On January 23rd, the Senate of the Oliy Majlis unanimously approved a new edition of the Law of the Republic of Uzbekistan "On Investments and Investment Activities" during its third plenary session.
The approved draft law consists of 6 chapters and 37 articles. It was developed jointly with experts from the World Bank and the International Finance Corporation.
The document will ensure that investment legislation complies with international standards, including the rules of the United Nations Conference on Trade and Development (UNCTAD) and the World Trade Organization (WTO), in particular:
– the bill introduces the main internationally recognized practices and principles in the field of investment;
– the concept of "investment activity" reflects the internationally recognized "Salini" principle, according to which the investor is risk-oriented, present for a long time and aims to bring benefits (positive results) to the national economy;
– principles for encouraging responsible business conduct (RBC) of investors are established;
– the WTO requirement to introduce "national treatment" for foreign investors is reflected in the Law;
– relations that are not typical for investment activity are excluded from the subject of regulation of the Law;
– the uncertainty of terminology in the field of investment in the legislation is eliminated by bringing the main concepts and terms in the Law into line with international standards and modern requirements. Thus, the definitions of the concepts of "investment", "investment project", "investor", "domestic investor", "foreign investor" and "direct investment", as well as the concepts of "investment agreement", "investment dispute" have been clarified. New concepts such as "single window", "individual investment activity" are introduced.
A number of amendments were made based on an analysis of investor appeals received by the Ministry of Investment, Industry, and Trade. Solutions are being introduced to eliminate factors and risks that cause the greatest concern among investors, and unnecessary restrictions are being removed.
For instance, guarantees of market access and guarantees of protection of investment activities from unjustified inspections are established.
A classification of investment projects is introduced: priority small investment project (up to $3 million), priority medium investment project (up to $10 million), priority large investment project (up to $100 million), priority strategic investment project (over $100 million).
The Law raises the status of the Council of Foreign Investors under the President of the Republic of Uzbekistan.
All interactions between investors and government agencies are organized on the basis of a "one-stop shop" principle. A system of primary and secondary support for foreign investors is also being introduced.
Additionally, additional guarantees for the protection of investment activities are introduced: the term of land use rights for foreign investors is increased from 25 to 49 years.
Local and foreign investors are granted equal benefits and preferences, which is one of the most important requirements of the WTO.
The range of investment benefits and preferences has been expanded - the requirement for the equity participation of foreign investors in an enterprise with foreign investments is reduced from 15 to 10 percent.
Overall, the draft law approved by the country's parliament aims to bring investment activities in Uzbekistan to a strategically new level, increase investor confidence, and contribute to the implementation of the key objectives of the "Uzbekistan-2030" Strategy, the fundamental basis for the country's development.