February 13, 2006
of the PRESUDENT OF THE REPUBLIC OF UZBEKISTAN ISLAM KARIMOV at the Cabinet Ministers Session on the results of social and economic development of Uzbekistan in 2005 and major priorities of economic reform in 2006
Dear participants of the session,
Our task for today is to assess critically and discuss the economic development, reforms and liberalization results in 2005 and set up the main priorities for 2006.
Speaking about the results, I would like to note with satisfaction that all forecasted macroeconomic indicators were achieved fully and in many of them there was a significant increase.
Gross domestic product (GDP) of Uzbekistan was up by 7% in 2005, whereas inflation rate was kept around 7.8%.
Industrial output rose by 7.3%, consumer goods production - by 17.7%. agricultural production increased by 6.2%.
The state budget was implemented with 0.1% surplus of GDP against expected 1% deficit and its profitable part exceeded forecasted parameters by 38%.
The steady GDP growth attracts attention that was seen at more than 7% for the last two years. In comparison with 2000, economic growth was up by 30.1% and in comparison with 1991 ? 28.2%.
In addition to that favorable commodities prices in the world market did not influence the economic growth of Uzbekistan. We achieved it due to our consecutive commitment and persistent work within the economic model and long-term program of market reforms and modernization of the society.
Briefly on major directions of economic reform in 2005.
Firstly, it is systematic and consistent structural transformation of the economy, which is mainly aimed at preserving its macroeconomic balance, acceleration of development in spheres, which are to become the powerhouses of economic growth as a whole; solution of specific problems, related to the demographic features and employment; increase of population incomes, and etc.
The importance of this priority task is that without structural transformations that require the concentration of domestic and foreign investments, it is hard to get away from one-sided economy based on raw resources and to gain the true economic independence.
The results of current reforms have impacted positively on the GDP structure in which the share of industry rose by 20,7 % in 2005 against 14 % in 2002.
Services sector is growing at significant pace. Its share in GDP is now over 38.5 %. The transport and telecommunication industries grew by 1,5 times for the past five years.
Rapid development of new types of services in telecommunications, finance and banking is particularly noteworthy. Over the past five years, insurance services have gone up five-fold, leasing deals - almost six-fold, audit services in monetary terms rose by about nine-fold.
Significant development of textile and food manufacturing industry can be pointed out as a specific evidence of the structural reforms. Growth of the sector was up by 12% in comparison with 2004, in particular the production of weaving industry rose by 17%, clothing products rose by 24.5 % and knitwear production by 53%.
Number of manufacturing plants with modern technology and joint ventures with foreign investors as well as significant growth of light industry?s export capacity of ready compatible goods were the main characteristics of such development process. More importantly, new work places are being created in order to provide the population, in particular, women, with job opportunities.
It would not be an overestimation to say that main outcome of the reforms in 2005 was the growth of the export capacity production by 11.5 percent. Volume of integrated products and services accounted for more than 50% in total export. It allowed us to achieve the highest trade surplus in the amount of 1.3 bln USD since our independence.
As a result, the gold and exchange currency reserves of the country rose by 1.3 times which reflects growing stability of our economy to the changes of external market.
To assess the positive changes in economy it would be reasonable to recall that if the share of cotton fibre in foreign export in 2000 was 27,5%, in 2005 it was reduced by 19%. Structure of import has also changed ? share of machines and equipments in total import of the country rose by 44%. Encouraging development of economy has been achieved as result of structural changes in investments, which exceeded 20% of the GDP.
In the light of reducing the centralised expenditure there is a improvement of investments by the companies and individuals, foreign shareholders and in the form of commercial banks? resources. In 2005 share of nongovernmental investments accounted for 76,5%, foreign direct investments and financial credits rose by 1,5 fold.
The second main task, which we attributed our central attention, was about expansion and intensification of economic liberalization process.
