After 2 year-long process of negotiations and regular checks by the European Commission, which dragged out due to the COVID-19 pandemic, the EU has finally accepted the Republic of Uzbekistan as the 9th beneficiary country of the special incentive arrangement for sustainable development and good governance, more known as GSP+. Under this new arrangement, the EU will start applying preferential treatment for products imported from Uzbekistan, granting full removal of tariffs on over 66% of tariff lines covering a very wide array of products including, for example, textiles and fisheries - writes Vita Kobiela
There are strict criteria to fulfil to be granted a GSP+ scheme. Uzbekistan firstly had to meet economic criteria followed by political ones (the most difficult), which means, to ratify the 27 international conventions on human rights, climate, labour rights, etc. However, it is not enough to simply ratify them: all of them should be implemented and exercised, under the scrutiny of the European Commission and the EEAS.
This kind of development in their bilateral relations shows once again, that Uzbekistan is highly relevant for the EU and its growing importance as a reliable economic partner in the Central Asia region is being recognised.
It is worth mentioning, that this importance has been acknowledged not only by the EU as a whole but also by its Member States.
For example, on the 30th of March 2021, Prime Minister of Hungary Victor Orban together with the President of the Republic of Uzbekistan Shavkat Mirziyoyev has signed a strategic partnership agreement. This document among many other intergovernmental agreements, opened a new window of opportunity and cooperation not only for their states but also for the two regions, which they respectively represent: Central-Eastern Europe and Central Asia. This strategic partnership can be perceived as a historical occasion, which opens a new road for Europe to Asia and vice versa.
Coming back to the GSP+, it is essential not to underestimate the overall meaning of this event, which is crucial for both the EU and Uzbekistan.
Of course, from the economic perspective, the GSP+ scheme gives more benefits to Uzbekistan. Around 74% of the total export to the EU has been already exported under the previous GSP programme. That being said, after being granted GSP+, this number is expected to double, which will boost exports and attract additional investments to the country. The GSP+ commitment to sustainable development further strengthens Uzbekistan's international position as a reliable and forward-looking economic partner.
For the EU, however, this upgrade in bilateral relations has nothing to do with economic interests. Despite the fact, that the EU is the fourth top trading partner for Uzbekistan (in total trade as of 2019), still in comparison to the EU’s FTAs, DCFTAs partners, the presence of Uzbekistan in the European market is minimal. For example, when it comes to the agri-food trade, Uzbekistan is in the EU's 95th position, as a food exporter, the same numbers concerns other items such as machinery and transport equipment, etc.
Nevertheless, it can change after the conclusion of the new Enhanced Partnership and Cooperation Agreement with the country, which is still in the negotiation process.
The biggest advantage of the GSP+ for the EU is that it gives it the right to regularly monitor the implementations of the abovementioned 27 international conventions, while at the same time will allow Brussels to promote universal values and ensure their strict implementation in Uzbekistan.
During the press conference in Tashkent, the Head of the EU Delegation to Uzbekistan, Ambassador Charlotte Adrian noted: "The application of the GSP+ system of preferences to Uzbekistan is very timely, especially in the period when the country is recovering from the COVID-19 crisis. It is also a good incentive for the further implementation of reforms in Uzbekistan related to the implementation of 27 major international conventions on the environment, human and labour rights, as well as good governance»1.
Minister of Investment and Foreign Trade of the Republic of Uzbekistan Sardor Umurzakov at the same press conference said: "The decision of the European Union to grant our Republic the status of a GSP+ beneficiary country was taken given the tangible results of the large-scale reforms and transformations carried out under the leadership and on the initiative of the President of the Republic of Uzbekistan, which is aimed at establishing a democratic state with strong institutions of governance and civil society".
Indeed, this tiny from the European perspective economic „carrot” is a supporting hand for the country in its difficult period of transformation towards the "new Uzbekistan". Uzbekistan is pressed between Russian and Chinese influence, having, in general, no choice but to follow their political model of governance, just to survive. Thus, European openness and a pro-active attitude will encourage the country in its struggle towards an independent and prosperous state. Even more, after experiencing European Single Market and all benefits stemming from that, as well as the successfully implemented international conventions, Uzbekistani businesses, civil societies and authorities will be motivated to move forward in its relations with the EU, making its first steps towards the European path of development.
