Annexure Financial Solutions August 2019 Uzbekistan Market

Education Sector Overview

General Overview of Education Sector Schoo School age population Annexure Financial Solutions Until 2017 in Uzbekistan the government had played almost l age exclusive role in education sector. The involvement of private Milllions Firdavs Olimov, CFA | Managing Partner sector in Education had been highly limited. The reforms in 2017 2.0 1.9 +86 21 5472 1773 had crucial effect on improving education sector and increasing 1.8 1.7 1.7 [email protected] 1.5 1.6 1.5 private sector participation in private sector. The Education 1.4 1.3 system of Uzbekistan is managed by three ministries - Ministry of 1.4 1.2 Kenneth Lai, CFA | Managing Partner Preschool Education (MoPSE), Ministry of Public Education 1.2 +6012 2252251 (MoPE) and Ministry of Higher and Secondary Specialized 1.0 [email protected] Education (MoHSSE). 0.8 The population of Uzbekistan is growing fast and consists of 0.6 Shawn Abdurakhimov | Research Associate largely young people. Between 2009 and 2016, the population 0.4 +998 71 212 1194 grew from 27.5 million to 33.3 million, 20.8% increase in ten 0.2 [email protected] years. About 37% of the population is under age of 19, indicating 0.0 0-4 5-9 10-14 15-19 that the demand for education is driven by demographic pressure. Men Women Compared to other CIS counties, the government of Uzbekistan has been much larger portion of its budget in education. In 2017 Source: The State Committee of Uzbekistan on Statistics the government spent 6.4% of its GDP on education, which is more that did other CIS counties such as Kazakhstan (2.8%), Tajikistan (5.2%), Belarus (5%), and Russia (3.8%). (WorldBank, 2018)1 Study programs for academic lyceums have been condensed to two years. Upon completing 9th grade, students can choose to attend academic lyceums instead of general secondary schools for grades 10 and 11. To make it more flexible and aligned with the labor market, the government is reforming vocational educationBefore the reforms, students could choose to attend either academic lyceums or vocational Preschool Education colleges. However, under new scheme, students can choose to continue their studies at vocational colleges Preschool education in Uzbekistan is managed by Ministry of only after finishing 11th grade. Depending on the specialization, the programs of vocational colleges will last Preschool Education (MoPSE), which was established in from six months to two years. Several colleges are planned to operate under Public-Private Partnership September 2017 to improve preschool education sector. In (PPP) scheme. Uzbekistan, Children can attend preschools at the age of 3. The number of children preschool age has been increasing at a fast rate over the past twenty years. However, according to the World Bank, the number of preschools in Uzbekistan has decreased by Higher Education 45% over the past 20 years. Today only 0.8 million out of 2.5 Ministry of Higher and Secondary Specialized Education (MOHSSE) manages the higher education system million preschool age children have access to preschool in Uzbekistan. There are currently 109 higher education institution in Uzbekistan out of which 30 are education. (World Bank 2018)1 universities, 35 are institutes, 2 academies, 29 branches of HEI, 1 conservatory, 1 highest school, and 7 In spite of the fact that preschool enrollment rate has increased affiliations of foreign institutions. Besides, the participation of the private sector is limited despite the from 20% in 2007 to 29% in 2017 following the measures taken Government Laws does not limit its participation. Uzbekistan spends very small portion of its education by the government, it still remains low. Although the government budget (5%) on higher education compared to 20% spend by most countries. The enrollment rate is very low invests as much in preschool education as OECD countries, its due to limited capacity of education providers. The supply of higher education is limited mainly because of rate in Uzbekistan remains extremely low compared to such the quotas set by state universities/institutes and very small number of private universities/institutes. countries as Kazakhstan (60%), Finland (79 percent), Moldova Although the number of enrolled students has been increasing over the past twenty years, the gap between (82 %), Russia (85 %), Japan (90 %), and Brazil (82 %). The the number of applicants and enrolled ones has been increasing simultaniously, indicating the increasing costs of preschools impose barrier to enrollments. Especially in demand. rural areas, with low-income population, preschool enrollments are extremely low. To address this issue, government has invested considerable Demand and supply for seats in universities, 2009-2018 amount to this sector. In December 2016, the government approved the “Program for Further Improvement of the Preschool thousands 800 730 20% Education System from 2017 through 2021” with the aim of 19% 680 700 663 18% improving the quality of preschool education. In 2017 the 606 16% 600 15% 543 government announced its plan to achieve 100% enrollment for 5- 14% 481 14% 500 13% 419 432 12% 12% 6-year-old children by 2021. It will be compulsory for all 6-year-old 386 11% 400 351 10% 10%10% children to be enrolled in preschool education starting with the 9% 9% 300 8% 2021/22 academic year. 6% 200 4% 67 57 57 56 57 58 58 58 67 69 100 2% 0 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Admissionss Applications Admission rate, % General Secondary Education and Secondary Specialized Vocational Education Source: The State Committee of Uzbekistan on Statistics General secondary education in Uzbekistan consists of 11 years of compulsory education. The government spends in general Moreover, education market of Uzbekistan was recently opened to foreign suppliers owing to the secondary education in line with EU and OECD countries. implemented reforms by government. The government exempted all foreign higher educational institutions Uzbekistan is in the process of reforming its secondary education accredited in the country from payment of all types of taxes until January 1, 2023. Following these reforms, a system. Until 2017, general secondary education in Uzbekistan decent number of foreign univeristies expressed interest in both providing the service and cooperation with consisted of 9 years of compulsory education. In the 2017/18 local universities and institutes. Namely, in 2018 Webster University (USA) started offering courses on the academic year, general secondary education was expanded to 10 basis of Tashkent University of World Languages, NCUK has launched admission to its foundation programs, years and in 2018/19 academic year the 11th year was added. Amity university established its branch in Tashkent and will offer courses in IT,

