The Past, Present, and Future of Public-Private Dialogue in Uzbekistan

12.17.2021 | Tatyana Bystrushkina

Over the last few years, the American Chamber of Commerce in Uzbekistan (AmCham Uzbekistan) has witnessed strong improvements in policy dialogue between the Uzbekistani government and foreign investors.  

Recently, President Shavkat Mirziyoyev and Sir Suma Chakrabarti, Presidential Adviser on economic development, governance, and international cooperation, have been soliciting feedback from foreign investors on Uzbekistan’s Roadmap for 2021-2025, which is a plan for the economic development of Uzbekistan. This is monumental progress, given that public-private dialogue did not exist a few years ago in Uzbekistan.

Similar dialogues have been occurring within Uzbekistan’s business and investment climate. The AmCham Uzbekistan members have carried out regular consultations with Sadyk Safoyev, the First Deputy Chairman of the Senate, which is the upper house of Oliy Majlis, the parliament of Uzbekistan. 

Members of the American Chamber of Commerce in Uzbekistan participated in a round table with the Senate of the Oliy Majlis to discuss tax administration, income tax, and VAT with representatives of the Ministry of Finance and State Tax Committees

Sectoral consultations between the legislative branch of the government and relevant stakeholders have been instrumental for developing policy changes and new legislation, such as the new Labor Code and improved tax legislation in Uzbekistan. Members of AmCham Uzbekistan’s human resource committee joined a Senate group to provide input during the drafting of the new Labor Code. One-third of the recommendations proposed by the AmCham Uzbekistan were included in the new draft Labor Code, which would replace the 1995 Code.

Additionally, members of AmCham Uzbekistan provided recommendations to the Senate Tax and Accounting Committee to improve the administration and implementation of the value-added tax (VAT). The new draft VAT law included 35 percent of the recommendations from the AmCham Uzbekistan. In addition, AmCham Uzbekistan’s Fast-Moving Consumer Goods (FMCG) Committee raised fifteen other policy and legislative reform issues with various government ministries and agencies that it intends to address in upcoming consultations.  

While important progress is taking place, some challenges persist as the business community engages with officials in reform dialogue. From the business perspective, public-private dialogue can often be fragmented, unstructured, lacking coordination, and in many cases, driven by personal motives of individual government officials or advisers. Further, public-private dialogue is weakened by the high turnover of government officials. Frequent transitions by public servants impede the progress made over months of work on specific policy reforms. Maintaining regular and consistent dialogue that results in tangible outcomes requires dedicated effort. Without results, such dialogue sessions merely become an event or photo opportunity.  

Platforms for policy dialogue play significant roles in shaping policy and legislation. Impactful policy dialogue often involves regular participation of the President or Prime Minister. In meetings between business associations and high-level government officials, business associations can learn about proposed policies directly from the decision-makers and provide their feedback. For instance, in Kazakhstan as part of the ongoing effort to improve the country’s investment climate, the government hosts regular meetings with investors who are AmCham Kazakhstan members as well as a panel of government ministers chaired by the Prime Minister.  

There are several ongoing initiatives to create policy dialogue platforms in Uzbekistan. The Foreign Investors’ Council  (FIC), created in 2019 by the President of Uzbekistan, provides a venue for engagement between the government and both foreign and domestic investors, including international financial institutions. The FIC originally planned to have two annual sessions led by two officials:, the Deputy Prime Minister for Investments and Foreign Economic Affairs and the Minister of Investments and Foreign Trade of the Republic of Uzbekistan. During these sessions, various working groups, such as on banking, corporate law, valuation and privatization, and anti-corruption, can provide nuanced input to legislative developments. The FIC held two sessions in April and November of 2019. Unfortunately, the COVID-19 pandemic has impeded any further FIC work. 

