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Government Measures to Stimulate Growth of the SME Sector in Uzbekistan may Liberate up to $40 Million Annually for the Private Sector, According to IFC Study


In Tashkent
Zafar Khashimov

Phone: +(998) 71 138-5928

Email:
zkhashimov@ifc.org


Tashkent, February 19, 2007 - IFC’s Uzbekistan Business Enabling Environment Survey sheds light on administrative barriers faced by Uzbek enterprises. The survey revealed that during the last five years a high portion of small enterprises made investments into fixed assets. According to Zafar Khashimov, IFC Project Manager, this trend implies that small businesses are expanding their production of goods and services, which should eventually contribute to growing employment and general economic growth.

The findings of the fifth annual study are based on a comprehensive survey of 2,500 small business representatives (legal entities) and 400 individual entrepreneurs in all regions of the country, across every sector of the economy.  It was implemented with financial support from the Swiss State Secretariat for Economic Affairs (SECO).


Throughout 2002-2006, IFC assisted the Government of Uzbekistan in drafting Presidential Decrees aimed at improving the business enabling environment in the country, affecting improvements in areas such as registration, inspections, permit issuance and tax administration. Introduced by the government in 2005-2006, these measures will liberate over $40 million for Uzbekistan’s SME sector, including over $13 million in direct cost savings for entrepreneurs and an additional $26 million in profit for the SME sector as a result of faster business start up and new restrictions on inspectorates’ ability to shut down businesses.


IFC designed this year’s enterprise survey to help government agencies gain a thorough understanding of how businesses evaluate the efficiency of the recent reforms. Survey results indicate that entrepreneurs across Uzbekistan positively assessed the Government’s measures aimed at further developing the SME sector. However, the survey showed that these measures were being poorly implemented outside of the capital. While 72% of those polled indicated that the amount of paperwork submitted to various state agencies has indeed been reduced, only 40% of entrepreneurs indicated that waiting lines in tax inspectorates became shorter, in spite of the introduction of the Presidential Decree to streamline the reporting process. Only 30% of those surveyed indicated that authorities accept documents throughout the entire business day.


Survey participants also pointed to a number of administrative barriers which impede business, in spheres which include foreign trade and firm liquidation.


“There is no information about liquidation of an enterprise at all. We had to fulfill requirements of the local municipalities and Tax Inspectorate officers. We would be told there was no document regulating procedure and that we were supposed to follow their instructions,” said one of the focus group participants.


“While Government initiatives to liberalize and stimulate the business climate in Uzbekistan were positively received and viewed by the country’s entrepreneurs, much is still left to do, including improving practical applications of these measures in the regions and increasing legal awareness of both entrepreneurs and state officials,” said Mr. Khashimov.


An electronic version of Uzbekistan BEE report is available at
www2.ifc.org/centralasia/sme/uzindex.htm.

About IFC


IFC, the private sector arm of the World Bank Group, promotes open and competitive markets in developing countries.  IFC supports sustainable private sector companies and other partners in generating productive jobs and delivering basic services, so that people have opportunities to escape poverty and improve their lives. Through FY06, IFC Financial Products has committed more than $56 billion in funding for private sector investments and mobilized an additional $25 billion in syndications for 3,531 companies in 140 developing countries. IFC Advisory Services and donor partners have provided more than $1 billion in program support to build small enterprises, to accelerate private participation in infrastructure, to improve the business enabling environment, to increase access to finance, and to strengthen environmental and social sustainability. For more information, please visit
www.ifc.org.

About SECO



The State Secretariat for Economic Affairs (SECO) is the Swiss Confederation's competence centre (
www.seco.admin.ch) for all core issues related to the economic policy and for sustainable economic development including the integration of developing and transition countries into the global economy. SECO's aim is to create the basic regulatory and economic policy conditions to enable business to flourish for the benefit of all. In terms of foreign trade policy, SECO is active in the shaping of efficient, fair and transparent rules for the world economy. SECO also represents Switzerland in the large multilateral trade organizations as well as in international negotiations.

In Moscow
Ilya Sverdlov
Phone: +(7) 495 411-7555 x2075

Email:
isverdlov@ifc.org

In Washington, D.C.
Andrea Engel
Phone: (202) 458-1969
Email: aengel@ifc.org