Feature Article
On October 30-31, 2007, OSCE organized a conference in Tashkent on Land and Water Resource Management in Central Asia.  On behalf of AmCham, Board Director Yevgeny Onokhin made a presentation at this conference titled “Support from International Business Community in Technology Transfer to Land and Water Resources Management”

The presentation was focused on the relationship of technology transfer with the investment climate in the recipient countries. Mr. Onokhin also discussed how organizations like AmCham and American-Uzbekistan Chamber of Commerce (AUCC) can participate in and promote the process of the technology transfer.  In his presentation, Mr. Onokhin stressed that the main vehicle and the means for a technology transfer in any sector of the economy is business and to a large extent it is a foreign business.  One of the competitive advantages of the businesses with foreign participation is that most of them use modern technologies no mater in which sectors these companies operate: financial sector, services or industrial sector.  Foreign businesses bring new technologies, management expertise and money in one package and this is natural since foreign businesses have a better access to those resources than the local businesses.  Mr. Onokhin gave a few examples of technology transfer via foreign businesses and pointed out that the more foreign businesses enter the market, the more positive change they bring to the country's economy.

The speaker offered three different levels of financing of the technology transfer.  On the first (initial) level the financing is done by the foreign governments or international financial institutions like the World Bank.  These investment projects have a non-commercial base and are usually very limited in scope and in resources invested.  The reason for that is because they are only aiming to create the basis for commercial investments and make the way for the businesses to enter the market.  Next, if the local government sets the right initial conditions for allowing businesses to enter this or that sector, privately owned small businesses with limited financial resources try to test the new market. And this was identified as the second level of financing where businesses act as strategic investors, relying on their own entrepreneur skills, certain industry knowledge and limited money that they have.  They are ready to take higher risk and if they survive, they are followed by other more cautious strategic investors.  And if these commercial trials by privately owned firms are successful, the next to the market come public companies with unlimited financial resources coming from the financial investors both from inside and from abroad.  And this was identified as the third level of financing with the most abundant funds available for investment.

It was mentioned by the speaker that in order to be able to invest in any country, the investment funds need that certain important requirements and preconditions be met within each country in order to insure the protection of their investments.  First of all, they need the transparency: the transparency of the legal and business environment in the country.  They want to be sure that there are defined and clear rules for businesses to operate.  Secondly, they need to know that the country adheres to the principle of rule of law because they want to make sure that clear and defined rules are enforced.  Third, they require that the companies where the investment funds make investments have a corporate governance policy because they want to make sure that these companies have enough capabilities to manage the funds' money.  And fourth, the investment community needs that the requirement of the liquidity is met.  Investors want to make sure that after they invested into the company, they can sell this company with a profit in a few years to someone else and take the money back if needed.  

The better the government within the region creates the required investment conditions, the more money it can attract from the foreign investors.  Mr. Onokhin suggested that a perfect investment situation in a context of land and water resource management would be if one could have a piece of land where he could grow anything he wanted and where he could easily buy any input materials that he would need, including water, and where he could freely sell his output to whomever he would like to sell and where he could predict his profits after paying all taxes during the next ten years.  The speaker noticed that such  a perfect scenario for an investment opportunity is probably hard to be achieved in any country in the world but this would be considered as a perfect opportunity from the investors' point of view.

These are preconditions for an inflow of very big investments, practically unlimited amounts of investments into the country.  Both strategic and financial investors make their decisions exclusively on the basis of commercial interest, which in turn requires the existence of the basic investment conditions mentioned above.  As soon as these conditions are met in any country of the region, the country should expect a tremendous inflow of the money to its economy.

During his presentation Mr. Onokhin pointed out that such organizations as AmCham and AUCC play an important role in the formation of favorable investment climate in Uzbekistan and in promoting foreign investment to the country.  For example, AUCC provides a platform for the US business community to get acquainted with the latest economic developments in Uzbekistan.  During the AUCC annual conferences, the Uzbek government has an opportunity to promote US investments in the sectors of interest and hold discussions on investment possibilities. As an example, the speaker mentioned the most recent AUCC conference held in June 2007 in Washington, DC.

Speaking of AmCham, Mr. Onokhin stated that AmCham is a good platform for maintaining a dialog with the government in discussing problems that businesses face in their operations in Uzbekistan.  It was mentioned that AmCham has launched a series of seminars on corporate governance, which is important for any type of organization, whether it is a business or a governmental organization.  AmCham is keen to promote the joint efforts aimed at the development of regional cooperation.  Such issues as water management, transportation, telecommunication and trade need the collaboration of each country of the region.  In this respect, AmCham is participating in the program of the US Chamber of Commerce called Eurasia Business Platform that promotes regional cooperation in the Central Asian region.  The presentation was concluded with the message that AmCham is eager to continue the collaboration with the Uzbek government in its efforts to improve the investment climate and to attract more private investment in the country.

