Uzbekistan Business & Economy - The Times Of Central Asia

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Uzbekistan Working on Economic Reforms, Wants U.S. to Get More Involved

Uzbekistan’s ambassador to the United States says the relationship between the two countries is on a roll. “It’s a very promising time,” Ambassador Furqat Sidiqov said in Washington this week, adding that the two nations have a high level of “effective, open dialogue” as Uzbekistan seeks American investment and U.S. support for economic reforms and in other areas. Even difficult topics such as child labor and concerns about religious freedom in Uzbekistan are on the table, he said. American businesses stand to benefit from Uzbekistan’s push into information technology and other industries, Sidiqov said on Wednesday at a meeting of the Caspian Policy Center, a research center based in Washington. More than 100,000 Uzbeks are engaged in IT services; with most industry exports already go to the United States, a technology campus affiliated with Arizona State University will open this year in the Central Asian country, according to Sidiqov. The ambassador acknowledged that Uzbekistan faces challenges such as water scarcity, and that the country’s leaders hope U.S. and international institutions can help implement “smart technologies” that save water. Only 20% of Uzbekistan’s water comes from within the country – the rest coming from neighboring states - and the vast majority of water is used in agriculture, often inefficiently, according to the press office of President Shavkat Mirziyoyev. Uzbekistan is privatizing most of its banking industry, there are plans to relax the tax burden on foreign investors, and an anti-corruption push is underway. “Our main strategy is to minimize the role of the government in business,” said Sidiqov, a former deputy foreign minister who became ambassador to the U.S. last year. Sidiqov worked as a lower-ranking diplomat in the Washington embassy on two previous tours lasting a decade. Uzbekistan’s state-owned banks have made progress toward “more commercially-driven business models” since the unveiling of a banking reform plan in 2020, according to Fitch Ratings, the credit ratings agency. But “further improvements may take longer due to the sector’s deep-seated structural weaknesses and new risks,” the agency said in March. A U.S. congressional delegation recently returned from a trip that include a visit to Uzbekistan. The delegation, which included Adam Smith, the top Democrat on the House Armed Services Committee, met Mirziyoyev and his foreign and defense ministers. The Uzbek ambassador said a key development in ties between Central Asia and the United States came last year when U.S. President Joe Biden met leaders from the region in New York. The summit, dubbed “C5+1,” included the presidents of Kazakhstan Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan. They discussed security, economic development, climate change and efforts to promote peace. “For the first time in our history, the United States is seeing us as a region. Before, we were part of American policy toward Afghanistan, something like that,” said Sidiqov, adding that Central Asia would welcome a Biden visit. “We will be more than happy to organize that,” he said.

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In Fear of Sanctions, Kyrgyz Banks Shun Russian Cards

Kyrgyzstan's Interbank Processing Center (IPC) reports that on April 5 it will stop servicing the Russian payment system 'MIR'. The decision was made "to minimize the risk of secondary sanctions." Interbank is a Kyrgyz company that services the national payment system, called ElCard. In 2019 Interbank entered into a partnership with MIR, so that citizens of both countries could pay with their domestic bank cards while in either Russia or Kyrgyzstan. On February 23 the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC), which is responsible for controlling foreign assets that involve U.S. dollars and/or the U.S. banking system, imposed sanctions on Russia's MIR. Earlier, the National Bank of the Kyrgyz Republic told The Times of Central Asia that it doesn't interfere in the activities of commercial banks in Kyrgyzstan, but only monitors compliance with the country's legislation on combating the financing of terrorist activities and laundering of criminal proceeds. Therefore, Kyrgyz banks can independently decide whether or not to work with the Russian payment system. Kyrgyz banks that have accounts with western financial organizations ceased working with the MIR system in 2022, after Russia's full-scale invasion of Ukraine. After ElCard severed its ties with the Russians, all financial organizations in Kyrgyzstan also stopped accepting MIR cards. This decision has hit Kyrgyz citizens in Russia as well, because Russian ATMs and POS terminals have stopped accepting their ElCards. But, as the Kyrgyz National Bank has explained, this decision will not affect international transfers. "It should be noted that the possibility of money transfers from the Kyrgyz Republic to the Russian Federation and vice versa with the use of mobile applications of commercial banks in the presence of direct contractual relations between Kyrgyz and Russian commercial banks, as well as through money transfer systems without opening an account, will remain," Kyrgyzstan's financial regulator writes on its website. Banks in several other Central Asian countries have refused to cooperate with MIR, also for fear of falling under U.S. sanctions. Since February 27 banks in Kazakhstan have stopped servicing MIR cards. At the same time, the Central Bank of Kazakhstan emphasizes that each Kazakh bank makes this decision independently. "Our position is as follows: we as a first-tier bank do not interfere in the operating system of second-tier banks... It is their commercial interests, economic expediency. They calculate their own risks and benefits by having compliance services," said the Central Bank's bank's press service at the time. Besides Kyrgyzstan and Kazakhstan, Armenia has refused to cooperate with the MIR system for the same reasons. And now Tajikistan -- and even Moscow's closest ally, Belarus -- are distancing themselves from it. The national payment systems of these countries -- Belarus's Belkart and Tajikistan's Korti Milli -- had agreements with the Russians that are similar to MIR's arrangement with the Kyrgyz. Currently Uzbek banks do not accept the MIR payment system either, as the UZCARD processing center has suspended work with the Russian system. In response, the Russian Central Bank has commented...

