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IFC Completes Legislative Work on Leasing in Uzbekistan with Adoption of Accelerated Depreciation Measures for Leasing


In Washington:
Irina Likhachova

Phone: (202) 473-1813

Email:
ilikhachova@ifc.org

In Almaty:

Rachel Freeman

Phone: +73 272 980 580

Email:
Rfreeman@ifc.org


Almaty, Kazakhstan, April 27, 2004Lease finance for Uzbekistan got a further boost thanks to Government Decree No. “On the Further Development Of Leasing “ signed by the President of Uzbekistan and issued by the Government of Uzbekistan on April 26, 2004.   With the adoption of these new measures, Uzbekistan has created additional stimulus to support its rapidly growing leasing industry.  

The new leasing measures  were developed by the Working Group on Leasing in Uzbekistan, the Ministry of Finance, and the Ministry of Justice, with support from the seco—IFC Central Asia Leasing Project.  IFC is the private sector arm of the World Bank Group and has worked in Uzbekistan since its independence.




Bakrom Asrakhanov, Deputy Minister of Finance,
 stated that the “new Uzbekistan leasing measures were the logical next step to support the acquisition of new technology through leasing.  Adopting accelerated depreciation for leased assets will give entrepreneurs greater incentive to modernize their operations and invest in their businesses. The Uzbekistan government has provided the environment for leasing development, and now expects to see financial institutions and business react positively to these measures.”  


Benefits of the Uzbekistan measures include:


       
Implementation of accelerated depreciation for tax purposes for leased assets.    Lessees can now deduct from their taxable income the full depreciation of the leased asset over the period of the lease agreement.  


       
Reduction of fees for lessors using notary writ to repossess leased assets.  The fee for using notary writ to repossess assets is now based upon the lessee’s unpaid debt to the lessor, not on the full lease agreement amount.


       
Simplification of registration procedures for leased vehicles.  Lessors or lessees can now register the leased vehicle using significantly easier procedures, and taxes on the sale of the vehicle are levied only once at the purchase of the vehicle from the supplier, not on the transfer of the vehicle to the lessee’s ownership at the end of the lease period.



Gorton De Mond Jr.,  Regional Representative IFC in Central Asia,
noted that “the adoption of these additional measures for leasing following last year’s enactment of totally new leasing legislation in Uzbekistan is a clear example of the Uzbekistan Government's commitment to creating a positive environment for leasing and increase financing opportunities for the private sector.  Commercial bank leasing grew 400% in 2003 – and I expect that due to these new measures, we should see further significant growth in the industry in 2004 ”.



Uzbekistan is currently experiencing a boom in leasing.  In 2003, over $37.5 million worth of equipment has been leased to SMEs in Uzbekistan through local financial institutions, and over $50 million worth of equipment has been leased to Uzbekistan businesses by joint venture partners and international leasing companies.   This boom is in part due to significant amendment to the Law on Leasing, Civil Code, Tax Code and Law on Customs Tariffs in December 2002 and to the Civil Litigations Code in August 2003.



The seco - IFC Leasing Project
was launched in Uzbekistan in early 2002 to increase the volumes of leasing transactions for small and medium-sized businesses. The project works closely with Uzbekistan’s parliament and government agencies to create an appropriate legislative environment for leasing. The Project additionally provides training and consulting services to local enterprises, financial institutions, and foreign investors interested in leasing. seco and IFC have also launched a public education campaign to educate private enterprises, financial institutions, and regulatory agencies about leasing.


About IFC


IFC’s mission is to promote sustainable private sector investment in developing countries to help reduce poverty and improve people's lives.  IFC fulfills its mission through financing private sector ventures in partnership with private investors and through technical assistance and advisory services to governments in partnership with donors. Established in 1956, IFC is the largest multilateral investor in emerging markets.  To date,  IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion..


IFC has long been a champion of leasing for developing and transitioning economies. IFC has advised 44 countries on leasing and has invested almost $1 billion dollars in leasing operations in 50 countries over the last 30 years.  


About SECO


Switzerland participates in the international community’s efforts to help transitional countries build stable democracies and viable market economies. Each year, Switzerland spends approximately SFr1.5 billion on development aid around the world, or about 0.34 percent of its gross national product. This is a testimony to Switzerland’s belief that long-term global security and prosperity can be achieved only by narrowing the gap between developed and transitional countries.


As for SECO, its economic development cooperation program has four main objectives: (1) to help transitional countries reach the stage of development most favorable to growth and investment; (2) to mobilize private sector resources as a means of increasing the flow of finance to the transitional countries, as well as technology transfer; (3) to improve the productive and social infrastructure; (4) to achieve greater integration of developing countries in international trade.