1 World Bank. 2018. Uzbekistan Education Sector Analysis. © World Bank.

Annexure Financial Solutions Monthly Report - August 2019 Page 1 Annexure Financial Solutions August 2019 Uzbekistan Market

computer Science, economics and tourism administration starting Schoo Incentives for investments into preschool and general secondary education sector from 2019-2020 academic year. Besides, following universities l age In order to develop preschool and general secondary education sector, increase private sector have announced intentions to open affiliated branches in participation and improve the quality of education, the government of Uzbekistan now provides the Uzbekistan: following incentives for the providers of preschool and general secondary education in Uzbekistan: - National Research Technological University - Moscow Institute of Steel and Alloys - Bauman Moscow State Technical University School type Privileges Obligation - Sechenov First Moscow State Medical University Investor should build necessary - Moscow Architectural University Exemption from all taxes until infrastructure and provide high - Russian Technological University (Russia) January 1, 2021, refund of half quality education services. - Nanjing Polytechnic Institute (China) Private kindergartens of the electricity and gas bills He/she should also set - Yeoju Technical Institute (South Korea) until January 1, 2023. Buildings reasonable prices and support - Universiti Teknologi Malaysia (Malaysia) are given for nil price. children from low-income families.

Investor should build necessary infrastructure and provide high quality education services. Private general secondary Exemption from all taxes until He/she should also set schools January 1, 2021. reasonable prices and support children from low-income families.

Incentives for investments into higher education sector According to the Presidential resolution “On forecast of the main macroeconomic indicators and parameters of the State Budget of the Republic of Uzbekistan for 2018”, which was signed on 29 December 2017, until 1 January 2023, foreign universities are exempt from all types of taxes and mandatory contributions to state trust funds in the framework of their educational activities in Uzbekistan. Moreover, the universities will not pay a single social payment and personal income tax in part of the labor fund of foreign workers.