It was our central policy to carry out a streamlined strategy in reducing the tax burden, implementing liberalization and unification of budget and tax regimes, simplification of taxing procedures, and increasing the responsibility by tax authorities.
The corporate income tax rate in 2005 was reduced from 18% to 15% which allowed the enterprises to allocate some 40 bln. sum by their own. Rate of unified social payments was cut by 31%, in line with the reduce of property tax individual tax regime was changed by 3,5%.
The introduction unified payment for small enterprises rated as 13% against 15.2% of consolidated payment is of a great importance for the development of entrepreneurship. It also allowed small enterprises to save about 10 bln. sums only in the second half of 2005.
Adopted measures on lightening the tax burden resulted in decrease of fiscal withholdings to state budget down to 22.6%. As a result, more than 130 bln. sums were left at the disposal of enterprises, which were used to replenish current assets and contributed to enhancement of their financial status.
Important step in liberalization of bank-credit system was the abolition of limitations and strict observance of the requirements on unhampered payment of cash, strengthening of control on fullness and timeliness of delivery of cash receipts by banks.
Granting commercial banks with unlimited access to their correspondent accounts in Central Bank, as well as adopting measures for further unification of cash and non-cash payments, extensive practical implantation of the progressive way of non-cash payments by using plastic cards, quantity of which increased up five-fold for the last year were also of a great importance.
In 2005 we moved further in liberalization of foreign trade, integration into the world economic relations. It was encouraged by the adoption of specific measures aimed at stimulation of domestic products exports, further development of customs and tariff regulation of export-import operations, unification of customs payments, simplification of tax and customs management.
Thirdly, the significant step in the liberalization of the system of access and realization of material resources and finished commodities was made in 2005.
Today we can say with the confidence that steady market mechanism is formed, which opens wide access for entrepreneurs, primarily for small businesses, to main material resources, including high-liquid ones, which are highly required.
The volume of turnover of exchange trade during 2001-2005 increased 5.5 fold. Today exchange accounts for one third of total wholesale turnover, while in 2000 it was only 8.5%.
I would like to note in particular that major profits from the products realization through exchange were gained by the entities of small and private entrepreneurship. Nowadays procurements made by small businesses at exchange trades allow them to cover about 70% of their needs in inventory holdings.
The first International Cotton Fair, which was held in Tashkent in 2005 was of a high importance. More than 340 representatives of 200 foreign companies from 26 countries participated at the fair. As a result there were concluded 122 contracts with the companies from China, Russia, India, Republic of Korea, Singapore, Bangladesh, United Arab Emirates and other countries ? importers of cotton.
The geography has changed and the mechanism of selling and delivery to the processing plants and avoiding intermediaries became more transparent. The fair in Tashkent demonstrated that Uzbekistan as one of the leading producers of cotton yarn in the world can play an active role on the world cotton market.
Fourth - cardinal turnover in order to broaden private sector, speedy development of small business and farmers? enterprises and entrepreneurship is implemented.
Starting from 2005 is taken the course to sell enterprises as a whole, as well as the state shares to private owners. As a result from 980 enterprises 902 have been privatized. Altogether from 2000 to 2005 about 4660 enterprises and other establishments have been realized to private owners.
For example, such big enterprises as Samarkand tea-packing factory, Joint-stock companies including ?Ahangarancement?, ?Bukhorogips?, ?Parkentsuv-kurilish? and others were sold to private owners totally.
The distinctive nature of the privatization process of last years is a full implementation of state assets and shares? packages at zero redemption value. During last three years at zero redemption value 396 enterprises and other establishments with investment obligations had been realized on total amount of 43.2 bln. sums. The quantity of establishments with state share in their funds decreased by three times in comparison to 2001.
Today about 76% of GDP is made by the state sector, as well as more than 78% of industrial production, and practically the whole agricultural production and retail turnover. In non-state sector more then 77% or three fourth of total workforce are involved.
