HISTORICAL EXCURSUS IN THE DEVELOPMENT OF UZBEK TOURISM
One would be mistaken to claim that tourism is a new sector in Uzbekistan, for its widespread development started as far back as the 1960s, when the organization of mass recreation on the basis of local resources came to the fore. Following corresponding governmental resolutions and decisions made by non-state organizations, a solid material and technical base of tourism was established in the Republic. By the end of the 1980s, its structure was as follows:
- 10 per cent of property was in the Union’s ownership;
- 30 per cent of property was owned by both the Union and the Republic;
- 60 per cent of property was owned entirely by the Republic.
The very organization of the tourist industry was not uniform by structure and composition, since the following entities appeared in the role of participants and proprietors:
- ministries, departments and committees, which built rest homes and tourist centers within the framework of their sectors (some 40 per cent of the total number);
- public organizations (the communist party, Komsomol, trade unions, women’s committees etc.) – their share reached 20 per cent;
- enterprises and institutions, with rest homes, sanatoria, children’s summer camps and tourist centers on their balance (30 per cent);
- cooperatives and other economic establishments (collective farms, consumers’ cooperatives etc.), with rehabilitation and tourist facilities on their balance (9 per cent);
- local administrations and self-government institutions (executive committees and village soviets), which also run tourist centers on their territories for regional development purposes, but their share in tourist business was negligible – less than 1 per cent.
There were some peculiarities that characterized the organizational structure of tourism in the period 1960-1990. First of all, one should mention the many-vector pattern of development and the lack of well-coordinated development policy. This situation, however, was a natural result of the tourist sector’s extremely scattered character. The point is, it was composed of the following tourist facilities:
- enterprises incorporated into the USSR State Committee on Foreign Tourism (hotels and tourist centers) and located on the Republic’s territory;
- tourist centers and installations subordinated to the State Committees on Sports and Physical Training of both the USSR and Uzbekistan;
- rest homes and children’s summer camps owned by the ministries of industry, agriculture, construction and internal affairs, as well as by industrial enterprises, research institutions and collective farms;
- tourist installations incorporated into the trade union systems of both the USSR and Uzbekistan;
- tourist facilities owned by Komsomol organizations of both the USSR and Uzbekistan, and public organizations;
- health resorts, rehabilitation clinics, health centers and sanatoria incorporated into the ministries of public health of both the USSR and Uzbekistan;
- tourist installations owned by local village soviets and executive committees.
Needless to say that tourist facilities run by the State Committee on Foreign Tourism surpassed other categories in terms of technical equipment, architectural excellence and construction quality. It is quite clear that tourist installations owned by local soviets and public organizations were on the opposite end of the range, i.e. they were poorly-equipped and offered low-quality services. A fierce struggle for financing and investments required to build and maintain tourist facilities was carried on within decades and not only between the republics of the former USSR, but also between local institutions of self-governance within the republics. As a consequence, the development of tourism didn’t take account of technical, natural and infrastructure potentialities of one or another region. Moreover, most ecological and geographical requirements were ignored, which could not but adversely affected the environment, employment and profitability of this sector. For all that, tourism continued to develop, with the following factors influencing the process:
- the availability of so-called “iron curtain” between the USSR and the rest of the world, that made mass foreign tourism impossible, but facilitated the exchange of tourists between the republics;
- the existence of social economy, where tourism-related services were viewed as luxury and therefore were very attractive for common citizens;
- the reinforcement of USSR state property on the territories of national republics, which led to a centralized distribution of tourist flows;
- the support of low-profitable and unprofitable tourist organizations by injecting state subsidies, which scaled up the social importance of the sphere of recreation and tourism.
According to some estimates, in the period 1985-1989, the number of domestic and regional tourism in Uzbekistan approximated 1.4- 1.6 million people, including 130,000-180,000 foreign tourists. In 1992, the Republic’s tourist sector could offer foreign tourists only 27 types of services. Compare this indicator with 250-400 types of tourist services offered in countries well advanced in tourism, such as Turkey, Italy and Spain. As you can see, the potentialities of Uzbek tourism were limited. And the main reason behind such a deplorable state of affairs in the region, which had everything to become a tourist Mecca, was a planned-directive method of administration, combined with the peculiarities of socialist economy.
A sharp transition to regional self-financing in the former USSR in the middle of the 1980s, the ensuing disintegration of economic links between the regions, inflation and a complicated political situation in Central Asia resulted in a protracted crisis, which befell almost all the industries of Uzbekistan in 1990. Tourism was no exception. By 1992, the sector witnessed a 4-5-fold slump in the number of foreign tourists arriving in the Republic. Utilization of the national tourist potential didn’t exceed 6 per cent, with daily profit generated by a foreign tourist averaging US $12. Very often, tourist services were rendered at reduced tariff rates. By the most modest tallies, Uzbekistan received US $3 million less in profit in 1992. It must be observed that the number of rooms, which met generally accepted international standards was insignificant in that period. By the end of 1992, almost 50 per cent of tourist installations available in the Republic were loss-making or low-profitable. What’s more, the situation exacerbated by a sharp drop in both the volume of inter-republic exchange of tourists and the share of domestic tourism.
On the other hand, at the end of the 1980s, the “iron curtain” was completely destroyed, and international tourism entered the phase of continuous progress. In 1990, a total of 7.2 million foreigners arrived in the USSR, of whom 2.2 million as tourists. At the same time, 9.08 million Soviet citizens went abroad, including 2.1 million as tourists. The same tendency could be observed in Central Asia, in particular in Uzbekistan and Kazakhstan. According to customs statistics for 1997, more than 1 million people left the Republic, for various reasons, mainly for the CIS member states.
The entire period of tourism development in Uzbekistan can be divided into several stages:
THE PERIOD OF FORMATION: 1990-1998. It started simultaneously with the introduction of the Law on Foreign Economic Activity. This document allowed domestic enterprises to trade in their produce and services in the international markets. The Law specified that each subject of foreign economic activity may independently determine the form, type and direction of its participation in foreign economic relationships, to enlist, in accordance with the established procedure, cooperation of legal entities and natural persons on a contract or gratuitous basis, for the purposes of its foreign economic activity. In addition, it was entitled to possess, use or dispose of the results of its foreign economic activity, including foreign exchange receipts, in keeping with the legislation of the Republic of Uzbekistan. The objects of foreign economic activity encompass all kinds of industries, goods and services created in all industries and sectors of the national economy, as well as securities, scientific findings, intellectual and other values, with the exception of the objects, whose utilization in foreign economic activity is banned under the law of both the USSR and Uzbekistan. Legal entities and natural persons, including foreign and international organizations operating within and outside the Republic and registered in Uzbekistan as participants of foreign economic activity may be the subjects of foreign economic activity, irrespective of their type of ownership.
The second important step taken by Uzbekistan was the passage of laws on enterprise and cooperation, which enabled the private sector to join the process of market transformation in the tourist industry. Cooperatives and facilities taken on lease started to appear in the tourist sector. They specialized primarily in public catering, accommodation and transportation, offering their services to foreign and home tourists. The Law on Citizenship constituted one more step in the development of tourism in the country. Under this document, Uzbek citizens may leave the Republic as representatives of a sovereign and independent state, and their status was determined on the basis of international agreements and conventions signed by Uzbekistan. It should be noted in this context that over the 8-year period in question, more than two-third of intergovernmental and inter-departmental agreements were concluded with foreign countries in the field of tourism. They formed the regulatory and legislative framework for the expansion of cooperation with overseas tourist organizations. The year 1994 saw the signing of the Samarkand Declaration on Revival of the Great Silk Road, which defined Uzbekistan as the heart of the new tourism direction.
At the beginning of the 1990s, it became clear that the tourist sector needed root-and-branch reformation. The necessity to concentrate resources for joint action and a breakthrough to the international market took central stage. By that time, Moscow-based structures could no longer represent Uzbekistan’s interests abroad. The Republic had to elaborate its own vision and approaches to tourist business.
Established following the July 27, 1992 Presidential Decree, the National Tourist Company, Uzbektourism incorporated upwards of 150 economic operators functioning in the Republic. Later on, there were issued other governmental resolutions, bearing, directly or indirectly, on the development of national tourism. Let it be mentioned that experts and specialists positively assessed a decision to form a single tourism regulation center. In many countries, tourism is subordinated to the ministries of civil aviation, transport, foreign and home trade, internal affairs, the environment, manufacturing and crafts, youth and sports, culture, labor, economy etc. This hampers the development of tourism as a separate activity. A national tourist administration set up in Uzbekistan made it possible not only to cover a wide range of tourism-related issues, including advertising, information services, licensing, statistics, compilation of economic data, management etc., but also to champion the sector’s interests in the ministries of finance and macroeconomics, the Goskomimuschestvo Committee and other instances.
To tell the truth, its establishment per se failed to radically change the situation in the tourist sector at once. As of January 1, 1993, Uzbektourism ran 1.04 billion Rouble deficit of payment balance, including compensation for installations handed over to Uzbekistan after the demise of the USSR. Among the reasons that led to such a posture of affairs were the departmental dissociation of long standing, the lack of a single controlling abs coordinating body, plus hyper-inflation and various economic problems.
The newly- created tourist administration began elaborating a national tourism model. When working out its general concept, domestic specialists studied the positive experience accumulated by Turkey, Israel, Greece and Spain and methodical recommendations of the World Tourist Organization. The following priority directions were identified: national (home) tourism, international tourism on the basis of the Great Silk Road Project, the sphere of services and trade, training of personnel and creation of new jobs, and, finally, re-establishment of state ownership rights in the sector. Delineating the main directions in which to perfect tourism, the Presidential Decree, “On measures to activate the participation of the Republic of Uzbekistan in the revival of the Great Silk Road and development of international tourism in the Republic” and the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On measures to create modern infrastructure of international tourism in the Republic of Uzbekistan” gave a new impetus to the development of the industry of hospitality in our country. During the process of re-establishment of state ownership rights and privatization, many tourist facilities were privatized and changed the form of ownership. In the period 1991-1995, the number of rooms available in Uzbek hotels grew 70 per cent, amounting to 9,800. However, in 1996, their number decreased to 7,900, mainly as a result of reconstruction of 1st - and 2nd –category rooms, which were subsequently categorized as top-class suites. A procedure for licensing tourist activity introduced in 1994 created the legal framework for the emergence and functioning of private structures in the national hotel and tour business.
