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SOCIAL ECONOMIC DEVELOPMENT OF THE REPUBLIC OF UZBEKISTAN AND THE MEASURES TAKEN TO IMPROVE THE BUSINESS ENVIRONMENT Ministry of Economy of the Republic.

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Presentation on theme: "SOCIAL ECONOMIC DEVELOPMENT OF THE REPUBLIC OF UZBEKISTAN AND THE MEASURES TAKEN TO IMPROVE THE BUSINESS ENVIRONMENT Ministry of Economy of the Republic."— Presentation transcript:

1 SOCIAL ECONOMIC DEVELOPMENT OF THE REPUBLIC OF UZBEKISTAN AND THE MEASURES TAKEN TO IMPROVE THE BUSINESS ENVIRONMENT Ministry of Economy of the Republic of Uzbekistan August 17, 2012

2 2 Sustained high rates of economic growth (7-9% per annum on average) Main trends of social economic development of Uzbekistan for the period of independence, the development of GDP based on purchase power parity has increased 3,5 times volume of industrial production has grown more than 3 times during

3 3 №Indicators ExpectedForecast Gross Domestic Product (GDP) Level of inflation (end of period) Volume of industrial products Volume of agricultural products Volume of Investment Main macroeconomic indicators of development of the Republic of Uzbekistan for the period of (in % change to the previous year) Main trends of social economic development of Uzbekistan

4 Factors affecting to the growth rate of social economic development of the Republic of Uzbekistan 1.Maintaining macroeconomic stability, domestic and external equilibrium in the economy of the state; 2.Active industrial policy, aimed at structural changes, the rapid growth rate of the share of processing industry with the production of goods with high value added; 3.Implementation of innovative techniques, including energy- conserving; 4.Modernization and development of industrial infrastructure, particularly transport, power industry, water use and sewer systems, as well as means of communication; 4

5 5.Intensification of agricultural sector at the expense of the introduction of new technologies, water conservation, efficiency and productivity; 6.Further liberalization of economy and improvement business environment for developing small business and private entrepreneurship, as well as attracting foreign investment; 7.Stimulation and support for export; 8.Active investment on the building of human capital in the fields of education, health and physical training. 5 Factors affecting to the growth rate of social economic development of the Republic of Uzbekistan

6 6 Macroeconomic stability, internal and external balance of the economy have been ensured a moderately tight monetary policy kept inflation below 7-8 percent Budget balance (in % to GDP) balanced state budget – executed with a surplus since 2005 conservative policy of domestic and external borrowing. Government external debt doesn’t increase 7% of GDP Main trends of social economic development of Uzbekistan

7 7 balanced foreign trade – sustainable surplus and over 6-times growth of the official reserves in the past 5 years Main trends of social economic development of Uzbekistan Volume and dynamics of Uzbekistan foreign trade (USD mln.)

8 8 Implementation of large-scale structural reforms and diversification of the economy structural reforms of economy have provided growth of industrial production share in GDP from 14,2% in 2000 to 24,1% in 2011; implementation of transport and communication infrastructure development projects that increased share in GDP from 7,7% in 2000 to 11,7% in 2011; qualitative changes in the structure of economy due to growth of services in GDP from 37% in 2000 to 50,5% in Main trends of social economic development of Uzbekistan

9 9 Program includes: Implementation of 519 large-scale industrial investment projects for the total of USD 47,3 bln.; Advanced implementation of projects producing high-value-added industrial goods based on deep processing of local feed-stock and natural resources; Annual growth of industrial production at the rate of 9-12%; Increase of industry share in GDP from 24% in 2010 to 28% in 2015; Increase of processing industries share in the structure of industry from 41% in 2010 to 49% in 2015; Increase of export share in the volume of production from 42,3% in 2010 to 63,2% in Industries Value of projects (USD mln.) Total47261,5 incl.: Oil-gas and petrochemistry28562,1 Power5470,6 Chemical industry2867,1 Metallurgy3065,7 Textile industry1755,6 Machinery construction1458,6 Construction materials production 534,8 Other industries3546,7 Program on priorities of industrial development of the Republic of Uzbekistan for

10 Construction of Ustyurt Gas and Chemical Complex (on the base of Surgil gas field) and Mubarek Gas and Chemical Complex with total production capacity of 800 thousands tones of polyethylene and 100 thousands tones of polypropylene; Production of synthetic liquid fuel based on refined methane from Shurtan Gas and Chemical Complex (671 thousands tones of diesel, 278 thousands tones of air fuel, 370 thousands tones of naphtha, 65 thousands tones of liquefied gas); Construction of the modern combined-cycle power plants in Tashkent, Navoi and Talimarjan power stations, with the total capacity of 1746 MWt; Transferring units №1-5 of New Angren pover station to year-round coal firing (stage 1) with modernization of the section "Angren"; 10 Program on priorities of industrial development of the Republic of Uzbekistan for