The Business Ombudsman, who is also known as the Commissioner for Protection of Rights and Legitimate Interests of Entrepreneurs, in Uzbekistan is responsible for protecting the rights and legitimate interests of entrepreneurs in Uzbekistan. This is a relatively new institution, established in 2017. The person serving in this position is appointed by and reports to the President of Uzbekistan. Although this position is independent of the President and has the authority to act without consulting the President of Uzbekistan, it can be difficult for the Business Ombudsman of Uzbekistan to make decisions without the President weighing in.  

Public-private dialogue should be institutionalized and occur at the highest level of government on a regular basis.

The concept of a Business Ombudsman is not unique to Uzbekistan. Other countries in Eurasia have this institution as well. Uzbekistan can glean some useful lessons. In Kyrgyzstan and Ukraine, the Business Ombudsman is perceived as the most reliable defender of the private sector. In Ukraine, the Business Ombudsman, which is entirely independent, is selected by an independent Board of Directors (BoD) comprised of three parties: the government, business associations, and donors. Donors can be from among the European Union Delegation, or representatives of individual member states of the European Union, Japan, Norway, Switzerland, the United Kingdom, and the United States. The decision-making process of the BoD requires unanimous agreement from all parties.  

The Ombudsman deals with systemic businesses challenges and develops policy recommendations to address them. To aid in the decision-making process, business associations both in Kyrgyzstan and Ukraine are partners of the Business Ombudsman’s BoD. This structure allows representatives of all types of enterprises, large and small, to have a voice in the decision-making processes, which builds trust between the government and the private sector. The Business Ombudsman is not the only venue where private sector actors are able to use their voice to influence the decision-making process; engagement with civil society and the media also provide effective channels and partnerships. 

Civil society and the media play an important role in making the interests of the private sector known to the government and the public. The increased freedom of civil society and the media in the last six years has provided an opening in Uzbekistan that allowed them to become more active in the public policy decision-making process.  

To date, many business associations are registered with Uzbekistan’s Ministry of Justice. Their types of constituents vary greatly, from multisectoral membership business associations, to foreign bilateral associations such as the American Chamber of Commerce in Uzbekistan (AmCham), the Uzbek Chamber of Commerce and Industry, or sector-specific associations, such as the Association of Freight Forwarders, the Association of Beekeepers, or the Association of Silk Producers. Despite the variety and number of registered associations, many are not actively involved in the regulatory and legislative process.  

Associations can participate in public discussions when draft laws are being developed and passed in the Legislative Chamber, the lower house of the Uzbekistani parliament. However, this process is often viewed as an ineffective participation method, as business associations are only given three-to-five days to provide comments on draft laws. When given ample time to consult with relevant stakeholders and submit high quality, detailed recommendations, private sector comments can provide valuable impact assessments that would likely increase the effectiveness of legislative acts. In some countries, relevant stakeholders are given 30 days or more to submit their recommendations and comments on draft laws.  

Creating a more transparent legislative process with a clear framework for how and when public consultations and hearings are conducted could allow the government to encourage greater private sector participation in policy discussions. Involving relevant industries and business associations when drafting legislation that will affect them would serve as an effective way for the government to avoid unforeseen pitfalls. Business association members could contribute expert industry knowledge on the issues they face daily and reflect their ideas for solutions in the legislative process. This suggestion would therefore increase the efficiency of the process of drafting new laws.  

The recent resolution on the creation of an Agency of Strategic Development of Uzbekistan, adopted on July 19, 2021, was a first step towards creating expert platforms for dialogue among government bodies, international organizations, entrepreneurs, and business associations. The Agency’s goal is to develop measures to solve systemic problems that the economic sector encounters. It will be chaired by the President of Uzbekistan and the Deputy Chairman will be Sardor Umurzakov, the Deputy Prime Minister of Uzbekistan. The Agency will be headed by a General Director to be appointed by the President.

This initiative will focus on accelerating strategic economic initiatives, such as improving the investment climate and facilitating foreign trade. Its purpose will be to provide prompt and effective solutions toon acute problems experienced by investors and mobilize the resources of state bodies. Only time will tell if the promises made in the new resolution will be successful, but the language of the resolution has given civil society and the business community a reason for optimism that the independent voice of businesses will be heard in this high-level forum.