Since 2016, Uzbekistan has embarked upon a path of economic and political reforms. Many achievements highlight the political will to modernise and transform the country. This novel approach puts Uzbekistan positively in the spotlight in Central Asia, a region that is itself the object of renewed attention in the context of the EU Connectivity Strategy.
Upgrading Uzbekistan from the GSP to GSP+ marks the beginning of a new path in the EU-Uzbekistan partnership, based on the stable and long-term enhanced cooperation. The next step is to conclude Enhanced Partnership and Cooperation agreement, help Uzbekistan in its accession to WTO and keep building on this positive momentum to finally connect Europe with Asia, by reinvigorating its relations with Central Asian states.
Worthy of the timeless monuments of the glorious past: In 2022 Uzbekistan will see the grand opening of Silk Road Samarkand, a unique tourist complex
In 2022, Silk Road Samarkand, a multifunctional tourist complex designed to become a modern attraction not only of the city of Samarkand, but also of the entire Central Asia, will be opened for visitors. The complex will combine cultural, gastro, medical and business tourism facilities.
The new complex will house world-class hotels, specialized boutique hotels, contemporary public spaces, parks, recreation and sports areas, authentic restaurants, cafes and bars, as well as an international congress hall and sites of cultural interest. The state-of-the-art project developed by an international team of architects and engineers will allow for combining various thematic zones into a balanced architectural ensemble without parallel in the entire region of Central Asia.
The scale and significance of Silk Road Samarkand are to make it a well-deserved follow-up to the sublime monuments of the past and a driver of tourism development in the region. The name of the center was selected deliberately: the routes of the Great Silk Road passed through the territory of current-day Uzbekistan from the II century BC until the XV century, and ancient Samarkand was one of the most important stops for trade caravans.
The new complex is located in the eastern part of the city and covers an area of about 260 hectares. It centers around the affluent waterway of the Samarkand rowing canal, which in Soviet times served as a training base for the USSR national team and a venue for All-Union competitions.
The complex includes multiple various zones. To the north of the rowing canal is a Business Cluster, including a congress hall and four upscale hotels with beautified territories. The Southern Cluster includes four boutique hotels, each operating in their own medical and sanatorium area of activity, as well as an eco-village, the Eternal City historical and ethnographic complex, and some shopping areas.
The business cluster
Silk Road Samarkand has eight hotels, four each on the northern and southern banks of the rowing canal. They will provide for a total of about 1,200 rooms. To the left of the congress hall, a 22-storey five-star Samarkand Regency Hotel with 234 rooms, including executive suites and two presidential suites, will be put up. This is the first and only hotel in Central Asia being part of LHW, the world's leading hotels association.
Savitsky Plaza, a hotel named after Igor Savitsky, an honored artist of the Uzbek SSR and a collector of avant-garde art objects, is distinguished by its one-of-a-kind interior design and has 179 rooms available for the guests.
Other hotels of the highest category include Silk Road by Minyoun with 242 rooms and Stars of Ulugbek by Lia! Minyoun, named after the great astronomer and mathematician of the Timurid era, counting 174 rooms. Both buildings are managed by the leading Asian hotelier Minyoun Hospitality.
All hotels have conference rooms, meeting rooms, restaurants, bars, gyms, SPAs and swimming pools.
The Congress Hall
At the international congress hall, a multifunctional hall, presidential and VIP halls, rooms for delegations and meeting rooms, as well as banqueting room and exhibition hall will be available.
The medical cluster
The medical cluster of Marakanda Park Hotels will be situated to the south of the rowing canal. Each of the four boutique hotels specializes in a certain type of medical services: preventive medicine, detox, joint and spine treatment, and pulmonary medicine. The second floors of the hotels are allocated for health centers. In addition to medical and treatment rooms, the hotel guests will be offered the services of a cosmetician, massage, mud therapy, therapeutic showers, infrared sauna, pressure chamber. The offered programs are developed for 3, 7, 10 and 14 days of stay. The hotels of the cluster will have a total of 366 rooms.
