264 Journal of Public Diplomacy and International Studies www. grnjournal.us AMERICAN Journal of Public Diplomacy and International Studies Volume 02, Issue 01, 2024 ISSN (E):2993-2157 Possibilities of Increasing Investment Attractiveness in Attracting Foreign Investments to the Republic of Uzbekistan Mukhamаdjanov Shakhriyor Abstract: This article reflects the results of a study conducted to determine the possibilities of increasing the investment attractiveness of the regions of the Republic of Uzbekistan. In the first part of the study, the scientific and theoretical foundations for increasing the attractiveness of the investment environment were studied, including the content of such closely related categories. The second part of the article examines areas for increasing the efficiency of investment projects in the regions, including an analysis of investment projects in the industrial zones in Uzbekistan and the possibility of using financial incentives to increase investment attractiveness. Keywords: developing, investment, investment environment, attractiveness of investment environment, investment projects, regional economy, industrial zones. INTRODUCTION The experience of developed and developing countries shows that one of the main criteria for attracting investments to regions is to improve the investment environment, ensure its attractiveness, and develop a business environment by conveniently locating production infrastructure networks and production forces in the regions. The development of the region's economy is difficult to imagine without foreign investment. Investment activity is understood as investment and implementation of practical actions with the aim of making a profit and achieving another beneficial effect. In practice, investment activity is carried out through the development and implementation of an investment project, which, according to the current legislation, is understood as a rationale for the economic feasibility, volume and timing of capital investments, developed in accordance with the legislation of this country and the norms and standards approved in the prescribed manner , as well as a description of practical steps for the implementation of investments (Vershinina & Bambaeva, 2019). In order to increase the economic potential of the regions of Uzbekistan, further improve the attraction of foreign direct investment in the economy, create a favorable investment environment for investors, ensure and develop its attractiveness, further liberalize the economy, organize and improve the free use of goods, as well as the necessary production in the regions. It is important to create an infrastructure, modernize the existing one from a technical and technological point of view. 1. LITERATURE REVIEW In this sense, it is appropriate to consider the scientific and theoretical foundations of increasing the attractiveness of the investment environment in the regions. In this regard, it is necessary to research the essence of categories that are close to each other, such as "investment environment", "investment climate", and scientific-theoretical views related to them. 265 Journal of Public Diplomacy and International Studies www. grnjournal.us We will consider the concept of "investment environment" as part of the research topic. In this direction, a number of foreign economists-scientists, including: J.D. Daniels and L.H. Radeba, evaluated the concept of "investment environment" as a synonym for the concept of "business environment", and the multinational corporations of the 1970s and 1980s of the last century are now " they emphasize that they managed to completely copy the conditions of adaptation to the requirements of the business environment (Daniels & Radeba, 2014). In the scientific researches of A.M.Basenko, P.V.Taranov, the terminological aspects such as "investment environment" and "investment climate" refer to the level of riskiness during the investment of capital, the internal and external conditions and facilities that form the level of attractiveness of investment in relation to a clearly planned object. we witness that it was approached as (Basenko & Taranov, 2016). According to research conducted by Ernesto M. Pernia and J.M. Ian S. Salas, "the investment climate can be broadly defined as 'the existing and expected policy, institutional and behavioral environment that affects the returns and risks associated with investment'" (Pernia & Salas, 2005). According to Z.T.Mamadiyarov, F.S.Makhmudov, the attractiveness of the investment environment is assessed in terms of profitability, investment environment, infrastructure, development prospects and level of investment risk. Investment attractiveness is determined by the simultaneous influence of the country's investment potential and the level of investment risk. By assessing such indicators, it will be possible to determine the appropriateness and attractiveness of investments. The level of investment risk is directly related to the investment environment (Mamadiyarov & Makhmudov, 2020). 