Photo from acs-nnov.ru
Investments and other assets of foreign and local investors in Uzbekistan will not be subject to nationalisation, and the free transfer of funds into and out of the country in foreign currencies is guaranteed. These and other assurances have been included in a new law “On Investments and Investment Activities”, the full text of which has been published (in Russian) on the website Xalq So’zi.
The government guarantees investors the right to dispose of revenue and profits made in the country as they wish, including by transferring them out of the country. The Uzbek state will also ensure adequate compensation in the event of the expropriation of assets and guarantee the restitution of losses resulting from the unlawful actions or omissions of local government organs.
Government bodies and their employees do not have the right to interfere in investment activities that are conducted in accordance with state legislation, and may only do so if such activities violate the law. In addition, state organs may not use the occurrence of a legal violation as grounds to interfere in the affairs of investors which are not connected to their investment activity.
Also included in the new document are guarantees against adverse changes to legislation relating to investment. Thus, legislative acts will not have retroactive effect if their execution entails losses for investors. In the event of legislative changes, investors can remain subject to laws in effect at the time of investment, as long as no more than ten years has passed since this time.
The new document sets out the fundamental principles of investments and investment activity in the country, as well as the rights and duties of investors. Among these fundamental principles are legality, freedom, justice, the equality of investors and non-discrimination in relation to them, and the assumption of good faith on the part of investors. In turn, investors are obliged to follow the law, pay their taxes and fees, and fulfil their contractual obligations.
In May 2018, chairman of the Russian branch of the international consulting firm Boston Consulting Group (BCG) Vladislav Butenko advised investors not to delay and to invest money in the Uzbek economy as soon as possible. Around the same time, the Ministry of Economy and Industry of Uzbekistan acknowledged the existence of 15 basic issues hindering the attraction of foreign investment into the country, among which featured the extensive state influence over the economy, the incomplete state of the regulatory and institutional environment, and the low level of efficiency in production. At the same time, no mention was made of factors like the risk of entirely losing one’s business due to the arbitrary decisions of local authorities. On various occasions under the rule of Islam Karimov such a problem was faced by the Russian companies MTS and Wimm-Bill-Dann Foods, the American firms Newmont Mining and Coca-Cola, the Israeli Metal-Tech Ltd, the British Oxus Gold PLC, and the Turkish businessmen who owned the Turkuaz and Demir shopping centres in Tashkent.
