Italy and Uzbekistan: an ever stronger partnership
Uzbekistan, a country rich in raw materials and rapidly developing, is increasingly attracting the interest of foreign investors looking for new markets and business partnerships. It is in this context that the first Italy-Uzbekistan Business Forum must be inserted. The Forum was held virtually on December 11th, in the presence of the Undersecretary for Foreign Affairs Di Stefano and the bodies in charge of internationalization of the two countries (including ICE, SACE, Simest and Confindustria).
Uzbekistan is the most populous country in Central Asia (34 million inhabitants, according to 2020 estimates), it has a young population and a potential market of over 300 million people (the Commonwealth of Independent States). The Central Asian republic is the sixth largest producer of cotton in the world and among the first producers of natural gas, uranium and gold (the Muruntau mine, in the Kyzyl Kum desert, is the largest in the world). These elements would be enough to make it an extremely interesting country from a geopolitical and economic-commercial point of view.
Under the leadership of President Mirziyoyev, Uzbekistan has embarked on an important modernization and liberalization plan, which has seen national GDP grow at a rate of over 5% per year. As part of the 2017–2021 development strategy, the government has implemented a series of economic reforms aimed at reducing the role of the state in the economy, while providing guarantees to small and medium enterprises, and the private sector in general. Moreover, huge investments for industrial modernization and technological innovation were made.
In order to attract foreign companies, 21 free trade zones have been created for industrial, pharmaceutical, agricultural and tourism activities, and potential investors are offered tax and financial advantages. The recent establishment of a new Confindustria Uzbekistan is indicative of the extent to which Italian companies have taken an interest in this country, especially in certain sectors. 53 of our companies are currently present on the Uzbek territory, and operate mainly in production and services (Techint, Danieli, Pietro Fiorentini, Ariston Thermo, Landi Renzo and Lovato Gas, to name a few).
What emerges from various reports is the complementarity between Italy and Uzbekistan in the priority sectors of infrastructure and transport, precision mechanics, agro-industry and energy. The strategic position along the New Silk Road and the lack of an outlet to the sea required the government of Tashkent to make an investment of around 10 billion dollars in the logistics sector (in particular railways), with some Italian players already involved. The same goes for precision mechanics and the production of industrial machinery, in great demand in Uzbekistan, for which Italy is a world leader.
The 2017–2020 strategy also involves downsizing the production of raw cotton in the face of an increase in the cultivation of fruit and vegetables, favoring agricultural diversification. If we consider that more than a third of the local workforce is engaged in the agricultural sector, it is evident that this investment aims to strengthen Uzbekistan’s role as a regional exporter. And it so happens that even in quality agricultural production Italy has a lot to offer, especially thanks to innovative machinery and technologies.
Finally, the 2018 textile reform allowed operators in this sector to control the entire production chain, until then subject to the monopoly of the state company UzTekstilSanoat. This has led companies to focus more on the production (and export) of finished products and to a progressive qualitative growth, due in part to the use of Italian know-how and machinery.
In addition to those just mentioned, there would be other potential sectors in which to invest, not least tourism: cradle of ancient peoples and cultures, of museum cities such as Khiva, Bukkara and Samarkand and about 8,000 sites of historical importance, Uzbekistan is destined to grow in this sector too, being already included in the itinerary of the Belt and Road Initiative.
In recent years, the Italian government has worked to intensify bilateral relations with Uzbekistan and with other countries in the Central Asian region, aware of the interests and opportunities that can be generated. The important Uzbek reforms and the opening up to international investors are an encouraging sign, now we just need more determination from Italian companies.
Davide Garavoglia
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This article was originally posted in Italian on Polikòs: https://www.polikos.it/economia/2020/12/italia-uzbekistan-un-sodalizio-sempre-piu-forte/
