Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
Government agencies and large state-owned enterprises are the major importer of goods and services. By law, government and public sector procurements require clearance from the Ministry of Investments and Foreign Trade and the Center for Comprehensive Expert Examination of Projects and Import Contracts under the Ministry of Economy and Industry.
Key opportunities for selling to the Government of Uzbekistan lie in the following areas:
- Healthcare: Medicine, medical equipment and devices
- Oil and gas: Technology, equipment and construction services
- Information and communication technologies: Telecommunication equipment and materials for mobile operators, hardware and software for state organizations and SOEs.
- Energy: Power generation and transmission equipment
- Construction services: Construction and repair of roads, water supply systems,and buildings.
Competitiveness factors (e.g., price, value, training, after-sales service), government processes (e.g., for announcing tenders, registering bidders), requirements (e.g., local representation), and challenges (e.g., transparency, preferential treatment).
Officially, the selection of foreign suppliers and contractors for each contract, project, or assignment is conducted through:
- Electronic shopping
- Reverse auction
- Competitive bidding
- Public tender
- Single supplier public procurement
However, foreign businesses note that public procurement procedures are not always transparent. A bidder with an attractive financing proposal, such as long-term loans, can apply for exceptional preferences in a tender.
Differences in central, regional, and local procurements.
There are no formal differences in rules, regulating central, regional, and local procurements. The Law on Public Procurements (effective from April 1, 2018) defines the terms used to refer to parties involved in public procurement, as well as their rights and responsibilities:
- State customers: budget-funded agencies and state-owned enterprises
- Participants of procurement procedures: firms, both domestic and foreign, which participate in the procurement procedure as candidates for procurement
- Contractor: the bidder selected as the winner based on the results of the procurement procedures, with whom a contract is signed
- Procurement commission: a collegial body authorized to select a contract winner from the participants. The commission consists of an odd number of members; its composition and number of members depends on the procurement method and may vary depending on the nature of procured goods.
Legal requirements for selling to the host government, including whether the country or economy is a party to the WTO Agreement on Government Procurement or a party to a free trade agreement (FTA) with the United States that contains commitments on government procurement. (i.e., Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Korea, Morocco, Mexico, Nicaragua, Oman, Panama, Peru, and Singapore).
The Law of the Republic of Uzbekistan on Public Procurements (ZRU-472) regulates trade with the government. State-owned enterprises may have their own procurement rules. Uzbekistan is not a party to the WTO Agreement on Government Procurement and is not a party to a free trade agreement (FTA) with the United State.
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy Center for additional information.
Financing of Projects
There are several sources of funding for projects in Uzbekistan. These include government agencies, international financial institutions, publicly- and privately-financed investment funds, venture capital funds, and grant programs. Procurement of equipment and services is either financed directly from the national budget, with financing through international financial institutions, or through assistance from various export-import banks.
The government established the Public-Private Partnership Development Agency (https://pppd.uz/en/) in October 2018 to attract foreign investors to projects in the energy, communal services, transport, healthcare, education, culture and tourism industries. Companies from UAE, France, Saudi Arabia and Turkey agreed to invest in the construction and operation of power plants for 25 years, and Uzbekistan’s government will allocate land and guarantee state purchases of electricity at the contracted price.
Uzbekistan is a member of the European Bank for Reconstruction and Development, World Bank, Islamic Development Bank, Asian Development Bank and Asian Infrastructure Investment Bank. Financing from private international banks is growing, but still uncommon for large-scale projects. In most cases, the potential contractor or exporter offers the government financing sources for a specific project, such as long-term loans with attractive terms and conditions. Uzbekistan has also established its own development bank, the Fund for Reconstruction and Development of Uzbekistan, which finances or co-finances most large-scale projects in the country.
In July 2020, the Ministry of Investments and Foreign Trade and the Development Finance Corporation (DFC) “agreed to regular engagement to identify and implement strategic infrastructure projects in Uzbekistan in the field of energy, transport, education, and health on the principles of public-private partnership with the involvement of DFC financing.”
Multilateral Development Banks and Financing Government Sales. Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects with loans from the Multilateral Development Banks (MDBs). A helpful guide for working with the MDBs is the Guide to Doing Business with the Multilateral Development Banks. The U.S. Department of Commerce’s (USDOC) International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.
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