Starting a Business: What has changed

Apr 26, 2016

In 2015 in terms of ‘Starting a Business’ Uzbekistan was ranked 65 out of 189 economies in World Bank’s “Doing Business-2016” report.  Two years ago, in 2014, Doing Business recorded 7 procedures required to register a new company and start operations, which took 7.5 days and costed 3.3%  of GNI per capita. Last year, only 5 procedures were required, cost and time to complete those procedures were 3.4% of GNI per capita  and 6.5 days accordingly. Uzbekistan climbed 22 positions up to 42nd place in 2015, compared to 2014.

UNDP’s ‘Business Forum of Uzbekistan (Phase-III)’ experts explain such a significant jump in ‘Starting a Business’ with several factors.

The first reason is legal reforms that led to better practices. Two pieces of legislation – a Presidential Decree dated April 7, 2014 and Cabinet of Ministers’ Resolution dated November 25, 2013 #312 – made possible business registration online. The legislation allowed entrepreneurs to register their businesses online, while a registrar office assigns taxpayers and statistics IDs simultaneously online, within registration process.

To make the registration of a business more accessible, a single entry point created at https://my.gov.uz/ru/service/214 web portal. One-stop-shops (single window centers) established throughout the country to ease access and improve transparency and quality of public services.  These reforms, as recorded by the World Bank team, have streamlined registration procedures because of eliminating requirement to register with the statistics and tax authorities, which reduced time to register by one day. A slight increase in cost of registration is associated with the increase of minimum wage.

As a follow up step in further improving of registration procedures, the Chamber of Commerce & Industry of Uzbekistan with support of the Business Forum project, developed proposals to further reform business registration system.

As assigned by the Presidential Decree dated May 15, 2015, the business registration must be automated online procedure, which allows registration within 30 minutes. Applicants will not have to visit either a registrar office to submit documents or a bank to pay registration fees, in order to establish a business. In addition, online registration of newly formed company’s employees with the pension system will be considerably improved and integrated into registration process.

Project experts outlined that business registration process may ideally involve two procedures – the first is registration in real time, and the second is opening of a bank account. The entire process of starting a business, including the reservation of company name, payment of state fees for registration, obtaining a certificate of registration and registered constituent documents, registration with the tax and statistics authorities, and with the Halk bank – operator of the pension accounts, as well as opening a bank account, will only require a day. Likewise, the number of required documents will be considerably reduced – from six to two for legal entities, and from six to one for individuals. Abolishing the hurdles faced by businesspeople will make establishing an enterprise much more inviting prospect.

Beyond making procedures of starting a business easier, the online automated registration system can have a multitude of other benefits such as a) maximizing the contactless form of interaction with other public service providers that contributes to abolishing red-tape and corruption ; b) applying differentiated rates of due fees (i.e. lower fee is paid in case of online application compared to a fee when service is applied for in person); c) lower indirect cost (time and money) associated with establishing a business and d) replication of successful e-registration as a fully automated service to other public services. Apparently, online users will be motivated to improve their IT literacy, while the queues and paper workload at state agencies will be considerably reduced.

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