Business Environment in Uzbekistan for Foreign Direct Investment

CONTENTS        PAGE

1.        INTRODUCTION……………………………...……………………………        3

2.        RESEARCH QUESTIONS and OBJECTIVES ……………………………4

3.        LITERATURE REVIEW………………………………………………...…4

4.        PROPOSED METHODOLOGY………………………………..…...…… 12

        Research design……….……………..……………………………….……13

        Sampling strategy and data collection……………………........…………..13

5.        STUDY LIMITATIONS………………………………………………..…14

6.        MY PERSONAL WORK PLAN……………………….….………………14

7.         REFERENCES……………………………………………………………..        15

BUSINESS ENVIRONMENT IN UZBEKISTAN

FOR FOREIGN DIRECT INVESTMENTS:

BARRIERS AND OPPORTUNITIES

1. INTRODUCTION

The Republic of Uzbekistan is a central country of Central Asia with a population of around 31 Million. It has a strategic location to serve as a trade corridor between several countries in the region. The country can exploit its location as well as other resources to gain foreign investment resulting in improving economic state of the country. However, there is relatively quite low level of confidence shown by foreign investors in the economic stability and investment conditions in Uzbekistan.

This study is aimed at exploring the reasons behind low level of Foreign Direct Investment (FDI) in Uzbekistan. It includes exploring government’s initiatives regarding attracting FDI or repelling whichever the case may be. The research paper extensively explores a number of studies in the field through presenting a comprehensive literature review. The paper also explores the opportunities for FDI present in Uzbekistan and the government’s initiatives to attract foreign investors.

By this research I am going to contribute to the Uzbekistan business environment in that, if my recommendations are considered, a broader base spending will be stimulated through policies. This will revamp the business policy of Uzbekistan and improve on growth in umber as well as put the FDI willingness in a more confident condition in contrast with its recent condition.

1. RESEARCH QUESTIONS AND OBJECTIVES

Research Questions

1. What factors are considered the most serious threat for FDI in Uzbekistan?
2. What aspects of business environment should be improved to attract foreign investors?

Research Objectives

• Negative points of government policy;
• Infrastructure (involving transport roads, electricity, combustible (natural gas) and fuel stability);
• Educated and professional labor sufficiency;
• Corruption (all forms of corruption, including legalized forms such as payments for a number of unnecessary documentations;
• Inflation of national currency;
• Probability of extremism.

1. LITERATURE REVIEW

The score of economic freedom of Uzbekistan is stated as 47.00, which placed the economy of Uzbekistan at 160th freest in year 2015. It has been reported that this score has been enhanced last year by 0.5 point. It has also improved in freedom of trade, omitting corruption and the labor freedom which has significantly reduced the spending and freedom of business of the government’s management. As for as the ranking of Uzbekistan in Asia Pacific Region is concerned, it is ranked as 37th among 42 countries in the region. However, its average score is very much lower in world ranking. But during the last half decade it has been reported that economic reforms have positively been developed, however, this development is not up to the extent to shift Uzbekistan from repressed category to the developed one (heritage.org).

Uzbekistan came into being on September 1991 and is named as Republic of Uzbekistan. It appeared confident to take lead in gaining foreign investment among its neighbors in central Asia. There is lack of oil reserves of Caspian Sea which is mostly located in Turkmenistan and Kazakhstan. For instance, other significant resources are available in its land.  These resources are known as the three golds of Uzbekistan. These are named as white cotton, natural gas and gold; all of these have significant values in the world (Newman, 1999).

As for as rate of foreign investment in Uzbekistan is concerned, it was decreased in year 2014 by 8%, and FDI flow reduced by half to 45 billion dollars. This is a rapid decrease in rate of FDI in year 2011 which is -35%. In this context, it has been decided by Tashkent to review the restrictive business policy of the country; which includes closure of border temporarily, enhancement in the tariffs of customs and strict import procedures.  Moreover, the imposed sanctions on Russia, regional conflicts and negative growth aspects have also discouraged the investment from foreigners. It is stated in the reports that about 58 companies have worked in Tashkent and FDI has been reached to one billion dollars (Standard Trade Portal, 2015).