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ISSUES OF IMPROVING INFRASTRUCTURE TO INCREASE THE
INVESTMENT ATTRACTIVENESS OF FREE ECONOMIC ZONES IN
UZBEKISTAN
Ataismatov Iqboljon Zumratjonovich
PhD Independent researcher of Fergana State Technical University
Tel: +998(33)000-44-77
e-mail: iataisamtov@bk.ru
https://orcid.org/0009-0002-1233-4561
https://doi.org/10.5281/zenodo.15188769
Abstract
This thesis analyzes the factors that negatively affect the investment
attractiveness of production-specialized free economic zones operating in the
Republic of Uzbekistan, identifies the main factors, and proposes positive
changes that serve to increase the investment attractiveness of free economic
zones.
Keywords:
investment, infrastructure, free economic zone, efficiency,
global economy, competition, preferential tax, specialized regions, economic
indicators.
Introduction
Free economic zones (FEZ) occupy a special place in the economic
development of Uzbekistan. These zones play an important role in strengthening
the country's integration into the global economic system, creating a favorable
environment for investors, and ensuring economic growth. Free economic zones
increase their competitiveness in the global market with such features as special
tax and customs benefits, freedom in the production and service sectors,
innovative approaches, and infrastructure development.
However, the factors determining the investment attractiveness of free
economic zones are numerous and interconnected. On the one hand, they are
influenced by such factors as the economic and political stability of the region,
market infrastructure, legal framework, and tax policy. On the other hand,
innovative approaches, which play an important role in attracting highly
qualified personnel, modern technologies, and investments, are also an
important factor in making personal and general investment decisions.
At the same time, analyzing the effectiveness of the existing system and
developing practical proposals to increase the investment attractiveness of free
economic zones of Uzbekistan is a pressing issue. This thesis analyzes the factors
influencing the investment attractiveness of free economic zones of Uzbekistan,
their changes and development prospects.
Issues of increasing the investment attractiveness of regions have been
studied by many domestic and foreign scientists. In economic literature, there
are various interpretations of the concept of "investment attractiveness," most
of which are aimed at expressing the ability and potential of the region to attract
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investments. In particular, G.A. Alexander interprets investment attractiveness
as a set of favorable conditions for investors[1], V.V. Litvinova expresses it
through the level of socio-economic development of the region and the ratio of
investment risks[2]. Researchers from Uzbekistan, such as D. Gozibekov, N.
Khaydarov, B. Salimov, studied the methodological foundations of the formation
of a regional investment environment[3].
In the research process, such methods as systemic and comparative
analysis were widely used. Also, the rating method and a multi-criteria
assessment methodology were used to assess the investment attractiveness of
the regions. Empirical data were obtained from official reports of the State
Committee of the Republic of Uzbekistan on Statistics, the Ministry of
Investments and Foreign Trade, as well as international organizations.
One of the important directions of Uzbekistan's economic policy is the
comprehensive creation of free economic zones and the creation of new jobs
based on the attraction of foreign investment. In 2008-2016, three free
economic zones were created in the country, and in recent years their number
has reached 24. Currently, there are 15 free production zones, 6 pharmaceutical
zones, 2 tourism zones, and 1 free economic zone operating in the agricultural
and innovative directions in the republic.
There are several problems affecting the investment attractiveness of free
economic zones of Uzbekistan:
The variability of laws and regulations:
The complexity of the tax and customs system:
Insufficiency of infrastructure:
Absence of information about free economic
zones for investors:
Laws and regulations for free economic zones change frequently. This creates
uncertainty for investors, as they must constantly adapt to new rules.
Tax and customs benefits are sometimes very complex, which can be confusing and
difficult for investors. In particular, the complexity of benefits and tax rates hinders the
attraction of some investors.
Infrastructure (roads, energy, communications, etc.) in free economic zones is
underdeveloped in some places. This complicates production and increases costs.
For an investor to make a decision, it is necessary, first of all, to obtain sufficient
information about the country and free economic zones in it, as well as the benefits
provided to them:
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To solve these problems, the government is carrying out a number of
reforms. If these issues are resolved, Uzbekistan's free economic zones will help
attract more investments and increase economic growth.
The fact that large funds are spent on infrastructure improvement in the
most important and almost all of the above-mentioned free economic zones
shows that there is a need for even more infrastructure.