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Uzbekistan and Pakistan Strengthen Ties in Trade, Transportation

With bilateral trade between Uzbekistan and Pakistan rising sharply, Uzbekistan's ambassador to its southern near-neighbor, Oybek Usmanov, believes that Pakistan's Punjab province alone could potentially hold $1 billion in trade value with Uzbekistan. Usmanov has commented that the two countries can each grow their exports of garments and textiles, chemicals and agricultural machinery. To this end, Uzbekistan has invited the Lahore Chamber of Commerce and Industry to participate in the Tashkent International Investment Forum on May 2 -- as well as in exhibitions of agricultural equipment to be held in the Uzbek capital in June. Transportation companies from both countries have played a key role in Uzbek-Pakistani relations. The Trans-Afghan railway line is currently being designed, to pass through Afghanistan between the Uzbek town of Termez and Peshawar in Pakistan. The idea to build a railway line through Afghanistan was conceived in 2018. At that time, the cost of the project -- which could potentially carry 20 million tons of cargo per year -- was estimated at $5 billion. In July 2022 Uzbekistan estimated the cost of the project at $4.6 billion, with a construction period of five years. In December 2022 Pakistan announced a figure of $8.2 billion. A year later, the cost of the railroad was adjusted downward to $7 billion.

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Uzbekistan Offers More Help to Its Citizens Moving Abroad

Uzbeks will now be compensated for their expenses in traveling abroad to work, with the federal budget allocating $7.9 million for that purpose in 2024. The country's foreign embassies and ministries are also in the process of setting up round-the-clock call centers to help solve problems and address issues faced by Uzbeks abroad. Those wishing to work outside the country can now sign up to the 'Online Mahalla' platform, where recruiters in several countries can approach potential candidates from Uzbekistan. Since 2022 Uzbekistan's Agency for External Labor Migration has sent 70,000 Uzbek migrants to work in other countries. European employers are increasingly willing to hire people from Central Asia; recently Germany has created 5,000 jobs for Uzbeks, including as hotel staff, farm hands, electricians and mechanics. Decent salaries of $2,500-2,800 per month are being offered to citizens of Uzbekistan who have professional qualifications and speak conversational German. The Agency for External Labor Migration is organizing foreign language classes for would-be migrants. The state will also reimburse them part of the costs of obtaining a work visa, travel tickets, language assessment and certain professional qualifications. In addition, Uzbek nationals who start a business in Uzbekistan after returning from abroad will be given preferential loans -- along with free medical check-ups for them and their family members. Agencies known as Inson centers will provide social assistance to the children of migrant workers, while Uzbek employers who employ returning migrants will receive a $40 monthly subsidy per employee from the Employment Support Fund.

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Uzbekistan to Support Migrant Workers

At a government meeting on April 2nd, following his previous order to facilitate access to the external labour market, Uzbekistan President Shavkat Mirziyoyev was presented with proposals to streamline labour migration and support Uzbek migrant workers abroad. Over the past two years, the Uzbek Agency for External Labour Migration has assisted 70 thousand people in securing work in developed countries. Many unskilled laborers, however, still opt to work abroad independently and as a result, struggle. To resolve problems encountered by Uzbek citizens working abroad, Uzbekistan is to introduce round-the-clock call centres and labour migration attachés in its embassies and consulates in the UK, Germany, Poland, Hungary, and Japan. A mahalla is a traditional Uzbek community centred in a residential neighbourhood. Under the new initiative, based on the principle “work abroad begins with the mahalla,” local authorities and youth leaders will identify anyone wishing to work abroad and enter their data in a designated “Online Mahalla” platform. Candidates will then be invited to compete for employment abroad. Training will be provided by vocational education institutions for citizens lacking professional skills. In addition, a centre for teaching foreign languages will be opened at the Agency for External Labour Migration to help prepare candidates. The state has announced that it will also reimburse part of the costs of work visas and tickets, as well as the assessment of labour migrants’ knowledge of foreign languages and professional qualifications. Earlier on, the head of state instigated measures to ensure employment for people returning from labour migration.

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Uzbekistan’s Banks Top List of Country’s Most Valuable Brands

British company Brand Finance has published a list of rankings of the most valuable domestic brands in Uzbekistan. Uztelecom took first place among 20 companies with a brand valuation of $241 million, followed by Sanoat Qurilish Bank ($122 million) and Trastbank ($95 million). Additionally, the list includes Aloqa Bank ($43 million), Uzum ($39 million), NBU ($36 million), Anor Bank ($16 million), Farg'onaazot ($7 million), Kafil Sug'urta ($6 million), Uzagrosugurta ($6 million). Uzum recently became Uzbekistan's first tech-company "unicorn" when it landed an investment of more than $100 million to fund its growth strategy, putting its overall valuation at $1 billion. Brand Finance's rating is compiled using information on 20 companies provided by the Uzbekistan Agency for Innovative Development, which is engaged in improving the country's position in the Global Innovation Index. The British company took into account the company's value, business efficiency, value of trademarks, as well as marketing investments and brand recognition when compiling the rating. According to international PR expert Natalia Ikonnikova, in 2024 "[amid] the endless streams of generated content, brands that retain a human face will stand out. This trend is not [in its] first year, but in Uzbekistan it is still gaining popularity." Retailer Korzinka, headed by its founder Zafar Hashimov, is a good example of such a brand. Hashimov is not just the official face of the brand, but a real person with his own values and views who does not shy away from personal communication with consumers and eagerly solves problems. According to Madina Ruzmatova, an independent consultant on corporate PR and personal branding, there are great prospects for the development of content-creators in Uzbekistan. At this early stage of the sector's maturity, using the right PR tools, it's possible to gain an audience and increase public awareness of any particular brand.