Observing the EAEU: Opportunities for the electro-technology industry of Uzbekistan

Heads of the Eurasian Economic Union Member States decided to grant the Republic of Uzbekistan the observer status at the EAEU during the meeting of the Supreme Eurasian Economic Council held on December 11.

Trade and Economic Relations with EAEU countries

Uzbekistan is using a duty-free trade regime with all EAEU countries (Russia, Kazakhstan, Kyrgyzstan, Belarus and Armenia) under the CIS Free Trade Agreement.

As an EAEU observer country, Uzbekistan will have the opportunity to further explore opportunities to expand the supply of local products to the markets of EAEU countries and to develop appropriate recommendations for exporters.

Over the past three years, the trade volume of Uzbekistan with the EAEU countries increased by 54.5% (e.g., exports by 41.7% and imports by 65.2%). At the same time, it is notable that Uzbekistan exports not only raw materials to the EAEU countries, but also finished products of the processing industry and agriculture.

Exports of Uzbekistan with EAEU countries (in US dollars)

Source: State Statistics Committee

So, one fourth of Uzbekistan exports corresponds to the EAEU countries, and while ignoring the export of raw materials in total exports, the share of EAEU countries will be much higher.

A number of developments are being implemented in our country to accelerate the growth of industries producing finished products with high added value.

The president of our country aimed to increase significantly the volume of exports in the manufacturing industry, mainly increase exports of electro-technology products to $ 370 million in 2021.

In this regard, Uzbekistan should consider the EAEU states as the main market for which the enterprises of Uzbek electro-technology industry can expand their position in international market.

Development of electro-technology industry

Over the past three years, the volume of products produced by electro-technology industry has increased 2.5 times.

High growth rates are observed in the production of home appliances, for example, in 2019 and 2020, almost twice as much were produced.

With the increase in the volume of electro-technology production, export figures also are growing simultaneously. Thus, over the past three years, exports of electro-technology products increased by 31.6%, while increase in exports of home appliances rose by 2.2 times.

By the end of 2020, it is planned to increase the export volume of electro-technology products by 20% to $ 300.4 million.

In the first 10 months of 2020, exports of electro-technology products increased by 25.3%, while exports of home appliances almost doubled compared to the same period in the last year.

Dynamics of exports of electro-technology products (in millions of dollars)

Source: Uzeltehsanoat Association Report

The export scale of electro-technology products is expanding year by year, but the main trade markets, which demands more than a third of total exports of these products, are the CIS countries, and among them mainly EAEU countries.

In 2019, the share of EAEU countries in the total volume of exported home appliances increased from 49.4% to 57.2%, and transformer products from 45.7% to 47.3%.

Exports of electro-technology products in 2018-2019 (in millions of dollars)

Source: Uzeltehsanoat Association Report

As of first 10 months in 2020 compared to the same period in 2019, the share of EAEU states in total exports of electro-technology products of Uzbekistan increased from 33.2% to 40.0%, in particular, the share of home appliances from 51.9% to 60.3%, transformers and other products from 41.0% to 53.2%, while cable products remained unchanged at 22.7%.

Exports of Electro-technology products as of first 10 months in 2019-2020 (in millions of dollars)

Source: Uzeltehsanoat Association Report

It is notable that the main volume of exports for many types of home appliances are flowed to the markets of EAEU countries, in particular, Kazakhstan, Russia and Kyrgyzstan.

Accordingly, as of first 10 months in 2020, 99.5% of all exported "lighting and visual signaling devices", 92.8% of "kitchen gas stoves", 75.9% of "household electric stoves"; "TVs and monitors" - 60.8%, "vacuum cleaners" - 68.1%, "refrigerators" - 60.4%, "washing machines" - 52.6%, "electric cables" - 49.0%, "transformer products" - 42.8% were delivered to the markets of EAEU countries.

The exports of Electro-technology products by type to the EAEU countries in the first 10 months of 2020

Source: State Statistics Committee

As of first 11 months in 2020, the volume of investments in the sector amounted to $ 151.0 million, constituting of 2.7 times increase compared to the same period in the last year.

The implementation of investment projects and the launch of new production facilities requires to expand the export volume of new manufactured products, which will further increase the importance of the EAEU market for domestic manufacturers of electrical products.

Kutbitdinov Yu., Center for Economic Research and Reforms

Bobojanov Shakhrukh translation

Leading Research Specialist

Center for Economic Research and Reforms