D. FAYZULLAYEV, Candidate of Economic Sciences

Throughout almost the entire period of its existence as an independent state, Uzbekistan has been striving to reform its own economic system in order to transition to the market. Significant financial resources are needed to meet this challenge. An important role in investment in Uzbekistan is played by funds of foreign corporations and foreign loans, which now reach almost a third of the total volume of fixed capital investments. In this regard, it is interesting to analyze how these funds are distributed by industry and region.

Already in the first years of independence, the republic began to receive funds from the Commission of the European Communities through the TASIS program. These funds were intended to assist Uzbekistan in creating a market infrastructure, namely, to develop projects in the field of energy sector development, consultations in the oil and gas industry, food production and distribution, as well as to support farmers, small and medium-sized enterprises, transport, etc. In general, TASIS experts developed 30 projects with a deadline of implementation takes 1-2 years. Under this program, Uzbekistan received $ 18 million in 1992. ECU, in 1993-1994 - 15.7 million euro. ECU ¹ .

THE LAW AS AN INCENTIVE TO CREATE A JOINT VENTURE

The development and implementation of legislation on foreign investment, primarily the Law of the Republic of Uzbekistan "On Foreign Investment and Guarantees of foreign Investors 'Activities" dated May 5, 1994.2 became a definite incentive for the creation of new joint ventures (JVs), as it significantly improved the conditions for placing foreign investments in the republic. In 1993, there were 895 registered joint ventures in Uzbekistan, including 234 active ones. In 1993, with the direct participation of the State Property Committee of the Republic, 15 joint ventures were formed in Uzbekistan with foreign partners from the USA, Italy, South Korea, Turkey and other countries. Uzbekistan has expressed its intention to attract foreign investment in the privatization of large enterprises, including automotive, engine-building, chemical, and food. But, first of all, the country was interested in attracting funds from foreign investors in the development of natural resources, primarily in the gold mining industry. The reasons for choosing this priority are obvious. The republic has huge gold reserves (in 1993 - 1994). Uzbekistan ranked 7th in the world in terms of gold production - 70 tons per year, the export of which could provide much-needed funds for active market reforms).

In 1993, there were 39 gold mines in the republic, of which only 12 were active at that time. One of the first foreign companies to invest in this industry was the American company New Mont, which established a joint venture with the Uzbek geological combine Zaravshan-New Mont to extract gold from landfills in Muruntau. In November 1993, the European Bank for Reconstruction and Development (EBRD) allocated $ 52 million to complete the construction of a gold mining complex in Muruntau, the total project cost of which was estimated at $ 150 million.

In 1993, during the visit of the President of Uzbekistan I. Karimov to the UK, an agreement was signed with the British firm Lonro on the development of the Amantaytau and Daugistau gold deposits in the Kyzylkum desert. It is implemented by the joint company Amantaytau Goldfields, which includes two state-owned Uzbek companies in addition to Lonro.

Partners of Uzbek geologists in carrying out research work were Turkish specialists, in particular the company "BMB". In addition, a memorandum was signed with the Metal mining agency of Japan on conducting a joint search for tungsten deposits in Kyzylkumakh3 .

In 1994, 900 joint ventures were registered in the republic. Most of them - 531 - produced and sold consumer goods; 170 JVs were created in the field of agro-industrial complex (AIC); 40 JVs were engaged in the production of computer equipment; 35 JVs provided medical, household and other services.

The largest investor in Uzbekistan's economy was Turkey, which provided $ 250 million in loans and guaranteed subsidies between 1992 and 1994. The most successful Turkish-Uzbek joint ventures in 1994 were the Katex textile complex, created with the participation of the Turkish company Yazex; Turk-Atlas, which produces silk carpets for export, and other enterprises.

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In addition to Turkey, firms from Germany, France, Great Britain, Italy, the Netherlands, the Republic of Korea, Indonesia, Malaysia and India were very active in setting up joint ventures in Uzbekistan. The largest projects of 1994 were the following:: participation of the South Korean company DAEWOO in the creation of an automobile plant, an agreement on the creation of 30 joint ventures with German companies, such as Mercedes-Benz, Ferrostal, etc. Foreign investment also came to the banking sector in 1994: the Uzbek-Turkish Bank Utbank was established and an agreement was reached on the establishment of an Uzbek-Dutch Bank4 .

