Slovak companies can take advantage of new export opportunities in Asia, available tools will help to minimize risks.
Uzbekistan is a dynamic player in Central Asia. Its stable macroeconomic framework and growing demand create conditions for foreign partners. The government in Tashkent has made no secret of its ambition to attract foreign investment in priority sectors. These include energy, agriculture, chemicals, metal processing, automotive, transport infrastructure and IT. These segments are opening up to technological partners and are ready to absorb know-how from abroad. Slovak enterprises can engage in transformation processes that affect infrastructure, industry and technological innovation. The key is the right timing of market entry and the use of tools to minimise risks.
Stability and growth
The country of Uzbeks is profiling itself as a state with prerequisites for foreign investors. GDP growth of 5.6 to 5.9 percent in previous years signals strong economic dynamism. “For exporters, the positive GDP growth trend is important, reflecting the country’s favourable credit environment. Uzbekistan’s economy is driven by strong domestic demand, growing industrial production and infrastructure investment,” explains Eximbanka’s risk analyst Tatiana Gecova. Uzbekistan is profiling itself as the hub of Central Asia. It borders Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan, making it a gateway for foreign partners. “An example is the penetration of a Slovak manufacturer and exporter of road scales into Tajikistan, which the company identifies as a reliable partner for future cooperation and, following the example of Uzbekistan, is interested in Slovak technology,” says Michal Demák, Eximbanka’s director of non-tradable risk insurance. The development is underpinned by a five-year public finance strategy that aims to make budget planning more transparent. Bilateral agreements with countries such as Portugal, Slovakia and India are expanding the framework for economic cooperation and improving investor protection. However, risks remain – the country is dependent on remittances from Russia, commodity exports and foreign capital flows. Global inflation or commodity price fluctuations can cause macroeconomic imbalances. Therefore, insurance and guarantee mechanisms that can offset these risks are important for investors.
Money and guarantees
Slovak exporters perceive Uzbekistan as a market with a higher level of risk. The commercial financial sector is less willing to take on risk, which increases the importance of state support instruments. Eximbanka therefore plays a key role in making financing and trade security options available. Insurance, guarantees and loans are a prerequisite for the implementation of larger projects. Eximbanka is preparing a number of transactions by Slovak companies going to Uzbekistan and also plans to systematically continue to support viable projects. Planned projects include the supply of road scales, meteorological technologies and the export of extruders. Insurance products help exporters to eliminate the risks of insolvency of foreign partners. Without them, many companies would not be able to make larger deliveries, which require complex financing and longer maturities. Guarantees increase the credibility of Slovak companies in the eyes of local partners. In the long term, Eximbanka also supports the diversification of projects so that Slovak companies do not concentrate only on traditional segments.
Export industries
Eximbanka supported exports to Uzbekistan through insurance activities for EUR 0.67 million – mainly exports of machinery for industrial food production. It is currently preparing insurance for a concessional export buyers’ credit, which concerns the supply and installation of mobile weighing scales for weight detection and monitoring of technical and emission parameters of trucks and road traffic safety. Food processing machinery and agricultural equipment are also areas of interest.
In the automotive industry, opportunities are emerging in the sub-supply of components to manufacturers expanding into Uzbekistan. Renewable energy and infrastructure modernisation projects are opening up thanks to investments in the energy sector. Slovak companies with experience in photovoltaics or wind power plants can participate in upcoming tenders. (ts)
Source: TREND.sk
Author of the article: Tomáš Szmrecsányi