CC BY
84
УДК 334.7
Rustamov D.Ja. student
2-course, Faculty of Economics Tashkent State University of Economics Uzbekistan, Tashkent
WAYS OF IMPROVING OF ATTRACTION FOREIGN INVESTMENTS IN THE ECONOMY OF THE REPUBLIC OF
UZBEKISTAN
Annotation: The question of the place and role of foreign investment in the economy of Uzbekistan is of paramount and predetermining importance for further sustainable and balanced development, for which it is important to determine the level, conditions, forms and ways of integrating the country into the international capital market. This article is devoted to the study of ways to attract foreign investment in the economy of the Republic of Uzbekistan. The article analyzes the existing problems and the state of the investment climate of the Republic of Uzbekistan, and also develops proposals to improve the creation of a favorable investment climate to attract foreign investment.
Key words: investment climate, investments, FDI, economics, national economy, control.
Globalization of world economic relations leads to diversification of forms and directions of international competition, methods of struggle for possession and control of technological, labor, intellectual, natural and investment resources. The formation of an optimal structure of the economy with a predominance of the share of services, and high-tech products in it is becoming increasingly important. In the context of globalization, countries that actively participate in the international scientific, technical and information exchange, have a developed infrastructure, highly qualified workforce win, which is ensured by the presence of sufficient capital and its free movement in countries. Financial globalization requires a review of the existing system of theoretical and practical knowledge about the functioning of the world economy from the point of view of the international movement of capital in the form of investments.
It is generally recognized that only high growth rates of the state economy and per capita incomes can ensure the preservation of socio-political stability in the country. At the same time, the growth of gross domestic product and per capita incomes can be achieved by attracting foreign direct investment in the structural adjustment of the country's economy. To this end, the government has adopted and is implementing appropriate investment and industry programs. In his message in his message to the Parliament of the Republic of Uzbekistan, President Mirziyoyev Sh.M. noted "... the country is obstructed by an outdated management system in the economy, inactive implementation of innovative ideas".[2]
Attracting foreign investment, creating the necessary investment climate and guarantees for foreign investors are the most important conditions for ensuring structural transformations of our economy and modernizing production, export growth and ensuring import substitution. Foreign and domestic investments, first of all, should be directed to leading sectors of the economy, which should become the locomotives for updating the entire economy and stable growth of gold and foreign exchange resources.
The relevance of attracting foreign investment for the development of the economy of the Republic of Uzbekistan today is due to the transitional economic processes in the Republic and the need for financial support for such processes. World practice and domestic business experience show that in modern conditions it is impossible to reform the economy and structure it without external sources of financing, i.e. foreign investment. Uzbekistan has huge investment potential. The investment attractiveness of industries of Uzbekistan is caused by relatively low costs of production factors (electricity, natural gas, labors), a significant domestic market (33.25 million residents) [1], duty-free entry to the markets of the CIS countries (288 million people of the population). [4]
The developed concept of attracting and using foreign direct investment in the country's economy, as well as domestic investment resources, allows us to substantiate the general trends in the development of the investment process and draw some conclusions, the essence of which is as follows:
Firstly, the accumulated in the republic and still unused potential of innovative developments is very significant. In addition, in conditions of insufficient and extremely "meager" financing by the state of basic and applied sciences, a significant gap has formed in the country in technologies, inventions, and know-how that can have a significant impact on the development of the economy of the republic.
Secondly, a significant part of the banking structures in Uzbekistan, in the process of reform, began to take part in the investment of small, medium and large enterprises, recognizing the increased role of long-term investment.
Thirdly, the republic, possessing a huge resource, production and technological potential, cheap labor, a wide sales market, attracts foreign investors who are ready to invest in the economy by providing long-term loans and in the creation of joint ventures.
Fourth, regional management structures are interested in the development of regional economies, including through the wide attraction of external capital.
Fifthly, Uzbekistan will not be able to sufficiently ensure the accelerated growth of its economy without raising funds from outside. Their presence will be a determining factor in the rise of industry, agriculture and other sectors of the economy.
According to researches, in modern conditions of transition to market relations, the attraction and use of foreign investment for ensuring sustainable economic growth is of particular importance for the Republic of Uzbekistan.
