News Uzbekistan Pagina 2 Van 12 Direction of the Development of the TRACECA Transport Corridor and Eliminate Its Technological Shortcomings

MAY 22 - MAY 31, 2018

CONTENTS

1) News of the period 2

Uzbekistan eyes to receive new trade preferences from EU 2

2) Politics 3

2.1) Meeting with the delegation of the European Union 3 2.2) Uzbekistan to develop SMART government 3 2.3) Uzbekistan, France set to open new horizons for cooperation 4

3) Economy and Finance 5

3.1) Uzbekistan to develop strategy for development of agriculture until 2030 5 3.2) IFC places bonds nominated in Uzbek soums on London Stock Exchange 6 3.3) The World Bank will allocate a $ 100 million loan to improve the emergency medical care system in Uzbekistan 7 3.4) President approves new procedure for granting privileges and preferences [to economic entities] 7

4) Business 8

4.1) Production of Hyundai trucks and buses will be established in Namangan 8 4.2) Japan allocates no-string aid for US$7.3 million to Uzbekistan 9 4.3) Uzbekistan to buy out General Motors’ stake in GM Uzbekistan 9 4.4) Uzavtosanoat plans to attract automakers from Asia and Europe 10 4.5) Uzbekistan intends to organize production of electric vehicles 10

5) Tourism and Culture 11

5.1) Uzbekistan eases tourist registration 11 5.2) Moynak to host “Element” Music Festival 12 5.3) Previously forbidden places became accessible for visits by tourists 10 12

1)NEWS OF THE PERIOD

Uzbekistan eyes to receive new trade preferences from EU Uzbekistan intends to receive new trade preferences from the European Union (EU). These issues were discussed at the talks between Foreign Trade Minister Jamshid Khodjaev and the working group of the Council of the European Union on Eastern Europe and Central Asia in Tashkent on May 23. The purpose of their visit is to familiarize with the political and socio-economic reforms in Uzbekistan, as well as discuss the prospects for expanding cooperation between Uzbekistan and the European Union in the trade and economic sphere. “One of the steps to improve the terms of trade with the EU may be to obtain unilateral tariff preferences in the framework of the Generalized System of Preferences (GSP+) by Uzbekistan. Currently, the republic enjoys the basic Generalized System of Preferences (GSP), according to which the country can export 3,000 commodity items without customs duties and 3,200 commodity positions at reduced rates to the EU,” Khodzhaev noted. In case of being granted tariff preferences within the framework of GSP+, Uzbekistan will get duty-free access to more than 6,200 commodity items, according to the minister. He also added that Uzbekistan is interested in promoting the practical implementation of the agreement on the bilateral trade in textile products by the EU countries. Currently, despite the fact that it will soon be year since the entry into force of the Protocol on Amendments to the Partnership and Cooperation Agreement, the customs services of the EU member states continue to create difficulties in the supply of Uzbek textile products. In this connection, the Uzbek side asked to consider the possibility of rendering assistance in bringing the provisions of the Textile Protocol to the employees of customs services and governments of the EU member states. A well-coordinated logistics system is also one of the important factors in the development of trade relations, Khodzhaev believes. To improve it, he urged EU representatives to step up work on the

//////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// May 2018 News Uzbekistan pagina 2 van 12 direction of the development of the TRACECA transport corridor and eliminate its technological shortcomings. Today, the European Union is one of the most important trade and economic partners of Uzbekistan. As a result of 2017, trade with the EU countries amounted to $2.5 billion, of which $420.7 million fell for export.

2)POLITICS

2.1)Meeting with the delegation of the European Union

On May 22, 2018, a meeting with the head of the working group of the Council of the European Union for Eastern Europe and Central Asia (COEST) Jutta Edthofer was held at the Ministry of Foreign Affairs of the Republic of Uzbekistan. At the meeting, prospective directions of development of cooperation between Uzbekistan and the EU, implementation of previously reached agreements at various levels were discussed. As reported by the Ministry of Foreign Affairs, special attention was paid to issues of developing projects of a Comprehensive Partnership and Cooperation Agreement between Uzbekistan and the European Union, as well as the new EU Strategy for Central Asia.

