At $450 million, annual trade between Uzbekistan and Ukraine is modest.
But businesspeople from both countries are working to boost that total and this year set up a joint Uzbek-Ukrainian Business Council.
Oleh Revchuk, the Ukrainian co-chair of the council, told the Kyiv Post that a council meeting in the Uzbek capital of Tashkent in May was a great success.
“We brought along 45 companies, and 10 or 15 of them have already found an Uzbek firm to partner with,” he said.
European gateway
After Ukraine signed a political and trade association agree with the European Union in 2014, Uzbek businesses began to see Kyiv’s potential as a gateway to European markets.
Uzbekistan is a poor but growing nation, with 34 million people currently. Uzbek demand for Ukrainian machine-building expertise for its new factories has great potential.
The Central Asian nation is industrializing. It is seeking to build up its metallurgical sector and halting nearly all raw cotton exports to build a domestic textile industry.
Revchuk says there is now a large demand for Ukrainian industrial machinery, of which Uzbekistan bought $58 million in 2020, and expertise in rebuilding or servicing factories.
He added that Metinvest, Ukraine’s largest steel producer, is among the companies currently looking to increase sales in Uzbekistan.
Logistical problems
Difficult transportation is an obstacle to the enthusiastic interest on both sides. Getting people from Ukraine to Uzbekistan is not easy as there are currently few regular direct flights.
But this problem is dwarfed by the difficulty in transporting goods: Uzbekistan is landlocked, making trade heavily dependent on railroads.
This is a challenge for Ukraine. The cheapest way to carry freight to and from Uzbekistan is through the railways of Russia, which has banned rail cargo from Ukraine unless it is electronically sealed and geotagged at great cost.
Revchuk said that he is currently trying to bring together the heads of Ukrainian and Uzbek railway networks to lower the transportation costs for other routes.
“If they negotiate a good tariff with the transit countries, it could be about the same price as going through Russia,” he said.
Ukrainian IT
Looking to the future, Uzbek businesses are interested in Ukrainian information technology.
On Aug. 26, the Uzbek Ministry of Innovation announced its intention to boost the development of digital start-ups in Uzbekistan.
Uzbek growth offers new markets for well-established Ukrainian IT companies. For instance, Uzbek supermarket chains are already using IT systems fully programmed by Ukrainian developers.
Revchuk said that he sees considerable interest from some Uzbek investors in Ukraine’s privatization program, but too few entrepreneurs know about it in the first place.
“We want the State Property Fund to conduct an advertising campaign in Uzbekistan.”
