INFORMATION DIGEST OF PRESS OF UZBEKISTAN # 05
The ongoing process of globalization in the world economy leads to an expansion of the role played by small business and medium-sized entrepreneurship in international cooperation in terms of profiting from the international division of labour and joining industrial cooperation with large-scale business. The orientation of small and medium-sized enterprises towards the active participation in international cooperation facilitates the attraction of investments and an increase in the country’s innovative and scientific-technical potentialities, as well as promotes the resolution of many socio-economic problems. It is for this reason that stimulating foreign economic activity in the sector of small business and medium-sized entrepreneurship has become one of the top priorities of economic policy across the developed and developing countries alike.
As one of the leading economic sectors in many countries, small and medium-sized entrepreneurship has a sizable influence on the rate of economic growth, the state of population’s employment, as well as on both the structure and quality of GDP. The development of small entrepreneurship is in the mainstream of the global tendencies to the formation of a flexible mixed economy and the combination of various forms of property and an adequate economic model, which requires the complex synthesis of a competitive market mechanism and state regulation of large-scale, small and medium-sized production. Small entrepreneurship proves to be the basis of market economy.
One should take into consideration the fact that in today’s world, small business has an important role to play in the economic development of many nations. In the European Union, the US and Japan, for example, small and medium-sized enterprises account for some 50 per cent of all the people employed in the economy. By exporters’ estimates, their share of industrial exports in a number of developed countries makes up 70 per cent in Europe, 50 per cent – in Japan and the US and 20-25 per cent – in Russia.
Since the first days of independence, the Uzbek leaders have been tackling, among other priority tasks, the task of increasing the national export potential, while expanding the share of finished goods in the composition of exportables.
In 1991, Uzbekistan exported about US $160 million worth of goods. To compare, in 2014 this indicator has already exceeded US $13 billion.
At the same time, the very composition of Uzbek exports has changed noticeably. In 1991, as one example, raw materials represented over 90 per cent of the total exports volume. For the time being, a given indicator doesn’t exceed 30 per cent.
In 2014, more than 500 new indigenous enterprises, above all small businesses, were involved in export activity. As a consequence, the Republic’s positive foreign trade balance reached US $180 million, with the stock of gold and foreign exchange reserves swelling by US $1.6 billion.
In such an environment, an ever growing part is being assigned to the following two institutions: the Special Fund for Support of Export Activity by Small Business and Private Entrepreneurship, created at the National Bank for Foreign Economic Activity, and Uztadbirkorexport, a foreign trade company set up as a structural sub-division of the Ministry of Foreign Economic Relations, Investment and Trade of the Republic of Uzbekistan.
In 2014, the Fund provided legal, financial and organizational services to as many as 2,400 domestic entrepreneurs, advising them how to promote their goods and services in foreign markets. Armed with the Fund’s tangible assistance, the representatives of entrepreneurship succeeded in concluding export contracts to the tune of US $1.25 billion, under which they already exported US $840 million worth of goods in 2014.
Additionally, the Republic’s entrepreneurs are strongly backed by the Fund in such questions as the study of foreign markets, selection of reliable partners, participation in international tenders, as well as the drawing up of export contracts, obtaining of international certificates and permits and registration of customs documents.
As far as Uztadbirkorexport is concerned, this foreign trade company’s remit is to provide assistance to small businesses and private entrepreneurs in carrying out their export activity.
It goes without saying that a great deal of attention is given to the support of measures designed to improve the business climate in the country and to create far more propitious conditions for small business and private entrepreneurship to further develop and prosper.
Every effort is made to speed up the introduction of the “one-window“ mechanism of registering property, allotment of land plots, obtaining of licences to carry out certain lines of economic activity, issuance of permitting documents to start a construction project or to have a new enterprise linked up to electricity networks etc.
One more development is worth mentioning. A mechanism of presenting statistical and tax reports was significantly simplified for small businesses and private entrepreneurs. At the present time, up to 98 per cent of them present their statistical and tax accounts and draw up customs declarations in electronic form.
An important step was taken as part of a package of measures to encourage the development of small business in such labour-intensive sectors as the light and food industries and the production of building materials. The maximum number of employees there was increased from 100 to 200.
In 2014, commercial banks allotted more than 9 trillion soum worth of credits to small businesses and private entrepreneurs, including micro-credits to the tune of some 2 trillion soum. Compared to 2013, the increases were 1.3-fold and 39 per cent, respectively. Over the past 5 years, the volume of crediting in the sector jumped almost 5 times as much. (currency rates of CB RU from 08.01.2016 1$= 2816.47 soums)
What’s more, private entrepreneurs were given broader access to raw-stuff resources and fair auctions. In 2014, to cite an example, they spent some 3 trillion soum on the purchase of raw stuff and materials at the Republican Commodity and Raw Stuff Stock Exchange, or 1.6-fold more than a year later. At the same time, the sales of their own produce via exchange auctions were up 1.7 times as much on a year ago, or 1.5 trillion soum in monetary terms.
All these measures proved to have welcome effects in stimulating the development of small business and private entrepreneurship. In 2014, for instance, upwards of 20,000 new small enterprises (excluding farms and dekhkan establishments) were set up in Uzbekistan. Their total number was in excess of 195,000, twice as many as in the year 2000.
