TODAY.AZ / Business

Azerbaijan, Uzbekistan: potential opportunities for cooperation

13 September 2018 [16:39] - TODAY.AZ

By Trend

Reforms designed to bring Uzbekistan to a new stage of development, prospects for the participation of this Central Asian country in transnational projects, opportunities for the development of bilateral relations between Baku and Tashkent - all these issues were raised in Trend's interview with Ambassador of Uzbekistan to Azerbaijan Sherzod Fayziyev.

Mr. Ambassador, first of all, allow to congratulate You and the entire fraternal Uzbek people regarding the 27th anniversary of the Independence Day of the Republic of Uzbekistan. What can you say about your country's achievements during the years of independent development?

Thanks for the congratulations. A sovereign state with a rich history and the greatest cultural heritage, huge production and intellectual potential, peaceful and hardworking people appeared on the world map twenty-seven years ago.

Uzbekistan has come a long way over the years of its independent development. We are proud of our achievements in the formation of national statehood, stable economic growth rates, consistent improvement of the living standards of the population, the growing prestige of the country at the international arena.

In order to radically improve the effectiveness of the reforms, to create conditions for the accelerated development of the state and society, for the implementation of priority areas of the modernization of the country and for the liberalization of all spheres of life, President of Uzbekistan Shavkat Mirziyoyev approved in early 2017 the Strategy of actions in five priority areas of development of the Republic of Uzbekistan for 2017-2021. The large-scale document included work on improving public administration and the judicial and legal systems, liberalizing and developing the economy, as well as the social sphere, strengthening inter-ethnic friendship and harmony.

The adoption of this document marked a qualitatively new approach to the system of strategic planning of prospects of public and social development of the country. We are confident that the consistent implementation of this document will further strengthen the foundations of sustainable and stable development of Uzbekistan.

How can you briefly assess the current level of relations between Uzbekistan and Azerbaijan and the dynamics of their development?

Uzbekistan is well aware of and sincerely sympathizes with Azerbaijan and its friendly people, with the impressive successes of the country achieved thanks to a balanced and pragmatic policy. The country is successfully implementing a course to strengthen the foundations of statehood, economic potential and prestige in the international arena. And of course, the role of the distinguished President of Azerbaijan Ilham Aliyev in all this is invaluable.

The strengthening of relations with Azerbaijan, a key state in the South Caucasus, remains one of the important and priority directions of Uzbekistan's foreign policy. Today we can state that the relations between the countries have been formed as close and brotherly. Undoubtedly, the establishment of close and trusting relations is based on deep historical roots, community and proximity of national traditions, language and culture.

It is gratifying to note that in recent years we have witnessed a qualitatively new stage in the development of bilateral cooperation. Thus, over the past time of 2018, our countries maintained active contacts in a wide range of areas. Among them we can mention the visits to Azerbaijan of the delegations of Uzbekistan led by first Deputy Chairman of Senate of Parliament of Uzbekistan Sadiq Safayev, Deputy Speaker of the Legislative Chamber of the Parliament Sarvar Otamuratov, Minister of Employment and Labor Relations Sherzod Kudbiyev, Defense Minister Abdusalom Azizov, Minister of Culture Bakhtiyor Sayfullaev, Interior Minister Pulat Babajanov and others.

I would also like to note with deep satisfaction the fact that, by analogy with the previous periods, the cultural and humanitarian aspect continues to be one of the important factors that make a significant contribution to the development and strengthening of friendly relations between our countries.

In particular, this year the representatives of Uzbekistan took part in many international events held in Azerbaijan in the field of culture, science, education and sports. As an example, I can mention the international conferences entitled as "Zahiriddin Muhammad Babur and Azerbaijani literature", "The issues of innovation in construction", the 5th international festival "World of Mugham", the festival-competition of young performers (under 20) of classical music from the countries of the Islamic world, the World Cup Competition in Rhythmic Gymnastics and many more.

In turn, during this period, Azerbaijan has sent its representatives to participate in a number of events held in Uzbekistan. Among them, the international conference dedicated to the life and work of the great Uzbek poet, statesman and thinker Alisher Navoi, international competition of academic, pop and traditional music "Istedod" can be mentioned.

At the same time, I would like to express my deep gratitude for the fact that Azerbaijan has decided to send a high-level delegation to participate in the first International Forum of Maqom Art, which was held on September 6-10 in the Uzbek city of Shakhrisabz.

To what extent does the current level of economic cooperation between the two countries correspond to the existing potential?

The deepening of trade, economic and investment ties is a priority of bilateral cooperation, and I would say the starting point for the promotion of all our other relations. As you know, the efforts of the international community are currently aimed at overcoming the consequences of the global financial and economic crisis. In this regard, the issues of determining a joint action program, strengthening cooperation between enterprises and companies of our states, maintaining and increasing the achieved rates of mutual trade are extremely relevant.