In 1995, 1.5 thousand joint ventures were registered in Uzbekistan. Among the foreign companies that participated in their creation were such well-known companies as New Mont (USA), Coca-Cola, Pepsi-Cola (USA), Rank Xerox (Great Britain), Mercedes-Benz (Germany), DAEWOO Corporation (Republic of Korea), Burselo (Turkey), Buller (Switzerland).

1995 was the year when Uzbekistan received large loans from the IMF and the World Bank. Foreign investment totaled about $ 1.5 billion this year (including loans).⁵ . The most attractive sectors of the economy for foreign capital are the automotive industry, the electronic and mining industries, and telecommunications.

CONVERSION RATE

One of the new areas of foreign investment in 1995 was conversion production. American companies took the lead here. An Uzbek-American program was developed, for the implementation of which the American Corporation for Private Investment allocated $ 500 million. The conversion program assumes the transfer to the production of civilian products of such mothballed defense production facilities of the former USSR as Uzelektromash, Algorithm, Onyx JSC, Uzbekkabel software and a number of others. In addition, the Uzbek side proposed to produce units for American aircraft on the basis of the Tashkent Aviation Production Association named after V. Chkalov. It is planned to implement a project on the basis of the Uzbek-Kosmos NGO, the purpose of which is to create a complex for receiving, processing and distributing satellite information, and to form global telecommunications networks.

One of the central events of 1995 was the establishment of the Foreign Investment Agency in Uzbekistan, which coordinates all investment projects in the republic ^.6

In 1996, in the face of a shortage of foreign exchange resources, the Government of Uzbekistan tried to encourage foreign investment in the economy, primarily for the development of gold and uranium deposits. The main task in this direction was the technical re-equipment of the country's uranium-ore industry, and first of all, the Navoi Mining and Metallurgical Combine, until 2030. The purpose of the modernization of the enterprise is to increase the export of uranium.

The largest deposits of uranium ore in Uzbekistan are located in the Kyzylkum desert, where uranium reserves exceed 230 thousand tons. Meanwhile, only 28 of the 40 explored deposits were developed in 1996. At the same time, the cost of Uzbek uranium is one of the lowest in the world. As of January 1, 1996, Uzbekistan ranked 3rd in the world in terms of uranium sales and 5th in terms of its production. A significant disadvantage of the Uzbek uranium industry is the lack of processing of uranium, which ends up in the production of uranium concentrate.

According to the IAEA, the Navoi combine produced about 30 thousand tons of uranium concentrate in 1994. It is expected that in the future this production will grow, although not too fast.

Technical re-equipment of the plant, which will increase the production of uranium and gold by one and a half times, will cost $ 1 billion. These funds will be used to modernize the drilling equipment fleet and build a casing pipe plant. The equipment for this enterprise was supplied by the German companies "Mannesmann Demag AG" and "Klaus Masai". To replace drilling equipment, a tender was announced with the participation of a number of foreign companies.

In the summer of 1996, the Navoi Plant negotiated the creation of a joint venture with the American company Nokim. It is assumed that the result of these negotiations will be a joint venture for the production of 500 thousand tons of uranium ore per year. Nokim is known for signing a contract with the Uzbek side in 1992 for the exclusive right to sell all Uzbek uranium on the world market.

In total, over $ 5 billion is expected to be invested in the Uzbek economy from various sources. In the structure of capital investments, foreign investments accounted for 17.8%. Foreign investment and loans granted under government guarantees have increased more than 1.5 times since 1996, while foreign direct investment and loans have increased 2.3 times. The main part of foreign investment is accounted for by state-owned enterprises (55.7%) and joint ventures (23.9%) ^.7

In 1997, the first republican investment program was adopted. Under this program, the development of projects with foreign direct investment carried out without a government guarantee has increased significantly - from 24% to 85% of the total number of projects.

The sectoral distribution of investments in the republic in 1997 reflected the rapid development of the so-called priority industries. About 80% of all investments are made in two industries - light industry (42%) and telecommunications (36%).

