TASHKENT (TCA) — From 1 April 2018 Uzbekistan will cancel preferences for enterprises included in the country’s production localization program. The measure is provided by the president’s decree dated 29 December 2017, Novosti Uzbekistana news agency reports.
Uzbekistan has been implementing the policy of production localization of import-substituting products for more than 15 years.
Import substitution has been enjoying extensive state support in the form of tax and customs preferences. Participants of the localization program producing import-substituting products have been exempted for three years from customs duties for imported technological equipment and spare parts for it, as well as from property and profit tax.
According to the Economy Ministry, during 15 years Uzbekistan has implemented over 2.8 thousand production localization projects worth a total of US $5.5 billion. The country has launched production of over 4.8 thousand new types of products that were previously imported.
However, analysts believe that the import-substituting production model has some shortcomings, such as self-isolation from the world’s new economic trends and lagging behind developed countries in terms of technology and competitiveness.
Localized production often becomes noncompetitive and enjoys no demand in foreign markets.
According to official figures, Uzbekistan’s localized production is not as export-oriented as it should be. Only 112 out of 972 Uzbek enterprises included in the production localization program export their products.
Moreover, foreign capital reluctantly invests in Uzbek enterprises producing localized products.
