Tashkent, Uzbekistan (UzDaily.com) — On 4 September 2024, a video conference meeting was held under the chairmanship of the President of Uzbekistan, Shavkat Mirziyoyev, to address issues related to increasing production, exports, and investments in the electrical engineering sector. The meeting was attended by over 100 entrepreneurs working in this field.

The President highlighted that, thanks to the opportunities created over the past seven years, US$1 billion in investments had been attracted to the sector. As a result, 762 new enterprises were launched, and the production of 45 new types of products was established.

Production volume increased 1.8 times, and the number of enterprises with annual revenues exceeding 100 billion soums grew from 6 to 25. Revenue from the sector to the budget increased eightfold.

The number of countries to which Uzbekistan exports its products has doubled over the past three years, reaching 62.

The President emphasized that exports of electrical engineering products have reached US$1 billion, making the sector the second largest in the country after the textile industry.

However, it was also noted that Uzbekistan has the potential to produce electrical engineering goods such as smart cards, generators, telecommunications devices, and office equipment.

It was observed that the regional market potential, estimated at US$5 billion, is not fully utilized.

The President stressed that, in an environment where all countries actively protect their domestic markets, the only solution for Uzbekistan is to enhance the competitiveness of its products by ensuring quality and reducing production costs.

This can be achieved by expanding the value-added chain in the sector.

It was noted that a quarter of the country’s electrical engineering exports consist of low-value-added products, such as copper wire and bars.

About 80% of cables produced in Uzbekistan are used in construction and for household needs, while only four enterprises manufacture cables required by the automotive industry.

As a result, it was decided to develop technoparks in the electrical engineering sector based on industrial cooperation with enterprises in related fields.

Up to 10 hectares of land will be allocated in the technoparks of Akhangaran, Fergana, Karshi, and Urgench for enterprises engaged in the production of composite materials, metal and plastic processing, and manufacturing of molds and packaging.

Responsible officials were instructed to build ready-made buildings for specific projects and lease them to entrepreneurs on industrial mortgage terms. These enterprises will also receive benefits similar to those granted to electrical engineering companies, including a 50% reduction in property and profit taxes.

Overall, the importance of increasing the share of deep processing of copper products to 60% this year and 75% next year was emphasized, as well as raising the added value per ton of copper to US$1,000.

Currently, there is growing demand for electrical engineering products in energy, construction, water management, and automotive industries.

For example, energy projects are underway to produce 27 gigawatts of electricity worth US$36 billion.

Over the next three years, it is planned to install 4,150 water meters on water facilities, main networks, and distribution points, as well as update 243 gas distribution points by 2026.

The construction of 100,000 apartments in multi-story buildings and 13 million square meters of non-residential buildings annually also requires cables, transformers, heating and cooling systems, pumps, elevators, surveillance equipment, as well as electricity and gas meters.

In the automotive industry, electrical engineering products worth over US$200 million are imported annually.

Noting that all these sectors receive benefits and cheap financing from the government, the President stated that officials’ justification that “local products do not meet our requirements, so we are forced to import them” will no longer be accepted.

It was emphasized that the share of local products in state investment programs and major projects must be increased.

For example, an agreement has been reached to increase the share of local goods to 25% in public-private partnership projects in energy and to 70% in cable and wire products. Instructions were given to achieve similar conditions in other sectors.

In this regard, the Association “Uzeldtechsanoat” and regional khokims will place orders with enterprises, and leaders of relevant sectors will convey their requirements to local producers, help them adapt to standards, and obtain certifications.

Overall, it was noted that this year, production in the electrical engineering sector should reach 40 trillion soums.

During an open dialogue with entrepreneurs, many issues related to the electrical engineering sector were resolved.

For example, enterprises in this sector are major users of factoring. By the end of the year, at least US$30 million will be attracted to the sector for factoring operations.

Currently, goods imported within projects funded by external debt are exempt from customs duties and VAT. However, it was noted that local enterprises participating in these projects could not compete on price with imported products due to VAT, which limited their participation in such projects.

It has now been established that producers supplying goods within projects involving international financial organizations will have their VAT reimbursed.

The only requirements for enterprises in the sector remain quality, cost, and competitiveness. It was emphasized that this requires the implementation of international standards in production and obtaining relevant certifications.

The President noted that household appliance production is developing mainly due to the domestic market.

Last year, 70% of the produced household appliances were sold in the domestic market.

Although there are significant tariff and non-tariff barriers in external markets, production can be established in export markets based on large-scale assembly, supplying components and semi-finished products without additional fees.

The supply of technologies, skilled specialists, and components to neighboring markets will now be an important step in transforming Uzbekistan into a regional electrical engineering hub.

Leaders were instructed to establish the production of at least 15 new products under national brands for neighboring markets.

The meeting emphasized that industry leaders and khokims should work not only with large enterprises but also with all entrepreneurs in this sector.

In this regard, it was highlighted that the activities of the Association “Uzeldtechsanoat” need to be radically changed.

In particular, the key tasks of the association should be identifying high-demand products in domestic and international markets, developing projects on them and providing them to entrepreneurs; implementing international standards in the sector and assisting entrepreneurs in adapting to standards and obtaining certifications.

Additionally, important areas of the association’s work should include placing orders with universities and technical schools for training engineers and mid-level staff, jointly developing educational programs, and sending promising specialists from local enterprises for internships in leading foreign companies.

The President supported the proposals to exempt new members of the Association “Uzeldtechsanoat” from fees for two years and completely exempt enterprises with a turnover of less than 10 billion soums. He also approved free testing of their products at the “Elttech Lab” laboratory.

It was noted that it is important to attract US$200 million from external sources for the implementation of electrical engineering projects.

Overall, this year, within the framework of 85 projects, the goal is to begin production of SIM cards, payment cards, a wide range of household appliances, transformers, televisions, solar panels, lighting fixtures, electric scooter batteries, lithium-ion batteries, and laser cutting devices.

In conclusion, the President held a meeting with industry representatives and entrepreneurs, listening to their problems and proposals. During the discussion, the following measures were proposed:

- Implementation of a leasing system for industrial electrical engineering products;

- Increase in the volume of credits for enterprises with annual exports exceeding US$50 million, intended for working capital;

- Improvement of the profit tax system considering enterprises’ expenses on research and development;

- Implementation of a system for recycling automotive battery waste;

- Provision of the opportunity for partial exclusion of costs for purchasing modern equipment for new projects from the taxable base.

The President instructed relevant ministries and agencies to carefully study the proposals and develop projects for corresponding documents.

During the meeting, reports from industry leaders and regional heads were also heard.