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Capital Markets Update

Uzbekistan stock market performance, in UZS Top UZS Exchange Rates Major Sectors 31-Jul-19 28-Jun-19 30-Apr-19 MoM QoQ CBU Rates 31-Jul-19 28-Jun-19 30-Apr-19 MoM QoQ UCI 632.1 621.8 626.1 1.6% 1.0% UZS/USD 8,666.7 8,562.3 8,445.5 1.2% 2.6% Financial 565.7 546.8 576.8 3.5% -1.9% UZS/EUR 9,641.7 9,732.0 9,415.0 -0.9% 2.4% Industry 9,839.9 9,706.5 9,451.3 1.4% 4.1% UZS/AUD 5,987.0 5,927.7 5,944.8 1.0% 0.7% Agro-Industrial 1,390.7 1,609.6 1,408.7 -13.6% -1.3% UZS/CAD 6,582.6 6,476.3 6,277.8 1.6% 4.9% Construction 2,680.1 2,894.4 2,974.5 -7.4% -9.9% UZS/TRY 1,528.3 1,471.1 1,422.5 3.9% 7.4% Social sphere 3.3 3.3 3.3 0.0% 0.0% UZS/RUB 136.6 135.3 130.3 1.0% 4.9% Transport 370.9 370.9 530.1 0.0% -30.0% UZS/CNY 1,260.0 1,246.6 1,255.2 1.1% 0.4% Trading 3,705.7 3,098.0 2,951.7 19.6% 25.5% UZS/JPY 79.8 79.8 75.7 -0.1% 5.4% Other sectors 4,952.1 2,449.8 1,971.5 102.1% 151.2% UZS/KZT 22.5 22.7 22.2 -0.7% 1.6% Source: UZSE (Republic Stock Exchange "Tashkent") UZS/KRW 7.3 7.4 7.3 -0.9% 0.4% UZS/GBP 10,729.4 10,908.4 10,909.0 -1.6% -1.6% Uzbekistan Composite Index, in UZS (UCI) - 1 year performance Source: CBU (Central Bank of Uzbekistan) 1600 Major M&A and equity investment deals - YTD 2019 1400 Investment (bln Ownership Target Investor Sector Date 1200 UZS) % North-West 1000 Navigul JV LLC Production 25.7 23.4% March, 2019 Production and 800 Swiss Capital 600 InfinBank International Banking na 15.0% July, 2019 Group AG 400 TBC Bank Group Payme Fintech 5.5 mln USD 51.0% April, 2019 200 PLC Kokand Indorama 0 Production na 96.0% July, 2019 Superphosphate Holdings August, Kapitalbank Promadik Invest Banking na 36.0% 2019 Source: UZSE (Republic Stock Exchange "Tashkent") Source: Spot.uz

Planned IPO/SPOs of Government entities Major share placements - YTD 2019 Ownership Offering Planned Placement (bln Offering Company name Sector Company name Sector Date % type Date UZS) type JSC Commodity Exchange Trading 12.0% SPO 2019-2022 Quartz Production 4.0 SPO April, 2019 JSC Aloqabank Banking 10.0% SPO 2019-2022 Jizzakh Plastmassa JSC Production na IPO April, 2019 JSC Uzsanoatqulrilishbank Banking 10.0% IPO 2019-2022 JSC Asia Alliance Bank Banking 10.0% IPO 2019-2022 Source: Spot.uz Source: Spot.uz

