Uzbekistan Business & Economy - The Times Of Central Asia

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Tajikistan and Uzbekistan Sign Allied Relations Treaty

On April 18, Shavkat Mirziyoyev, President of Uzbekistan met Emomali Rahmon, President of Tajikistan in Dushanbe, where the two leaders signed a Treaty on Allied Relations between their countries. Referring to Tajikistan as Uzbekistan’s closest, most reliable, and time-tested strategic partner, Mirziyoyev announced, “The fraternal Uzbek and Tajik peoples are inextricably linked by strong bonds of centuries-old friendship. We are brought together by common history, cultural and spiritual values, traditions, and customs.” He went on to emphasize the enormous significance of the Treaty on Allied Relations saying, “With this step, we confirmed our strong mutual commitment to an irreversible course towards deepening the multifaceted Uzbek-Tajik strategic partnership and alliance. Without any exaggeration, this important document will mark a new historical milestone in bilateral relations.” Adding that the Treaty takes Tajik-Uzbek relations to a qualitatively new level, President Rahmon stated, “This document will also become an important factor in strengthening peace and stability in our region – Central Asia” On the eve of Mirziyoyev’s visit, a Tajik-Uzbek business forum resulted in a solid portfolio of new cooperation projects and trade contracts in mechanical engineering, electrical engineering, energy, mining, agricultural, textile and pharmaceuticals industries. During the Tajik-Uzbek talks it was reported that in recent years, bilateral trade turnover has increased 40-fold and the number of joint ventures has grown 15-fold. Tajikistan and Uzbekistan have now raised the bar by setting a target to increase trade turnover to $2 billion by expanding the exchange of supplies and launching cross-border trade zones.

Central Asia Uzbekistan International Affairs Business & Economy Uzbekistan Business & Economy

Uzbekistan Planning to Abandon State Regulation of Coal Prices

A decision to end Uzbekistan's price caps on coal has been made against the background of rising costs for electricity. To date, hard coal in the country is a social commodity, which is sold to the population at fixed prices. Currently, coal is sold under direct contracts to the population, state organizations and thermal power plants, and because it's included in the list of socially important goods, its price is regulated by the state. Wholesale and retail prices for coal are considered and approved by the Interdepartmental Commission on Tariffs at least once a year (valid through June 1). Retail coal is sold to the population through coal warehouses run by the state company "Kumir ta'minot". The Ministry of Energy, together with other agencies, has a mandate to make proposals for the formulation of wholesale and retail prices "based on market principles" within a month. In 2023 Uzbekistan's coal production rose to 6.19 million tons, up 15.5% from the previous year. However, imports also increased -- 3.1 million tons were purchased from Kazakhstan alone. At the beginning of this year, Uzbek president Shavkat Mirziyoyev instructed domestic mining companies to increase coal production by 22%, taking into account the needs of the population, social sphere and industries. According to experts, the potential of the coal industry is not being properly utilized. At the same time, coal combustion is the main air pollutant in Uzbekistan, especially in Tashkent, which has recently taken a leading position on the list of cities with the worst air quality. During the fall and winter period, greenhouses on the outskirts and industrial enterprises of the Uzbek capital massively use coal and fuel oil as heating and power generation fuel. This has led to a sharp deterioration of air quality indicators and an increase in respiratory diseases among citizens.

Central Asia Uzbekistan Local Politics Uzbekistan Business & Economy Uzbekistan Local Politics

Uzbekistan to Raise Energy Prices for First Time in Five Years

Electricity and natural gas tariffs in Uzbekistan will increase from May 1, and social consumption quotas will also be established. The price increase will be the first since August 2019. The quota for electricity use was defined up to 200 kWh per month, for gas -- from March to October -- up to 100 cubic meters, and from November to February, up to 500 cubic meters. The authorities attribute the price increase to inflation, which has cumulatively reached 66% over the past five years. At the same time, most energy companies are suffering severe losses, with state company JSC Thermal Power Plants reporting losses of 1.6 trillion sum ($125 million). The Uzbek government has announced assistance to the vulnerable in the form of raising the official poverty line, pensions and allowances. "About $80 million has been allocated from the state budget to support low-income families. These funds have clear sources and will be allocated in a timely manner and without any delays," Economy and Finance Ministry spokesman Khurshed Mustafayev said.

