Uzbekistan Market Entry

Uzbekistan Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

The coordination of foreign trade operations is entrusted to the Ministry of Investments and Foreign Trade. This ministry covers a number of organizations that deal with export and import operations. Contacts for state-owned enterprises engaged in export-import operations are available at www.gov.uz. Check smber for agriculture and fishing facts of Uzbekistan.

It is also possible to establish contacts with a number of business companies. However, it is always important when concluding a specific business case to check whether: – the given product is not among those for which the import or export regulated by the state (special license required, trade reserved only for certain organizations, export, import or transport prohibited; does the partner really have access and authorization to trade in the offered commodity; does the partner have a real possibility to obtain freely convertible currency; has his own foreign exchange account and sufficient domestic currency for exchange; whether it is possible to buy goods or services that can be further traded with it – e.g. on the raw material exchange of export commodities (but many goods sold on the exchange can only be bought again with freely convertible currency). The use of local representatives is possible, and many companies use this applies the practice.

Personal contacts are important for promoting the offered goods in Uzbekistan. You cannot build your business activities only on sending e-mails and links to websites. If the Uzbek businessman is not interested in the offer or contact, he does not respond. He behaves similarly if he does not understand the sent offer. A good knowledge of Russian is necessary for communication with a partner, the use of other languages, both in writing and orally, can cause problems.

Forms and conditions of operation on the market

The following organizational forms of business can be established in Uzbekistan.

Dealership

The establishment of a commercial agency is governed by Government Resolution No. 410 of 23 October 2000. According to this resolution, the agency does not have legal personality. Subject to registration in MVESIT. The application for accreditation must be submitted in writing on a company form, signed by an authorized person, stamped and attached with a translation into Uzbek or Russian. The application must state:

  • information about the agency’s activities
  • the address of the head office of the main company
  • telephone, fax and e-mail
  • Top management
  • number of company employees
  • Scope of business
  • sales volume/turnover for the last tax period
  • shares of individual business activities in the company’s turnover
  • production/goods nomenclature
  • details of owners or major shareholders
  • main plants (subsidiaries, branches, etc./addresses and subject of activity)
  • company history (founders and stages of development. other data (trademarks, ownership of real estate, production capacities, means of transport)
  • detailed information on business and other relations with enterprises and organizations of Uzbekistan
  • cooperation perspectives
  • the period of the required accreditation (a decision on accreditation is issued for one to three years). Accreditation must be renewed.

The request should be processed within 10 days. Accreditation takes place on the day the decision on accreditation is issued.

Enterprise with participation of foreign capital

The basic regulation governing the registration of a company with foreign capital is Government Resolution No. 237 of 22 August 2003. Registration is carried out on the basis of an application. The following is attached to the application:

  • two original notarized articles of incorporation
  • proof of the postal address of the business entity
  • bank documents on payment of the registration fee
  • company name certificate issued by statistical authorities
  • impressions of a round and square stamp in three copies
  • an extract from the commercial register according to the place of registration and a letter of recommendation from the bank legalized by the consular department of Uzbekistan
  • if the registered capital of the company exceeds 20 million USD, also a copy of the decision of the Government of Uzbekistan on the establishment of a joint venture
  • proof of contribution of 30% share of the share capital by each of the founders

An enterprise with foreign investment means an enterprise:

  • in which foreign investment represents at least 30% of the share capital,
  • one of the founders is a foreign investor – a legal entity,
  • the minimum amount of the share capital is the amount corresponding to the equivalent of 150,000 USD (75,000 USD in the Republic of Karakalpakstan and the Khorezm Region).

Marketing and communication

Advertising and promotional activity can be carried out in Uzbekistan using completely standard procedures, i.e. using the press, radio, television, advertising areas in public spaces – billboards, banners, etc. Posters or electronic banners etc. are common in Uzbekistan. In addition, there are various advertising, marketing and consulting companies operating in Uzbekistan.

Effective advertising and promotion in Uzbekistan for Czech companies is their participation in specialized international exhibitions and fairs. It is recommended to accept local customs, which means especially communication with potential local customers in Russian, and to prepare catalogs and other promotional materials in Russian as well.

