20.08.2024

On August 20, an annual open dialogue between the President of the Republic of Uzbekistan and entrepreneurs took place in Nukus.

This dialogue, which has become a tradition in recent years, is a highly anticipated event for entrepreneurs, as it serves as an effective platform for addressing systemic issues in the sector, discussing proposals, and creating new incentives.

It can be said that this time the open dialogue continued throughout the entire year. The President himself, along with the Prime Minister, his deputies, ministers, hokims, the head of the Chamber of Commerce and Industry, and the Business Ombudsman, maintained constant communication with entrepreneurs.

As a result of this interaction, over 700 issues, initiatives, and new projects proposed by entrepreneurs were supported, and an additional 8 trillion soums was allocated. Furthermore, an additional 18 trillion soums was directed toward the development of industry, agriculture, services, and entrepreneurial infrastructure. The most important achievement is the establishment of a new support system, ranging from small projects in mahallas to mega-projects.

Previously, due to issues with loans, market access, infrastructure, and endless inspections, 60 percent of new entrepreneurs ceased operations in their first year. Currently, the share of businesses operating for more than three years stands at 76 percent, and for the first time, the number has reached 300,000. This also includes 100,000 individual entrepreneurs.

Only this year, the turnover of entrepreneurs increased by 25 percent compared to last year, reaching 986 trillion soums. The number of medium-sized enterprises with an annual turnover of 10 to 100 billion soums has doubled, and the number of large enterprises with a turnover exceeding 100 billion soums has surpassed 2,200, which is twice as much as last year.

Thanks to the tax, banking, financial, and economic systems working at the level of mahallas and clients, 16,000 previously unprofitable enterprises received 6.5 trillion soums in profit over six months.

As of today, the number of enterprises with more than 100 employees has approached 3,000, and the number of jobs in these enterprises has increased by 440,000 over the past year. In the private sector, over 1 million employees now earn a salary of more than 5 million soums, including 370,000 who earn more than 10 million soums. This indicates that entrepreneurs are emerging from the shadows, transitioning to legal business activities, and fostering healthy competition.

Another example is in the entrepreneurship ranking, where the number of "A" and "B" category enterprises increased by 91,000, and an additional 170,000 enterprises were removed from the lowest "D" category. As a result, tax audits were reduced by half compared to last year. During this period, the contributions from major taxpayers increased by 10 percent, regional-level businesses by 25 percent, and taxes paid by district entrepreneurs by 40 percent. This is the result of changes in the working style of tax authorities and liberalization of business practices.

Relations with neighboring states have reached an unprecedented level. Uzbekistan has already become a major market for both local enterprises and foreign companies, as well as an industrial hub in the region.

Recently, the country's gross domestic product exceeded 100 billion dollars for the first time. In the first six months of this year, the volume of direct foreign investments doubled compared to last year, reaching 14 billion dollars. These figures have not been seen in the entire 33-year history of independent development.

"All of this is the result of the reforms started eight years ago, based on mutual trust, working side by side with entrepreneurs, and continuous dialogue. We still have many opportunities ahead of us. Most importantly, we have patriotic and dedicated entrepreneurs like you who can implement them," said Shavkat Mirziyoyev.

The head of state announced new initiatives in five areas.

The first area is increasing financial resources for small and medium-sized businesses.

From now on, all banks and microfinance organizations will be able to participate in supporting small and medium-sized businesses. The size of microloans will be tripled, reaching up to 300 million soums. Additionally, no collateral will be required for the portion of the loan up to 100 million soums.

Furthermore, "Microcreditbank," through its microfinance organizations, will attract another 1 trillion soums by the end of the year. It will also be possible to establish microfinance banks with a minimum charter capital of 50 billion soums.

Additional opportunities will be created for microfinance organizations: entrepreneurs will be allowed to provide services in foreign currency and operate as a payment organization based on a license.

Third, in accordance with the Presidential Decree of Uzbekistan dated August 12 of this year, wide opportunities have opened up for factoring organizations. They will now be able to serve clients in foreign currency as well. An electronic platform will be launched where entrepreneurs can choose a financial product that suits them.

Overall, thanks to the popularization of factoring, entrepreneurs will have access to 20 trillion soums in working capital, and exporting enterprises will have access to an additional 1 billion dollars in financial resources.

Fourth, a law on Islamic finance will be developed. This will facilitate the provision of new financial services, attract more investors, and create additional resources worth 5 billion dollars.

Fifth, the practice of transferring state-attracted funds to large enterprises will gradually be phased out. The provision of such funds will be reduced by at least 40 percent over the next two years. As a result, banks will allocate at least 30 trillion soums to private businesses.

The second area is ensuring access of businesses to infrastructure, land, and energy.

Two thousand requests received during the open dialogue were related to land and infrastructure. The cost of acquiring land for new investment projects has sharply increased.

Therefore, from now on, when an entrepreneur purchases land at auction, value-added tax (VAT) will not be applied. In Tashkent city and regional centers, payments for acquired land will be allowed in installments for up to three years, in other regions for up to five years, and in 4th and 5th category districts, up to ten years.

