The problems of establishment and development of free economic zones in tashkent region

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THE PROBLEMS OF ESTABLISHMENT AND 
DEVELOPMENT OF FREE ECONOMIC ZONES IN 
TASHKENT REGION 
 
Nurbol Maidanovich Karakulov
1
, Nasiba Iranqulovna Safarova
2
, Urol Xamrayevich Safarov
3
,
Ziyoda Abduboisovna Amanbayeva
4
 
Gulistan State University, Uzbekistan
1 
Tashkent state pedagogical university named after Nizami, Uzbekistan
2 
Tashkent state pedagogical university named after Nizami, Uzbekistan
3 
Tashkent state pedagogical university named after Nizami, Uzbekistan
4 
DOI: 10.29322/IJSRP.11.04.2021.p11230 
http://dx.doi.org/10.29322/IJSRP.11.04.2021.p11230 
Abstract
-This article describes the formation, development and geographical distribution of free economic zones in Tashkent 
region. The role of free economic zones in the socio-economic development of the regions was also assessed. 
Key Words 
- foreign economic, agriculture, investment, market infrastructure, free economic zones, industry, pharmaceuticals, 
tourism, special industrial zones, government, reforms, market, taxes, small industrial zones, investor, customs, currency. 
I
NTRODUCTION
The role of foreign investment in the development of the country's economy and the development of foreign economic relations 
is great. Uzbekistan has created equal conditions for foreign investors and investments. Their complete safety is constantly 
maintained.
Uzbekistan has the following factors to attract foreign investment: large reserves of minerals and fuel and energy resources, 
agricultural potential, scientific potential, modern market infrastructure institutions, a wide network of commercial banks, a 
reliable telecommunications network with Internet access, tourism development opportunities etc. 
A free economic zone is a specially designated area with clearly defined administrative boundaries and a separate legal order, 
created to attract domestic and foreign capital, advanced technology and management experience for the rapid socio-economic 
development of the region.
In the past, significant work has been done to liberalize and modernize the economy, thereby achieving the production of 
competitive products. Particular attention was paid to ensuring the rights and legitimate interests of investors, in general, to 
ensuring the investment attractiveness of our country in all areas.
Certainly, the activities of free economic zones play an important role in attracting investment, creating a favorable environment 
for investors. Based on the world experience, Uzbekistan has also started to establish FEZ during the years of independence. Italy, 
China, Egypt, Croatia, UAE, South Korea, Serbia and Colombia are the leaders in the number of FEZ in the world. It is known 
that in 1996 Uzbekistan adopted the Law "On Free Economic Zones".
This law defines the status of free economic zones, the order of their establishment, the guarantee of the rights and interests of 
legal entities, customs, currency, tax procedures and other important rules in these zones [1]. On December 2, 2008, the Decree of 

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the President of the Republic of Uzbekistan on the establishment of a free economic zone in Navoi region was adopted, which 
became the first FEZ in the country. This document introduces special customs and tax regimes in the territory of the FEZ, a 
simplified procedure for entry, stay and exit of non-resident citizens of the Republic of Uzbekistan, as well as obtaining work 
permits [8].
Later, Angren and Jizzakh special industrial zones were established. Free economic zones make a significant contribution to 
attracting foreign investment in the regions, increasing their export potential and improving the living standards of the population 
by providing them with jobs [8].
The 23 FEZs established in the country can be divided into 4 groups based on their scope of activities. These are industry, 
pharmaceuticals, agriculture and tourism. By regions, if we focus on the geography of the FEZ, free economic zones are located 
in 12 regions and the Republic of Karakalpakstan (Table 1). Uzbekistan has 12 free economic zones (FEZ) specializing in 
industrial production. One of them, the Angren Free Economic Zone, is located in the Tashkent region.
Table 1 Geographical distribution of free economic zones established in the Republic of Uzbekistan.
№ 
Name of free economic zone 
Located 
territory 
branch 
date of 
formation 
By industry 
1 
«Navoiy» FEZ 
Navoi region 
industry 
2008
2 
 «Angren» FEZ 
Tashkent region 
industry 
2012
3 
"Jizzax" FEZ 
Jizzakh region 
industry 
2013
4 
"Urgut" FEZ
Samarkand region 
industry 
2017
5 
"Gijduvon" FEZ
Bukhara region 
industry 
2017 
6 
"Qoqon" FEZ
Fergana region 
industry 
2017 
7 
«Xozarasp» FEZ
Khorezm region
 
