Representatives from the two countries at the Hungarian-Uzbek Business Forum on Tuesday stated that there is great growth potential for Hungarian-Uzbek bilateral trade and economic cooperation, and that both sides have an interest in expanding links further.
At the forum – organized by the Hungarian National Trading House Zrt. (MNKH) – Uzbekistan's Deputy Minister of Foreign Economic Relations, Investments and Trade Ibrahim Ergasev said that last year's figure for trade between the two countries of US $40 million was very low. He said that Hungarian companies should be more actively present in Uzbekistan - in the form of joint ventures where needed – taking advantage of the opportunities offered by free trade zones.
The Uzbek deputy minister highlighted the advantages offered by his country, including natural resources, low labour costs, cheap energy for industry, well-developed infrastructure and tax and tariff concessions for foreign investors. Many major international companies have a presence in Uzbekistan, and there are more than 4,800 companies with foreign interests. A bilateral agreement between the governments safeguards investors’ interests. Cooperation with Hungarian companies is not only important in terms of capital investment, he said, but also in terms of adoption of high-technology.
László Szabó, Parliamentary State Secretary of the Ministry of Foreign Affairs and Trade, also said that he sees opportunities for developing relations in a number of areas. He noted that, according to Hungarian data, last year saw US $75 million in trade between the two countries; he said this could be increased several times over. He went on to say that one year ago Eximbank signed an agreement with Uzbekistan’s Hamkorbank for a US $3 million credit line to finance the export of Hungarian goods.
He added that cooperation is possible in many areas, such as the healthcare industry, machinery manufacture, pharmaceuticals, tourism, water management, remediation and the processing of agricultural products.
The State Secretary pointed out that three industrial parks are operating in Uzbekistan – and a fourth is being built – in which tax and tariff concessions assist in the launch of companies. He emphasised that Hungarian capital can be safely invested in Uzbekistan, and that Hungary would not close its doors to Uzbek investors either. The EU is still Hungary’s most important export market, he said, but there is a real opportunity for growth in the Central Asian and Far East markets.
At the event a protocol was signed amending the existing double tax avoidance agreement between the two countries; Deputy Minister of Foreign Affairs and Trade László Szabó signed on behalf of Hungary, while leader of the Uzbek tax authority Parpiev Botir Rakhmatovich signed on behalf of Uzbekistan. After mutual ratification, this amendment will update the agreement to meet the latest international standards on exchange of tax information between the two countries' tax authorities. It will allow for full exchange of information between the competent authorities in Hungary and the Republic of Uzbekistan, which excludes the lack of domestic interests as an excuse and also makes compulsory the issue of information related to banking secrecy and ownership interests. The contents of the protocol comply with international practice, OECD standards, and the provisions in other bilateral tax treaties which Hungary is party to.
At the forum László Balogh, Director of the Hungarian National Trading House (MNKH), said that the mission of his organisation is to assist access to foreign markets for export-oriented Hungarian SMEs. Over the course of two years, trading house offices have been opened in 18 countries, and this number will have increased to 25 by the end of the year, thus covering a large number of target regions outside Europe. At present the MNKH has trading agreements with more than 1,700 companies – a number which they would like to further increase. He stressed that Eximbank provides financial assistance for the success of Hungarian entrepreneurs in foreign markets, and diplomacy is also of help in this.
Sohruh Gulamov – lead specialist in European and American Affairs at the Uzbek Ministry of Foreign Economic Relations, Investments and Trade – said that the Uzbek economy has grown more than 8 per cent in the last seven years, and this year the budget deficit will be 0.3 per cent of GDP. Since gaining independence, foreign investments have grown to US $180 billion, a significant portion of which is direct investment.
Foreign investors are protected by a number of laws. The SME sector has a key role in the Uzbek economy, providing 55.8 per cent of GDP. Mr. Gulamov said that in recent years several measures have been introduced to improve the business climate in Uzbekistan, including tax reductions and tax relief. Small businesses now pay tax of 5-6 per cent, he said. In the Navoi Free Trade Zone, for example, no tax is payable for the first seven years on investments of EUR 3-10 million.
Deputy Minister of Health Tillayev Shavkat and Deputy Chairman of the Board of Directors of Uzvinpromholding Duszmuratov Mirzanazim gave an account of health care in Uzbekistan and business opportunities in the pharmaceutical industry. It became clear from presentations that of a population of over 30 million, 60 per cent are of working age: 18-65 years. A successful healthcare programme has been carried out, resulting in significant reductions in maternal and child mortality. The Deputy Minister stated that nationwide access to healthcare and emergency services is good, with more than 15 per cent of annual government spending allocated to health care. He said that the main needs are for X-ray, sterilization and disinfection equipment.
Duszmuratov Mirzanazim said that 70 per cent of healthcare products are imported, including many from Hungary. Richter is a key player in the country’s pharmaceutical market. In Uzbekistan there is not yet the capacity to produce asthma, hormonal and anti-viral medicines, and therefore assistance in these areas is greatly welcome.
(Ministry of Foreign Affairs and Trade)
