Business is registered in Uzbekistan – Kommersant FM

Business has flocked to Uzbekistan: the number of companies with Russian capital in the republic has doubled. Such data over the past three years was shared at the Uzbekistan Embassy in Moscow. There are about 3 thousand such companies in the country. What opportunities does the local market open up for Russian entrepreneurs? Sabina Adleiba talks about this.

Last year, according to Uzbek authorities, it was Russians who opened the most foreign enterprises in the country. At that time we were talking about about 1 thousand companies, now there are three times as many.

Among those who decided to develop the Uzbek market, for example, are the retailer Magnit, the Wildberries marketplace and the Broniboy delivery service. Popular Russian food chains Syrovarnya and Dizengoff 99 have opened their outlets in the capital of the republic, Tashkent.

Why does the Uzbekistan market attract business? According to Andrey Bodrov, director of strategy and investment for the Magnit network, these are infrastructure features and the average age of potential clients:

“The country’s population is almost 40 million people, so this is one of the largest markets in the CIS from this point of view. Moreover, more than half are young people under the age of 30; there are a lot of children in every family.

At the same time, younger generations are exposed to all modern trends, and the digital infrastructure factor is at work. In addition, settlements in Uzbekistan are very densely located when compared, for example, with Kazakhstan, where the population is dispersed throughout the country.”

Interest in Uzbekistan is growing. This is indirectly evidenced by data from local authorities: in 2022, Russians crossed the country’s border more than twice as often as a year earlier.

The attitude towards Russian business in the country is captivating, noted Lenar Rakhmanov, managing partner of the consulting company LWM: “They created a special economic zone in which they sheltered a lot of companies, in particular from Tatarstan.

Businesses opened their offices and production facilities here, and gathered a large lobbying pool right at the level of the Deputy Prime Minister.”

Four years ago, an IT park covering 6.5 hectares with business centers, office and residential premises was opened in this economic zone. Getting there is not difficult: a legal entity can be registered within a day, the size of the authorized capital starts from $1.

There are also no input KPIs, meaning the company does not have to have a certain number of employees or high profits. The only requirement is that the company’s profile must correspond to one of 18 types of activities in the IT sector. True, in essence, we are talking about any company that exports its services via the Internet.

You can become a resident of the park 12 days after submitting an application, and this status provides many benefits, says the general director of the Nanoecokhim company, Aidar Gimadeev, who took advantage of this opportunity a year and a half ago:

“The income tax here is 0%. In principle, in Uzbekistan the VAT is very interesting – 12%, that is, for Russian business it is, one might say, offshore.

Very good warehouses and production areas. At the same time, the cost of renting a square meter for an industrial space is $3, for an office space — $5. We have already started our first export transactions; we are supplying goods to Kazakhstan, Turkey and Russia.

Here, a young workforce is available for relatively low wages; people understand the Russian language well. Accounting is quite clear for us, all the standards by which we work in Russia or Turkey are much more complex.”

True, there are also difficulties, in many ways the Uzbek market is inferior to the Russian one, continues Andrey Bodrov from the Magnit network: “For example, the disposable income of the population, although growing, is dramatically lower than the level that exists in Russia. There is a strong commitment to traditional channels, called bazaars, where people know specific sellers.”

At the same time, Russian companies are not so actively entering the market of Uzbekistan and give preference to Georgia, Armenia and Kazakhstan. Thus, Tbilisi stated that from March 2022 to July 2023, over 21 thousand companies with Russian capital were opened in the republic, which is three times more than over the past 27 years.

But businessmen who make a choice in favor of Uzbekistan receive an obvious advantage, emphasized Ilya Kurasov, partner relations manager at Relokod:

“One of the main advantages is that money is still flowing. That is, there is a list of sanctioned banks in Russia, from which it is impossible to carry out transactions, but there is an option to open accounts in other alternative credit institutions and send funds to your company’s account in Uzbekistan.

Thus, accordingly, you can continue to transfer money to any country, convert it into any currency and send it further to Europe, the USA, anywhere.”

In general, the economic forecast for Uzbekistan is favorable. According to the Asian Development Bank, the country’s GDP will grow by 5% in 2023 and 2024. At the same time, among the risks for the economy, analysts name anti-Russian sanctions and their impact on exports.

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