Second, when new land is allocated, deadlines will be specified for each stage, from building design to project completion.

Third, for each land plot, it will be clearly defined which types of activities can be substituted for the main activity and which auxiliary structures can be placed. To facilitate this, a unified classifier of land plots and capital construction objects will be introduced starting January 1.

Fourth, restrictions on electricity and natural gas for industrial enterprises will be reduced. The base tariff will remain even if energy consumption exceeds the limit by up to 20 percent. If the limit is exceeded by more than 20 percent, the tariff for the excess part will increase by 20 percent. Moreover, utility services will not be suspended even in the presence of collection orders.

The third area focuses on creating a level playing field in the domestic market and expanding opportunities to enter foreign markets.

To this end, the process of joining the World Trade Organization will continue, and competition will be enhanced. Exclusive rights in the metallurgy, chemical, energy, and telecommunications sectors have already been abolished.

Now, in corporate procurement, price preferences for products used in production will be eliminated. From now on, no entity—whether a state-owned strategic enterprise, private business, or foreign investor—will have special rights. All will operate under equal economic conditions.

Second, $200 million will be directed toward pre-export financing, with $50 million of this provided as guarantees for bank loans out of the funds allocated for industry development. These funds will support an additional $1 billion in exports over the next year.

Third, the "E-logistics" platform for cargo transportation will be launched, allowing exporters to see which companies have transport permits and in what quantity, enabling them to conclude direct contracts.

Fourth, no debt will be accumulated while importing equipment and components, as long as the contract terms are met.

From now on, an electronic certificate from the customs authority confirming export will serve as the basis for VAT refunds, eliminating the need for additional documents.

Fifth, cooperation between exporting enterprises and compatriots with extensive business experience abroad will be expanded.

Sixth, the share of domestic products in government procurement will be increased. Large enterprises in the energy, oil and gas, chemical, metallurgy, and railway sectors will place 2- to 3-year orders on the cooperation portal. Based on these orders, local enterprises will establish production of new types of products. An initial $100 million will be allocated for their projects.

Seventh, the private sector will be involved in managing regional power grids. In particular, a tender will be announced in October to attract a private operator to the power grid of Samarkand region. The same work will be carried out in Jizzakh and Syrdarya regions next year.

Eighth, by the end of the year, 300 more mineral deposits and sites with valuable resources will be offered to entrepreneurs. To meet the demand for sand and gravel, 172 deposits with reserves of 110 million cubic meters will also be allocated.

The fourth area is to give a new boost to the service sector.

In Uzbekistan, 52 percent of the employed population works in the service industry. Now, artificial intelligence technologies will be widely implemented across all sectors. An AI center will be established at the IT Park, and $50 million will be allocated for project funding.

Second, a support ecosystem for startup projects will be created, and venture funds will be established. The government will match each dollar of foreign investment attracted by a startup. Additionally, the state will cover costs related to patenting startup developments and registering trademarks.

Third, to localize services, 3,000 specialists will be sent to improve their qualifications at manufacturing companies in Germany, Japan, South Korea, China, and Turkey throughout the year. A program will be developed to expand the participation of local enterprises in servicing large companies.

Fourth, starting January 1, part of the value-added tax for catering enterprises will be returned to the entrepreneur in the form of cashback. The profit tax for restaurants and cafes that switch to paying such a tax will be halved.

Furthermore, from December 1, no documentation will be required for the accounting of agricultural products purchased in cash by these businesses. Restaurants and cafes will also be able to hire workers under short-term, simplified labor contracts.

Fifth, starting October 1, the "Shaffof Kurilish" system, similar to the Entrepreneurship Rating, will be managed by the entrepreneurs themselves. The functions of consulting centers will be fully transferred to the private sector.

The fifth area focuses on further reducing barriers and obstacles for businesses.

First, a registry of criteria representing actual threats to the life and health of the population will be developed to eliminate barriers to entrepreneurship. Officials who suspend the activities of an entrepreneur for a reason not listed in the registry will be held accountable.

Second, the criminal liability of entrepreneurs will be further liberalized.

Third, from now on, in case of overdue loan repayment, the current market value of the collateral will be determined before the property is auctioned. If the outstanding debt is less than 15 percent of the collateral's value, the property will not be seized. The bank will allow the client to repay the debt using another source.

Fourth, proceeds from land sales will be primarily directed to settling entrepreneurs' debts related to the demolition of buildings.

The President highlighted that this year's open dialogue is being held in Karakalpakstan, noting the advantages of doing business there. Karakalpakstan offers more than 50 business incentives, which are unavailable in any other region, including a simplified land allocation system. The region is also well-positioned for access to large markets.

It was noted that a "Do Business in Karakalpakstan" program will be launched to effectively utilize these opportunities.

The event continued in an open dialogue format, with entrepreneurs from central and regional studios, as well as compatriots conducting business abroad, sharing their opinions. Problems were openly discussed and proposals were supported.