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1WAYS OF IMPROVING MECHANISMS FOR ATTRACTING FOREIGN INVESTMENT IN THE REGIONS OF
UZBEKISTAN
Graduate student Shermatov Tulkin Turgunovich ALFRAGANUS UNIVERSITY e-mail: Nonajon6888@gmail.com
Abstract. The article examines directions for improving the mechanisms of attracting foreign investments in the regions of Uzbekistan. At the same time, the following issues were studied: analysis of the conditions for attracting foreign investors in Uzbekistan; clarification of the work to be done to increase the volume of investments in the national economy based on domestic investments; solving the issues of liberalization of business activities to activate private investments; Analysis of the conditions for admission to the special system of GSP+ preferences in order to increase investment attractiveness in Uzbekistan. The article analyzes the prospects of foreign investments in the regions and their increase. The analysis of conditions for attracting foreign investors, increasing the volume of investments based on domestic investments and activating private investments in Uzbekistan was carried out. Given that the investment climate affects all spheres of activity in the country, the scope of reforms has covered economic, institutional, education, health, agriculture, water supply, energy, transport and other areas. The policy of attracting foreign investments for the development of the priority sectors of the economy in the Republic of Uzbekistan is the proper use of available funds, time and opportunities, the effective disposal of wealth based on the created conditions, and in this way, the promotion of the country's economy and the promotion of its integration into the world economic system. aimed at active involvement and rational use of them. Liberalization of business activities is required to activate private investments. Constant communication with business, and diligent work to identify and overcome obstacles that hinder the development of certain sectors. In this regard, active work is being carried out in the following directions.
Key words: foreign investments; territory; national economy; domestic investments; private investments; investment attractiveness; special system of preferences.
Introduction
The policy of attracting foreign investments for the development of priority sectors of the economy in the Republic of Uzbekistan is aimed at the active involvement and rational use of investments in order to properly use existing funds, time and opportunities, effectively dispose of wealth based on the conditions created and, in this way, raise the country's economy, stimulate its integration into the world economic system. The socio-economic development of the country depends on the increase in the income of the population, the improvement of living conditions, mainly on the size and composition of investment funds involved in various sectors of the national economy. Therefore, it is inevitable that each state pays special attention to the formation of an attractive environment for attracting investment funds on its territory.
LITERATURE REVIEW
The issues of attracting foreign direct investment in the national economy were analysed in the research of the following scientists: S.Brue (Brue,1993), R.Agion (Aghion, 2012), D.Asemoglu, S.Johnson, Dj.Robinson (Asemoglu et al, 2003), N.G. Mankiw (Mankiw, 1999), Thomas Pistorius (Pistorius, 2010), T.N.Polyakova (Polyakova, 2007), S.A.Smolyak (Smolyak, 2002), T.G. Kasyannenko (Kasyannenko, 2009) and other researchers.
Among the economists of our country: Vakhabov A.V., Khojiboqiev Sh.Kh., Muminov N.G. (Vakhabov et al, 2010), Khashimova N.A. (Khashimova, 2015; Khashimova, 2017), Abulkosimov H.P. (Abulkosimov & Rasulov, 2017), Muinov J.A. (Muinov,2017), Khaydarov N.H. (Khaydarov, 2003), Yuldashev Sh.G. (Yuldashev, 2001) and Valiev B.B. (Valiev, 2017), Mamatov M.A.'s (Mamatov, 2019) scientific researches improve the scientific-methodological foundations of the development of the investment environment and investment potential, issues of direct foreign investments and their effective use in ensuring stable economic growth in the national economy in the conditions of modernization of the economy.
However, in the context of the transition to the innovative economy of Uzbekistan, it is assumed to improve the theoretical foundations of the network policy, mechanism of foreign direct investments involved in the national economy, to carry out scientific research aimed at researching quantitative and qualitative changes in it. These aspects determine the relevance of the topic of scientific work. METHODOLOGY
The purpose of this scientific research article is to research directions for improving the mechanisms of foreign investment attraction in Uzbekistan. Based on this goal, the following tasks were solved: analysis of the conditions for attracting foreign investors in Uzbekistan; clarification of the work to be done to increase the volume of investments in the national economy based on domestic investments; solving the issues of liberalization of business activities to activate private investments; Analysis of the conditions for admission to the special system of GSP+ preferences in order to increase investment attractiveness in Uzbekistan.
