Page 53 - BNE_magazine_06_2019

bne June 2019 Eurasia I 53
the economy, most notably the elimina- tion of the dual-currency system and easing of capital controls.
The visa regime started to change so that, today, citizens of dozens of coun- tries can enter visa free and the process of obtaining work visas, etc., has been greatly simplified. It is also a lot easier for Uzbek citizens to cross borders in the region that were previously closed.
Promised tax changes have now taken place as of January 1. Tax rates, e.g. for corporations, investors and individu- als, have been reduced and some taxes eliminated.
Stage 3. Secured IFI support
Uzbekistan has been able to secure billions of dollars in grants and loans from foreign governments and the major international financial institutions, such as the World Bank, EBRD and the Asian Development Bank. This money is being used to improve critical infrastructure, fund social programmes and help sup- port small business development.
Stage 4. Investment into critical infrastructure
Most of the money raised for investment over the past two years is committed to improving the economic infrastructure. A substantial amount is being invested
would have liked, it was enough to allow the government issue two debut Eurobonds, raising a total of $1bn, in February. This now opens the way for more international debt issues and for big corporations to follow with their debut issues.
The bond debut is now being followed with the opening up for the local stock market to foreign investors. The first steps, i.e. allowing repatriation of sale proceeds from equities, private equity deals and from other transactions, has now taken place while further liberalization mea- sures to make it easier for foreigners to work on the local bourse and buy local debt issues will be initiated this year.
Stage 6. Privatisation
The next important step will be the start of the privatisation process. There is
a list of several thousand state owned enterprises eventually to be priva-
tized and preparations have now been completed to start the process. The ownership of state assets is now being transferred to the newly created State Asset Management Agency, an agency, which is also being beefed-up, in order to prepare the business to be sold.
Many will be sold to local investors, including to existing management. This has been seen in many other privatisa-
over the past year but the major step came on March 30 when the president signed the Measures to Further Improve Mechanisms for Attracting Foreign Direct Investment into the country. Under this latest decree the government is to put up for sale, both to local and foreign investors, the following:
• Banking sector, a 25% equity stake in:
• Aloqabank
• Turonbank
• Asia Alliance Bank
• Insurance sector: 25% stake in
the Kafolat insurance company
is to be sold
• Cement sector: 35.9% stake
in Kyzylkum cement
• Aviation: 74.98% stake in Kvarz
• Food & Beverage: the government’s
57% stake in Coca-Cola Bottlers Uzbekistan. In addition, the government is to offer equity stakes, ranging from 51% to 71.2% in alcoholic beverage plants.
• Edible Oil & Fat sector: equity in six companies are to be offered, ranging from 51% to 84.5% equity stakes
• Oil & Gas: The government will sell its equity in eight oil and gas companies.
The President’s decree also instructs the government to prepare the country’s first major international investment forum, to be held in Tashkent in the autumn. The President has made clear that he wants to see as many of the assets, listed for priva- tisation, sold or agreed to be sold, ahead of the Forum. Ideally several deals could be signed at the Forum, making it similar to the importance and functionality of the big annual government sponsored Forums in Russia (SPIEF) and Kazakh- stan (Nur-Sultan).
To some extent the Tashkent Forum will be similar to the traditional autumn harvests that take place in many countries around the world, expect
that this one will celebrate the harvest yield from (expected) asset sales and the debut international bond issue from February. It will also hope to celebrate the arrival of new investors and look forward to the spring planting and
the start of Phase 2 of the country’s economic transformation.
“Privatisation is the next major step in the effort to bring in new investors and to create sustainable growth in the economy”
into new and improving existing power generation, including a big focus on renewable energy projects.
Extractive industries, including the oil and gas sector, has also attracted big investment commitments. Related indus- tries, such as chemicals, are also high on the list of early stage investment targets.
Stage 5. Credit rating and debut international debt
In December, Uzbekistan secured its first ever international credit rating. Although lower than the government
tions carried out in the Eurasia region. Some of the more important assets will be offered for sale to both local and foreign investors.
Some state assets are to be sold via a stock market listing on both an international bourse and the local stock exchange.
Privatisation is the next major step in the effort to bring in new investors and to create sustainable growth in the economy. There have been some measures agreed and decrees signed
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