In 1993, the Uzbektourism National Company joined the World Tourist Organization and since then it has been upholding the right of Uzbekistan to become a coordinating center of the Great Silk Road International Project. A year later, under the aegis of the UN and UNESCO, Uzbektourism conducted a WTO seminar, titled “The Silk Road” in Tashkent. At its visiting session on the Registan Square, the participating countries signed the Samarkand Declaration on the development of the Silk Road route within the framework of the international project. Tenacious efforts made by domestic tourist organizations to promote the national tourist product to the world arena bear witness to their aspiration for penetrating the regional and global markets for tourist services. With this objective in view, they also take active part in large-scale international travel-business exchange-fairs held in London, Berlin, Milan and Moscow. In particular, at the WTO seminars in Japan and Teheran dedicated to the Silk Road International Project, the Republic of Uzbekistan was defined as its geographical and coordinating center. Uzbektourism’s successful international activity obtained the recognition at the 12th General Assembly of the World Tourist Organization convened in Istanbul in October 1997, where Uzbekistan, together with France and Italy, was elected a member of the WTO Executive Council.
The 1st International Tourist Fair, Tourism on the Silk Road held in Tashkent in October 1995 was attended by more than 100 firms from 33 countries and official delegations of national tourist organizations operating in the countries, through which the Great Silk Road runs. The 2nd International Tourist Fair held in 1996 brought together 150 companies from 100 countries. As many as 170 firms took part in the 3rd International Tourist Fair. Such a steady rise in the number of participants reflects the fact that the position of the Tashkent Tourist Fair in the rank of the most prestigious international tourist forums solidifies year in, year out.
In 1996, the National Tourist Company incorporated 98 enterprises, under all types of ownership, including 24 state-owned organizations, 31 public joint-stock companies, 2 private joint-stock companies, 10 limited liability societies, 27 collective enterprises and 2 enterprises taken on lease. The high efficiency of economic and financial activity carried out by some of them was apparent, while others didn’t report such impressing results.
In order to improve the situation, Uzbektourism decided to attract foreign capital and advanced managerial experience. A special program was worked out to ensure the attraction to the sector of capital investments from abroad. By 1997, the National Tourist Company completed reconstruction of Shodlik-Palace Hotel with 107 rooms. The project’s total volume of capital investments came to DM 15 million. Uzbektourism planned to channel US $31.5 million to a project to reconstruct the Uzbek-Malaysian joint venture, Hotel Uzbekistan. For the time being, two-third of the invested capital has been already realized. Reconstruction of another hotel facility, the 60-room Hotel Khivahas also been recently brought to completion, with the amount of capital investments in excess of 20 million Soum. In addition, Uzbekistan received a 117.3 million Soum credit toward the development of motor tourism in general and construction of gas filling stations nationwide in particular.
The March 17, 1994 Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On the procedure for entry to the Republic of Uzbekistan of foreign citizens and non-citizens” specified a procedure for visiting the country by foreigners and for visiting foreign countries by Uzbek citizens. Tourist flows started taking shape. By 1997, the number of foreign tourists arriving in Uzbekstan grew substantially. According to data furnished by the State Customs Committee of the Republic of Uzbekistan, in 1997, 53, 086 thou tourists came to the country from abroad with cognitive purposes, 108,69 thou – on business, 709,66 thou – on private visas, and 83.01 thou – as passengers in transit. As for tourists from the CIS and “far abroad”, their number reached 953.47 thou. At the same time, the flow of tourists leaving Uzbekistan for foreign countries increased as well. Uzbektourism data demonstrate that domestic tourists went to 74 countries.
The Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On professional activity carried out by citizens of the Republic of Uzbekistan abroad and by foreign citizens in the Republic of Uzbekistan” dated October 19, 1995 made it possible to draw a distinction between tourism and labor migration. This document freed domestic tourist agencies from problems associated with the sending of Uzbek citizens abroad as labor force, while re-orientating their overall performance to a specific segment – organization of tours.
One more step in the development of Uzbek tourism was the approval by the Cabinet of Ministers of the Republic of Uzbekistan of the National Program, Meros, aimed at preserving the Republic’s rich historical and cultural heritage, including architectural and historical monuments, works of arts and suchlike. One should also mention in this context the Presidential Decree, “On measures to provide state support to folk crafts and applied arts to ensure their further development” dated March 31, 1997. The Uzbek Government also drafted Regulations on the establishment of special open economic zones of international tourism in the towns of Tashkent, Samarkand, Bukhara and Khiva. Unfortunately, this document is approved so far, in spite of the fact that it bears a great potential, substantiating the possibility for creating such zones in the world renowned touristy centers of Uzbekistan.
The period under discussion was also marked by a noticeable expansion of Uzbektourism’s international relations. With a view to establishing direct linkages with foreign tour operators, the National Tourist Company opened representative offices in countries, with which the Republic of Uzbekistan maintained direct air communication. These included Germany (Frankfurt-on-Maine), Great Britain (London), the US (New York), the United Arab Emirates (Shardge), Russia (Moscow), as well as India and Japan, where some employees from local tourist firms combined jobs. By the ways, most western experts positively assessed their performance and even proposed to broaden their functions. The international tourist community also recorded the accomplishments achieved by Uzbekistan in the hotel industry. In 1996, Hotel Intercontinental won first place in Europe in the “Quality of Services” nomination. As a result of all these steps, by 1997, the Uzbektourism National Company provided services to the tune of 3.26 billion Soum and US $18.84 million, compared with the similar indictors for 1996 – 1.77 billion Soum and US $14.5 million. According to relevant statistics for 1997, the domestic tourist enterprises serviced 730,000 tourists (8.2 per cent higher than the 1996 number), including 350,000 foreigners (12 per cent). Let us underline one more important fact: in a move to augment the nation’s export potential and to put in place corresponding infrastructure facilities in the tourist sector, a group of international and domestic experts worked out a plan of measures designed to ensure a sustainable pace of tourism development in Uzbekistan in 1998. It comprised a number of projects, all directed at the improvement of the material and technical base of tourism and recreation facilities, raising of the level of services, development of advertising, elaboration of new tourist tours and charter flights etc. However, by the end of 1997, Uzbektourism was classified in the national industry classification system as sub-sector of the services industry, rather than a separate sector..
Notwithstanding the apparent progress made by Uzbek tourism, the sector faced certain difficulties at that period. All of them were associated with factors such as conversion of the national currency, stagnation in the field of economic reform, excessive bureaucratism in the sector’s administration, an increased number of check-ups and inspections on the part of controlling bodies, impaired management practices and the lack of real marketing. In addition, low personal incomes didn’t allow the local population to spend money on traveling and recreation. The bulk of their trips abroad and within the country were motivated by economic reasons. That’s why the overwhelming majority of charter flights and a lion’s share of tour firms’ activity were associated with the servicing of tourists involved in shopping and chelnok commerce. Meanwhile, the tour firms themselves lacked a corporate association, which could protect them from unfair competition, regulate their international relationships, appear in the role of arbitrator, and introduce the codes of business ethics for domestic entrepreneurs.
Uzbektourism experts revealed that some 50 per cent of exchange receipts was generated by visa-cards and transfers of money funds by foreign firms to settlement accounts of tourist enterprises and hotels of the Republic of Uzbekistan. 15 per cent of exchange receipts came from the exchange by foreigners of freely convertible currency at the Central Bank exchange offices in accordance with the fixed rate of exchange. Interestingly, 35 per cent of currency receipts received by Uzbektourism came from the exchange of freely convertible currency bypassing the Central Bank exchange offices,. At the same time, the amount received by foreign tourists via channels other than official ones reached some US $7.0 million or 549.5 million Soum at the effective rate of exchange, compared with 1.33 billion Soum received as a result of illegal exchange operations. The difference between the indicators was 780 million Soum, or US $9.9 million at the official rate of exchange that was in effect at the time. It meant that the Republic’s budget lost about US $10 million that distorted the figure of service exports in the tourist sector.
According to experts, one of the ways for the resolution of this problem stipulated the receipt by Uzbek tourist organizations of foreign exchange funds directly form overseas tour operators.
A significant role in the attraction of foreign tourists was played by tariffs on air, rail and bus communication, as well as accommodation in hotels, catering and servicing en route. All these factors were reflected in the contracts signed. However, transport tariffs tended to increase. Uzbektourism experts calculated that in 1996, the cost of flights to such cities as Istanbul, Frankfurt-on-Maine and New York, compared with that a year ago, grew 16 per cent on the average, while in 1997, it was already 62 per cent, 41 per cent and 49 per cent higher than the 1996 indicators, correspondingly. Although the cost of services offered by Uzbektourism hotels remained unchanged, the inflow of foreign exchange and tourists to the Republic decreased.
As far as tourist servicing is concerned, it accounts only for 20 per cent of the total volume of tourist services exports, with the rest 80 per cent being represented by works accomplished by other ministries and departments of Uzbekistan. Meanwhile currency revenues generated by the tourist sector in the period of its stable development (1997-2002) may grow from US $82.4 million to US $192.6 million. This figure may be reached at the expense of those segments that spawn demand for tourist products (hotels, transport and other conveniences typically associated with the reception of foreign tourists). Besides, the proposed growth would depend on an increase in budgetary appropriations for marketing and popularization of tourism.
However, all those calculations and forecasts were far from local realities, because lots of problems of macroeconomic character were not taken into consideration.
As is evident from what has been said above, national tourism made no headway in the period in question. New approached were needed to state policy and management in the field of tourism, which were elaborated and introduced in the next period of development.
1998-2002 – THE PERIOD OF RE-ORIENTATION. The tourist industry started analyzing the results achieved and the situation in the tourist market as a whole, as well as looking for new ways and directions of further progression. The Republic introduced the uniform rules for the provision of hotel services. In addition, some hotels, including Le Meridian Tashkent, were granted a number of tax and customs privileges. To further improve the situation in the sector, the Ministry of Foreign Affairs of the Republic of Uzbekistan introduced the practice of issuing return certificates to those Uzbek citizens, who encountered certain problems abroad following the loss of their passports. What’s more, a procedure for import and export of cash foreign currency was substantially streamlined. Procedures for examination of hand luggage and baggage by the homeland security authorities at airports, as well as procedures for execution of frontier and customs control at the road, rail, air and river border posts were ameliorated. This made it possible to avoid lots of criminal and medical problems. The Law on Frontier became the fundamental document regulating the border crossing by natural persons, goods and material values. The Law “On import and export of cultural values” complemented the overall legal framework for crossing the Republic’s frontier. It should be noted in this context that several legal documents approved in the Republic of Uzbekistan contributed much to legalization of entry to and departure from the country. In particular, the February 26, 1999 Presidential Decree, “On the passport system in the Republic of Uzbekistan” specified a procedure for drawing up national documents. Another document, the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 519 dated December 30, 2000 laid down a procedure for registering and issuing identity cards to citizens of the Republic of Uzbekistan under the age of 16.
