June 8, 2015
The Big Starts with the Small 2
Meeting with the Ambassador of Hungary. 5
Silk and Spices Festival Makes a Splash. 5
small business
The Big Starts with the Small
The current global economy provides almost unlimited opportunities for entrepreneurs and small businesses in particular. It stands to reason that analysts call globalization of small business and its active invasion of export markets as the main trend in the development of the business landscape in the 21st century. Uzbekistan, where the share of small business in GDP has already exceeded 56%, showing an increase of more than 25% over the last 15 years, has been evolving amidst the dynamic flux.
IN THE MAINSTREAM OF GLOBAL TRENDS
The final stage of the competition Tashabbus 2015 (Initiative) for entrepreneurs, artisans and farmers took place last week in the capital city Tashkent. It is often called a litmus test for assessing the state of small economy in the country and the latest trends in its development. This year’s competition has lived up to expectations. The competition was distinguished by a large number of participants focused on export-oriented production. The demonstration of their success stories is very important for the domestic private entrepreneurship, many representatives of which see the expansion to the international market as a very complicated process. The expansion to foreign markets is certainly not an easy challenge, but the representatives of ‘small economy’ have been turning into the key to unlock international trade barriers, reshape the global economy, and open up the potential for the own growth.
Experts believe that the current situation is best advantageous for businessmen to enter foreign markets. The crisis in the global economy has forced some large companies to leave the niches, or even completely withdraw from the market in many countries, until the situation stabilizes. This largely depends on the fact that multinational companies and corporations have a rather unwieldy structure, appearing unable to quickly refocus their production in the conditions of the falling demand and changing customer needs. Small businesses always face this challenge because they are unable to compete with large-scale industrial production by volumes or dumping. They become effective only is case if they optimally satisfy customer needs. This suggests that they are always ready for market changes.
There is a simple example: small businesses in the United States provide a significant share of the gross domestic product, generate more than a half of new jobs and, most importantly, annually exports goods worth $350-400 billion. This sector employs more than 70% of working-age population in another world’s industrial center – Germany. At the same time, there is a huge number of small craft businesses (500-600,000), covering more than 90 different kinds of activities. Exporters make up nearly a quarter of them, providing 17% of the total foreign trade of the country.
Uzbekistan also has something to show. The share of small business in GDP in the first quarter of 2015 increased to 41.7% (41% in the first quarter of 2014), in the industry – up to 29.8% (26.8%), paid services – to 48.4 % (42.7%) and employment – to 76.8% (76.4%). The consistent measures on creation of the business environment, integrated support and further stimulation of the ‘small economy’ players have contributed to the establishment of over 8,000 new small businesses in the first three months of 2015 alone, which is 10.2% more YOY. Industry and manufacturing sectors (37.7% of the total), construction (11.5%), trade and catering (29.3%) have taken the lead in this area.
Many analysts of the global market note that the Fund for Support of Exports of Small Businesses and Private Enterprises has been actively upholding local entrepreneurs, farmers and artisans in their expansion into foreign markets. Founded in 2013, the Fund has managed to significantly promote domestic products in the world market. For example, last year it assisted in signing contracts worth $1.25 billion. In the first quarter of 2015, the Fund has supported 315 business entities in exporting their products valued at $220.4 million, and assisted 36 enterprises in seeking for foreign customers and making export contracts worth $2.5 million.
A private enterprise Livadiya-Bukhara – the winner of the Bukhara regional stage of ‘Tashabbus-2015 – might be exemplified as a success of export-oriented activity. Several years ago, its experts developed new equipment for processing and drying fruits and vegetables, meat and dairy products, and established a supply to the domestic and foreign markets. The new technology allows saving up to 90% of vitamins and minerals, as well as the flavor and aroma of the food.
“The focus on our own innovations has empowered us acting in two directions – to produce equipment for harvesting agricultural products, and produce a wide range of fruits and vegetables,” says the director of Livadiya-Bukhara private enterprise Ilkhom Sayfiev. “We can annually produce up to 400 cases for infrared drying of fruits and vegetables. They have already been enjoying a high demand in neighboring countries. We are currently working on the development of an innovative project on the production of energy-saving conveyor dryer, which would be also demanded in other countries.
The company has accrued a considerable experience both in the implementation of technological projects and processing agricultural products. It produces artichoke powder, apple chips, sets for stewed fruits, semi-finished products for soups, dried fruit. Their quality was appreciated by Israeli partners. Subsequently Uzbekistan signed a contract for the supply of dried fruits worth $2 million. Over the past few months, the company’s exports totaled $150,000. By the end of the year it is planned to increase shipments abroad up to $500,000.