2.2)Uzbekistan to develop SMART government

Uzbekistan adopted a new strategy for development of e-government, which envisages creation of innovative projects: SMART Government Uzbekistan. This was stated by the Minister on the Development of Information Technologies and Communications Azim Ahmedkhadzjhayev at the conference #MITCROADMAP2018 in Tashkent. The minister stressed that the strategy had absorbed the best world practices and [would be] implemented till 2021. So, what is SMART Government Uzbekistan: The service-oriented government - the new Strategy envisages implementation of a large number of projects to implement the most demanded electronic public services, so in 2018 it is planned to implement more than 50 popular public services, 70% of which are for all categories of citizens and 30% for entrepreneurs . In addition, the modernization of

//////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// May 2018 News Uzbekistan pagina 3 van 12 certain projects related to the provision of public services is planned, include such as the Open Data Portal, the System for Assessing the Impact of Acts of Legislation, and the introduction of a mobile version of the Single Portal for Interactive Public Services. Mobile government - within the framework of the new Strategy it is stipulated that the state strives to be much closer to the population, to create additional conveniences for rendering certain services based on needs and needs. Provision is made for introduction and improvement of mechanisms for the provision of public services. That is, the state will promptly respond to these or other needs of the population and business. The government that responds to the needs of the population at any time - e-government projects help the public to be heard at any time and in any place through any means of communication. A permanent reforming government - public administration should be constantly developing, taking into account the opinions and interests of all segments of the population. In this regard, within the framework of the new strategy, it is envisaged to optimize the administrative procedures of all state bodies, taking into account the eradication of bureaucratic and redundant processes that are taking place at the present time. An open government - the creation of an "Intelligent Government" is impossible without ensuring the openness of government agencies. Thus, information on the activities of state bodies should be available and published in an open form on the Internet. Over the year, it is planned to create more than 400 sets of open data. At the same time, it is planned to improve the activity of state bodies in a virtual environment, taking into account active interaction with the public within the framework of its activities. "We expect that the implementation of the new Smart Government strategy will allow us to shortly enter the TOP-50 countries in the rating of the UN e-government and TOP-50 countries in the Global Open DataIndex," the minister said.

2.3)Uzbekistan, France set to open new horizons for cooperation

As it was reported earlier President Shavkat Mirziyoev is expected to visit France this summer. Although the level of cooperation had been modest between Uzbekistan and France during the last quarter of century, the president Mirziyoyev’s visit will be a good opportunity to bolster the ties, in terms of opening new horizons for co-operation and strategic partnerships between the two countries, thus providing more fruitful opportunities and mutual benefits for them especially in the economic, financial, investment and security sectors.

In preparation for the visit the two sides have been readying various sector deals. In particular, the first deputy finance minister of Uzbekistan Ahadbek Haydarov recently met the deputy director of the French Development Agency Jean-Claude PIRES. The meeting was aimed at strengthening bilateral financial, economic and investment relations, focusing on financing of projects in agriculture sector, while, the agency said it was ready to provide Uzbekistan with a EUR 150 million financial aid. Other accords that are taking shape are construction of a solar photovoltaic plant, launching of Uzbekistan's space program, modernization of heating system of Tashkent city and helpingestablishment of Charvak recreation zone. The French Ambassador to Uzbekistan H.E. Violaine de Villemeurt met with Prosecutor General Otabek Murodov. The Ambassador expressed interest in organizing joint trainings for the Uzbek law enforcement officials at the Academy of Higher Education with the involvement of French experts. French civil defense and emergency situations experts held meetings with their Uzbek colleagues in Tashkent to “share experiences in ensuring the public safety and overcoming the consequences of emergencies.” A number of other important deals are taking shape as the presidential visit is approaching.

3)ECONOMY AND FINANCE

3.1) Uzbekistan to develop strategy for development of agriculture until 2030

Uzbekistan attracted the Russian consulting company Strategy Partners Group to develop a draft strategy for development of agriculture until 2030. This is stated in a draft resolution of the Government of Uzbekistan, developed by the Ministry of Agriculture of Uzbekistan. The document is published on the portal for discussion of draft normative legal acts. The main goal of the draft resolution is to implement measures, aimed at qualitative development of the Strategy for the Development of Agriculture in the Republic of Uzbekistan until 2030. The draft resolution approves the Concept of agricultural development of the Republic of Uzbekistan until 2030, developed by the international consulting company Strategy Partners Group in conjunction with the Ministry of Agriculture of the Republic of Uzbekistan.