Equity Market Price of Major Companies (in UZS) Major World Indices Ticker 31-Jul-19 28-Jun-19 30-Apr-19 MoM QoQ 200.0 KVTS 4,600.0 6,255.0 7,170.0 -26.5% -35.8% Name Last +/- Time 3 Months YTD 150.0 UZMK 38,760.0 29,500.0 20,000.0 31.4% 93.8% Market Prev. Close % Date 6 Months 1 Year 100.0 UZIR 3,400.0 4,090.0 3,420.0 -16.9% -0.6% NORTH AMERICA UTYK 3,001.0 3,001.0 3,001.0 0.0% 0.0% The Global Dow 2,951.6 11.7 4:35:04 PM 1.3% 8.1% SQBN 16.5 16.3 17.0 1.2% -3.0% USA 2,939.9 0.4% 30-Aug-19 -1.8% -4.6% ALSM 1,400.0 1,640.0 1,670.0 -14.6% -16.2% Dow Jones 26,403.3 41.0 5:07:58 PM 4.9% 13.1% UNVB 5,300.0 5,000.0 5,000.0 6.0% 6.0% USA 26,362.3 0.2% 30-Aug-19 1.5% 1.6% URTS 9,500.0 7,800.0 7,000.0 21.8% 35.7% NASDAQ 100 7,691.0 -11.3 5:16:01 PM 6.2% 20.9% CBSK 12.6 14.4 17.5 -12.5% -28.0% USA 7,702.3 -0.2% 30-Aug-19 7.5% 0.6% QZSM 1,610.0 1,600.0 1,700.0 0.6% -5.3% S&P 500 2,926.5 1.9 5:07:58 PM 4.9% 16.6% AGM1 28,000.0 23,000.0 22,000.0 21.7% 27.3% USA 2,924.6 0.1% 30-Aug-19 4.4% 0.9% KUMZ 1,030.0 1,100.0 1,118.0 -6.4% -7.9% WESTERN EUROPE Source: UZSE (Republic Stock Exchange "Tashkent") DAX 11,939.3 100.4 11:45:00 AM 0.3% 12.9% Germany 11,838.9 0.9% 30-Aug-19 2.9% -4.4% Relevant Information, Major Companies MDAX 25,720.0 329.9 11:45:00 AM 3.2% 18.5% Ticker Company Full Name Principal Activity Germany 25,390.1 1.3% 30-Aug-19 4.3% -5.4% (10.0) KVTS JSC "Quartz" Glass production FTSE 100 7,207.2 22.9 11:35:30 AM -0.2% 7.0% UZIR JSC "O'zbekko'mir" Mining Great Britain 7,184.3 0.3% 30-Aug-19 1.4% -4.1% MNGM JSC "Muborakneftgazmontaj" Oil and Gas services ASIA / PACIFIC UTYK JSC "Uztemiryulkonteyner" Container transportation Australia All Ordinaries 6,698.2 92.5 2:41:36 AM 3.2% 19.1% SQBN JSC "Uzbek Industrial and Construction Bank" Commercial bank Australia 6,605.7 1.4% 30-Aug-19 6.8% 3.7% ALSM JSC "Alskom" Insurance company Hang Seng 25,724.7 21.2 4:08:44 AM -5.1% 2.4% 28 UNVB Private JS Commercial Bank “Universal bank” Commercial bank Hong Kong 25,703.5 0.1% 30-Aug-19 -10.7% -8.7% 28 URTS JSC "Uzbek Republican Commodity Exchange" Commodity exchange KOSPI 1,933.4 -7.7 5:03:30 AM -4.4% -3.8% 28 CBSK JSC "Chilonzor Buyum Savdo Kompleksi" Trade and retail Republic of Korea 1,941.1 -0.4% 29-Aug-19 -11.7% -16.3% 27 27 QZSM JSC "Qizilqumsement" Cement production Shanghai Composite 2,890.9 -2.8 3:59:18 AM -0.8% 17.3% 26 AGM1 JSC "Almalyk MMC" Mining China 2,893.8 -0.1% 29-Aug-19 -3.4% 4.4% 26 KUMZ JSC "Qo'qon mexanika zavodi" Mechanical plant Data was updated on 15th August 2019 26 Source: UZSE (Republic Stock Exchange "Tashkent") Source: Markets Business Insider 2019

Annexure Financial Solutions Monthly Report - August 2019 Page 3 Annexure Financial Solutions August 2019 Uzbekistan Market

Uzbekistan Macroeconomic Indicators

Economic Overview of Uzbekistan (UZS bln) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Nominal GDP 71,875 87,575 84,893 163,171 91,098 130,924 YoY real growth 5.1% 4.9% 5.2% 5.1% 5.3% 5.8% Investments in fixed capital 16,826 24,413 29,829 36,265 29,885 55,890 YoY real growth 29.4% 13.4% 30.9% 18.1% 29.9% 58.9% Foreign investments and credits 4,690 3,906 7,337 (1,272) 10,544 21,895 YoY real growth 1.2% -8.3% 32.9% -14.2% 91.2% 290.0% Retail trade turnover 27,079 39,028 27,075 38,586 32,839 44,285 YoY real growth 2.7% 4.1% 4.9% 5.5% 5.9% 6.4% Source: The State Committee of Uzbekistan on Statistics

Foreign Trade (USD bln) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Foreign trade turnover 7.9 9.8 5.4 10.8 9.4 10.3 YoY real growth 52.0% 46.9% 17.2% 27.3% 27.2% 29.8% Exports of goods and services 4.1 3.7 1.6 4.9 4.1 8.4 YoY real growth 59.0% 31.1% -0.4% 13.5% 20.6% 27.0% Imports of goods and services 3.8 6.1 3.8 5.9 5.3 11.2 YoY real growth 45.2% 62.2% 33.3% 39.6% 32.9% 32.0% Balance of foreign trade 0.2 (2.4) (2.2) (1.0) (1.1) (2.8) Source: The State Committee of Uzbekistan on Statistics