Triumph Gorniak Copmany, the winner of the Navoi region, is another successful example of the focus on exports and diversification of production backed by tracking the market demands. Founded as a manufacturer of narrow-purpose construction materials, the company is already exporting them; it has established a sewing workshop, manufactures polypropylene bags, and makes plans on expansion.
SPOTLIGHT ON ADVANTAGES
This year’s Tashabbus is surprising in many ways. Despite the long background, the number of enthusiastic applicants has not decreased, but tending to grow. The district and city stages involved over 6,200 entrepreneurs, farmers and artisans. The best participants passed to the regional stage. Finally, 41 winners of regional shows have reached the national stage, where they presented their achievements at the traditional exhibition.
As always, the winners of the republican stage will be selected in three main categories – the year’s top entrepreneur, farmer and artisan. There are also some additional categories like ‘The Year’s Youngest Entrepreneur’, ‘The Year’s Top Business Woman’, ‘The Year’s Top Innovative Project’, ‘The Top Employer for the Young’, ‘The Top Exporter’, ‘The Most Reliable Social Partner’, and others.
For the second year run the selection criteria says on behalf of transparency and selection of the most deserving candidates. Previously, the winners were determined by the outcomes of the two-day exhibition, while now an expert commission scrutinizes all achievements of competitors and makes the choice. For this reason, the winners of the review competition Tashabbus-2015 will be announced on June, 11 2015.
This year’s competition, and actually the entire domestic small business sector, has been strikingly active in its pursuance of the global trend on changing business mentality. Previously, the answer to the question on what a small business is came to hairdressers, shop, repair, tailoring, restaurants and that sort of thing. To date, the trend has changed. The representatives of ‘small economy’ have been trying science and high technologies, Internet and communications, pioneering innovative products.
In Germany, for instance, such giants as BMW, Volkswagen, Daimler, Siemens and others are backed by numerous small and medium-sized businesses, which make calculations, manufacture certain parts and subassemblies, invent electronic stuffing.
Uzbekistan has been actively promoting a proven model of creation of technological startups. Chamber of Commerce and Trade of Uzbekistan jointly with the Brand.uz Company has created a like platform entitled a ‘Startup Mixer’. Startups are small businesses that focus on the development of new innovative ideas and services, occupying a free niche in the market, or even creating a new one. Mobility and competitiveness are key distinguishing features.
In a short time the Startup Mixer has turned into the ambitious project in information and communication technologies. It empowers young professionals to present their own products, find investors for making their ideas true, get advice from experienced entrepreneurs, provides lectures on promotion of innovative projects.
Modern communication technologies, primarily the Internet, stay in focus. Internet has become a breakthrough for small businesses into the global trade. Today, any small store or company can create its own trading platform and sell goods to customers around the world. One can also take advantage of specialized websites like Amazon, eBay and others. Internet has simplified the implementation of promising and commercially successful projects on a global scale. Moreover, the Internet space has itself become a field for numerous microfirms that develop software applications for smartphones, build websites, that is, produce the most expensive intellectual products.
STRATEGIC VISION
The newspaper space is too small to describe all the steps and the path traversed by Uzbekistan towards the development of small business and private entrepreneurship. Therefore, it makes sense to focus on the latest steps of the government, which many experts have already assessed as fateful in terms of promoting this sector to foreign markets, and drawing domestic and foreign investment. In this regard, the past month was particularly important for ‘small economy’ – the state’s leader approved a program of measures on ensuring protection for private property, small business and private entrepreneurship, and elimination of barriers to their rapid development. The document envisages specific measures to further simplify all kinds of registration, permits and licensing procedures, including those related to foreign economic activities, create appropriate conditions and opportunities for the accelerated development of the business sector, and expands access to loan and financial resources.
The measures will be taken despite the fact that the country has already achieved a significant progress in abovementioned directions. As part of business support and assistance in the establishment of small industries 2.8 trillion soums of loans have been allocated in the first quarter of 2015 with a 1.3 times increase YOY, $38.3 million of credit lines of international financial institutions have been channeled for the development of small businesses. Besides, 14 projects worth over 10 billion soums have been funded with the support of the Fund for Financing the Development of Project Documentation for Investment Projects under the Association of Banks of Uzbekistan (currency rates of CB RU from 08.06.2015 1$= 2541.65 soums).
The current measures on expanding access of private enterprises to commodity and feedstock markets have contributed to the four-time increase YOY in the number of small business entities that have been accredited to supply their goods and services for public procurement. Their number totaled to 34,200 entities, or 98.3% of all participants in public procurement. As a result, as of the beginning of 2015, the volume of public procurement from small businesses has amounted to 77.9 billion soums, or 99.6% of total public procurement through electronic trading. At the same time, the introduction of electronic trading on public procurement has saved 22 billion soums or 21.9% of the budget provided for this purpose.