The most important landmark of the period under discussion was the passing by Uzbek Parliament of the Law on Tourism, which noticeably reinforced the status of tourist organizations and the tourist sector as a whole. In particular, this document introduced the Temporary Procedure for sending tourist groups abroad. According to the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On improvement of the organization of activity carried out by tourist agencies”, the Association of Private Tourist Organizations was conferred a status of corporate/public structure with precise powers. To tell the truth, this organization failed to win any special authority, despite the fact that it provided assistance within its powers to the private sector.
On the other hand, procedures relating to foreign exchange remained unresolved. This affected many sectors of the national economy. Tourism was no exception, where the lack of convertibility led to serious distortions. The problem came on a head with the approval on May 13, 1999 of the Procedure for providing services to foreign tourists for freely convertible currency. Needless to say, the document debased the situation by confusing mutual settlements between suppliers and consumers of tourist services. Besides, it exposed a number of other drawbacks and weaknesses that had contagion effects on the sector’s development. It appeared that the location of tourist installations was highly deformed, which couldn’t held leading to an uneven distribution of revenues and material benefits, as well as a disproportioned employment of production capacities and labor force. For instance, up to 40 per cent of the tourist sector’s total production potential was concentrated in the Uzbek capital city and the Tashkent Province, 37 per cent – in the Bukhara, Samarkand and Khorezm Provinces, and some 16 per cent – in the Ferghana Valley and the Surkhandarya Province. Other provinces making up 50 per cent of the Republic’s territory accounted for a mere 7 per cent of the estimated national tourist potential.
The number of companies involved in tourist activity remained stable. Uzbektourism’s data show that in 1998, 370 licensed tourist enterprises were functioning in the Republic at that period. The biggest non-state organizations in the sector included JV Hotel Uzbekistan, AO Shodlik-Palace, AO Hotel Sayokhat, AO Uzintour, AO Bukhorotourist, KTF Orient Star, KTF KATS, JV Sitara International etc. Some tourist firms terminated their activity for different reasons (violation of the law, bankruptcy, re-orientation of economic activity and the like), while a number of newly-established tourist companies emerged. Meanwhile, notwithstanding the difficulties referred to above, the inflow of tourists tended to grow. In the period 1993-1997, it grew 2.7 times, including the visits by foreign tourists, which increased 5.4 times. In 1993, 92.3 thou people arrived in Uzbekistan, in 1994 – 60.9 thou, in 1995 – 92.0 th0u, in 1996 – 173.0 thou and in 1997 – 252.9 thou. An upward tendency on this front was evident. Domestic tourism grew 129 per cent in the period in question.
At the end of 2002, the Cabinet of Ministers of the Republic of Uzbekistan passed the Resolution, “On measures to ensure the completion of the BUMI Tashkent International Hotel reconstruction project”. This document introduced amendments into the Resolution, “On the sale of the hotel complex in Tashkent to the Bakri Investindo “Indonesia” Company” issued in February 1996. In particular, the Government extended the validity terms of property tax-related privileges. In the words of Gesang Budiarso, executive manager of this hotel complex, the edifice, bought in 2000 for US $39.4 million, remains the biggest installation in the domestic real estate market. A year later, management of this 14-storeyed building was transferred to Choice, a US-based company. Under the management contract, the operator masterminded a reconstruction project valued at some US $2 million. In particular, hotel rooms were substantially widened. Two storeys of the hotel were allotted for apartments in the form of mini-flats intended for residence over a long period of time. Beyond that, the hotel’s room reservation network was expanded. Reconstruction works were finalized by the end of 2003. It should be added that for the American company, it was the first hotel business management project not only in Central Asia, but in the CIS as a whole.
The Uzbek Government took measures to preclude any pressure on entrepreneurship in the tourist industry on the part of enforcement and other controlling authorities. The Law “On guarantees of freedom of entrepreneurial activity” dated May 25, 2000 was an important step in this direction. On April 23, 2001, the Republican Council for Coordination of Controlling Authorities’ Activity approved the Regulations on the procedure for coordinating check-ups of economic operators’ performance carried out by controlling authorities. This document streamlined the way in which inspections and check-ups were conducted at non-state enterprises. Two other documents – the Procedure for payment of duty on the purchase of freely convertible currency issued in 1998 and the Rules for the transaction of operations in foreign currency issued in 2000 – contributed much to the efficient regulation of the domestic foreign exchange market. However, certain limitations contained in the documents made it impossible to put an end to the functioning of the black market.
The period under discussion also saw the continuation of work on the reinforcement of the tourist sector’s international legal base. More than 15 agreements were concluded between the Uzbek Government and the Uzbektourism National Company on the regulation of tourist activity. Using the data furnished by Uzbektourism, the World Tourist Organization compiled its own table highlighting the development of tourism in the Republic of Uzbekistan.
THE PERIOD 2003 – UP TO THE PRESENT TIME IS MARKED BY A SUSTAINABLE GROWTH OF TOURISM IN THE COUNTRY. Since 2003, certain changes took place in the sector as a result of geopolitical transformations in the Central Asian region. They urged on the interest for Uzbekistan on the part of overseas tourists. In 2003, the Uzbek Government simplified visa registration procedures for certain categories of citizens. Starting May 2004, new regulations governing the acceptance of foreign tourists by the Republic’s tourist organizations came into force. This facilitated an increase in the number of visitors arriving in Uzbekistan from abroad, while entrenching the sector’s financial position. In 2003, the tourist industry (within the framework of the Uzbektourism National Company) rendered services to both foreign and domestic tourists to the tune of 16,857 billion Soum, up 105.2 per cent over the established forecast indicator. In 2002, this figure was 15,778 billion Soum (118.1 per cent), in 2001 – 10,118 billion Soum (144.4 per cent) and in 2000 – 6,882 billion Soum (128.5 per cent). The volume of tourists totaled 1.398 million man-days in 2003, 1.399 million – in 2002, 1.590 million – in 2001, and 1.741 million – in the year 2000. These figures provide a clear evidence of the tourist sector’s increasing importance for the national economy. In 2003, the Republic’s tourist infrastructure was significantly strengthened with the commissioning of the following new and reconstructed tourist facilities: Tashkent-based hotels – Grand-Mir, Le Meridian Tashkent, Dedeman and Radisson-Tashkent, as well as President Hotel in the town of Samarkand. Additionally, two new Boeing-757-200 airliners were bought to solidify the tourist industry’s air fleet, in a move to expand the geography of flights and thereby to attract more foreign tourists to the Republic.
According to statistical data, as many as 162 hotels, tourists centers and campings, with a total capacity to accommodate 8,900 tourists, functioned in Uzbekistan in 2004. The load coefficient in the tourist sector reached 22.2 per cent in 2003. 351 organizations under different types of ownership enjoyed licences to carry out tourist activity. 290 of them were privately-run firms. The private sector accounted for 90 per cent of all services provided in the sector. Upwards of 15,000 people are employed in the domestic tourist industry, of whom 30 per cent are university-degree specialists and 70 per cent of workers finished specialized secondary educational establishments. Efforts were made to further expand the network of tourist installations across the Republic. In November 2003, in particular, the Uzbek Government issued a special resolution on the creation of a health resort area in the town of Khanabad located in the Ferghana Valley. It will be built on the basis of an incomplete rest home. With its construction due to be completed by the end of 2005, the region’s population will have the opportunity to rest and improve their health. The sanatorium will specialize on cardiology, neurology and lung and motor diseases.
As recent studies graphically demonstrates, the Bukhara, Samarkand, Korezm and Tashkent Provinces and the capital city account for 76.2 per cent of the total tourist inflow to the Republic. At the same time, interest is growing on the part of foreign tourists for the Ferghana Valley, the Djizak, Kashkadarya and Surkhandarya Provinces, whose share in the tourist sector now doesn’t exceed 24.8 per cent. The greatest number of tourists come from countries such as Germany, Japan, France, Italy, the UK, Turkey, the US and the Russian Federation. At the same time, citizens from the CIS member states stay 5 days on the average, whereas the duration of stay of tourists from “far-abroad” countries reaches 3-4 days. 89 per cent of all non-residents arrive in Uzbekistan with business, professional and private purposes. The marketing studies also show that, apart from travel-related expenses, foreign tourists readily spend money funds on additional services , which represent 60 per cent of their total expenditures.
Meanwhile, the marketing studies stress an insufficient development of tourist infrastructure and advertising in Uzbekistan, which narrows the national tourism’s potential. According to estimates, the average expenditure per tourist in the world approximates US $2,000, while in Uzbekistan this indicator was less than US $1,000 in 2003.
In this connection, the Cabinet of Ministers of the Republic of Uzbekistan issued the Resolution, “On further development of activity carried out by the Uzbektourism National Company” on July 24, 2004. The document was intended to optimize the organization’s overall performance. Uzbektourism is an authorized state body in the field of tourism, incorporating the Samarkand, Bukhara and Khorezm regional sub-divisions, as well as state-run travel and excursion bureaus that operate in the regional centers nationwide, the Republican Research-Training Consulting Center, the Central Directorate of Dispatching and Servicing and other departmental structures. The company pursues a common state policy in the field of tourism and forms the national infrastructure of tourist services. Uzbektourism implements the state sector development program, including measures designed to ensure a high level of tourist safety. In addition, the company accomplishes certification and licensing procedures. Moreover, Uzbektourism is tasked to attract foreign credits and investments, to carry out advertising and information activity, to train and to raise skill levels of personnel, as well as to encourage research in the field of tourism. On August 29, 2004, the Ministry of Justice of the Republic of Uzbekistan approved the Regulations on the imposition of tourist duty on tourist firms and hotel operators for tourist servicing, which made an appreciable contribution to coordination of tourist activity in the Republic.
The Regulations, “On the procedure for importation and exportation of national currency of the Republic of Uzbekistan” dated March 1, 2004 also had a positive role to play in the development of national tourism. The document laid down that natural persons, both residents and non-residents of the Republic of Uzbekistan, may import to and export from the Republic of Uzbekistan national currency funds, whose amount doesn’t exceed a total of 50 minimum wages. In other words, the Regulations fixed a quota on cash national currency funds that may be imported to or exported from the Republic by foreign and domestic tourists.
Uzbekistan’s international tourist-center status strengthened with the approval by the Cabinet of Ministers of the Republic of Uzbekistan of the Resolution, “On preparation and conduct of the 4th World Tourist Organization (WTO) Meeting in the town of Bukhara” No 356 dated October 12, 2002. It was stated in the document’s preamble that “the event is held with a view to popularizing culture, history and traditions of the Uzbek people, and the tourist potential of Uzbekistan on the basis of ancient historical and architectural monuments that are part and parcel of the world civilization’s treasure-house, to ensuring a wider acquaintance of foreign tourists with the country as one of the famous commercial centers along the Great Silk Road, as well as to attracting foreign investments to the tourist industry”. All expenses associated with the organization and conduct of this meeting, plus the stay of the program director and WTO Secretariat employees in Uzbekistan, were born by the Uzbektourism National Company. No consular duties were charged on registration of entry visas for its participants. The most favorable regime was ensured for all guests and participators when they settled customs formalities.