On the basis of the concept, it is planned to develop draft strategy of agricultural development of the Republic of Uzbekistan until 2030. The strategy will include such goals as stable growth in the added value of the products, increase volumes, as well as geographical and product diversification of exports, ensure food and environmental safety, increase efficiency of the agriculture industry, yield and productivity, improve quality of rural population, etc. The draft strategy of agricultural development of the Republic of Uzbekistan until 2030 will be developed until 31 December 2018.

3.2) IFC places bonds nominated in Uzbek soums on London Stock Exchange

On 18 May, the International Financial Corporation (IFC) placed bonds in Uzbek soums “SamarkandBonds” on the London Stock Exchange. The total volume of the issue is 80 billion soums, the maturity period is 2 years, the coupon rate is 9.5% per annum. This was reported by the press service of the Central Bank of Uzbekistan. The bonds sale agreements were concluded with three European asset management companies. The organization of transactions was undertaken by the brokerage company ING Capital Markets. Information on the terms of this bond is placed on the terminal of the information agency Bloomberg. The attracted resources will be used to open a credit line in national currency to finance small business projects in Uzbekistan. This transaction is the first of its kind operation with securities in Uzbek soums in international capital markets. The appearance of bonds nominated in Uzbek soums on international markets will positively affect the image of the country, stimulate the interest of institutional investors in Uzbekistan. The interest rate of IFC bonds on the international market will be an indicative benchmark for foreign exchange risk in Uzbekistan. This should help in assessing the economic situation both to foreign financial institutions and investors, and to the economic departments of Uzbekistan. Expansion of lending to projects in Uzbekistan by IFC in the national currency will promote the development of the money market and reduce the level of dollarization in the banking sector.

3.3) The World Bank will allocate a $ 100 million loan to improve the emergency medical care system in Uzbekistan

The Board of Executive Directors of the World Bank on April 25 approved a project to improve the emergency medical care (EMC) system in Uzbekistan, the bank's press service reported. The funding will be provided through a loan from the International Development Association (WB structure) of $ 100 million. Within the framework of the project, integrated dispatch centers will be created in 12 regions of Uzbekistan and in Tashkent, which will be responsible for handling calls, coordinating traffic of EMC vehicles, and also monitoring the activities of their teams. The dispatch centers will be of great importance for the effective use of the resources of the EMC system. Their main element will be a unified automated control and communication system that controls the distribution and availability of resources for a quick and effective response to cases requiring EMC. The project will allocate funds for upgrading the skills of doctors and nurses in the EMC system in order to attract a greater number of medical workers in this area. About 60 modern EMC vehicles will be purchased for distribution among hospitals throughout the country, as well as the necessary equipment to assist patients with various injuries in urgent and emergency cases. Reducing the response time to treatment, modern equipment and upgrading the skills of health workers should help reduce the mortality and health consequences of patients, and increase the confidence of Uzbek citizens in the quality of EMC services. According to Hideki Mori, the head of the World Bank Office in Uzbekistan, thanks to the project, the improved EMC system will be able to provide qualified assistance to about 6 million patients a year.

3.4) President approves new procedure for granting privileges and preferences [to economic entities]

On 31 May 2018, Uzbek President Shavkat Mirziyoyev signed a decree “On cardinal improvement of the procedure for granting privileges and preferences”. The document criticizes the current practice of granting privileges, preferences and exclusive rights for certain economic entities. The resolution said that now the tax and customs privileges and preferences are granted by the laws and acts of the president as a whole for industries, spheres of activity, territories.

At the same time, they must have a specific goal and ensure the achievement of clear social, economic and financial results. Temporary benefits are provided by presidential acts for a period of not more than 3 years, except in cases stipulated by international treaties of Uzbekistan. The document noted that individual benefits are provided by presidential acts, in exceptional cases, for implementation of socially significant projects in sectors, where there is no interest of the private sector in investing, given specific social or economic grounds, or in accordance with international treaties of the country. The president banned government and departmental decisions on granting privileges, approving lists of goods imported (imported) into the territory of Uzbekistan with the application of benefits for customs payments.

