The state is leaving the oil and fat industry; Fitch Upgrades 4 Uzbek State-Owned banks ratings; Uzbekistan for the first time plans to give control over supervisory board of a FEZ to a foreign company; French Gruau is considering the establishment of a plant in Uzbekistan; The draft on the simplification of the bankruptcy procedure was submitted for discussion; Punishment for illegal traffic in foreign currency is tightened; The Economic Crimes Department has the right to access bank confidentiality if necessary.
The state is leaving the oil and fat industry
This is done in the framework of reducing state participation in the economy, increasing the country’s investment attractiveness and creating conditions for the introduction of modern technologies.
Now, the Association of Fat and Oil Industry Enterprises is being established on the basis of JSC Uzpakhtayog, and companies from the structure of the liquidated Uzpakhtayog with a state share are transferred to the Agency for Management of State Assets. Besides, the President gave a number of significant benefits and preferences to the enterprises belonging to the new association.
The agency is instructed to put all shares in these 25 companies for auction, ensuring the transparency of the process of evaluating packages and determining their starting price. Corresponding measures should be taken before September 1 of this year.
Fitch Upgrades 4 Uzbek State-Owned banks ratings
Fitch Ratings has upgraded the Long-Term Issuer Default Ratings (IDRs) of four Uzbek state-owned banks to ‘BB-’ from ‘B+’. The affected banks are UzPSB, Joint Stock Commercial Bank Asaka (Asaka), OJSC Agrobank (Agro) and Microcreditbank (MCB). The outlooks are Stable.
Equalisation of the four banks’ ratings with that of the sovereign reflects Fitch’s view of a high propensity of the Uzbek authorities to provide support to these banks in case of need, due to:
-Majority state ownership;
-High system importance and important policy roles;
-High flexibility of the state to provide support, as reflected by substantial international reserves of $26 billion at 3Q18;
-State guarantees on banks’ largest exposures; and a large share of government-related funding (received both from the Uzbek Fund for Reconstruction and Development and from other state-owned entities);
-Positive track record of capital and liquidity support provided to state-owned banks ($670 million of capital injections in 2017 alone).
Uzbekistan for the first time plans to give control over supervisory board of a FEZ to a foreign company
A new free economic zone (FEZ) “Andijon-farm” will be created in the Andijan region of Uzbekistan. Pharmaceutical companies from India will be strategic partners in its creation.
The main tasks are attracting investments and advanced technologies from leading Indian companies to create modern production facilities for the production of pharmaceutical products and medicines with high added value. The term of functioning of the FEZ “Andijon-farm” will be 30 years with the possibility of its subsequent extension. During this period, special tax and customs regime will be in effect on the territory of the FEZ.
Depending on the amount of their investments, the participants of the zone will be exempt from land tax, profit tax, tax on property of legal entities, tax on the improvement and development of social infrastructure, single tax for micro firms and small enterprises, as well as mandatory contributions to some state funds for various periods.
French Gruau is considering the establishment of a plant in Uzbekistan
During the visit to France, the delegation of the Jizzakh region met with the vice-president for international business development of the company Gruau Sylvain Sene. The organization of production on the modification of vehicles on the territory of Uzbekistan has been discussed.
Sylvain Sene, noting the strategically important location of Uzbekistan between Russia, India, China and Europe, said that his company views Uzbekistan as a promising location for the creation of a vehicle tooling plant.
According to the research conducted by the company, Uzbekistan has all the necessary conditions for the implementation of the project on the “transformation” of vehicles.
The draft on the simplification of the bankruptcy procedure was submitted for discussion
Nowadays the liquidation proceedings are conducted by employees of the state tax service, which leads to corruption and abuse. There is no mechanism for evaluating the work of court managers, and their lack of qualifications leads to low efficiency.
There is no transparency in the sale of property of debtors, and the current procedure and rules do not correspond to modern conditions.
The project “On measures to further simplify the bankruptcy procedure and fundamentally improve the activities of judicial managers” has been submitted for discussion.
Punishment for illegal traffic in foreign currency is tightened
In Uzbekistan, the punishment for illegal circulation of foreign currency was tightened. President Shavkat Mirziyoyev signed a law on January 15, which makes additions and changes to the relevant articles of the Administrative Code and the Criminal Code.
Now the illegal acquisition or sale of currency values by citizens entails an administrative arrest of 15 days or a fine of 20 minimum wages (MRZP) on individuals for whom administrative arrest cannot be applied, with confiscation of currency values.
Also, the illegal acquisition or sale by citizens of currency valuables, committed after applying administrative penalties for the same actions, is punishable by a fine of from 75 to 100 minimum wages or correctional labor from 2 to 3 years or restriction of liberty up to 1 year or imprisonment up to 1 year.
The Economic Crimes Department has the right to access bank confidentiality if necessary
On January 15, President Shavkat Mirziyoyev signed the law “On Amendments and Additions to Certain Legislative Acts of the Republic of Uzbekistan in connection with the improvement of mechanisms for combating economic crimes and financing the proliferation of weapons of mass destruction”.
One of the changes concerns the law on bank confidentiality. The Department for Combating Economic Crimes at the General Prosecutor’s Office has received the right to receive information constituting bank confidentiality, if this information is necessary to carry out the tasks assigned to it.
Also at the request of the Department, the Central Bank provides the necessary information on operations related to the movement of state funds in bank accounts to study the targeted and rational use of funds of the country’s budget system.