Uzbekistan and Finland: an economic partnership based on technology and trust

The history of Uzbek-Finnish relations goes back to the early nineties, when Finland was one of the first to recognize the independence of the Republic of Uzbekistan - this happened on December 30 1991. Just two months later, on February 26, 1992, diplomatic relations were established between the countries. It was then that a new chapter began in the history of bilateral cooperation, based on mutual respect, trust and the pursuit of technological development.

The first high-level visits, held in 1992, laid the foundation for political dialogue. During the visit, he took part in the signing ceremony of the OSCE Helsinki Final Act and the Charter of Paris. In October of the same year, President of Finland Mauno Koivisto arrived in Tashkent on a return visit. Since then, cooperation between the two states has developed consistently, covering both political and economic spheres.

Legal and institutional basis for interaction

The legal framework of Uzbek-Finnish relations today includes eight existing documents, including two interstate and six intergovernmental agreements. Among them are the Agreements on mutual protection of investments and on trade, economic and technological cooperation, signed back in 1992, agreements on aviation and road transport (1996 and 1997), as well as documents on the avoidance of double taxation and customs assistance.

New initiatives are under consideration that reflect the current stage of the partnership: a draft agreement on exemption from visa requirements for holders of diplomatic passports, a memorandum of cooperation in the field of environmental protection and a protocol of consultations between the ministries of foreign affairs.

Vector of cooperation: technology, ecology and innovation

Finland, recognized as a world leader in innovation, sustainable development and green technologies, has become an important reference point for Uzbekistan in the process of transition to a new economic model based on digitalization and energy efficiency.

It is significant that that in 2017 the country was visited by a representative business delegation of nine Finnish companies operating in the fields of mechanical engineering, agro-industry, telecommunications and logistics. They took part in the international exhibition AgroWorld Uzbekistan, which became a new impetus for establishing direct contacts between the business circles of the two countries.

In April 2019, Tashkent received a delegation led by the Deputy Secretary of State of Finland for Foreign Economic Relations Mikko Keinenen. It included twenty-nine representatives of leading companies and organizations - from Nokia Siemens Networks and ABB to Wärtsilä, Uponor Infra, Tikkurila, ISKU and Airbus Defense and Space. During the meetings, issues of introducing Finnish technologies in Uzbekistan, joint projects in energy and raw materials processing, as well as opportunities in the field of “smart” cities and water resources were discussed.

Later, in November 2019, a representative of the Finnvera export credit agency Antti Koskelainen arrived in Tashkent, which became an important step towards financial and investment cooperation. Negotiations with the leadership of the Ministry of Investment, Industry and Trade, the Ministry of Finance and the Agency for Management of State Assets made it possible to discuss mechanisms for lending and insurance for export operations of Finnish companies in Uzbekistan.

Trade: tripled growth over the year

Economic cooperation between Uzbekistan and Finland is steadily expanding. The countries have a most favored nation treatment in trade, and regular meetings of the Joint Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation (five in total, the last one in February 2023 in Tashkent) ensure the dynamics of contacts.

Indicators of mutual trade in recent years have shown impressive growth. If in 2020 trade turnover was $48.45 million, then by 2024 it more than tripled to $151.7 million. Thus, trade volume increased by 3.1 times, which reflects the intensification of business ties and the growing interest of Finnish companies in the Uzbek market.

Investment and business cooperation

Finland is perceived in Uzbekistan not only as a trading partner, but also as a source of innovation and investment. Today, there are 14 enterprises with Finnish capital operating in the country, of which 4 are joint ventures and 10 with 100% foreign participation. They operate in industries such as electronics, programming, energy, agriculture, food and chemicals, and telecommunications equipment.

Finnish companies are interested in projects in the fields of renewable energy, recycling, green building, as well as the introduction of technologies for rational use of water and sustainable agriculture. In turn, the Uzbek side offers attractive conditions for investors - tax breaks, developed infrastructure of industrial zones and access to the Central Asian market with a population of over 75 million people.

Finland's economic potential: opportunities for partnership

Finland is one of the most technologically advanced and innovative economies in Europe, with a high standard of living, a stable macroeconomy and a strong industrial sector. The country's gross domestic product in 2024 exceeded $320 billion, with a per capita GDP of about $58 thousand. The economy is balanced: the share of the service sector exceeds 70%, industry - about 27%, and agriculture - 2.5%. The inflation rate remains one of the lowest in Europe - about 3%, which ensures predictability and stability of the business environment.

For Uzbekistan, partnership with Finland opens up a wide range of areas for industrial, investment and technological cooperation. In particular:

• In the energy sector - joint projects to introduce renewable energy sources, smart grids and storage systems, as well as the development of production capacities for the production of solar panels and equipment for wind turbines.
• In water resources and ecology - the use of Finnish technologies for water purification, waste recycling and rational water use, especially relevant for agriculture and urban infrastructure of Uzbekistan.
• In mechanical engineering and electronics - creation of joint ventures for the production of industrial equipment, automation systems and telecommunications equipment based on industrial zones and technology parks.
• In construction and “green” materials - participation of Finnish companies in the implementation of energy-efficient construction projects, production of environmentally friendly insulation, finishing materials and smart home systems.
• In education and science - development of programs in engineering and IT education, creation of joint research laboratories and introduction of a dual education model following the Finnish model.
• In the agro-industrial sector - cooperation in the field of precision farming, digitalization of agriculture and the production of environmentally friendly products oriented for export.

Finland, with its rich experience in the field of sustainable development and digital solutions, can become a strategic partner for Uzbekistan in the implementation of green economy programs and innovative industrial transformation. At the same time, Uzbekistan, having significant natural resources, a young workforce and a growing domestic market, is able to offer Finnish businesses favorable conditions for localizing production and entering the Central Asian market.

Looking into the future

Cooperation between Uzbekistan and Finland goes beyond the usual economic partnership. It becomes an example of how innovation and sustainable development can serve as the basis for long-term mutually beneficial interactions. Joint projects in the field of digitalization, green energy and education open new horizons for the exchange of experience, technology and investment.

Finland sees Uzbekistan as a reliable partner in Central Asia, and Uzbekistan views Finland as a strategic ally in promoting the smart growth model and building a knowledge economy.

Exactly. in the synergy of these two approaches - the pragmatic experience of the North and the dynamic development of the East - lies the potential for further strengthening Uzbek-Finnish relations based on trust, innovation and mutual respect.