Monthly Macro Data (USD mln) Official reserve and other foreign currency assets Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 a) Official reserve assets 27,222 28,080 27,637 26,618 26,503 27,743 Foreign currency reserves (in convertible) 12,271 13,233 12,854 11,592 11,036 11,462 IMF reserve position 0 0 0 0 0 0 SDRs 373 372 369 369 367 370 Gold 14,578 14,476 14,414 14,658 15,101 15,911 b) Other foreign currency assets 41.5 28.1 61.8 45.0 65.9 63.8 CB refinancing rate 16.0% 16.0% 16.0% 16.0% 16.0% 16.0% Inflation/(Deflation) 1.6% 1.2% 0.9% 0.7% -0.5% Source: CBU (Central Bank of Uzbekistan), The State Committee of Uzbekistan on Statistics

Graphs and Charts

Gross Domestic Products (UZS trln) Investments in Fixed Capital (UZS trln) Retail Trade Turnover (UZS trln) 200.0 6.0% 60.0 55.9 80.0% 50.0 44.3 8.0% 163.2 39.0 38.6 150.0 130.9 5.5% 60.0% 40.0 32.8 6.0% 40.0 36.3 27.1 27.1 87.6 91.1 29.8 29.9 30.0 100.0 71.9 84.9 5.0% 24.4 40.0% 4.0% 20.0 16.8 20.0 50.0 4.5% 20.0% 10.0 2.0% 0.0 4.0% 0.0 0.0% 0.0 0.0% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Nominal GDP YoY real growth Investments in fixed capital YoY real growth Retail trade turnover YoY real growth

Foreign investments and credits (UZS trln) Exports of goods and services (USD bln) Imports of goods and services (USD bln) 30.0 400.0% 10.0 8.4 80.0% 15.0 80.0% 21.9 8.0 60.0% 11.2 20.0 300.0% 60.0% 6.0 4.9 40.0% 10.0 10.5 200.0% 4.1 4.1 7.3 3.7 6.1 5.9 5.3 40.0% 10.0 4.7 3.9 4.0 20.0% 3.8 3.8 100.0% 1.6 5.0 2.0 0.0% 20.0% 0.0 0.0% 1Q18 2Q18 3Q18 4Q18-1.3 1Q19 2Q19 0.0 -20.0% 0.0 0.0% (10.0) -100.0% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Foreign investments and credits Exports of goods and services Imports of goods and services YoY real growth YoY real growth YoY real growth

Official reserve assets (USD bln) Foreign currency reserves, (USD bln) Inflation Consumer Price 14 13.2 28 28.1 2.0% 1.6% 28 27.7 13 12.9 27.6 13 1.2% 28 12.3 0.9% 27.2 12 1.0% 0.7% 27 12 11.6 11.5 26.6 12 27 26.5 11 11.0 26 11 0.0% 10 26 10 -0.5% 26 10 -1.0% Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19

Annexure Financial Solutions Monthly Report - August 2019 Page 4 Annexure Financial Solutions August 2019 Uzbekistan Market

Upcoming events in Uzbekistan - 2019

№ Title Description Date Venue

8th meeting of the Asian Cotton The event is organized by the International Cotton Advisory International hotel Tashkent 1 Research and Development Committee and will be held within the framework of Global Textile September 9-11 Network Days Tashkent 2019

2nd International Exhibition for The unique specialized exhibition of textile and garment industry 2 Textile and Fashion Industries - September 11-13 NEC "Uzexpocentre", Tashkent attended by international participants and visitors in Uzbekistan. UzTextile Expo

2-nd Central Asian International Exhibition «Green technologies, GETCA 2019 - is the only specialized event in Uzbekistan which International hotel Tashkent 3 environmental protection and will gather well-known producers and developers of October 9-10 recycling – GET Central Asia environmentally friendly equipment and technologies. 2019»

10th International Exhibition on The exhibition is dedicated to the modern achievements in the the Industry of Plastics and field of plastics, natural rubber, and chemicals. It promotes the 4 October 9-11 NEC "Uzexpocentre", Tashkent Polymers – Plastex Uzbekistan entry of foreign producers into the new and fast-emerging market 2019 of Uzbekistan

21st International Exhibition on O’ZuPACK - O’ZBEKinPRINT - the most effective platform for Packaging and printing - establishing and maintaining close ties between business circles 5 October 9-11 NEC "Uzexpocentre", Tashkent O’ZuPACK- O’ZBEKinPRINT of Uzbekistan and the leading players of the international 2019 packaging and printing industry of Central Asia Cultural and Ethnographic International Franchise and For further information, please email to Complex "Dasmia", 6 Trade Expo & Bishkek October 10-11 [email protected] Bishkek, Kyrgyzstan Investment forum