A very good opportunity to promote Czech goods and services is the participation of companies in exhibitions or fairs as part of the so-called official participation of the Czech Republic (events under the auspices of the Ministry of Trade and Industry of the Czech Republic and some other ministries – MMR, Ministry of Agriculture, where participating companies are provided with a contribution to the exhibition area, etc.). An overview of these promotional events for the relevant year is published on the websites of the relevant ministries. The embassy also supports Czech companies if they are interested in participating in fairs or other events.

Issues of intellectual property protection

Uzbekistan has adopted a number of legal regulations governing the issue of intellectual property. In addition, it created bodies that should provide protection to the rights guaranteed by the said legislation. So, Uzbekistan is taking steps to bring itself up to common world standards. The State Patent Office of the Republic of Uzbekistan According to Appendix No. 2 to the Resolution of the Government of Uzbekistan No. 209 dated 6/14/2002 was created

State Patent Office of the Republic of Uzbekistan

Its basic task is the creation and implementation of a unified state policy in the field of industrial property protection. It ensures, among other things, the fulfillment of obligations arising for Uzbekistan from international agreements in this area. The Office is headed by a director appointed by the government. It is based in Tashkent, it has no territorial authorities.

Uzbek Republic Copyright Agency

According to the President’s Decree No. UP 3358 of 9/12/2003 and subsequent Government Resolution No. 286 of 16/06/2004, the Uzbek Republic Copyright Agency was created. Its main task is the protection of copyright and related rights. The agency is headed by a director general who has the status of a minister.

Although Uzbekistan has relatively high-quality legislation for the protection of intellectual property rights, counterfeit branded goods have recently entered its market very often. Goods of this origin are usually sold in markets. The Uzbek Agency for Standardization, Metrology and Certification has announced that it will support the above-mentioned authorities in the fight against counterfeits on the Uzbek market.

Public procurement market

The issue of public procurement is governed by several regulations. The basic legal regulation is made by an annex to Government Resolution No. 456 of 21 November 2000, as amended by later resolutions, the last amendment was made by Government Resolution No. 206 of 8 September 2005. This regulation applies to practically all government contracts, with the exception of those implemented on the basis of separate ad hoc government decisions or if the conditions of foreign loans or grants stipulate different conditions than the said regulation.

In the case of deliveries under a single contract exceeding the equivalent value of USD 100,000, it is possible to implement the order only on the basis of a tender procedure. This is often circumvented and the subject of delivery is divided into several contracts. The tender procedure is carried out by a commission established by the customer, if the value of the contract does not exceed the equivalent of 1 million USD. If it exceeds this value, the composition of the commission must be approved by the government. The tender committee must have an odd number of members, usually 9–11. The number of commission members appointed by the client may not exceed 30%. Furthermore, representatives of ministries, banks, expert organizations, etc. are appointed members of the commission.

In addition to the tender commission, a “working body” of the commission is being created, which is the body that conducts the tender procedure in practice. For deliveries of up to USD 1 million per contract, he is appointed by the customer, for deliveries above USD 1 million, government approval is required. Tenders are open or closed. Anyone can participate in open tenders, closed tenders are exceptional and are announced with the approval of the government, or the relevant vice-chairman.

The notice of the tender will be announced by the labor body no later than 30 days in advance, in the mass media. In the conditions of Uzbekistan, these are mainly newspapers: Narodnoje slovo (Xalq so´zi), Pravda vostoka, Bizněs Vestnik Vostoka. This is followed by the submission of a tender offer and the sending of tender documentation to those interested in participating in the tender. The tender documentation must contain: instructions for the tender participant, technical part, commercial part, preliminary draft of the contract. After that, the labor body will make a preliminary qualification selection, which will be approved by the tender committee. The rating follows. The results are published within three days in mass media (as mentioned above). Tenders financed by foreign loans are carried out according to the rules of the bank granting the loan.

The reasons for which the contract was awarded to a particular supplier are usually very difficult to ascertain. It is the fact that the issue of public procurement is not regulated by law that enables various manipulations with tenders (e.g. postponements, repetitions, etc.).

