ACADEMIC RESEARCH IN MODERN SCIENCE
International scientific-online conference
119
STATE SUPPORT MEASURES FOR ENHANCING THE EXPORT
POTENTIAL OF BUSINESS ENTITIES IN FREE ECONOMIC ZONES
Nazarov N.
Institute of Higher Qualification of
Staff and Statistical Researches,
PhD.
https://doi.org/10.5281/zenodo.15220426
Abstract.
Free Economic Zones (FEZs) are strategic instruments used by
governments to attract foreign investment, develop industry, and stimulate
export growth. In Uzbekistan, FEZs have become dynamic centers of production,
innovation, and trade. This thesis explores the mechanisms and impact of state
support on enhancing the export capacity of enterprises operating in FEZs. It
analyzes fiscal policies, export promotion programs, customs and logistics
advantages, innovation support, and human capital development. Based on
Uzbekistan's recent economic reforms, this study provides insights into
improving the country’s integration into global trade networks through
enhanced FEZ policies.
Keywords:
Free economic zone, export potential, state support, investment
climate, customs facilitation, trade infrastructure, innovation, human capital.
Introduction
In recent years, the Government of Uzbekistan has initiated sweeping
reforms to shift its economy from a raw material exporter to a value-added
manufacturing and export-oriented model. A key part of this strategy is the
development of
Free Economic Zones (FEZs)
. These zones offer a unique
environment with liberalized customs, taxation, and regulatory systems
designed to attract domestic and foreign investors.
A pivotal moment in this transformation was the
Presidential Decree No.
PF-5281, dated October 26, 2017
, titled
"On Measures to Further Improve the
Activities of Free Economic Zones in the Republic of Uzbekistan."
This decree
aimed to create a more efficient legal and institutional environment for FEZs,
offering comprehensive tax holidays, customs privileges, and administrative
streamlining.
Despite the progress, there remains a pressing need to deepen export
potential in these zones. Export activity not only generates foreign currency and
economic growth but also enhances technological capability, product quality,
and global competitiveness. This thesis focuses on how state support
mechanisms can better enable FEZ-based firms to scale up their exports and
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enter high-value international markets. The following factors influence the
enhancement of export potential:
1. Fiscal and Customs Incentives
The Uzbek government provides a range of fiscal benefits to companies
operating in FEZs as a form of indirect support for exports. These include:
Profit tax exemption
for up to 10 years depending on investment volume;
Property and land tax exemption
to reduce fixed costs;
Exemption from customs duties and VAT
on imported machinery, raw
materials, and production inputs intended for export;
Accelerated depreciation
and simplified accounting to support
reinvestment and liquidity
[1]
.
These incentives are critical for enabling businesses to produce at globally
competitive costs. Additionally, customs procedures have been streamlined
through the introduction of electronic declaration systems and the “green
corridor” system for trusted exporters, reducing delays and bureaucratic
obstacles at borders.
2. Export Promotion and Trade Facilitation Programs
To connect FEZ-based businesses with foreign markets, the state actively
promotes exports through:
Trade fairs and exhibitions
, where Uzbek products are showcased
globally;
B2B matchmaking
through Uzbekistan’s embassies and trade attachés;
Subsidized export insurance and financing
, which reduces commercial
risks for exporters;
Grants for obtaining international certification (e.g., ISO, HACCP)
,
which are essential for entering developed markets.
Institutions such as the
Export Promotion Agency
and
UzTrade
play a key
role in providing export intelligence, partner search, marketing support, and
legal consultation. For SMEs in particular, this external support is often the
difference between exporting and being limited to the domestic market
[2]
.
3. Logistics and Transport Infrastructure
The government has prioritized the development of transport and logistics
infrastructure as a means of reducing the cost and time of exports. Measures
include:
Establishing multimodal logistics centers
within FEZs, allowing
combined use of road, rail, and air transport;
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Upgrading customs terminals and warehouses
to ensure fast clearance
of goods;
Development of digital logistics systems
such as e-waybills and cargo
tracking;
Improved access to major transport routes
, such as the Navoi Airport
International Cargo Hub and the China–Central Asia–Europe railway corridor.
For export-oriented businesses, timely and cost-effective delivery is a core
component of competitiveness. By reducing transit times and customs
formalities, these infrastructure investments significantly enhance the export
capacity of FEZs.
4. Innovation and Product Diversification Support
To succeed in competitive global markets, businesses must constantly
innovate and diversify. Recognizing this, the Uzbek government has launched
initiatives aimed at:
Supporting R&D and technology transfer
within FEZs through co-
financing and tax incentives;
Establishing tech parks and innovation centers
in or near FEZs;
Encouraging joint ventures
with foreign firms to introduce advanced
production methods;
Providing grants and subsidies
for the development of new, export-
oriented products
[3]
.
Innovative production not only raises export value but also strengthens
resilience against commodity price fluctuations and changes in global demand.
The introduction of new product lines—especially in pharmaceuticals,
electronics, and food processing—demonstrates the potential of such policies.
5. Human Capital and Export-Oriented Workforce Development
Exporting requires more than products—it demands capable people.
Recognizing this, the government supports human capital development by:
Providing training in export procedures, international standards, and
foreign languages
;
Developing curricula in universities and colleges aligned with FEZ
needs
;
Establishing partnerships with foreign universities
to enhance technical
and managerial skills;
Facilitating professional exchanges and internships abroad
for young
specialists in trade and logistics
[4]
.
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Building a workforce skilled in international commerce ensures that
businesses can effectively manage exports, comply with foreign regulations, and
build lasting relationships with international partners.
In conclusion, Uzbekistan’s strategic focus on Free Economic Zones has
already yielded positive results in attracting investment and modernizing
production. However, the next frontier is the
sustainable expansion of export
potential
, particularly in high-value sectors. State support is pivotal in this
regard and must evolve from basic tax relief toward
integrated, export-
focused strategies
.
Key policy recommendations include:
Expand financial products for exporters
, such as pre-export financing,
guarantees, and risk insurance;
Strengthen digital tools
like the national export portal, enabling real-time
market access and e-commerce;
Foster regional integration
through improved cross-border trade
agreements and customs harmonization;
Develop unified branding campaigns
for FEZ products in key target
markets;
Encourage cluster development
in sectors like agro-processing, textiles,
and chemicals to boost scale and specialization.
With targeted, innovation-driven, and inclusive support policies,
Uzbekistan's FEZs can become competitive export engines and serve as vital
gateways to the global economy.
References:
1.
Yuldashev, T., & Mukhammadiev, A. (2020). State Support for Business
Entities in Uzbekistan’s Free Economic Zones. Journal of Economic Policy, 5(3),
125-134.
2.
Nazarov, N. (2023). O‘ZBEKISTONDAGI ERKIN IQTISODIY ZONALARDA
TADBIRKORLIK
SUBYEKTLARINI
MOLIYAVIY
QO’LLAB-QUVVATLASH
MEXANIZMLARI. ILM FAN TARAQQIYOTIDA ZAMONAVIY METODLARNING
QO'LLANILISHI, 3(9), 52-56.
3.
Nazarov N. Integrity into Global Trade with Attractive Investment Practice
in Free Economic Zones (Case of Uzbekistan) //Theoretical & Applied Science. –
2020. – №. 2. – С. 55-66.
4.
Nazar N. Increasing Export Potential with Special Economic Zones in
Uzbekistan.
