Page 20 - bne_newspaper_May_24_2019

Eurasia
May 24, 2019 www.intellinews.com I Page 20
MACRO ADVISORY: Uzbekistan Terraforming: Privatisation is the next stage
Chris Weafer of Macro-Advisory
Since the election of Shavkat Mirziyoyev in December 2016, Uzbekistan has been on a fast- track programme to transform what was, for the previous 25 years, a no-go investment zone for most investors and international corporations. The president has largely delivered on promises made and the government largely remains on the course outlined. It means that confidence remains high that promised reforms will be delivered
and investment opportunities will continue to be available. All that has happened so far can be described as Phase 1 of the economic building project. This phase focused primarily on:
• clearing up legacy problems from the previous regime
• removing investment and business obstacles
• starting to fix the basic infrastructure problems
and inefficiencies
• plugging the economy into the international
financial markets
Having now largely completed the “basics” of creat- ing a new economy, the government needs to broad- en the appeal of the country to a greater number of investors and to increase both the availability of opportunities and the mechanism for participation in assets across a broad swathe of the economy.
A good way to look at what has been achieved so far, and where this fits into the longer-term de- velopment strategy, is to look at the sequence of actions as a sort of terraforming exercise, but for the economy rather than a desert. The recently announced focus on privatizations can be consid- ered stage 6 of the Phase 1 of the transformation exercise. The sequence we have seen so far can be broken down as such:
Stage 1. Political change and stability.
After 25 years of an authoritarian government, which kept many of the structures inherited from the Soviet system, President Mirziyoyev moved quickly to replace people in key positions and started the process of de-bureaucratizing the economy, e.g. changes to the tax and customs procedures. He also surprised many with changes at the top of the security services, effectively also ending the soviet-era apparatus.
At the same time, the president improved rela- tions with neighbouring states and concluded deals that make it easier for goods, services and people to cross borders and ended the threat of conflict over the management of scarce water resources and electricity sharing.
Stage 2. Critical reforms
In the first twelve months, the government com- pleted some critical reforms in the economy, most notably the elimination of the dual-currency system and easing of capital controls.
The visa regime started to change so that, today, citizens of dozens of countries can enter visa free and the process of obtaining work visas, etc., has been greatly simplified. It is also a lot easier for Uzbek citizens to cross borders in the region that were previously closed.
Promised tax changes have now taken place as of January 1. Tax rates, e.g. for corporations, inves- tors and individuals, have been reduced and some taxes eliminated.
Read the full story here