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A guide to Uzbekistan's construction industry

With the largest populace in Central Asia, Uzbekistan is a resource-rich nation with a lot of potential. However, it has not attracted much foreign investment in the past. This is gradually changing, with a number of government policies being enacted to encourage more business from overseas.

This is good news for the international build and interiors industry. The nation's growing economy has led to a rise in construction projects, many of which are connected to the growing residential needs of its population. This guide will take you through doing business in Uzbekistan, from the business culture to trends in interior design.


Key statistics

- Population: 28.9 million (2014 estimate).

- Annual population growth rate: 0.93 per cent (2014).

- Percentage of population of a working age: 51.7 per cent.

- GDP per capita: $5,600 (2014).

- Total GDP: $170.3 billion (2014).

- Estimated GDP growth: 7.9 per cent (2014 estimate).

- Unemployment: 4.9 per cent (2014 estimate).

- Ease of enforcing contracts: 28th in the world.

- Government: Republic.

- DHL Global Connectedness Index 2014 ranking: 138th.

- Interest rate: 9 per cent.

- Foreign Direct Investment (FDI) into Uzbekistan: $1.08 billion (2013).

- From 2003-2014, the top investors in Uzbekistan have been Russia, South Korea, the US, Germany, the UK and China.

- Starting a business in Uzbekistan takes an average of 7.5 days, compared to the world average of 30.6 days.


Construction facts

- Total value of construction work in 2014: $7.79 billion.

- Construction growth: 16.6 per cent (2013).

- Value of construction work completed by small businesses: $5.48 billion (2014).

- Construction output rose by 18.3 per cent in 2014.

- The number of steps needed to receive a construction permit decreased from 25 to 23 in 2014, and the time this procedure takes fell from 243 days to 160.

- 8.9 per cent of Uzbekistan's enterprises are construction-related.

- Production of building materials rose by 10.7 per cent in 2014, to a total value of $1.86 billion.


Major projects

1. Housing for Integrated Rural Development Investment Programme

A major project is ongoing in 2015 to build thousands of homes in some of Uzbekistan's most rural areas. The programme will see 12,000 modern houses built across 13 regions, along with the construction of 277.4 km of water pipelines, 273.5 km of electrical infrastructure, 283.9 km of gas pipes and 244.4 km of roads.

The regions that will benefit most from the initiative are Kashkadarya, which will see 1,320 homes constructed, and Andijan, where 1,060 houses are planned to be built. All in all, around $2 billion is to be invested in this scheme, helped by loans of $100 million from the Asian Development Bank and $100 million from the Islamic Development Bank.


2. Tashkent International Airport terminal

Tashkent International Airport, the busiest airport in Central Asia, is set to see a major upgrade in the next few years. A source from Uzbekistan Airways told Trend that the facility would see the construction of a new terminal by 2019. The cost of this building project at this stage is estimated to be around $310 million.

Two of the three current terminals have a combined capacity of roughly 1,700 passengers per hour, with the third used mainly for special and VIP services. The new terminal will almost double this capacity, as it is predicted to be capable of serving around 1,500 passengers per hour. This would make it the largest terminal in the airport.


3. Kandym Gas Processing Facility

The Kandym oil and gas fields - located in the west of Uzbekistan, in the Bukhara region - are set to see a major new facility constructed in the next few years. The Kandym Gas Processing Plant will be run by Lukoil and built by South Korea's Hyundai Engineering, with completion roughly scheduled for 2018.

Once completed, the facility will be able to process 8.1 billion cubic meters of gas per year. The plant is planned to be an impressive size - the largest investment project Lukoil has ever run in Uzbekistan - and will require an estimated 10,000 construction workers to complete.

The contract signed between Hyundai and Lukoil has an approximate value of $2.662 billion. However, it is estimated that the actual project will attract around $3 billion worth of investment.


4. Navoi chemical complex

Another major project to begin construction in 2015 is a chemical complex planned for Uzbekistan's central Navoi region. The facility - which will be attached to Navoiazot, the largest chemical plant in the country - will be used to produce 660,000 tonnes of ammonia and 577,500 tonnes of carbamide per year once completed.

This project will cost $961.74 million to complete, according to Uzbek Chemical Industry. Part of this funding will come from a $320 million loan from the Fund for Reconstruction and Development of Uzbekistan. The complex will be built by Japan's Mitsubishi Heavy Industries.


Business culture

When you first greet somebody in Uzbekistan, you will usually end up either shaking hands or gripping each other's forearms. This is the case for people of the same gender, but when meeting somebody of the opposite sex it is sometimes considered more polite to simply nod and say hello.

The main language of Uzbekistan is Uzbek. Around 75 per cent of the populace speak it as their first language, with 20 per cent speaking Russian and the remaining five per cent speaking Tajik. Russian is widely used due to the continuing proliferation of Russian media across Uzbekistan. When talking to somebody, it is typical to leave less than an arm's length of space.

It is common practice to ask several questions about the other person's health, marriage, children and other small-talk subjects when you meet them. You might find yourself being asked five or six of these at rapid-fire, and you will not necessarily be expected to answer. However, asking is polite.

Punctuality is not as important in Uzbekistan as it is elsewhere in the world. People will often be late or early for meetings, and it is rarely commented on.

Respect for elders is an important part of Uzbek culture - even if someone is only a few years your senior.


International investment

The Uzbek government is keen to attract international investment to its nation. As an incentive, several tax incentives are provided to firms classified as "enterprises with foreign investment". This applies to companies founded by foreign legal entities with charter capital of at least $150,000, of which $50,000 must come from overseas investment. As of Jan 1st 2015, this applied to 1.8 per cent of businesses in Uzbekistan.

In addition, a 'free industrial economic zone' has been set up in the Navoi region of Uzbekistan in order to encourage foreign investment. Businesses registered in this territory are exempted from land, corporate profits, property and infrastructure tax, school tax, and payments to the Road Fund for a length of time dependent on the size of the investment.

Uzbekistan has two main laws that protect overseas investors: 'On Foreign Investments' and 'On Guarantees and Measures to Protect Rights of Foreign Investors'. Both of these date back to 1998. They provide ten-year-long protection for foreign companies from any changes in the law that would adversely affect them.


Interior design trends

Uzbekistan is famous for its two unique styles of embroidery: suzani and ikat. Both of these involve creating elaborate, colourful patterns, but while suzani is traditionally done on white cloth or made into rugs, ikat is made from multiple shades of silk woven together. Both feature heavily in Uzbek interior design.

While some homes might use these traditionally, with suzani rugs and ikat bedding, modern homes are being more creative. It is common to see ikat wallpaper or room dividers, or to come across a suzani that has been framed and hung on the wall.

Contemporary Uzbek homes are increasingly monochrome, with heavy use of white or pale walls and black furniture. Sometimes wood panelling is also used; where this is the case, it tends to be a light, rich colour such as golden teak.
Traditionally, doors and window shutters were elaborately carved in Uzbekistan. Modern homes retain a lot of this character. Windows are often stained with patterns - usually floral or abstract - and doors typically feature either a small amount of patterned carving or shaped windows that form a pattern of their own.

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