The methodology of a scientific research article is based on the tasks and the development of concepts for solving problems and their implementation sequence. Selective and comprehensive research, structural analysis, intersectoral balance, systematic approach to researching the problems of attracting foreign investments, target forecasting methods were used in the research (Blaug, 1993). The scientific research article analyzes the prospects of foreign investments in the region and their increase. The conditions for attracting foreign investors in Uzbekistan, increasing the volume of investments on the basis of domestic investments and activating private investments were analyzed. RESULTS
In 2022, the share of capital investments financed from centralized financing sources in our country decreased by 19.6 percentage points compared to the share in 2021 and amounted to 15.4% or 41.4 trillion soums. Correspondingly, 228.4 trillion soums or 84.6% of total investments were invested from decentralized financing sources, which increased by 5.8% compared to the figure in 2021. In 2021, all indicators of the business environment remained at a high level. In 2021, the average annual cumulative indicator was 60 points, which is 18 points more than in 2020 (Development of investments, 2021).
As a result of stability and favorable investment environment in our country, foreign economic relations are developing consistently. In 2022, a total of 10.2 billion dollars of foreign investment will be absorbed. As a result, 318 large and more than 15,000 regional projects were implemented and more than 273,000 jobs were created. The new businesses have the potential to replace more than $1 billion in total exports and $530 million in imports. Of course, the coronavirus pandemic is still having a serious impact on economic processes. Despite this, consistent growth is being achieved in exports. In particular, in 2021, the amount of exports in our country exceeded 16 billion dollars, and in 2022 it amounted to 19 billion dollars. It is noteworthy that the share of finished and semi-finished products has increased significantly (2022 yilda, 2022).
The investment of investors in the national economy largely depends not only on the rating of enterprises or the results of economic activity, but also on the geopolitical location of the country and the internal policy conducted by the state. Investors choose the most stable countries to invest in. Therefore, all countries of the world try to reduce investment risk as much as possible. In our country, a number of things are being done to increase the attractiveness of the investment environment in the national economy. Uzbekistan has the following conditions for attracting foreign investors:
- political stability;
- the formation of a legal base protecting private property and competition;
- establishment of the infrastructure supporting the investment process;
- convenient geographical location of the country;
- the high development potential of the agro-industrial sector and the wealth of the country's mineral and raw materials resources;
- availability of highly qualified labor resources;
- sufficient width of the domestic market for trade.
In the world, there is a sharp struggle between countries to attract foreign capital. Regarding the volume of foreign investments, its quality, and the use of favorable conditions, in developed countries,
year after year, various forms of innovative instruments that serve to ensure the attractiveness of the investment environment are emerging.
The amount of savings funds formed in the domestic economy of our country depends on the size of the gross domestic product and the level of consumption. The practice of foreign countries, especially newly industrialized countries, Hong Kong, Singapore, South Korea, and Taiwan, shows that the weight of investments in the country's economy was 35-40 percent of the gross domestic product (GDP) during the period when the rate of economic growth was higher than 10 percent and most of them were domestic investments.
However, since our country has set strategic goals for the socio-economic development of the regions, it will be necessary to increase the volume of investments in the national economy in order to implement them. This can be done on the basis of, firstly, increasing the volume of domestic investments, and secondly, attracting foreign investments to the national economy.
As mentioned above, the amount of savings funds formed in the domestic economy is limited by GDP and consumption. In order to increase the volume of investments in the national economy on the basis of domestic investments, it is necessary to carry out the following actions:
- improvement of the existing mechanism related to conversion of savings into investment;
- attraction of monetary resources available in the hands of the population by commercial banks, whether in national or foreign currency, and providing them as loans to business entities;
- attraction of funds collected in the hands of the population to the investment process through the "Tashkent" stock exchange, etc.
It can be seen that the more intensive attraction of domestic investment funds to the national economy requires passing the stage related to the improvement of the mechanism of directing the available capital resources in our country to the economic sectors.
An alternative factor to domestic investments in increasing the volume of investments in the national economy is only foreign investments and credit funds. Therefore, today it is necessary to study and review all available resources and reserves related to the attraction of foreign investments to the national economy, to improve the mechanism of directing foreign capital to national enterprises.
