INFORMATION DIGEST OF PRESS OF UZBEKISTAN # 3

January7, 2015

special industrial zone “Jizzakh”. 2

Roison Electronics implements project in SIZ Jizzakh. 2

BUSINESS CLIMATE.. 2

The development of small business and private entrepreneurship in the Republic of Uzbekistan. 2

Society.. 5

Single portal launches system on discussing draft legislative acts. 5

 

 

 

 

special industrial zone “Jizzakh”

Roison Electronics implements project in SIZ Jizzakh

Roison Electronics will launch production of modern electronical products at the territory of the special industrial zone Jizzakh in 2015.

According to the press service of the administration of JIzzakh region, the enterprise will produce 650,000 tonnes of TV-sets, refrigerators, washing-machines, air-conditioners, vacuum-cleaners, electric and gas stoves.

The enterprise will start its activities at the SIZ Jizzakh by the end of 2015. The cost of the project is US$26.6 million, of which US$6.45 million will be used this year.

This year, the enterprise will produce 325,000 electronical products. The project envisages creation of 240 new jobs.

Roison Electronics was founded in 2002. The company specializes on production of various electronics.

(Source: UzDaily.com)

BUSINESS CLIMATE

The development of small business and private entrepreneurship in the Republic of Uzbekistan

The leaders of Uzbekistan regard the development of private entrepreneurship and small and mid-sized business as a priority political task aimed at creating a real platform on which to form the class of proprietors. Moreover, this is considered to be a condition sine qua none for transforming the very structure of the national economy, so that to boost the development of the services sector, a universally recognized source of employment growth and a vital factor of technological progress and competition.

For a start, it should be mentioned that the comprehensive legislative and normative framework that exists in the Republic of Uzbekistan creates an auspicious climate for the development of small and mid-sized business, attraction of investments and organization of production of competitive export-oriented commodities and services. As well as ensuring that the rights and vested interests of indigenous entrepreneurs are protected, the legislative base guarantees them the equal access to material, financial and labour resources, protection against the ungrounded interference in their activity and protection of information that constitutes an official or commercial secret. A special approach applies to the creation of small and mid-sized businesses during the re-establishment of state ownership rights and privatization, as well as in the course of secession from joint-stock companies, collective and lease-based enterprises.

Currently, small business plays a significant role in the country’s economic development. The formation of small market structures in all sectors and areas of the national economy is in line with the mainstream trends unfolding these days in the global economic process. All over the world a great number of small enterprises successfully operate in virtually all industries. Today, the Uzbek economy is represented by big, mid-sized and small enterprises, as well by economic establishments, which are based on individual and family labour.

Their sizes depend on the specificity of sectors, in which they operate, their technological peculiarities and a so called “effect of scale”. Some sectors are characterized by a high level of capital intensity and big production volumes. There are also sectors, where smaller enterprises prove preferable, because they are much more productive.

The efficient functioning of small production forms is associated with a series of their advantages in comparison with large-scale production. These include: the proximity to local markets and quicker adaptation to clientele’s demand; production of small batches, which is not profitable for bigger enterprises; elimination of some superfluous links of management etc. Small-scale production benefits from the differentiation and individualization of demand in the sphere of industrial and personal consumption.

The development of small and mid-scale production, in turn, is a highly propitious environment for an overall economic rehabilitation, as it stimulates sound competition, creates additional jobs, facilitates the restructuring processes and expands the consumer sector. What’s more, the development of small enterprises makes it possible to quickly satiate the home market with goods and services, leads to export-potential increases and a better exploitation of locally-mined raw materials.

Small enterprises have a vital role to play throughout the globe. In the last few years, the small business sector has been taking on special significance in Western Europe, the US and Japan, where it is represented by a whole spectrum of small and mid-sized enterprises. It should be emphasized at this point that small enterprises, with a staff of no more than 20, make up a lion’s share of that number, accounting for a 2/3 increase in the creation of new jobs. It is thanks to this very factor that the countries mentioned above have managed to significantly cut unemployment.