Study UK programme exhibition to explore new business opportunities in Uzbekistan and https://education-services.britishcouncil.org/exhibition/study-uk- 7 October 15 Tashkent the round table around uzbekistan-october-2019 Transnational education in Uzbekistan

14th International Exhibition on The unique specialized exhibition in Uzbekistan representing a Mining, Metallurgy and 8 range of technologies and services for the mining industry and November 5-7 NEC "Uzexpocentre", Tashkent Metalworking – Mining Metals metalworking. Uzbekistan 2019

16th International Exhibition on The unique event that brings together at a single platform the 9 Transport and Logistics international experts and professionals of transport & logistics November 5-7 NEC "Uzexpocentre", Tashkent –Translogistica Uzbekistan 2019 industry

Conference is supported by EBRD, 50% discount will be provided 10 Conference Trade Finance 2019 November 6-7 Tashkent for the British Embassy guests

11th Central Asian International Securex Uzbekistan is the International security, safety and fire Exhibition on Protection, prevention exhibition. It is the largest event in Central Asia’s 11 November 20-22 NEC "Uzexpocentre", Tashkent Security and Fire Safety security industry. It is the only professional event in Uzbekistan –Securex Uzbekistan 2019 covering all sectors of the security market.

The event programme will focus on key regulatory updates and Glaziers Hall, 12 UzInvest Forum 2019 empower delegates with market intelligence and expert insights, November 27 London Bridge especially as they pertain to new investment opportunities. * Updated as of 23 August 2019

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Annexure Deal Flow

Investment amount (mln № Sector Type Project description IRR USD) - Project 1: c.200 Operational & - Investment in residential and commercial real 1 Real Estate - Project 2: 180 Greenfield estate - Project 3: c.350 2 Real Estate Operational - sale of business center in Tashkent CBD c.20

- Mall 1: 32.6 - Mall 1: 17.3% 3 Malls Greenfield - investment in newly built shopping malls - Mall 2: 29.2 - Mall 2: 15.2% - Mall 3: 19.3 - Mall 3: 14.9%

4 Textile Greenfield - investment in cotton yard and denim factory 350 23.3%

5 Leasing Operational - selling its c.40% stake c.8

6 Textile Greenfield - cotton yarn production 22

7 Insurance Operational - controlling stake sale to strategic investors 1~1.2 - 7 projects related to building materials 8 Building materials Greenfield 2~29 - 1 greenhouse project - equity investment in leading ready-mixed 9 Building materials Operational c.70 concrete maker - build modern transportation logistics complex 10 Logistics Greenfield 14 33.5% in Uzbekistan - equity Investment in cosmetics company in 11 Cosmetics Operational 5~10 Uzbekistan * Updated as of 30 August 2019

Update on Annexure’s recent activities and future plans

Update on Annexure’s future plans Update on past activities

2nd October – 2019. Business Seminar in Chungbuk province, Korea June, 2019 On 2nd October, 2019 Annexure plans to organize a business seminar in Shanghai, China, Seoul, Korea - 24-28 June 2019. Annexure Financial Solutions in cooperation with in in collaboration with Chungbuk Techno Park to discuss business and investment Uzbekistan Banking Association and Korean Banking Institute organized training on opportunities in Uzbekistan. Project Financing for commercial bankers from Uzbekistan in Seoul, Korea. http://www.annexurefs.com/news

Mid-October – 2019. Business tour to Uzbekistan for Chinese companies May, 2019 Annexure plans to organize a business tour to Uzbekistan for Chinese companies. Tashkent and Fergana Valley, Uzbekistan - 18-23 May 2019. Annexure Financial Solutions organized meetings between 9 Chinese food & fruits trading companies Mid-November – 2019. Business tour to Uzbekistan for Korean companies in and exporters of cherry in Uzbekistan, and cherry tour to Fergana Valley. Chungbuk province http://www.annexurefs.com/news Annexure plans to organize a business tour to Uzbekistan for Korean companies in Chungbuk province. April - May, 2019 Tashkent, Uzbekistan - 22 March - 5 May 2019. Annexure Financial Solutions organized training sessions on Financial Modeling for students & graduates of local universities http://www.annexurefs.com/news

February, 2019 Hangzhou, China - 20 February 2019. Firdavs Olimov, Managing Partner of Annexure Financial Solutions presented Uzbekistan investment opportunities in “Uzbekistan-China Business Forum” in Hangzhou, China. Over 100 Chinese companies from different sectors attended the forum. http://www.annexurefs.com/news

