Effective Reforming

Forecasting of Development of Economic Processes


     Over the past ten months the social and economic portrait of our country has profoundly changed. According to the Action Strategy on the five priority directions of development of Uzbekistan in 2017-2021, the national economy has actually been moved into a new stage of the development. Every day we observe positive changes in social and economic life, new approaches to reforming of economy are being applied. They are reflected, first of all, in deep structural transformations in industry, fiscal framework, customs and monetary policy and also in creating favorable business environment for entrepreneurial development.
     Studying the practice of development of other countries shows that countries which have been most successful in overcoming external challenges are those where governments implement comprehensive measures to support private sector and create favorable business environment for developing small business.
There is no coincidence that the Decree “On additional measures to ensure accelerated development of entrepreneurship, full protection of private property and qualitative improvement of the business environment” has become the first programming document issued by the president of our country, Shavkat Mirziyoyev. This fact testifies that the government pays close attention to development of this sphere.
In a view of the short period three laws, more than 20 decrees and 25 decisions of the president directed to improve business climate in the country and develop entrepreneurial activity have been adopted. Under the State program on implementing the Action Strategy on five priority directions of development of the Republic of Uzbekistan in 2017-2021 in the Year of dialogue with people and human interests more than 60 activities have been conducted to enhance business environment and support entrepreneurship.
At the same time, in practice there are still some systemic problems across a range of directions that hinder development of free entrepreneurial business. Large business still faces difficulties caused by complexity of tax and tax administration systems. There is still a considerable number of outdated licenses and authorization procedures in sphere of entrepreneurial activity. There are 58 types of licenses and 196 authorization documents and this is a lot for growing economy. Entrepreneurs still point to the interference of supervisory authorities in their activities. The procedure of allocation of land plots for business purposes is not transparent and includes some differing rules followed by bureaucracy.
For the purpose of solving specified problems, it is necessary to develop mutual relationship between business and state bodies of all levels, including law enforcement and regulatory agencies and also banks on the basis of such new progressive principles, as competition priority principle, principle of implied consent, principle of joint responsibility and “one for two” principle. These are absolutely new institutions for the national legislation, and for the first time in our history they provide for ranking interest of the business together with interest of the state. For example, according to competition priority principle, the operation of enterprises with state participation will be restricted in fields where private business can operate and there is healthy competition environment.
In order to substantially limit state regulation, it is proposed to transfer separate control functions to institutions of public oversight and civil society. Additionally, part of controlling functions can be replaced by such market mechanisms, as liability insurance, certification, authority delegation to private accredited organisations, etc.
The Ministry of Economy has prepared proposals to cancel 60 types of licenses and authorization documents in sphere of entrepreneurial activities including by means of combing 41 licenses and permits into 19 types. Among them, for example, there are licenses in pharmaceutical, medical, veterinary, tourism and customs sectors and also in spheres of wholesale trade, road transportations. It is proposed to issue all licenses for the right of carrying out a specific type of activities without limiting the terms of their validity.
The time has come to introduce unified procedure of allocation of land plots for business purposes. Thereby, consideration and coordination of documents related to land plots granting should be carried out by authorized bodies only in the electronic form.
Currently the possibility of launching single export brand for domestic products — “Best in Uzbekistan” is being considered. Such approach will minimize marketing and advertising costs of manufacturers at external markets through partial delegation of this function to the state. According to researches, such steps will allow improving recognition and demand for goods made in Uzbekistan.
It is noteworthy that mentioned measures are included in the package of documents developed in pursuance of assignments of the leadership of our country directed on solution of key and systemic challenges in activities of business entities. Since August 16, 2017 drafts of these documents have been available on the Governmental portal for discussion of normative legal acts of the Republic of Uzbekistan. Businessmen actively participate in this process and share their constructive proposals. So, in a short period of time the Ministry of Economy of the Republic of Uzbekistan has received over 200 proposals from business entities.
In recent years considerable steps have been taken to establish free economic zones and technology transfer centers. In particular, the strong legal framework and effective system of exemptions and preferences have been developed. Priority directions of their implementation have been defined. They are needed, first of all, to attract foreign investments into the national economy, introduce new technologies and modern methods of management and corporate governance. For example, on the basis of 58 enterprises located in the free economic zones of “Navoiy”, “Angren” and “Jizzakh” there have been implemented 63 projects with a total value of 454.4 million USD and created more than 4 thousand new jobs. Benefiting from these projects, manufacture of different types of modern export-oriented industrial output has been launched, such as car components, mobile telephones, LED lamps, boilers and water-heaters, sanitaryware products, gas bags for cars, medical products, cosmetics, leather products and others.
Over the past year 11 free economic zones have been created in ten regions of the republic. Much work remains to be done for their further development, definition of clear specialization and focus on modern technologies, creation of necessary conditions for attraction of foreign investors and new technologies. It is fee economic zones which can become an engine of economic growth of our country.
It is necessary to point out the activities of seven pharmaceutical free economic zones established for the purpose of development of domestic pharmaceutical branch, implementation of innovative technologies and scientific and research developments in this branch, improvement of competitiveness of products.
It is planned to develop industrial plantations, work out the list of definite herb species recommended for cultivation and launch deep processing and production of pharmaceuticals and biologically active dietary supplements.
Administration board of free economic zones has approved an investment project worth 38.2 million USD in “Sirdaryo-farm” FEZ. The project includes production of glass containers for pharmaceutical and food processing industries with creating new 200 jobs. Other 15 investment projects for a total amount of 69.9 million USD are being also considered.