As part of these tasks, our countries are actively using opportunities of the joint intergovernmental commission for cooperation. So, to date, ten meetings have been held in this format. Preparations are under way for the eleventh meeting of the commission to be held in Tashkent. I am convinced that its results will give an additional impetus to the development of mutually beneficial cooperation between our countries in the field of trade, economic and investment exchange.

We also consider the establishment of relations between industrial enterprises and business circles of Uzbekistan and Azerbaijan to be an important direction. In this regard, it should be noted that the beginning of this year was marked by an important event, which, in our opinion, laid a solid foundation for building mutually beneficial ties between the business communities of the two countries.

In particular, in February 2018, the Azerbaijani delegation led by the President of the Confederation of Entrepreneurs’ (Employers’) Organizations of Azerbaijan Mammad Musayev visited Uzbekistan. During this visit, a business forum was organized with the participation of more than 20 representatives of large companies of Azerbaijan and more than 50 heads of enterprises of Uzbekistan, operating, in particular, in the fields of construction, trade, pharmaceuticals, production of packaging materials, printing, ICT. As a result of this business forum, an agreement on cooperation was signed between the Chamber of Commerce and Industry of Uzbekistan and Azerbaijan's Confederation.

It should be noted that this visit and the events held within this visit played an important role in our further work in the field of economic diplomacy. In particular, they were followed by a large number of mutual visits of representatives of business circles of Uzbekistan and Azerbaijan, following which the parties reached an agreement on the establishment of mutually beneficial cooperation in trade, economic and investment spheres. Due to this activity, a large increase in trade turnover between the countries was observed. In particular, in the first seven months of 2018, the volume of mutual trade increased by 129 percent compared to the same period last year.

Which areas of Uzbekistan's economy may be of interest to Azerbaijani investors? Is there any interest in establishing joint ventures?

Before answering this question, I would like to draw attention to the following statistics. There are more than 80 enterprises in Uzbekistan with the participation of Azerbaijani investments, including more than 70 joint ventures. They operate in such areas as trade, engineering, metalworking, finance, energy, services, food and light industry.

In turn, representative offices of the OJSC National Air Company “Uzbekistan Airways”, “Uzavtoprom” (“Uzavtosanoat”) JSC, which is the leading manufacturer of a wide range of passenger cars under the “Ravon” brand in Uzbekistan, as well as the “Artel” LLC company specializing in the production of high-quality and competitive electrical engineering products are functioning in Azerbaijan.

However, the above statistics on joint ventures and operating companies do not mirror the full potential of our countries. In this regard, we are working on the creation of new joint ventures focused on the production of various types of products, the solution of the issue of opening a Trading house of Uzbekistan in Azerbaijan is at the stage of completion.

We also consider investment cooperation as an equally promising area. Taking this opportunity, I would like to note that today in Uzbekistan, under the leadership of President Shavkat Mirziyoyev, special attention is paid to creating a favorable business environment for foreign investors interested in implementing their projects in our country. At the present stage, Uzbekistan has the most favorable conditions for investments or starting a business, I mean not only the steps taken to liberalize the economic sphere, but also the skills and hard work of the Uzbek people.

It is important in this context to also mention the creation of 17 free economic zones, as well as 47 industrial zones, which are considered drivers of the modern economy. The most favorable conditions for investors were created on their territory and production of textile, chemical, construction, furniture, food, electrical and other products in demand in the domestic and foreign markets was established.

It is gratifying to note that the conditions for doing business that are being formed in Uzbekistan attracted the attention of Azerbaijani business circles interested in establishing mutually beneficial relations with partners from Uzbekistan. In support of my statements I can say that presently, Azerbaijani entrepreneurs started practical implementation of projects in the fields of agriculture, construction, ICT, food and so on. I am confident that this trend will be further expanded in the near future.

You said that Uzbekistan created favorable climate for investors. Could you please elaborate on this? What privileges and preferences does Uzbekistan provide for entrepreneurs?

I can say that favorable investment climate, first of all, envisages the existence of economic conditions for capital. At the same time, the political situation in the country, the region, the social component is also important.

Only a democratic and legal state, where peace and stability, the rule of law is ensured, human rights are respected, sustainable development of all spheres of society’s life is observed, can provide guarantees for the preservation and augmentation of investments. Thus, not only foreign policy principles of a country, but also the vector of its domestic policy, are important for an investor.

The new reform strategy in Uzbekistan was the most important factor in increasing the inflow of foreign capital into the country’s economy and social sphere. Liberalization of the foreign exchange market and easing of visa policy became substantial incentives in attracting investments. Deepening tax and customs reforms led to significant reduction in various costs and taxes. Development of electronic administration and the single window system, simplification of the registration procedure of a company, reduction in the number of scheduled inspections and active work to ensure transparency of activity also yielded results.