industry 
2017
8 
«Nukus» FEZ
The Republic of 
Karakalpakstan 
industry 
2019
9 
«Sirdaryo» FEZ
Syrdarya region 
industry 
2018
10 
«Chiroqchi» FEZ
Kashkadarya region 
industry 
2020
11 
«Namangan» FEZ
Namangan region 
industry 
2018
12 
«Termiz» FEZ
Surkhandarya region 
industry 
2018
In the pharmaceutical industry 
13 
«Zomin-farm» FEZ
Jizzakh region 
Pharmaceuticals 
2017
14 
«Boysun-farm» FEZ
Surkhandarya region 
Pharmaceuticals 
2017
15 
«Sirdaryo-farm» FEZ
Syrdarya region 
Pharmaceuticals 
2017
16 
«Kosonsoy-farm» FEZ
Namangan region 
Pharmaceuticals 
2017
17 
«Bostonliq-farm» FEZ
Tashkent region 
Pharmaceuticals 
2017
18 
«Parkent-farm» FEZ
Tashkent region 
Pharmaceuticals 
2017
19 
«Nukus-farm» FEZ
The Republic of 
Karakalpakstan 
Pharmaceuticals 
2017
20 
«Andijon-farm» FEZ
Andijan region 
Pharmaceuticals 
2019
In the agricultural sector 
21 
«Buxoro-agro» FEZ
Bukhara region 
Agriculture 
2018
In the fishing sector 
22 
«Baliq ishlab chiqaruvchi» 
FEZ 
Tashkent region 
Fishing 
2018
In the field of tourism
23 
«Chorbog’» FEZ
Tashkent region 
Tourism 
2017
The Tashkent region is bordered on two sides by the Fergana and Mirzachul economic regions, and on the other side by 
Kazakhstan, Kyrgyzstan and Tajikistan. Due to its convenient geographical location, Tashkent has been the capital of Uzbekistan 

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since 1930. The influence of the capital on the specialization and socio-economic development of almost half of the rural districts 
of Tashkent region (Yangiyul, Kibray, Bostanlyk, Parkent, Orta Chirchik, Tashkent and Zangiota districts) is significant.
Economic and social changes are accelerating in the districts adjacent to the big city. This can be clearly seen in the example of 
the suburbs. The territory of Tashkent region consists of various forms of relief. This will create great opportunities for both 
industry and agriculture.
The Chirchik and Ohangaron valleys of the region are very suitable for artificial irrigation as they decrease by more than 100-150 
km to the Syrdarya. The Chirchik and Ohangaron rivers are saturated with mountain rain (500-700 mm) and play an important 
role not only in irrigating fields but also in generating electricity. In terms of the diversity of mineral resources, no other region 
can be compared to the Tashkent region. The Angren coal basin is the largest coal deposit in the country (remember the amount of 
coal reserves).
The coal seams are located close to the earth's surface, and are often used in the production of aluminum, cement, and ceramics. 
Almost 20% of the population of our country live in this region. The share of urban population in the region, excluding the 
population of Tashkent, is 50%. The economic region ranks first in Uzbekistan in terms of the share of able-bodied people in the 
total population. The working age population is also characterized by a high level of education. This is due to the fact that from 
time immemorial universities, the Academy of Sciences, and many research institutes are located in Tashkent (the capital). In 
addition, the number of knowledgeable and qualified enterprises and departments is one of the key factors. 
The economic region's economy is now diversified, covering almost all of Uzbekistan's industrial sector. Heavy industry accounts 
for two-thirds of GDP. The light and food industries are also developed. 
The high economic potential of the region certainly attracts foreign investors. 
The facilities created for foreign investors in the region are mainly: 
1. The foreign exchange market has been liberalized. This allows each investor to convert and withdraw their income in the 
desired foreign currency. 
2. Tax benefits: 
- Corporate income tax; 
- Property tax; 
- Tax on landscaping and development of social infrastructure; 
- Single tax payment; 
- Exempt from taxes and fees, such as mandatory contributions to the Republican Road Fund [5]. 
The directorates of free economic zones were also given the right to participate as customers in the development of master plans 
and architectural-planning works of their territories. Construction and repair of roads, water supply and sewerage networks and 
other infrastructure facilities of free economic zones are planned by the state [7]. 
These tax incentives are valid for a long time, depending on the volume of foreign direct investment. 
We propose to create free economic zones in Chirchik, Almalyk, Yangiyul, Chinaz in order to use the available resources of 
Tashkent region. 
The eight free economic zones (FEZ) specializing in the production of pharmaceutical products have been established in 
Uzbekistan. Taking into account the uniqueness of soil and climatic conditions, in the Republic of Karakalpakstan, Jizzakh, 
Namangan, Syrdarya, Surkhandarya and Tashkent regions "Nukus-farm", "Zaamin-farm", "Kosonsoy-farm", "Syrdarya-farm", 
"Boysun-farm" , "Bostanliq-farm" and "Parkent-farm" free economic zones were established [3]. 
The two of the FEZs established in this area operate in the study area. These include Bostanliq-farm and Parkent-farm. 
The purpose of these FEZ is to deepen and expand the localization of pharmaceutical products by expanding the production of 
medicines based on local raw materials and medicinal plants, as well as their widespread introduction into medical practice, 

