To reverse the country's economic slide, the following three steps should be taken.  First, the SME business sector needs immediate relief from the myriad regulations imposed that hinder business growth.  It is encouraging to see that the Uzbek government has undertaken some initiatives in this regard.  Easing of the requirement that exporters receive full payment in order to export their goods removes one ill-designed measure.  The formal introduction of currency convertibility is also a step in the right direction.

Second, in order to reduce the number of enterprises operating informally, new legislation must provide entrepreneurs with incentives to operate within the formal sector.  Most importantly, ownership issues lingering from the post-Soviet privatization of state assets must be resolved.  The surge in credit accompanying the availability of undisputed property as collateral will infuse the economy with new functioning capital.

Finally, in the future the voice of the business community needs to be heard when legislation is being written.  These unfortunate results came about from policies made behind closed doors with little private sector participation (or the participation of only a favored business elite) to supply information about the practical effects of changes.  True economic reform is possible only when the private sector is widely represented in transparent policymaking to reflect the best interests of the wider citizenry. 

 

Elena Suhir is the Center for International Private Enterprise's Program Officer for Eurasia.  This article is based on personal observations and interviews conducted with Uzbek business owners and mangers during visits to the country over the course of 2003.  This essay is adapted from a longer report issued by CIPE and available at http://www.cipe.org/pdf/publications/fs/suhir.pdf.