#1Uzbekistan's journey of reforms Major reforms in Uzbekistan since 2017. What does this transformation mean for business environment? September, 2018#2Uzbekistan is the largest market in Central Asia; stable and fast growing Uzbekistan map Key information 258K Nukus 51K Khiva (UNESCO) Comparable to Spain or California Zarafshan (gold and copper mines) 12K Gazli (500B sq. km gas field) 51K Largest in the region Area 448,978 sq. km Population 33M (72% under 40) GDP USD 47,8 billion USD 222,6 billion (PPP) 2.3M Tashkent 475K Namangan 333K Andijon 65K Asaka 504K Samarkand (UNESCO) 273K Bukhara (UNESCO) 100K Shahrisabz (UNESCO) (Car production 250K) Capital Tashkent (2.3M official data) Urbanization -50% Official currency "Sum" - UZS (UZS/USD = 7900) Languages Uzbek (official), Russian (commonly used) Political system Presidential multi-party democratic republic XX size of population#3Over the last twenty months, a large-scale transformation and liberalization of the economy has been underway in Uzbekistan December 2016 February 2017 April 2017 September 2017 2018 and beyond Election of Shavkat Mirziyoyev as President In September 2016, the parliament elected Mr. Mirziyoyev as the interim president On 4 December 2016, he won a presidential election, receiving 88.6% of the vote Uzbekistan Development Strategy for 2017-2021 The strategy outlines the government political, economic, and social priorities, including measures to liberalize the economy Creation of a State Committee for Investments The Committee was created to unlock the country's investment potential, through the creation of favorable conditions for investors and the implementation of major reforms Currency exchange liberalization The authorities linked the official exchange rate to the curb market rate and implemented a floating exchange rate, with free market exchange Further implementation of numerous reforms Green channel in airports Simplification of the tax system, including the implementation of tax monitoring Two-year moratorium on business inspections Many others... Key to reforms#4The Development Strategy for 2017-2021 (adopted in Feb '17) gave start of 5 priority reforms, including one for investors It is envisaged that a separate state program for the implementation of initiatives in 5 reform areas will be approved yearly Development of state governance Rule of law & legal reforms Development and liberalization of economy Development of social sphere The area, in which priority is given to attracting investments Security, religious tolerance and interethnic harmony, foreign policy#5In 2017-2018, the country managed to make notable progress in the chosen areas 29 laws were adopted Development of state governance 29 3 ...... 420 decrees and resolutions of the President of the Republic of Uzbekistan were adopted ៩ ན Rule of law & legal reforms 14 Liberalization 5 of economy Social sector 2 Security 5 Source: EBRD, State Investment Committee 120 decrees 50 22 9 in the state society development 54 27 22 in judicial and legal system reforms 54 in development and liberalization of the economy 27 in social development 4 in security, religious tolerance and the implementation of constructive foreign policy#6Uzbekistan is moving ahead with reforms focusing on the first priority issues identified by the business community 100 $ 84% Currency regulation Key directions for reforms Legal environment 45% Customs . ⚫ Liberalization of the foreign exchange market Further steps to liberalize monetary policy . regulation • • Improvement of legal framework in various areas of law: e.g. land allocation; stock exchange transformation; systematization of control procedures; enforcement of property rights; strengthening of fair competition; etc. Unification and decrease of customs tariffs Simplification of customs administration processes Status Tax system • 35% Reform of State governance Share of investors citing the barrier as critical . • Reduction of tax burden Elimination of complex and unfair procedures Efficiency improvement for state bodies to eliminate inconsistencies; bureaucracy Implementation of eGov system (based on interviews with internal and external investors) Source: investor interviews Implementation progress#7One of the main milestones of economic reforms was the liberalization of the currency exchange regulations Decree of the President dated 2 September 2017 Key elements of the reform The impact of reforms $€ Free purchase and sale of foreign currency by individuals | $ and legal entities Removal of requirements for compulsory sale of foreign currency for exporters % Commercial banks are granted the right to determine commissions on currency exchange for export revenues Equal competitive conditions for all players by reduction of administrative interference in the economy II Strengthening of regional and international economic cooperation III = IV Improvement of business activity and investment climate Attraction of foreign direct investments (FDIs)#8A new system of land allocation & construction regulations is among the key elements of the legal & rule of law reform Key elements of the reform In the course of discussion with the government bodies and agencies The impact of reforms The implementation of a new simplified & quicker process for construction approvals Creation of a new system