2. METHODS AND PROCEDURES It should be noted that there are a number of problems in doing business with foreign and local investors:  projects and initiatives of business activities reported by foreign and local investors at the regional level are not fully formed by the mechanism of proper support by all local state authorities, responsible state organizations;  the activities of relevant ministries and agencies are not clearly coordinated in terms of not violating the guarantees of the rights of foreign and local investors who wish to actively engage in investment activities;  as a result of increasing illegal interference in the activities of investors, the confidence of foreign investors to protect their financial resources from risks for investment activities in the regions remains at a low level;  the incomplete formation of the necessary production infrastructure, the strong need for technical and technological modernization of the existing infrastructure object systems, has a negative effect on the start and expansion of production activities at full capacity;  the investment environment is unattractive as a result of the insufficient development of the financial market, the high participation of financial institutions with a state share in the infrastructure of financial services, the formation of investment projects mainly at the expense of bank capital;  due to the existence of cases of artificially increasing the costs of investment projects (mainly projects implemented taking into account centralized investment sources) from the actual costs, the efficiency of the financial resources of the state budget and other centralized funds allocated for the investment project is very low, in this regard, due to the strengthening of offshorization processes, the regional investment environment is sufficient unable to develop and others. We do not have the investment attraction mechanisms accepted in many countries of the world. 266 Journal of Public Diplomacy and International Studies www. grnjournal.us Many leaders of organizations prefer not to take any economic responsibility, attracting financial resources from outside. That is why it is necessary to define the status of investment banks in the economic regions by law and to organize preferential work process at the beginning. First, increasing the activity of the state during the investment process, that is, increasing the value of investments within the framework of the development of the state guarantee; Secondly, to legislate the conditions that ensure the entry of investments into the economy; Thirdly, to strengthen and develop the position of the banking community in investment activities. 3. DISCUSSION AND RESULTS Regarding the development of the investment environment in the regions, the tariff and notary preferences given to newly established special economic zones should be revised based on the proposals of investors. It is expedient to consider the concessions given when making calculations with the local budget in agreement with the regional administration. Also, one of the factors that have a direct impact on the attractiveness of the investment environment in the country and regions are the processes related to currency and inflation. In order to stabilize relations in this regard, the following main tasks should be solved: First, a free-floating currency mechanism should be chosen to ensure stable internal and external exchange; Secondly, it is necessary to organize the foreign real exchange rate taking into account the price of the products of the main export competing countries; Thirdly, during the period of export organization, it is necessary to strongly organize monitoring activities so that the effect of domestic inflation does not lead to a decrease in the competitiveness of local exporters; Fourth, effective use of intensive and extensive methods of increasing gold and foreign exchange reserves (intensive method - attraction of capital from foreign countries, extensive method - effective use of domestic potential); Fifth, optimizing the economic policy aimed at quality organization of the production and services market in order to prevent the growth of inflation. In addition, it is appropriate to use the factor of youth industrial and entrepreneurship zones in the further development of the investment environment in the regions. In this regard, it is planned to implement a total of 4059 investment projects in youth industrial and entrepreneurship zones established in the regions of our republic. The total value of investment projects is 5792.5 billion soums. Table 1. Information on the implementation of investment projects in the Youth Industrial and Entrepreneurship Zones in 2022 (www.stat.uz/en/official-statistics/investments) Indicators Projects N u m b er o f in v es tm en t p ro je ct s T o ta l v a lu e, m il li o n s o u m s from that, according to the sources of financing O w n f u n d s, m il li o n s o u m s L o an s in n at io n al c u rr en cy f ro m th e Y o u n g E n tr ep re n eu rs S u p p o rt F u n d , m il li o n s o u m s L o an s in f o re ig n c u rr en cy f ro m th e Y o u n g E n tr ep re n eu rs S u p p o rt F u n d , m il li o n d o ll ar s L o an s o f co m m er ci al b an k s in n at io n al c u rr en cy , m il li o n s o u m s L o an s o f co m m er ci al b an k s in fo re ig n c u rr en cy , m il li o n d o ll ar s F o re ig n i n v es tm en t, m il li o n d o ll ar s Implemented 249 663018 564839 27770 130 34051 150 3150 267 Journal of Public Diplomacy and International Studies www. grnjournal.us projects It is being implemented 1731 2768972 1945301 270498 2862 303489 7910 13968 Future projects 2079 2360567 1370061 601039 15571 93158 12383 - According to Table 1, a total of 249 projects with a total value of 663 billion 18 million soums have been implemented by young entrepreneurs in the industrial and entrepreneurial zones of the regions. More than 564 billion of their own funds were invested by young entrepreneurs for these projects. Also, 27 billion in national currency will be allocated from the Young Entrepreneurs Support Fund for the implementation of these projects. A loan of 770 million soums and 130 million dollars in foreign currency was allocated. It is noteworthy that foreign investments in the amount of 3 million 150 thousand US dollars were attracted