The Eternal City
Over more than 10 hectares, the image of an ancient city has been recreated, inviting guests of the resort to experience the history and traditions of the lands and peoples of Uzbekistan. Artists, artisans and craftsmen will "settle" on the narrow streets. Visitors to the city will be offered to try national cuisine from different eras and regions of the country and watch authentic street performances. The Eternal City will provide guests with an exceptional opportunity to find themselves at the borderline of Parthian, Hellenistic and Islamic cultures, and observe the diversity of the bygone centuries' heritage with their own eyes. The author and curator of the project is the famous modern Uzbek artist Bobur Ismoilov.
The place of attraction
Resort guests will enjoy green pedestrian zones, open spaces and a well-designed environment. The entrance will be decorated in traditional motifs reminiscent of the majestic arches of Registan. Sports grounds and bike paths, the Volcano aqua zone with swimming pools and a variety of cafes and bars are sure to become a place of attraction. Bicycle rental will be available.
“Samarkand was a major stop on the Great Silk Road, a place where entire civilizations crossed. We believe that Silk Road Samarkand will become a center of international tourism, where residents of the city, tourists, travelers and businessmen from all over the world will be able to spend time with pleasure and benefit. I am sure that the opening of the complex will launch a new era in the history of tourism in Samarkand,” said Artiom V. Egikian, CEO of the managing company of Silk Road Samarkand.
The complex is easily accessible by transport: it takes 20 minutes by car to get there from the historical center of the city, 15 minutes from the international airport and 25 minutes from the train station. The project includes the construction of a road junction and a bypass bridge. You can get to the resort both by car (parking lots are available) and by special shuttles that will be launched when the center opens.
Development of the economy of Uzbekistan in the first half of 2021
Despite the ongoing pandemic in the world, the economy of Uzbekistan has reached record growth rates. According to the State Statistics Committee of the Republic of Uzbekistan, the gross domestic product for the first six months of this year increased by 6.2%. For comparison: over the same period last year, due to the pandemic and lockdowns, the economy grew by only 1.1%, and in the first three months of 2021 - 3%, writes Ruslan Abaturov, Centre for Economic Research and Reforms.
At the same time, it should be noted that Uzbekistan’s main trade partners’ economy is stabilizing at the end of the six months and returning to the growth trajectory. Thus, Kazakhstan's GDP increased by 2.2%, against the decline for the same period last year by 1.8%. The Kyrgyz economy is gradually decreasing, in January-June, the rate of decline slowed to 1.7% against 5.6% in the first half of 2020. China maintains dynamic growth this year, where a 12.7% increase in GDP is recorded in the first half year. In Russia, GDP grew by 3.7% during January-May.
In Uzbekistan, inflation in the consumer sector continues to slow, despite serious price hikes for certain commodities such as carrots and vegetable oil. According to the results of six months, prices increased by 4.4% while in 2020 over the same period - by 4.6%. By May 2021, prices decreased by 0.2% due to seasonality. The largest increase in prices is noted for food products - by 5.7% (in the first half of 2020 - 6.2%). The rise in prices for non-food products is also slowing down - 3% against 3.6% in January-June 2020.
The inflow of investment in the first quarter of this year has shown positive dynamics. Investment in fixed assets rose by 5.9% against a decline of almost 10% in the same period last year. Investments from the budget decreased by 8.5%. Investments and loans attracted under the guarantee of the government decreased by more than 36%, and their share in the total volume of investments fell to 8.9%. The inflow of investments from non-centralized sources has noticeably increased - by 14.9%. Investments at the expense of the population and own funds of enterprises increased insignificantly - by 4.4% and 4.7%, respectively. A significant inflow of investments is due to the growth of attracted loans from commercial banks, foreign direct investment and credit funds from abroad.
The positive dynamics of production is noted in all sectors of the economy. The main drivers are industry and the service sector.
The industrial sector in January-June demonstrates high growth rates - 8.5% against a decline of 0.3% over the same period last year. The mining industry grew by 7.5% (a decline of 18% in January-June 2020), the manufacturing industry - by 8.6% (4.9%), electricity, gas and air conditioning - by 12.1% (8.4%). The production of consumer goods increased by 7.7% against the growth of 1.2% in the same period last year, with the outstripping dynamics in the production of food products.
