08/July/2020 Growth point
Interview with the founder of the company BMB TRADE GROUP Mr. Bekzod Mamatkulov.
As an economist and a lawyer Bekzod Akmalovich Mamatkulov has 16 years of experience in government and public institutions. He has been Chairman of the Supervisory Board of the investment and consulting company BMB Trade Group since 2017. In a short period of time, the company has implemented a number of promising projects in cultivation and processing of the agricultural products. Those initiatives have resulted in a number of major export and investment projects through the import of advanced technology, modern tools and equipment from Russia, China, USA and Italy. Bekzod Mamatkulov is an entrepreneur with a vision for economic diplomacy of the new Uzbekistan, as well as the development of mutually beneficial relations in an international arena.
- First of all, we would like to thank you for accepting the invitation. The BMB TRADE GROUP operates effectively in creating modern agro-industrial clusters, the development of international business and trade relations, attracting foreign investment, innovative technologies. Let's start with talking about the history of the company, the factors that led to its creation and the initial steps taken towards the goals.
- The idea to establish our company emerged in late 2016, in the period of radical reforms launched in all spheres of the country. These reforms included new opportunities for entrepreneurs, state guarantees, liberalization of market relations, protection of the rights and interests of entrepreneurs, digitalization of registration and documentation, openness of government agencies to communication, public control over them and an uncompromising fight against corruption.
In short, deep and consistent reforms and positive changes which are taking place in the country have had a positive impact to the activities of national and foreign entrepreneurs. The increasing number of investors has shown the need to open a company that will provide them with consulting services. As a result of reforms in the new Uzbekistan, the BMB TRADE GROUP was established in April 2017.
We leased about 1,100 hectares of arable land in Arnasay district of Jizzakh region. We have cultivated the land by eliminating its salinity and created several hundred permanent jobs in a short period of time at our own expense. Nowadays, beans and other legumes, cotton, wheat, rice, sunflower, garlic, onions and other melons are being harvested for domestic market. In the next stage the products will be exported to Kazakhstan, Russia, China, Afghanistan, Qatar and other countries. This year we have launched an uninterrupted supply of local fruits and vegetables to major Russian trade networks with the support of the Embassy of the Republic of Uzbekistan in Russia and the Consulate General in Yekaterinburg. We have started to implement major investment projects in 2018, such as cotton cluster in Jizzakh region, which was financially invested by the United States. As a result of the joint venture SILVERLEAFE BMB AGRO TRADE GROUP with SILVERLEAFE INTERNATIONAL, an agreement worth $344 million was signed. Today this modern cotton cluster operates effectively.
Our second project is the establishment of the Research and Production Center for the Development of Tea Production with the Chinese company BAY TEA GROUP in Uzbekistan. In 2019-2020 our company implemented two more major investment projects. In particular, the Uzbek-Russian joint venture BMB-NRC AGROLOGISTICS was established in cooperation with the Russian NATIONAL RESERVE CORPORATION to develop and implement a project for building a modern agro-logistics center in Sharof Rashidov district of Jizzakh region. The main goal of the project is to provide storage, processing, calibration, sorting, quality control laboratory, freezing and packaging services for agricultural products grown in the district, as well as in Jizzakh and other regions of the country. The estimated cost of this investment project is $57.7 million. The agro-logistics complex will have laboratories accredited by Rosselkhoznadzor agency of the Russian Federation, which will issue certificates for the tested products. This will allow delivering products to the Russian market without restrictions at the border control and customs. In other words, the Uzbek exporters are taking advantage of opportunities to carry out guaranteed exports by drawing up official documents submitted by competent and official bodies of the Russian Federation directly in the Agrologistics Complex. This will serve to further expand the Uzbek-Russian trade and economic ties and the export of our local products to Russian markets.
Another promising project is with the Italian company OPERA SRL for cultivation and processing of saffron in Bakhmal district of Jizzakh region and exporting it to the European markets. It should be noted that with this project we intend to create about 2,000 permanent and more than 5,000 seasonal jobs.
The Ministry of Foreign Affairs of the Republic of Uzbekistan, Ministry of Investments and Foreign Trade of the Republic of Uzbekistan, Ministry of Agriculture of the Republic of Uzbekistan, our diplomatic missions abroad and the Chamber of Commerce and Industry have made a significant contribution to the effective implementation of these projects.
- You have mentioned that the company is actively implementing investment projects at the international and national levels. It is no secret that it was difficult to attract private investment to the country a few years ago. As the head of a company with experience in working with more than 200 foreign partners, how would you respond if you were asked to compare changes in the investment policy of the previous and new Uzbekistan?