There are several problems related to infrastructure in free economic
zones, including: First of all, the lack of a transport and road network. In some
free economic zones, transport infrastructure (roads, railways) is
underdeveloped. This, in turn, creates difficulties in transporting and delivering
products, which increases production costs.
Secondly, energy supply. Shortage and disruption of electricity and other
energy resources in free economic zones. This reduces production efficiency and
creates additional costs for companies.
Thirdly, problems in water supply and sewerage systems. In some free
economic zones, there are shortcomings in clean water supply and sewerage
systems. This situation is especially related to the lack of water sources
necessary for agriculture or the industrial sector.
Fourthly, the insufficient development of logistics and warehouse facilities.
In some zones, the logistics system and warehouse facilities are insufficient. This
complicates the processes of storage and transportation of products, and also
increases delivery times.
Today, to solve these problems, efforts are being made to improve
infrastructure, provide the necessary energy resources, and develop the
transport system, which, in turn, will serve to improve the investment
attractiveness of free economic zones.
Today, countries are implementing a number of reforms aimed at
improving legal, economic, and infrastructural conditions for attracting
investment, creating tax incentives, developing international cooperation,
supporting the innovation environment, and training a qualified workforce. All
these measures serve to ensure the economic growth of countries and their
integration into the global market.
To increase the investment attractiveness of free economic zones operating
in Uzbekistan, it is important to work primarily on improving infrastructure. To
For investors, the process of entering the free
economic zone is closed and takes a long time:
The time required to submit documents and make decisions to become a member of
the FEZ for any investor wishing to invest:
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improve infrastructure in free economic zones, it is advisable to carry out the
following important work:
Firstly
, international financial institutions (for example, the World Bank,
the Asian Development Bank, the European Bank for Reconstruction and
Development) can provide loans, grants, or investments to finance
infrastructure projects of free economic zones.
Secondly
, the necessary infrastructure for free economic zones can also be
financed by the private sector. Private companies, foreign and local investors
will attract capital for the construction and development of infrastructure
facilities. For example, in Singapore, many infrastructure projects were
implemented by the private sector. Cooperation between the state and the
private sector is at a very high level. Public-private partnership (PPP)
mechanisms are widely used in Singapore for infrastructure development.
Thirdly, attracting international investments and direct investments. For
the development of infrastructure in free economic zones, it is possible to attract
foreign direct investment. Investors are especially ready to invest in
infrastructure projects that provide access to global markets. Free economic
zones in Dubai, for example, are financed by many international investors.
Foreign investments make up the majority of infrastructure projects in Dubai.
Fourth, the use of public-private partnership (PPP) mechanisms. The use of
public-private partnership (PPP) mechanisms can be an effective solution for
the development of the infrastructure of free economic zones. Through PPP, the
public and private sectors can jointly finance and implement infrastructure
projects. For example, in India, the infrastructure of free economic zones is
developing through the public-private partnership (PPP) mechanism. Many
successful infrastructure projects based on PPP have also been implemented in
countries such as Australia and Great Britain.
Fifthly
, attracting international grants and donor funds. International
organizations, donors, and management assistants can provide grants or
economic assistance for infrastructure projects in free economic zones. This
method is especially important for developing countries. For example, some
countries in South Asia have received grants from the World Bank and other
donor organizations to help develop the infrastructure of free economic zones.
Funds for infrastructure improvement in free economic zones will be attracted
from various sources, including the state budget, international financial
institutions, the private sector, public-private partnerships, international grants
and bonds. Global experience shows that cooperation between the public and
private sectors, as well as assistance from international financial institutions and
investors, is of great importance in infrastructure development.
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References:
1.
Alexandr G.A. Regional Investment Attractiveness: Methodology and
Assessment. // Journal of Economic Studies, 2023. Vol. 45. №3. — pp. 256-268.
2.
Litvinova V.V. Investment Attractiveness and Investment Climate of the
Region: Monograph. Moscow: Financial University, 2022. — 248 p.
3.
Gozibekov D.G. Issues of financing investment activity. Monograph. - T.:
Finance, 2023. - 325 p.
4.
Khaydarov N.Kh. Directions for increasing the investment potential of the
regions. // Economics and Innovative Technologies. 2023. No. 4. - Б. 45-52.
