American-Uzbekistan Chamber of Commerce
Week in Review:
January 31, 2014 - February 7, 2014
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2014 Opens a New Era for the Chamber

Since 1993 the American-Uzbekistan Chamber of Commerce has been at the forefront of advancing trade and business relations between the US and the Republic of Uzbekistan. AUCC prides itself in catering to the needs of our members, providing them with a platform to interact with policy makers in the US and the Republic of Uzbekistan and ensuring that bilateral commercial relations continue to be on the governments' top agenda.   


For the last twenty years AUCC has been a vigorous advocate of the views of the business community to ensure that private sector positions are considered during the development of policies that impact American businesses and the future of U.S.-Uzbekistan relations.  While 2013 concluded our celebrations for the 20th anniversary it also opened a new era for the chamber and our members.


We are delighted that today AUCC continues to be a well-known organization that is recognized for its strength and ability to work closely with a great number of partner organizations. AUCC enjoys excellent working relations with the Embassy of the Republic of Uzbekistan in Washington, D.C., the Government of the Republic of Uzbekistan, Uzbek ministries, associations and organizations as well as the executive and legislative branches of the U.S. AUCC also coordinates its efforts with a great number of international financial institutions, business councils and other professional organizations.


We thank you all for your support and engagement and look forward to another year of progress and business successes.  


If your company is interested in joining AUCC, please contact our office at 202-509-3744 or  We invite you to be part of our organization and participate in our activities and events.   


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In This Issue:
FRDU to issue US$872m to Uzbekenergo in 2014
Uzbekistan's Economic Development in 2013 and Priorities for 2014
World Bank: Eurasia's Development: Diversifying Economies, Naturally
Eurasia Should Make the Most of Its Natural Resources, Says World 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.  


February 3, 2014


Fund for Reconstruction and Development of Uzbekistan (FRDU) will issue US$872 million to implementation of five investment projects of Uzbekenergo state joint stock companies.

In particular, the Fund will issue US$300 million to construction of Turakurgan thermal power station in Namangan region.

Uzbekenergo will receive US$270 million to construction combined-cycle units with the capacity of 250 megawatts at Takhiatash thermal power station and US$122 million to construction of solar station in Samarkand region with the capacity of 100 megawatts.

Fund for Reconstruction and Development of Uzbekistan (FRDU) was founded in May 2006 with the decree of the President of Uzbekistan with the charter capital of US$1 billion. Currently, its capital makes up US$15 billion.

The fund was created to finance and co-finance important investment projects, included to the state investment programme.  


On Friday, January 31, 2014, Ambassador Bakhtiyar Gulyamov held a lunch briefing on "Uzbekistan's Economic Development in 2013 and Priorities for 2014. Mr. Laziz Kudratov, Trade and Economic Counselor, made a presentation on the country's economic transformations and 2014 investment projects in the energy, infrastructure, chemical, machine building and other sectors. The participants welcomed the Embassy's initiative to keep US businesses informed of the Uzbek government priorities and expressed their support for the country's path to industrial modernization and further improvement of its' investment and business climate.


[Remarks by Mr. Laziz Kudratov]


Dear Ladies and Gentlemen:


2013 was fruitful for the Uzbek economy. Despite the serious impact of the ongoing global financial and economic crisis, the annual GDP growth in 2007-2013 exceeded 8%.

Industrial output in 2013 grew by 8.8%. The main increases were recorded in machine building (21%), construction materials sector (13,6%), light industry (13%) and food sector (9%). As a result, the share of industry in GDP accounts today for about 25% compared to 14,2% in the year of 2000.

Last year the volume of agricultural production increased by 2.3 times compared with the year of 2000. Along with consistently high growth of agriculture, its share in the total GDP tends to decrease: from 30% in 2000 to 16.8% in 2013. This, above all, the evidence of deep structural changes and progressive transformation of our country from an agrarian to a modern industrialized state.

The Service sector is playing an increasingly large role in the sustainable development of our economy. The volume of services increased by 13,5% last year and its share in the GDP reached 53% compared to 37% in the year of 2000. Now we have every reason to say that in the Service sector we are approaching the levels of developed countries.

We enjoy budget surpluses for the last 9 years. In 2013 the surplus was 0,3% despite the fact that the tax burden on the economy last year declined from 21.5 to 20.5%, and the minimum tax rate on personal income has been reduced from 9 to 8%. I would like to draw your attention that about 60% of the state budget expenses go to social sector: healthcare and education.

We do believe that investing in education is the key to Uzbekistan's future success.          Inflation rate in 2013 as you can see was 6.8%. This figure is actually lower than the government predicted.

