Uzbekistan – Azerbaijan: Shared NationaI Interests and Strategic Goals

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Uzbek Ambassador to Azerbaijan, Mr. Bahkrom Ashrafkhanov, in an exclusive interview for Azeri Observer magazine, speaks about large-scale economic reforms, which opened up new opportunities for business in Uzbekistan, new industrial enterprises in the country and the measures which led to a several fold increase in inbound tourist flow. He also focused on Uzbekistan’s intention to increase transit goods through Azerbaijan and gave details on a promising new joint venture in the automotive industry and growing bilateral trade turnover. Finally, he discusses upcoming bilateral meetings and his first-hand experience of life and work in Azerbaijan.

BY ELENA KOSOLAPOVA
AZERI OBSERVER STAFF WRITER

Question: In recent years, Uzbekistan has paid special attention to creating a favorable business environment for foreign investors. Tell us what benefits and preferences entrepreneurs can count on?

Answer:  First of all, I would like to note that the large-scale reforms, which are underway in Uzbekistan, marked the beginning of a new period in our development – the era of the New Uzbekistan. We have every reason to say that over a historically short period, we have created a completely new atmosphere in various spheres in our country, including the economy. For example, according to the International Monetary Fund and respected rating agencies, Uzbekistan is among the few countries in the world that managed to ensure financial and economic stability, recovery of industrial sectors and economic growth, despite current difficult conditions. The same findings are in the recently published analytical report called Uzbekistan: Soum’er Solstice by the American investment bank J.P. Morgan.

In this regard, I would like to give you some data related to the structural economic reforms and the main macroeconomic indicators in my country. In 2017-2020, the economic growth in Uzbekistan amounted to 18.3% and the GDP reached $60 billion. The foreign trade turnover increased from $24 billion in 2016 to $36 billion at the end of 2020; the industrial production rose by 23.4%. As a result, the share of industry in GDP increased from 19.5% to 27.4% in this period. Thanks to the economic liberalization and simplified customs procedures, our exports increased by 25% to $15.1 billion in 2020 compared to 2016. The positive results of our reforms reflected in various world ratings, created opportunities for the country’s entry into the international financial markets. In particular, this year, foreign investors have bought our state Eurobonds in the amount of $635 million and 2.5 trillion sums, Uzbek Ipoteka Bank’s corporate bonds totaling 785 billion sums and UzАuto Motors Joint Stock Company’s bonds worth $300 million. We have managed to significantly enhance investors’ confidence in our economy. 2.1 times increase in the volume of investments, including a 3 times increase in foreign investments over a short period of time, proves that. Over the past three years, we have implemented reforms in our tax system: some taxes were cancelled, the turnover tax has been abolished, and the value added tax rate has been cut from 20% to 15%. In 2017-2020, the total capital of our banks increased by 5.7 times, or $5 billion. We have passed structural changes in the electric power industry, oil and gas industry and utilities, and taken important steps to create a competitive environment in these spheres. Moreover, a number of infrastructure projects have been carried out: thousands of kilometers of roads, power lines and gas supply lines have been built and repaired. We also consistently develop our public transport sector. In particular, two new underground metro stations and a 12-kilometer-long overground metro line have been commissioned in Tashkent.

I would also like to mention a number of large investment projects, which are being implemented in Uzbekistan, including the third copper-processing plant of the Almalyk Mining and Metallurgical Complex worth $2 billion, which is under construction. Besides, we have recently commissioned a solar power plant, worth $110 million in the Navoi region, which is a very important step towards the development of a new energy system in Uzbekistan. Navoiazot Joint-Stock Company has put into operation nitric acid and ammonia and urea plants. These two projects worth $1.5 billion will lead to a 3-fold increase in Navoiazot total production. All these important developments testify the start of a new stage in the domestic industry’s history. In addition, the number of small businesses and private entrepreneurship in Uzbekistan has doubled, and 1.4 million new jobs have been created in this area. It is worth mentioning that more than half of these enterprises appeared in the last three years. As many as 16 laws and more than 100 resolutions have been passed to ensure freedom of entrepreneurial activity. The procedure of business registration has been simplified over the last year, and the terms for issuing licenses and permits have been reduced. Moreover, all types of inspections have been banned to protect the rights of entrepreneurs. The creation of favorable conditions has prompted 500,000 citizens to register as self-employed over the past year.

Q.: The trade turnover between our countries has grown significantly in recent years. What measures contributed to this growth? What are the main products of our trade? What opportunities do you see in this area?

A.: Uzbekistan sees Azerbaijan as a promising trade and economic partner in the CIS, and we are open to a large-scale expansion of mutually beneficial cooperation. Enhancing cooperation in economic and investment spheres is one of the main priorities in our bilateral relations. We are happy to see the positive trends in trade between our countries in recent years. It is doubly gratifying that the mutual trade grew, despite the crisis in the global economy resulting from the coronavirus. This trend has continued this year with a 31.1% increase in the bilateral trade in January-August. However, the current volume of trade exchange still doesn’t reflect the existing potential. Therefore, we are making efforts to build up cooperation in this direction. To meet this goal, the heads of the relevant structures of Uzbekistan and Azerbaijan maintain active contacts.

