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Annexure Monthly Report - July, 2018

· Monthly report

Overview of Privatization in Uzbekistan

Privatization Itself

In Uzbekistan, the important purpose of privatization is the attraction of foreign investments. The privatization improves modernization within the country. Moreover, technological developments and re-equipment of the enterprises could also be accomplished due to privatization. Over the period of independence of the country, over 30 thousand state objects, including 6,500 large and medium-sized enterprises, were privatized. Today, the non-state sector accounts for more than 81% of gross domestic product, 94% of industrial production and more than 82% of the total employed population.

The Principles of Privatization in Uzbekistan

The State Committee of Uzbekistan for Privatization, De-monopolization and Development of Competition states the principles of the privatization in Uzbekistan involves four main issues:

○ all State-owned Assets are being sold exclusively through Open Sales on a Competitive Basis
○ the Privatization Process is maximally transparent and simplified
○ all investors, independently of their jurisdiction, possess equal rights/ access to information
○ safety of the performed Investments is guaranteed by the stable (firm) legislation

Uzbekistan has been achieved the number of developments since a moment of gaining independence. Particularly, the role of foreign investments pays essential role in current achievements. The government pays special attention to the attraction of foreign investors and tries to improve the whole climate of investments. With the purpose of significantly improve investment climate in country, the government undertakes the measures of further improvements, considering not only short but long term issues raising the level of prosperity as well. The base example for all abovementioned statements could be Free Industrial Zones that have been created in Navoi, Tashkent and Djizzakh Regions.

Completed Privatization Case

Joint Stock Company Uzbek Metallurgical Plant
The share of Uzbekistan's metallurgical plant - UzMetKombinat JSC was handed over for trust management to the foreign entity named SFI Management Group. The new arrangement is aimed at achieving efficient management introducing international standards for production, economic and investment processes. SFI Management Group’s supervisory board will appoint and dismiss all deputy chairs of the board of UzMetKombinat. The company will be entitled to make proposals on changing the company's executive structure, with the chairman to be elected by the general meeting of shareholders and approved by the Cabinet of Ministers in coordination with the President of Uzbekistan.

Planned Stage Privatization Cases

JSC "Jizzakh Battery Plant"
The Jizzakh Battery Plant is a unique enterprise for the production of batteries. The products of the Jizzakh Battery Plant are widely utilized by the giant manufacturer as GM Uzbekistan, ManAuto, SamAuto, as well as agricultural machinery. 51% of shares of the Jizzakh battery factory decided to sell to foreigners, it follows from the press service of the Ministry of Justice. It is reported that the president signed a document on measures for the further development of the enterprise, among which is the sale of a controlling stake in the statutory fund to foreign investors. In particular, 51.78% of the plant's shares, which are now owned by UzAvtoSanoat, will be sold to foreigners in accordance with the established procedure. In this regard, the company is entrusted to determine the market value of the package and put it up for auction. This is not the first time that the government decides to privatize large enterprises by transferring control to foreigners. In early January, it was noted that the Chinese company Xuzhou Construction Machinery Co. Ltd will buy a 51% stake in the "Urgench excavator plant". In May, the shares were issued.

Uzbekistan Airways
The state Airline of Uzbekistan "Uzbekistan Airways" is prepared to be privatized. The Deputy Prime Minister, Sukhrob Kholmuradov said Uzbekistan was ready to open up country's aviation sector for the privatization. Uzbekistan Airways is a monopolistic air company, however, Uzbekistan government ware closely working with World Bank in order to make Uzbekistan Airways off list of untouchable companies.

"UzAvtoSanoat" Joint Stock Company (Automobile company)
Automobile industry of Uzbekistan will be heading away from monopoly said chairman of UzAvtoSanoat. In the country, there is only one car making giant - Chevrolet, and the government plans to bring competition to current industry including Volkswagen, as well as Chinese and South Korean companies. Uzavtosanoat is buying out the GM’s shares in the Asaka car plant, GM has 10% of the shares. Bringing competition to the car industry was ordered by the President of Uzbekistan Shavkat Mirziyoyev.

Detailed Information for the Privatization of Enterprises and Objects in Uzbekistan

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