As a result of the steps taken by Uzbekistan to expand and strengthen cooperation with foreign countries and international financial institutions, more than 200 international treaties were signed last year alone, agreements and contracts worth about $60 billion were signed in trade, economic and investment spheres.

In 2017, Uzbekistan entered the top 10 reforming countries in terms of creating the most favorable conditions for doing business in the World Bank’s "Doing Business" international report.

In the first half of 2018, Uzbekistan spent 41.2 billion soums of investments in fixed assets. Over 12 percent of this amount accounted for foreign direct investments and loans. The share of foreign loans under the guarantee of Uzbekistan was 8.8 percent.

In general, this year as part of investment and infrastructure programs it is envisaged to implement 2,600 projects at the expense of all sources of financing and to spend over $6.85 billion. Some $4.9 billion of this amount accounts for foreign investments, including $2.3 billion for loans from international financial institutions and $2.6 billion for direct investments.

On August 1, Uzbek President Shavkat Mirziyoyev signed a decree “On measures to dramatically improve investment climate in Uzbekistan,” which became another important step in improving the investment climate and caused wide positive response in business circles of foreign countries.

In accordance with the decree, starting from August 1, 2018, a bona fide investor and a business entity are compensated for property damage. This will take place in case if they suffered losses by trusting an administrative act of a public authority that was applied in their regard, relying on the legal force of which they used the property, concluded a deal or used the benefits and advantages provided.

The compensation is possible with the subsequent recognition of this act as invalid or its cancellation. The issue of cancellation or amendment of an administrative act of a public authority, in cases if it affects the legitimate interests of a bona fide investor and a business entity, is judicially examined, unless its preservation creates a threat to the public interest.

Starting from September 1, 2018, decisions on the seizure of land plots for state and public needs will be allowed only after an open discussion with interested parties whose land plots are planned to be seized, as well as assessing the benefits and costs. Demolition of residential, industrial premises and other structures belonging to individuals and legal entities, during the seizure of land plots will be allowed after full compensation of the market value of immovable property and losses caused to owners in connection with such seizure. A list of conditions under which the seizure of land plots for state and public needs will be allowed, was strictly defined.

Starting from October 1, 2018, a new mechanism has been introduced to provide land plots for carrying out investment activities, which provides for substantial increase in the long-term lease of non-agricultural land plots, the auction sale of the right to permanent ownership of land plots for the construction of real estate objects, which will guarantee business stability.

New benefits, as well as the imposition of personal responsibility on the heads of relevant government agencies dealing with improving the investment climate in Uzbekistan, will further stimulate the attraction of direct investments, strengthening investor confidence in consistency and public policy in this direction.

Azerbaijan implemented the Baku-Tbilisi-Kars (BTK) railway project jointly with Georgia and Turkey. Uzbekistan previously expressed interest in transportation of goods along this route. What are the plans of Uzbekistan to connect to the BTK railway at the moment?

Undoubtedly, this direction is in the focus of attention of our countries. Today, transportation routes from Central Asia through the Caspian Sea and further through the Caucasus are becoming particularly relevant. In this regard, the wide use of the Transcaucasian transport corridor for the transportation of increasing volumes of export-import cargo meets the interests of our states.

The BTK railway commissioned in late October 2017, as well as the creation of infrastructure in the Baku International Sea Trade Port in the Alyat settlement, open up good opportunities for implementing the huge transit, transport and communication potential of our countries and regions.

I would also like to draw attention to the fact that at the solemn ceremony of opening the BTK railway, the delegation of Uzbekistan was headed by Prime Minister Abdulla Aripov. This, in turn, is a convincing indicator that the Uzbek side is interested in actively using and increasing the volume of transportation of its foreign trade cargoes along this corridor.

In turn, we hope that Azerbaijan is also interested in using the potential of Uzbekistan, which is situated in the heart of Central Asia and has enormous economic and strategic capabilities. In this regard, I would like to note that the Navoi Free Economic Zone also creates a good basis for deepening cooperation in the transport and communication sphere.

Located at the important intersection of road, rail and air routes, the Navoi International Airport connects the countries of Southeast Asia with Central and South Asia, the Middle East, and also the states of the European continent. Joint work in the implementation of intercontinental air transportation in the future will be particularly beneficial for Uzbekistan and Azerbaijan.

I would like to take this opportunity and say that this month an international conference titled “Central Asia in the system of international transport corridors: strategic perspectives and unrealized opportunities” will be held in Tashkent. We are grateful that the representatives of Azerbaijan accepted the invitation to participate in this event. I am confident that this trip will also allow our countries to discuss ways to further promote mutually beneficial relations in the field of transport.