- For a long time, there were a number of unresolved issues in business as the currency conversion, free distribution of income, and attraction of funds from international financial institutions. All this had negatively affected the image of our country and the attractiveness of investments. However, in recent years, the situation has changed radically. The consistent reforms have been carried out, monetary policy has been liberalized, and comfortable conditions were created for the investment inflow. Most importantly, it was determined that reforms should serve the cause of improving the lives of the people. The result is that today the number of entrepreneurs willing to invest in our country is growing. For example, our company implements the investment projects worth about $500 million. This resulted in opportunity for investors led by the initiative of the head of our state, the support and contribution of government and non-government organizations.
- Uzbekistan has a huge potential for the production and export of a wide range of agricultural products. However, sometimes we hear that some of the accumulated problems do not allow to take full advantage of all possibilities. As a major exporter, can you tell us what aspects of agricultural entities should pay close attention to in order to bring their products to international markets? What are the aspects we need to pay attention to today in order to master international standards, study the market and enter into a decent competition?
- A number of measures are being taken by the government in order to support exporters. For example, up to 50% from the transportation cost is covered by the state and the practice of covering a certain part of the funds spent on certificates was introduced. Despite these facts about 15% of our country’s agricultural products are exported.
We all know some of our products are already being exported to the Russian and Kazakhstan markets. The main reasons for that are the initial establishment of trade and economic relations with Russia and lack of problems with logistics.
However, the European, Middle Eastern and Chinese standards are different from Russian requirements. Export of fresh fruits to these countries can cause some problems and difficulties. That’s the reasons, why export of dried fruits and vegetable is more favorable.
Although agricultural goods produced in our country are competitive in the world with their deliciousness and richness of useful minerals, they do not fully comply with the requirements of the European market. Since, in most cases farmers without realizing this use the mineral fertilizers which are prohibited in European countries.
Based on the work we are doing in order to enter the European market and on our experience let me prove my point of view. According to our marketing study, the need of European countries for dried fruits and nuts consists 11 billion euros, the need for dried vegetables makes up more than 8 billion euros. The experience of new participants in the European market such as Vietnam has shown that with the implementation of right policy it is possible to export more than 1 billion euros of products to Europe per year. In addition, as a participant in the European market in 2-3 years, it is possible to turn into a supplier of a large share of imported products.
Pursuing the similar goals, our company in cooperation with representatives of Italian and French business entities, is implementing a project covering the full period of modern technological export of fruits and vegetables: processing, drying and storage. At the first stage, the processing, drying and storage of fruits and vegetables are carried out on the basis of Italian technology. During the second stage, dried fruits are exported to France, after packaging they are released to the markets of France and the European Union. As a result the quality of the products at all stages fully complies with the European standards.
Moreover, our company is ready to provide our local suppliers with consulting services on mutually beneficial terms. I mean the penetration of products into European markets.
- We agree with your opinion. We hope that our young entrepreneurs willing to exercise export activities will take into account your recommendations. It should be noted that great work is being accomplished by our country in order to promote exports. But will we face more tasks ahead?
You are right, we have a lot of achievements to admit but the result still depends on us. Since the goal is to achieve more and more new goals, it is necessary to adapt to the modern demand and continue with a critical analysis of the activities.
Referring to the issue of export promotion in the resolution of the President of the Republic of Uzbekistan Shavkat Mirziyoyev “On measures to further support export activities” of May 7, 2020, it is established that the amount of transport costs for a number of products in exports up to 50% is covered by the state.
This, in turn, ensures the competitiveness of the net value of exported products and allows our domestic products to find their niche in foreign markets. In addition, participation in the exhibitions abroad organized by the Export Promotion Agency under the Ministry of Investments and Foreign trade of Uzbekistan, as well as a certain part of the costs incurred for the consulting services and market research, will be covered.
But it is also should be noted that in this process we must act on our own. In the European market there is a strict rule – consumer rights are of a high value therefore any product entering the country must meet all requirements – certificates of conformity and packaging, hygienic standards. Currently, a number of foreign partners are willing to invest, produce goods at the level of European standards, reprocess, pack and even provide guaranteed exports. I believe that the wide application of advanced agricultural machinery, modern equipment and tools will serve to eliminate many existing problems in this field.
It is gratifying that today we are already achieving certain results thanks to the stage-by-stage reforms. In particular, the European countries are recognizing the quality of products exported from Uzbekistan and giving their high rates.
Today, some of our products are being re-exported through Turkey because they do not have quality certificates and are entering the European markets at a much more expensive price. I think that European countries are interested in the direct supply of agricultural products grown in Uzbekistan. Meeting these European requirements should be our first goal.
- In recent years, the phrase of active economic diplomacy has become widely used. What can you say about the role of economic diplomacy in the diplomatic missions of our country abroad, in the activities of the company you are leading, in foreign economic relations, in export and import transactions, in finding potential partners?
