Korean Herald
December 10

The following message was contributed by Mr. Elyor Ganiev, deputy prime minister of the Republic of Uzbekistan, to The Korea Herald on the occasion of the successful hosting of the 4th session of the Uzbek-Korean and Korean-Uzbek Committees on Economic Cooperation and Trade.

First of all I would like to take this opportunity to extend my sincere congratulations to the publisher of The Korea Herald and all its distinguished readers. I offer my sincere congratulations for the paper's 50th anniversary.

Uzbekistan attaches exclusive importance to the development of multisided and full cooperation with the Republic of Korea. For many years, our countries have formed stable and close ties based on confidence, mutual understanding and support.

We see in Korea a strategic partner with which we would like to build reliable, long-term and stable relations.

Uzbekistan is prepared to become a solid bridge for Korea in accessing the Commonwealth of Independent States and Central Asian markets. And in return, through Korea, Uzbekistan would like to consolidate itself on the markets of East Asia.

I want to emphasize that we have a basis for strategic partnership - the existence in Uzbekistan of the largest CIS diaspora of 250,000 Koreans.

Economic development

For the last seven years, our economy has developed steadily and dynamically. This can be proven by a number of factors.

Starting from 1996, our economy has grown steadily at an average of between 4 percent and 5 percent. In 2002, the gross domestic product grew 4.2 percent. In 2003, we expect GDP to grow 5 percent and next year 6 percent.

The government measures on strengthening the monetary-credit system and cash flow played a crucial role in the consequent reduction of the inflation rate. During the January-September period last year, inflation stood at 17.4 percent. However, this year, we have inflation of 0.3 percent.

The United Nations Children's Fund expressed confidence in the efficiency of Uzbekistan's reform measures in its 2003 Social Monitoring report. According to this respected source, Uzbekistan holds a leading position in the CIS and Central Asia on a number of social development indicators.

Last year, the positive balance of Uzbekistan's foreign trade turnover was $274 million. In the first nine months of this year, the foreign trade turnover increased 15 percent and the positive balance reached $515 million. At the same time, exports increased 25 percent and imports 4 percent. By the end of this year, we expect the exports growth rate to reach 30 percent.

As a result of consistent reforms, on Oct. 15, 2003, Uzbekistan joined Article VIII of the International Monetary Fund Charter and has allowed conversion its national currency without any restrictions.

The free-floating of the soum has special significance for further realization of broad-scale market reforms, attraction of foreign investment and expansion of external trade.

To increase the efficiency of the state, today we are avoiding unsound state regulation and excessive administrative interference in the economy.

In parallel with the liberalization of the economy, we are implementing measures to stimulate entrepreneurship, provide economic freedom to enterprises and engage the private sector in the process of privatization, foreign economic activity and reduction of the tax burden.

During the years of independence, one of our main tasks has been to create a real class of owners. Today, the private sector covers 90 percent of enterprises and produces 73 percent of GDP. The private sector accounts for 73 percent of industrial products, 99 percent of agricultural products and 99 percent of retail turnover.

A favorable investment climate and reliable guarantees provided to foreign investors fosters this. I should emphasize that through a system of tax concessions and preferences to foreign investors, we made the environment even more attractive than for local producers.

We need to note that Uzbekistan has attracted foreign investment worth more than $14 billion.

Today, the share of foreign investment to total capital investment is more than 20 percent, while in 1993 it did not reach even 1 percent.

One of the major priorities of our policy is full integration into the world economic system. We expect that the accession of Uzbekistan to the World Trade Organization will encourage the development of our national economy and are grateful for the support of the Republic of Korea on this issue.

Bilateral cooperation

Korea is the largest trade partner and investor in Uzbekistan and we have considerable potential for mutually beneficial cooperation. All conditions have been created for this, including a complete bilateral legal framework.

However, the turnover figures show that we are not working hard enough to develop trade relations.

In 2002, the turnover between two countries stood at $326 million, which is 48 percent lower than in 2001. For the first 10 months of 2003, trade turnover between the two countries was $223.1 million. This is almost 22 percent less than for the same period last year. At the same time, Uzbek exports dropped nearly 17 percent and Korean imports dipped 22.8 percent.

Today, there are 98 Korea-invested enterprises in Uzbekistan, including 18 enterprises with 100-percent Korean investment, representative offices for more than 20 large Korean companies were opened, including Kabool, LG Electronics, Samsung Electronics, Asiana Airlines, Korean Air and Daewoo International. The total volume of Korean investment in the economy of our country is more than $1 billion.

Loans provided by the Korea Export-Import Bank of Korea to develop the telecommunication sector, automobile and silk industries and education have reached $96.4 million.

All the above indicates the broad spectrum of current cooperation. At the same time, we could considerably expand bilateral economic relations. The economy of Uzbekistan, which possesses large raw material resources, and the economy of industrially developed Korea, which possesses high technologies, are mutually complementary.

Now, I would briefly like to outline our vision for the most prospective spheres of further joint cooperation.

Firstly, we support the realization of investment projects in the textile and silk industries, in particular the establishment of enterprises featuring a complete production cycle.

Uzbekistan produces 1.3 million to 1.5 million metric tons of cotton annually. Presently, light industry enterprises in the country process domestically 25 percent and produce a broad spectrum of ready-made garments. By 2005, we intend to increase the volume of domestic processing to 50 percent.

With the participation of Korean companies, Kabool and Daewoo International, Uzbekistan created two modern, export-oriented textile complexes. They are the Joint Venture Uzbek-Kabool Company and Daewoo Textile.

With the financial support of EXIM Bank and the company IDM, we are enforcing a modernization project for the nation's silk industry. Today, two factories have been completely modernized.

Secondly, the development of chemical and petrochemical industries has progressed. We are interested in modernizing chemical industry enterprises with the introduction of new technologies to make world-class products.

Thirdly, we have further developed the automobile production industry. With the assistance of Korean investment, Uzbekistan became one of 28 car-producing countries.

In 1996, partnered with the Daewoo Group, Uzbekistan launched a modern car plant with an annual capacity of more than 200,000 automobiles. Last year, the model lineup was modernized. At the moment, the joint venture produces such popular models as the Lacetti, Matiz and Nexia-2. It should be noted that as the results of the last two years, UzDaewooAuto is taking the lead position for sales on the markets of the CIS countries and especially in Russia. This year alone, we plan to sell more than 20,000 automobiles in Russia.

Fourthly, the Republic of Uzbekistan is interested in the further development of a machine-building complex, which consists of more than 100 enterprises with production equal to two-thirds of all Central Asia.

Fifthly, the development of the electro-technical industry will be promoted. We attach great significance to the introduction of new science-intensive technologies, organization of hi-tech production capacities, development of information technologies and production of software.

Sixthly, the joint exploitation of Uzbekistan's rich mineral resources. Our country possesses unique natural raw materials potential, the value of which is estimated by foreign experts at $3.3 trillion.

There is also strong potential for cooperation in the finance and banking sectors, privatization of industrial and non-industrial facilities, as well as Uzbekistan's tourism industry considering the country's significant historical and cultural heritage.

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