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Uzbekistan's Bold Reforms Transform Economy; Competition, Transparency & Growth Take Center Stage
Sumaira FH Published December 25, 2024 | 11:00 PM
Uzbekistan has introduced a series of transformative institutional reforms over the past five years to modernize its economic policies and enhance competition
TASHKENT, (APP - UrduPoint / Pakistan Point News - 25th Dec, 2024) Uzbekistan has introduced a series of transformative institutional reforms over the past five years to modernize its economic policies and enhance competition.
Khalilillo Turakhujaev, Chairman of the Committee for the Development of Competition and Protection of Consumer Rights, has highlighted the nation's commitment to reducing state presence in the economy and fostering fair market practices.
The implementation of the "Yellow Pages Rule" has been a cornerstone of these reforms. This rule prohibits the establishment of a state-owned enterprise (SOE) if five private-sector entities are already operating in the same industry.
This benchmark was established after robust market monitoring revealed that the presence of five entities signals sufficient non-concentration.
In a move to strengthen governance, Uzbekistan has made the competition authority directly accountable to the President and Senate, ensuring independent decision-making and minimizing conflicts of interest. State enterprises and public bodies are now required to comply with competition compliance tools aimed at preventing competition law violations.
These tools include adopting good governance principles such as ethics codes, corporate governance rules, and oversight mechanisms. Companies must appoint internal officers to report compliance annually, enhancing transparency and accountability. Non-compliance carries increased fines, reinforcing these measures as effective deterrents against anti-competitive practices.
Further, SOEs are now barred from participating in public procurement to eliminate conflicts of interest. New obligations for beneficiary disclosure have also been introduced. Regulatory Impact Assessments (RIA) and Competition Impact Assessments are now mandatory for all draft legal acts to significantly reduce the regulatory burden on businesses.
Uzbekistan has also committed to revising and eliminating state aid provisions that distort competition, ensuring a level playing field. Tax and customs benefits across 24 sectors have been abolished, along with individual benefits in four sectors and exclusive rights in thirteen others.
To streamline operations, 130 types of licenses and permits have been canceled, and 33 others replaced with notification procedures. The adoption of the Competition Development Strategy for 2020-2024 underlines Uzbekistan's efforts to stimulate economic development, attract investments, create jobs, and improve consumer welfare by fostering fair competition.
A new competition law, enacted in July 2023, introduces robust penalties for anti-competitive behaviour and establishes a framework for digital market regulation—the first of its kind in the region.
As part of its ambitious reform agenda, Uzbekistan has pledged to abolish 17 state monopolies across sectors such as energy, oil and gas, and water management by 2030. These services will be transitioned to private operators, reducing the number of SOEs by sixfold. Independent economic regulators are being introduced in key sectors, with the first established in the energy sector earlier this year. By 2025, regulatory bodies for sectors including railways, aviation, and telecommunications are expected to be operational.
In alignment with World Trade Organization (WTO) principles, Uzbekistan is reviewing state trading enterprises (STEs) to ensure compliance. Exclusive rights granted to STEs, such as the procurement and export of metals, flour, wheat, and natural gas, are being phased out. Starting January 2025, licensing procedures for metal scrap, natural gas, and electricity will be introduced to promote fair competition and eliminate market distortions.
Reforms have already shown measurable success. The liberalization of 13 regulated prices since 2019, including those for socially significant goods such as wheat, bread, and fuel, has helped integrate the economy into global trade networks. State assistance has dropped to 12% from over 22%, while the share of state participation in the economy has decreased to 37% from 55%. The number of small and medium-sized enterprises has grown by 25%.
A notable success has been the unbundling of monopolies in sectors like civil aviation, energy, and cement production. The "open skies" policy implemented in 2019 has significantly increased competition in the aviation sector, reducing Uzbekistan Airways' dominance in international flights.
Uzbekistan's reforms underscore a decisive shift toward a market-driven economy. By enhancing competition, attracting foreign investments, and fostering innovation, the country aims to establish a transparent, equitable economic environment. These steps will ensure compliance with international trade standards, boosting Uzbekistan's integration into the global economy and creating a sustainable path for growth and development.