The reinforcement of tourist infrastructure was accompanied by the approval of corresponding normative and regulatory documents. For example, the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On measures to further develop the hotel business and international tourism in the Republic of Uzbekistan” No 310 dated September 2, 2002 decreed to set up, on the basis of the hotel complexes “Dustlik”, “Tashkent” “Rossiay” and “Chorsu” located in the capital city, joint venture enterprises specializing on reconstruction, construction and subsequent running of these tourist installations. These Measures aimed to prepare Tashkent-based hotels for the reception of participants and guests of the Annual Meeting of EBRD Board of Governors in 2003, to further develop international tourism and to ensure the attraction of foreign investments to the hotel business. It should be noted that foreign partners of these joint ventures made contributions to their authorized capital in both foreign and domestic currency. Necessary funding for the projects was secured on property of the newly-created joint ventures and their founders, with the subsequent mortgage of their buildings to banks upon completion of the construction and reconstruction projects.
In the period of credit repayment, the above-mentioned hotels and Hotel Uzbekistan were exempt from customs payments on materials and equipment imported for reconstruction and construction purposes under the “turn-key” contracts signed. As well as that, they were granted exemptions on payment of income (profit) tax, value-added tax, property tax, land tax and environment tax. The Uzbek Government prescribed that the money funds thus exempt from taxation should be directed, in keeping with the established procedure, to the repayment of credits attracted to implement reconstruction and construction projects. In addition, foreign banks and insurance agencies taking part in the financing of given projects were exempt from payment of profit tax imposed on non-residents in the Republic of Uzbekistan. The reconstruction of the Chorsu Hotel complex stipulated the establishment of a joint venture between the Uzbektourism National Company and the Turkish firm, Emsash, which would take the form of a limited liability society, called Chorsu Hotel with the authorized capital of US $10 million. The Uzbek side contributed US $3 million in the form of the Chorsu Hotel complex, while the Turkish side’s contribution took the form of equipment and money funds to the tune of US $7 million.
As is evident from the facts mentioned above, the development of hotel facilities constitutes a priority policy objective in the field of tourism. The Uzbektourism National Company is determined to intensify work in this direction. Its plans for reinforcement of the industry’s material and technical base provides for the construction, by the year 2010, of 56 hotels, capable of accommodating 2,100 tourists; reconstruction of the hotels “Bukhora” (situated in the town of Bukhara) and “Ziyorat” (situated in the town of Ferghana) and AO Kumyshkan tourist center (located in the Tashkent Province). A network of campings will be built along the Tashkent – Urgench motorway. The introduction of modern technologies is expected to more efficiently exploit the sector’s 217 hotels, which will have 9.900 rooms and suites for 18,600 tourists. As a result, the load coefficient may reach 66.9 per cent, which corresponds to the world level.
DEVELOPMENT OF THE REGULATORY AND LEGAL FRAMEWORK. After acquisition of independence, Uzbekistan began taking active steps toward the elaboration and introduction of a sound regulatory and legal framework for a sustainable development of tourism, including the encouragement of private entrepreneurs to set up in the tourist sector. In practice, these two processes were inseparable. Take, for instance, a resolution of the Cabinet of Ministers of the Republic of Uzbekistan aimed at improving tourist infrastructure. This is bound up with the development of small and private businesses, through which all programming documents are implemented. Some 60 per cent of the documents governing the tourist industry were approved in the period 1990-1997, when the foundations of a market-oriented economy were laid down in the Republic. In the second period, the number of tourism-related regulatory and legal documents reached 30 per cent. Since 2003, the Uzbek Government has passed 10 per cent of all documents that constitute the regulatory and legal base for carrying out activities in the tourist sector. Needless to say, the documents approved in the first period had the most important implications for the sector as a whole, by providing a precise definition of the national tourism model and formulating the major directions of its future progression. The period 1998-2002 can be classified as a period of re-orientation, when the earlier approved fundamental documents were amended and supplemented to meet new requirements and challenges.
RE-ESTABLISHMENT OF STATE OWNERSHIP RIGHTS AND PRIVATIZATION. Tourism was one of the sectors, where re-establishment of state ownership rights started to unfold earlier than in other industries of the Uzbek economy. The process was triggered by the January 21, 1994 Presidential Decree, “On measures to further intensify economic reforms, to ensure protection of private property and to develop entrepreneurship”. The document allowed to sell, on a competition basis, commercial and servicing enterprises, together with the land plots adjacent thereto, to legal entities and physical persons, including foreigners, without the requirement to declare the source of money funds they use to privatize these enterprises. The Government was commissioned to guarantee that enterprises involved in trade and services, whose construction and creation is financed by private entrepreneurs, are located in the most prestigious parts of towns and populated areas. Additionally, the Presidential Decree stipulated the granting of all necessary privileges, including credits and government guarantees, to legal entities and individuals, with corresponding resources and possibilities being provided by the Government for the latter to operate successfully in the tourist sector. According to experts, this document contributed to a further reinforcement of market infrastructure in the tourist industry.
The next period has seen the unfolding of a well-orchestrated process of tourism development in Uzbekistan, despite the fact that certain tourist installations remained in the state’s possession. The list of enterprises, objects and groups of state property, which were not subject to re-establishment of state ownership rights, privatization or redemption through the Uzbektourism National Company, included, in particular, the Khiva Tourist and Excursion Complex. Anotehr 13 objects were included in the list of enterprises, installations and groups of state property, whose privatization required approval by the Cabinet of Ministers of the Republic of Uzbekistan. Presented below are all these objects:
· the Interim Board of Directors in the town of Bukhara (construction);
· the Kuksaray Agency in the town of Samarkand (tourism);
· the Interim Board of Directors in the town of Samarkand (construction);
· Uzbektourism in Tashkent (management);
· the Dayokh Insurance Company in Tashkent (insurance);
· the Central Directorate of Rest Homes in Tashkent (tourism);
· the Education and Production Complex in Tashkent (tourism, education);
· the Yoshlik-Show Enterprise in Tashkent (cultural tourism);
· a new hotel in Tashkent (hotel services);
· the Uztourstroy Enterprise in Tashkent (construction);
· the Advertising and Information Agency in Tashkent (tourism, the press);
· the Yordamchi Enterprise in Tashkent (sporting tourism);
· the Board of Directors of the Great Silk Road Exchange in Tashkent (tourism).
Later on, all these enterprises changed the type of ownership, and by the year 2005, almost 98 per cent of agencies, organizations, enterprises and complexes operating in the tourist sector are no longer under state ownership.
On November 5, 2002, the Uzbek Government approved a list of activities, to be carried out as prescribed in the law, exclusively by entrepreneurs with legal entity status. These include the organization of hotels and campings and the provision of catering services in private houses or at places specially allocated for these purposes by local authorities.
INVESTMENT AND CREDITING. The Government of the Republic of Uzbekistan views tourism as the most promising industry. Evidence of the importance it attaches to this sector is reflected in the fact that tourism is included in the nation’s economic development plans and programs. The Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On issues surrounding the organization and performance of the Private Entrepreneurship and Small Business Support Foundation (Business Fund)” dated July 26, 1995 contained a provision that in the tourist sector, banks extend credits on preferential terms by implementing credit lines opened by the Business Fund, which, in turn, uses both its own money funds and attracted resources to finance the realization of investment projects by small and medium-sized enterprises. The credits are to be repaid within 10 years, with a grace period ranging from 2 to 5 years, depending on the term fixed for recoupment of one or another projects. The interest rate on credits allotted on preferential terms is non-fixed. Instead, it is specified by the Business Fund in coordination with the Finance Ministry of the Republic of Uzbekistan.
During the implementation of the 1997 Privatization Program, a new joint-stock company, called Sayekh Sugurta, and a limited liability company, Chimghantourstroy were set up within the framework of the Uzbektourism National Company.
The hotel business proves to be one of the most attractive sectors for domestic and foreign investors. In the November 22, 2001 Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On the Investment Program of the Republic of Uzbekistan for the year 2002”, the total amount of investments and credits provided against government guarantees to the Uzbektourism National Company was estimated at US $29,16 million. Of this sum, US $22, 8 million was appropriated for the construction of President Hotel in the town of Samarkand, and the remaining US $6.36 million – for the construction of Khorezm Palace Hotel in the town of Urgench. Moreover, the Uzbek Government earmarked 1 billion Soum toward the realization of the Charvak – Cimghan Area Development Project.
The Government of Uzbekistan tries to provide lavish incentives and tax breaks to enterprises specializing in tourism. According to the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On the provision of privileges to the hotel complexes run with participation of foreign investments” dated July 12, 1999, starting January 1, 1999, the hotel complex “Le Meridian Tashkent” of the Bakhri Investindo Company (Indonesia) and a new hotel built in Tashkent by France’s Boigue, were granted exemption from payment of value-added tax on hotel services for the term of 3 years. As well as that, Le Meridian Tashkent didn’t pay VAT, till January 1, 2000, on imported equipment and materials intended for reconstruction and equipment of its edifice. Moreover, the hotel was granted a 18-month delay of payment to the budget of VAT arrears as of January 1, 1999.
In keeping with the 2004 Investment Program approved by the Uzbek Government, the Hypo Wereins Bank of Germany extended a US $6 million credit for the construction of a hotel in the town of Shakhrizabs. It was planned to implement half of the amount in the course of one year. The Government of the Republic of Uzbekistan included a projects to complete the construction and equipment of the Chorvak Oromgokhi health-improving center located in the Tashkent Province in the list of priority investment proposals. Valued at US $27.94 million, the center is now popular with Tashkent inhibitors and foreign visitors alike. Experts think that its outfitting with modern services and utilities will make it possible to improve the quality of services offered there and to shape the image of the center as one of the most attractive regional tourist destinations of Uzbekistan.
Besides, tangible foreign investments are expected to be made in the Republic’s hotel business in the foreseeable future. In particular, the Government of Poland will extend credits to reconstruct Bukhara Hotel based in the town of Bukhara (US $5.0 million) and a hotel located in the town of Nukus, the capital of the Republic of Karakalpakstan (US $4 million). It is also planned to build a three-star hotel facility in the town of Termez, with German investors taking active part in the project.