4)BUSINESS

4.1) Production of Hyundai trucks and buses will be established in Namangan

During the trip to Namangan region on May 2-3 this year, President Shavkat Mirziyoyev noted that in this region there are no large production enterprises and soon a project on construction of an automobile plant will be implemented here. Twenty days after the trip, the first steps were taken to implement another major project in automotive industry of the country, Evergreen Motors CEO Kim Chang-keon arrived in the region to hold negotiations on the project. At the presentation, which was held with participation of representatives of relevant spheres, information was given on the project, according to which the company will assemble trucks with a carrying capacity from 1 to 50 tons, as well as intercity, international and tourist buses, special vehicles. At first, 8-20 cars will be produced a day, 1000 cars a year. Within three years, this figure will be brought to 3 thousand, that is 2 thousand trucks and 1 thousand buses. If in the beginning the spare parts will be imported from the Republic of Korea, in accordance with the localization program, the production of spare parts will be gradually mastered here in three years. With introduction of this enterprise, about 100 new jobs will be created, and in the future it is planned to bring this figure up to 6 thousand.

Members of the delegation visited the sites recommended for construction of the plant, became familiar with existing conditions.

4.2) Japan allocates no-string aid for US$7.3 million to Uzbekistan

The Japanese government provided no-string aid for over US$7.3 million for the supply of road machinery to Uzbekistan. On 30 May 2018, Japanese Ambassador to Uzbekistan Nobuaki Ito and Chairman of the State Committee for Roads Abdurahmon Abduvaliev signed Exchange Notes within no-string aid under the program of economic and social development. According to the Embassy of Japan in Uzbekistan, within the framework of the document, Japan will provide Uzbekistan with the financial resources for 800 million Japanese yen (over US$7.3 million). This project envisages supply of road equipment of leading small and medium-sized enterprises in Japan for Uzbekistan, which in turn will create a solid foundation for development of the country’s infrastructure potential, and will also provide indirect and direct benefits to the entire people, including the 5.7 million residents of the Syrdarya, Jizzakh, Khorezm regions and the Republic Karakalpakstan. In addition, the project will contribute to economic and social development of the country by ensuring the stability of society.

4.3) Uzbekistan to buy out General Motors’ stake in GM Uzbekistan

Uzbekistan plans to acquire GM’s "remaining" 10% stake in Uzbek-US joint venture GM Uzbekistan, the chairman of Uzbek state-owned vehicle holding company Uzavtosanoat, Umidjan Salimov, told Gazeta.uz news agency on May 31. GM Uzbekistan was thought to be 75%-owned by Uzavtosanoat and 25%-owned by General Motors— there has been no news of Uzavtosanoat having already bought 15% of the company from GM. Salimov neither specified when and at what price his company purchased the bigger portion of GM’s shares in the automaker nor what price it planned to pay for the remainder. In what was seen as the first official criticism of the flagship company, Uzbek President Shavkat Mirziyoyev criticised it this month for failing to create jobs despite enjoying tax and other benefits for decades, Reuters reported. Mirziyoyev said the plant—visited in 2011 by Hillary Clinton when she was US secretary of state—was “useless” because it had no competitors and, according to AKIPRESS, said it was not profitable.

The company was formed in 1996 as UzDaewoo Auto but was renamed GM Uzbekistan in 2008. It is much dependent on imported parts and until last year sold cars domestically for foreign currency. Because of high demand, ordinary Uzbeks have been known to endure months-long waiting lists in order to buy a vehicle.

4.4) Uzavtosanoat plans to attract automakers from Asia and Europe

Uzavtosanoat plans to attract automakers from Asia and Europe to Uzbekistan to demonopolize the industry, the Chairman of the Board of Uzavtosanoat Umijan Salimov said. According to him, now multi-branding for Uzbekistan is one of the priorities. He noted that negotiations are under way with European producers, including Volkswagen, as well as with Chinese and South Korean companies to attract them to Uzbekistan. Umidjan Salimov said that Uzavtosanoat will buy 10% of shares of General Motors in the automobile plant in Asaka. He underlined that there is a corresponding decision of the Government of Uzbekistan. After the repurchase of shares, the name of the plant will be changed. Also, Uzbekistan intends to purchase a 70% stake of GM in the GM Powertrain Uzbekistan, which produced engines in Tashkent. According to the head of the company, after the purchase of stake, this plant will produce “alternative” engines. GM will work in the market of Uzbekistan on the terms of technical assistance. Uzavtosanoat and GM agreed that the Uzbek plant will continue to produce models of the American company.