The share of small business and private entrepreneurship in the formation of GDP jumped from 31 per cent to 56 per cent since 2000. As regards the proportion of industrial output, the sector’s share rose from 12.9 per cent to 31.1 per cent.
In 2014, more than 480,000 new jobs were created in the sector of small business and private entrepreneurship. Nowadays, over 76.5 per cent of all employed citizens work there, up from 49.7 per cent registered in 2000.
In 2014, the Republic of Uzbekistan raised eight notches in the rating characterizing the conditions of doing business, and 61 notches – in the taxation rating. By the PROON’s estimates, the country joined the world’s top ten nations by the quantity of economic reforms undertaken in 2014 in a move to ease doing business.
To diversify a list of commodity categories and product groups exported from Uzbekistan, much attention has been given in the last few years to the cultivation, industrial processing and exportation of farm produce as well as to the careful study of agrarian and food markets throughout the globe. The Republic’s agriculture, without doubt, enjoys a stupendous export potential.
Today, the Republic of Uzbekistan exports 180-plus varieties of fruit and vegetables, as well as the products made on the basis of their processing, to 80 countries of the world.
Judging by exports volumes, Uzbekistan is now one of the world’s top ten exporters of apricots, plums, grapes, nuts, cabbage and other varieties of fruit and vegetables.
The rich experience gathered during the latest global financial-economic crisis demonstrates that small businesses and private entrepreneurs play an inestimable role in any state’s endeavors to find a reliable way out of the dire situation, since they are characterized by mobility and quick adaptability to modern requirements of the world economy.
With a view to furthering the development of small business and private entrepreneurship in the Republic of Uzbekistan, the creation of a more auspicious environment for domestic exporters is required. Moreover, the latter should be regularly provided with information and analytical materials about foreign markets and the demand-and-supply situation in the world marketplace.
At the same time, it is necessary to minimize the national economy’s dependence on raw materials, as well as to diversify the composition of exported goods (services).
When it comes to the exportation of goods and services from the Republic, much prominence should be given to the reduction of transport costs, in an effort to raise the level of competitiveness of indigenous exports on the international arena.
(Source: «Business partner.uz» newspaper)
Representatives of the Uzbek Metallurgical and Industrial Complex and Italy’s Danieli have held talks on joint implementation of projects on the establishment of production of steel seamless hot finished pipes and ropes.
Investment projects in Uzbekistan are primarily focused on ensuring the accelerated development of the economy, increase in the production of competitive and import-substituting products. UMIC ranks among the leaders in this field.
In order to further deepen the level of localization of production and expand inter-sectoral industrial co-operation, the Complex has been introducing modern high-tech competitive manufactures to produce import-substituting goods, saturate the domestic market, save and rationally use foreign currency. For example, this year the plant has launched the production of basalt-based heat-insulating materials, which has employed over 150 people.
UMIC production and resource capacity has enabled it to successfully run the production of high-quality thermal insulation materials like mineral wool, rigid and semi-rigid slab, wired mats, which are in demand in many countries today. Presently, it supplies new products to the construction, chemical, oil and energy industries. It is noteworthy that the new products have allowed reducing imports of thermal insulation materials into the country.
The cooperation with the Italian Danieli ranks among the new promising projects. During negotiations, the sides reviewed a preliminary concept of implementation of joint projects and discussed some technical issues. Following the meeting, they signed a protocol on the further cooperation on implementation of the projects.
In 11 months of 2015, the plant produced 611,800 tons of finished steel with a 0.4 percent growth rate, consumer goods worth 43.2 billion soums, including enamelware worth 36.1 billion soums. In the reported period, the UMIC produced commodities at a total of more than 917.5 billion soums with 0.8 percent increase. (currency rates of CB RU from 08.01.2016 1$= 2816.47 soums)
(Source: «Uzbekistan Today» newspaper)
In 2016, Uzbekistan is planning to work on several documents on the development of various components of e-commerce.
By mid-2016, the government intends to define regulations for the service market of information intermediaries, who organize electronic fairs, auctions, contests, exhibitions and trade fairs. In order to control the situation with e-commerce, the government will also change the forms of statistical reporting by adding new indicators for market research and for defining key trends of its development.
The changes will affect the procedure of transactions, storage of electronic documents and information in e-commerce related messages.
It is also planned to settle clear requirements on exchange of banking and other financial information between the parties of online transactions.
Development of the documents that would regulate the procedure of real estate sales through a global network, as well as creation of a national portal of online e-commerce training are seen as interesting initiatives. Certain measures will be taken to enhance online trade. Uzbek online stores will be assigned a special section in the national search engine, and exporters will be offered a national portal for foreign trade.
There is a strong legislative and technological capacity for further development of e-commerce. This field is regulated by a dozen of laws. The intensive expansion of telecommunication infrastructure has been ensuring efficient interaction of state bodies, business entities and individuals by means of new technologies and through widespread introduction of modern electronic applications and payment solutions.
The mechanism of electronic payments has been introduced and streamlined everywhere. Commercial banks provide a broad range of services for remote management of bank accounts, allowing increasing the number of users two-fold, and Internet banking and mobile banking services – by more than 21 times over the last five years. Uzbekistan has been running and developing a unified interbank payment system of Uzkart with the transition to the EMV standard, which merges payment systems of 26 commercial banks for settlements with microchip plastic cards.
(Source: «Uzbekistan Today» newspaper)