Payment terms, payment ethics and resolution of commercial disputes

Payment ethics in Uzbekistan can be unpredictable, so we recommend asking your partner for payment in advance or one of the secured means of payment (e.g. documentary letter of credit). We recommend using EGAP insurance for business, which currently ranks Uzbekistan in country category 5 (out of 7) according to the OECD Consensus, which is one of the best ratings among Central Asian countries.

Although reforms and a significant fight against corruption are taking place in the country, it is necessary to take into account that changes in the perception of bribes (whether at the level of ordinary people or businessmen and officials) cannot be expected immediately and one hundred percent.

The basis of Uzbek commercial justice is the system of economic courts. It consists of economic courts located in individual regions and the capital city of Tashkent and the Supreme Economic Court located in Tashkent. This system exists independently of the general court system. In addition to the regular economic courts, the arbitration court was introduced by Act No. ZRU 64 of 2006 on arbitration courts, which came into effect on January 1, 2007. Permanent arbitral tribunals and ad hoc arbitral tribunals may be established under this law. These courts are competent to resolve economic disputes between business entities, unless the law provides otherwise. Disputes under this law shall be resolved under Uzbek law. The jurisdiction of the arbitration court can only be established in writing, either by an arbitration agreement or an arbitration clause in the relevant agreement. Disputes before arbitration courts are decided either by self-arbiters or arbitration panels. Judicial review of the decision of the arbitration court is possible only exceptionally for the reasons expressly stated in the law, based on a motion to annul the decision of the arbitration court. This proposal has a suspensory effect. However, the general court cannot review the facts established by the arbitration court or its decision on the merits. The introduction of arbitration is officially justified by Uzbekistan’s interest in introducing international standards as part of economic reforms. In reality, however, it is a pragmatic response to the hitherto widely applied out-of-court settlement of commercial disputes. However, experiences with the activity of arbitration courts are mostly positive so far. In particular, speed, availability and, above all, cheap management are appreciated.

Visas, fees, specific conditions for traveling to the territory

From 1 February 2019, citizens of the Czech Republic can travel to Uzbekistan without a visa, but the stay may not exceed 30 days. In the case of a gainful stay or a stay longer than 30 days, the obligation to obtain an Uzbek visa before entering the country applies. The representative offices of Uzbekistan issue a wide range of visas according to the purpose of the applicant’s stay (work, student, academic, health, pilgrimage, expatriate, etc.). More detailed information on the conditions for issuing visas is provided by the embassies of Uzbekistan abroad. Uzbekistan does not have an embassy in the Czech Republic, the nearest offices are the Uzbek embassies in Berlin and Vienna. For citizens of the Czech Republic, the embassy of Uzbekistan in Berlin is locally responsible.

Contact information for Uzbek embassies can be found on the website of the Ministry of Foreign Affairs of Uzbekistan ( https://mfa.uz/en/consular/consular/ ).

With effect from November 5, 2019, in connection with the adoption of Law of the Republic of Uzbekistan No. 579, fines for foreigners for exceeding the number of days of permitted stay on the territory of Uzbekistan were reduced. Citizens of the Czech Republic have been allowed to stay in Uzbekistan without a visa since 1 February 2019, but the validity of the permitted stay may not exceed 30 days. If the permitted period of stay is exceeded by 10-30 days, the foreigner will be fined EUR 580 (approx. CZK 14,700). If the permitted period of stay is exceeded by more than 30 days, the foreigner will be fined EUR 1,160 (approx. CZK 29,500). Foreigners are required to register during their stay in Uzbekistan. This registration will be handled automatically and free of charge by the hotel where you are staying.

If you will be staying in private accommodation, you are obliged to register with the relevant police department within 3 days of crossing the Uzbek border, which has the abbreviation UVViOG, but is usually called by the former abbreviation OViR. Compliance with the registration obligation is strictly controlled when leaving the country. In the event of a violation of the registration obligation, the person in question is not allowed to leave Uzbekistan until the fine is paid or until the court’s decision. The fine for failure to comply with the registration obligation starts at 1,000 euros and can be even higher.

Employment of citizens from the Czech Republic

The basic labor law regulation in Uzbekistan is the Labor Code. Regarding the employment of foreigners, it is supplemented by Government Resolution N 408 of 19/10/1995 on work activities of citizens of Uzbekistan abroad and foreigners in Uzbekistan, as amended, last amendment N 203 of 29/04/2004.

