Frolov A.V., senior teacher,
Tashkent Branch of REU after G.V. Plekhanov
Active entrepreneurship as a main factor of the national
There were fundamental changes in the pace of economic development of the Republic of Uzbekistan in 2017. In accordance with the new strategy, economic development has moved to a qualitatively new level, which implies an improvement in the quality and standard of living of the population. The key reforms were implemented on the basis of the principle “the interests and well-being of a man above all else.” In this regard, special attention was paid to further strengthening of macroeconomic stability, implementing a tight monetary policy, ensuring the stability of the national currency, as well as continuing reforms in the field of fiscal policy.
The bulk of reforms during the past year centered on revitalizing the private sector: the government is betting on small- and medium-sized businesses becoming the engine of Uzbekistan’s economic development. Specifically, Uzbekistan took concrete steps to liberalize its financial and monetary policies—notably, easing currency convertibility and attempting to diminish the government’s regulatory role. Moreover, accommodating the business sector has led to a spillover effect on political liberalization: the government became eager to improve its image abroad and began to address the lingering challenges with conducting business in Uzbekistan. The most significant undertaking in Uzbekistan last year may have been the process of narrowing the distance between government officials and the people they serve. Indeed, not coincidentally, 2017 was named the “Year of Dialogue with People and People’s Interests.” Uzbekistan held negotiations in 2017 with South Korea on information technology, motor vehicle production and medical education; with Turkey on manufacturing and tourism development; with Russia on increasing exports of agricultural products; and with China on developing its oil and natural gas sector as well as receiving additional loans. Two criteria guided these foreign engagements: first, a desire to maintain friendly neighborly relations, in particular with immediate neighbors, and second, interest in what economic benefits this cooperation would bring Uzbekistan. Looking onward to 2018, domestically the leadership can be expected to continue attempts to unleash a true market economy with entrepreneurship and small business at its center. The administration counts on small- and medium-size businesses rather than large enterprises to propel the country’s economy. Consequently, the government will, by all indications, continue shaping its reforms to help the private sector grow by adopting further private-sector reforms and creating a favorable investment climate. Concrete and purposeful comprehensive measures aimed at liberalization of the exchange market were made, which allowed to ensure free conversion of the national currency. All existing barriers were eliminated on the way of economic entities’ activity, and mandatory sale of foreign currency was abolished. Legal entities have the right to acquire foreign currency to ensure the import of products, and foreign investors have the opportunity for free repatriation of their profit. Citizens are able to buy or sell foreign currency for the purpose of studying abroad, as well as for the purpose of tourist trips, business or for other purposes, without any restrictions and on legal grounds.
These reforms were positively evaluated and recognized by leading financial institutions, such as the International Monetary Fund, the World Bank, and the Asian Development Bank. Government control was strengthened over stability of prices for consumer goods in the domestic market. For these purposes, a fund for the promotion of price stabilization in the domestic market has been formed in the amount equivalent to 100 million US dollars. Also an additional $70 million was allocated for the acquisition of important and vital medicine. Concerning further liberalization of foreign trade and forming an effective market economy, the customs duty rates are halved. The customs duties for more than 8 thousand names of imported products have been sharply reduced, the duties for 3550 products are applied at zero rate.
In accordance with international standards, the government, ministries, the Central Bank and other organizations regularly and transparently publish statistical and analytical information on macroeconomic indicators of economic development, on the state budget execution, on money turnover and on the country’s gold-currency reserve. When creating the most favorable conditions for business entities, improving the business environment and developing small business and private entrepreneurship, they followed the well-known principle “if the people are rich, then the state will be rich and strong.”
At the same time, unscheduled inspection of business entities was canceled. It is forbidden to use as punishment a deprivation of the right to engage in entrepreneurial activity to business entities. In the final annual rating “Doing business 2018”, conducted by the World Bank, “Uzbekistan entered the top 10 states with the most favorable conditions for doing business, which is the result of ongoing reforms in the country. The list of state services and the rules for the registration of business entities were revised, their number and time spent on registration significantly decreased. The activity of the Chamber of Commerce and Industry has been completely reformed, and special institution has been established to protect the rights and legitimate interests of entrepreneurship (business ombudsman). The approaches of commercial banks have been fundamentally revised on working with business, as well as with the population in mahallas, especially with young people, when they are involved in entrepreneurial activity. Another important area of economic reform is the reduction of state participation and the increasing role and importance of the private sector in the economy. At the same time, through close cooperation with privatized enterprises, increasing the effectiveness of their activities, the methods of managing state property were radically changed.
The state introduced a new practice of post-privatization support to idle enterprises by developing investment projects that are aimed at restoring their activities. Entrepreneurs are given the opportunity to create new production capacities on the basis of already existing, but not operating or operating at full capacity production. This, in turn, gave the opportunity to develop highly liquid investments and create thousands of new jobs. It is with the purpose of financial support for the above projects that a special fund for supporting privatized enterprises was established, which opened the corresponding credit lines. The practice of transferring state property to business entities at zero cost has significantly expanded, with the condition of attracting investments, and this makes it possible to create thousands of new jobs. During the last year 45 new small industrial zones were created on the base of idle, empty and ineffectively used large objects and land plots, as a result, their total number was brought to 75. They implemented investment projects aimed at production of demanded industrial goods.