State investments to the tune of 500 million Soum will be directed to the reconstruction of the old part of Samarkand, whose marvelous historical monuments generate a constant inflow of overseas and domestic tourists interested in ancient architecture and national crafts.
It should be emphasized that the Uzbek Goevrnment attaches special importance to the development of infrastructure facilities, including transport communications, realizing that the “Great Silk Road” brand may ensure the attraction of travelers who use different means of transport in their trips across the globe. In connection with this, in 2004, the Government of Uzbekistan apportioned 3,0 billion Soum to the State Joint-Stock Rail Company, Uzbekiston Temir Yullary, for the construction of a new railway Guzar – Baysun – Kumkurgan. It is appropriate to mention here that the Baysun region enjoys wide popularity with tourists interested in ethnography and social anthropology. UNESCO included its cultural values in the list of mankind’s non-material heritage. A US $75 million project is now under way to modernize the railway section Samarkand – Khodjidavlet. The OPEC Foundation and the Asian Development Bank have given a credit to meet its costs.
The Uzbek Government intends to earmark US $50 million needed to develop and equip rail links connecting Uzbekistan and Afghanistan, and thereby to restore transport communications between the ancient cities of the two states. Undoubtedly, this will not only ensure a greater degree of political and economic stabilization in the region, but also augment tourist interest for
Central Asia.
Road infrastructure plays an essential role in the development of the Great Silk Road Project. In a move to step up the fulfillment of its far-reaching plans and programs, the Government has earmarked the wherewithal to the tune of 5 billion Soum - for the construction of a highway Andijan – Tashkent – Nulus – Kungrad – Beineu; 7.5 billion Soum – for the construction of small-scale ring road in Tashkent; and 17.5 billion Soum – for the reconstruction of a number of major motor-roads currently in operation, including 5 billion Soum required to upgrade the Tashkent – Gazalkent – Charvak section. The International Bank for Reconstruction and Development has provided a US $29 million loan to the Uztranssanoat Association towards the realization of urban transport development project. The Tashgorpasstrans State Association has received a US $$38.1 million credit to purchase 304 Mercedes-Benz-Conecto 0345 buses.
For Uzbekistan, seeking to intensify its export activity and tourism, aviation is a priority sector. The National Air Company, Uzbekiston Khavo Yullary, has acquired, with financial support from the Eximbank of the US and the Socijete Generale Bank (France), two Boeing0767-300 jets for a total of US $181.36 million. Since airports are the country’s air gates, passenger flows are highly contingent on their performance. Using the loans for a total of US $2.3 million extended by the European Bank for Reconstruction and Development, modernization of Tashkent Airport will be continued. Baerishe Hypo Wereins, a German bank, and the Socijete Generale Bank of France, have given Us #15.9 million and US $19.8 million in loans, respectively, to meet the costs of reconstruction and expansion of Navoi Airport.
THE HOTEL SECTOR AND TRANSPORT SERVICES. By 1996, the total accommodation capacity of domestic hotels, tourist centers, campings and other installations incorporated in the Uzbektoruism National Company, could provide accommodation to 8.137 tourists. Given their average annual utilization rate of some 67 per cent, this indicator reached 5,452, of which only 2,579 rooms were in line with international standards. According to sociological studies, however, 50 per cent of demand for tourist accommodation in Uzbekistan was met by hotels and other similar facilities run by other ministries and departments. Overall, they provided approximately 9,000 rooms, of which only 1,076 were up to international requirements. To satisfy demand for accommodation on the part of foreign tourists on their visits to the country, it was necessary to refurbish the available material base (some 7,518 rooms) in accordance with internationally accepted standards, to construct new hotels with an aggregate accommodation capacity of 15,000 rooms by the year 2000, as well as to develop the private sector’s accommodation facilities.
Uzbektourism signed a contract with Gordial Tours & Cargo for the supply of 10 motor vehicles for a total of US $1.413 million. In 1997, the company bought 6 comfortable buses valued at US $847.800.
In May 2003, the Turkish companies – AySel, Emsas, APEAC and Demir Group – completed the reconstruction of 5 hotels in Tashkent, with the total cost of the projects coming to US $62 million. Their reconstruction was carried out as part of a wider program of measures to prepare the capital’s major hotels for the annual meeting of the Board of Governors of the European Bank for Reconstruction and Development (EBRD), which was held in Tashkent on May 4-5, 2003.
To facilitate the realization of the projects valued at US $51.2 million, the Tashkent Khokimiyat set up 4 joint ventures with the Turkish firms referred to above. Created on the basis of the hotel complexes Dustlik, Tashkent, Rossiya and one incomplete hotel, these enterprises were designed to ensure their reconstruction, erection and further exploitation. These included Khak Sel JV (established together with Ay-Sel, on the basis of the former Tashkent Hotel; Ipak Yully-Tourism Invest JV (set up together with APEAC on the basis of Dustlik Hotel); Grand Mir JV (set up together with the Demir Group on the basis of Rossiya Hotel) and Ay-Sel Invest JV (founded together with Ay-Sel on the basis of Ay-Sel Hotel). At the same time, contributions made by the Turkish firms to their charter capital were mainly in the form of money funds, whereas the Tashkent Khokimiyat contributed hotel edifices and land plots adjacent thereto. The projects were financed our of credits extended by Turkey’s Eximbank to the tune of US $25.2 million, a US $7.2 million loan from the European Bank for Reconstruction and Development, plus resources from the joint ventures’ charter funds for a total of US $18.8 million. All the credits were secured on liquid property owned by the newly established enterprises and their founders, with the subsequent mortgage of the hotels’ buildings to the banks upon completion of their construction and reconstruction projects.
After their refurbishment was finalized, all the hotels, enjoying in sum 700 rooms, were handed over to foreign operators. In particular, Tashkent Hotel, reconstructed by Ay-Sel, was managed by France’s Le Meridian. Management of another hotel built by Ay-Sel was carried out by the American company, Radisson SAS.
At present, 4 Tashkent-based hotels are managed by renowned international operators. Choice Co, of the US, is carrying out management of Indonesia’s Bumi Resources Tbk. This hotel complex has been bought by the Indonesian company, Bakhri Group, for US $38 million. A hotel of the Agency for Foreign Economic Relations of the Republic of Uzbekistan, put into operation in October 1997 by Turkey’s Ay-Sel, is currently run by the British company, Inter Continental.
The Turkish company, Emsas insaat turizm ticaret AS and the Tashkent Khokimiyat set up a joint venture, called Premier International Turan, to be involved in reconstruction of Dustlik Hotel. The reconstruction projects was valued at US $16.8 million. The joint venture’s charter capital, created by the founders on an equal footing, totaled US $6.8 million. The Turkish party contributed money funds, while the Uzbek counterpart made its contribution in the form of the hotel’s premises together with an adjacent land plot. Reconstruction of the hotel domiciled in the center of the Uzbek capital city started in 2002. The entire duration of the reconstruction project was 2 years. After its completion, Dustlik Hotel was conferred a 3-srat hotel status. Nowadays, it is known as Dedeman Hotel.
The funding towards this reconstruction project was provided out of the joint venture’s charter capital and a credit allotted by Turkey’s Eximbank. Built as far back as 1969, the hotel consisted of two 9-storeyed edifices, with a total number of rooms reaching 450. With its reconstruction having been finalized, the hotel’s administration seeks to attract a foreign operator for management purposes. According to estimates, the project’s costs will be repaid in five years.
Germany’s Veno GmbH is going to build a US $25 million hotel complex in the town of Termez. The project’s customer is the Surkhandarya Province Khokimiyat. Apart from a new 220-room hotel, the foreign partner plans to erect a business center and a supermarket. The construction of such a complex is necessitated by an increase in the volume of goods traffic transported via this town, including the amount of goods in transit through the territory of Uzbekistan, to Afghanistan. As a result, there is now an urgent need to improve all infrastructure facilities involved in the process.
The hotel complex will be well-positioned to service some 30,000 visitors a year. The project’s fulfillment will take 18 months. To ensure its successful implementation, Veno GmbH plans to create a joint venture on a par with the Surkhandarya Province Khokimiyat. The construction project will be financed by credits to be extended by German banks for a total of US $19 million, as well as by the enterprise’s own money funds.
For the time being, one more German company, Inpro GmbH, which has founded, together with the Uzbetourism National Comaony, a joint venture, called Uzolmonhotels, is completing construction of a new hotel worth US $24 million, in the town of Samarkand. With its construction launched in 2001, President Hotel, as this hotel facility is called, will be a 7-storeyed building with 180 rooms.
The two projects for a total value of US $30.3 million will be financed by a US $28.05 million credit facility supplied by Germany’s Hypo Wereins Bank. The money will be given under insurance coverage from Germes, for 9 years and a half, with the interest rate of 8.5 per cent, against the guarantee from the Uzbek Government. Uzolmonhotels JV was set up in 1999, with the charter capital amounting to US $11.65 million. At the same time, Inpro GmbH owns 42.49 per cent of its charter capital, with the remaining 57.51 per cent possessed by the Uzbek partner.
In 1997, Inpro GmbH reconstructed Shodlik Hotel in Tashkent, with the project’s total value coming to DM 17.6 million. For now, this hotel, whose full name is Shodlik Palace, is managed by SRS, a German operator.
In April, 2002, the German company has finalized reconstruction of Khorezm Hotel situated in the town of Urgench. Valued at US $10 million, the project made it possible to upgrade the hotel to such a pitch that it was conferred a 3-star hotel status. The number of rooms there was almost doubled – from 76 to 150. The necessary funding was provided out of a US $28.05 million credit allotted by Germany’s Hypo Wereins Bank, as well as from the joint venture’s charter capital.
Meanwhile, the Turkish firm, Emsas insaat turizm ticaret AS and the Uzbektourism National Company have founded a joint venture, Chor-Su Hotel, to be engaged in reconstruction of Chor-Su Hotel in Tashkent, with the reconstruction project worth US $22.9 million. The joint venture’s charter capital is US $10 million, of which the Turkish side has contributed 70 per cent in the form of equipment and money funds. The 30-per cent contribution made by the Uzbek partner comprised the hotel’s edifice and a land plot adjacent thereto.
The cost of this project will be met by the joint venture, which will use it’s the resources from its charter capital, plus a US $12.9 million credit supplied by Turkey’s Eximbank, with the term of repayment fixed at 7 years. Besides, the Goskomimuschestvo Committee of the Republic of Uzbekistan plans to sign an agreement with the Turkish counterpart on the sale of the Uzbek side’s US $3 million share in its charter capital within a 5-year period following the completion of the hotel’s reconstruction project.
Uzbektourism leaders intend to open hotels of some world-known networks along the main directions of the Great Silk Road, which presently enjoy a growing popularity with foreign tourists.