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reducing imports of medicines, environmentally friendly and clean. is the establishment of new plantations in existing districts. 
We know that more than 100 species of medicinal plants are found in the Western Tianshan Mountains and adjacent hills in the 
Tashkent region. 
Without doubt, the further development of the pharmaceutical industry has been identified as a priority in the establishment of 
free economic zones. 
The term of the established free economic zones is set at 30 years with the possibility of further extension, in these areas there are 
separate tax, customs and currency regimes [3]. 
In particular, when the participants of free economic zones make appropriate investments, they are: 
- Land tax, income tax, property tax for legal entities, tax on landscaping and social infrastructure development, a single tax 
payment for micro and small enterprises, as well as the Republican Road Fund and the Fund for Development of Material and 
Technical Base of Educational and Medical Institutions under the Ministry of Finance deductions; 
- Exemption from customs duties on import of technological equipment, raw materials and components not manufactured in 
Uzbekistan, imported. 
Participants in free economic zones will also have the right to use the terms and forms of payment and settlement convenient for 
export and import of goods. 
These benefits and conveniences increase the interest of local and foreign investors in direct investment in the economy. It should 
be noted that only pharmaceutical companies in the zone will receive benefits [3]. 
We propose to create free economic zones in Yukorichirchik and Akhangaron districts in the field of pharmaceuticals in order to 
use the available resources of Tashkent region. 
Only one economic zone (FEZ) specializing in agriculture has been established in Uzbekistan. The territory of the Bukhara-Agro 
Free Economic Zone, established in Bukhara region, is 3,000 hectares and covers 9 districts of the region. 
This FEZ specializes in the cultivation and processing of agricultural products in the age of modern technologies. 
According to the developed program, foreign and domestic investments will be attracted in the FEZ for the organization of 
modern greenhouses, including hydroponics, on a cluster basis. 
The project will also organize the production of structures, equipment and other components for the construction of modern 
energy-saving greenhouses. 
FEZ has not been established in Tashkent region in this area. However, due to population growth, the wide range of agricultural 
opportunities in the region, favorable economic position and other factors, it is expedient to establish FEZs specializing in the 
agricultural sector in the region. 
In 2018, a free economic zone "Fish Producer" was established in the Lower Chirchik district of Tashkent region on the basis of 
reservoirs in the field of fisheries. The main objectives of this FEZ (applicable to all farms in other regions of the country) are: 
- Improving nursery and breeding operations for intensive cultivation of valuable fish species and fry in the conditions of public-
private partnership; 
- expansion of production of fish products (canned food, salmon, fish meal, etc.); 
- implementation of measures for the development of aquaculture, efficient and rational use of land and water resources; 
- Further development of research in the fishing industry; 
- Improving training, retraining and advanced training; 
- increase the export potential of the fishing industry; 
- increase the fodder base for the development of fisheries, increase the culture of fish consumption; 
- creation of conditions for strengthening the logistics of fisheries. 
One free economic zone (FEZ) specializing in tourism has been established in Uzbekistan, and this single zone operates in 
Tashkent region. 