Investors from 25 countries participated in the 1997 investment program. By the end of 1997, the leaders among donor countries in terms of investment volumes were the United Kingdom (22%), Malaysia (16%), Turkey (12.6%), the United States (10%), Japan (9.7%), and the Republic of Korea (8.9%).

1997 was marked by the creation of the national export-Import insurance company "Uz" by the decree of the President.-

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bekinvest". It is designed to provide insurance protection for foreign investors from political and economic risks, and for Uzbek exporters from various types of risks on international markets.

In the same year, 1997, an agreement was signed between the US Trade and Development Agency and the Navoi Mining and Metallurgical Combine to provide the company with a grant of $ 500,000 to develop technological equipment that would help increase gold production in the Kyzylkum desert, which is considered the most promising gold-bearing area in the world. So far, only 10% of all potential reserves of this precious metal have been explored here.

The Uzbek government is trying to attract strategic investors to the stock market, which is still underdeveloped. Thus, the National Bank for Foreign Economic Affairs of Uzbekistan and the Merill Linch international financial company signed an agreement on the creation of a financial syndicate, whose activities will be aimed at attracting foreign investors to the stock market and promoting Uzbek securities to international financial markets ^.8

In January 1998, the Government of Uzbekistan approved the republican investment program for the same period in 1998. It was assumed that the total amount of capital investment will be about $ 7 billion ($600 billion). sumov). The largest volume of investments - $ 200 million - was supposed to be spent on projects of the national corporation "Uzbekneftegaz", in second place - construction and modernization of chemical industry enterprises ($170 million). In March 1998, Uzbekneftegaz Corporation signed the largest contract in the history of the industry with the ABB consortium worth more than $ 500 million. for the construction of the Shurtan gas chemical complex. The project will be financed by American and Japanese export-import banks. In 1998, the republic's leadership managed to attract significant investments in the oil and gas processing and chemical industries.

MAIN PARTNER - USA

The United States has become Uzbekistan's main political and economic partner. In the period from 1995 to 1998, the volume of trade turnover between the two countries increased 7-fold and exceeded $ 700 million. Uzbekistan has become the second largest trading partner of the United States (after Russia)in the former Soviet Union. The volume of direct US investment in the republic's economy reached $ 800 million in 1998. Of the existing US-Uzbek joint ventures, the largest is the Zaravshan - New Mont gold mining enterprise. In 1997, the Americans produced 3.85 million ounces of gold in Uzbekistan, half of which was sold abroad. In total, from July 1995, when the joint venture started gold production, to 1998, Uzbekistan received $ 33 million from it. in the form of taxes, equipment, and workers ' salaries. Cooperation between the United States and Uzbekistan is long-term, despite the contradictions between the two countries on the issue of human rights in the Uzbek Republic9 .

In 1999, the total volume of foreign investments and loans reached $ 986.8 million. The main trend of this period was a reduction in the inflow of direct investment from abroad and an increase in the receipt of foreign loans. In 1999, the largest inflows of foreign investment were observed in the energy (30%), transport (13%) and agro-industrial (12%) sectors.

A significant part of the budget expenditure for 1999 consists of investments in priority sectors of the economy. These include agriculture, modernization of the Shurtan gas chemical complex, construction of new roads and railways, and development of telecommunications. Foreign investments in the republic's economy, including loans, amounted to more than $ 1 billion. The main donor countries were France, Germany, Turkey, Japan and the United States10 .

In 2000, the largest share of foreign investment - over 54% - was attracted to the petrochemical and transport sectors ^.11

As of July 1, 2000, the State Property Committee of Uzbekistan registered 442 joint ventures with state assets. Total authorized capital

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the capital of these enterprises amounted to 1649.9 million soums.

