NEWS AND EVENTS
January 27, 2014
The President of Uzbekistan sets guidelines and priorities for socio-economic policy in 2014
For any state, the dawn of each year is a time to review the past and plan for the future. It is especially relevant for socio-economic development strategy, which is the pillar stone of any dynamic advancement.
Uzbekistan is no exception in this trade: at the final session of the government the state’s leader mentions the achievements of the past, but spotlights the future priorities and initiatives that might bring the country to a new stage of development.
Islam Karimov’s report on socio-economic development in 2013 and key priorities of economic program for 2014 is traditionally a kind of information burst: dozens of news agencies, portals and media outlets quote the head of the state, literally taking his words to pieces of ‘hot’ news.
Uzbek President said that the country continued ensuring the high rate of sustainable growth, macroeconomic balance, modernization and diversification of the economy. In 2013, gross domestic product increased by 8 percent, industrial output increased by 8.8 percent, agriculture - 6.8%, the volume of retail trade - 14.8%. Inflation rate has not exceeded the estimated index and made up 6.8 %.
\"External debt by the end of 2013 amounted to 17% of GDP and about 60% of the volume of exports at zero internal debt. This is the result of well considered approach to attraction of foreign investment and foreign borrowing in general. The national budget was executed with a surplus of 0.3% of gross domestic product, while the tax burden on the economy in 2013 declined from 21.5 to 20.5%, and the minimum tax rate on personal income has been cut from 9 to 8%. The national budget assignments to the social sector remain high - 59.3% of total expenditures,\" Islam Karimov said.
The second part of the report was, perhaps, the most important one to outline guidelines and priorities of the economy in 2014. This year, as most experts predict, will be complicated for the global economy. The American and Chinese markets, its main pendulums, can both swing the flywheel of the growth, or bring it to a deep recession. It is therefore very important to have a clearly defined long-term development strategy that would ensure a consistently high growth through mobilization of existing reserves and opportunities.
As estimated, this year GDP growth in Uzbekistan will reach 8.1%, which is a serious indicator unfeasible for many countries.
According to Islam Karimov, \"it is no exaggeration to say that 2014 will mark the commissioning of major high-tech industries, modern facilities and capacities, growth and intensification of investment processes. Total volume of capital investment from all sources of funding will make up $14.3 billion with an increase 10.1% YOY, maintaining the share of investment in fixed assets to GDP at 23%, the level of 2013.\"
More than 73% of all investments will be allocated to industrial construction, and 40% of capital investments will go to the purchase of machinery and equipment. It is projected to draw over $3.9 billion of foreign investments and loans with 29% increase YOY. It is noteworthy that 69% of total foreign investment is direct investment, which in 2014 will increase by 22.4%. In general, more than 150 big manufacturing facilities will be commissioned throughout the year with a total cost of $4.4 billion.
However, as noted by the head of state, large-scale program goals and objectives for 2014 require the mobilization of all available sources of growth, deepening of reforms and solution of the problems that impede economic development.
\"I primarily mean the formation of a full-fledged competitive environment, which is generally a key factor in technical and technological renovation and upgrade of production, access to world markets. We have to recognize today that the policy measures taken in this direction fall behind modern requirements. We are still in the thrall of the old stereotype of thinking, there are still side effects of wicked old planning and distribution system.
There is a deeply rooted misconception that survival in a competitive environment can be achieved through tax incentives and protectionist measures. We absolutely miss the fact that all of these measures, primarily affect the interests of the enterprises themselves, reducing their income and budget revenues. Most importantly - benefits and preferences can not be eternal. In the conditions of an open economy, such businesses can not compete with foreign suppliers not only in internal, but also in the domestic market,\" emphasizes Islam Karimov in his report.
According to the President, it is not the time to engage in explanations and clarifications on these issues, but to resolutely get rid of the leaders who obviously do not want or can not abandon old stereotypes and management practices, and, primarily, to stake on trained and progressively minded managers.
Indeed, in modern conditions the high production costs, power intensity, and, above all, the technological backwardness of the real sector of the economy are now turning into a serious barrier to competitiveness. In Last year a special technical audit covered more than 500 companies in the real sector, and over 160,000 units of the equipment across the country. As a result, 30% of them were recognized obsolete. Electrical and mechanical engineering industries showed the worst indicators.
More than 140 enterprises across the country, including 67 big enterprises, are unprofitable. To recover the situation, the President entrusted the Cabinet of Ministers, the Ministry of Economy and Ministry of Finance within three months to develop and approve program, or so-called ‘road maps’ to resolve the financial crisis and the actual bankruptcy for each unprofitable enterprise. In case, if the measures are no longer able to work - sell to private individuals at zero cost.
Uzeltekhsanoat Association, which coordinates domestic electrical enterprises, will undergo changes as well. By February 1, core ministries will apply to the Cabinet of Ministers for the transformation of the association into a joint stock company, as well as Electrical Industry Development Program for 2014-2018 that envisages radical expansion of the range and volume of production and export of electrical goods.