In the past 9 months of the current year, the small business sector’s share of GDP in the Republic of Uzbekistan has reached 52.9 per cent (compared with 51.2 per cent in the similar period of 2013), including in manufacturing – up to 31.1 per cent (27.9 per cent), investment – up to 33.2 per cent (32.2 per cent), paid services – up to 47 per cent (43.1 per cent), and in employment – up to 76.5 per cent (76 per cent).

The practice of assistance rendered by the state to the non-monopolistic sector in developed economies demonstrates that their governments identify the main directions for their help and promotion on the basis of comprehensive studies of a given range of problems.

Accordingly, direct financial backing is one of the major instruments used by the state to further the development of small business. Such assistance frequently takes the form of subsidies given to small firms on favourable terms, guarantees to obtain loans from other sources or preferential taxation.

Another vital instrument of state assistance to the small business sector is a system of state orders. Widely used in the majority of industrialized countries, it allows the state to ensure that small enterprises have access to a guaranteed market, to precipitate the process of capital accumulation, to expand production capacities, to strengthen competition, to upgrade equipment etc.

State authorities, acting in conjunction with private enterprises, set up special outfits designed to render consultancy services to small companies. This form of state assistance is well developed in a number of countries.

All-round support of small business and private entrepreneurship, the removal of numerous obstacles that may hamper their rapid development, guarantees of the freedom of operation and simplification of a procedure for their foundation are specified as the priority directions of Uzbekistan’s state policy. One of the striking illustrations of the state’s attention and concern for the development of the private sector is the Presidential Decree, “On measures to radically reduce the number of statistical, tax and financial reports, licensed lines of activity and permitting procedures” as of 16th July 2012. Notwithstanding the fact that regular efforts have been made in this direction, the system of statistical, tax and financial record-keeping remained cumbersome and required fundamental reforming and simplification. That’s why the tasks specified in the document are viewed as a logical continuation of reforms to liberalize the national economy.

In particular, the Decree abolishes a series of statistical, tax and financial reports. This becomes possible by combining the forms, where one and the same information is repeated. A given document envisages a tangible reduction in both the number and periodicity of state statistical, tax, financial and other kinds of reports to be presented on a regular basis. Moreover, as many as 80 permitting procedures and 15 licensed lines of activity are cancelled. In keeping with the Presidential Decree in question, the presentation of monthly reports of all taxes and other obligatory payments, with the exception of tax on additional profit, is abolished starting 1st January 2013, which is a great relief for small enterprises, since they can now devote more time to their business.

It is also stipulated in the document that by the end of 2014 all entrepreneurial establishments should accomplish a stage-by-stage transition to the electronic system of tax, statistical and financial accounting. A given measure is also intended to save domestic entrepreneurs the time and form-filling paperwork, to raise the quality of interactive services provided by tax authorities and to improve the business environment in the Republic as a whole. The changes introduced amenably to the Presidential Decree under discussion imply that small businesses and privately-run firms should opportunely review the types and contents of reports they are obliged to present.

The implementation of this Decree and other relevant normative documents, which are aimed at creating a business-friendly environment in Uzbekistan, will contribute appreciably to the further liberalization of the national economy and, in the long run, to the runaway development of small business and private entrepreneurship.

Characterized by a high degree of mobility, small business quickly responds to any changes in the market situation and consumer demand. Additionally, it plays an important role in creating new jobs, expanding the home market of goods and services, meeting the population’s needs and fuelling the country’s economic growth.

For the time being, entrepreneurs, intending to start their own business, can receive a corresponding approval within two days. This term corresponds to the criteria, which are in effect in developed countries. The introduction of a “one-counter” system is very convenient for start-ups. Procedures for linking up entrepreneurial establishments to engineering communication networks and for registering their exports with customs authorities have been simplified and cheapened. As well as that, a special provision has been introduced to ban the conduct of planned check-ups at newly-created entrepreneurial establishments within 3 years since the date of their official registration. At present, small businesses and private entrepreneurs are going over to an electronic system for the presentation of their statistical, tax and financial reports.

For economic establishments, the rate of unified tax payment is subject to reduction on a regular basis. For instance, in 2009 the rate of unified tax payment for small businesses and private entrepreneurs was reduced from 8 per cent to 7 per cent. At the beginning of 2011, this indicator was lowered to 6 per cent, thus becoming another important privilege granted to the sector. In 2012, the rate of unified tax payment for micro-firms and small enterprises operating in the manufacturing industry was fixed at 5 per cent.