EXPORT ACTIVITY FORECASTS FOR THE TOURIST SECTOR. According to the State Program of Export Potential Development in the Republic of Uzbekistan, approved by the Uzbek Government on March 12, 1998, by the year 2000, the volume of tourist inflows to the country will reach 1 million people, including 650,000 tourists from abroad. The volume of services rendered to foreign tourists will worth US $1 billion. Over the period 1998 through 2000, the tourist enterprises incorporated in the Uzbektourism National Company will earn US $75 million in foreign exchange receipts. The Program estimated the sector’s demand for investments in the indicated period at US $42 million. These money funds were mainly required to reconstruct a number of hotels, including Uzbekistan, Chorsu and Shakhrisabz. At the same time, foreign credits were expected to account for a lion’s share of this amount – US $41.5 million. This would ensure an increase in the export of services from US $17 million in 1997 up to US $30 million in the year 2000. As well as that, the Program stipulated that the tourist sector would turn out produce to the tune of 9.455 billion Soum in 1997; 11.5 billion Soum – in 1998; 15.4 billion Soum – in 1999 and 18.9 billion Soum – in 2000. Regarding the value of exports, in 1998 it would increase by 118 per cent compared with the 1997 figure, in 1999 – by 147 per cent and in 2000 – by 176 per cent.
THE DEVELOPMENT OF TOURIST INFRASTRUCTURE IN UZBEKISTAN. The November 27, 2002 Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 143, “On measures to further develop the market for insurance services” prescribed that the minimum amount of charter capital for underwriters specializing in life insurance should be equivalent to US $250,000; for those involved in general insurance – US $150,000; for re-insurers (on condition that re-insurance is the exclusive line of their activity) – US $2 million, and for underwriters specializing in obligatory insurance – US $500,000. The document also specified the annual expenditure limit for legal entities on voluntary types of insurance at the rate of 2 per cent of their annual volume of receipts earned from the sale of goods (works or services).
In Uzbekistan, much prominence is given to the development of crafts and applied arts, whose output generates a constant interest in foreign and domestic tourists. In this connection, on March 28, 2005, the President of the Republic of Uzbekistan has issued the Decree, “On measures to further develop folk crafts and applied arts”. The document envisages to extend, till April 2008, the validity of tax incentives and privileges granted to legal entities and individuals alike, involved in this sector. Issued with a view to stimulating the development of folk crafts and applied arts, creating an favorable environment for their efficient creative activity and attracting more citizens to the sector, the Presidential Decree covers the following directions: production of souvenirs, wood, stone and bone carving, ceramics, production of goods from metals (including precious ones), tin-plate, wood, glass, porcelain, leather and fabrics; production of musical instruments, gold embroidery, miniature, toys, footwear etc. The improvement of the quality, range and volume of craft goods that has become possible thanks to this Presidential Decree will, undoubtedly, lead to an increase in their sales volumes.
FOREIGN EXCHANGE PROCEDURES INTENDED FOR THE TOURIST SECTOR. Broaching the aspect that is bound up with the transaction of foreign exchange operations, it should be noted that the following rights granted to physical persons are essential for the Uzbek tourism system:
· to possess currency values, imported, transferred or sent to the Republic of Uzbekistan, or those earned or acquired in the Republic of Uzbekistan;
· to open foreign exchange accounts and deposits in authorized banks and their branches;
· to effect international money transfers, with and without the opening of bank accounts;
· to transfer, import and send to the Republic of Uzbekistan, as well as to transfer, export and send from the Republic of Uzbekistan of currency values in accordance with a procedure established in the law;
· to use currency values independently as specified in Uzbek law;
· to enjoy other rights in keeping with the legislation of the Republic of Uzbekistan.
· At the same time, the purchase and sale of foreign exchange may be carried out:
· by legal entities – through authorized banks;
· by physical persons – through authorized banks, their branches and exchange offices.
All these processes were reflected in a given period of development of the home market for banking and financial services in different ways. One can easily trace this with the help of government documents approved in the period under review. Experts observed that the January 21. 1994 Presidential Decree, “On measures to further intensify economic reforms, to ensure the protection of private property and to develop entrepreneurship” had a special role to play in the tourist industry of Uzbekistan. In a move to boost the development of the home foreign exchange market and to raise the level of efficiency, with which cash currency resources are used, the document commissioned the National Bank for Foreign Economic Activity of Uzbekistan to accomplish the following:
· to create all conditions nationwide for individuals to open accounts in foreign currency, with appropriate interest being paid on such accounts in accordance the norms accepted in international banking practices;
· to step up the issuance of debit and credit cards, Visa International, as well as to ensure their servicing both within and outside the Republic of Uzbekistan;
· to ensure the centralized servicing of banking operations in cash foreign currency, using a system of its own correspondent accounts. To remove limitations on the import and export by citizens of the Republic of Uzbekistan and foreigners alike of foreign currency and banknotes of the CIS member states, with the exception of provisions that are at variance with the national legislation.
According to experts’ estimates, all these measures will allow to somewhat ease certain tension in the exchange market for domestic and foreign tourists. Later on, the Central Bank of the Republic of Uzbekistan , in its Letter No 1316/840 as of April 15, 1994, informed that “for the future, local exchange offices will buy freely convertible currency, Russian rubles and other national currencies of the former Soviet republics at the exchange rate fixed by the Central Bank of the Republic of Uzbekistan.” It should be mentioned here that foreign currency funds are sold at the rate of exchange that is 10 per cent higher than that at which foreign currency is bought.
In the period under review, freely convertible currency was sold only to persons going abroad on business and only on conditions that they have foreign passports with a valid visa. At the same time, those going on an official journey were allowed to buy foreign currency right from the bank to the tune of no more than US $500. The amount of Russian rubles that might be bought by each person upon presentation of traveling and some other documents didn’t exceed 150,000. When transacting foreign exchange operations, a special seal was attached to the traveling documents to certify the fact that Soum-coupons were exchanged for Russian rubles. However, in 1995, the Government of Uzbekistan deemed it expedient to abolish, since July 1, the provision, under which the fact of exchange should not be indicated in the passport of an Uzbek citizen or a residence permit, by affixing the seal.
In keeping with the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On measures to precipitate the putting into circulation of the Visa debit and credit cards” dated April 25, 1994, the country started servicing Visa cards issued by foreign banks. On June 14, 1994, the National Bank for Foreign Economic Activity of the Republic of Uzbekistan issued and put into circulation Visa cards on the country’s territory and abroad.
It was stipulated that in order to prevent the import of false foreign banknotes, domestic enterprises and organizations, under all types of ownership, as well as individuals had to use Visa cards when paying and settling their accounts in foreign currency. The ministries, state committees, concerns, associations, banks, enterprises and commercial organizations were commissioned to ensure the transition to the cashless system of business trip-related expenditures. Those going abroad on a permanent basis had to use Visa cards emitted by the National Bank for Foreign Economic Activity of the Republic of Uzbekistan. Without doubt, the introduction of such a system of mutual account settlement facilitated the development of tourism.
The March 20, 1998 Presidential Decree No ÓÏ- 1979 charged the State Customs Committee of the Republic of Uzbekistan, with the assistance of the Uzbekistan Khavo Yullary National Air Company, with establishing a simplified procedure for registration of customs documents and control over the import and export of cash foreign currency by non-residents of the Republic of Uzbekistan transiting the country’s territory by air.
In addition, the document specified a range of cases where cash foreign currency might be accepted in settlement for goods and services in Uzbekistan. These include:
· when goods (works or services) are exported by small and medium-sized enterprises;
· when tourist services are rendered to individuals – non-residents of the Republic of Uzbekistan, as well as when passengers are conveyed by air and rail transport.
According to the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On the introduction of amendments and supplements into the Regulations on the procedure for receipt of foreign currency as payment for goods and services on the territory of the Republic of Uzbekistan”, the services rendered by domestic enterprises to foreign tourists for cash foreign exchange included:
· stay in hotels and tourist complexes (including all additional hotel services);
· transport services;
· excursion services.
It should be noted that later on, when the economic situation in the country changed for the better, this document was abolished.
STATE AND PUBLIC BODIES OF TOURISM ADMINISTRATION. One of the first steps taken by the Uzbek Government was the establishment of a single body designed to control and to implement the state policy in the tourist sector. This step made it possible to concentrate the industry’s resources and efforts on the resolution of economic, social, organizational and legal problems arising in the sector in the course of its development. In the first years of its operation, it was a monopolistic structure. Later on, commercial activity was excluded from a list of Uzbektourism’s basic functions, whereupon the National Tourist Company could direct its efforts at coordinating the performance of all sector participants. Mush attention was devoted to the development of servicing standards, as well as licensing and certification procedures. In length of time, several non-governmental organizations joined the process, thereby creating a professional environment for the tourist business, entrenching the confidence of domestic entrepreneurs in the sector’s administrative system. Another fact worth mentioning is that the Republic’s NGOs became increasingly involved in making decisions that were crucial for the Uzbek tourist industry as a whole.
The National Tourist Administration was set up in accordance with the Presidential Decree No ÓÏ- 447, “On the establishment of the Uzbektourism National Company” dated July 27, 1992. The February 15, 1993 Resolution of the Cabinet of Ministers of the Republic of Uzbekistan No 82 approved its charter, which specified Uzbektourism as and economic organization, which is authorized to perform state administrative functions and to carry out foreign economic activity. The main tasks to be addressed by the company were outlined as follows:
· to implement a unified policy in the tourist sector, including the development of infrastructure based on the national concept of priority directions;
· to carry out all types of foreign and regional tourism, to raise the quality of tourist services up to the level of internationally accepted standards and to significantly increase the sector’s contribution to the state budget;
· to create legal, economic and organizational frameworks and pre-requisites for the development of all types of tourism;
· to develop a network of hotels, campings, tourist centers and holiday homes across Uzbekistan;
· to attract overseas credits and investments needed to set up joint venture enterprises, to elaborate long-term programs of cooperation with foreign countries and the CIS member states, as well as with different companies and firms, both domestic and overseas;
· to establish and maintain bilateral international relations with foreign countries and the CIS members in the field of tourism;
· to coordinate and regulate activities carried out by ministries, departments, public organizations, small enterprises, private firms and foreign companies, associated with the reception, transportation and servicing of tourists, as well as to preserve the historical, natural and ecological diversity of the Republic’s regions;
· to ensure the rational exploitation of tourist centers countrywide, as well as to effect control over the performance of local tourist enterprises, foundation of new and re-organization of operational companies;
· to popularize the historical and cultural heritage of Uzbekistan, as well as a wide range of opportunities afforded by the domestic tourist industry, including through its own representative offices and bureaus abroad and the CIS;
· to restore historical and architectural monuments covered by a variety of tour and excursion programs;
· to create and use reserve, insurance funds, including those associated with insurance of tourists in keeping with international principles;
· to develop and implement personnel-related programs and to organize a system of continuous staff training for the nation’s tourist infrastructure;
· to represent the interests and to protect the rights of enterprises and organizations specializing in tourist and excursion activities, in legislative bodies, court, arbitration tribunal and the Office of Public Prosecutor, both abroad and in the CIS.