of land allocation via electronic auctions Updating construction regulations via adoption of Construction Codes and Regulations based on Eurocodes (following example of Kazakhstan) | || III = IV Reducing the time taken by the process for land allotment and construction approvals by 30-40% Providing investors with the information about the list of available land lots, their full effective cost and relevant documentation Ensuring the fair compensation to the state budget for use of land Solving the issues related to obsolete construction regulations, which hinder the use of modern construction technologies#9Customs reform reduces the tariff burden while simplifying and accelerating administrative procedures Key elements of the reform 闫 (80 Reviewing the rates of customs duties with the aim to reduce them Creating a unified approach to the setting the rates of and levying customs charges Introduction of a risk management systems at customs bodies Simplifying and accelerating customs processes (e.g. customs valuation, border crossing, etc.) Reduction of the frequency of and time spent on the issuance of the requested authorization documents The impact of reforms | Improvement of customs tariff regulation, incl. reducing the likelihood of corruption || Intensification of negotiations with the WTO standards and best practices III = IV Reduction of time taken by paperwork and procedural formalities by 3-5 times Decreasing the costs of customs procedures by 30-70%#10State governance reform improves the coherence of the work of state bodies and reduces pressures on business Key elements of the reform Improvement of institutional, 停 III Decree of the President dated 09/08/2017 The impact of reforms organizational and legal framework for government bodies and authorities Clear specification of tasks and responsibilities of executive bodies | In total, 46 governemnt bodies were reshaped or merged; 6 abolished Reduction of administrative influence on the economy & investors Improvement of overal governance and interaction of executive authorities Introduction of modern forms of strategic planning, innovative ideas, developments and technologies Formation of an effective system of professional civil services (e.g. eGov) III Structures, tasks and functions revised for Office of the President, the Cabinet of Ministers, 20+ Ministries Better coordination between state bodies and local administrations#11Main Takeaways from the Presidential Decree on "Improvement of the investment climate" Decree of the President dated 01/08/2018 Decree point Details Relaxation of visa requirements for foreign investors and their employees Foreign investors can also be granted the status of an Honored Citizen Expansion of regional authorities to provide land for foreign investors Regional authorities can now effect a contract for investments up to $10M and provide land of up to 5000 sq m Loosening of legal requirements for enterprises with foreign shareholders Minimum shareholders equity lowered from 600M som to 400M som (~$51k) Minimum level of foreign share for foreign investment company status is lowered to 15%#12State Committee of Uzbekistan for Investments ensures "front to end" support for current and potential investors Preparation of investment proposals & business cases • Search for, study and evaluation of the project business cases • Identification of funding sources for projects • Preparation of investment proposals for investors • Attracting foreign investors Finding investors for specific strategic projects Working with projects initiated by investors Engaging international financial organizations Promoting investment activity . · Supporting foreign investors Assisting and supporting investors until the completion of their projects Collecting feedback and responding to it ("Voice of investors") Improving the investment climate in the relevant areas according to the "Voice of investors"#13Our target vision is to ensure seamless customer journey for investors while they do business in Uzbekistan Let's get familiar with the country... If you have seen an "Invest in Uzbekistan" advertisement in the Financial Times. Googled it! . Read some information on Uzbekistan and got interested in new opportunities . Found contacts of the State Committee for Investments in Uzbekistan ...and finally obtain necessary approvals and kick-off a project! Hired a project team Quickly completed required documents jointly with the State Committee for Investments Started construction, received support services & examine the facts, evaluate the potential of industries... • • Filled out the application form on the portal of the State Committee for Investments Examined the detailed information on different industry sectors and their benefits on the website of the Committee • Reviewed success stories ... then get acquainted with investment proposals... • • • Received additional information from the State Committee for Investments Chose the most attractive projects or suggest yours Examined the available support and co-financing opportunities .fly to Uzbekistan to explore everything on the spot, and to sign off an agreement. • • • Bought tickets to Tashkent Met with a personal manager from the State Committee for Investments • Visited potential sites Held negotiations and signed a memorandum of cooperation