4.5) Uzbekistan intends to organize production of electric vehicles

Uzbekistan intends to study the issue of organizing production of electric vehicles, Umidjan Salimov, Chairman of the Board of Uzavtosanoat, said. The head of Uzavtosanoat stated that a special group was created in the Innovation Center at the Turin Polytechnic University in Tashkent. This group is studying introduction and organization of production of electric vehicles. A concept for the production of electric vehicles is being developed. The company is also negotiating with potential partners that produce electric vehicles. Salimov noted that negotiations are underway with the Uzbekenergo company to create the infrastructure necessary for electric vehicles.

5)TOURISM AND CULTURE

5.1) Uzbekistan eases tourist registration

By the May 29 Government’s decree, foreign nationals staying in Uzbekistan hotels, medical institutions and other residences shall no longer be held liable for violation of temporary registration rules. Liability for their registration, except for foreigners on a self-guided journey, shall be borne by the inviting or receiving parties (tour operators, hotels and medical institutions, as well as owners of residential premises). Before the said liability was borne by foreign citizens themselves. In case of violation of the law, they had to pay a fine amounting to 50 to 100 times the minimum wage (from 8.6 to 17.2 million UZS, or 1073-2146 USD, MW=170,000 UZS). According to the new procedure, the inviting or receiving parties shall get registration through online notification system, which is due in the near future, or by application to local Police Department. Temporary registration shall be obtained upon arrival within three business days. The three-day period starts at 01:00 AM the next day after the arrival. Foreign nationals will not need registration if their stay in each city, town, village doesn’t last more than three days. In this case, they will need documents confirming the fact of stay (for example, receipt for goods or services). The requirement to get registration in one place for whole duration of stay is scrapped. Foreign citizens traveling on self-guided tours, living in tents or vehicles, may obtain a temporary residence permit by sending an online notification within three days through an app with indication of settlements to be visited. In addition, they can apply to tourist information centers or nearby hotels. In this case, the administrations of tourist information centers and hotels are required to send a notice to the police and provide information about a foreign citizen. Previously, Uzbekistan's legislation did not allow individual tourists to live in tents or in vehicles.

5.2) Moynak to host “Element” Music Festival

On September 14, 2018, festival of abstract electronic music in Uzbekistan "Element» will be held with support of the State Committee of the Republic of Uzbekistan for Tourism Development. The mission of the festival is to raise the awareness of the world community about this problem and increase responsible attitude to the rational use of water and revitalization of the Aral Sea. The subsequent festivals will be aimed at collecting donations for development of the Aral Sea region.

The festival will be held at the ship graveyard in the city of Moynak, in Karakalpakstan. The festival is also aimed at promoting qualitative electronic music.

Visitors of the festival will enjoy sounds of ambient techno, electro, acid techno and other IDM. According to the State Committee for Tourism Development, the sound voyage will last without stopping for about 10 hours. Within the framework of the festival, participants can take a walk tours along ship graveyard, as well as visit local salt pits, which is useful to breathe, as well as visit the museum of local lore.

5.3) Previously forbidden places became accessible for visits by tourists

The Cabinet of Ministers ruled out a number of objects and territories of the country from among those which were banned for visits by tourists. According to the State Committee for Tourism Development, the following territories are available for visiting: • radio-astronomy complex (RT-70) on the Suffa plateau and the adjacent area of the Zaamin district of the Jizzakh region; • within the Jizzakh region - the Guralashsay locality, the road from the Zaamin sanatorium through the Suffa plateau and the Kyzylmazar tract to the village of Muzbulak; • within the Kashkadarya region - Tamerlane cave in the Kalasay gorge, Tashkurgan village, traces of dinosaurs in the Kalasay gorge, waterfall in the Kalasay gorge, the Suvtushar waterfall, the villages of Javuz, Gilan, Kul, the Hadja-Karshavar plateau, Janka Lake, the Severtsev glacier, the "Hazrat Sultan" sacred place. As noted in Goscomtourism, the decision was made to increase the attractiveness of Uzbekistan as a destination for tourism and attract foreign and domestic tourists.