Furthermore, it is the decree on the recruitment and use of foreign workers in Uzbekistan, which forms Annex No. 2 to the above-mentioned Government Resolution, and finally the Decree on the method of accreditation and activities of trade representatives of foreign commercial organizations on the territory of Uzbekistan, which forms Annex No. 1 to Government Resolution No. 410 of on 23.10.2000 as amended by Government Resolution No. 162 of 06.04.2001. According to these regulations, foreigners can work on the territory of Uzbekistan on the basis of a permit to obtain foreign labor. This permit is issued to an Uzbek employer. It is issued by the territorial body of the Agency for External Labor Migration, which is responsible for the employer’s seat.

The employer is obliged to submit the following documents to the agency:

  • request
  • draft employment contract or other documents confirming a preliminary agreement with foreign citizens or foreign companies on the intention and conditions of obtaining foreign specialists
  • questionnaire of a foreign specialist with a photo
  • proof of payment of the permit fee
  • medical certificate of freedom from HIV infection
  • other documents at the request of the Agency

The agency must issue a decision no later than 30 days from the date of submission of the application. In case of refusal, the decision is issued within one week in writing with reasons. Based on this decision, the foreign worker will receive a confirmation of the right to work on the territory of Uzbekistan. The certificate is issued for a period of one year. The extension of the confirmation is issued for the period of validity of the employment contract. Annex 2 to Government Resolution No. 408 contains a detailed list of persons to whom this procedure does not apply.

For the needs of our entrepreneurs, the founders and partners of companies established in Uzbekistan, who stay on the territory of Uzbekistan for a maximum of three months, should be listed. It also does not apply to employees of trade representatives of foreign commercial organizations who are accredited by the Ministry of Foreign Trade. The aforementioned regulations do not set any restrictions on the employment of foreigners. Issuing a permit is purely at the discretion of the Uzbek state authority. When it comes to employing local citizens, there are no restrictions. However, it must be taken into account that in the case of business trips abroad, a citizen of Uzbekistan must have an exit permit. In the conditions of cheap and relatively qualified labor, many foreign companies prefer to employ citizens of Uzbekistan. Some Czech companies also do this.

The Uzbek legal system also allows cooperation on the basis of a trade license (the so-called švarc system).

More detailed information can be found at www.norma.uz.

Fairs and events

Overview of international exhibitions in Uzbekistan in 2021, organized by International Expo Group.

UzMedExpo 21 – 23 September 2022 – medical devices, pharmaceuticals, dentistry

UzEnergyExpo 26 – 28 October 2022 – energy, renewable energy sources

UzStroyExpo 26 – 28 October 2022 – mechanical engineering, engineering, heating systems

UzAgroExpo 23 – 25 November 2022 – agricultural industry, production

UzProdExpo 23 – 25 November 2022 – food industry, packaging and packaging materials

InterPackExpo 23 – 25 November 2022 – technology for polygraphy, printing, marking, packaging production

Overview of international exhibitions in Uzbekistan in 2021, organized by Iteca Uzbekistan

Oil and Gas Uzbekistan 18 – 20 May 2022 – oil and gas industry, technology and equipment

Power Uzbekistan 18 – 20 May 2022 – energy, energy supply, nuclear power, alternative energy sources

CAiTME 7 – 9 September 2022 – tools for processing cotton, spinning and spinning wool

AquaTherm 28 – 30 September 2022 – heating and air conditioning equipment

UZ E-TECH EXPO 28 – 30 September 2022 – electronics, electrical technology, cables and wires, green energy, technology and production

UZuPack-UzbekPrin t 5 – 7 October 2022 – equipment for polygraphy, printing

Plastex Uzbekistan 12 – 14 October 2022 – raw materials for the chemical industry; inorganic chemistry and organic synthesis; equipment for the production and processing of plastics and rubber

MiningMetals Uzbekistan 2-4-11-2022 – Equipment for the Mining and Mining Industry

TransLogistica Uzbekistan 2 – 4 November 2022 – transport and logistics

Securex Uzbekistan 2-4 November 2022 – health and safety, equipment

Uzbekistan Market Entry