The president Shavkat Mirziyoyev, during an open dialogue with business leaders on Friday, August 18 named support package for small and medium enterprises.
According to him, over $1 billion is being contributed annually through the programs for financial support of small businesses. As a result, today at least 40-50 new businesses have appeared in each neighbourhood, thousands of permanent jobs are being created, he said.
At the beginning of the year, criteria were defined in Uzbekistan for who shall be included in the category of small business.
“Now, in order for small businesses to “stand on their feet” and expand their activities, we will introduce completely new approaches. An integral ecosystem will be created to train representatives of this sector in businesseship, develop projects for them, finance activities, search for business partners and a market for products,” the head of state said.
For this, Qishloq Qurilish Bank will be transformed into a Business Development Bank. A small business center will be created at the bank in each region, totaling 14 centers.
Secondly, financing of projects of businesses trained in small business centers in the regions will be arranged on the most favorable terms.
For businesses with their own business and a clean “credit and tax history”, the collateral requirement for obtaining a loan to take their activities to a new level will be reduced by 50%, Shavkat Mirziyoyev said.
Enterprises that need additional resources for the implementation of a project shall be allowed to allocate additional funds to the existing loan. An additional 1 trillion soums will be allocated annually for these purposes. Also, the costs of insurance of equipment imported under the project, certification of raw materials and materials will be covered by the centers.
Small businesses participating in the program shall not be subject to checks for three years.
Thirdly, with the assistance of small business centers, cooperative ties will be established between project initiators and large state-owned enterprises, the head of state noted. At the same time, the centers will assist new enterprises in introducing modern technologies, improving the skills of employees and selling products.
While, these enterprises in the public procurement system will be able to sell their own products for two years on the basis of direct contracts.
Fourth, private partners will be involved in the management of small business centers. Such businesses will be granted the right to equity participation in the Business Development Bank.
It is also planned to attract foreign specialists to the centers. At the same time, specialists attracted from abroad, such as a business consultant, process engineer, designer, hotel manager, marketer, agronomist, veterinarian, seed grower, will have their work permit in Uzbekistan extended from 1 year to 3 years. The payment for a work permit will be reduced from the current 10 million soums to 330,000 soums. For them, the requirement for the conclusion of the territorial labor authority on the expediency of hiring will not apply.
Fifth, for the implementation of the new system, a separate law will be adopted, which will also provide for a simplified procedure for all processes related to the implementation of small business projects together with the center.
“Undoubtedly, both the bank and the center should be interested in the fact that the new project generates income and the entrepreneur's activity develops. Therefore, with the launch of a new small business project, all taxes received from it will be transferred to the Business Development Bank for working capital within two years. That is, a system is being created in which the bank will be interested in the high level of income of the entrepreneur,” said Shavkat Mirziyoyev.
Any public and private banks can participate in the program, as well as independently attract resources. Profit received by banks under the program will be deducted from the tax base. Then both businesses and banks will have interest and competition, he believes.
For this, another $500 million will be attracted from the European Bank for Reconstruction and Development, the International Finance Corporation and other international financial organizations.
“Our goal is to “put them on their feet” at least 150,000 small businesses within a year, turn at least 25,000 into medium-sized enterprises, and create 250,000 new permanent jobs in the sector,” the head of state said.
The president noted that at present the conditions for medium-sized businesses are not sufficient. Guarantees or compensation for commercial loans are provided only by the Enterprise Fund, and even then not for everyone.
Therefore, the government will establish new approaches to support businesses who want to move from small to medium-sized businesses.
From now on, the Businesseship Fund will be responsible for providing financial assistance to projects in the service sector, green and energy-efficient projects, while the Industrial Development Fund will be responsible for industrial projects.
Qualified foreign managers will be invited to manage the funds. The funds will not be limited by budgetary funds, they will be given the authority to independently attract investments. Thus, next year these funds will attract an additional $1 billion for medium-sized businesses, Shavkat Mirziyoyev expects.
First, to implement promising projects in "driver" industries, the Industrial Development Fund was created, which at the initial stage received $200 million.
From September 1, loans in foreign currency at a rate of 5%, in national currency - 10% for a period of 10 years will be allocated from the fund to finance new projects, loans for working capital for a period of up to 1 year in foreign currency at a rate of 4% will be provided to industrial enterprises , in national currency - 10%.
At the same time, for imported equipment, the fund will also provide a 15 percent advance payment in the form of a loan, pay compensation for part of the costs of up to $20,000 for marketing, design, and attracting foreign specialists.
Secondly, it is planned to establish an industrial mortgage system, build and transfer to businesses production sites in the form of a “ready-made business”. In particular, at least three new industrial zones will be created in each region.
In addition, in industrial zones where a production facility is launched, it is allowed to privatize land plots after the fulfillment of investment obligations.
Thirdly, in recent years, about 20,000 enterprises equipped with modern equipment have been built in the country. Half of them are medium-sized enterprises.
According to the president, in order to expand their activities, they need to be assisted in attracting new investors and brands. Therefore, now, if an enterprise enters into an agreement with a foreign brand and investor, it will be able to participate in it with an investment of up to 25% of the capital of the newly created Industry Fund.
Fourthly, the Businesseship Fund will be responsible for the service sector. He is given the authority to enter as a participant in potential medium-sized enterprises. To this end, the fund will receive an additional $25 million this year, and another $100 million next year.
At the same time, the fund also issues a guarantee for a loan in foreign currency for medium-sized businesses. The Fund will introduce a system of "mortgage of services" in the areas of tourism, trade and service.
From now on, businesses will be offered ready-made projects for such objects as a hotel, restaurant, shopping mall, parking lot, gas station, camping.
Also, the fund allocates resources to businesses for the acquisition of a land plot for service facilities, the construction of buildings, structures and working capital. At the same time, 100 million dollars will be attracted from foreign partners to introduce "green" technologies at enterprises.
These two new systems will be fully launched from October 1, next year new projects for medium-sized businesses in industry - 2000 and the service sector - 10 thousand will be financed, Shavkat Mirziyoyev said.
“If we all work hard together, then thanks to new opportunities we will be able to organize additional services for $1 billion, the production of new products for $5 billion, and 350,000 new jobs,” he said.