Top 3 spheres to do business
Renewable energy sources
Currently, the problems of energy are becoming urgent all over the world. For this reason, countries are looking for and applying alternative ways to meet their energy needs. Today the share of “green” sources in the global energy sector has reached nearly 30%, and in some European countries exceeded 80-90%.
In particular, Uzbekistan is also actively working in this direction. In the last three years, the energy sector has attracted direct investments of 8 billion dollars. Solar power plants have already been launched in Navoi and Samarkand regions. Masdar, a world leader in renewable energy and sustainable urban development, won a tender to build a solar photovoltaic power plant (SPPP), one of the first two private renewable energy projects in Uzbekistan.
The Tutly solar power plant, located about 100 kilometers west of the city of Samarkand, was developed entirely by Total Eren.
Many new projects are being initiated, for example, 18 more such plants are being built, which will result in a 50% increase in electricity generation for household needs. A decree of the head of state adopted a large-scale program to accelerate the implementation of renewable energy sources in the country. In particular, “Yashil Energy” company was organized and initial financing in the amount of 10 million dollars was allocated to it. According to the program, it is planned to install solar panels with a total capacity of 1 thousand 700 MW at enterprises, social facilities, and homes this year.
Saudi Arabia’s “ACWA Power” will build two new solar power plants in Uzbekistan. The agreements provide for the launch of:
- A 400 MW solar photovoltaic power plant (SPPP) and a 400 MW energy storage system in the Tashkent region;
- SPPP with a capacity of 1,000 MW and an energy storage system with a capacity of 400 MW in the Samarkand region;
- 400 MW energy storage systems in the Bukhara region.
The projects also provide for the construction of high-voltage power lines. The projects will reportedly attract $2.5 billion in investments.
To reduce the burden on the power system, the government will incentivize entrepreneurs who use renewable energy installations. Not only benefits are being added, but also responsibilities. This is stipulated by Presidential Decree №57 “On Measures to Accelerate Implementation of Renewable Energy Sources and Energy Saving Technologies in 2023”.
Textile industry
Today, Uzbekistan’s textile and garment industry is one of the economy’s fastest-growing sectors, greatly facilitated by its raw material base and the ever-growing demand for the products. The main focus of production is shifting from raw materials, such as cotton yarn, to value-added products in the production chain.
On March 1, 2022, the International Labor Organization recognized that Uzbekistan was able to eliminate forced and child labor from the cotton production cycle in 2021 and lifted the boycott on Uzbek cotton. Abolishing the boycott will facilitate the process of cooperation with international companies, including the process of attracting foreign direct investment into the country. Cooperation on this issue will ensure sustainable economic growth and increase textile exports.
In the period from 2016 to 2020, 288 projects worth $2.3 billion were implemented in the regions. More than 8 thousand enterprises operate in the industry. If the volume of production by enterprises in 2016 amounted to 12.6 trillion Uzbek soums, then already in 2021 – 51.7 trillion soums or 7% of GDP. Employment in the industry was about half a million people, more than doubling compared to 2016 when the employment was less than 200 thousand people. The share of textile production in the processing industry grew from 12 percent in 2020 to 13.7 percent in 2021. The physical volume of products produced for 2018-2021 increased by 47%. Apparel production amounted to 13.284 trillion soums or 2% of the country’s GDP. If we combine the textile and apparel production figures, they contribute 9% of Uzbekistan’s GDP.
In January-September 2019, exports of textile products amounted to 174.9 million USD and increased by 21.4% compared to the same period in 2018, reaching 8.6% of the total volume. Cotton yarn (56.3%) and ready-made knitted goods and clothing (23.1%) accounted for the main share in the structure of textile exports. Since the beginning of the year, more than 384 types of textile products have been exported to 56 countries, and the number of exporting enterprises amounted to more than 780, 120 new enterprises were involved in export activities.
As a result of practical work to diversify the country’s textile industry and stimulate finished product exports, the country’s potential in this field is growing. The Russian Federation ($443.0 million – 37.7%), China ($316.7 million – 27.0%), and Turkey ($131.2 million – 11.2%) account for the largest share of textile exports.
Food production
Processing and producing finished products with high added value is highly profitable. Agriculture is one of the key sectors of Uzbekistan’s economy. Land used for agricultural production occupies 45% of the territory, and about 50% of the population lives in rural areas. Processing and producing finished products with high added value is highly profitable.
Together with water and forestry, the sector employs 3.6 million people (27% of employed in the economy as a whole) and 18% of GDP. The export of agricultural products brings about 20-25% of total export revenues to Uzbekistan.
The volume of agricultural production for 20 years has increased almost 3 times, amounting to 24 million tons of fruits and vegetables, of which 11.3 million tons of vegetables, 3.1 million tons of fruits, 1.7 million tons of grapes, and 2.1 million tons of melons. In addition, the country has more than 12 million heads of cattle, more than 20 million heads of small ruminants, and about 72 million birds, and produces more than 2.4 million tons of meat, more than 10 million tons of milk, 37 thousand tons of wool and more than 7 billion eggs annually.
Uzbekistan is a producer of about one hundred types of fruit and vegetable crops, of which 70 types are exported. Uzbekistan ranks third in persimmon exports, fourth in fresh and dried apricots and raisins exports, fifth in prunes exports, and tenth in exports of grapes. In 2018, Uzbekistan moved from fifth to fourth place in cherry exports, ahead of Spain.
In Uzbekistan, there are the following factors that contribute to the development of fruit and vegetable production:
- low cost of energy resources and cost of production;
- environmental friendliness;
- excellent indicators of the content of useful substances;
- access to the largest world markets.
In addition to the population growth, including the urban population, its purchasing power, the growth of retail trade in Uzbekistan, the accessibility of the markets of neighboring countries can be considered as the main growth factors in the industry. Thus, if the domestic market of Uzbekistan is composed of 35 million people population, the market of the CIS countries available within the free trade zone is 300 million people.
At present, to develop agriculture, the government is taking measures to modernize and diversify agriculture. Attracting foreign investment plays an important role in the implementation of the above-mentioned measures.
Attracting investment in agriculture is done in three ways, such as attracting government-guaranteed investment, foreign direct investment, and attraction of gratuitous technical assistance funds.
At present, Uzbekistan is pursuing a policy of further agriculture diversification, including:
- Increasing the sown area of horticultural products by reducing more than 135,000 hectares of land under cotton and grain crops;
- Development of farming by encouraging diversified activities;
- Cultivation of non-traditional crops (soybeans, saffron, pepper, medicinal herbs, etc.);
- Creation of clusters for the effective development of agriculture.