In early 2000, the investment program for the same year was approved. Its address part includes 91 projects. We note a 2-fold decrease in the projects listed in the 2000 investment program compared to 1999 (181 projects). A characteristic feature of the program was the special attention of the state and foreign investors to the development of small and medium-sized businesses. Thus, the following foreign investments have been made in investment projects in this area:: EBRD - $ 60 million, IMF - $ 30 million, Raanani Holding - $ 35 million. (Canada) and $ 15.31 million from Turkish firms. A significant amount of foreign investment was attracted in the field of transport and communications, in particular, in the reconstruction of the telecommunications network ($218.64 million - Bakri Communications (Indonesia), paging communications ($54 million - DAEWOO Corporation (Republic of Korea), reconstruction of airport communications ($19.38 million -"Sumitomo (Japan), mobile network expansion ($10.50 million - AGTI (USA).

The Government of Uzbekistan monitors the implementation of the largest investment projects, among which preference is given to projects for the creation of high-tech industries. Thus, in 2000, the construction of the Shurtan gas chemical complex was completed, pulp production was organized at the Ferghana Chemical Compounds Plant, and the Kyzylkum Phosphorite Combine was expanded.

In 2000, several joint ventures were launched that are extremely important for the economy of Uzbekistan, namely: the Khobas-TAPO plant for the production of non-metallic pipes with a production capacity of 270 km of pipes per year, the Uzmatana-Santekhnika enterprise for the production of water installations, the Oltin Deri enterprise in the Andijan region with a capacity of 45 thousand tons. leather goods per year, a plant for the production of medical products (capacity-390 million units and 6.6 million ampoules per year), etc. ¹²

The main document defining the investment policy of Uzbekistan for 2001 was the next investment program, which, according to the Ministry of Macroeconomics and Statistics of Uzbekistan, was fulfilled by 101.7%. Considering the sources of investment financing under this program, it can be noted that the share of foreign investment under the government guarantee was 28.5% of all capital investments, and foreign direct investment-5.2%.

Of the total amount of investments provided for in the targeted program of investment projects for 2001, the share of foreign loans guaranteed by the government was 82.76%, and foreign direct investment and loans - 17.24%. The number of projects included in the targeted part of the investment program decreased compared to 2000 and amounted to 75 enterprises. The tendency to reduce the number of investment projects observed since 1999 is associated with strict requirements for the quality of project development, providing them with design and estimate documentation and sources of financing.

The largest share of investments and loans was attracted to fuel and energy (22.9%) and industrial (20.7%) complexes. According to the Ministry of Macroeconomics and Statistics of Uzbekistan, the sectoral distribution of foreign investment in the country is extremely uneven. In 2001, about 70% of all investments were attracted to industry, 12.4% to transport, 4.6% to agriculture, and 3.6% to utilities. In the industrial sector, light (18.1%), fuel and energy (17.5%) and machine-building (16.6%) industries occupy the leading position in terms of attracted foreign investment. Metallurgical (6.9%), chemical and petrochemical (4.6%) and food (3.8%) industries are more than twice as far behind them13 .

Investment programs adopted in recent years are characterized by their social orientation. Thus, in 2000, 7.1% of the total volume of foreign investment was directed to ^the social complex14 . According to the 2001 investment program, 14.1% of all investments were made in the social sphere. Much attention is still paid to supporting small and medium-sized businesses. In 2001, credit lines for the development of small and medium-sized businesses accounted for more than 10% of all investments and loans.

THE MOST, THE MOST, THE MOST...

Among the most significant investment projects included in the targeted part of the 2001 investment program are the construction of an auxiliary station at the Shurtan gas condensate storage facility (the project cost is $ 106 million), the creation of the Uzbekseid joint venture for the production of batteries ($37.9 million), the extraction and processing of gold ore at the Amantaytau Goldfields joint venture($33.7 million), establishment of JV "Kabul-Fergana Company, Ltd." on the basis of the Ferghana Textile Mill ($33 million), establishment of JV "Oqsaroy Tukimachi, Ltd." (spinning complex) ($28.7 million), completion of construction of the spinning complex of JV " Chinoz Tukimachi, Ltd. " ($27.5 million).

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The consolidated list of priority investment proposals included 115 projects with an estimated volume of attracted foreign investment and loans of about $ 5.9 billion. Investment-attractive projects were proposed in the energy sector - these are projects for the reconstruction and modernization of the Tashkent, Navoi, Novo-Anrgren GRES, Mubarek and Tashkent CHPP.

