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17 September 2012 / 10:20

Dear participants of the conference!

Ladies and Gentlemen!

It gives me a profound pleasure to welcome you, our dear guests, the representatives of high-profile international institutions – the United Nations Organization, World Bank, International Finance Corporation, Asian Development Bank, Islamic Development Bank, renowned scientists and specialists, businessmen, all participants of the conference from 45 countries of the world, and express to you my deepest respect and sincere gratitude for participation in the conference.

It is not far by chance that we chose this very topic of the conference: «The Role and Importance of Small Business and Private Entrepreneurship in Implementing the Social and Economic Policy in Uzbekistan». It is explained, primarily, by the fact that the priority of accelerated development of this sector of economy since the early days of Uzbekistan’s independence served as the most important locomotive in tackling the most acute crisis problems inherited from the old totalitarian, planning and distributive system.

The advance development of this sphere, and in general, the chosen model of reforming and modernizing the country have played in Uzbekistan a decisive role in preventing and neutralizing the negative and destructive consequences of the global financial-economic crisis broken out in 2008. The crisis that now unfortunately tends to further deepen.

It cannot but raise alarm the growing threat of a new wave of recession and bankruptcy, stagnation and downfall of production, increase of debt instruments and deficit of budgets, problem of unemployment, dramatic decline of living standards of population, and as a consequence, the growing overall discontent of people and social tension.

The ongoing pumping of banking sector with new money supply at the expense of their printing, as well as uncontrolled flooding the financial market with various derivatives may well lead not only to delaying tackling the crisis, but also to further devaluation of national currencies with all related consequences.

Moreover, these huge pouring of currency resources don’t reach the real economy and mainly aggravate the speculative component and stagnation processes in the global economy.

In short, the unfolding state of affairs does not provide a basis for an early solution to the problems of the world economy. It becomes more obvious that overcoming the crisis is expected to be tedious and to much extent difficult to predict.

In the framework of this conference we would like to share the experience we have accumulated in developing the small business and private entrepreneurship as the most important factor to mitigate and overcome the negative consequences of the crisis.

It goes without saying that we are keenly interested in rather abundant experience accumulated during centuries in the highly developed and developing countries where the share of this sector of economy makes up nearly 80 percent of gross domestic product and not less than 70 percent of the working population. It is extremely important for us.

It truly gives me a big satisfaction to see our foreign guests in this hall. Your participation in the conference, your reports and speeches at the plenary and group sessions, your close engagement with your Uzbek colleagues, travels, visits to particular facilities, discussions and exchange of opinions, - all this cannot but enrich and diversify our forum, and I hope shall justify your expectations.

I would like to sincerely thank you for this.

Dear friends!

I think it is quite logical to ask a question: by what and which factors and reasons the choice of the priority of advance development of small business and entrepreneurship was conditioned?

If to briefly dwell on the reasons of this choice, they are as follows:

First, the world experience shows that the small business, as the vital structure-forming sector of economy, serves as a principal source to fill the domestic market with necessary goods and services.

The small business not only fills in the certain niches in the economy, but also plays an extremely important role in its diversification and ensuring its sustainable growth rates.

It is difficult to overestimate, especially in our conditions, the enormous role now played by entrepreneurship to provide employment and increase of people’s incomes. One can judge about this if to take into consideration the following figures.

During 2005-2011 we created more than 5 million new jobs in the economy of our country and more than 60 percent of them were created in the sphere of small business and private entrepreneurship. As a result, at present over 75 percent of the employed population of our country works in this sphere.

Second, being compact in its form, mobile and quick in decisionmaking, as well as receptive to innovations, the small business can more flexibly and faster adapt to fluctuation of demand and opportunities at the global and regional markets, and it timely responds to its challenges.

Third, establishing and running small business do not require big spending and capital inflows, and this allows to carry out quicker and easier modernization, technical and technological upgrading of production, develop the new types of products, continuously renew their nomenclature and ensure competitiveness.

Fourth, this sphere, as compared to large enterprises, has a stronger resistance to challenges and consequences of the global financial-economic crisis.

Only thanks to rapid development and dominating status of small business and private entrepreneurship we have been able to cope with negative consequences of the 2008-2009 crisis less painfully and with minor losses, and in a short period of time to restructure the production taking into account the changing demand of the global market.

