Uzbekistan-Baltics: as trade grows

By Elier Ganiev, Uzbekistan Minister of External Economic Relations, co-chairman of the Lithuanian-Uzbek inter-parliamentary commission

The building of the Uzbekistan Ministry of External Economic Relations

I have great pleasure in addressing you on the pages of this great edition o the eve of an official visit to Lithuania by the president of the Republic of Uzbekistan, Islam Karimov, and tell you in short about the conditions and prospects of cooperation between Uzbekistan and the Baltic states, firstly in the economic sphere.

Practically right after independence proclamation in 1991 Uzbekistan acknowledged the independence of the three Baltic states of Estonia, Latvia and Lithuania, and diplomatic relations between our countries were established in the same year. Today Uzbekistan cooperation with the three Baltic states has successfully developed on a mutually beneficial basis in practically all sectors.

I want to emphasize that the visit of the Uzbekistan president Islam Karimov to Latvia and Lithuania in 1995, the visit of the Latvian president Guntis Ulmanis to Uzbekistan in May 1996, and the visit of the Lithuanian president Algirdas Brazauskas to Uzbekistan at February 1997 have brightly demonstrated the mutual interest of all parties in the development of all-rounded cooperation.

Delegation visits of official and business circles from the Baltic states to Uzbekistan are carried out on regular basis, representatives of our republic also often visit the Baltic states. A student exchange program has recently been initiated, as have other different forms of so called public diplomacy.

By the force of its geographical location, the production and research potential of the Baltic states leads for development of cooperation with which Uzbekistan considered as one of the priority directions in its foreign economic policy.

The emphasis of Uzbekistan on the Baltic states is confirmed by principles of basic agreements on trade and economic cooperation, signed with each country of the region. The specified agreements on bilateral trade between our countries have also established most-favored nation treatment.

The legal base is formed between Uzbekistan and Baltic states, creating the necessary conditions for cooperation development between business circles. Important agreements are comprised between Lithuania and Latvia in the field of transport, investment, taxation, customs, tourism and the fight against crime.

The Uzbek-Latvian intergovernmental commission on trade-economic and research cooperation has been created and is successfully operating; an agreement has been reached on the creation of the Uzbek-Lithuanian intergovernmental commission on trade-economic cooperation, for which the first meeting is planned to be conducted in Vilnius in the near future.

The positive trend of growing mutual trade volumes exists between our countries over the last years. So, for example, comparing today to 1994, the trade turnover of Uzbekistan with Latvia has grown nearly 8 times, with Lithuania around 3 times, and with Estonia 15 times.

The main items of export from Uzbekistan to the Baltic states include a cotton-fibers, mineral fuel, products of food and chemical industries, textiles and more.

From the Baltic countries we import basically sugar and confectionery, milk products, furniture, different types of equipment, consumer goods and others.

At the same time it is necessary to note that existing amounts and the current structure of  trade does not correspond to the potential of our countries. In this connection the Uzbek side is interested in increasing the volumes and diversifying the structure of its exports to the Baltic states. Uzbekistan companies are at present realizing the broad nomenclature of export goods, which could find demand for the markets of the Baltic region.

Speaking about investment cooperation, I want to note that Uzbekistan is interested in the production of products with a high degree of conversion. So we want to see more active participation of Baltic companies in the realization of investment projects in such areas, as electronics, light industries, pharmaceutical and food industries, the production of building materials and consumer goods, transport infrastructure and telecommunications, public health and more.

Hereby Uzbekistan could become the supporting point for moving the products of joint-ventures to the quickly developing markets of Central Asia and the CIS, with which we have a mode for free trade. For this sort of joint production we are ready to create the most favorable conditions.

It must be noted that in Uzbekistan great attention has been focused for the steady improvement of the investment climate, making favorable conditions for foreign investors. First of all, political stability is provided in the country, allowing foreign investor to realize long-term investment plans in Uzbekistan, a favorable investment climate has been created. A special system of privileges and stimulus has been designed, the main distinctive feature of which is its aim at stimulating foreign investment in the production sphere and especially in sectors and production lines possessing big export potential.

At present over 60 enterprises with Baltic investor participation operate in the Republic of Uzbekistan, eight of these being one-hundred-percent foreign funded.

