Esteemed Forum Participants,  Dear Ladies and Gentlemen!

Allow me to greet cordially the Business-Forum Participants who are present here today.

At today’s presentation allow me to introduce to your kind attention the Privatization Program in accordance with which the State-owned Assets in various sectors of economy are being offered to Foreign Investors.

The Programs approved by Decree by President of the Republic of Uzbekistan dated April 2015 (No PP-2340) and the Resolution by the Cabinet of Ministers of the Republic of Uzbekistan dated February 2016 (No PCM-33) present being one of the key elements of the Strategy for Further Development of Uzbekistan. The Lists of Enterprises, the Stocks of which are subject to Sale to Foreign Investors, display the unique Investment Opportunities opened today in our country for Foreign Investors. 

It should be stressed that we strive to attract Foreign Investments not only because they provide inflow of the Foreign Capital. What is especially important for us at cooperation with the Investors – is their ability to bring with themselves the modern production technologies, nowadays management, marketing and knowledge on markets, especially the external ones.

Therefore, participation of Foreign Investors in Projects’ Implementation in Uzbekistan plays the enormous role for us. We pay great significance to strengthening the relations with Foreign Investors and are ready to expand and develop this cooperation on the mutually beneficial basis, which will do good both to the success of your business and the accelerated development of our country.   

At the beginning of presentation, allow me to make a brief excursus into the history of Privatization Development in Uzbekistan.

Privatization in Uzbekistan was always regarded as a main guideline within the economic reforms. At that, in Uzbekistan, unlike to other countries, we refused from hurry-scurry methods of forced Privatization.

In Uzbekistan, since the first years of its Independence, the number of main Laws and significant number of Normative Acts, containing the Ownership Issues in their basis, were adopted.  Thus, Uzbekistan, first among the CIS countries, as early as 1990, adopted the Law “On the Property” and legislatively introduced the idea of the Private Property.

During the First Stage (period of 1992-1993), named “the Small Privatization”, the State-owned Housing Stock, Small and Medium Enterprises belonging to systems of Trade, Services, Local, Light, Food Production Industries, Motor Transport and Construction Spheres were handed over to the Private Sector. 

The Second Stage of Privatization was characterized by transformation of the State Enterprises into the Joint-Stock Companies. As a result of the consecutive Privatization the Owners’ Class got formed in the country, embracing 2 million Owners of the Stock and Shares in privatized Enterprises, 3 million Personal Farms’ Owners, 85 thousand Owners of Individual and Small Enterprises and 14 thousand Owners of the Real Property Facilities.

The Third Stage of Privatization started in 1998, when turning of the Industrial Branches, Subsidiary Enterprises of the Fuel-Energy, Chemistry, Metallurgy and Machine-Building   Complexes into the Joint-Stock Companies - took place.

Processes of Privatization of the State-owned Property started in 1990s allowed to bring into economy of Uzbekistan the modern technologies, production arrangement experiences, foreign investments and large orders for exports, develop the new kinds of products, electrical engineering items.

As a whole, the growing role of the Private Sector in the economy is explicitly seen at the Indicators, such as: Investments into the Own Capital (growth by over 3 folds since 2000), Manufacture of Industrial Products – rise from 12,9 percent up to 31,1 percent (during the period since 2000). Presently the share of the Small Business and Private Entrepreneurship in the country’s GDP constitutes 56 percent and continues to grow.  

Presently over 4 thousand Enterprises with participation of the Foreign Capital from more than 90 countries are operating in Uzbekistan. At that, it is important to understand that in Uzbekistan the State-owned Assets are being sold to the Investors who are capable and ready to create on their basis the New, Modern Production Facilities.

President of the Republic of Uzbekistan Islam A. Karimov stressed the necessity to “critically review and reduce the level of the State’s presence in the economy down to strategically and economically founded sizes”.

With the aim to expand attraction of Foreign Investments, radical rise of the level and role of the Private Property in the economy of the Republic, the Program of deepening the Privatization Processes was adopted, which stipulates Sales to Private Investors, first-place to the Foreign Investors, of the State-owned Shares and Assets being present in the Charter Capital of the Enterprises. 

Uzbekistan is intended, during the oncoming years, to reduce in a radical way the level of the State’s presence in our economy down to strategically and economically founded sizes.

By the results of performed critical analysis, we are going to maintain the State’s participation in management and ownership only related to element Enterprises belonging to the Mining Sectors, Natural Monopolies and Enterprises performing the socially-significant functions for population. 

As for all other Enterprises, State-owned Stock Packages in other Sectors, the State intends to transfer them, stage-by-stage, into the hands of the Private Owners, Private Sector, first-place – to the Foreign Investors.  

At that, for valuation of the State-owned Stocks subject to sale to Foreign Investors mainly the International Appraisal Companies, such as: Deloitte, Ernst & Young, Grant Thornton etc. have been involved.

In particular, the Privatization Program adopted in April, 2015, stipulates Sales to Potential Investors of 1247 State-owned Assets, including:

-        the State-owned Shares in 68 large Enterprises of Chemical, Machine-Building, Food Products, Construction and Light Industries, Oil & Gas and  Financial Sectors, Services’ Sphere offered to the Strategic Foreign Investors;

-        the State-owned Facilities and the State-owned Shares in 667 Enterprises with their Sale mainly to the Foreign Investors;

-        at a “Zero” Purchase Price with undertaking of the Investment Obligations by a New Owner - 512 Property Complexes being at the State Ownership.

Upon the results of the Program, the number of Enterprises with the State’s participation will reduce by 2,4 folds, while the Non-State Sector’s Share in the economy will increase from the present 82 percent up to 86 percent, which will become a powerful stimulus for the sharp rise in the economy’s efficiency.  

