Baltic States – CIS, Investments, Transport

Taking into consideration richest of Uzbek soul with mineral resources, hydrocarbons, self-sufficiencies with energy resources, high-quality labor forces and well developed legislation base among the CIS countries, the Government, since gaining independence, starts to work on creation of Free Economic Zones in Uzbekistan.

As a result of mentioned activity Law “On Free Economic Zones” have been adopted in April 25, 1996.

Currently we are working on creation of legislation basis of operational management of FEZ, regulation of relationships and conditions for providing of guarantees and protection measures for the residents of FEZ. In the beginning of December 2008 (2 December) Decree of the President of the Republic of Uzbekistan, which establishes the basis for operational regulation and management of Free Industrial Economic Zone have been adopted.

The first Special Economic Zone is planning to be established in the form of Free Industrial Economic Zone (FIEZ) near the administrative center of Navoi Region of Uzbekistan.

Following are determined as a main directions of enterprises activity within the territory of FIEZ: production of wide spectrum of high-technological, competitive on international markets products by introducing of modern foreign equipment and technology, technological lines and modules, innovation decisions.

Decision to establishing of FIEZ in Navoi Region comes as a result of consideration of following objective prerequisites:

1) Industrial character of Navoi city, surrounded by well established of chemical, energy, mining and metallurgical and cement industries. Main economic brunches of Navoi Region formed enterprises of Navoi Mining and Metallurgical Combinat, JSC “NavoiAzot”, JV “Electrochemical Plant”, JSC “Kizilkumcement”, Navoi Thermoelectric power station – one of biggest in Uzbekistan. In total volume of industrial output of the country the share of industrial production of the region makes 10%. Relatively city has all necessary industrial and communication infrastructure as well as labor resources, which needs and has an opportunity for further development.

2) Transit, transport and logistic potential of Navoi city.

In 3,5 km. from Navoi city International airport is located and along with regular passengers and cargo flights of Uzbekistan Airways, now it is used by «Korean Air» и «Московия» (Russia). Currently, establishment of sub regional transport-distribution network and logistic center (Hub) is under development.

“E-40” international significance automobile road (highway) connecting Beijing and Paris goes near Navoi International airport.

Commercial use of Navoi airport in the form of “dry port” will provide a possibilities of processing 200 thousand tones of export-import cargoes annually. According statistics of State Rail Road Company of Uzbekistan “Uzbekistan temir yullari”, volume of transit cargoes in 2008 made up 8,6 mln.tones (increased by 6% to 2005). In he first half of 2007 this figure increased by 1.9% to the same period of 2006. Almost half of international transit cargoes accounts for railroad, located in 4 km. from Navoi airport.

Furthermore, railroad connections are started to be constructed near the airport, which in near future will connect the Navoi city with following railroads of international significance:

·        in North-West direction – Uchkuduk-Nukus-Volgograd with connection through Russia to European countries;

·        in East direction – Samarqand-Tashkent-Dustyk with connection to China and South-East Countries;

·        in South direction – Bukhara-Turkmenistan-Bandar Abbas with connection to the Middle East and Persian Gulf countries.

Also with launching of Guzar-Baisun-Kumkurgan railroad and its connection with Navoi city through Karshi-Termez railroad will provide an opportunity to directly switch with Afghanistan and other countries of Asian and Middle East regions.

3) Reach mineral resource opportunities of Navoi and bordering other regions.

Bukhara, Samarqand and Kashkadarya regions are reach with a huge deposits of mineral recourses, used for production of construction materials – marble, granite, limestone, metal deposits, raw cement, haydite and bricks (Samarqand region); natural gas deposits, graphite, facing stone, limestone, sand, needed for production of silicate, concrete and bricks (Bukhara region); oil deposits, natural gas, ore and non-ore deposits, used for production in ferrous metallurgy, porcelain stone, ceramic raw material, salt, bituminous clay and glauconite, facing stones and etc.

Kashkadarya region has perspective ore-bearing deposits of gold, wolfram, copper, zinc, lead, aluminum, antimony, stone coal, shale oil and  sulfur.

Alongside, it should be pointed out that close location of Navoi airport to the historic monuments of world civilization, allocated in Bukhara and Samarqand cities, become an additional stimulus factor of tourist segment development of the region along with industrial development.

Taking into consideration all above mentioned FIEZ will be allocated near Navoi and Malikrabat city on the territory of 500 Ha with possibility of its further expansion:

-         destination from Navoi Airport Cargo Terminal – 1.8 km;

-         destination to railroad network – 1.8 km;

-         destination from automobile road “E-40” – 0.8 km.;

-         destination from nearest electro station – 8 km.;

-         destination from nearest water station – 0.8km.;

-         destination from gas pipeline of high pressure “Karmana-Khazara” – 0.8km.

Terms of operation of «Navoi» Free Industrial-Economic Zone is 30 years with the possibility of further extension for additional period.

During operation period, within the territory of FIEZ special customs, monetary and fiscal, simplified procedure for entry, stay and departure, as well as obtaining permits for non-resident citizens of the Republic of Uzbekistan to carry out labor activity regimes are applied.

Effectiveness of special legal regime, including fiscal, monetary and customs, applies only to activities carried out by business entities registered by the Directorate of FIEZ exclusively on the territory of FIEZ.

Business entities registered in «Navoi» FIEZ shall be exempt from paying of land, property, profit, social infrastructure development taxes, as well as unified tax payment (for small businesses), compulsory contributions to the Republican Road Fund and Republican School Fund depending on the volume of invested foreign direct investment:

- in the amount from 3 to 10 million Euros – for 7 years;

- from 10 to 30 million Euros – for 10 years. Over the next 5 years the rates of profit and unified taxes payment shall be fixed at 50 percent level below current rates;

- more than 30 million Euros – for 15 years. Over the next 10 years the rates of profit and unified taxes payment shall be fixed at 50 percent level below current rates.

Above mentioned shows, that for creation of FIEZ in Uzbekistan on the basis of conducting international experience we try to carry out necessary work to make provision in order to attract foreign companies for establishment of their productions within FIEZ and its effective development.

As an approval we can say about raising interest to the project by a number of foreign companies, especially from Asian countries (“Korean Air”, “Jurong” (Singapore) and etc.), with whom Memorandums of cooperation have been signed. For example as our current partners we can indicate Korean Corporation for Industrial Development “KICOX”, organized in July 2008 visit of Korean companies to Navoi city.

At the same time it should be noted that, we have to make a complex of measures for practical realization of project and set up effective management by FIEZ in Navoi. Taking into consideration that this project is becoming our first experience in the field of establishing of FIEZ in Uzbekistan, we are open for cooperation with internationally-recognized foreign partners in the following directions of creation and management of FIEZ:

-         development of Regulations of FIEZ;

-         development of legislative documents, regulated of FIEZ activity;

-         FIEZ infrastructure planning;

-         attracting and selection of investors for allocation in FIEZ;

-         FIEZ management.

In this connection we consider that our partners should comply with following criteria:

·        Internationally recognized experience;

·        FIEZ projects, realized by Company in other countries;

·        Financial creditability;

·        Showing a real income from the project.