The Ministry of Justice presented for public discussion the draft presidential decree on improving Uzbekistan's investment climate, which is aimed at removing bureaucratic barriers and obstacles in working with investors, as well as strengthening confidence in the consistency of national policies.

Unification of legislation

The document provides for drafting of unified investment-related legal document by the year-end. At present the investment legislation comprises the Investment Activity Law, Foreign Investments Law, Guarantees and Measures to Protect the Rights Of Foreign Investors Law, Free Economic Zones Law, Investment and Mutual Funds Law, Concessions Law, Production Sharing Agreements Law, as well as over 100 by-laws.

The scatteredness of investment-related regulation in various legal acts complicates its application and adversely affects Uzbekistan’s investment attractiveness, often leads to legal conflicts and violates the principle of systemic nature, the document says.

Compensation for damage

Starting from August 1, it is proposed to adopt a procedure in accordance with which an investor, entrepreneur acting in good faith shall be reimbursed the property damage caused through trust in the legal force of a legal act adopted by a government body (official) in respect of them, relying on the legal force of which the investors used the property, or otherwise used the benefits and waivers provided.

From the same date, according to the proposed document, the issue of cancellation or amendment of an act of a government body (official), insofar as it affects the legitimate interests of a bona fide investor and business entity, should be considered in court, unless its preservation creates a threat to the public interests.

Predictability and legality of land seizure

Subject to the draft document being approved, starting from September 1, decisions on seizure of land for state and public needs will be allowed only after an open discussion with interested parties whose land plots are being seized, as well as assessing the benefits and costs.

Demolition of residential, industrial premises, other structures belonging to natural or legal persons, in case of land seizure, shall be allowed after full compensation of the market value of property and losses caused to owners in connection with such seizure.

It is proposed to refund the losses caused to natural and legal persons as a result of the issuance of an illegal administrative act by a government body (official) primarily at the expense of off-budget funds of the relevant bodies.

It is also proposed to implement the principle of protection of a bona fide purchaser, according to which it is forbidden to demand property from a person acting in good faith, if the person purchased the property for a fee in compliance with the law without the consequences of invalidity of deals being applied.

The document specifies cases when it is allowed to seize land plots for state and public needs: seizure of lands for defense and state security needs, protected natural areas, creation of free economic zones; out of necessity to fulfill obligations arising from international treaties; discovery and development of a mineral deposit; construction (reconstruction) of roads and railways, airports, airfields, railway transport facilities, bridges, subway, tunnels, power grid facilities and power transmission lines, communication lines, space objects, main pipelines, engineering and communication networks; the implementation of urban general plans in the construction of facilities at the expense of state budget funds and in other cases, directly provided for by laws and presidential acts.

The document proposes to adopt from October 1 of new mechanisms for provision of land for investment activities:

• long-term lease of a non-agricultural land plot for up to 50 years, but not less than the period specified in the application for implementation of investment projects;
• realization of the right of permanent possession of land for the construction of real estate (hotels, shopping facilities, cultural and entertainment complexes, consumer services facilities, construction of educational institutions, medical organizations, road infrastructure, etc.).

Simplification of business registration

It is proposed to abolish the requirements on the compulsory participation of a foreign legal entity as a a participant in an enterprise with foreign investments, as well as requirements on the mandatory share of a foreign investor in the authorized capital of an enterprise.

The minimum amount of the statutory fund of a joint-stock company is to be cut to 100 million soums, the minimum share of foreign investment in the statutory fund of the enterprise with foreign investments to be cut from 30% to 15%, the minimum amount of the statutory fund of the enterprise with foreign investments - from 600 million to 400 million soums, the amount of fees for registration of enterprises with foreign investment – by three times.

It is planned to provide foreign nationals with the right to act directly as a founder (participant) of an enterprise with foreign investments.

It is planned to improve the procedure for accreditation and activity of representative offices of foreign commercial organizations in Uzbekistan, including to extend the accreditation period to five years.

In addition, it is envisaged to abolish the mandatory procedure for concluding export contracts for fruit and vegetable products at prices not lower than the prices published by Uzagroexport, as well as the customs clearance of fruit and vegetable products without an export contract, on the basis of an invoice, at prices not lower than the prices specified in site of "UzAgroExport".

Honorary Citizen

The draft decree proposes granting the residence permit to foreign citizens and stateless persons who bought at least 200 thousand US dollars worth of real estate in Uzbekistan within simplified scheme.

It is also proposed to issue a multiple visa for a period of up to three years when a foreign citizen buys shares of companies, as well as sets up a foreign enterprise, with the possibility of an unlimited number of renewals without the need to leave the territory of Uzbekistan. It is also proposed to grant the Honorary Citizen status to foreign nationals who made significant investments in priority sectors of the Uzbek economy.