The government provides business entities with a range of supportive benefits in order to reach the new heights. For instance, the new benefits have been granted to individual entrepreneurs as they provide a significant share of the service sector in Uzbekistan. As of July 1, they have the right to hire from one to three employees, depending on the type of activity, paying insurance fees to the Pension Fund in the amount of 50% of the minimum wage and the fixed tax of 30% of the established rate for the individual entrepreneurs-employers for each hired employee. In addition, they are exempt from fixed tax for employed workers – graduates of vocational colleges within twelve months after graduation.
Meanwhile, another initiative is likely to become the most useful for the business. A centralized system of a ‘single window’ centers will start operating across the country as of January 1, 2016. Single centers of public services for businesses will be established on the platform of inspections for business entity registration under rural and urban administrations.
A new system of checks is destined to simplify the activity of many entrepreneurs. As of July 1, 2015, all checks of microfirms, small businesses and farms are eligible no more than once every four years, other economic entities – no more than once every three years and solely by the decision of the National Council for Coordination of Regulatory Authorities of Uzbekistan. The terms of the scheduled inspections unrelated to non-financial and business activities should not exceed 10 calendar days. Scheduled inspections of financial and economic activity of business entities cover only the period following the last scheduled inspection.
(Source: «Uzbekistan Today» newspaper)
International cooperation
Meeting with the Ambassador of Hungary
On June 7, 2015Minister of Foreign Affairs of Uzbekistan Abdulaziz Kamilov received newly appointed Ambassador Extraordinary and Plenipotentiary of Hungary with residence in Moscow (Russia) Janos Balla.
Ambassador handed over credentials, addressed to the President of Uzbekistan Islam Karimov, the press service of the Ministry of Foreign Affairs said.
At the talks, the sides considered current state and perspectives of developing bilateral cooperation in various spheres, including in Uzbekistan-EU format.
The sides also exchanged opinion on some international and regional issues of mutual interest.
(Source: UzDaily.com )
Tourism: Bukhara
Silk and Spices Festival Makes a Splash
The festival in Bukhara presented a treasure trove of art, ceramics, jewelry with traditional twists, carpets and embroideries, while putting the spotlight on centuries-old traditions and contemporary trends.
Those who have visited Bukhara will understand the symbolism of one of the most magnificent cultural events of the country, the 14th Silk and Spices Festival. And those who are planning a foray into Uzbekistan are advised to visit this wonderful city, where they are certain to enjoy fascinating aromas and colors…
The scorching sun of the desert. Bukhara: magnificent and very special. It was here that representatives of different countries, ages and professions united by a common objective came together – to immerse into the melodic atmosphere of oriental hospitality and get acquainted with the gem of the Great Silk Road. Representatives of more than 50 countries, hundreds of tourists and as many masters have become participants of the unforgettable travel into the fairytale world of silk and spices, traditions and trends.
The main events of the festival were not incidentally held at the Labi hovus. It is namely here, the historical treasury used to arrive trade caravans since times immemorial. Having started with magnificently enchanting procession of artists, clowns, trumpets and flutes, from the first minutes used to be so much promising. The intrigue of pleasant surprises was preserved to the last minute of the festival though.
Annually the festival turns into a unique ground for cultural and business dialog. At the international scientific-practical conference “How to turn Bukhara – a city on the Great Silk Road – into one of the centers of global tourism”, experts of the tourist business discussed the realities of the national market.
“We have come to the festival and taken an active part in the conference to unite our efforts with colleagues from Uzbekistan and channel those efforts toward promoting Uzbekistan in general and Bukhara in particular, specifically as a unique tourist destination,” says Beka Jakeli, Senior Officer of the Regional Programme for Europe, United Nations World Tourism Organization. “The UN World Tourism Organization has unique experience working on the Great Silk Road project. I think that our joint efforts will help achieve great results. Bukhara presented investment projects in the sphere of tourism at the conference, which is very important for potential investors – foreign participants of the event. I would like to admit the high level of business demand and just inform you in advance that we have plans to implement in this direction.”
During the breaks between master classes, previews and back-stages the participants were entertained with programs of folklore performances, national costume shows and traditional fairs of applied folk art.
“This year our theater celebrates its 20th anniversary,” says Irina Sharipova, a festival participant and director of the Ovation Theater of Fashion. “Our history started with a small circle. Later, we set up a sewing workshop… Now, being a full-blooded and the only theater of fashion in Uzbekistan, we work in two directions: produce clothes and stage accessories for actors and deal with authors’ design of clothes in ethnic direction for all those interested in it. It’s pleasantly surprising to note that not only tourists but also the local population displays great interest in the national clothes.”