Since its inception, the Uzbektourism National Company incorporated 37 organizations, of which 18 were state-run operators, 22 – joint-stock enterprises, 3 – joint ventures, 30 – collectively-owned structures, 2 leased facilities and 20 limited liability societies. Additionally, the Association of Private Tourist Operators was also part of Uzbektourism at the time.
On September 25, 1996, the Cabinet of Ministers of the Republic of Uzbekistan issued a resolution on the creation at the Ministry of Foreign Affairs of the Directorate of International Cooperation in Culture, Science and Tourism. This new structure was tasked with developing and coordinating international linkages between the Republic’s ministries and departments and foreign countries and international organizations in the areas of culture, science and tourism.
A corporate professional non-governmental organization appeared in the Republic a few years after the establishment of the Uzbektourism National Company. It was designed to reflect the interests of the tourist business, as well as to provide active assistance to the Government in running the tourist industry on behalf of private firms. In 1998, several tour operators, including AO Sairam Tourism, OOO Sogda Tour, OOO Dolores Tour, OOO Orient Star Hotel, FE Sitara International, JV Movaro-Un-Nahr etc., initiated the creation of the Association of Private Tourist Organizations of Uzbekistan. Their initiative was backed up by the Government. In its August 8, 1998 Resolution , “On the improvement of organization of activities carried out by tourist agencies”, the Cabinet of Ministers of the Republic of Uzbekistan obliged the Uzbektourism National Company to render methodical and legal assistance to the Association in addressing the issues that surround the organization of efficient activity in the home tourist sector, marketing, training and re-training of personnel and observance of laws governing the tourist activity.
In 2005, the Association of Private Tourist Organizations of Uzbekistan numbers some 60 members, which were granted the following privileges in different periods:
· a 10 per cent discount on accommodation of tourists in all hotels across the Republic (this privilege was in effect till the year 2000);
· free extension of the licence to carry out tourist activities (this privilege was in effect in the period 2000 to 2002);
· a 10 per cent discount on the price of air tickets for groups of 10 and more tourists on the domestic air lines serviced by the Uzbekiston Khavo Yullary National Air Company (this privilege was in effect in the period 2002-2003);
· a 10 per cent discount on the price of railway tickets for groups of 10 and more tourists on the domestic routes;
· a 25 per cent discount on the cost of participation in the Tashkent International Tourist Fair TITF;
· a 25 per cent discount on the cost of training within the Uzbektourism’s system (including attestation of guides, tour operators and hotel personnel; a range of seminars and courses, including refresher courses, which are considered to be obligatory for all tourist organizations operating in Uzbekistan.
MACROECONOMIC FUNCTIONING OF TOURISM. Formal procedures used to effect economic calculations play a special role in the macroeconomic assessment of tourist activity. Regulations on the record-keeping of exports (imports) of goods (Form No 22-RER)” approved by the State Committee on Forecasts and Statistics of the Republic of Uzbekistan in its October 14, 1995 Resolution No 27, were designed to govern the foreign economic activity carried out by domestic enterprises, which enjoyed the right to independently conclude contracts and sign agreements.
The situation the field of export-import of tourist services has always been of pre-eminent concern to the Uzbek Government. For instance, export is defined as expenditure spent by visitors arriving in a country other than the country of their permanent residence, for the purposes of rest, business etc. Export includes payment for tours, provision of services to foreign tourists in a country of stay and accommodation in hotels and other tourist facilities, as well as receipts derived from the sale of souvenirs and international freightage. Receipts earned by hotels comprise payment for rooms, meals and other associated services; receipts derived by restaurants, bars and night clubs, as well as payment for the organization of conferences and banquets, provision of means of transport, sale of theatre tickets, souvenirs and other services. Import in the tourist sector is specified as the amount of consumer expenses associated with the departure of a country’s citizen abroad for different purposes, whose term of stay there doesn’t exceed one year. These indicators also include expenses relating to the preparation for a trip abroad, the execution of the trip itself and associated expenditures spent by the citizen in a foreign point of destination and in the native country on his return.
Services that bear directly on infrastructure of the tourist industry are also worthy of note here. In particular, one should mention transport services, which, in turn, encompass both freightage and passenger conveyance by all means of transport.
Communication services include two major categories of international communication operations: telecommunications covering the transmission of sound, image and other information by telephone, telex, cable, satellite broadcast, e-mail etc., as well as postal and courier services.
Insurance services comprise insurance of life, goods (both exports and imports), transport company etc. All data on insurance operations are furnished by underwriters engaged in insurance operations with the country’s residents.
Financial services include commission and duties charged for accreditation, crediting, leasing, exchange operations and operations in traveling cheques, as well as services associated with the provision of consumer and commercial credits, brokerage operations, issuance of bonds etc.
FORECASTS OF TOURISM DEVELOPMENT IN UZBEKISTAN. The Republic of Uzbekistan occupies the central part of the Great Silk Road, with its ancient cities of Samarkand, Bukhara and Khiva being the real pearls on this centuries-old transport route known all over the world. They continue to inspire the same amazement that travelers might have felt many centuries ago when visiting them. Uzbekistan has much to offer foreign and domestic tourists, who are fond of traveling. To succeed in today’s highly diversified tourist business, the national tourist administration should focus on creating and promoting the country’s image as an attractive tourist destination in the world market for tourist services. It is high time to combine efforts of all tour operators and tourist agencies of Uzbekistan, regardless of their type of ownership, in showing a wide variety of national tourist products to full advantage. By uniting the merits and exotics of our ancient cities with romanticism of the Great Silk Road, whose rebirth is presently in process, on the one hand, and pragmatism of a market-oriented economy, a single national tourist brand could be created to the benefit of the Republic’s tourist industry. Statistical data give every reason to single out tourism as an independent sector, with an entire technological cycle of production, distribution, sale and consumption of tourist products and services. At a time when the latter’s nature and content are undergoing a radical transformation in response to global changes, the tourist industry should re-orient itself towards a completely new direction that is fully consistent with the standards and norms of international tourism. This will enable the national tourist sector to develop at a sustainable pace, while keeping abreast with the times.
To ensure the prosperity of Uzbek tourism, the National Tourism Administration should exert every effort in a move to overcome fragmentation of the domestic market for tourist services. As well as that, measures should be taken to learn how to show the country’s unique tourist products to full advantage. The services of all sorts of specialists, including journalists, artists, designers, brand-makers and advertising experts, should be enlisted to achieve this goal. The work in this direction may take a variety of forms, such as training seminars, national contests etc. In addition to the step-by-step implementation of all these measures, comprehensive marketing research should be conducted, which is aimed at identifying ways and means to attract to the Republic as many tourists as possible, and to develop a modern system of tourist infrastructure facilities, including comfortable motor roads and ramified communication networks.
Among other measures that may lead to the achievement of a tangible success in the development of tourism in Uzbekistan is the simplification of entry and departure procedures, as well as the legislation regulating tourist activity in the country. Besides, more specialists of high caliber should work in the national tourist sector. Knowing all the peculiarities of national tourist products as a book, they should be able to accurately assess the available resources and to fashion, on the basis of such an assessment, an efficient strategy of their rational use.
In addition to the creation of new jobs, generation of foreign exchange receipts, introduction of new technologies and modernization of public utilities, tourism contributes to the development of the nation’s foreign economic linkages, attraction of overseas investments to the Republic’s economy, as well as to improvement of relations between the countries.
UZBEKISTAN’S INTERNATIONAL COOPERATION IN THE FIELD OF TOURISM. There is no doubt that the tourist industry can hardly develop without involving international-level formalities. Bilateral agreements signed by the Republic of Uzbekistan with foreign countries constitute one of such formalities. Moreover, these agreements not only make up a regulatory and legal framework for entry and departure procedures, but also form the basis of activity carried out by tourist organizations, strengthen partner links and promote the national tourist product to the world marketplace.
China was one of the first states which offered Tashkent to build contacts in the tourist sector. On March 13, 1992, the two countries signed an international agreement on cooperation in culture, education, healthcare, tourism and sport. According to this document, “the sides agree to accelerate and encourage the development of cooperation and exchange of experience in fields such as culture, arts, education, public health, tourism and sport through corresponding organizations operating in both countries on the basis of the principles of equality and mutual benefit”, as well as “to stimulate the development and solidification of linkages between sporting and tourist organizations”.
In 1995, the Uzbek-Indonesian Intergovernmental Memorandum on cooperation in tourism came into effect. The document was designed to address the following objectives:
to augment the number of tourist trains running to both countries from other states through the territory of the Republic of Uzbekistan and/or the Republic of Indonesia;
to stimulate tourist trips to different tourist destinations and sights of both countries;
to encourage visits by Uzbek and Indonesian citizens and permanent inhabitants to both countries;
to back progress in the development of tourist business in Uzbekistan and Indonesia.
Signed in 1994, the Uzbek-Greece intergovernmental agreement stipulated the achievement of the following purposes: “to facilitate an increase in tourist flows in both directions be developing close cooperation between firms and organizations, which specialize in the development of tourist business in Uzbekistan and Greece”. In addition, the document planned to encourage, within the framework of national legislations and on the bilateral basis, the dissemination of tourist editions and advertising materials in Uzbekistan and Greece, including audio and video materials. This Agreement contains references to the additional Protocol to the June 4, 1954 New York Convention on the importation of information documents and materials needed for publication purposes, as well as to the corresponding legislation of the European Union. The latter provides fro exemption of such materials, including those intended for tourist exhibitions, and tourist films designed to promote tourism, from customs duties and import taxes.
Another document – the Agreement on unrestricted freedom to travel signed between the Governments of the Republic of Uzbekistan and Germany on April 11, 1995, deserves mentioning in this context. Under this document and in accordance with Article 26 of the Vienna Convention on Diplomatic Relations, one signatory should ensure that all employees of another signatory’s diplomatic missions enjoy unrestricted freedom to travel on its territory. At the same time, no advance permission or notification of such trips is required. The document, however, contains restrictions imposed on visits to certain organizations or military bases, as well as to other places, where unauthorized persons are not admitted for homeland security reasons.
