Dialogue  July-September,  2011, Volume 13 No.1

Ways of Raising the Investment Attractiveness of the

Economic  Sectors in Uzbekistan

A’lokhon Ahrorkhujaev*

Abstract

This paper describes the ways and means of raising the investment attractiveness of the economic sectors of the Republic of Uzbekistan. Also, in this paper we have explored the growth of investment in the country for 2005-2011, analyzed the sector-wise breakdown of the investment projects included in the local investment programme for 2011 and summarized our research.

In the present conditions of implementing economic reforms, the economic policy – aimed at modernization of the national economy, steady raising of the rate of production and improvement of the country’s export potential – requires to revive the investment attractiveness of the economic sectors. In this viewpoint, following the reforms implemented during the last few years, the processes of sustainable growth in the economy attained the positive balance of payments at the cost of expanding the production volume for export. As a result of favorable investment environment in Uzbekistan the scale of high-technology-based direct investments has gradually increased in the overall structure of the national economy. 

The capital investments in economic sectors can be divided into two general types: production construction and non-production construction. Each has a special importance for the development of the national economy. Capital investments in production construction bring  sustainability to the national economy and to the growth of the production volume. Capital investments in non-production construction bring improvement in the country’s existing infrastructure system, and  growth of the people's welfare and to stability of the production process.

Specifically, the President of the Republic of Uzbekistan, Islam Karimov has stated in this regard: “Creation of favorable investment environment has remained the main factor in consecutively implementing the structural transformations in our country. In 2010 an investment of 3.3 billion US dollars was attracted from all the financial sources for development of economy”. We can see the growth of investment rates in the Republic of Uzbekistan for 2005-2011 from the following graph1. 

                                                 Graph 1. Investment rates in the Republic of Uzbekistan for 2005-2011             

                                                                                  (pertaining to the previous year, in percents)

       During 2005, the investment rates made up 107% as compared with the previous year but this figure made up 109.3% in 2006, 122.9% in 2007, 128.3% in 2008, and in the period of the global financial and economic crisis it made up 124.8% in 2009 and declined to 109.2% in 2010. It is forecasted to go up to 112.6% in 2011.   

Main reason for decrease in investments for 2009 is the world financial economic crisis. Consequently, not only the Republic of Uzbekistan but whole world faced investment decline. On President I.A.Kaimov’s initiative, they programmed arrangements against the negative consequences of the crisis. Uzbekistan supported local manufactures by encouraging demand in the internal market to meet decrease in requirement of goods in world market; provide competition for exporting enterprises in foreign markets. These helped in growth of export and local manufacturing. We know that world economic crisis negatively exerted on the economy of developed countries of the world. For example, in 2009, Greece's acceptance of default condition, further decreasing of credit rating of Spain and Portugal by Standart and Poor’s were the reasons of financial crisis in European Union. On the basis of fulfilling of tasks of accepted programme, Uzbekistan played a leading roll in economic growth among countries of CIS. An analysis was carried out for longterm capital investments in economic sectors to raise their investment attaractiveness. In the following schedule we analyze allocation of the projects in the territorial investment programme by sectors in the Republic of Uzbekistan for 2011.

Research of investment attractiveness of the economic sectors for the long-term capital investments was carried out in two stages. The capital is invested in the economic sectors which attract interest from a perspective of  long-term effectiveness.

As it is seen from the graph 2, during 2011 it is planned to implement 146 projects in light industry sector; 148 projects in building materials production sector; 43 projects in petrochemical and chemical products sector; 17 projects in woodworking and furniture production sector; 19 projects in leather processing and shoe production sector; 12 projects in consumer goods sector; 102 projects in meat and dairy processing sector; 37 projects in food production sector; 40 projects in bread and pastry production sector; 30 projects in confectionary production sector; 27 projects in fruit and vegetable processing and drying sector; 42 projects in heat production sector; 65 projects in eggs and poultry meat production sector and 161 projects in other sectors.

Graph 2. Sector-wise breakdown of the projects included in the local Progemmes

                                                                                                       investment program for 2011

Since independence there have been more than 33.6 billion US dollars of foreign investments, of which the government guaranteed loans made up 16.1% and the direct investments made up 83.9%.

Generally, at present, raising the investment attractiveness of the economic sectors has a great significance in supporting the economic growth of the country. Therefore, only on the basis of investments and by replacing basic capital, reduction in production costs and improvement of product quality can we attain  product competitiveness in the world market.

The list of using literatures:

          1.   Volkov A.S., Marchenko A.A. Assessment of Effectiveness Investment  Projects: Teaching aid.  – Moscow: RIOR, 2009.

          2.   Kojukhar I.O. Practical Work on Economical Assessment of      Investment: Teaching aid.  – Moscow: KNORUS, 2008.

          3.   Neshitoy A.S.  Investments: Textbook. – Moscow: 2008.

          4.   Tukliev B.K. Organizing of Investment and Financing: Teaching aid    – Tashkent: TDIU. 2008. – on page 144.

          5.   Karimov I.A. The global financial-economic crisis, ways and measures to overcome it in the conditions of Uzbekistan. –Tashkent: Uzbekistan, 2009.

          6.   N. Jumaev, O. Abdurakhmonov. World financial - economic crisis: reasons and  adjustment problems.  –Tashkent, 2010.

Footnotes

1.Karimov I.A. The Concept of further deepening the democratic reforms and establishing the civil society in the country. 12.11.2010.