In the industry the growth rates of the sector of small business and private entrepreneurship in 2008-2009 made up on average 23-24 percent and the growth rates of services made up not less than 15-16 percent.

Fifth, small business is not only a source of income, but also an instrument to reveal the creative and intellectual abilities of people. This sphere gives an opportunity to each person to demonstrate his individual talents and capabilities, thus shaping a new layer of people who are initiative and entrepreneurial, who are prone to an independent economic activity and able to achieve the set objectives.

In a word, small business and private entrepreneurship, in their essence, serve as a continuously expanding basis to form a middle class – the backbone of a democratic society. It is due to development of this particular sphere we are creating the social layer of society which is interested in socio-political, social and economic stability in the society, and stands as an active driving force in the country’s movement along the path of progress and democratic transformations.

I am convinced that the deep comprehension of these and other factors may well explain the reasons of the huge attention which is paid in Uzbekistan to the advance development of small business and private entrepreneurship. Suffice it to say that 20 years ago in Uzbekistan private entrepreneurship did not practically exist, and nowadays more than 90 percent of all economic entities are the enterprises of small business. Today the share of small business makes up about 54 percent of gross domestic product, 22 percent of manufactured industrial and 98 percent of agricultural products.

I believe that the participants of the conference shall duly assess our achievements in this sphere for over the last years.

I would like to especially emphasize that the fact that since the ancient times private entrepreneurship occupied a special place in the history of our country to much extent facilitated such a rapid growth of small business.

We are rightfully proud of the retained traditions of entrepreneurship of our ancestors, their respectful and careful attitude to land, ownership and crafts.

Dear participants of the forum!

Allow me to briefly dwell on the following extremely important question: what principles and prerequisites are we proceeding from to develop the sphere of entrepreneurship and small business in Uzbekistan?

First of all, this sphere is built on the foundation of existing solid legislative and legal basis, its permanent improvement, systematic assistance by the state in terms of granting benefits and preferences to business, technical and technological upgrading and modernization of production.

In the early 90s on the basis of constitutional norms and principles Uzbekistan adopted the laws «On denationalization and privatization» and «On property» which permitted in a short period of time to privatize the tens and hundreds of thousands of state property in industry, trade, public catering and services, and introduce the principles of leasehold, first of all, in the agricultural sector.

The law «On guarantees of freedom of entrepreneurial activity» adopted in 2000 has played a fundamental role in development of the private entrepreneurship. The law stipulates all main guarantees and conditions for a free participation of citizens in entrepreneurial activity, and it protects the rights and lawful interests of subjects of entrepreneurship and business.

The issues of taxation have always remained and still remain in the focus of our attention. During the period from 2005 to 2012 alone the single tax rate for microfirms and small businesses was cut to more than 2,5 times, from 13 to 5 percent of the turnover. The entities of applied folk arts and family business are fully exempt from taxes or are taxed at the minimum rate.

I would like to draw your special attention to the very fact that during the global financial-economic crisis we have not increased the tax rates, as it was done by many countries in the framework of anti-crisis programs, but vice versa we cut the single tax rate for small enterprises. We have also freed from taxes for 5-7 years the enterprises engaged in production of highly demanded consumer goods and completely freed from customs duties the enterprises undertaking technical and technological modernization and renewal.

In 2011 alone the total sum of tax benefits granted to the entities of small business and private entrepreneurship exceeded 500 million dollars in equivalent.

About 35 percent of this sum the enterprises have channeled to expand and modernize the production, and additional 25 percent was spent to stimulate the employees.

It is hard to overestimate the role of state in the formation and development of small enterprises and entrepreneurial activity, if we take into account its vital contribution to development of production, social, communication and transport infrastructure.

It is suffice to give an example of the experience of successful operation of the high-tech business in the «Navoi» free industrial-economic zone and «Angren» free industrial zone established in Uzbekistan.

In the «Navoi» industrial zone the state has invested about 100 million dollars into construction of engineering networks, logistics and support system which allowed to actively attract foreign investors to establish the tens of cutting-edge industries.

For the «Angren» industrial zone established this year we have elaborated the special program, which is already being implemented, to set up the production infrastructure and communications worth more than 60 million dollars.

What is being done for? We understand very well that small business cannot cope with such a burden. It cannot invest enormous capital inputs into construction of communications which serve not only one small enterprise or some group of enterprises, but in the whole this production infrastructure stimulates, brings people together, creates the necessary conditions and capabilities for organization of effective activity of the representatives of small business and private entrepreneurship. Naturally, this must be understandable for all.