It should be mentioned in this connection that the document stipulates for the issue of appropriate permits to stay on other signatory’s territory “for other citizens of the Republic of Uzbekistan and Germany, including representatives of political organizations, specialists sent on an official trip to cultural institutions, persons working in the areas of science, culture or education or within the framework of technical cooperation, as well as representatives of public or trade union organizations, businessmen, experts, scholars and other scientific specialists, employees from organizations involved in provision of humanitarian aid, journalists and tourists, residing or traveling on the territory of another signatory”.
Within the framework of an agreement on cooperation in the sphere of tourism signed between the Republic of Uzbekistan and Ukraine in 1995, it was stated that the countries intended “to favor the development and strengthening of business cooperation between organizations specializing in tourism, with a view to acquainting corresponding authorities and citizens from both countries with the experience both states amassed in the course of their socio-economic, scientific and cultural development, as well as with historical and architectural monuments , tourist and natural attractions, cultural and historic traditions of their nations”. To this end, the sides decided to facilitate, in any possible way, the opening of tourist agencies’ representative offices and information and service centers in Uzbekistan and Ukraine. As it was pointed out in the agreement, “prior to the establishment of information and service centers on the territory of one of the signatories, another signatory renders assistance in the reception and servicing of its tourists.”
One also needs to emphasize a growing role of legal regulations in entrenching tourist relations between the Republic of Uzbekistan and the CIS member states. A memorandum on cooperation in the field of tourism signed between Uzbekistan and Georgia in 1995 was subsequently transformed into an agreement signed in 1997, which significantly raised the tourist business’ status in the development of people’s diplomacy. As for the Uzbek-Pakistani Agreement on cooperation in the areas of culture, healthcare, science, technique, personnel training, sport and mass media, signed in Tashkent on June 27, 1992, it developed into a separate document on cooperation in the sphere of tourism that was signed on May 22, 1995.
The July 9, 1995 Agreement on simplification of visa registration procedures signed between the Republic of Uzbekistan and Turkey contained the following provisions:
to inform, within 3 working days, about the results of consideration of visa applications submitted by diplomatic, administrative and technical employees of their embassies and members of their families to diplomatic and consular missions of both states;
to inform, no later than 5 working days, about the results of consideration of visa applications submitted by deputy ministers, members of governmental delegations and commissions, members of chambers of trade and industry, entrepreneurs, employees of banks and organizations, members of sports competitions and participants in cultural, festival and concert programs;
to inform, no later than 7 working days, about the results of consideration of applications requesting entry visas for a term not exceeding 30 days, as well as transit visas for a term not exceeding 15 days;
to inform about the results of consideration of visa applications submitted by visitors arriving on the invitation of public organizations for a period exceeding 30 days – within 5 working days, and by visitors invited by private organizations fro a period exceeding 30 days – at the earliest possible date.
Visas to those arriving to both signatories to work or study, as well as visas valid for several occasions will be considered separately and issued only in case of expediency. Annual visas valid for several occasions will be issued to aircraft crews and drivers of trucks and buses, who work in organizations involved in international communication, at the earliest possible date.
The number of multilateral contacts in the sphere of tourism shows a healthy upward trend. In 2000, Uzbekistan, Kirgizstan, Tajikistan and Kazakhstan signed a joint document, which is vital to the expansion of cooperation in the development of sanatoria, health centers, resorts, tourist organizations and agencies, in a move to create the most auspicious conditions for the citizens of these states arriving to improve their health, to familiarize themselves with culture, nature, sights, historical monuments and national traditions of these neighboring countries”. The Agreement also helps organizations and enterprises to set up joint ventures and to implement investment projects in the area of tourism, recreation and provision of facilities in sanatoria and health resorts.
Cooperation in this sphere envisages the exchange of citizens on the principles of equality and mutual advantage. The signatories to this Agreement will, therefore, realize measures designed to simplify customs procedures, to exchange the lists of tourist firms, sanatoria and health resorts functioning on their territories, to facilitate the exchange of experience gathered in the field of organization and running of rest and recreation facilities, cooperation between sanatoria, rest houses, health resorts, children’s health-improvement centers and tourist organizations. Particular attention is paid to the dissemination of information by publishing advertising materials, exchanging relevant data, periodicals, films and exhibitions, as well as by conducting a variety of symposia and seminars.
Efforts are made to establish cooperative links between departments. In the tear 2000, the Uzbektourism National Company and Italy’s Association of Tour Operators (Assoziazione Tour Operator Italiani – ASTOI) signed an agreement, where the sides confirmed the necessity to make for a mutual increase in the volume of tourist flows in both directions by encouraging cooperation between enterprises and organizations under all types of ownership, which specialize in tourism, and by creating appropriate conditions that are essential for developing this sector at a fast clip. The sides intend top to disseminate tourist information by different means, including the exchange of periodicals, specialist editions and films, as well as to organize conferences, symposia and seminars of every description, Beyond this, the signatories will study the opportunities for expanding bilateral cooperation:
in the field of tourism – between enterprises and organizations involved in construction, outfitting and management of hotels and other tourist installations, since they are regarded as the key aspect in the development of tourism in both countries;
in the field of investments to the tourist sector – the sides will exchange experience and consult together on various issues, including privileges granted to investors under both countries’ laws and great opportunities for investment that exist in Uzbekistan and Italy;
in the field of education and training of personnel for the tourist business.
In 2000, the Governments of the Republic of Uzbekistan and the Russian Federation signed an agreement regulating the issues of reciprocal visits by their citizens. In particular, Article 1 of this document stated that “citizens of one of the sides may enter, depart, transit, move and stay on the territory of another side without appropriate visas, only upon presentation of one of the documents designed to prove the identity and certify citizenship of their holders. Citizens of the signatories, who reside in third countries, may enter, depart, move, stay and transit through the signatories’ territories without any visas”. Article 5 of the Agreement regulates a range of issues, surrounding the stay on the territory of one of the signatories: “Citizens of one of the sides, when staying on the territory of another side, should observe its laws and rules, including those regulating the stay in this country.” In cases where they infringe thee rules, they are subject to deportation to the country of their citizenship or permanent residence as required under the law. In addition, the Governments retain the right to introduce certain restrictions on visa-free entry, departure, stay, movement and transit of Russian citizens, on condition that diplomatic channels are informed 72 hours prior to their introduction, with a view to ensuring homeland security, public order and health of their citizens.
The April 24, 2001 Resolution of the Cabinet of Ministers of the Republic of Uzbekistan, “On measures to intensify economic and trade cooperation with the Federal Republic of Germany” stipulated the signing of several documents, includi8ng those in the field of tourism. The Uzbektourism National Company planned to sign agreements, contracts and memoranda of intentions with the following organizations:
Germany’s Association of Tour Operators – on cooperation aimed at ensuring the exchange of tourists;
The Turingia Entrepreneurs’ Union in Central Asia – on cooperation in the field of tourism, designed to ensure the exchange of tourists, as well as on the application of advanced experience to the development of tourist infrastructure;
Hanzer Excursion International GmbH – on the exchange of tourists;
IVS Bau-Konsal GmbH – on reconstruction of Bukhara Hotel (development of a joint action plan, preparation of a business-plan, determination of sources of funding etc.).
In 2002, the Republic of Uzbekistan and Iran signed the memorandum on simplification of visa registration procedures for drivers of motor vehicles. According to this document, diplomatic and consular missions of the two countries issue entry-departure visas valid for several occasions for a term not exceeding 3 months (with the right to stay on their territories within up to 20 days) to drivers involved in international road freightage. Such visas should be issued within 5 working days from the date of receipt of an appropriate application. To obtain a transit visa, the drivers should present all the documents stipulated in the national legislation of both countries. What’s more, the signatories undertake to issue transit visas to drivers of trucks transiting through their territories, within 3 working days. At the same time, the signatories may refuse an entry visa or limit the term of stay for citizens, whose presence on their territories is undesirable.
In the course of 2003, the Republic of Uzbekistan simplified a procedure for registering entry visas for a number of European states. This unilateral measure has boosted the inflow of tourists from countries, such as the UK, Belgium, Switzerland, Italy, Spain and Austria.
In 2003, within the framework of note exchange between the Republic of Uzbekistan and Romania, the two countries signed an intergovernmental agreement, which released the holders of diplomatic passports from registration of visas for entry and stay on their territories during a period not exceeding 90 days from the date of entry. In the event their stay exceeds the indicated term, appropriate visas should be obtained in advance. However, if they perform official duties as diplomatic personnel, they may enter and stay in both countries within the entire period of their work without any visas required. This rule also applies to their family members. The same norm is specified in the 1997 Uzbek-Slovak Intergovernmental Agreement, “On visa-free trips of citizens – holders of diplomatic and official passports”. It was specified in the document that the citizens of one of the signatories must comply with the laws and rules of another signatory when staying on its territory, including the procedures for registration, stay and movement prescribed for foreigners”. The Uzbek-Hungarian Agreement, “On the procedure for visa-free trips of citizens with diplomatic passports” dated October 30, 1997, specifies that “the period , during which citizens from both countries may stay on their territories without any visas should not exceed 30 days from the date of entry”. However, at the written request of a diplomatic or consular mission of the signatory, whose citizens are solicited for, another signatory’s Ministry of Foreign Affairs may extend the term of stay up to 90 days.
It seems directly relevant to cite the example of Uzbek-American cooperation in the introduction of a passport system. Within the framework of note exchange between the Republic of Uzbekistan and the US, the countries signed an appropriate agreement, which stated that “the persons applying for non-immigrant visas should be refused the right of entry to the US, if at the date of application for such an entry visa, he (she) lacks a passport valid for a period of six months at the minimum, which allows its holder to return to the country, from which he (she) arrived, or moved to a third country”. This requirement is an outgrowth of policy pursued by the US Government, which permits most individuals entering the country with non-immigration visas on hand, to stay on its territory within 6 months. Governments of many countries have signed agreements with the US Government on the extended period of passport validity. Such a passport is recognized as valid for its holder’s return to the country, where the document was issued, within 6 months after the expiry of the latter’s period of validity. This provision makes it possible to issue an US non-immigration visa to its holder at any time during the entire period of the passport’s validity.
A word or two should be said about peculiarities of international collaboration on tourist projects and programs. During the official visit by the President V. Klaus of the Czech Republic to Uzbekistan on September 12-15, 2004, the sides talked over a a whole spectrum of issues surrounding the expansion of bilateral cooperation in political, trade-economic and cultural-humanitarian areas, including tourism. Following the visit, the Uzbek Government passed the Resolution, “On measures to further develop cooperation with the Czech Republic”, which commissioned the Uzbektourism National Company to set up a working group specializing in the development of tourism in this country, establishment of joint venture tourist agencies and training of personnel for this sector.