In the year 2000, the small business sector accounted for 31 per cent of the nation’s GDP. These days, a given indicator exceeds 54.6 per cent. Over 75 per cent of the country’s manpower is employed there, with both indicators testifying to the correctness of the state’s decision to concentrate attention on the development of the private sector in Uzbekistan.

Each year, indigenous commercial banks earmark more and more credit resources for the development of small business and private entrepreneurship. Consistent work is carried out on expanding the scope of crediting, improving the mechanisms for long-term credit allocation for investment purposes, forming the initial capital and allotting micro-credits.

As is generally known, entering a foreign market is an uphill job for small enterprises. This is associated with the need to bear certain expenses and to acquire sufficient knowledge of the market situation and peculiarities of foreign legislation. In this connection the Uzbek government devotes special attention to the creation of organizational, legal and financial mechanisms for the development of the sector’s export potentialities. For example, for small enterprises, whose share of exported goods (works or services of their own production) for freely convertible currency (with the exception of raw materials) ranges between 15 per cent and 30 per cent of the total sales volume, the established tax rate is reduced by 30 per cent; if that indicator exceeds 30 per cent of the total sales volume, the established tax rate is reduced by 50 per cent.

According to domestic and overseas specialists, a new mechanism of attracting small businesses to state purchases can safely be viewed as a new stage of modernization in the national economy. At this point it is worth mentioning the Presidential Resolution, “On optimization of the state purchases system and wider attraction of small business to state purchases” dated 7th February 2011. In conformity with this document, a new mechanism of state purchases of goods (works or services) has come into force. A renewed procedure for accomplishing state purchases is based not just on guarantees of enlarged access to participation of small enterprises in tenders for state orders to supply goods (works or services). It is designed to boost sound competition among potential suppliers, as well as to make the deals much more transparent. During such tenders, other things being equal, small businesses are given preference. What’s more, contract organizations for the execution of construction and reconstruction projects, worth up to 500 million Soum, which are funded from the state budget and other centralized sources, are selected exclusively among small enterprises. These examples provide a graphic demonstration of the fact that the sector’s dominating role is secured in the Presidential Resolution under discussion (currency rates of CB RU from 07.01.2015   1$= 2424.23 soums). Correspondingly, the treatment of representatives of small business and private entrepreneurship changes radically. Today, they start appearing in the role of the state’s equal partners. A range of issues surrounding the sector are addressed within the framework of a corresponding program approved by the Uzbek government. These include the expansion of participation in foreign economic activity of small businesses and private entrepreneurs, the provision of all sort of assistance in raising their export potentialities and promoting their exports to the regional and international markets.

That small enterprises enjoy support in all developed countries confirms the fact that small-scale business and private entrepreneurship as a novel organizational form of socially indispensable labour is equitable to their socio-economic interests. The Republic of Uzbekistan is no exception. The small business sector makes a tangible contribution to the national economy at large and to each citizen taken separately. So the recognition and support it receives from the state is well-deserved. Small enterprises often draw additional labour in the public production process and thereby create new values and augment the national income and national wealth. Small-scale entrepreneurship represents the source of growth Uzbekistan will never refuse.

(Source: «Business partner.uz» newspaper)

Society

Single portal launches system on discussing draft legislative acts

A system to discuss of developing draft of legislative acts and evaluation of existing legislative acts affecting to business was launched on the Single interactive state services portal.

Thanks to this system, citizens and business entities can take part in discussion of developing the drafts and the adoption of legislative acts in the field of entrepreneurship.

Comments and proposals left by users on the Single portal will be considered by public agencies and on the base of them will be took decision (acceptance or rejection of proposals).

In addition, users can participate in the evaluation of the impact on the business already existing legislative acts by filling out a special questionnaire posted on the portal.

The system is realized in accordance with the Decree of the President of the Republic of Uzbekistan from 7 April 2014 “On additional measures to further improve the investment climate and business environment in the Republic of Uzbekistan”.

(Source: UzDaily.com)

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