In Uzbekistan we have adopted a resolution that stipulates that in these zones which are established as preferential zones the entire infrastructure for particular facilities with more than 30 million dollars of foreign investments shall be 100 percent financed on the part of state. We believe that such measures stand as the very stimulus which provides rapid growth of economy and entrepreneurship in Uzbekistan.

The issues of streamlining and soft lending stand as a decisive factor to stimulate establishment and development of private entrepreneurship.

In 2011 alone the banking system of the country allocated 2,5 billion dollars of credits in equivalent for the development and stimulation of this sector, and this made up 26 percent of the total amount of the allocated credits.

We highly appreciate the enormous assistance rendered for this purpose by such international financial institutions as the Asian Development Bank, World Bank, International Finance Corporation, Islamic Development Bank, the UN structures, the countries of the Arab Coordination Group, the governments of South Korea, China, Germany and others, which for over the past years have allocated over 1,5 billion dollars of credit resources for financing small business and private sphere in the economy.

Speaking about this, on behalf of all our Uzbek entrepreneurs and on my own behalf I would like time and again to express a sincere gratitude to the leadership and representatives of the United Nations, banking structures and the representatives of foreign embassies present in this conference for your contribution to formation and successful development of business in Uzbekistan.

Today there is no need to convince or prove to someone that only the educated, modern thinking, intellectually developed and professionally trained youth are able to become the most important condition and guarantee of a quality, dynamic and innovative development, and can ensure the commendable future of the country.

Comprehending this fact, the issue of personnel training in Uzbekistan is raised to the level of the most important priority of state policy. The unique system of education is already being implemented for 15 years in the country.

Its essence is in the transition to a mandatory and free 12-year education on the principle of «9+3», i.e. after completing the 9-year general secondary school during the following 3 years children continue their education at vocational colleges or lyceums of their choice.

As a rule, the lyceums are established at higher educational institutions and universities for a subsequent learning at them.

During these years we have constructed about 1,5 thousand new secondary special vocational educational institutions – the colleges supplied with the cutting-edge equipment in which the students obtain profession on 3-4 majors and learn not less than two foreign languages.

For over the last 5 years alone, more than 2 million 500 thousand young men and women graduated from these educational institutions. They are joining those who are now employed at the newly built modern enterprises and agricultural farms of the country.

I am convinced that many of you, our guests – the participants of this forum, could be convinced and find confirmation for these words while learning about the level and quality of training of future specialists during visits to colleges and lyceums in Tashkent, Samarkand, Bukhara and other cities of the country.

I want to share one notion with you. I consider it to be very important. Oftentimes during conversations with our foreign guests, especially with those who want to have a business in Uzbekistan, and certainly, the politicians and diplomats, first of all, they are interested in learning the following: what society does Uzbekistan build? What goals does it pursue? And to what extent we can be confident and convinced that the future of Uzbekistan shall develop in such a direction which the democratic world traverses along?

In this case I always say: look and be convinced of this on your own while visiting one of our new colleges or lyceums, and you shall be convinced that there is birthplace of Uzbekistan’s future – the new generation which thinks entirely anew. They do not know what the Soviet regime is. For 21 years we have been developing while not depending on anyone, and proceeding from our national interests. These are the free people, freely thinking people who believe in their power, and most importantly, they have gotten rid of the ideology of former regime long time ago. Those times are bygone long time ago. Once all of us have thought that there was a General Secretary atop the power, and he knew everything and decided everything. And in fact, naturally with such thinking we could not develop. I would rather say: the USSR has demised only because of the fact that it could no longer develop. The system could no longer exist. We should have developed in such a way which the entire democratic world develops. And we shall develop in this direction.

You should look at the young men and women who are graduating from higher educational institutions and colleges. In their eyes you can interpret what they want, what they are striving for and which direction they are moving along. I think that if you want to be truly convinced of the fact that Uzbekistan will continue developing in democratic community then you should talk more to our youth, and you shall understand what kind of generation grows in Uzbekistan and how this generation sees its future.

Dear participants of the conference!