In addition, I would like to note that in September this year, we witnessed another important development towards strengthening the Uzbek-Azerbaijani brotherhood – the launch of the Azermash SR joint venture. We thank the Respected President, Ilham Aliyev, who personally visited this enterprise, for the high honor given to the initiators of this project. The automotive industry is the engine of industrial development, which contributes to the growth of intellectual and engineering potential. One job created in the automotive industry creates a base for seven jobs in related industries, thereby pushes their development. Therefore, the creation of Azermash SR is another step towards the prosperity of our countries. The joint venture between Azerbaijan and Uzbekistan will allow the entering of not just the Azerbaijani market, but also the markets of Georgia, Turkey and African countries. I have no doubt that the people in Azerbaijan will like the updated Nexia, Cobalt, Damas and Labo cars, as well as the SamAvto buses. In future, the plant will also produce Chevrolet Onix and Tracker premium cars. Azermash SR’s goals are very ambitious: it plans to produce up to 5,000 cars and up to 1,000 buses per year. The Uzbek party is ready to provide all kinds of support to our dear Azerbaijani partners. The joint venture can and should become an exemplary model of cooperation between our countries, since it is obvious that the potential of such cooperation is unlimited.

Speaking about the development of bilateral cooperation in the economic sphere, I would also like to mention that we are preparing for the 11th meeting of the Intergovernmental Commission on Cooperation, as well as the Made in Uzbekistan national exhibition, which will take place in the city of Baku in December. I am sure that this exhibition will contribute to the expanding economic ties between the businesses of the two countries.

Q.: Tell us about transport cooperation between Azerbaijan and Uzbekistan. What are the trends in this sphere?

A.: You have touched upon a very important issue. Diversification of export routes for Uzbek goods is an important goal for our rapidly growing economy. It is obvious that transportation costs directly affect the final cost of goods and largely determine the products’ competitiveness as a result. Tashkent keeps that in mind while developing a strategy in the transport sphere, as well as building cooperation ties with foreign partners in the area. Coming back to your question, I would like to note that under the leadership of the Respected President, Ilham Aliyev, Azerbaijan has made great strides in developing transport and transit infrastructure, realizing the country’s potential and converting it into a major transit hub between North and South, West and East. In this context, it is necessary to pay attention to the commissioning of the Baku-Tbilisi-Kars railway and the Baku International Sea Trade Port at Alat, and large-scale work on road construction and reconstruction. We see great prospects for cooperation in transport, therefore we broadly use the aforementioned infrastructure to supply Uzbek goods both to Azerbaijan and third countries. I think that our cooperation in transport will continue expanding. The forecast comes from the fact that in April this year, Uzbekistan became a member of the Generalized System of Preferences, which allows duty-free exports of 6,200 types of goods to the European Union. It means that our export to Europe will grow rapidly and our country intends to use the most optimal routes in terms of cost and delivery time. We hope that Baku is also interested in using the potential of our country, located in the very heart of Central Asia, with its great economic and strategic capacity. In this regard, I would like to mention such projects as the Uzbekistan-Kyrgyzstan-China, Mazar-i-Sharif-Kabul-Peshawar railways, which can open up additional supply routes to Eastern and South Asia for Azerbaijan in future. In addition, the Navoi free economic zone in Uzbekistan lays a good basis for deepening cooperation between our countries in the transport and communication sphere. Located at the crossroads of roadways and rail and air routes, the airport of Navoi city connects the countries of Southeast Asia with Central and South Asia, the Middle East and Europe. Creation of joint production facilities and cooperation in intercontinental air transportation here would be especially beneficial for Uzbekistan and Azerbaijan.

Q.: Restoration of the liberated territories is the main priority for Azerbaijan. What projects in these regions could Uzbek companies participate in?

A.: First of all, I would like to use the opportunity and congratulate the leadership and people of Azerbaijan on the liberation of the occupied territories once again on the pages of your esteemed magazine. As for the participation of my country in the restoration of Azerbaijan’s liberated territories, I would like to note that the President of the Republic of Uzbekistan, Shavkat Mirziyoyev, speaking at the informal video summit of the Turkic Council in March, 2021, said that our country was ready to take part in the restoration of ancient monuments, mosques, cultural and educational facilities in the historical land of Azerbaijan. Uzbekistan intends to build a school in these territories. Currently, we are discussing the projects to be implemented by the Uzbek side, with our Azerbaijani colleagues.

Q.: Are there any visits and meetings aimed at deepening bilateral cooperation in the schedule for the coming months?