Active work on attracting foreign investment was carried out in 2001 in the chemical industry. Among the projects that have attracted significant investment are the following: expansion and reconstruction of the Samarkand Chemical Plant, construction of the Kungrad soda plant, development of the Tyubegatan potash deposit.

Projects on irrigation and land reclamation of agriculture provided for the supply of technological equipment at the expense of foreign loans and investments.

Several projects related to Almalyk Mining and Metallurgical Combine JSC, namely the expansion and reconstruction of the Kalmakyr mine, a copper processing plant and a non-ferrous metal processing plant, were implemented through the sale of part of the shares to foreign investors.

The main investors and creditors who invested in the economy of Uzbekistan in 2001 were: Japan Bank for International Cooperation; Commersbank (Germany); Chase Manhattan Bank (USA), which invested $ 622.2 million in the construction of the Shurtan gas chemical complex; Bateman Projects (Israel), which invested $ 195.45 million in the construction of an auxiliary station at the Shurtan gas condensate field.

Such foreign banks as Societe Generale (France), AG Behring Bank (Czech Republic), BerlinerBank (Germany) have allocated significant investment funds for the reconstruction and modernization of several enterprises in Ferghana.

A huge amount of investment - $ 400.88 million - was directed to the social sphere. The Asian Development Bank and Exim Bank (Republic of Korea) have provided loans for the development of specialized secondary and vocational education, the purchase of educational equipment, and the modernization of equipment for the production of school textbooks.

Investment loans totaling $ 233.8 million allocated for the development of small and medium-sized businesses were provided by the EBRD, the Asian Development Bank, KFW Bank (Germany) and IFC ¹⁵ .

Thus, during the first decade of Uzbekistan's existence as an independent state (1991-2001), the distribution of funds of foreign investors by sectors of the republic's economy was characterized by unevenness. A significant part of the investment was attracted to industry, where the dominant positions were occupied by such industries as fuel and energy, mining and metallurgy, light, machine-building, chemical, petrochemical and food.

REGIONAL STRUCTURE

The volume of foreign investment in Uzbekistan is also very unevenly distributed regionally (see table 1).

The largest volume of investment is concentrated in Tashkent (in 2001 - 73.9% - enterprises with foreign investment (FDI). Prior to 2000, a quarter of all foreign investment was concentrated in the Andijan region (26.4% of FDI in 1999), but in 2000 the number of newly registered enterprises with foreign capital decreased by 3.7 times and accounted for 7.01% of the total number of FDI in the republic. In 2001, the number of registered FDI flows in the Andijan region continued to decline and amounted to only 2.69%.

A certain positive trend was achieved in the Tashkent region, where the number of FDI increased 1.8 times in 2000. However, in 2001 this indicator dropped almost to the level of 1998-1999 and amounted to 5.9%. In 2000-2001, Navoi Oblast experienced a 4.3 - to 13-fold decline in the number of foreign direct investment (FDI).

Table 1

Distribution of production volume of registered enterprises with foreign investments by region, in % of total

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Source: data from the State Property Committee of Uzbekistan (www.spa.uz) and Foreign Investment Agencies in Uzbekistan (www.fia.uz).

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Table 2

Foreign economic indicators of operating enterprises with foreign investments in Uzbekistan in 2001

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Source: database of the State Property Committee of Uzbekistan (www.spa.uz).

Compared to 1999, the most noticeable changes occurred in 2000 in the Khorezm region, where the total number of FDI increased by 9 times compared to 1999, but the contribution of the Khorezm region to the total number of FDI in the republic is not so significant and amounted to only 3.6% in 2000. Unfortunately, in 2001 the indicator returned to the position of 1996-1999 and amounted to 1%. In other regions of the republic, the decrease or increase in the share of FDI in 2000 compared to 1999 is insignificant and amounts to + 0.5-2%.

However, the number of registered FDI does not always accurately reflect the investment attractiveness rating of a particular region, since not all registered enterprises are actually operating. Thus, in 2001, the largest share of FDI was registered in Tashkent (73.9%), but only slightly more than half of them were active (53.7%) (see table 2). According to this indicator, Tashkent is far ahead of Syrdarya (95.5%), Andijan (87.6%), Namangan (86.8%), and Samarkand (83.5%) regions.

