Uzbek Government Sets Hopes on Special Economic Zone
Uzbek Government Sets Hopes on Special Economic Zone
The Uzbek authorities want to give the economy a boost by creating a special zone where more liberal rules would apply. NBCentralAsia observers are cautious about the plan, saying it could easily be frustrated by the overregulation that currently prevents the very economic growth the government wants to promote.
Under a decree which President Islam Karimov issued on December 2, site and building plans for a “free economic zone” are to be in place by next March. The zone will be located close to Navoi city airport, in the resource-rich northwestern province of the same name.
Officials hope that preferential tax and customs tariffs, less rigorous restrictions on exchanging currency, and relaxed rules for obtaining visas, work and residence permits will encourage investors to come in and set up state-of-the-art manufacturing plants making products that can compete on the international market.”
Navoi region was selected because it sits on substantial reserves of natural gas, precious metals, uranium, and building materials, and because it also has a range of industries and a skilled labour force.
Transport was also a consideration, as Navoi is crossed by several railway lines and lies on trade routes to the Middle East, South Asia, Russia, the Baltic states, Iran and Afghanistan.
Tashkent-based economist Viktor Ivonin says that the idea of setting up a free economic zone – first proposed in the early Nineties – could provide an economic boost provided the latest technologies are used for manufacturing processes.
“Unless industrial enterprises are modernised and more active use is made of natural resources, Uzbekistan will not be able to compete successfully, even with regional neighbours. The free economic zone could be an instrument for energising business activity,” he said.
Experts in Kazakhstan, which adjoins Navoi, say investors there are ready to get involved because of the region’s mineral resources.
Observers inside Uzbekistan are also hopeful about the project, but warn of factors that could undermine it, for example tight regulation of the economy, the illiberal banking system, and widespread corruption.
Analysts say that previous initiatives by President Karimov to create a more liberal financial and business environment have not been put into practice.
Late last year, for instance, the authorities announced banking reforms and urged people to open accounts so as to increase the banks’ assets. This was followed in February, 2008, by a pledge that private bank account information could not be monitored by or disclosed to the authorities. Even so, businessmen say banks continue to provide confidential information to the security services.
Experts also note the red tape and corruption that stand in the way of anyone planning to start up a business, requiring them to do the rounds of various state agencies to collect a range of documents, paying bribes every step of the way.
“I think investors, too, will come up against the realities of Uzbekistan,” said a businessman from the Fergana valley.
For the moment, then, there are major questions hanging over the success of the planned economic zone.
“For the zone to function normally, the authorities will need to create as liberal an environment as possible,” said an observer in Tashkent. “But will they be able to do that under the current circumstances?”
(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service has resumed, covering Uzbekistan and Turkmenistan.)
Under a decree which President Islam Karimov issued on December 2, site and building plans for a “free economic zone” are to be in place by next March. The zone will be located close to Navoi city airport, in the resource-rich northwestern province of the same name.
Officials hope that preferential tax and customs tariffs, less rigorous restrictions on exchanging currency, and relaxed rules for obtaining visas, work and residence permits will encourage investors to come in and set up state-of-the-art manufacturing plants making products that can compete on the international market.”
Navoi region was selected because it sits on substantial reserves of natural gas, precious metals, uranium, and building materials, and because it also has a range of industries and a skilled labour force.
Transport was also a consideration, as Navoi is crossed by several railway lines and lies on trade routes to the Middle East, South Asia, Russia, the Baltic states, Iran and Afghanistan.
Tashkent-based economist Viktor Ivonin says that the idea of setting up a free economic zone – first proposed in the early Nineties – could provide an economic boost provided the latest technologies are used for manufacturing processes.
“Unless industrial enterprises are modernised and more active use is made of natural resources, Uzbekistan will not be able to compete successfully, even with regional neighbours. The free economic zone could be an instrument for energising business activity,” he said.
Experts in Kazakhstan, which adjoins Navoi, say investors there are ready to get involved because of the region’s mineral resources.
Observers inside Uzbekistan are also hopeful about the project, but warn of factors that could undermine it, for example tight regulation of the economy, the illiberal banking system, and widespread corruption.
Analysts say that previous initiatives by President Karimov to create a more liberal financial and business environment have not been put into practice.
Late last year, for instance, the authorities announced banking reforms and urged people to open accounts so as to increase the banks’ assets. This was followed in February, 2008, by a pledge that private bank account information could not be monitored by or disclosed to the authorities. Even so, businessmen say banks continue to provide confidential information to the security services.
Experts also note the red tape and corruption that stand in the way of anyone planning to start up a business, requiring them to do the rounds of various state agencies to collect a range of documents, paying bribes every step of the way.
“I think investors, too, will come up against the realities of Uzbekistan,” said a businessman from the Fergana valley.
For the moment, then, there are major questions hanging over the success of the planned economic zone.
“For the zone to function normally, the authorities will need to create as liberal an environment as possible,” said an observer in Tashkent. “But will they be able to do that under the current circumstances?”
(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service has resumed, covering Uzbekistan and Turkmenistan.)