Table 1. Cumulative target indicators of decentralized and decentralized investment appropriation in 2022 — 2026
billion soum
№ Funding sources Total in 20222026 From that:
2022 2023 2024 2025 2026
Total capital investments 2 025 200 298 772 346 848 400 318 457 659 521 603
including:
1. Centralized Investments: 344 309 50 767 61 480 72 378 76 106 83 579
1.1. Budget funds 136 669 23 790 25 017 28 074 29 400 30 388
1.2. Funds of the Recovery and Development Fund of the Republic of Uzbekistan (in soums) 17 614 1 613,2 3 100 3 450 4 514 4 937
million in US dollars 1 352 142* 258 271 335 345
1.3. Foreign loans under the guarantee of the Republic of Uzbekistan (in soums) 190 027 25 363 33 364 40 854 42 192 48 255
million in US dollars 14 738 2 240 2 780 3 212 3 129 3 376
2. Decentralized investments: 1 680 891 248 006 285 368 327 940 381 553 438 024
2.1. Enterprise funds, including taxes left at the disposal of enterprises 478 234 69 433 76 926 92 465 110 384 129 026
2.2. Commercial bank loans and other debt funds 338 864 49 606 53 696 64 861 79 242 91 458
2.3. Foreign direct investments and loans (in soums) 714 278 107 621 130 186 141 024 157 094 178 353
million in US dollars 55 572 9 506 10 849 11 087 11 651 12 479
2.4. Population funds 149 515 21 346 24 560 29 590 34 833 39 187
As can be seen from the data of Table 1 below, the aggregate target indicators of the acquisition of centralized and decentralized investments in our country in 2022-2026, including total capital investments, are planned to increase by 74.5% in 2026 compared to 2022, of which centralized investments are planned to increase by 64.6%, and decentralized investment This increase in investments will positively serve to ensure that the country's level of economic growth will grow steadily.
The draft decision of the President of Uzbekistan "On measures to implement the investment program for the years 2022-2024" was adopted regarding the measures to be implemented in Uzbekistan. With this decision, it is proposed to approve the following (O'zbekistonda investitsiyalar, 2021):
- Aggregate forecast parameters of capital investments in 2022-2024. They envisage the absorption of centralized and decentralized investments in the amount of 1,025.5 trillion soums, including foreign investments in the amount of 41.4 billion US dollars;
- Forecast parameters of investment and loan absorption and attraction in 2022-2024;
- Targeted program for the launch of large production facilities and capacities in 2022, which envisages the creation of 230 new production capacities and more than 50 thousand jobs;
- the cumulative address program for investment and credit utilization in 2022, as well as the forecast indicators of its implementation in quarters;
- Addressed program of investment projects to be implemented in 2022 under the state guarantee of the Republic of Uzbekistan with the involvement of foreign loans;
- Addressed program of investment projects to be implemented in 2022 involving direct foreign investments and loans, etc.
- From January 1, 2022, it is proposed that the control over the implementation of projects approved under this Program be carried out through the automated information system "Control and monitoring of the implementation of investment projects".
- Until January 15, 2022, ministries, agencies, business associations and local governments - project initiators will develop complex network schedules for each investment project in the months of their implementation through the information system.
Decree No. PD-60 of the President of the Republic of Uzbekistan dated January 28, 2022 "On the development strategy of New Uzbekistan for 2022-2026" was adopted. In accordance with the decree, the development strategy of New Uzbekistan for 2022-2026, developed on the basis of the principle "From the strategy of actions to the strategy of development", and the state program for its implementation in the " Year of ensuring human interests and development of the mahalla " were approved.
Goal 26 of the "New Development Strategy of Uzbekistan for 2022 - 2026" states "To further improve the investment environment in the country and increase its attractiveness, to take measures to attract 120 billion US dollars, including 70 billion dollars of foreign investments, in the next five years." (O'zbekiston Respublikasi Prezidentining, 2022) to achieve this goal:
- establishment of a new system based on the "bottom-up" principle for effective use of investments and increase in export volumes;
- Implementation of the strategy of attracting foreign and domestic investments until 2026;
- attraction of investments equal to 14 billion US dollars in energy, transport, healthcare, education, ecology, communal services, water management and other sectors on the basis of public-private partnership;
- Establishing foreign economic relations between the republic's territories and business representatives of foreign countries, including development of investment and foreign trade relations with the People's Republic of China of the Syrdarya region, the Russian Federation of the Surkhandarya region, and the Indian business circles of the Jizzakh region;
- Provide practical assistance to entrepreneurs by organizing "Investor Support Center" in Surkhandarya Region, "Business Support Center" by Navoi Mining and Metallurgy Combine in Navoi Region, "Advanced Projects and Engineering Center" and "Innovation and Technology Centers" in each district;
- "Tashkent International Investment Forum" is scheduled to be held in Tashkent every year.