We can say literally that 2005 became turning-point in the speedy development of small businesses and private entrepreneurship.
Today this sphere plays leading role not only in speeding up the rate of economic growth, but also in solving the most important task for our country on providing employment and increasing the national income.
In many respects this was provided due to increased attention paid in the republic to the issues of strengthening of legal basis, formation of stable system of preferences, privileges, loans for this economy sector.
In 2005 the number of small business entities increased by 31500, and comprised 310 thousands.
Nowadays, the share of small businesses in GDP of the
country comprises 38.2%.
Today, more than 65% of all employed people in the economy of the country involved in this sector. Small businesses account for 85% of newly created working places.
Last year great attention was paid to cardinal reformation of agricultural production and primarily to rapid development of rural farming.
More than 1 mln. people are involved in farming sector of the country and they produced more than 65% of cotton and more than 55% of wheat in 2005.
Fifth ? in 2005, a lot of work has been done on drastic decrease of intervention of state and controlling bodies into the financial and economic activity of enterprises and on essential broadening of economic freedom and rights of business entities and entrepreneurs.
The number of carried out inspections was decreased by 2.5 times in comparison with 2001.
The number of state accounting reports issued by economic entities was decreased by 2 times, of monthly reports ? by 5 times, 12 permission procedures were abolished and the responsibility was strengthened for illegal request of accounting reports.
Due to introduction of single tax the number of taxation documentation that should be provided by tax payers was decrease by 10 times.
I think that there is no need to say that now all decisions by controlling bodies on results of their inspections of economic entities and enterprises are implemented only through courts and this changes the situation with regard to applying of various sanctions to them.
The decisive steps were made on complete elimination of outdated practices of considering and solving disputes between economic entities in state controlling bodies on different levels. All these issues nowadays are considered only through court procedures as it is custom for a democratic country.
During last years the system of economic courts has been significantly strengthened, separation of functions of courts of general jurisdiction the into civil and administrative-and-criminal ones was made.
Activity of economic courts is attaining a distinct significance. During 2001-2005 number of cases, which were proceeded by this courts increased 3.7 fold, including cases on administrative contempt ? more than 4 times.
Deserves attention dominating majority of cases are proceeded in favour of entrepreneurs and economic entities. Only 45 bln. sums in 2005 were collected in their favour.
To decide issues of deepening market reforms and limiting interference into activity of entrepreneurial structures we should pay much attention to realization of administrative reforms.
I think there is no need to prove someone that deepening of the reforms and liberalization of economy are directly connected with elimination of superannuated old bureaucratic administrative system.
It is necessary to admit that administrative reform carried out in the country has essentially effected the optimization of the administration agencies structure on the central and local levels, has led to significant reduction of administrative personnel and costs for its maintenance.
From 2001 to 2005 total number of administrative personnel was reduced by 75 thousand which makes 35,5%, including national agencies for 21%, local authorities - 63,5% and economic agencies for 30,5%.
At the same time it is not a secret that the bureaucratic administrative system still exists firmly, posing its negative influence. Unfortunately, many people still consider administrative reform as a simple reduction the number of the officials. This is a big mistake.
An administrative reform, first of all, considers the change of functions of the administrative structures, termination and fundamental reduction of their imperious, regulative and supervisory powers as well as barring the direct intervention and regulation of activity of economic entities.
Everyone especially leadership at the central and regional levels should learn that and implement it into a practice firmly.
Speaking about qualitative changes in the economy, real achievements in the market reforms, I would like to reiterate that we carry out reforms not for the sake of reforms. It is important to bear in mind how these reforms effect the social life of people.
In 2005 the wage of employees in budgetary sphere, pensions, grants and welfare payments were increased for 40% on average. In its turn this has formed a basis for further increase of real incomes of the population for 22%.
The perception and the mentality of people are being changed, and social dependence and orientation on state only is being passed into a history.