A.: It is true that frequent contacts have a direct impact on the dynamics of interstate relations development. I am happy to note that the harsh realities of the pandemic have not stopped the active dialogue between our countries at various levels and on the wide range of issues and areas. Moreover, high-tech technologies enriched the capabilities of our communication. I can say that we expect bilateral contacts in economic, cultural, scientific, educational, sport and tourist spheres. They will all be aimed towards one goal: the comprehensive preparation for contacts at the highest level.

Q.: Your country has many places of interest, therefore it is no surprise that tourism was one of the pillars of the Uzbek economy before the pandemic. How does this sector develop in the new reality? Do you plan to take measures to attract tourists from Azerbaijan?

A.: As you know, Uzbekistan is a country with an ancient history, located in the heart of Central Asia on the Great Silk Road. Our country is a home for 7,300 cultural heritage sites, or 90% of all historical monuments in the region. Tourist routes include over 500 of them. The monuments in Bukhara, Samarkand, Khiva and Shakhrisabz are the main pearls.

In recent years, Uzbekistan carried out large-scale reforms in almost all spheres at the initiative of President Shavkat Mirziyoyev. Tourism and everything related to this industry is declared by the state as a strategic sector of the economy. The country works hard to develop our tourist potential, promote pilgrim tourism (ziyarat tourism) among others, as well as provide many benefits and preferences for business.

The introduction of a visa-free travel system for citizens of the majority countries of the world, simplification of the visa issuance procedure for visitors from other countries, and creation of electronic visas became a revolutionary step on the way to tourism development. Today, citizens of 90 countries can visit Uzbekistan without visas, transit passengers from 36 more states can enjoy visa-free entry and temporary stay, and citizens of 57 states may get e-visas, which are issued within 2 working days. All these measures had a positive impact on the tourism sector development in Uzbekistan. Before the pandemic, the tourist flow growth rate was massive: the number of tourists almost doubled year-after-year. For example, 3 million people visited our country in 2017, and the number increased to 6.7 million tourists in 2019.

As for Azerbaijani tourists visiting Uzbekistan, the annual increase in their number before the pandemic was at about 20%. However, the coronavirus has created certain logistical challenges. Nevertheless, we are working to solve this problem and I am sure that direct flights between Tashkent and Baku will resume soon. Moreover, we intend to open an air route between the historical cities of Uzbekistan and Azerbaijan. I can assure you that these plans have long-term prospects. I have spoken to many representatives of fraternal Azerbaijan, who dream of visiting and enjoying the beauty of such ancient and world-famous Uzbek cities as Bukhara, Samarkand and Khiva. At the same time, my compatriots have similar feelings about visiting the beautiful cities of Azerbaijan, including Gabala, Guba, Ganja, Sheki, etc.

Q.: Azerbaijan and Uzbekistan have centuries-old cultural and humanitarian ties. Which joint projects in this sphere are happening now?

A.: Indeed, cooperation in the cultural and humanitarian spheres is one of the main priorities of Uzbek-Azerbaijani relations due to our centuries-old cultural ties, spiritual closeness and similarities in traditions and cultures.  It is a pleasure to see the regular exchange of the representatives of our countries at various international music and dance festivals, scientific Olympiads, sports and other events. This year, despite the pandemic, Uzbekistan has hosted a number of major international cultural events, and delegations from Azerbaijan have attended them. For example, “Central Asia at the Crossroads of World Civilizations” International Cultural Forum in Khiva under the auspices of UNESCO,  a meeting of the Turkic Council member states’ culture ministers, as well as the Pearl of the Silk Road International Film Festival, which took place in several cities – Tashkent, Samarkand, Bukhara, Kokand and Khiva.

The Embassy of Uzbekistan, in turn, is active in organizing and participating in local cultural events, as they contribute to the further strengthening of fraternal relations between the two nations. In addition, a 40-thousand Azerbaijani diaspora in Uzbekistan plays an important role in the development of our cooperation in the humanitarian sphere. They enjoy the same rights and freedoms as all other ethnic groups living in Uzbekistan, and make a worthy contribution to the development of our republic.

Q.: Our final question to conclude the interview. How does it feel to live and work in Baku?

A.: I like this question very much, since it is always a great pleasure to talk about something good. Believe me, all my compatriots who have had an opportunity to visit fraternal Azerbaijan share my feelings. From the very first day of my stay in Azerbaijan, I felt not just the traditional hospitality, which your ancient land is famous for, but also a special warmth, friendship and respect of Azerbaijani people from different social groups. It is primarily due to the historical closeness and similarity of long-term national interests and strategic goals of our countries. While working here, I have seen first-hand that Azerbaijan, despite the harsh current realities, is taking firm and confident steps toward implementation of development and economy diversification programs, and effective use of the country’s rich resources under the leadership of President Ilham Aliyev. All these efforts undoubtedly aim towards the steady improvement of people’s quality of life.

The interview was published in Azeri Observer Magazine’s Autumn 2021 issue.