I would thus specifically like to note such joint-ventures as the Uzbek-Lithuanian Bravo-Sut (dairy processing), Uzbek-Latvian UzBaltTrans (cargo forwarding facilities) and others.

At the same time cooperation between our countries in the investment sphere also has a big unused potential. The Republic of Uzbekistan is a country with a high degree of investment capacity in its economy. At present the practice of realizing large multinational consolidated investments is increasing. Already formed relationships between our countries in the world also for allow uniting forces in realizing investment projects by attracting investment from third countries and international financial organizations.

The most perspective, in our point of view, would be projects in the field of food industry and processing of agricultural production, chemical, textile and electronics industries, production of building materials, furniture and consumer goods, pharmaceuticals. Thus the most acceptable form of cooperation would be organizing small and medium sized join-ventures.

For Uzbekistan there is interest to study the Baltic state experience and cooperation development in the field of privatization of its agricultural system, adjustment to small-scale agricultural commodity production, leading methods in growing agricultural goods and cattle-breeding development.

In particular, the Uzbek side is interested in the assistance of realizing programs on the development of cattle-breeding in the northern region of the country by means of delivering pure-bred cattle, as well as modern technologies of breeding, equipment for meat and milk production.

Participation in the process of privatization for industrial enterprises and commercial banks of Uzbekistan can become another perspective direction to the extent of our cooperation.

The list of perspective directions for research cooperation and the establishment of scientific schools between Uzbekistan and the Baltic states include also medicine, pharmacology, information and computer technologies, mining and processing of mineral and raw material resources.

Priority - transport

The transport sector is one of the most significant in relations between Uzbekistan and the Baltic states. The suitable geographical location of Baltic ports and the possibility of navigation in winter allows realizing the transportation of Uzbek cargo to many countries of Northern Europe and the Americas the whole year round. The development of a clearly working transit corridor with economic profitable estimation on cargo transportation corresponds to the interests of Uzbek transport companies. On the other hand, the loading of Baltic transport systems with additional cargo volumes would also be profitable for the Baltic states.

The existing practice, as well as rising export capacities for Uzbekistan predetermine the interest in the organization and development of transport routes to Northern Europe and Scandinavian countries, using seaports (Klaipeda, Riga, Ventspils, Liepaja, Muuga) and terminals, on the conditions that profitable tariffs are granted for ports, transport and other facilities.

At present Uzbek air companies with their colleagues from Latvia and Lithuania are considering the possibility of opening a direct air connection between our countries that to a considerable extent would promote the intensification of trade-economic cooperation and increase the mutual flow of tourists and businessmen.

As a member of different delegations I have repeatedly visited the Baltic states and always noted the amiability and friendliness of people living here. But particularly I would like to note my valid attitude to local businessman, who personify the best traditions in business. It is pleasant to cooperate with such partners, and we intend to assist the expansion of our cooperation in any way possible.

Uzbekistan is located in a strategic important region, in the very center of transport and energy systems in Central Asia. The republic disposes a unique potential for natural-raw materials, which is valued by foreign experts to around 3. 3 billion US dollars. Besides this, Uzbekistan possesses significant industrial potential. The country produces modern planes, cars and farming machinery, there are highly developed chemical, food, textile and electronic industries, metallurgy and energy. Uzbekistan with its 25 million population is also one of the most populated countries of Central Asia that makes it the largest trade partner in the region. The enormous history and cultural heritage of Uzbekistan, which is located on route of the Silk Road, also is of great interest for foreign guests, certainly for the admiration of ancient cities Samarkand, Buhara and Hiva.

During independence years great work was done in the Republic of Uzbekistan on the formation of a sovereign state: state independence was sealed in its constitution, while the country's political, social and economic situation is stabilized.

The economy of Uzbekistan saw the smallest decline amongst the republics of the former Soviet Union: statistics shows that the fall in GDP extended to only 14% between 1992 and 1996 while o average in the CIS countries this factor was on 44%.

The positive trends in moving forces of macroeconomic development and indicators of financial stability for Uzbekistan in the last five years have gained in stable nature: since 1996 economic growth has been recorded at a rate of 4 - 4.5% annually. This is an indicator for achievement of a real positive result in decisions made for the tasks of reshaping the economy and ensuring favorable macroeconomic conditions for the further economic growth and realization of structured transformations.