Uzbekistan to restrict consumer goods imports

By bne IntelliNews February 19, 2013

bne -

The Uzbek government is planning to introduce new restrictions on imports of consumer goods, local press reports revealed on February 18. While Tashkent is presenting the move as an anti-smuggling initiative, it looks more likely that the authorities are starting to panic over the country's growing deficit of hard currency.

A resolution signed by President Islam Karimov lists the new measures, which Tashkent says are intended to increase the competitiveness of local products, and combat smuggling of consumer goods. The move follows the introduction of strict new currency controls in February 2013.

The State Customs Committee has been instructed to review the list of imported consumer goods and by March 1 submit a proposal to the Cabinet Ministry for a "sharp reduction" in the volume of goods to be imported, Uzreport writes.

The State Customs Committee, State Tax Committee and other ministries and agencies have also been asked to expand the list of consumer goods that must carry special control identification signs.

From April 1, companies importing goods to Uzbekistan, or using the country as a transit route, will have to submit additional information about the goods they are transporting. From July 1 all food, personal care and other consumer products that have been approved for import will have to carry labeling in the Uzbek language that is stamped by the manufacturer.

The State Customs Committee has also been ordered to step up its efforts to prevent smuggling and the import of counterfeit goods, by introducing stricter examinations of goods brought into the country by road and rail.

The new regulations follow in the wake of new currency controls. On February 1, Tashkent banned the sale of foreign currency cash to Uzbek citizens, with the State Tax Committee warning that trading in foreign currency is now a criminal offence.

The move was announced as part of Tashkent's ongoing attempt to maintain the country's isolation from fluctuations in global markets, and to address the foreign currency deficit. It also resulted in dramatic fluctuations of the soum in the days following the ban, and mass unemployment of former bureau de change workers.

Since the 1990s, Uzbekistan has maintained a strict currency control regime. A fall in exports of gold, one of the country's main export commodities, alongside gas and cotton in late 2012, raised fears that hard currency shortages could worsen in 2013, and is the most likely cause of the introduction of tighter controls.

Currency convertibility is one of the major bugbears for the handful of foreign investors operating in the country. The central bank keeps the exchange rate artificially low, which has created a thriving currency black market which features exchange rates around 35% higher than the official rate. The latest Transition Report from the European Bank for Reconstruction and Development issued in November, warned there has been "no progress" in eliminating distortions in Uzbekistan's foreign exchange market.

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