At that, I would like to stress: we conduct Privatization not for replenishment of the State Budget, as it is being done in other countries, but for attraction of the Strategic Investors capable to bring the new technologies and equipment, arrange the output of the competitive modern demanded products, their marketing and promotion into the external markets.

We are inviting the Investors to invest into the Enterprises and, in each particular case we are ready to discuss the optimal mechanisms of management related to the concrete Enterprises and Assets.

For example, if by the Privatization Program presently a minor Stock Package of a certain Enterprise is offered for Sale, we are ready to consider transfer into a management by a Foreign Investor of the remaining State-owned Stock Package so, that he becomes able to manage the Enterprise as a whole effectively. In future, in course of successful cooperation, that Investor will possess the priority right for the buyout of the remaining part of the State-owned Stocks.       

In accordance with the Resolution by President of the Republic of Uzbekistan dated December 25, 2015 No PP-2454, the order has been established, in compliance with which, at all Joint-Stock Companied presence of the Foreign Capital at size of not less than 15 percent shall be obligatory. For attraction of the Foreign Capital into the Joint-Stock Companies the additional conditions have been created.   

For example, Privileges shall be applied to  the Joint-Stock Companies where the Share of a Foreign Investor Constitutes from 15 to 33 percent of the Charter Capital, including the Privileges concerning the Legal Entities’ Profit Tax, Property Tax, Area Improvement and Social Infrastructure Development Tax, Single Tax Payment, as well as the Obligatory Deductions into the Republican Highways’ Fund, granted to the Enterprises with Foreign Investments stipulated by the Decree by President of the Republic of Uzbekistan dated April 11, 2005 No UP-3594, shall be applied differently, depended to a volume of the brought-in Investments.

Together with that, the Profits of the Foreign Investors gained in a form of the Dividends accrued on the Stocks belonging to them at the Joint-Stock Companies, shall be exempted from Taxation for a period till January 1, 2020. Also, Joint-Stock Companies with Foreign Investments shall be exempted from payment of the State Fees at their Applications to Courts with a Claim on Violation of their Rights and Legal Interests with their consequent recovery from a Party recognized guilty by the appropriate Court Decision.

For the Prospective Investors the incentives are foreseen – both in form of the Tax Privileges as well as in way of granting other effective Preferences at their purchase of the Assets subject to Privatization.

It should be noted, that a distinctive feature of the Privatization Process in Uzbekistan is that the Cash Means received from Divestment of Government Property are being targeted for support and development of the Entrepreneurship.

Such an approach found its reflection in the current Privatization Program as well – the Cash Means paid for the additionally issued Stocks, meant for purchase by Foreign Investors, remain at disposal of the Company itself with their targeted allocation for modernization and expansion of the production process.

Besides that, the Period of Purchase Payments may be prolonged up to 2 years and, if the Purchase Payment has been effected within a one-month period, a Foreign Investor receives a discount at size of the refinancing (interest) rate set by the Central Bank of the Republic of Uzbekistan (presently it is 9 percent).

I would like also to draw your kind attention to the unique opportunity provided by the legislation – the possibility of the State-owned Property’s Privatization at a so called “Zero” Purchase Price. In this case, over 500 inactive, unfinished by construction facilities, nevertheless possessing all the necessary infrastructure (water-, natural gas-  and electric power-supply networks) shall be handed-over to the Effective Owner for Free with the condition of his undertaking the Investment Obligations on creation on their basis of the New Production Facilities and Job-Places.

As you are aware, tariffs for electric power, natural gas in our country are one of the lowest over the Central Asia region and, we dispose, in sufficient quantity, the skillful professional personnel. 

More than that, for the Investment Projects with a cost of over 50 million US Dollars and a Share of the Foreign Investor at size of not less than 50 percent, construction of the necessary External Engineering and Communication Networks shall be performed at the expense of the State Budget Means.

Allow me to describe separately the large State-owned Assets subject to Sale to Strategic Foreign Investors – those including Enterprises belonging to the Chemical Industry, Agricultural Machine-Building, Financial Sector, Construction Branch, Enterprises servicing the Oil and Gas Complex etc. 

In particular, the adopted Program stipulates Sales of the Stocks of the following Enterprises: 

the largest manufacturer of Mineral Fertilizers in the Central Asia – “Navoi Azot” JSC (Number One in the Central Asia);

the largest manufacturer of Cement in the country and the region – “Qizilqum Sement” JSC;

the State-owned Shares at the Hotel JV LLC “Ipak Yo’li – Turizm Invest” (operating under the Windham brand), the modern Exhibition and Business Centers – the International Business Center, the “UzExpoMarkaz” Exhibition Center, the Angren Logistics Center, the “Turon” Bank and many other Enterprises.

The more detailed information about the Privatization Program, its Facilities, as well as the Legal Acts, Procedures and Terms regulating their Purchase - you may find by visiting the State Competition Committee’s official web-sites: http://gkk.uz and http://gkitorg.uz

Dear Participants of the Today’s Event!

The State Competition Committee is ready to render any assistance for your successful participation in the Privatization Program in Uzbekistan.

We will be glad to see you in our country as the Strategic Investors!

�ных с их приобретением, Вы можете найти на сайтах Госкомконкуренции «ГКК.УЗ» и «ГКИТОРГ.УЗ».

Уважаемые участники сегодняшнего мероприятия!

Госкомконкуренции готов оказать любое содействие для вашего успешного участия в программе приватизации в Узбекистане.

Мы будем рады видеть Вас в нашей стране в качестве стратегических инвесторов!

??????? Orphus