The service sector, such as tourism, catering and accommodation, demonstrates impressive dynamics - an increase of 18.3% in the first half of the year versus an increase of 2.6% in January-June 2020. The transport sector is actively recovering after last year's decline: freight turnover increased by 14.1%, passenger turnover by 4.1%. Retail trade in the period under review increased by 9%.
A slowdown in relative to last year is noted in agriculture to 1.8% versus 2.8%, which is due to difficult weather conditions this year and lack of water. The growth rates of the construction sector also slowed down to 0.1% against 7.1% in the first half of 2020.
Foreign trade also managed to overcome the recession. In the first half of this year, sales grew 13.6% to $18 billion. In the same period last year, there was a significant decline of 18%. During the period under review, exports grew by 12% to $7.1bn and imports by 14.4% to $11bn. In the second quarter, Uzbekistan sold gold abroad against the background of positive price conditions on the world market. However, it should be noted that in the first six months the volume of exports without gold increased by 36.4% and reached $5.7bn.
In the structure of exports, the volume of food supplies to foreign countries increased by 6.3%, chemicals by 18.6%, industrial products by 74.4% (mainly textiles, non-ferrous metals), machinery and transport equipment doubled.
At the same time, there is an increase in imports of food products by 46.2%, industrial products by 29.1% (mainly metallurgical products), chemical products by 17%. Imports of machinery and equipment with the largest volume increased by 1.4%.
Thus, according to the results of the half-year, the economy of Uzbekistan is actively overcoming the consequences of the crisis and reaching the dynamics ahead of the pre-crisis indicators.
Uzbekistan is a tourist country
Since ancient times, Uzbekistan has been in the center of Great Silk Road and has a great historical, cultural and architectural heritage. Samarkand, Bukhara, Khiva are the brands of the ancient culture of the East. The landscapes of mountains and deserts of Uzbekistan attract attention and admiration of the Internet community. Therefore, the tourism potential of this country can hardly be overestimated and the government is making significant efforts to develop it, writes Khasanjon Majidov, Leading Researcher at the Centre for Economic Research and Reforms.
Explosive development of tourism
At the beginning of 2016, a process of radical reform of the tourism industry was launched in Uzbekistan. More than 60 regulations were adopted related to the development of tourism industry during the 2016-2020.
The visa regime between the countries was simplified. In 2018, Uzbekistan introduced a visa-free regime for citizens of 9 countries, in 2019 for citizens of 47 countries, in 2020 - 2021 another 5 countries. As of May 10, 2021, the number of countries for citizens of which a visa-free regime is granted in the Republic of Uzbekistan is 90 countries.
In addition, citizens of about 80 countries have the opportunity to apply for an electronic visa in a simplified manner. Five new types of visas have been introduced for foreigners: "Compatriot", "Student", "Academic", "Medicine" and "Pilgrimage". According to the Ministry of Tourism and Sports of the Republic of Uzbekistan, the simplification of the visa regime has yielded positive results. In particular, in 2019, if the average growth in the number of foreign tourists was 26%, then the growth rate among the countries where the visa-free regime was introduced reached 58%.
The government took comprehensive measures to develop tourism infrastructure. Firstly, 22 types of requirements regulating the activities of hostels related to the type of budget housing have been canceled. In particular, the procedure for mandatory certification of hotel services provided by hostels has been canceled and the practice of working with a unified register of guest houses and hostels has been introduced. Secondly, in order to increase the number of small hotels, entrepreneurs were provided with 8 standard projects of small hotels up to 50 rooms free of charge and this measure is developed based on the experience of Turkey and South Korea.
As a result, the number of placements in the country has increased dramatically. In particular, from 2016 to 2020, accommodation places increased from 750 to 1308 and the number of guest houses increased 13 times to 1386. Their number is planned to be increased to 2 thousand.
As a result of the reforms in the tourism sector from 2016 to 2019, the number of tourists increased from 2.0 million to 6.7 million. The dynamics of the increase in the number of foreign tourists in 2019 compare to 2010 amounted to a record 592% (an increase of more than 6 times). It is noteworthy that the growth in the number of tourists from different regions occurred in different ways. For example, the number of visitors from Central Asian countries increased by an average of 22-25% per year, while the annual growth among tourists from non-CIS countries was 50%. At the same time, positive results were noted in domestic tourism. Compared to 2016, the number of domestic tourists in 2019 almost doubled and amounted to 14.7 million.