November, 2018 Tashkent, Uzbekistan - 9 November 2018. JB Financial Group held a FinTech Workshop on Obank, its open banking platform, in collaboration with Uzbekistan Banking Association and Annexure Financial Solutions. Representatives from commercial banks and government organizations attended the workshop. http://www.annexurefs.com/news

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Monthly News Picks

Metals&Mining

A large project of domestic industry to be implemented on the basis of Tebinbulak The Central Bank not set prices for the sale and purchase of foreign currency 20 August 2019 | Tashkent, Uzbekistan (UzDaily.com) 20 August 2019 | Tashkent, Uzbekistan (UzDaily.com) • President of Uzbekistan Shavkat Mirziyoyev got acquainted with the construction project of a • From now on, the Central Bank of Uzbekistan will not set prices for the sale and purchase of mining and metallurgical complex based on the Tebinbulak deposit in Karauzyak district. foreign currency. This was stated by Chairman of the Central Bank Mamarizo Nurmuratov. • The raw material reserve of the field is estimated at 1.1 billion tonnes. According to preliminary •According to him, the exchange rate of the Uzbek sou will be formed independently in the market. estimates, it is planned to mine 33 million tonnes of ore per year and get 1.5 million tonnes of iron Source: http://www.uzdaily.uz/en/post/51374 from it. • The mining and metallurgical complex will have an annual production capacity of 900,000 tonnes of fittings, 225,000 tonnes of wire, 375,000 tonnes of corners, channels and other materials. The implementation of the project will contribute to the replacement of a significant volume of imports and the sustainable development of industry. The complex will provide work for more than 2,000 Others people. It is planned to export 35 percent of the products. • The companies "DMT-Group Consulting" (Germany) and "Horst Wiesinger Consulting" (Austria) Uzbekistan to provide additional benefits for the development of sericulture were involved in the preparation and implementation of the project. Source: http://uzdaily.com/en/post/51390 03 August 2019 | Tashkent, Uzbekistan (UzDaily.com) •President of Uzbekistan Shavkat Mirziyoyev signed a resolution “On additional measures for the development of deep processing in the silk industry”. •The document said that till 1 August 2022, the silk industry enterprises are provided with Energy subsidies to compensate up to 50 percent of the costs of transportation of 8 types of products by air and rail to the United States, the European Union and Turkey. The compensation will be paid Two combined cycle plants with a capacity of 230 and 280 MW to be launched at the due to the expense of the state budget. Takhiatash TPP in 2020 •Starting from 1 January 2020, 50 percent of the collected fines for illegal cutting, damage or 08 August 2019 | Tashkent, Uzbekistan (UzDaily.com) destruction of mulberry plantations are sent to the planting of new mulberry seedlings in the • In Uzbekistan, a number of projects are being implemented in this direction. One of them is territory, where the offence was committed. designed to cover the need for electricity in Karakalpakstan. •Tax benefits established by law for legal entities with an export share of more than 15 percent of • Currently, construction of two combined cycle plants with a capacity of 230-280 MW at the the total revenue from the sale of goods (works, services) also apply to products made of raw silk Takhiatash TPP. Commissioning is scheduled for 2020. and silk wool till 1 January 2021. •The design capacity of the project is 510 MW, the total cost is US$678.2 million. Source: http://uzdaily.com/en/post/51132 •Putting two combined cycle power plants into operation will allow the Takhiatash TPP to cover the predicted increase in electricity consumption with an annual fuel savings of 488.6 million m3 than with the operation of the currently operating equipment. Fiat Chrysler Automobiles intends to invest in auto industry of Uzbekistan •It is planned that the average efficiency of TPPs will increase from 31.21 to 49.7%, the annual 12 August 2019 | Tashkent, Uzbekistan (UzDaily.com) amount of generated electricity will amount to 3.6 billion kWh, the annual amount of generated heat •The Italian-American concern Fiat Chrysler Automobiles is interested in establishing industrial - 139,000 Gcal. 97 new jobs will be created. cooperation by creating a car manufacturing enterprise in Uzbekistan with foreign investment. This •At the moment, a contract has been signed with the general contractor on a turnkey basis between was stated by vice president of the company Youssef Hajas. Uzbekenergo and the Consortium of Hyundai Engineering Co. Ltd. in conjunction with Hyundai •According to the Tahlilnom broadcast of Uzbekiston 24, Fiat Chrysler Automobiles suggests using Engineering & Construction Co. Ltd.. the TOFAŞ project in Turkey as a guideline for setting up a joint venture in Uzbekistan. Source: http://uzdaily.com/en/post/51219 •Youssef Hajj noted that Uzbekistan is seen as the preferred location for the creation of the second enterprise for the production of Tipo, Fiorino and Doblo models under the Fiat brand. •According to him, TOFAŞ plans to start producing crossovers in 2021 and is working on the ADB to support PPP project for the construction of a photovoltaic station development of a pickup model, which can also be made in Uzbekistan in the future. 