Businessmen are studying 27 investment projects at total cost of 403.7 million USD. Fulfillment of these projects will establish complete production cycle of pharmaceuticals, reduce import of foreign medical products and increase export of national products.
Considering stably high indicator of demand in national pharmaceutical branch, pharmaceutical zones can become leaders among other free economic zones.
The head of our state has defined priority for reforms intended to ensure comprehensive development of each province, city, region and countryside. Equal development of regions and territories is the keystone in this direction. Indeed, the acuteness of the problem is that with high growth rate of economy there are disparities in development of different regions and territories. So, while there are big cities and industrial centres of regions being rapidly growing, there are still territories specializing on manufacture of agricultural production and less involved in ongoing reforms. This has led to differentiation of social and economic development both at level of regions of the republic and at level of regions of provinces. For instance, in the Khorezm, Jizzakh, Fergana, Namangan, Andijan, Samarkand provinces industrial product manufacture per capita is 1.5-2 times lower than average national index and volume of services per capita is lower than average national index.
The same contrast is found in regions of provinces. In the Navoiy province the index of industrial product manufacture per capita is one of the highest in the republic. However, in the Nurata region this index is almost 10 times lower than province average index, in the Tamdyn and Khatyrchin regions – 5 times lower.
The similar situation is noted in the Republic of Karakalpakstan, in regions of the Namangan, Surkhan-Darya and Syr-Darya provinces.
Why it happens? First of all, elaborations of programs of branch and territorial development do not always take into account peculiarities, needs and capability of regions, including mineral raw material base, manpower resources and infrastructure.
Besides, in the majority of regions of the republic the current engineering-communication and road infrastructure does not meet modern requirements and needs of enterprises and population.
Certainly, it is not possible to solve all mentioned challenges at once. Significant capital investments are required. In addressing these challenges, comprehensive programs of advanced development of regions and particular areas are being worked out; that will have the result of creation of conditions for business and living, increase living standard and quality of life of each particular person and the whole population.
Programs of comprehensive development of all provinces of the country, including 32 particular regions and cities of the republic lagging behind in social and economic development, have been adopted in the current year. Approaches to develop programs are absolutely new: they are being elaborated on the basis of deep analysis of present situation, studying needs and proposals of territories – each mahalla, village, city and region.
The role of the Ministry of Economy in this process is to coordinate activities of all interested state bodies, economic associations, civil society institutions in development and implementation of industry-specific and comprehensive programs of social and economic development of territories, regions and cities.
Every activity is provided by guaranteed source of finance, specific terms of commissioning of facility, proposals to handover of unused facilities to businessmen, including at zero purchase price, establish new industrial site, service industry, development of agricultural production. Moreover, the monitoring system of project implementation is being developed for each project. The system enables to timely identify and solve arising problems operatively.
It is also required to mention the role of the Program of localization and its key objectives at the present stage. The program has been initiated with a view of creation on the basis of local raw materials the manufactures that will provide for import substitution and saturation of domestic market by necessary consumer goods, pharmaceutical products, production of industrial-technical purpose, components and materials, and also expansion of intersectoral industrial cooperation, including between the large enterprises of the republic and small business entities.
Over the past period the program has shown good results. Since 2000 under this program over 2.8 thousand projects of the total amount over 5.5 billion USD have been fulfilled, production of more than 4.8 thousand new types of products to replace previously imported ones has been mastered. In the last three years import of 356 commodity items has been decreased by more than 2 times, including such items, as electrical domestic appliances, automobile filters and radiators, steel and copper pipes, ceramic tiles, some types of fabrics made from synthetic fibre, medical ampoules, children’s toys, sport equipment.
At the same time, present conditions and system of privileges for participants of the Program of localization distort the healthy competitive environment. The enterprises included in the program, get used to have various privileges and preferences during many years. This leads to decreasing of initiative and business activities; this is reflected in product quality, volume of output in local market. In the environment of currency market liberalization local products may become noncompetitive comparing to imported analogues.
What should be done? Certainly, it is necessary to radically reconsider principles and mechanisms of forming of the Program of localization. Additionally, it is necessary to cancel the practice of inclusion of specific enterprises into the program.
Instead, it is offered to prepare annual list of import substituting finished products, components and materials which are recommended to be mastered by domestic enterprises. The validity of granted privileges should not exceed two years from the moment of inclusion of localized product into the approved list. At the same time, the list of localized products will not include those items which bring healthy competitive environment, provide saturation of domestic market or similar products are manufactured locally.
Increasing income of population and raising living standard in regions can be secured, first of all, by establishing new enterprises, upgrading and expansion of production capacities, creation of favorable conditions for wide involving of population in entrepreneurial activities.
It is impossible to implement this task without favorable business climate; this once again confirms importance of the given direction in implementation of reforms.
In conditions of monetary policy liberalization being carried out according to the Action Strategy, it is expected to have inflow of foreign investments and introduction of modern technologies. This will require improvement of quality and vocational skills of labour power.
In conclusion it should be highlighted that large-scale structural transformations and reforms demand maximum return from all of us. The Ministry of Economy of the Republic of Uzbekistan as the authority responsible for social and economic development of our country will exert its utmost efforts to achieve set strategic objectives.
Press-service of the Ministry of Economy
of the Republic of Uzbekistan


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