Dialogue to Determine the Ways for Improving the Investment Climate in UzbekistanApr 25, 2018
UNDP and the Senate of Oliy Majlis of Uzbekistan hosted a conference to discuss problems impeding foreign investments, introducing modern technologies to the regions of the country and the way of addressing existing bottlenecks.
The identification of problems - a step towards to solving them
The development begins with identifying the areas that need improvement. Dialogue between the state and entrepreneurs is the best way to get acquainted with the needs and demands of business, as well as to identify the problems and barriers that they face. In this regard, from March 25 to April 5, 2018, the United Nations Development Programme in Uzbekistan, the Senate of the Oliy Majlis and the Chamber of Commerce and Industry conducted a survey among representatives of the private sector and the results of survey were presented during the conference. Over 600 respondents from all regions of Uzbekistan took part in the survey.
The respondents positively reacted to the opportunity to take part in the survey and, in addition to answering the questions, they presented detailed proposals to address problems. It is noteworthy that entrepreneurs did not raise issues in the areas in which current reforms are implemented, for example, currency transactions, cash transactions and unjustified inspections, which confirms the effectiveness of the reforms.
Among the main areas that adversely affect the conduct of business, respondents noted taxation, banking and antimonopoly regulation. Assessing the business environment from the point of view of the favorable way of doing business, entrepreneurs voiced problems associated with excessively high interest rates for loans and high taxes, allocation of land, obtaining buildings and structures, and connection to engineering and communication networks.
At the same time, as the main obstacles to the inflow of foreign investments into Uzbekistan's economy entrepreneurs identified lack of qualified personnel, lack of information for investors, low interest of local authorities in attracting investments, high cost and complexity of export-import operations and bureaucracy.
The needs of the regions in attracting investment
The problems identified during the survey of entrepreneurs were also voiced by representatives of state authorities. As deputy governors of Andijan region Salombek Khabibullayev and Kashkadarya region Oybek Shagazatov noted, the problems of connection to communication networks due to an uneven distribution of engineering and communication networks across the region, as well as difficulties with the registration of an enterprise with foreign investments could be attributed to the main problems.
From problems to their solution
The next part of the conference was devoted to the study of measures that are implemented to remove existing barriers in doing business and in attracting investments.
In his speech, the Chairman of the Chamber of Commerce and Industry Adham Ikramov noted the current issues of protecting the rights of investors and spoke on measures which the Chamber is undertaking to provide legal support to entrepreneurs. Deputy Chairman of the State Committee for Investments Shamil Burnashev presented a detailed overview of the investment climate in the country and the direction of the committee's work on attracting investments.
Deputy Minister for Innovative Development Sherzod Shermatov highlighted issues of investing in science and innovation. He mentioned that in Uzbekistan the share of investment in research and development makes 0.2% of the country's GDP. This is 20 times less than similar figures for Israel and South Korea. According to the Global Index of Innovative Development in 2015, Uzbekistan ranked 122th among 141 countries.
Among the areas requiring development, Mr. Shermatov noted higher education, environmental sustainability, including energy efficiency, investments, the breadth of knowledge dissemination and the availability of intangible assets.
In response to voiced problems with tax regulation, First Deputy Chairman of the State Tax Committee Behzod Musaev said that in Uzbekistan it is proposed to cancel a number of payments and streamline the tax system and reduce tax rates as a whole.
Foreign experience in attracting investments and developing modern technologies
Senior partner of Ernst & Young Richard Tollis shared his foreign experience in attracting foreign direct investments in the infrastructure projects of developing countries. He noted that when implementing infrastructure projects it is important that the government provides guarantees to investors. Among the recommendations, it was noted that infrastructure projects require the development of a mechanism for public-private partnership.
Partner and Head of Investment and Capital Markets at KPMG, Lidia Petrashova presented key factors of the region's investment attractiveness based on international experience. Mrs. Petrashova recommended observing the systematic approach, coordinating the actions of various state structures and regions with the center; properly using fiscal instruments in combination with an effective tax system.
The UN supports the government's efforts to improve the business environment
The UN Resident Coordinator in Uzbekistan and UNDP Resident Representative Helena Fraser pointed out the importance of reforms in the country.
Helena Fraser stressed the importance of ensuring that as a result of the reforms, every entrepreneur felt that his/her voice was heard and supported. In this regard, an important role is played by a constant dialogue between the government and the business community. The survey became one of the platforms facilitating the conduct of such a dialogue.
In turn, the development of entrepreneurship and attraction of investments will contribute to the creation of jobs and economic growth, which corresponds to the Goal 8 of Global Agenda 2030 adopted by the UN member states in 2015.
Conference participants provided specific recommendations to the Government of Uzbekistan on improving the investment climate in Uzbekistan.
UNDP supports the government’s efforts to ensure sustainable economic growth through private sector development, enhancing the country’s investment attractiveness and export potential.