Liberalization of business activities is required to activate private investments. Constant communication with business, and diligent work to identify and overcome obstacles that hinder the development of certain sectors. In this regard, active work is being carried out in the following directions.
First of all, in order to maintain high and stable rates of economic growth, it is necessary to form a stable and competitive model of the country's economy, in which most of the assets of the banking system are in the hands of private investors.
Secondly, in order to increase investment attractiveness and ensure the rapid growth of investments in infrastructure, which is one of the main factors of sustainable economic growth, the promotion of investment activities is actively carried out through the development of public-private partnerships and project financing tools.
Thirdly, relations between investors and the state are being optimized to completely eliminate bureaucratic obstacles and restrictions in the implementation of investment projects through digitalization and remote provision of public services. In order to ensure maximum transparency and prevent corruption, the quality of organization of work with appeals and inquiries of foreign investors is being improved.
Fourth, there is a reduction in transaction costs that cause labor and capital to flow from the legitimate sectors of the economy to the shadow economy.
Fifth, an investment policy strategy is being developed, which can become a point of technological progress and create a basis for the development of the country's production capacity in the next 20-30 years.
Given that the investment climate affects all spheres of activity in the country, the scope of reforms has covered economic, institutional, education, health, agriculture, water supply, energy, transport and other areas.
Also, great attention is paid to practical support of entrepreneurs and initiators of investment projects. The most striking example in this direction is the activity of the Government Commission on Export and Investment Development, established in 2020, whose tasks include close cooperation with entrepreneurs and exporters, analysis of problems related to restrictions caused by the pandemic, as well as solving the problems of each business entity. includes the development and implementation of quick and effective solutions based on an individual approach.
In order to increase the investment attractiveness of the country, Uzbekistan was accepted into the GSP+ special system of preferences as of April 10, 2021, as a beneficiary country under the GSP general preferences scheme. As a member of the GSP+ system, Uzbekistan will have additional economic benefits compared to the standard GSP by completely eliminating tariffs on two-thirds of the product lines covered by the GSP, which, in turn, can serve to increase the volume of exports and attract additional investments to the country.
The General System of Preferences (GSP +) is a system of preferential customs tariffs for goods exported by developing countries to developed countries. GSP + covers almost all industrial and some agricultural products.( General System of Preferences, 2021).
In Uzbekistan, the level of use of GSP benefits is currently 87%. Product segments benefiting from reduced benefits are mainly textiles and clothing, plastic products, as well as fruits, nuts and
vegetables. This shows that Uzbekistan's export composition is more diverse than that of its Central Asian neighbors.
The GSP+ system provides additional opportunities to increase trade between the European Union and Uzbekistan due to the abolition of tariffs on a number of important export goods such as textiles, clothing and plastic products. Despite the proximity of Uzbekistan to the European Union market, the trade potential is not yet fully exploited, as the European Union ranks only seventh in the list of export destinations of Uzbekistan.
But GSP+ is more than just a trade tool. When joining the GSP+ system, low- and middle-income countries undertake to effectively implement 27 major international conventions on human and labor rights, environmental and climate protection, and quality management. The GSP Regulation provides for continuous monitoring of the obligations of GSP+ recipients. (Exporting from the EU, importing , 2021).
Acceptance of Uzbekistan as a GSP+ beneficiary reflects socio-economic and labor reforms and consistent positive development. The Uzbek government has initiated many major reforms to improve the business environment, judicial system, security services, working conditions, administrative accountability and efficiency.
In conclusion, we can see from the normative legal documents adopted in our country on the simultaneous development of the national economy and regional economy. Also, the improvement of the investment environment will definitely have a positive effect on the increase in the flow of foreign direct investments.
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