One of the key factor of the stability of Uzbek economy is that the external debt of the country does not exceed 17% of GDP. Our internal debt is equal to zero. This is the result of thoughtful and measured approach to attract foreign loans and foreign investments.

But at the same time, we understand that without investment there is no progress, no modernization of our industry, economy and the whole country.

In 2013, an equivalent of 13 billion US dollars was invested in Uzbekistan. Last year total investments increased by 11,3% compared with 2012.

Almost half of the total volume of capital investments (47%) were private investment. Foreign Direct Investments amounted at 2,2 billion US dollars.

Here I would like to mention that the Fund for Reconstruction and Development of Uzbekistan plays a key role in implementation of investment projects in the country. In short period of time of its activities, the Fund turned into powerful financial institute, which holds assets of over 15 billion US dollars. Today the Fund cofinances 86 startegic large-scale projects in the total amount of 29 billion US dollars.

Last year alone, we launched 150 manufacturing facilities in the total amount of 2,7 billion US dollars.

The clear evidence of progressive changes in our economy is in the growth of small business and entrepreneurship. In 2013 the share of small business in the GDP reached 55,8% compared to 31% in the year of 2000. Today small enterprises account for 23% of total manufactured goods, almost hundred % of services, 18% of exports, and 75% of jobs. This shows that Small business plays great role in sustainable development of Uzbek economy, creating jobs and ensuring well-being of population.

The main objectives and priorities of promoting the economy in 2014 are primarily dictated by the program goals of the country's long-term development, the adopted strategy ensuring the consistent high rates of the economic growth, mobilization of available resources and opportunities.

The government will put all its efforts to ensure the growth of GDP by 8.1% in 2014, industrial production - by 8.3%, agricultural production - by 6%.

2014 will be the year of commissioning the most important high-tech and modern industrial facilities, growth and improvement of the investment process.

The total amount of capital investments in all sources of financing will hit 14.3 billion US dollars with a 10.1% increase compared to the last year and maintaining the share of investments in the GDP at the level of 23%.

It is planned to complete several large projects in chemical sector, establish production of automobiles in the western part of the country, complete third branch of Uzbekistan - China gas pipeline, and continue construction of two gas chemical complexes.

Several projects are being implemented in power engineering. Among them are the projects to install combined cycle systems in power stations in Tashkent, Navoi and Talimardjan cities.

The large-scale program goals and objectives for 2014 require the mobilization of all available sources of growth, the formation of a full-fledged competitive environment, which is a key factor in technical and technological renovation and modernization.

Our government admits that there is still old stereotype of thinking which we should get rid of and break away from planned economy system. It is wrong to think that protection measures and endless tax preferences will ensure survival in competitive environment.

We also admit that the current state of business environment and conditions for doing business in Uzbekistan do not fully meet requirements and principles of free market economy and international standards. In this regard, creation a favorable business climate, support and stimulation of private businesses will become an important priority for us in 2014.

In particular, we plan to further decrease expenses for businesses, as well as simplify permission procedures and eliminate red tape. We will speed up work on transition to online form of registration, permission and licensing procedures, interactive forms of providing utility services, services on taxation and customs registration. Serious steps will be taken to ensure development of e-commerce.  


February 3, 2014


[Extract.  Read full report here]


Eurasia is one of the most natural resource-rich regions in the world, with 31 percent of its proven natural gas reserves, 17 percent of oil reserves, 23 percent of iron ore, 14 percent of gold, and 7 percent of copper. Endowed with such a vast quantity, the region has been able to benefit enormously from the export of natural resources, particularly during periods of high commodity prices. Russia has the largest share of oil, gas, mineral reserves, and agricultural land in the region, and is the biggest hydrocarbon exporter. AzerbaijanKazakhstanTurkmenistan,Ukraine, and Uzbekistan, are also resource-rich and hydrocarbon exporters, whileArmeniaBelarusGeorgiaKyrgyz RepublicMoldova, and Tajikistan are less resource-abundant.

The countries of Eurasia have made remarkable progress since the collapse of the Soviet Union a quarter of a century ago. The transition from communism to market-based economies during the 1990s had been a severely difficult period, with much of the institutional capital of the former republics of the Soviet Union practically wiped out. In addition, their greatest asset - natural resources - had not yet generated large export revenues because additional supplies on global markets initially pushed prices down. This would soon change, however.