The collection of the Ovation Theater of Fashion as well as models of the authors’ clothes made by national designers produced a furor among the participants, and many even tried to embroider decorations in gold and imitate the wonderful patterns of traditional suzanis.
“Prospects for tourism in Uzbekistan are unusually wide, and as a representative of the European Union, I would admit that we pay this fact special attention. Probably it will be spearheaded toward the development of tourism in rural areas of Uzbekistan since we can really see opportunities in this direction. No doubt, we have to support the potential of urban and rural tourism in the country, and the EU looks at the prospects of rendering assistance in the implementation of program on training managers in the field of tourism within feasible future,” said head of the EU delegation in Uzbekistan, Ambassador Yuri Sterk.
This thesis on how important it is for the Uzbek nation to preserve and multiply its cultural and historic wealth ran all through discussions.
“Bukhara is very advanced as a tourist site. The Silk and Spices Festival vividly shows what a city Bukhara is like. I am convinced that Bukhara has a great potential since it is one of the best preserved historical cities; its future depends largely on us, how well we will be able to maintain this heritage. There are few places like this in the world, thus, a trip to Bukhara is one of the unique opportunities to feel through the atmosphere of the Great Silk Road,” says UNESCO Representative in Uzbekistan Krista Pikkat.
One of the newest and most promising tourist trends for Bukhara, according to common opinion of scientific-practical conference is scientific-educational one. Namely this trend, experts hold, will open up new horizons for tourist business and enable to expand the general program of a tourist’s sojourn in this fascinating city.
“This conference like the festival in general is of major significance from the point of study and popularization of historical and cultural heritage of Uzbekistan, specifically that of Bukhara in terms of developing tourism. Considering that tourism is one of the most recently developing sectors of economy, it is a particularly pressing issue. Special attention was attached at the conference to educational tourism, and Uzbekistan – with its rich and great history – has got a great future in this direction,” said head of chair of modern history and international research of the Institute of History under the Academy of Sciences of Uzbekistan, Doctor of Science (History) Mirzokhid Rakhimov. “Materials with concrete recommendations by experts from different countries and national researchers will be published as the result of the conference upon its completion. The content of the published materials will enable to analyze under a different angle the realities of tourist business and specify its development vectors.”
The “Silk and Spices” has fully attracted the attention of local craftsmen:
“Our dynasty of potters represents a traditional Ghijduvan school of ceramics,” says potter in the sixth generation Abdulla Narzullayev. “We take part at the “Silk and Spices” festival for the tenth time and witnessed how considerable has been the increase in the number of our dear guests. Similarly we, representatives of the tourist sector, keep expanding the number of proposals and offers. It has to be noted that the quality of output, which our masters present annually to the attention of festival participants, has grown up significantly. We do not only sell our produce here specifically, but also pool experience, share our developments and ancient recipes.
Growth of supply in response to demand is a mutually interdependent process. Representatives of touristically advanced countries displayed their interest in regard to Uzbekistan’s tourist potential growth dynamics:
“This is my first visit to Bukhara and I have to admit it has deeply impressed me,” commented Ambassador of China in Uzbekistan Sun Lijie. “I wish to see more tourists from China in Uzbekistan. More than 100 million tourists from China annually visit different countries of the world. I think that this is an impressive number both for Uzbekistan in particular and for the entire world. Today your Republic possesses rich potential for attracting tourists, these include diverse architectural landscapes, rich history, and most importantly, oriental hospitality. To attract even more Chinese tourists, I would recommend consolidating links between cities and towns and popularizing Uzbekistan’s tourist routes through this partnership. On our part, we are prepared to present Bukhara as a tourist attraction in different cities and towns in China as a “gem” of the Great Silk Road and establish sister-city relations between our major cities.
The end of the most entertaining cultural event of spring has arrived imperceptibly. Bidding farewell, every participant already outlined plans for the next meetings, many would leave behind a coin to be able to come here back again. Mysterious Bukhara, full of fairytale beauty, will definitely wait for new guests.
“I am impressed and overwhelmed with the magnificent cultural heritage which is present not only in the center of the city but everywhere. In many countries it bears an abstract form from routine daily life. I feel that all the guests have submerged into the atmosphere of the old times,” says Beka Jakeli, Senior Officer of the Regional Programme for Europe, United Nations World Tourism Organization. “Bukhara plays a special role in shaping of international tourist demand, and today Uzbekistan offers amazing destinations. Being an important location on the Great Silk Road, your country has preserved numerous distinctive vestiges of those times.”
(Source: «Uzbekistan Today» newspaper)
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