Impact of the pandemic
It should be noted that due to the restrictions imposed against the backdrop of the coronavirus pandemic and the consequences of the global crisis, the tourism industry has suffered serious losses. In particular, the number of foreign tourists visiting Uzbekistan decreased by more than 4.5 times, to 1.5 million, and the volume of tourist services fell to $261 million in 2020.
Taking into account the current situation, the “Uzbekistan project” was developed. Safe travel guaranteed ("Uzbekistan. Safe travel guaranteed"), which is a new system of sanitary and epidemiological safety for tourists based on world standards. Certification of tourism objects and related infrastructure, tourism services based on new sanitary and hygienic requirements for all state border posts; air, railway and bus stations; objects of tangible cultural heritage, museums, theaters, etc. To mitigate the consequences of the pandemic for the tourism industry, the Safe Tourism Fund was formed at the expense of an initial contribution from the Anti-Crisis Fund, as well as payments for passing voluntary certification implemented within the framework of the “Uzbekistan. Safe travel GUARANTEED ".
Tourism players received a number of benefits and preferences to mitigate the impact of the coronavirus pandemic. The income tax rate was reduced by 50% of the established rates, they were exempted from paying land tax and property tax of legal entities and the social tax was set at a reduced rate of 1%. They also partially reimbursed interest expenses on previously issued loans from commercial banks for the construction of accommodation facilities and expenses for renovation, reconstruction and expansion of the material and technical base. Subsidizing accommodation facilities is provided in the amount of 10% of the cost of hotel services from June 1, 2020 to December 31, 2021. In total, 1,750 tourism entities received benefits on property tax, land and social taxes in the amount of about 60 billion soums.
Diversification of directions
In recent years, Uzbekistan has been focusing on the diversification of tourism services and the development of new types of tourism. In particular, much attention is paid to increase the flow of tourists through MICE tourism, which is organizing various tournaments, meetings, conferences and exhibitions in Uzbekistan. The traditional sports tournament "Game of Heroes" in Khorezm, the "Art of Bakhchichilik" festival in Surkhandarya, the "Muynak-2019" rally in Karakalpakstan and others have been held. The government approved the Action Plan for the development of MICE tourism in Uzbekistan.
Film tourism is an important tool for shaping the country's image, providing information to potential tourists. For the development of film tourism in Uzbekistan, a regulation has been developed on the procedure for reimbursing part of the costs ("rebate") of foreign film companies when creating audiovisual products on the territory of Uzbekistan. Moreover, foreign film companies have released films such as Basilik, Khuda Hafiz and Al Safar. Last year, foreign film companies shot 6 feature films in Uzbekistan.
Pilgrimage tourism. In order to create special convenience for those visiting Uzbekistan for the purpose of pilgrim tourism, new requirements have been introduced for hotels, a map of the country's mosques has been developed and posted in the mobile application. The first Pilgrimage Tourism Forum was held in Bukhara and 120 foreign guests from 34 countries took part.
Medical tourism. In Uzbekistan, measures are being taken to develop medical tourism and attract more tourists to medical organizations. In 2019, the number of foreign citizens visiting Uzbekistan for medical purposes exceeded 50 thousand. In fact, this number can be higher, since determining the number of tourists visiting private medical clinics is still a difficult task.
In recent years, Uzbekistan has been recognized as the best travel destination in the world by The Guardian, the fastest growing country in the eyes of Wanderlust and the best growing tourism destination according to Grand voyage. As a result of consistently implemented measures, Uzbekistan has climbed 10 positions (22 places) in the Global Muslim Tourism Index, compiled by Crescent Rating. In addition, the World Tourism Organization ranked Uzbekistan 4th in the list of the fastest growing countries in the tourism sector.
In conclusion, it should be noted that the tourism of Uzbekistan needs to transform its business models through innovation and digitalization. It is necessary to develop such market segments as agro and ethno tourism.
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