11 Construction of urea and ammonia plant with production capacity of 660 thousands tones of ammonia and 1 mln. tones of urea; Expansion of Dekhkanabad potash fertilizers plant up to 600 thousands tones (II phase); Construction of propane-butane production plant at «Mubarek Gas processing plant» for increasing of liquefied gas production up to 258 thousands tones and condensate up to 125 thousands tones; Organization of production of conveyor belts, tires for agricultural machines and automobiles. 11 Program on priorities of industrial development of the Republic of Uzbekistan for

12 Development of road infrastructure 12 Development of transport infrastructure More than 2300 km roads sections of the Uzbek National Highway are being constructed and reconstructed; International Logistic Center in Angren city put in operation. Development and modernization of the railway sector Currently, 1030 km of railroad is being rehabilitated, 82.4 km are being constructed, and 278 km is under electrification; High-speed passenger trains «Talgo-250» have been purchased and high-speed railway line from Tashkent to Samarkand is introduced for their exploitation. Development of air transportation Construction of new passenger terminals at the airports of Bukhara and Tashkent are completed; Exploitation of new ten Airbuses A and two Boeing are started; The purchase of two Boeing is foreseen in 2013 and two Boeing in 2016.

13 13 For the years of Independence the aggregate tax burden decreased by almost 3 times. Moreover the Government provides additional tax incentives for exporters, small business enterprises and companies engaged in new investments and starting production of new goods and products Government support for development of the economy Taxes Maximum tax rates in Legal entities income tax 45%9% Individual income tax13%-60%9%-22% Value added tax30%20% Single social payment 40%25% Single tax payment for small enterprises 15,2% 6% (in industry - 5%)

14 14 A stable banking and financial system in strict compliance with the Basel Core principles of banking supervision Capital Adequacy Ratio – 3 times higher than international standards; Total assets of banks – more than 2 times higher than the total balance of the deposits of population and legal entities, insuring complete protection and guarantee of timely payments; for the last 10 years volume of loans to the real sector of the economy, financed from internal sources has increased by 35 times; Total current liquidity of the banking system is 10 times higher than external payments due. Sources of credit portfolio of commercial banks (eq. USD mln) Government support for development of the economy

15 Education system of the Republic of Uzbekistan New education system has been established, which consist of:  1539 new academic lyceums and professional colleges, with the capacity of 1.6 million students;  9791 renovated and newly constructed secondary schools for 4.6 million students.  66 institutions of tertiary education are functioning in the Republic with more than 300 thousand students, including branches of leading foreign universities: Moscow State University named after M. Lomonosov; Westminster International University; Turin Polytechnic Institute; Russian Economic Academy named after G. Plekhanov; Management Development Institute of Singapore; Russian State University of Oil and Gas named after M. Gubkin. 15

16 16 From the beginning of economic reforms small business and private entrepreneurship development has made the basis of multi structure market economy formation share of small business in GDP has grown from 31% in 2000 to 54% in 2011; number of small business enterprises has increased 2 times during last 10 years; share of small business enterprises in employment has increased from 49,7% to 74,8%; share of small enterprises in the total volume of industry has grown from 12,9% to 21%. Small business and private entrepreneurship share (in %) in GDP31,054,0 In industry11,321,0 in construction37,069,0 in retail turnover45,347,0 in total employment49,774,8 in export10,218,8 Small business and private entrepreneurship Dynamics of small business and private entrepreneurship development

17 The number of registered small business entities per 1000 employed people in 2011 in the countries of CIS (units) 17

18 Government program “The Year of Small Business and Private Entrepreneurship” The results of the Program: at the legislative level, the principle of priority of the rights of entrepreneurs is established, according to which all unavoidable contradictions and ambiguities in laws and regulations shall be interpreted in favor of entrepreneurs; 4 Laws of the Republic of Uzbekistan, more than 20 decisions of the President and the Government, aiming to reduce inspections of entities of business, to simplify and cheapen the registration and post- registration procedures and to create more favorable conditions for their activities are accepted; fees for customs clearance of export is reduced by twice, a system of registration of export transactions by the principle of "one window“ and the order of voluntary product certification are introduced; Bureau of export products promotion of Agency “Uzstandard” and specialized foreign trade company “Uztadbirkorexport” are created. 18 Credit stimulation of small business entities, billion. sums

