The President of the Republic of Uzbekistan Shavkat Miyoyev signed a Decree on April 8, 2022. It sets out specific goals and time frames for taking actions in key areas of economic development. These include measures to promote the private sector development, fight corruption, and de-monopolization.
This Presidential Decree directly links to the “Development Strategy of New Uzbekistan 2022-2026”. The Decree’s goals are to achieve stable economic growth, increase the competitiveness of national economies, and reduce the state’s share in the private sector. It also allows for the liberalization of the markets of goods and services in areas where the state shares are present, creating equal conditions for businesses entities, a rapid transition to market relations and a dramatic increase in private investments.
Cancellation and exclusive rights
The Decree will gradually eliminate privileges and exclusive rights that were granted to a variety of business entities, foreign or not, starting May 1, 2022. Additionally, customs duty benefits starting July 1, 2022 will only be available on the law of the Republic of Uzbekistan. Until then, the conclusion of the Tariff and Non-Tariff Regulation Council will be mandatory.
The Reform of the Auto Industry, Aviation and Railways
These reforms will also impact some of the most important industries such as aviation, railways, and auto industry. UzAuto Motors JSC will have 10% equity and will go public on August 1, 2022. Later, a Strategy for the sale to strategic investors will be created, including Samarqand Avtomobil zavodi Ltd and UzAuto Motors Powertrain JSC. On September 1, 2022, 51% of the state capital of Uzbekistan Airways JSC, which is more than half of its authorized capital, will also be up for auction. The privatization of at most 49% of Uzbekneftegaz JSC shares and 51% of Thermal Power Plants JSC shares will begin by 2022. This should attract a lot of attention from investors and allow for companies to modernize more quickly.
New possibilities for public-private partnership
The Decree also gives a lot attention to public-private partnerships (PPP). The Decree predicts a sharp increase in PPP projects in the areas of drinking water, heat supply, landscaping, road construction, and aviation infrastructure. PPP or franchise will also allow for the transfer of domestic and international freight as well as passenger rail transport. This is not all. The priority for the construction of small- and medium-sized hydroelectric plants will also be given to projects that involve the participation of the private sector. This includes PPP. By establishing such wide opportunities for partnership, all stakeholders, including the end consumers, will be able to enjoy more benefits and privileges if they act together.
Residents, non-residents and real property
This Decree, as it was already stated, contains many turning points in reforming many fields and areas that will directly contribute economic growth and attract investments. According to the Decree, the personal income tax rate for income received from Uzbekistan sources will increase from 12% to 20% starting May 1, 2022. Foreign citizens can purchase real estate in Tashkent, Samarkand, and the surrounding cities, in an amount of $150 thousand during construction, and $180,000. In operation. Other regions, the equivalent of $70 thousand or $85 thousand. However, foreign citizens cannot obtain a certificate for permanent registration if they have not acquired these real property objects.
Foreign citizens who purchase real estate in Tashkent or Tashkent cities for at least $300,000 can get a residence permit in Uzbekistan.
The Decree also allows for the sale of non-agricultural land via auctions, with the possibility to make installment payments up to three years. Buyers who have paid a minimum 35% initial payment on non-agricultural land and state assets are allowed to use mortgage property as collateral for bank loans.
These changes also affected the heads of executive bodies as well as members of supervisory board. A person who is appointed or reassigned to the head of an executive body can no longer be the Head for more than two consecutive terms. The Decree also states that, starting from April 1, 2022, enterprises with a share of the state will have a single policy for stimulating supervisory boards and remuneration for labor members. Additionally, any additional payments to executive bodies, other than wages and bonuses, will be cancelled. It is also stipulated that sponsors must not spend more than 3% of their net profits in any year. A second change was made to the antitrust sphere. Entrepreneurs whose sales revenue in the last year has not exceeded 10 000 BCV (basic calculated values) or 2.7 million sums will not be subject to antitrust measures.
It is important to note that both time and world events offer a wide range of opportunities and are waiting for specific actions. The Decree’s successful implementation will attract large investments to the economy and allow private companies to benefit from all the opportunities provided by the ongoing reforms.
Dr. Obid Khakimov, director of the Center for Economic Research and Reforms
under the Administration of President of the Republic of Uzbekistan
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