Uzbekistan to cancel preferences for production localization projects

export_import-9c4

TASHKENT (TCA) — On February 21, President of Uzbekistan Shavkat Mirziyoyev held a government meeting to analyze the fulfillment of the program aimed at reducing the import and expanding production of localized, import-substituting products, the Jahon information agency reported.

“For 10-15 years, we have been talking about organizing in our country of the production of equipment and components necessary for the economy. But there are no initiatives and practical actions. Leaders of a number of spheres do not think about localization, choose the easy way and import necessary products from abroad. This takes currency funds, which are difficult to obtain in the current conditions of competition,” said President Mirziyoyev as quoted by his press service.

Earlier, in April 2017, a government meeting was held on these issues, where specific measures were identified on optimizing the volume and range of imports through expansion of production localization.

In particular, within the framework of the Localization Program, products for $512 million or 20 percent more than in 2016 were exported. The output of 100 new types of products was launched, and the imports in basic industries decreased by $353 million.

The head of state, considering the implementation of the Localization Program and the import reduction plan, criticized the shortcomings. It was noted that in 2017, production did not start on 176 out of 948 localization projects, production forecast on 218 projects was not fulfilled. The import reduction plan was fulfilled by 88 percent.

With the above in mind, the meeting reviewed the effectiveness of tax and customs benefits provided for stimulating localization projects.

It was said that as a result of unreasonable collection of customs payments for certain types of goods, the price of products produced in Uzbekistan is higher than imported analogues. For example, equipment imported for the textile industry is exempt from all customs duties. However, the import of components for production of such equipment is subject to a 20 percent value-added tax.

Similar inconsistencies are also observed for tax benefits. In this regard, from April 1, 2018, the benefits for localization projects will be terminated. Various unscrupulous enterprises will be deprived of the possibility of avoiding taxes through participation in the Localization Program. The program will include only projects that are really necessary for the economy, and their implementation will be taken under strict control.

The president ordered the ministries of economy and foreign trade to develop a new, elaborated Localization Program.

Sergey Kwan

TCA