At the beginning of the new millennium, the prices of commodities on global markets increased dramatically, chief among them fuels, food, metals, and agricultural raw materials. In 1989, oil prices had been below $30 a barrel, sinking further in 1999 to $15 a barrel, but by mid-2008, prices had reached $130 a barrel, falling temporarily during the financial crisis, and then rising again to above $100 a barrel.  [Read full report here].  


February 3, 2014


Having natural resources does not have to be a curse, it can be a blessing if the countries ensure proper management of revenues from natural resources, invest earnings in building up physical and human capital, and improve institutions, says the World Bank's newly-released report "Diversified Development: Making the Most of Natural Resources in Eurasia".

"The experience of resource-rich countries around the world shows that diversification of exports or production may be neither necessary nor sufficient for development," said Laura Tuck, World Bank Vice President for Europe and Central Asia. "Our new report recommends that governments in the Eurasia region need to worry less about diversifying their exports or production, and think more about building diversified national asset portfolios - to ensure better balance between natural resources, built capital, and economic institutions."

According to the report, Eurasia's portfolios are currently heavy in tangible assets such as oil and gas, schools and hospitals, and in some cases roads and railways. At the same time they are lagging behind more successful countries in intangible assets such as education levels, quality of healthcare, and institutions for managing volatile resource rents, providing high-quality public services, and effectively regulating private enterprise.

"The main observation of the report is that diversified development is the result of successful development and not the cause of successful development," said Hans Timmer, World Bank Chief Economist for Europe and Central Asia. "Successful countries will diversify in a natural way, as they diversify their assets and improve institutions. Forced diversification, for example by subsidizing new industries, if it is not consistent with the country's endowments, will almost always fail as it usually results in economic inefficiency."

The report studies economic development in the twelve countries of Eurasia, where six countries are rich in natural resources: Azerbaijan, Kazakhstan, Russia, Turkmenistan, Ukraine, and Uzbekistan, and the other six countries are not: Armenia, Belarus, Georgia, Kyrgyz Republic, Moldova, and Tajikistan. In the last two decades, natural resources have played a central role in the development of the whole region, as countries which are rich in natural resources grew their wealth and shared their prosperity with the rest of the region through trade, migration, investment or aid.

The report finds that the wealth of natural resources has served Eurasia well so far, helping improve the living standards for most of Eurasia's 280 million people. Since 2000, individual incomes increased fivefold, and health and education services have improved. The most impressive achievement is the remarkable poverty reduction in the region, as poverty has fallen to half of what it was in the 1990s. All these improvements coincided with high and rising commodity prices.

"To address the challenge of high volatility caused by unstable commodity prices, the policymakers in Eurasia may wish to learn from the lessons of other resource-rich countries, both successful and unsuccessful," said Ivailo Izvorski, World Bank Sector Manager for Economic Management and Poverty Reduction in Europe and Central Asia and a report co-author. "Our analysis shows that resource-rich countries that made early improvements in the quality of essential services and the regulation of private enterprise were more successful in controlling volatility and becoming sustained high-income economies."

The report suggests that better economic institutions in all Eurasian countries could enhance the stability and reduce the volatility of public finances, improve education and infrastructure to make workers more productive, and strengthen the competition regimes to encourage private enterprise and entrepreneurship. Stabilization, education, and competition are identified as three priorities for the Eurasian countries for the next decade.

According to the report, success in overall development in resource-rich countries is directly linked to how successful countries are in converting their resource revenues into built capital, such as infrastructure and healthy and skilled population. The report recommends that both resource-rich and resource-poor countries in Eurasia may wish to make a big push to improve their infrastructure, such as roads and railways, pipelines, electricity grids, and communication networks. Generally, resource-poor countries in the region lag behind their richer neighbors in infrastructure, but they have been steadily increasing public investment and managed to boost their per capita physical capital by almost a third in 2010 relative to 2005. The countries where investment in physical capital could help the most are Russia and Ukraine.

For every other country in the region, the more urgent investment is in human capital, especially education. International assessments of the quality of education show that the region is lagging significantly. The report suggests that Eurasian resource-rich and resource-poor countries can benefit from both spending more and improving the efficiency of public spending in education.

Another important finding of the report is that integration into global markets is a key factor of success, as it helps create prosperity regardless of diversification. The report compares three sub-regions - East Asia, Central Europe, and Eurasia - and draws the conclusion that all of them succeeded by integrating into global markets using their comparative advantage: labor in East Asia, capital in Central Europe, and natural resources in Eurasia. Eurasia can do even better by expanding its trade with East Asia in addition to strengthening established links with Western Europe.

The American-Uzbekistan
Chamber of Commerce
1300 I Street, N.W.,
Suite 720W
Washington, DC 20005
phone: 202.509.3744