January 24, 2013
Prospects of domestic small business in the new year By tradition, the New Year is always associated with new beginnings and future plans. This year has been declared the Year of the Well-being and Prosperity. Of course, a special program, on the development of which experts and specialists work today, will cover all areas and, of course, small business and private entrepreneurship. It is the very sphere, which is tasked now with improving employment and income of people, especially in rural areas.

Step by step

At the same time, at the beginning of each new year there is another tradition is to analyze the results of the work already completed and where it is possible to implement and more work is needed to improve efficiency. Overall outcomes of the socio-economic development of Uzbekistan and, of course, its main powerhouse is small business, are soon to be announced at a government meeting. But today is not only domestic, but also many foreign experts say the success of the phase of development of small business and private entrepreneurship.

Only twenty-one years ago, in a country with other ideology, there was almost no such thing as a business. And enterprising people willing to work and think in a new, progressive way were not only welcomed, but they were strongly opposed. Thinking about that, it becomes clear what a great way the country has passed in order to dramatically change not only the system of governance, financial, banking and tax policies, but also, that is much more difficult, thinking of an individual.

After all, an entrepreneur works not only for himself, he creates jobs, produces necessary public goods, pays taxes, contributes to the creation of social, industrial and communications infrastructure, that is, almost everything that surrounds him.

It would seem that the entrepreneur has created in his village only 5 jobs in a laundry. These small, almost invisible figures in statistics of the economic life of the vast country, but behind them there are lives of five families who will now be able to live better. And how many of these innovative and enterprising people in regions? Hundreds, thousands, ready to work and make life better. A simple example: if the last six years more than 5 million jobs were created in Uzbekistan, over 60% of them - small businesses and entrepreneurships, currently over 75% of the employed population are working in this field. It is also important to understand that Uzbekistan can not live outside of the global economy, which has recently been going through hard times. After the economic crisis there the recession has come, the markets are reeling, the world\'s leading industrial giants reduce output and optimize production processes. In these conditions, being compact in form, having mobility and efficiency in decision-making, being receptive to innovation, small businesses are more flexible and can adapt quickly to changes in demand, the situation on the world and regional markets, in a timely manner addressing its challenges. All this, the creation and support for small businesses do not require large expenses and capital investments that allows effective modernization, technical and technological re-equipment, develop new products, constantly updates its range and provide competitiveness.

A new approach

An emphasis on the development of this sphere was made in Uzbekistan in the early 1990. Since then hard work was done, structural reforms to change the legislation was carried out. However, experts and analysts said that the domestic small businesses lacked much of a special document - a kind of road map for development in the future. Thus, in late 2010, it was decided that the next year will be the Year of Small Business and Private Entrepreneurship. The best experts in their fields had begun developing a special program, which was to delineate horizons and lay a new foundation for future growth in the rapidly changing realities of the modern economy. The main thesis of this paper was to create the most favorable business environment through implementation of measures for further liberalization of the economy, providing greater freedom of enterprise, reduce public administrative functions and different licensing standards, elimination of bureaucratic barriers and obstacles. The guidelines of the program were also outlined by the President of Uzbekistan in his concept, noting that small businesses had not yet fully realized its potential in the real economy, and above all in manufacturing.

This work has given results. In 2011, the country did an unprecedented work on comprehensive improvement of the mechanisms responsible for the support, promotion and development of small business. First of all, the legislation was changed. The legal framework was improved; new instruments were adopted to enhance the protection of rights and lawful interests of this sector, providing new opportunities for development, strengthening the priority of private property, providing guarantees for her. This was not just a change for change\'s sake.

Previously, dozens of roundtables and workshops with hundreds of businessmen, experts and professionals were conducted in the regions of the country, who offered effective and really business-needed innovations. Therefore, the new changes in the legislation have made point-wisely those rules, which were to become an effective business support. The emphasis here is on the consistent implementation of measures in order to reduce the scale of a government’s and regulatory authorities’ intervention into financial and economic activities of enterprises. Looking ahead, we note that, also, thanks to this work, in May last year, the new version of the Law on Guarantees of Freedom of Entrepreneurship has entered into force in the country. It aimed at simplifying the creation of small businesses and private entrepreneurship, giving them greater freedom, stimulation of this sector through lending, government contractual work, and providing new incentives for promotion of their products. The document also provides a gradual transition, in accordance with international practice, the form of the annual declaration of income, further simplification of the system of financial and statistical reports, including its representation in public authorities, in electronic form.

One of the main innovations of the legislation was establishment of the principle of the priority of a business entity, in accordance with which all the inherent contradictions and ambiguities of legislation, arising in connection with business activities, shall be interpreted in favor of the business entity. Now, according to the new edition, the public registration of business entities is made on the ‘one-stop-shop’ principle and the entrepreneurs themselves have the right to choose how to provide statements - on paper or in an electronic form. At that, the Government encourages business entities to conduct their records in electronic form by distributing software for free or on preferable terms.

Stronger guarantee from versatile intervention in business has become important. For example, the law was amended with a norm, by which a supervisory authority shall inform in writing a business entity about starting of a scheduled inspection not less than 30 calendar days prior to the test with indication of frame and subject of the audit. In addition, business entities have the right not to allow the verification of those, who are not qualified to carry it out. With losses brought by entrepreneurs from unlawful decisions of government agencies and local authorities or omissions, shall be reimbursed by the state or self-government bodies on the basis of a court decision.

In addition, last year, representatives of businesses have received a number of significant benefits and preferences. In particular, the amount of dues, paid by entrepreneurs to obtain licenses and documents permissive for entrepreneurial activity, was reduced not less than 2 times. There have also been greatly improved capabilities of small businesses to attract foreign investments. According to the amendments in the Regulation on Application of Tax Incentives for Businesses, attracting direct private foreign investments, today for their attraction fairly 33% of foreign participation in the share capital of the companies is allowed, not 50%, as it was previously. The list of sectors of the economy also greatly expanded - 20 instead of 8, which is subject to the privileges. The conditions of the applicable of tax benefits have been changed, too. Now companies located in all cities and villages of the republic, except the Tashkent region, can count on them. Previously, businesses could be eligible for benefits if they were located in labor-surplus areas of particular regions.

Another important document, signed by the head of state at the fall, was the Law on Entrepreneurship Licensing, which should become a basic law, embodying the principles and provisions of the permit system. First of all, its provisions are aimed at removing unnecessary bureaucratic barriers in licensing procedures in entrepreneurship. So, for example, to prevent officials to slow process the period of applications from economic entities, the law contains a provision under which an entrepreneur, after written notice to an authorized body, shall be entitled to operate, even if the body have not issued a permit or refused of issuance within 30 days in due time. In this case, the document also provides for notification rules of conduction of the licensing procedure, in which the list of documents, submitted by the entrepreneur with a note of the date of their admission, may be equal to permission until its receipt is a basis for the entrepreneur’s activity. In the context of announcement of 2013 the Year of Wellbeing and Prosperity, the adoption in April last year the Law on the Family Business has become important. In Uzbekistan, there is a tradition for centuries when families from generation to generation do the same kind of business. Uzbek craft dynasties are worldwide known by their unique Rishton ceramics, Samarqand suzani and embroidery, Bukhoro carpets, Chust metal products and many others. This document legally secures the new organizational and legal form of a family business, which has increased its legal safeguards, created favorable conditions for its further development. (Source: Uzbekistan Today newspaper)


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