Prepared by: Yevgeny Onokhin, NUKEM, Member of AmCham Board of Directors

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Advantages of membership in the Chamber of Commerce and Industry of Uzbekistan

• Possibility of direct participation of the members of Chamber in the development of the drafts of the legislation;
• Representation and protection of the rights and interests of the entrepreneurs including their relations with authority and economic management;
• Participation of the representatives of the Chamber in the check-ups of the activity of the subjects of the entrepreneurship  members of the Chamber
• Promotion of export goods to the external markets
• Attraction of the direct foreign investment for the creation of the new and technical renovation of the acting production;
• Organization of the participation in the exhibitions and fairs which take place in Uzbekistan and abroad;
• Search of the business contacts and relations with foreign partners;
• Solution of the problems which appear in the process of doing business;
• Release from the payment of duties on the registration of claim to the court in the interests of the members;
• Delivery of goods of own production to exporters  - members of the Chamber addressing to the trade and investment firms of the Chamber under the conditions of consignment without bank guaranties  or insurance policy on the political and commercial risks for the export contracts;
• Confirmation of the certificates of origin of goods;
• Organization of the training courses, training trips and probation of entrepreneurs abroad;
• Information services provision including provision of information about potential exporters and importers in Uzbekistan and abroad;
• Introduction of international standards;
• 10% discount while receiving services from Association GS1 ( receiving of barcodes for the goods produced);
• Discounts or special offers for the services of unitary enterprises of the Chamber.

1. Membership in the Uzbekistan Chamber of Commerce and Industry (hereinafter referred to as Chamber) may be individual and/or associated (collective):
а) Any entity of private entrepreneurship, small and big business, natural persons engaged in entrepreneurship without formation of a legal entity and other organizations may become individual members of the Chamber.
b) Commercial banks to credit entrepreneurship entities, sectoral and territorial economic associations, insurance companies, entrepreneurship support funds and their member enterprises, irrespective of the property form, and other organizations may become associated (collective) members of the Chamber. Associated members should have their sectoral affiliations at the local level.
2. Admission to the Chamber is executed directly by the Chamber or through its territorial departments, district and city affiliations by concluding a membership agreement and fee payment.
3. When entering the Chamber, economic entities pay the membership fee amounting to the following:
Natural persons engaged in entrepreneurship without formation of a legal entity  0,5 of minimum wage;
Microfirms  2 minimum wages;
Small companies - 3 minimum wages;
Big companies - 10 minimum wages;
Associated members  agreed amount but no less than 50 minimum wages (regional level -25 minimum wages);
Insurance agencies and commercial banks - agreed amount but no less than 50 minimum wages.

4. Annual membership fees are established based on the agreement between the Chamber and its member but no less than:
Natural persons engaged in entrepreneurship without formation of a legal entity  1 minimum wage;
Microfirms  6 minimum wages;
Small companies  20 minimum wages;
Big companies - 100 minimum wages;

Associated members 100 minimum wages (regional level -50 minimum wages);
Insurance agencies and commercial banks - 200 minimum wages.

5. If membership is terminated, entrance and membership fees are not paid back.
 (Editorial note: The current minimum wage as of 01 February 2008 is UzS18630)

6. In compliance with Decree of the President of the Republic of Uzbekistan (#UP-3305, August 30, 2003В ) “On Changes and Amendments to be Made to Decree of the President of the Republic of Uzbekistan “ On Measures for Further Encouragement of Private Entrepreneurship, Small and medium Business” (# UP-1987, April 9, 1998”), categories of small entrepreneurship (business) are defined as below:

• Individual entrepreneurs;
• Microfirms with the average annual number of employees engaged in industry - no more than 20 persons, in services and other non-production sphere  no more than 10 persons, in wholesale and retail trade and catering - no more than 5 persons;
• Small companies with the average annual number of employees engaged in:
• Light and food industry, metal processing and instrument making, woodworking, furniture making and construction materials  no more than 100 persons;
• Machine building, metallurgy, fuel and energy and chemical industries, production and processing of agricultural products, construction and other production industries  no more than 50 persons; 
• Science, scientific services, transport, communications, service business (except for insurance companies), trade and catering and other non-manufacturing spheres  no more than 25 persons.
• While defining the annual average number of employees in microfirms and small companies, the number of employees at the branch establishments, affiliations and representative offices is also included.
• The above economic entities not incorporated in individual and associated members are considered as big companies.