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Overview of London Conference

By Resul Yalcin, 11 November 1997

All,

As you all know a conference on "Doing Business in Uzbekistan" was held on 6-7 November in the Royal Garden Hotel, London.

About 300 people over 25 countries have participated in the conference.

The Uzbek delegates were: The Speakers-: Prime Minister Utkur Sultanov, Minister of Foreign Economic Relations, Elyor Ghaniev, First Deputy Minister of Finance, Abdulla Abdukadirov, General Manager, Almaliq Mining Complex, Vitali Sigedin,

Chairman of the Board of Directors of the Uzbek National Bank for Foreign Economic Activity, Dr. Rustam Azimov,

Chairman of the State Committee for Geology and Mineral Resources, Dr. Tulkun Shayakubov, Deputy Chairman, Uzbekneftegas, Ibrat Zainnudinov,

The Uzbek embassy officials, officials from the Ministry of Foreign Relations, One person from the President's office, journalists, reporters and etc.

The speakers:- There were also the representatives of; IFC, EBRD, ABN AMRO NB Uzbekistan, the WORLD BANK-PIFs, Investment Bank, The Mayer Brown & Platt, the KPMG, Coopers and Lybrand, American Chamber of Commerce, Daewoo, Worldwide Director, Mining, Barents, Newmont Mining Corporation, Western Mining Corporation, Ralli Brothers f Coney, Case Europe, British American Tobacco-Uzbekistan, Société Generale Group.

The Uzbek delegates spent two days to convince the delegates that their country is the best place for investments in the region and assured the business community that they were ready to well come the new investors and would also do their best to solve the problems which the investors in Uzbekistan were facing, and provide a better business environment for them.

The main problems which were raised, were however, the Currency convertibility, local and the foreign firms experiencing problems gaining access to hard currency, Cumbersome registration procedures and weak implementation of laws and regulations and problems with the banking and, the Accounting system.

For the Currency convertibility the Prime Minister Utkur Sultanov made it very clear that there will not be a full convertibility in the very near future. And Dr. Azimov explained in detail the reason and the motive behind the non-full convertibility of the currency. His main points were: They will use the hard currency for the reconstruction of their country. There were several middle men who want to make quick money and disappear. They will not allow this. He also stated that they shall not spend the hard currency, which is needed for the future of their country, be wasted on the luxurious goods. Finally, he said that this measure (non-full convertibility) is a temporary measure, and assured that non of the genuine and large investors will have any problems with gaining access to hard currency.

The representatives of the firms/companies currently conducting business in Uzbekistan have refrained themselves from making any comments against the government policies, nor they ever touched upon any political issues. And those who had came there to seek the opportunities of winning new contracts were also not interested in any comments which might have jeopardize their chances. Thus the agenda was purely "Business" and purely "economic". Those who had problems either discussed their problems in private or discussed them with the Uzbek government representatives during the tea and coffee breaks. The conference was also a good opportunity for those who wished, but were never had the chance of discussing their problems face to face with the ministers, did finally have a chance to do so.

We have also been told that the inflation was reduced from 1200% in '94 to 64% in '96 and for the first time real GDP growth was 1.6% the Uzbek economy is out of the recession and the GDP is expected to be about 5% in '97.

The volume of industrial production increased by 6% in '96 and the production of consumers goods by 7.8%.

By the end of the '96 the number of registered companies had risen to more than 3000 of which 61% had started operations. Agriculture accounted for about 30% of GDP and contributed about 60% of the country's export earnings.

Trade balance - a deficit reaching 8% of the GDP.

It was also discussed and agreed in general that Uzbekistan is preferred for the following reasons:

• there is a clear political stability,
• there is a clear line of authority throughout Uzbekistan.
• there is no power struggle between the authorities,
• good geographical location or (strategic location),
• well educated population,
• it is the financial,
• cultural, and
• industrial center in the region,
• Cultural heritage; Uzbekistan is no stranger to trade and entreprenourship,
• trade and entreprenourship has become the part of the Uzbek Culture from the old "Silk Road",
• it is the gateway for Russian and CIS market,
• it is the gateway for Chinese market,
• there is a dynamic, unique business environment,
• adaptable, integrated & empowered-in-country team,
• rich in natural resources,
• attractive for hospitality and friendliness of people,
• it is the world's fifth largest producer and second largest exporter of cotton,
• it is the world's seventh largest producer and fifth largest proven reserves of gold and etc.

Finally, the World Bank representative has also stated that with some alterations which he would be proposing to the Uzbek government, the "Uzbek model" of economic transition to market economy could well be a model for China and some other developing countries in the future.

After all, the conference has been a well organized one, informative, and the environment was rather warm and friendly.

That is all for now,

Cheers,

Resul