The report also points out to pending issues of private property. \"Today there is no need to prove that the private owned enterprises are more efficient than government-owned. We also have to admit that sometimes we substitute the concept of private property with an evasive definition of ‘nongovernmental enterprises’. These concepts must be clearly defined, and most importantly, we sound ensure the priority, support and security of the private sector in accordance with our law,\" said the President of Uzbekistan.
Another important question, which impedes the Uzbek economy from reaching a new level, is the creation of a favorable business environment. Much has been done in this direction of late. For example, Uzbekistan introduced the principle of priority rights of a business entity. Last year alone, the country canceled more than 80 types of licensing procedures, 15 licensed activities, 65 types of statistical reports, and reduced frequency of submission in 23 kinds.
Besides, Uzbekistan introduced 22 kinds of interactive tax services, reduced terms of issuing the necessary permits twice, and cut the cost of these procedures five times. The cost of licensing procedures for businesses decreased by eight times, fee for opening bank accounts was canceled, and other measures were taken.
As a result, in terms of business registration Uzbekistan has climbed 66 positions and now ranks the 21st among 189 countries of the World Bank rating list. In the category of crediting Uzbekistan’s rating increased by 24 positions.
\"However, we must recognize that the current state of the business environment and business conditions in Uzbekistan does not fully comply with the requirements and principles of the free market economy, international norms. Our businessmen are still challenged by unstable power supply, underdeveloped industrial manufacture and road infrastructure in rural areas, numerous inspections, as well as a weak executive discipline in the field.
We have to pay more attention to further shortening, simplifying and cheapening of different licensing procedures for commissioning and management of business entities, as well as prevention and elimination of unnecessary bureaucratic barriers to entrepreneurship. We need to accelerate the transition to online processing of permits and licensing procedures, online provision of utilities, tax and customs clearance services,\" said the head of state.
Further development of e-commerce is another important point highlighted by President Islam Karimov. To date, Uzbekistan has issued more than 10 million plastic cards, including about 2.5 million online cards. Today one can pay telecommunications and utilities online. According to the President, obstacles should be promptly removed and services should be significantly extended.
To do this the concerned state bodies within two months should come up to the Cabinet of Ministers with related proposals and prepare a new edition of the law ‘On electronic commerce’, which was adopted in 2004 and today is already outdated.
Social sector, provision of jobs, housing and community development, further improvement of education and healthcare remain in priority this year. In general, about 60% of all budget expenditures will be allocated to the social sector.
As envisaged by the Parliament’s Program, about a million jobs will be created in 2014, of which about 500,000 jobs - for graduates of vocational colleges. 11,000 standard design houses with a total area of 1.5 million square meters will be built in 388 rural residential areas.
In education sector in 2014 over 410 billion soums (Currency rates of CB from 27.01.2014 1$=2203.39 soums), is scheduled for reconstruction and overhaul of 380 schools and 161 vocational colleges and academic lyceums. Meanwhile, as the state’s leader emphasized, special attention should be paid to equipping training workshops of vocational colleges with modern high-tech and training equipment.
Besides, it is projected to invest 173 billion soums in the construction, renovation and equipping of 34 higher education institutions, including the construction of new academic buildings and information resource centers in Andijon and Qarshi state universities, the Uzbek State World Languages University, and other institutes. 51 billion soums is allocated for the overhaul of 17 higher education institutions throughout the country.
The biggest initiative in health care envisages the construction of CIS’s first specialized multidisciplinary pediatric clinic of the level 4, which is the highest international standard, designed for 250 beds and a polyclinic for 200 visits per shift, at the expense of the Government of the Republic of Korea in the amount of $103 million. A total of over 407 billion soums will be allocated this year to strengthen the logistical capacity of healthcare institutions. More than $28 million of concessional loans will be attracted from international financial institutions to equip medical facilities.
Children\'s Sports Development Fund allocates 107 billion soums for construction and reconstruction of 115 children\'s sports facilities, equipping them with modern sports tools, most of which nowadays are produced domestically.
All these are ambitious plans of the vast country. No doubt that they will be successfully implemented, because they build the future of our society and the state. With this in mind Islam Karimov addressed the audience at the meeting of the government and all the Uzbek people: \"Our goal is to continue and deepen the reforms we have launched, upgrade and advance our economy, ensure a sustained growth and quality of our life, to be equal among equal taking a worthy place in the world community. We announced 2014 the Year of the Healthy Child, which is fully supported by our people. This is primarily a concern for the health and future of our children. It is our duty, our responsibility to do everything possible to bring up physically, spiritually and comprehensively advanced people with advanced knowledge and experience, able to take responsibility for the future of our country and our people.\"
(Source: “Uzbekistan Today” newspaper)