Certainly, the economic diplomacy became a unique “driver’ of active business in our country. By the initiative of the President of our country a key role is played by the revision of the activities of the Ministry of Foreign Affairs, special attention is paid to economic diplomacy. At present, our diplomats are facing enormous tasks such as ensuring the economic development of new Uzbekistan.
Currently, the heads of our embassies and consulates in foreign countries, people who are responsible for trade and economic relations are focusing their main efforts on the development of trade and economic cooperation with foreign countries, attracting investments, creating the necessary conditions for the export of local products.
One of the examples are the business entities, investment and business forums, which are organized in such countries as Russia, Belarus, India, Pakistan, China, the United States, Italy, France, Spain, Great Britain, Poland, Turkey, Oman, Saudi Arabia, Indonesia, our diplomatic missions play a crucial role in ensuring the participation of representatives of our country in various exhibitions. They have turned into a real buttress for our entrepreneurs in effectively tackling important and complex issues, choosing worthy partners and carrying out negotiations with them.
During our business visit to the countries of Middle East, Europe, Russia and South Asia, we took an active part in such business forums and exhibitions with the help of the diplomatic missions of our country abroad. During the meetings and events with the support of representatives of our embassy, we made presentations and gave detailed information about the favorable investment climate in the new Uzbekistan, the privileges, preferences and guarantees.
It is clear from the above that the role of the diplomatic missions of Uzbekistan in the effective implementation of the company’s projects is important. They are fully exercising their economic diplomacy activities.
- The BMB TRADE GROUP works with about 40 specialists and analysts around the globe. This means that you have the opportunity to study in advance the international market and the priorities for the near future, and on this basis to work in new directions. Please, share your recommendations on the markets we may visit in the coming years, the sectors we need to present and develop.
- Thank you for relevant and interesting question. Certainly, the company will work looking on to the future. Each initiative is based on the principle of “Measure thrice before you cut once”. Speaking of our specialists, most of them are the patriotic people with many years of experience in government offices, conscientious approach to their work. Among them are the diplomats, economists, financiers, lawyers, builders, experts in agriculture, law enforcement and administration. In addition, we have the experienced overseas specialists in the field of marketing and consulting. Their strategic analysis, assessment and conclusions in determining the future are important to us.
Let’s analyze the promising markets of China, South Korea, Japan, Afghanistan, Europe and the Middle East.
In the near future, we can expect an increase in exports to Southeast Asia. This can be achieved with the opening of the China-Kyrgyzstan-Uzbekistan railway.
Through the territory of Turkmenistan, access from the Iranian port of Bandar Abbas to the markets of the Middle East (Persian Gulf) and South Asia, as well as through the Caspian Sea to European markets can be opened. In these regions, it is possible to sell our products, which are distinguished by their unique taste and quality, at high added prices.
Speaking about a promising direction for us, we should pay a special attention to the fact that the President has declared this year the Year of Science, Enlightenment and Digital Economy. On behalf of the year, we need “know-how”, the introduction of innovative technologies in agriculture, the effective cultivation of various fruits and vegetables, as well as agro-technology which will increase their productivity.
This, in turn, will stimulate further development of the production and processing of export-oriented and competitive agricultural products (grapes, cherries, peaches, melons and legumes).
It is no exaggeration to say that, all the state programs on the development of agriculture in our country until 2030, water management and innovative development are based on such analysis and ensure the future development of new Uzbekistan.
- Our conversation is going on a cup of tea, and as far as I know, it has a symbolic meaning. BMB TRADE GROUP also owns the Tea Research and Development Center and saffron projects. What are the regulations on the cultivation of medicinal plants, your promising proposals in this direction for farms and entrepreneurs?
- At present, our company is working with Italian partners on a project for cultivation, processing and export of saffron. The Uzbek-Italian joint venture BMB-OPERA ZAFFERANO received 400 hectares of land in the Bakhmal district of Jizzakh region. This joint venture became a cluster of medicinal plants on May 1 this year. The project envisages establishment of additional manufacturing enterprises in the pharmaceutical, culinary, perfumery and other industries. The entire agrotechnological work in saffron cultivation is carried out by Italian agronomists. A laboratory will be set up to issue certificates that meet international standards. We plan to harvest the first crop in October-November this year, and we want to inform the public about the results.
As for the tea production center, within the framework of this project the tea seedlings are currently being grown in Uzun district of Surkhandarya region and Navbahor district of Navoi region. In addition, a number of investors have expressed interest in growing tea and we have set big plans for ourselves. I hope that the Dunyo News Agency will be the first to know about them.
- Thank you again for taking a time to talk with us.
- Thank you. We are always ready to take a time to hold such meetings with the Dunyo News Agency of the Ministry of Foreign Affairs.
Interviewed by Ulugbek Shonazarov
“Dunyo’’ News Agency
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