19 The financial and economic activities of newly created small businesses cannot be target for planned tax audits in the first three years from the date of their state registration. Moratorium of 3 years is declared to conduct tax audits of financial and economic activities of small business entities that pay taxes and other mandatory payments on time, as well as ensure sustainable growth rate and profitability. * Since January 1, 2012 the rate of individual tax payment has been decreased up to 5% out of revenue for microfirms and small enterprises in the field of industry. Reducing tax burden for small businesses and restricting the inspection of their activities 19

20 20 №Indicators Number of abolished forms Overall reduction Number of reporting forms Total number of passing records during a year I.Statistical reports Total65by 1.4 timesby 2.0 times including: 1.For large enterprises58by 1.4 timesby 1.9 times 2.For entities of small business7by 1.6 timesby 2.9 times II.Tax reports Total6by 1.4 timesby 2.2 times III.Financial reports 1.For large enterprises2by 1.5 times 2.For entities of small business1by 1.5 times IV.Other reports Total50by 1.7 timesby 3 times V.Permission procedures Total80by 1.3 times VI.Licensing activities Total15by 1.25 times Decree of the President of the Republic of Uzbekistan №DP-4453 dated July 16, 2012 “About measures of drastically reducing the statistical, fiscal, financial reporting, licensable activities and permission procedures"

21 Decree of the President of the Republic of Uzbekistan №DP-4455 dated July “About measures of further radically improving of business environment and providing greater freedom for entrepreneurship” Since August 1, 2012, 22 norms (standards) and measures, aiming at further improving conditions of business environment have been introduced 21 Cancelled:Optimized procedures (terms, cost) requirement for partly payment of the statutory fund before state registration of economic entities along with maintaining obligations on the formation of statutory fund within a year terms of authorization for connection to water supply networks and sewage systems has been reduced up to 2 days terms of providing access of telephone network for enterprises reduced up to 10 days rate of state fee for credit institutions’ claims, regardinjg to recover credits, loans and other liabilities, to the court in civil cases has been decreased from 20 to 2% of the amount of the claim notarized specimen of signatures for opening bank accounts, as well as the requirement for the mandatody presence of specimen of signatures of small businesses in cards – microfrims second signature (accountant) terms of customs clearance of cargo and delivering certificate for origin of goods has been reduced up to 3 days terms of authorization for employment of highly qualified foreign citizens has been reduced up to 15 days the procedure of confirming country origin of imported goods rates of state fees for filing an application to the economic court on initiation of bankruptcy cases has been decreased from 20 to 3 times as much as minimum wage

22 The Program introducing in measures on further radically improving of business environment and providing greater freedom of entrepreneurship is approved, which provides: Improvement of the legislation of the Republic of Uzbekistan; Implementation of 35 measures in the following areas: I. The acceleration of the procedures related to registration and the beginning of business activity; II. Measures to improve the lending procedures and improving the activity of credit bureaus; III. Strengthening the protection of the rights and interests of investors; IV. Further reduction in the tax burden on the business entities and improvement of tax administration system; V. Liberalization of procedures related to the implementation of foreign trade operations; VI. Further simplification of procedures to restore the solvency and liquidation of business; VII. Improvement of conditions related to employment and labor relations; VIII. Measures to strengthen the legal protection of business entities. 22 Decree of the President of the Republic of Uzbekistan №DP-4455 dated July “About measures of further radically improving of business environment and providing greater freedom for entrepreneurship”

23 23 Measures taken to improving the business environment and providing greater freedom of entrepreneurship in Uzbekistan MeasuresResults Indicators of the top ten countries according to the report "Doing Business" Reducing the number of procedures for the registration of new enterprises from 6 to 3 procedures 1-3 procedures Reducing the time spent on the registration of new enterprises from 14 to 4 days1-13 days Reducing the initial costs of creating new enterprises from 27.2% of income per capita to 0% 0-25% of income per capita Reducing the number of procedures for obtaining building permits form 25 to 12 procedures 5-17 procedures Reducing the number of procedures for connection to power supply form 9 to 5 procedures 4-5 procedures

24 24 Measures taken to improving the business environment and providing greater freedom of entrepreneurship in Uzbekistan MeasuresResults Indicators of the top ten countries according to the report "Doing Business" Reducing the number of procedures for registering property form 12 to 1 procedures 1-7 procedures Reducing the time spent on the registration of property from 78 to 7 days2-38 days Reducing the number of tax paymentsfrom 41 to 7 payments 3-29 payments Reducing the number of documents for export from 6 to 4 documents 3-7 documents Reducing the number of documents for import from 11 to 5 documents 3-5 documents Reducing the expenses of litigation for execution of a contracts from 22.2% to 9% of the value of the claim % of the value of the claim

25 Thank you!


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