for these projects. In order to increase the effectiveness of investment projects in the area of youth industrial zones, which are important for the development of the investment environment in the regions, the leasing of buildings by commercial banks to young business entities for production and service can have a positive effect. In this case, it is proposed to lease the buildings at an annual rate of 14 percent in the national currency. Fig 1. A mechanism for leasing buildings/structures in youth industrial zones in the development of the investment environment of the regions According to the mechanism in Figure 1, "Financial resources are provided to commercial banks from the funds of the Fund for the purpose of construction of buildings for production and service in the territory of Youth Industrial Zones based on the financial indicators of the Fund and its resource base, including: commercial banks from the funds of the fund to young business entities financial resources for the construction of buildings are provided in the national currency at an annual rate of 10 percent; Commercial banks lease buildings to young entrepreneurs at an annual rate of 14 percent in national currency. In this case, the young business entity pays 10% of the value of the building to be leased as an initial payment (Decree of the President of the Republic of Uzbekistan, 2021). As a result, the mechanism of financial support for the construction of production and service buildings within the framework of the development of a favorable investment environment in the territory of youth industrial zones has been improved. In order to increase the attractiveness of the investment environment of the regions, it is proposed to rate the effectiveness of investment projects on strategic investment projects. As a Directorates for small and youth industrial zones Young people are the initiators and executors of investment projects in industrial zones Commercial banks Ministry/Department/Organization Drawing up a lease agreement and leasing buildings/structures Fund for supporting young entrepreneurs 14% 10% 268 Journal of Public Diplomacy and International Studies www. grnjournal.us result, the mechanism for rating the efficiency of investment projects for strategic investment projects will be improved. In R & D within the framework of improving the assessment of the economic efficiency of investment projects in Uzbekistan, "financial assessment is used in the analysis of liquidity in the process of implementing an investment project. In other words, the task of financial assessment is to determine whether the enterprise will have sufficient financial resources to fulfill its total financial obligations in order to implement the project within the specified time. Economic evaluation is used to determine the potential ability of the investment project, to maintain the value of the funds invested in this project and to create a sufficient level of their growth rate (Bozorov, 2018). CONCLUSION Based on the above, it will be possible to determine the effectiveness of investments made by rating the effectiveness of investment projects on strategic investment projects. Also, the state and level of development of production infrastructures play an important role in increasing the attractiveness of the investment environment of the regions. For this reason, it is proposed to allocate funds from the republican budget for the implementation of the infrastructure costs of the investment project at the rate of 5 percent with the condition of repayment within three years. As a result of the implementation of this proposal, it was possible to increase the attractiveness of the investment environment of the regions by improving the financing of the external infrastructure of investment projects. REFERENCES 1. Vershinina, A.A., Bambaeva, N.Y. (2013). Content of investment attractiveness of a region economy as an economic category. Statistics and Economics Journal, no. 4, pp. 8-41. 2. Daniels J.D., Radeba, L.H. (2014). International Business: External environment and Business Operations. 4th ed. Delo LTD, p. 438. 3. Basenko, A.M., Taranov, P.V. (2016). Special Economic Zones as an Institutional Tool for Mobilizing the Investment and Financial Potential of Territorial Development. Financial research Journal, no. 1(50). 4. Pernia, Ernesto M. & Salas, John Michael Ian Sioson (2005). Investment climate and regional development in the Philippines, UPSE Discussion Paper, No.2005,01, University of the Philippines, School of Economics (UPSE), Quezon City. 5. Mamadiyarov, Z.T., Makhmudov, F.S. (2020). Specific aspects of factors affecting the country's investment attractiveness. "Increasing the attractiveness of investment funds in the development of the financial market of Uzbekistan" Republican scientific and practical conference. Collection of articles and theses. p. 259 6. Information from the official website of the Statistics Committee of the Republic of Uzbekistan. Retrieved from https://www.stat.uz/en/official-statistics/investments [Accessed on 25 December 2022]. 7. National database of legislative information of the Republic of Uzbekistan. (2021). On measures to organize the activities of youth industrial and entrepreneurial zones and support youth entrepreneurial initiatives. Decree of the President of the Republic of Uzbekistan no. PQ-5088 dated April 21, 2021. https://lex.uz/docs/5383002 [Accessed on 20 December 2022]. 8. Bozorov, R. (2018). Improving the assessment of the economic efficiency of investment projects in Uzbekistan. "Economics and innovative technologies" Scientific electronic journal. no. 2, p. 13-14. https://www.stat.uz/en/official-statistics/investments