Central Asia Uzbekistan Uzbekistan Business & Economy Business & Economy Uzbekistan International Affairs

Uzbekistan Considers Hosting Relocated Ukrainian Enterprises

Representatives of Uzbek and Ukrainian businesses have discussed the relocation of certain Ukrainian production enterprises to Uzbekistan. The meeting was held in Kyiv as part of a business council established in 2021. Heads of state bodies and businessmen -- including the founder of the korzinka.uz supermarket chain and co-founder of Newmax Technologies, Zafar Hashimov -- participated in the meeting to offer their perspectives on Ukrainian-Uzbek economic ties. Since the beginning of Russia's attack on Ukraine in February 2022 the countries' bilateral trade turnover has significantly decreased -- in 2023 it amounted to $320 million, down from $747 million in 2021. One of the issues discussed was the customs value of textile products exported from Uzbekistan to Ukraine. An important aspect of the discussion were proposals to transfer to Uzbekistan some Ukrainian production enterprises affected by military actions -- as well as to expand cooperation in the creative economy. Several Ukrainian investment projects are already being implemented in Uzbekistan. The pharmaceutical company Yuria-Pharm acquired the Reka-Myod enterprise in 2023. Another pharmaceutical company, Lekhim, entered the Uzbek market in 2021 and built a large production complex that opened in 2023.

Central Asia Uzbekistan Uzbekistan Business & Economy

Challenges Facing Uzbekistan’s Textile Industry

On April 16, President Shavkat Mirziyoyev chaired a government meeting on increasing exports and investments in Uzbekistan’s textile industry which currently comprises over 6,000 enterprises and has a workforce of 570,000. Due to investments and new technologies, productivity has increased 4.2-fold over the past seven years. Last year, the manufacture of textiles, clothing and knitwear was valued at $8.2 billion and exports amounted to $3.1 billion. However, the share of products with high added value in the export of finished goods remains low. Almost 80% of all exports are destined for traditional markets, while exports to Europe fall below expectations. This is largely because only 175 Uzbek enterprises are equipped with international certifications required for export to developed countries. According to an analysis by the Boston Consulting Group of Uzbekistan’s raw materials, the country has the potential to provide products worth at least $15 billion and create 500,000 new jobs. The cost of one kilogram of yarn is 28% cheaper than the world average giving Uzbekistan a major competitive advantage but access to raw materials remains a key challenge faced by domestic textile enterprises. Whilst the country has the capacity to process 1.3 million tons of cotton fibre, it currently produces about 1 million tons due to the high costs of cultivation. Reflecting on the situation, President Mirziyoyev emphasized the pressing need for Uzbekistan’s textile industry to engage in the complete processing of existing raw materials to create high added value and redress the balance by switching from exporting to traditional cheap markets to more lucrative alternatives. In addition to increasing the number of international export certificates to producers, the meeting highlighted the importance of extensive advertising campaigns in European countries and forging new partnerships with international textile and garment brands.

Central Asia Uzbekistan Uzbekistan Business & Economy Business & Economy Uzbekistan International Affairs

Taliban Returns 120,000 Liters of Uzbek Oil Products Over Low-Quality

The National Department of Standards of Afghanistan has reported that it returned two tanker trucks worth of oil products with a volume of 120,000 liters from the port of Hairatan back to Uzbekistan. According to Radio Television of Afghanistan (RTA) English, the reason for this was the low quality of the imported refined products. Furthermore, the National Administration of Standards sent back another 19 oil tankers from Sheikh Abu Nasr Farahi Port to Iran over their low-quality. The standards board once again asked Afghan businessmen to prevent the import of low-quality goods into the country. In January of this year, it was reported that the Taliban returned more than 62 tons of low-quality oil to Uzbekistan through the Hairatan border point. In response to this, Uzbekneftgaz Chairman Bahadir Sidikov said the report was misinterpreted, and that the oil products returned by the Taliban was of high quality. Sidikov stated that the product was returned not because of its low quality, but because its standard isn't available in Afghanistan. "This new product was supposed to enter the Afghan market. Unfortunately, the first batch was sent back. But it’s a process. It will not be easy to enter every market. To prove the quality of this product, we sold 1,000 tons of the same diesel to Estonia last month. They received it as a “premium” and ordered 10,000 tons [more]. Currently, we are producing 10,000 tons of [oil] products. In addition, there are inter-governmental agreements," commented Sidikov at that time.