On July 23, President of the Republic of Uzbekistan Shavkat Mirziyoyev chaired a videoconference session to discuss further development of small business and entrepreneurship in the country.
Small business and private enterprise is an important factor in economic development, employment and elevation of incomes of the population. In order to provide comprehensive support for the entities in this sphere, more than 50 presidential decrees and resolutions have been adopted over the last two and a half years.
In particular, public registration of business as well as obtainment of permits and many other procedures have been simplified. For greater convenience, the Public Services Agency and its local branches have been established. The institution of the Commissioner for the protection of the rights and interests of business entities (Business Ombudsman) has been introduced.
Across the country, reception offices of the Prime Minister have been established to consider appeals from businesspeople. Under the Cabinet of Ministers, the State Fund for the Support of Business Development has been set up, which was allocated 200 billion soums and 50 million dollars. Lending to entrepreneurs from commercial banks has also expanded.
These practical measures produce results. Small business produces almost 60 percent of gross domestic product, a third of industrial output, 98 percent of agricultural goods, and also provides half of the investments. In many areas, small businesses account for between 70 percent and 90 percent of exports. Within six months of this year, the number of business entities increased by 60 thousand.
It was noted at the meeting that these were the first results of the reforms, while the main focus was on solving the problems on the ground.
The President noted that the hokims of the regions, districts, towns and their first deputies should work in a completely new way and devote 70 percent of their time to the development of entrepreneurship.
The task is to introduce a new system in which the work of hokims of all levels and their first deputies will be assessed based on the number of new or resumed activities of small enterprises, as well as the jobs created in them.
An additional criterion for evaluating the proposed indicator is the ‘vitality’ of enterprises. In other words, if 50 percent of new enterprises do not cease to exist over the next 3 years of their inception, the hokims and their first deputies, the heads of local departments of the economy and the Chamber of Commerce and Industry will be rewarded.
The Cabinet of Ministers, the Ministry of Justice, the Ministry of Economy and Industry have been instructed to implement this procedure.
The meeting participants also discussed the implementation of the initiative to turn the Khavast district into an “Enterprise Zone”. The proposal was put forward during the President’s recent trip to the Syrdarya region.
Shavkat Mirziyoyev urged the government working group headed by the Minister of Economy and Industry to work out recommendations for small business development with an eye to the specific features and potential of each region. Based on these proposals, entrepreneurs will be assisted on issues such as project implementation, attainment of loans, land, buildings and facilities, and connection to infrastructure.
The President pointed to the need for a broad establishment of industrial cooperation among small businesses and large enterprises.
For example, the studies in the automotive and agricultural engineering industries show that such interaction is practically missing, the result being the goods and component parts produced in our country are imported. Moreover, some industrial enterprises are not able to work not only with small businesses, but even with consumer demand.
In this regard, the Ministry of Economy and Industry has been instructed to establish industrial cooperation of enterprises in ten major industries, including the agricultural engineering, electrical engineering, construction materials and chemical industries as well as the automotive sector, with small business.
The head of our state tasked the officials to organize, together with the Ministry for the Development of Information Technologies and Telecommunications, cooperation fairs and create a unified electronic cooperation exchange of goods and services.
Special emphasis was placed on another problem hindering the development of entrepreneurship, namely, the allocation of land for project placement.
There has been a persistent opacity around this procedure. In particular, out of the proposed 3.5 thousand hectares of land plots, only 1.3 thousand hectares, or 37 percent, were put up for electronic bidding for various reasons.
In this regard, the President instructed to radically simplify the processes of interagency coordination of land issues, registration of buildings.
Uzbekistan’s leader stressed the need to improve banking services for business entities and uplift the efficiency of lending.
Currently, applications of entrepreneurs for a loan are considered in 3 phases – at the district, regional, and national levels. The loan is not issued to the entrepreneur without the consent of the central office of the bank. As a result, this process is sometimes stretched for months.
With this in mind, Shavkat Mirziyoyev pointed to the necessity of reducing the process of reviewing applications for loans to one or two levels, and increasing the number of compact bank branches with a staff of 10-15 people instead of large few branches with a staff of 70-100 people.
When discussing the views of entrepreneurs on high interest rates on loans, the head of our state noted the significance of boosting the activities of the Public Fund for the Support of Free Enterprise set up to provide collateral for loans and partial coverage of interest.
The President drew attention to the lack of systemic approach in matters of demolition of buildings and structures of entrepreneurs, as well as compensation imbursement.
In the process of creative and construction works carried out across the nation, some buildings and structures fall under demolition plans. However, due to large-scale demolition efforts, often undertaken without regard to the prospective development of settlements and the corresponding calculations, there are huge amounts of compensation payments due. Local authorities, while attracting investors to the construction of enterprises at the site of demolished structures, often fail to oblige them to reimburse at their own expense, and these costs have to be borne by the state.
“I strictly warn all hokims: it is absolutely unacceptable to demolish property belonging to entrepreneurs without justified need,” the President insisted.
The Ministries of Justice and Finance, the Chamber of Commerce and Industry were tasked to work out jointly with the Business Ombudsman and introduce proposals for further improvement of the order of demolition and compensation of property.
Attention was drawn to the approaches of the judicial system to the consideration of appeals of small businesses.
In foreign practice, 70 percent of disputes are resolved in a pre-trial procedure, since judicial review is a lengthy and costly process.
In this regard, the head of our state noted the necessity to establish departments for the pre-trial settlement of disputes in government bodies directly working with entrepreneurs. The Ministry of Justice and the Chamber of Commerce and Industry were instructed to elaborate a draft resolution together with the Supreme Court, providing for the expansion of activities of alternative arbitration courts and the institution of mediation.
The President proposed to set up an agency in the system of the Ministry of Economy and Industry for the promotion of entrepreneurship and small business. The body would be empowered to develop and implement integrated government policy in the field of entrepreneurship and small business. The agency will also coordinate the work of the State Fund for the Support of Enterprise Development.
“We will hardly be able to fully address issues of boosting employment and incomes of the population, increasing the flow of revenues to the budget, by building only large enterprises. The most critical area of work to improve living standards is to bolster entrepreneurship and small business,” Shavkat Mirziyoyev suggested.
Hokims, responsible ministries and other government agencies provided information on the issues discussed at the meeting.