New opportunities: Kazakh business in Uzbekistan

Kazakh business in Uzbekistan
Photo credit: Labor Ministry

Recently, relocating to Tashkent has sparked considerable interest among young Kazakh professionals from various sectors. Many are heading to Uzbekistan to pursue opportunities in local oil and gas companies, international banks, and to launch startups and business ventures in emerging Uzbek market. Notably, BI Group, a leading Kazakh construction company, has expanded into the local market, introducing several upscale residential complexes under its own brand.

Why Tashkent is becoming a popular destination for Kazakh businesses and skilled workers in the article of Kazinform News Agency correspondent.

Bakhytzhan Arysbaev, a former project manager, shared his experience of moving to Tashkent due to a contract with the leading Uzbek oil and gas company. In the process he discovered numerous untapped opportunities for small and medium enterprises.

“Non-cash transactions trades are highly developed in Kazakhstan, and I want to develop a similar form of payment here too. After many years of closure, Uzbekistan is still developing in this direction of online technologies,” says Bakhytzhan.

He plans to introduce a business project centered on self-servicing coffee stations within few weeks. To do this, he hired local programmers who will be able to integrate QR code payment capabilities using the popular Uzbek payment applications Click and Payme.

“I brought several coffee stations from Almaty that work on Android. I handed them over to local programmers for testing, after which we’ll start operating,” he explains.

Starting a business in Uzbekistan is very straightforward, says Nazym Abuova, a former senior chemical engineer at Lukoil Ltd., and now textile business owner in Tashkent.

“Setting up a company can be done online or through a public service center. Firstly, a business license is required, costing $600 in 2021 and $1,900 in 2023,” Nazym stated.

Foreign entrepreneurs need to obtain registration upon your place of stay, create a Personal Identification Number for Individuals (PINFL) at a government service center, obtain an electronic key, and choose a business structure—either as a sole proprietor or a limited liability company. Tax obligations for foreign-owned businesses are the same as for local ones, except for the nominal difference in state duties when altering authorized capital.

“When changing the authorized capital, for example, as the sole founder of the company, I will pay a state tax in the amount of 200 thousand sums ($16), and a citizen of Uzbekistan will pay 20 thousand sums ($2),” notes Nazym Abuova.

However, foreign business owners must navigate challenges like only Uzbek language documentation and high customs duties on certain imports, which can significantly increase product prices.

“For instance, since I import textiles from Italy, which attract high customs duties plus VAT in amount around 40-60%, I have to raise my prices considerably,” Nazym mentions.

Local entrepreneurs often sell goods at much lower prices than those in Kazakhstan, primarily because they bypass official customs channels. This is evident at Tashkent's well-known bazaar “Malika”, where electronics like Apple products and LG refrigerators are sold at significantly lower prices than in Kazakhstan's official stores. This happens due to informal imports from UAE, when local entrepreneurs import goods without paying official customs taxes. “Also I avoid importing textiles containing cotton because of the high customs duties, which are designed to protect local cotton production,” Nazym concludes.

Aisulu Upieva, who moved to Uzbekistan in 2018 due to her husband's work, notes that living costs in Tashkent are comparable higher then to those in Kazakhstan.

“This is a big misconception propagated by travel bloggers and unreliable content creators,” says Aisulu.

Many people are not aware that living conditions in Uzbekistan had drastically changed over the past 5-10 years. Currently, the monthly rent in Tashkent's city center ranges from $500 to $2000. The rent in the neighborhood near Central Department Store—a popular area among the Kazakh community—for well-maintained 1-2 bedroom apartments will cost between $450 and $700. Larger families might spend $700 to $1,500 on 3-4 bedroom apartments with basic renovations. These prices often surprise many tourists and reflect the tough reality of today's real estate market.

Temporary registration of foreign citizens is carried out in the local internal affair bodies based upon residence. A six-month residence permit can be obtained for 85 thousand sums (about $6), regardless of employment status.

“Kazakh citizens now can stay for up to 30 days in Uzbekistan without needing to register. It’s very convenient,” finds Aisulu.

Transportation costs are quite reasonable with Yandex taxi offering city rides for about 600-700 tenge and longer trips for 1,000-2,000 tenge. The metro also provides an efficient alternative to avoid traffic, costing just 65 tenge, though it's best avoided during peak times due to heavy usage. Notably, Tashkent's population reached 3 million in 2023.

Uzbek people are known for their warmth and hospitality. The term "mehmon," meaning guest, underscores the local commitment to treating visitors with respect and responsibility. Whether as a tourist or immigrant, one can expect considerable support and guidance from the locals.

While Tashkent considered as a safe and calm city, this does not apply to its roads. Highways are particularly dangerous, and pedestrian safety is often compromised by drivers who disregard the rules, including at pedestrian crossings. “When crossing a pedestrian street, you must always be on guard, otherwise you will simply end up in the hospital at best,” warns Aisulu.

Uzbekistan, with its unique culture and mentality that distinctively contrasts with Kazakh perspectives, continues to draw tourists and professionals from the Central Asian countries and beyond. This is expected to continue in the future as the country strives for progressive policies aimed at attracting foreign investments and skilled workers.

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