On August 20, another open dialog of the President of the Republic of Uzbekistan with entrepreneurs took place in Nukus.
This dialog, which has become traditional in recent years, is a long-awaited event for entrepreneurs, as it serves as an effective platform for addressing systemic problems in the sphere, discussing proposals and creating new incentives.
It can be said that this time the open dialog continued throughout the year. The President himself, as well as the Prime Minister, his deputies, ministers, khokims, the head of the Chamber of Commerce and Industry, and the Business Ombudsman were in constant contact with entrepreneurs.
As a result of this interaction, more than 700 issues, initiatives and new projects put forward by entrepreneurs were supported and an additional 8 trillion soums were allocated. In addition, another 18 trillion soums were allocated for the development of industry, agriculture, services and entrepreneurial infrastructure. The most important achievement is the new system of support from small projects in mahallas to megaprojects.
Previously, due to problems with loans, finding markets, infrastructure and endless inspections, 60 percent of new entrepreneurs stopped operating in the first year. Currently, the share of enterprises operating for more than three years is 76 percent, and for the first time it has reached 300 thousand. This also applies to 100 thousand individual entrepreneurs.
This year alone, the turnover of entrepreneurs increased by 25 percent compared to last year and reached 986 trillion soums. The number of medium-sized enterprises with annual turnover from 10 to 100 billion soums has doubled, and the number of large enterprises with turnover over 100 billion soums has exceeded 2.2 thousand, which is twice as much as last year.
Due to the fact that tax, banking, financial and economic complexes work in the context of mahallas and clients, 16 thousand previously unprofitable enterprises gained 6.5 trillion soums of profit for six months.
To date, the number of enterprises with more than 100 employees has approached 3 thousand, and the number of jobs in them has increased by 440 thousand over the year. In the private sector, more than 1 million employees receive salaries of more than 5 million soums, 370 thousand of them – more than 10 million soums. This shows that entrepreneurs are coming out of the shadows, moving to legal activities and healthy competition.
Another example – in the rating of entrepreneurship, the number of enterprises of “A” and “B” categories increased by 91 thousand, another 170 thousand enterprises were excluded from the lowest category “D”. Thanks to this, tax audits have been halved compared to last year. At the same time, during this period, the receipts of large taxpayers increased by 10 percent, regional-level enterprises – by 25 percent, and taxes paid by district entrepreneurs – by 40 percent. This is the result of a change in the style of work of tax authorities and liberalization of doing business.
Relations with neighboring states have reached an unprecedented level. Uzbekistan has already become a big 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, foreign direct investment doubled year-on-year to 14 billion dollars. Such indicators have not been seen in the entire 33-year history of independent development.
– All this is the result of reforms launched eight years ago, based on mutual trust, working side by side with entrepreneurs and constant dialog. We still have many opportunities. Most importantly, we have patriotic and selfless entrepreneurs like you who are capable of realizing them,” Shavkat Mirziyoyev said.
The head of state announced new initiatives in five areas.
The first direction is to increase financial resources for small and medium-sized businesses.
First of all, from now on all banks and microfinance organizations will be able to participate in supporting small and medium-sized businesses. The size of microcredits will be increased three times to 300 million soums. At the same time, no collateral will be required in the part of the loan up to 100 million soums.
In addition, Microcreditbank will attract another 1 trillion soums through its microfinance organizations by the end of the year. It will become possible to establish microfinance banks with the authorized capital of at least 50 billion soums.
Additional opportunities will also be created for microfinance organizations: entrepreneurs will be allowed to provide services in foreign currency and operate as a payment organization on the basis of a license.
Thirdly, in accordance with the decree of the President of Uzbekistan dated August 12 this year, factoring organizations have been given wide opportunities. Now they will serve clients in foreign currency as well. An electronic platform will be launched, where entrepreneurs will be able to choose a convenient financial product.
In general, due to the popularization of factoring, entrepreneurs will have access to 20 trillion soums for working capital, and exporting enterprises will have access to an additional 1 billion dollars of financial resources.
Fourth, a law on Islamic finance will be developed. This will contribute to the provision of new financial services, the inflow of more investors and the creation of additional resources worth 5 billion dollars.
Fifth, the practice of transferring funds raised by the government to large enterprises will be phased out. The provision of such funds will be reduced by at least 40 percent over two years. Due to this, banks will channel at least 30 trillion soums to private business.
The second direction is to provide businesses with infrastructure, land and energy.
Two thousand appeals received during the open dialog are related to land and infrastructure. The cost of acquiring land for new investment projects has increased dramatically.
Therefore, now when an entrepreneur buys land at auction, no value added tax will be charged. In the city of Tashkent and regional centers it will be allowed to pay for purchased land in installments up to three years, in other regions – up to five years, and for districts of the 4th and 5th categories – up to ten years.
Secondly, the allocation of new land will now be obligatory to specify the terms from the design of buildings to the delivery of the object.