Important conditions for attracting foreign capital to the economy of the republic are:
- achieved socio-political and economic stability in society;
- presence of strategic directions and programs for the socio-economic development of the republic for the long term;
- formation of the foundations of a multistructure transitional economy and the identification of the most important directions for its reform;
- implementation of the processes of liberalization and deepening of economic reforms;
- increasing role of investment as the main factor in the economic growth of the Republic of Uzbekistan.
The strategy of stimulating the attraction of foreign investment should ensure the successful solution of the tasks set. Of great importance is the improvement of financial and credit, tax levers and incentives, as well as non-financial methods. The latter include market infrastructure that ensures the normal functioning of foreign capital, providing information with the necessary factor of production, etc. In order to avoid the occurrence of possible defaults, it is necessary that the tracking, planning and control system has a reliable statistical base of key indicators characterizing the size of incoming external resources in all forms and in all sectors of the national economy. It is also advisable to change the existing procedure for the closed distribution of loans, leading to various negative consequences.
It is also advisable to introduce a competitive selection of foreign loans with a careful study of the issue of the appropriateness of using foreign credit lines, based on the importance of obtaining loans for specific thoroughly justified and prepared projects. This requires a detailed preliminary examination of the proposed investment projects. In order to stimulate the attraction of portfolio investments in the privatization processes, it would be necessary to develop the princi ples of currency conversion of foreign portfolio investments, set aside a set of privatized enterprises for international trading, developing the primary and secondary securities markets for foreign investors to acquire property rights. When substantiating strategic directions and specific measures to improve the organizational and economic mechanisms for stimulating the attraction of foreign capital, it is important to take into account the experience of East Asian countries.
In particular, it seems appropriate to establish the following lending by banks: "at low interest rates on deposits, lending rates should also be low, the difference should not be significant and should not be assigned by banks" [9]. It is also important to establish a general low tax on enterprises in order to raise their stimulating role in the development of entrepreneurshi p. The same can be attributed to lowering the upper limit of income tax, which will contribute to the development of small business. In recent years, there have also been cases of unjustified growth in prices and tariffs for goods and services due to changes in the exchange rate.
This factor should also be taken into account when setting prices for goods and services. In order to enhance the influence of the tax system on the development of economic sectors and ensure revenue growth, one can use the short-term stabilization policy proposed by scientists and economists aimed at overcoming production downturns or lowering income growth rates. [6] The proposed scheme can work in the conditions of any industry making a profit (Figure 1). For this, in each individual case, a decision of the Government on granting the right to reduce corporate income tax aimed at accumulation is necessary. This will make it possible to attract enterprises own funds to the investment process more widely, and accelerate the technological re-equi pment of production.
Accumulation
Financial release
Direction of financial resources for investments
Increased demand for capital goods
Market expansion
Figure 1. Short-term stabilization scheme
To further stimulate the attraction of foreign investment in the country's economy, additional measures are being taken in the banking sector. So, the main attention is paid to the fulfillment of the tasks to increase the capitalization of commercial banks and to enhance their partici pation in the modernization of the economy of the decrees and decrees of the Republic of Uzbekistan listed in the list. In the new medium-term program of economic development of Uzbekistan for the near future, despite the active use of domestic economic potential, much attention is paid to creating favorable conditions for attracting foreign investment in various forms.
At the same time, particular importance is attached to attracting foreign direct investment. The most important source of funds for capital investments is direct financing from the state budget or the provision of preferential investment loans to state financial institutions. To attract investors, preferential credit conditions, special conditions for paying taxes, allocation of state land plots, etc. are created.
Problem Ways 4jf solving t»f the problem
Relative!}' slow renewal, modernization or replacement affixed assets, which leads to their longer use in inadequate quality and, as a result, reduces the efficiency of enterprises and the rate of economic growth (In 2018, foreign direct investment in Uzbekistan amounted only 32% of the total investment).[3] 1) lo attract foreign investors in increasing the volume of capital investments by introducing additional benefits;
2) lo develop global investment projects related to the renewal and increase of fixed assets.
Foreign investments only affect the increase in the efficiency of the mineral market, which in the long run can lead to the collapse of the national economy. 1) early transition to an economy of competitive goods and services.
2) stimulation of the scientific and innovative sphere. Adoption of necessary legislative acts, investments in the infrastructure of current industry.
Table 1. Problems and ways of solving
1) early transition to an economy of competitive goods and services.
2) stimulation of the scientific and innovative sphere. Adoption of necessary legislative acts, investments in the infrastructure of current industry.