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In order to further develop the tourist potential of Tashkent region and increase the efficiency of its use, to create favorable 
conditions for attracting foreign and domestic tourists to the region, to ensure the rapid development of modern infrastructure, to 
expand and improve the quality of tourism, hotel and transport services The zone was established and is currently operating. 
Modern hotel complexes, cultural, health, trade, entertainment and other facilities of tourist significance are being built in the 
territory of this free tourist zone, as well as facilities of modern engineering infrastructure are being established and the 
development of the industry is accelerating [5]. 
The main tasks and activities of the free tourist zone are as follows: 
- foreign for the implementation of projects for the creation of modern tourism infrastructure facilities (hotel complexes, cultural 
and recreational, trade and entertainment and other facilities of tourist importance) in the free tourist zone, special functional and 
seasonal recreational areas with the necessary conditions for tourist services and attracting investment from local investors; 
- organization of specific tourist routes, taking into account the ecological potential of the region; 
- Ensuring the cheapness of vehicles, the introduction of new modes of transport in the region (train, electric train, bus), including 
those running on alternative energy sources, the expansion of passenger transport routes, the organization of its uninterrupted 
traffic, the development of appropriate transport infrastructure; 
- creation of additional conditions for tourist safety, including the installation of video surveillance systems of tourist 
infrastructure, the organization of warning systems, the introduction of a single database of tourists visiting the region, the 
introduction of emergency care; 
- Ensuring separate customs and tax regimes for businesses and investors (including foreign investors) implementing and 
operating projects in the free tourist zone; 
- Implementation of projects to create a unique ecosystem based on the pilot introduction of new modern energy-saving systems 
and technologies using alternative and renewable energy sources [5]. 
The provisions of the legislation on free economic zones, including all privileges and preferences provided for free economic 
zones and their participants, apply to business entities registered as participants of a free tourist zone and a free tourist zone, with 
the possibility of further extension of the free tourist zone. It is 30 years old. 
We propose to create free economic zones in Yukorichirchik, Parkent, Koyichirchik and Okhangaron districts in the field of 
tourism in order to use the available resources of Tashkent region based on its tourism potential and rational use. 
In addition to FEZs, there are small industrial zones in Uzbekistan with limited benefits. 
A small industrial zone is an area that includes a certain plot of land, and in some cases - production areas with engineering and 
technical communications. 
According to the single portal of free economic zones and small industrial zones of the Republic of Uzbekistan, there are 
currently 149 small industrial zones in Uzbekistan. Unlike free economic zones, the benefits provided to SIZ participants are not 
uniform. The type, order and duration of tax benefits vary across regions where SIZ is located. All this is recorded in the 
document, which provides for the establishment of this or that SIZ. SIZ benefits will be limited to FEZs [7]. However, there are a 
number of non-tax preferences that apply to all SIZs: 
- application of the minimum rate of rent for production areas; 
- Construction of the necessary external engineering communications and infrastructure will be carried out at the expense of own 
funds of SJSC "Uzbekenergo", JSC "Uztransgaz", the Council of Ministers of Karakalpakstan, of regions and the capital mayor’s 
office and others.
As a result of economic reforms in the country, small industrial zones will soon appear in almost all regions of Uzbekistan. 
Among them are representatives of small business and private entrepreneurship. They will be able to implement their projects on 
favorable terms. 

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State real estate in the territory of SIZs is leased to business entities for a long period of ten years. If business plans are 
implemented and jobs are saved and all taxes are paid on time, they will be given the right to privatize. 
There is a zero rent for the use of state-owned real estate in the SIZ. The SIZ participants will also receive tax benefits for small 
industrial zones in Tashkent. 
The Fund for Reconstruction and Development of Uzbekistan has opened a $ 50 million credit line for the purchase of imported 
equipment and components to finance SIZ projects. 
Basic information on small industrial zones established in Tashkent region can be found on the basis of 2 tables [7]. 
This SIZ will make fuller use of the rich natural-economic, mineral-raw, scientific-technical and labor potential of Tashkent 
region, further encourage and support the development of new competitive industrial productions and small private enterprises, 
deepen industrial cooperation and create new jobs. and increase the income of the population [7]. 
According to the schedule, 17 small industrial zones have been established in the region so far. There are 9 commercial banks 
attached to SIZ, with which they cooperate mainly on financial issues.