Tashkent, July 8, 2005 — Uzbek businesses
received new incentives for growth when the president of Uzbekistan recently
signed four decrees to stimulate development of small and medium enterprises
and ensure a better entrepreneurial climate in the country. It is anticipated
that the decrees’ benefits to the SME sector will total almost $27 million
a year, or about 1.5 percent of the country’s gross domestic product.
With funding from the Swiss State Secretariat for Economic Affairs, IFC’s
Uzbekistan SME Policy Project has been working since 2002 to support the
country’s government in efforts to improve the business environment. IFC’s
assistance has focused on streamlining the inspections regime, the business
reporting requirements to various authorities, and the permits system.
Over the past year, IFC worked closely with Uzbekistan’s Ministry of Economy,
its Ministry of Justice, and the country’s Chamber of Industry and Commerce
in drafting the presidential decrees.
The Decree on Decreasing the Burden of Inspections shifts away from regulators
the rights to freeze a firm’s bank account, impose major fines, or confiscate
goods. These actions are now the prerogative of courts, and prosecutors
will be allowed to inspect a business only if they are investigating tax
and currency violations.
The Decree on Reducing Excessive Powers of Inspecting Agencies focuses
on the system of fines, which will be substantially reduced or waived altogether
in cases of a first offence or offences that are unintentional or effectively
harmless. The decree also calls for parliamentary approval of new rules,
giving firms six months to pay any fine that exceeds 20 percent of their
The Decree on Reducing Reporting Requirements concerns compulsory reporting.
IFC’s Uzbekistan 2003 SME survey found that Uzbek businesses had to submit,
on average, 133 statistics and tax reports to government agencies every
year. The new decree reduces this number, makes reporting strictly quarterly,
and prevents regulators from demanding additional documentation. Compulsory
contact between firms and tax authorities is thus reduced threefold, and
the number of reports an average SME has to file each year is halved.
The Decree on Simplified SME Taxation replaces a complex system of taxation
for small and medium enterprises, under which most SMEs had had to pay
four different taxes. Now they will pay a single tax equal to 13
percent of profits.
According to Uzbekistan’s First Deputy Minister of Economy, Galina Saidova,
“the government of Uzbekistan developed the new decrees in close collaboration
with the business community and international institutions, particularly
with the experts from IFC.” She added that the signed decrees demonstrate
that the Uzbek government recognizes an important role for the SME sector
in the economic development of the country.
Zafar Khashimov, IFC’s Project Manager, noted, “IFC is strongly committed
to continuing its assistance to the Uzbek government in order to create
a more favorable climate for business. These decrees will have a significant
impact on the SME sector and should serve as an additional impetus for
The International Finance Corporation is the private sector lending arm
of the World Group. The mission of IFC (www.ifc.org)
is to promote sustainable private sector investment in emerging markets,
helping to reduce poverty and improve people’s lives. IFC finances private
sector investments in transition and developing countries, mobilizes capital
in the international financial markets, helps clients improve social and
environmental sustainability, and provides technical assistance and advice
to governments and businesses. From its founding in 1956 through FY04,
IFC has committed more than $44 billion of its own funds and arranged $23
billion in syndications for 3,143 companies in 140 developing countries.
IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its
own account and $5.5 billion held for participants in loan syndications.
Switzerland’s State Secretariat for Economic Affairs (seco) seeks to create
the basic regulatory and economic policy conditions to enable business
to flourish for the benefit of all. It represents Switzerland in multilateral
trade organizations and in international negotiations. It is also involved
in efforts to reduce poverty and to help developing countries with transition
economies build sustainable democratic societies and viable market economies.
Each year Switzerland spends approximately 1.7 billion francs on economic
development cooperation and transition assistance to countries.