It is an open secret that one of the fundamental and mandatory conditions for normal operation of business is to provide, firstly, strong legal guarantees of freedom of entrepreneurship, their unconditional implementation not in words, but in practice, and to rule out unlawful interference of state, law-enforcement and controlling bodies and structures in their activity.

At the legislative level we have introduced the principle of priority of the rights of entrepreneurs in their engagement with state, law-enforcement and controlling bodies in which any contradictions and discords in legislation must be interpreted in favor of entrepreneurs. We have also introduced the procedure which prohibits the scheduled tax audits of small businesses for three years from the time of their registration and restricts further tax audits of steadily operating and honest taxpayers.

Starting from 2005 Uzbekistan has carried out the transition from permissive system to notification system of state registration of entrepreneurship entities. The entrepreneur needs no more than 2 days to set up his own business, and this meets the criteria practiced in the developed countries.

In Uzbekistan a big attention is paid to forming the institutional and market infrastructure which supports the development of small business and private entrepreneurship. The commodity exchange stands as the most important instrument in market-based price setting and ensuring an equal access to highly liquid raw resources and commodities. Today we have the well-tested mechanism of exchange trade which allows any entrepreneur to have an equal and free access to raw resources through trading sessions.

This year we have provided additional stimuli and benefits to exporters, as well as foreign investors. In July 2012 in cooperation with the International Finance Corporation we have elaborated the measures to radically improve the business climate and give more freedom to entrepreneurship. As a result, two Decrees of the President of the Republic of Uzbekistan have been adopted.

In Uzbekistan it is envisaged a broad introduction of electronic system of filing statistical, financial and tax reports, payment of taxes and mandatory payments, carrying out registration and permissive procedures, filing the statements of claim and petitions to economic courts, which considerably cuts short or completely rules out the direct contacts between the state, controlling bodies and subjects of entrepreneurship.

The approved measures have allowed from August 1, 2012 to reduce twofold the number of procedures during registration of business, cancel the requirements related to forming the initial pre-registration charter fund and reduce 2,5 times the legal costs of entrepreneurship entities.

With an aim to radically curb the interference of state in the operations of entrepreneurs, this year we have abolished 80 types of permissive procedures and 15 licensed types of activity and reduced 1,5 times the forms and periodicity of filing financial reports. Besides, we have adopted the norm to abolish from January 1, 2013 65 forms of statistical and 6 forms of tax reports with reduction to more than twofold of the periodicity of their filing.

I would like to especially emphasize that in line with adopted legislation we have introduced the procedure in accordance with which the state reimburses the damages caused to an entrepreneur as a result of unlawful decisions of state bodies, actions or inaction of their officials, as well as adoption of a departmental act that contradicts the legislation.

Dear participants of the conference!

Today we have all grounds to say  that the model of reforming and modernizing the country, shaping a civil society that we chose in the early days of Independence, and built on the evolutionary path of development and renowned five principles, has ensured in a historically short period of time creation of a solid foundation for a stable development of economy, allowed to safely withstand the negative consequences of the global financial-economic crisis, as well as achieve among few countries of the world sustainable and high rates of economic and social development.

During the past six years the gross domestic product has annually been growing with the rates of not less than 8,2 percent. In comparison with 2000, the GDP has increased 2,9 times, the production of industrial goods has grown 2,6 times, the volume of investments into the economy has grown 3,4 times, and the volume of direct foreign investments has increased more than 20 times.

What does it speak about? It speaks about the fact that we are trusted. The foreign investors believe that their invested funds shall be repaid, and they shall not be worry that they have signed a deal with the country or people who have come out to be insolvent. I attach a profound attention to the fact that the flow of direct investments is on the rise, and this is very important for the country. Thus, we are joining the world of business of the global community. Thus, the investors believe in us. Thus, we are trusted. And this is worth a lot.

According to the Asian Development Bank, in Uzbekistan for over the past 7 years the population’s per capita income has increased 3 times. We have been ensuring permanent surplus of current account balance, maintaining low external debt at the level of 10-12 percent of the GDP and practically zero state domestic debt. There are sufficient official reserves.

All this gives us confidence in the future of the country, our diligent and hospitable people.

Taking this opportunity, allow me once again to express to all participants of the conference my profound respect and sincere gratitude.

Dear friends, I wish you a fruitful work, pleasurable stay in Uzbekistan, a sound health, successes and best of luck in your endeavors.

Hope to see you again.


17.09.2012 11:44, Jahon News