For a wider attraction of foreign capital, it is necessary to ensure state guarantees for property in Uzbekistan, the stability of economic development, the development of a system of encouraging investment activity in the country, as well as the formation and implementation of investment legislation.
According to research, creation a favorable investment climate in Uzbekistan needs:
- create economic prerequisites, such as the provision of benefits for taxation of profits, property and infrastructure to increase the flow of investment in the economy;
- ensure the same legal regime for all investors; - ensure transparency of business entities;
- every year to allocate lists of priority industries that require investment at the state and regional levels;
- establish priority areas for the flow of foreign investment in enterprises of those industries in which the importer has absolute advantages.
Due to the fact that Uzbekistan is a treasury of natural resources, the bulk of investments is focused on investors' access to raw materials, while investments attracted by technological advantages or at least low production costs in Uzbekistan occupy a small part. Investments are also being developed aimed at ensuring investors' access to domestic markets, however, in this case, it is often a matter of creating industries that allow foreign companies to overcome customs barriers.
This is due to the foreign investors' unwillingness to localize other high-tech links of the production chain in the domestic market, to place research and management divisions of companies in Uzbekistan, etc.
place research and management divisions of companies in Uzbekistan, etc.
CONCLUSION. Thus, in order to attract foreign investments in the economy of Uzbekistan, the following tasks are required:
1. Attracting as many foreign investors as possible and creating a favorable investment climate.
2. Effective use of own investments along with foreign investments.
3. Stimulating foreign investment in order to increase the efficiency of enterprises.
4. Creating the infrastructure necessary for scientific and innovative progress in order to increase the competitiveness of domestic goods in the international market.
The need to reform the system of licensing procedures in Uzbekistan in relation to foreign investors is due to the following objectives:
- to ensure a favorable investment regime by reducing the high costs of doing business, reducing administrative procedures, increasing the transparency of obtaining licenses and permits, eliminating excessive bureaucracy during various procedures, improving the quality of services provided to investors;
- reduction of the bureaucratic burden on investment activities while maintaining effective state regulation of business;
- achieving transparency of legislation in the field of licensing procedures.
The achievement of these goals in the future is possible through the
following alternative ways:
1. The government in the long term is aimed at improving the efficiency of public administration of the economy by replacing administrative instruments of control over the activities of business entities with indirect regulation mechanisms.
2. Introducing targeted institutional changes for passing licensing procedures, which provide for improving the quality of services when issuing permits.
3. An alternative solution is the establishment of an institute that would become a single state body for interaction with a foreign investor to assist it in passing licensing procedures of the institute.
This idea assumes that an investor must go to only one authorized body to go through all the procedures necessary to start and conduct business in the reci pient country.
Thus, an important priority, designed for the long term and crucial for the growth of potential, the country's power and competitiveness of the economy, is the implementation of an active investment policy for the implementation of strategically significant projects aimed at modernizing, technical and technological updating of leading basic industries, developing a powerful modern network of transport and infrastructure communications.
Sources used:
1. Report of the State Committee of the Republic of Uzbekistan on Demographic Statistics //https: //stat.uz/ru/press-tsentr/novosti-komiteta/5260-demograficheskayasituatsiya-4
2. Speech by the President of the Republic of Uzbekistan Sh. Mirziyoyev in his message to the Parliament of the Republic of Uzbekistan on December 22, 2017 // http://uza.uz/ru/politics/poslanie-prezidenta-respubliki-uzbekistan-shavkata-mirziyeev23-12-2017
3. Uzbekistan News // https://www.uzdaily.uz/
4. World population statistics // https ://countrymeters. info/en
5. Paltrinieri A., Hassan M.K., Bahoo S. & Khan A., A bibliometric review of sukuk literature, International Review of Economics and Finance (2019), In Press https:// doi.org/10.1016/j.iref.2019.04.004.
6. Echchabi A., Abd.aziz H., Idriss U., 2016. Does sukuk financing promote economic growth? An emphasis on the major issuing countries. Turk. J. Islam. Econ. 3, pp. 63-73. 16. Global islamic finance report
7. Ahmad N., Daud S.N., & Kefelia Z. (2012). Economic forces and the sukuk market. Procedia: Social and Behavioral Sciences, 65, pp. 127-133.
8. Beck T., Demirg-Kunt A., Merrouche O., Islamic vs. conventional banking: business model, efficiency and stability. J. Bank. Finance 37, pp. 433-447.
