Egyptian business representatives promised $1.2 billion investments in Uzbekistan in different economic fields during the meeting with the Uzbek President. Egypt’s investments in the Central Asian republic confirmed Cairo’s economic interests in the region, especially in Uzbekistan, as well as Tashkent’s strategy to attract foreign investors to support its economic diversification and national development.
On May 29th, 2023, President of Uzbekistan, Shavkat Mirziyoyev, met with the chairperson of the Egyptian company Orascom Investment Holding, Naguib Sawiris, to discuss the development of cooperation between the two countries at the highest level.
The parties analysed the Egyptian company’s plans for implementing major investment projects worth of $1.2 billion aimed at developing the production of food products, exploration and development of metal deposits, the creation and management of modern hotel complexes, the construction of solar and wind power plants.
Egypt and Uzbekistan established diplomatic relations in 1992. Since then, the two countries have collaborated on many cultural and economic initiatives. Relations between the two countries have been cordial, with Egypt being one of the first countries to recognise the independence of Uzbekistan after the Soviet Union’s collapse.
In 2018, Uzbek President Shavkat Mirziyoyev met with the Egyptian President Abdel Fattah El-Sisi to evaluate ways to enhance the cooperation. Since then, there has been a significant increase in bilateral trade and investment between the two countries. The liberalisation of Uzbekistan’s economy has renewed interest in the country, and Egypt’s strategic position as a gateway to Africa has made it an attractive destination for Uzbek investors.
The countries established the Egyptian-Uzbek Business Council to facilitate communication and collaboration between business communities in both nations. Uzbekistan has also been taking steps to encourage foreign investment, including by implementing new investment laws and regulations, and promoting its natural resources and tourism potential.
On February 21st, 2023, in Cairo, Uzbek President Shavkat Mirziyoyev met again with the Egyptian President Abdel Fattah El-Sisi. The parties asked about exchanging experience in countering security threats, fighting corruption, mutual support for international initiatives in Afghanistan, and also identified five promising areas of cooperation in the economy: gas chemical, textile, electrical, jewellery, and pharmaceutical industries.
During the official visits, Egyptian companies declared their will to implement several projects in Uzbekistan such as the construction of power plants, a data centre, an industrial zone, full-cycle sugar production.
During the same day it was organised the Uzbek-Egyptian business forum, which was attended by about 200 representatives of companies from both countries, including Egyptian companies such as Orascom construction, Kandil Steel Group, Metco, ZAS, Giza Cable Industries, Shoura Chemicals, Polyee Plast, Solarsol, EG, and others.
As part of the event, the parties signed investment agreements and trade contracts worth $1.6 billion, including those providing for the creation of Uzbek textile enterprises in Port Said for subsequent export to Africa and the Middle East.
Uzbekistan and Egypt have also in common a scientific and educational heritage. For instance, Ahmad Ferghani, also known in the West as Alfraganus, was originally from the Fergana Valley, but he moved to Egypt to continue his work as an astronomer during the Abbasid Caliphate.
Uzbekistan and Egypt: economic performance, investments and trade
Uzbekistan’s economy is largely based on the cotton and gas industries, and the country is one of the largest cotton producers in the world. However, the Uzbek government has been working to diversify the economy by developing the tourism industry and investing in infrastructure projects. The country faces challenge such as the lack of a skilled workforce and cumbersome bureaucracy.
Egypt’s economy is the third largest in Africa and is heavily reliant on the oil and gas sector. However, the government has been focused on developing other sectors, such as tourism, agriculture, and information technology. The country has a sizable workforce, and the government has been making efforts to improve the business environment. The country’s bureaucracy and frequent changes in regulations can be challenging for investors.
The Centre for Economic Research estimates that trade between Uzbekistan and Egypt has more than tripled over the past five years, from about $10 million in 2017 to $30.5 million in 2022. Export of Uzbekistan to Egypt increased 16 times. Egypt imports cotton, textiles, and agricultural products from Uzbekistan, while Uzbekistan imports petroleum products, fertilisers, and other industrial goods from Egypt.
Uzbekistan offers investment opportunities in the agriculture, tourism, and infrastructure development sectors, among others. Meanwhile, Egypt is attractive for investors interested in manufacturing, energy, and real estate.
There are 29 joint ventures with Egyptian capital in Uzbekistan. Together with the Egyptian company Solyphar, work is underway to implement a project for the construction of a pharmaceutical production facility in the Free Economic Zone (FEZ) Bustonlik-pharm in the Tashkent region (the project cost is about $20 million). The Egyptian company One World Pharma has been working on organising the production of drugs against hepatitis C in the Kashkadarya region ($1.4 million). Negotiations were held with Kapo Agri to establish fisheries in the Namangan region ($1 million)
Economists predict that the trade and investment flows between Uzbekistan and Egypt will continue to grow in the coming years. Both countries have implemented policies to attract foreign investment, and the increasing economic ties between Asia and Africa are expected to further boost investment in these markets.
Geopolitical factors, such as regional conflicts and global economic trends, can also impact investment relations between Uzbekistan and Egypt. Political unrest or economic downturns in one country can have spill-over effects on the other, highlighting the need for investors to pay careful attention to these geopolitical factors.
Tashkent set goals to increase the growth of industrial production by 40% and attract additional investments in the amount of more than $120 billion. By the end of 2026, the share of private banks will reach 60% of the total assets of banks, from 2023 the value added tax will be reduced from 15% to 12%, and income tax for businesses such as banking, finance and telecommunications is reduced to 15%.
Uzbek fiscal reforms and the country’s strategic position offer large Egyptian companies with the opportunity to participate in various trade and economic projects of Uzbekistan, develop joint investment projects, considering the central location in Central Asia, which will increase both productivity and export opportunities.
Looking ahead, international and regional geopolitical trends, national economic policies, and global market conditions will shape the future of Uzbekistan and Egypt’s investment relations. Investors who remain vigilant and adaptable will be best positioned to take advantage of the opportunities that emerge in these emerging markets.
In conclusion, the investment relations between Uzbekistan and Egypt hold significant promise for both nations. Despite existing challenges and risks, the potential rewards of investing in these countries remain high, particularly considering the promising economic growth and political stability. By building on existing partnerships and exploring emerging opportunities, both Uzbekistan and Egypt can continue to grow their economies, create new jobs, and improve the standard of living for their citizens.
The investment relations between Uzbekistan and Egypt are significant in terms of their potential impact on the broader geopolitical landscape of Central Asia and the Middle East. As both nations continue to grow their economies and explore new investment opportunities, they could play an increasingly influential role in shaping the political and economic future of their respective regions. Additionally, the investment relations between Uzbekistan and Egypt could help to promote greater regional cooperation and stability.
Authors: Giuliano Bifolchi and Silvia Boltuc
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