widespread introduction of innovation in enterprises.
Budget funds directed towards financial support of the economy have been increased by 22 per cent in comparison to this year. Expenditure on centralised investments is also planned to be increased by 23 per cent.
Some 973.000 new jobs are planned to be created within the employment programme.
According to the report, the Cabinet of Ministers decided to approve the overall macroeconomic forecast, the concept of tax and budget policy, the draft budget and programme for the creation of jobs and send them to the parliament.
As previously reported, the state budget of Uzbekistan for 2012 was approved with a deficit of one per cent of the projected GDP, or 966.5 billion sums, the revenue to the sum of 21.1 per cent of the GDP (20 trillion 393.9 billion sums) and expenditure of 22.1 per cent of GDP (21 trillion 360.4 billion sums).
The official exchange rate on October 26 is 1952.60 sum / $ 1.

http://www.ers.usda.gov   

 

Uzbekistan is the seventh largest global cotton producer and third largest cotton supplier for world markets. Uzbekistan's Government policies largely shield cotton producers from world market price signals, and cotton area has changed little over the past decade despite strong international price fluctuations. Government pricing and exchange rate policies tax cotton producers and more than offset the value of input subsidies for cotton growers. The degree of taxation declined for several years after 2000, but increased again in the late 2000s. In the 2009, cotton output dropped as Uzbekistan responded to reduced water availability and increased global food prices with higher taxes on cotton growers. With continued taxation of cotton production, Uzbekistan likely will continue to lose ground to more dynamic cotton exporters like
India and Brazil. As a result, USDA's longrun baseline projections for Central Asia show that the region's share of world cotton production will continue to fall over the next decade.  Read full report here.

http://en.trend.az   

 

Uzbekistan is planning to attract Korean Kepco (Korea Electric Power Corporation) to the construction of thermal power plant (TPP) with estimated cost of $ 103 million in Uchkuduk (Navoi region), a source in governmental circles told Trend on Wednesday.

According to the source, in September, Uzbekenergo State Joint-Stock Company (SJC) and Kepco signed a memorandum of cooperation in the framework of this project.

It is assumed that the power plant with installed capacity of 200 MW will be of combined type, producing electricity and heat.

According to the source, a form of partnership is not yet determined, as the project is at an early stage of development.

As previously reported, in October, Uzbekenergo completed construction of combined cycle gas turbine (CCGT) worth $468 million in the Navoi thermal power plant - one of the largest thermal power plant in Uzbekistan in order to improve supply to Navoi free zone . The design capacity of CCGT - 478 MW with power generation in the amount of 3.4 billion kWh per year.

It is assumed that Uchkuduk TPP will also facilitate full energy supply to Navoi Free Industrial Economic Zone, which was established in Navoi region.

At present, there are 45 power plants with total capacity of 12.4 thousand MW in the power system of Uzbekistan. The major share of electricity is produced by 10 thermal power stations of Uzbekenergo with total installed capacity of 10.6 million kw. 29 hydropower plants with installed capacity of 1.4 million kw are mostly combined in cascades and work on watercourse

http://www.adb.org   

 

Ministers from 10 nations spanning the Caucasus, Central, East, and South Asia will gather here on 29-31 October to discuss concrete ways to boost connectivity and cooperation in their region through to 2020.

The meeting marks the 11th gathering of the ministers of Afghanistan, Azerbaijan, the People's Republic of China (PRC), Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan under the Central Asia Regional Economic Cooperation (CAREC) Program.

"Regional cooperation is the best means of ensuring regional prosperity. Next week, the goal will be to agree on how to implement our vision of better trade and transport links and how we can better share ideas and knowledge within the CAREC region," said Klaus Gerhaeusser, Director General of the Central and West Asia Department of the Asian Development Bank (ADB).

At the 10th CAREC gathering in Baku, Azerbaijan in November 2011, ministers endorsed a 10-year framework for the region, titled CAREC 2020: 10-year Strategic Framework for the CAREC Program. This year, the ministers will be discussing Implementing CAREC 2020: Vision and Action.

The CAREC program prioritizes projects and initiatives in four key areas: transport, energy, trade facilitation, and trade policy in an effort to promote economic growth and poverty reduction in the region.

Since CAREC was formed in 2001, the region has seen $19.6 billion in investments in just over 120 projects. This includes building or rehabilitation of almost 4,000 kilometers of roads and 3,200 kilometers of railways, allowing faster movement of goods and people within the region. In the energy sector, more than 2,300 kilometers of power transmission lines have been constructed and are already providing reliable electricity to homes and businesses.

In the past year alone, the region has improved border services and expanded customs control between Mongolia and the PRC among other efforts to promote trade. CAREC officials have also received training and other support to smooth the path toward World Trade Organization membership.

Six multilateral institutions support the work of CAREC: ADB, the European Bank for Reconstruction and Development, the International Monetary Fund, the Islamic Development Bank, the United Nations Development Programme, and the World Bank. ADB has served as the CAREC Secretariat since 2001.


Uzbekistan plans to invest $8.5 billion of local and attracted money asserts into transport-communication infrastructure of the country to increase the transit potential of Uzbekistan.

It's planed to invest $ 3.54 billion in construction and reconstruction of the republic's roads, $2.2 billion in development and electrification of railways, 1 billion in development of air transport, $1.8 billion in telecommunication and engineer-communication spheres.

These figures were announced at the seminar dedicated to the prospects of Central Asia countries' access to the world market through new transport corridors, held by the legislative chamber of Milli Majlis, written on the website of lower chamber of Uzbekistan's Parliament.

The participants mentioned that rapidly development of economical rate and foreign trade of Uzbekistan demand a quicken improvement of transport-communication complex, as well as increase of transit potential and diversification of international transport corridors.

Further prospects of Uzbekistan's integration into international transport corridors were also discussed at the seminar. Participants mentioned the importance of construction of transport corridor Uzbekistan-Turkmenistan-Iran-Oman-Qatar initiated by President Islam Karimov. This corridor will influence on strengthening of connections between the Central Asian countries and the Persian Gulf.

China Development Bank (CDB) is providing Uzbek state stock company Uzbekenergo with a credit of $220 million for the co-financing of a project for the modernization of Tashkent CHPP (combined heat and power plant), reported Interfax.
An Uzbek governmental resolution concerning measures for implementing the investment project for building 370 MW steam-gas installation at Tashkent CHPP, which lays out a financing scheme, was adopted on October 16. Interfax has obtained a copy.
It says that Uzbekenergo and CDB had clinched a credit agreement this past August.
The project price tag is $511.8 million. It will also be financed with monies allocated by Uzbekistan's Reconstruction and Development Fund ($76.2 million), a business loan from Synecta a.s. ($68.9 million), with Uzbekenergo's own funds ($117.7 million), an Uzpromstroybank credit ($26.9 million), and a credit from Japan International Cooperation Agency (over $2 million).
The government has established a number of customs and tax breaks for the project, and issued permission for construction and installation work to be conducted before next September 1 simultaneously with the working up of design and estimate documentation.
The engineering contract for building the steam-gas facilities, the procurement of equipment, and the actual construction was secured with a consortium consisting of Synecta a.s. and Istroenergy Group (both of Slovakia) and Lavalin Polska Sp.zo.o. (Poland). The cost of the project had earlier been put at $468 million.
Tashkent CHPP has installed generating capacity of 1,860 MW. Its first generating unit was put into operation in 1963 and its last, the twelfth, in 1971.


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