Thirdly, for each land plot it will be clearly defined what types of activities can be substituted for the main type of activity, what auxiliary facilities can be placed. For this purpose, a unified classifier of land plots and capital construction objects will be introduced as of January 1.
Fourth, restrictions on electricity and natural gas for industrial enterprises will be reduced. The base tariff will remain in place even if electricity and gas consumption exceeds the limit by 20 percent. If the limit is exceeded by more than 20 percent, the tariff for the exceeded portion will increase by 20 percent. Also, payment of utility bills will not be suspended even if there is a collection.
The third direction is to create an equal competitive environment in the domestic market and expand opportunities to enter foreign markets.
For this purpose, the process of joining the World Trade Organization will be continued and competition will be developed. Exclusive rights in the metallurgical, chemical, energy and telecommunications sectors have already been abolished.
Price priority in corporate procurement will now be abolished for products purchased for production. From now on, no one will have special rights, whether it is a state strategic enterprise, a private enterprise or a foreign investor – everyone will work in equal economic conditions.
Secondly, out of the funds allocated for the development of industries, 200 million dollars will be allocated for pre-export financing. Of these, 50 million dollars will be provided as a guarantee for bank loans. With these funds, an additional 1 billion dollars worth of products will be exported during the year.
Thirdly, an E-Logistics platform for transportation of goods will be launched, which will allow exporters to see which enterprise and how many transportation permits it has and to conclude direct contracts.
Fourthly, now when importing equipment and components, no debts will be formed if the term of the contract is not violated.
From now on, the electronic certificate of the customs authority confirming export will be the basis for value added tax refund, and other unnecessary documents will not be required.
Fifth, cooperation between exporting enterprises and our compatriots who have extensive experience in doing business abroad will be expanded.
Sixth, an increase in the share of domestic products in government procurement will be stimulated. In particular, large enterprises of energy, oil and gas, chemical, metallurgical, railway industries will place orders for 2-3 years on the cooperation portal. Local enterprises will start production of new types of products on the basis of these orders. 100 million dollars will be allocated for their projects at the initial stage.
Seventh, the private sector will be involved in the management of regional power grids. In particular, a tender will be announced in October to attract a private operator to the power grids of Samarkand region. Next year the same work will be carried out in Jizzak and Syrdarya regions.
Eighth, by the end of the year entrepreneurs will be offered another 300 deposits and sites with minerals. To cover the need for sand and gravel, 172 deposits with reserves of 110 million cubic meters will also be allocated.
The fourth direction is to give a new impetus to the service sector.
In Uzbekistan, 52 percent of the employed population work in the service sector. Now artificial intelligence technologies will be widely introduced in all spheres. An artificial intelligence center will be opened in the IT-park. Fifty million dollars will be allocated to finance the projects.
Secondly, an ecosystem of support for startup projects will be created. For this purpose, venture capital funds will be set up. Also, the government will provide a resource of one dollar for every dollar of investment that a startup has attracted from abroad. Such expenses as patenting of startup developments and registration of trademarks will be covered by the state.
Third, in order to localize services, 3,000 specialists will be sent for advanced training to manufacturing companies in Germany, Japan, South Korea, China and Turkey during the year. A program will be developed to expand the participation of local enterprises in the service of large enterprises.
Fourth, from January 1, part of the value added tax for catering enterprises will be returned to the entrepreneur in the form of a cashback. The profit tax for restaurants and cafes that have switched to paying such a tax will be reduced by half.
In addition, from December 1, no documents will be required for the receipt of agricultural products purchased by these enterprises for cash. Restaurants and cafes will be able to hire workers under short-term, simplified labor contracts.
Fifth, as of October 1, the “Shaffof Kurilish” system, similar to the Entrepreneurship Rating, will be maintained by the entrepreneurs themselves. The functions of consulting centers will be fully transferred to the private sector.
The fifth direction is further reduction of barriers and obstacles for business.
First, in order to eliminate barriers to entrepreneurship, a register of criteria that pose a real threat to the life and health of the population will be developed. Officials who suspend the activities of an entrepreneur on the basis of a criterion absent in the register will be held liable.
Secondly, criminal prosecution of entrepreneurs will be further liberalized.
Thirdly, from now on, in case of violation of loan repayment terms, the current market value of the pledged property will be determined before putting it up for auction. If the outstanding debt is less than 15 percent of the value of the collateral, the property will not be foreclosed. The bank will allow the client to repay the debt from another source.
Fourth, the funds from the sale of land will now be used primarily to pay off the debts of entrepreneurs for the demolition of buildings.
The President drew attention to the fact that this year’s open dialog is being held in Karakalpakstan and noted the advantages of doing business here. Karakalpakstan has more than 50 benefits for business that are not available in any other region. A simple system of land allocation has been introduced in Karakalpakstan. The region is also convenient for entering large markets.
It was noted that in order to effectively use these opportunities, a program “Do Business in Karakalpakstan” will be adopted.
The event continued in the form of open dialog. Entrepreneurs from central and regional studios, compatriots doing business abroad expressed their opinions. Problems were discussed and proposals were supported.