16 August 2019 | Tashkent, Uzbekistan (UzDaily.com) Source: http://uzdaily.com/en/post/51275 • On 16 August 2019, the Ministry of Energy of the Republic of Uzbekistan signed an agreement on the provision of consulting services with the Asian Development Bank on a project to build a number of photovoltaic stations with a total capacity of up to 1000 MW on a public-private Uzbekistan approves procedure for compensating transportation costs during the export of partnership (PPP) basis . This was reported by the press service of the Ministry of Energy of products Uzbekistan. 12 August 2019 | Tashkent, Uzbekistan (UzDaily.com) • The total capacity of photovoltaic stations is up to 1000 MW, the estimated cost of the project is • The Government of Uzbekistan approved the regulation on the procedure for compensating 800 million US dollars. transportation costs during the export of products at the expense of the State Budget of the • This project will be implemented by the Ministry of Energy with the assistance and coordination of Republic of Uzbekistan. ADB, the Ministry of Investment and Foreign Trade, and the PPP Development Agency. The start •According to the Regulation, a procedure has been established for reimbursement to local of the project is planned in 2021. exporting enterprises of up to 50 percent of expenses for exporting products for rail transportation Source: http://uzdaily.com/en/post/51341 at the expense of the State budget.. Source: http://uzdaily.com/en/post/51282 Macroeconomy President signs law on privatization of non-agricultural land Uzbekistan sets main directions of reforming and accelerated development of the insurance 13 August 2019 | Tashkent, Uzbekistan (UzDaily.com) market • On 13 August 2019, President of Uzbekistan Shavkat Mirziyoyev signed the law “On the 03 August 2019 | Tashkent, Uzbekistan (UzDaily.com) privatization of land plots for non-agricultural purposes”. • The President of Uzbekistan Shavkat Mirziyoyev signed a resolution “On measures to reform and • In accordance with the Law, land privatization is carried out in the following forms: ensure the accelerated development of the insurance market of the Republic of Uzbekistan”. redemption by legal entities and individuals of land plots that are on the basis of permanent use • The resolution said that the minimum authorized capital of insurers will be gradually increased (possession) or inherited lifetime possession; during 2020-2022. sale of land through an electronic online auction. • At the same time, the limit size of the reserve Fund of the insurance company, formed by • According to the law, residents of Uzbekistan - individuals and legal entities can privatize land. deductions of up to 20 percent of income with reference to deductible expenses, will be increased • The following land plots are not subject to privatization: to 50 percent of the authorized Fund of the insurance company located in territories, which do not have approved and published layout plans; Source: http://uzdaily.com/en/post/51142 on which mineral deposits are located, strategic objects of state ownership that are not subject to privatization, the list of which is determined in accordance with the law; that are part of the lands of environmental, recreational and historical-cultural purposes, as well as lands of forest and water funds, general use of cities and towns (squares, streets, driveways, Commercial banks start to sell cash foreign currency roads, embankments, squares, boulevards); 20 August 2019 | Tashkent, Uzbekistan (UzDaily.com) infected with hazardous substances and susceptible to biogenic infection; •On 20 August, commercial banks in Uzbekistan began selling foreign currency in cash through exchange provided to participants of free economic and small industrial zones. offices, the Central Bank of Uzbekistan said. • The law comes into force on 1 March 2020. •“As part of the implementation of measures to further liberalize the foreign exchange market, starting from Source: http://uzdaily.com/en/post/51299 20 August 2019, the commercial banks started selling foreign currency in cash through exchange offices,” the regulator said in a statement. Source: http://www.uzdaily.uz/en/post/51371

Annexure Financial Solutions Monthly Report - August 2019 Page 7 Annexure Financial Solutions August 2019 Uzbekistan Market

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