As is known, Uzbekistan has great potential in tourism sphere and special attention has been recently paid in Uzbekistan to the development of this sector of the economy. Care to comment? How do you assess the prospects for the development of bilateral relations in the tourism sphere?

Indeed, Uzbekistan has tremendous potential in the tourism sphere. Presently, there are more than 7,300 objects of cultural heritage in the country, including more than 4,200 objects of archaeological and more than 2,000 objects of architectural heritage. More than 500 of them are included in the tourist routes. Eight protected areas, three national nature reserves, six state natural monuments and 11 reserves are also of great tourist potential.

As part of implementation of this potential, Uzbekistan in recent years has created powerful regulatory and legal framework aimed at carrying out large-scale work to develop the sphere of domestic tourism. For example, in accordance with the presidential decree “On Measures to Ensure Accelerated Development of Tourism Industry of Uzbekistan” dated December 2, 2016 tourism is defined as a strategic branch of our country’s economy. The Program of Priority Measures for the Development of Tourism for 2018-2019 was approved by the presidential decree dated August 16, 2017.

The adoption of four important documents alone regarding this field by the Uzbek president in February this year is the embodiment of the high attention paid by the state to the development of tourism. These documents set the priority tasks for solving the problems accumulated in the industry, increasing the tourist potential, providing many benefits and preferences for the further development of domestic tourism.

As a result of the implementation of the above-mentioned instructions, the range and scale of services provided by national tourism companies has increased significantly, and their total number is currently around 600. Bukhara, Samarkand, Khiva and Shakhrisabz cities were declared safe tourism zones, and the “Charvak” free tourist area was established in the Tashkent region. Along with this, active and purposeful work is carried out in Uzbekistan to promote pilgrimage tourism.

I would also like to emphasize that the following decisions of the government of Uzbekistan had big resonance among the international community: since February 10, 2018, a visa-free regime for 30 days has been established for citizens of Israel, Indonesia, South Korea, Malaysia, Singapore, Turkey and Japan, the procedure for issuing visas to citizens of 39 countries has been simplified, and since July this year, e-visas have been introduced.

Since July 15, 2018, a new procedure of visa-free transit entry, temporary stay and departure from Uzbekistan has been introduced. In particular, in accordance with the presidential decree, a new procedure of visa-free entry, temporary stay and departure from Uzbekistan have been established through the checkpoints for citizens of 101 countries traveling through the territory of Uzbekistan at international airports of the country for a period of not more than five days if they have an air ticket to the third country of the air carrier.

Regarding your question regarding the interaction of Uzbekistan and Azerbaijan in the sphere of tourism, I can say that this doesn’t remain out of sight of our countries. Rich cultural and historical heritage of Uzbekistan and Azerbaijan, including the opportunities of health resorts in your country and historical sights of Uzbekistan, create a favorable basis for activating cooperation of the parties in the field of tourism.

Presently, tourist companies establish partnership ties, including in the implementation of projects for the organization of tourist trips. In this regard, I hope that representatives of fraternal Azerbaijan will soon be among the leaders in terms of visits to sunny and hospitable Uzbekistan.

Taking advantage of this opportunity, I would like to say that on October 3-5, 2018, the capital of Uzbekistan will host the 24th Tashkent International Tourism Fair (TITF) 2018 - Tourism on the Silk Road”. This event is held with the official support of the World Tourism Organization.

By inviting the representatives of the tourism companies of Azerbaijan to participate in the upcoming fair, I am confident that this event will create good platform for discussing ways of further building up ties between our countries in the sphere of tourism.

Last question related to regional geopolitics. Uzbekistan has long been one of the key countries of the Great Silk Road. How does the country see its participation in the “One Belt, One Road” initiative?

Uzbekistan supports the One Belt, One Road Initiative and is interested in more active participation in it. It is well known that this initiative, first of all, is aimed at developing trade and economic relations, the formation of new transport routes linking China to more than 65 countries, which now account for 60 percent of the world’s population and 30 percent of the world GDP.

In May 2017 in Beijing, President of Uzbekistan Shavkat Mirziyoyev, speaking at the Belt and Road Forum for International Cooperation, emphasized that it is relevant for Central Asia to use this project.

Firstly, this project includes implementation of major projects in the field of transport, trade, investments, energy and high technologies in Central Asia, and secondly, the development of a comprehensive action program for cooperation in the creation of transport and logistics routes linking Central Asia through China and Russia with the markets of South, Southeast Asia and European countries.

The construction and launching of the Uzbekistan-Kyrgyzstan-China railway can become one of the major transport projects as part of the One Belt, One Road Initiative. Negotiations of all interested parties on the implementation of this important regional project have started.

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