City of TashkentNor is it a leader in terms of the share of foreign investment and loans in total capital investment. Ferghana (45.4%), Navoi (41.5%) and Kashkadarya (39.6%) regions hold the leading positions by a significant margin.

Such indicators should not seem strange, since at this stage the republic's economy is focused on the development of industries that bring the highest income to the state budget. These are the mining and metallurgical, oil and gas production, and oil and gas processing industries. The main enterprises of these industries are located in Andijan, Bukhara, Kashkadarya, Navoi, Namangan, and Ferghana regions.

The city of Tashkent is mainly home to manufacturing and processing industries, as well as enterprises in the field of trade and services. It should be noted that the share of exports of Tashkent enterprises in GDP in 2001 remains the highest among all regions of Uzbekistan - 55%.

These data clearly show that foreign investment has become one of the most important levers of economic recovery in Uzbekistan. It is necessary to note the highly professional actions of the country's authorities to create a favorable investment climate, primarily in the field of legislation and other regulatory activities.

¹ New trends in economic development of Uzbekistan (the review was prepared Ionova E. P.) // Economy and politics of Russia and the CIS countries, 1995, N 10. Moscow. www.imemo.ru.

² Law of the Republic of Uzbekistan "On foreign Investments and guarantees of foreign investors 'Activities" dated May 5, 1994. Materials of the Agency for Foreign Investments of Uzbekistan. www.fia.uz.

³ Vneshneekonomicheskie svyazi Uzbekistanii (obzor prepared by E. P. Ionova) / / Ekonomika i politika Rossii i gosudarstv blizhne zarubezhya, 1994, N 2. Moscow, www.imemo.ru.

⁴ Novye tendentsii v ekonomicheskom razvitii Uzbekistanii (obzor prepared by E. P. Ionova) [New trends in the economic development of Uzbekistan (review prepared by E. P. Ionova)]. Moscow. www.imemo.ru.

⁵ Uzbekistan in search of foreign investments (review prepared by E. P. Ionova) / / Economics and Politics of Russia and the neighboring countries, 1996, N 7. Moscow, www.imemo.ru.

⁶ Intra-economic situation in Uzbekistan (review prepared by E. P. Ionova) / / Economics and Politics of Russia and the neighboring Countries, 1996, N 3. Moscow, www.imemo.ru.

⁷ Tendentsii ekonomicheskogo razvitiya Uzbekistanii (obzor prepared by E. P. Ionova) [Trends in the economic development of Uzbekistan (review prepared by E. P. Ionova)]. www.imemo.ru.

⁸ Nekotorye napravleniya razvitie Uzbekistanii v 1997 g. (obzor prepared by E. P. Ionova) [Some directions of development of Uzbekistan in 1997 (review prepared by E. P. Ionova)]. www.imemo.ru.

⁹ Ekonomika i finansovogo krizis (obzor podgotovoi Ionova E. P.) [Economy of Uzbekistan and the financial crisis (review prepared by E. P. Ionova)]. www.imemo.ru.

¹⁰ Structural transformations of the economy of the Republic of Uzbekistan in the transition period (review) (Ionova E. P.). Ekonomika i politika Rossii i gosudarstv blizhne zarubezhya, 2000, N 4. Moscow, www.imemo.ru.

¹¹ Nekotorye problemy ekonomiki Uzbekistanii (obzor prepared by E. P. Ionova) [Some problems of the economy of Uzbekistan (review prepared by E. P. Ionova)]. www.imemo.ru.

¹² Materials of the State Property Committee of the Republic of Uzbekistan. www.spa.uz.

¹³ Materials of the Ministry of Macroeconomics and Statistics of the Republic of Uzbekistan, www.gov.uz.

¹⁴ Materials of the State Property Committee of the Republic of Uzbekistan. www.spa.uz.

¹⁵ Materials of the Ministry of Macroeconomics and Statistics of the Republic of Uzbekistan, www.gov.uz.

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