The middle class is being formed in the country as a basis of democratic society, due to the privatization, strengthening of private property, stimulation of the establishment of small enterprises, microfirms, farms and entrepreneurship. First of all, this is the proprietors-businessmen who rely on their own capabilities and have own businesses, which feed them, their families and support the state.
These people constitute a pillar of our society, its social basis, as they are mostly concerned about preserving and extending of the reforms, stable and sustainable development of the country.
Summing up the results of development for the past period, we have ground to state that 2005 was a major landmark in the democratic transformation and deepening of market reforms as well as liberalization of the economy.
First of all, extensive economic changes had become a source for the GDP sustainable growth and increase of direct foreign investments, maintenance of high export of ready goods, fulfillment of the state budget and implementation of large social projects.
Speaking about the prospects of economic development of our country I would like to dwell on the main priorities of a deepening of economic reforms in 2006.
Ensuring of steadily high rates of growth of economy and the stable and balanced macroeconomic parameters should be in the center of our attention in 2006.
For realization of this task it is provided to increase a gross domestic product by 7,2 % in 2006 and in counting upon per head for 6%. Economic growth in 2006 will be provided, first of all, due to more accelerated development of the industry (9%), growth of agricultural production (5,2%), services (13,2%) and trade (8,5%). It is planned to keep inflation within 6-8% during this year.
We bind creation of the strong base to the accelerated development of manufacture, first, with the further deepening of budgetary and tax reforms, simplification and unification of system of the taxation and reduction of tax burden.
To achieve of this goal, from the beginning of this year some taxes have already been reduced significantly, e.g. the rates of profit tax - from 15 to 12%, single social payment - up to of 25 %. In 2006 with a view of increase of attraction of the stock markets and raise of incomes of its participants the rate of the income tax for dividends and interest rate is reduced from 15 to 10 %. The ecological tax and monthly dues for trade have been cancelled. Besides a number of the expenses connected with production costs is excluded from taxable base.
Preliminary calculations show that implementation of provided measures in this area will reserve for the enterprises and managing structures in addition about 250 billion sums which can be directed to manufacture and investments, as well as to increase of wages of employees.
The main objective of realization of the stipulated measures for essential simplification of tax burden is a maintenance of dynamic growth of consumer demand which is considered as a paramount factor to stirring up of manufacture.
Speaking about a consumer demand, we mean not only demand of the population. It is also a growing demand of the enterprises and business structures due to increase of their turnaround means. Growth of composite demand creates strong stimulus for escalating manufacture all commodities, including consumer goods.
The basic components of this policy are growth of wages and creation for the population such conditions which allow getting additional incomes.
In 2006 it is planned two-stage increase of wages of employees in the budgetary structures. As a result it will be provided increase of monthly average wages in 1,4 times. The amount of pensions, welfare payments, grants and other social transfers will increase in the same limits.
Continuation of the line to develop small enterprise, farmers and dehqan farming, expansion of cooperation among large and small manufactures and out-work activity will be importantly supportive for growth of incomes of the population. As a whole it is estimated that real incomes of the population should increase at least 20 %.
It is necessary to take the certain measures for stimulating these spheres of business, to pay a special attention to wider development of mechanisms and volumes of micro crediting and micro leasing. For these purposes we have to accelerate the work on adopting the Law ?On microfinancing \\\".
As a mechanism and instrument of implementing these tasks we should create a specialized bank with branches in all regions, which could render a wide range of services on micro crediting and micro-leasing for entities of small business and private entrepreneurship. The creation of this bank should be started in the first quarter of this year.
The most important issue, which should be addressed in this regard, is to find sources for forming the authorized fund of the bank. Interest rates on credits should not exceed 5%. We should also work out a mechanism of credit-back guarantee.
Another factor of stimulating consumer demand should be wide crediting of population, especially in rural areas, for purchasing of goods that are used for long period. At the present time only the crediting of cars purchase is widely used. At the same time there are vast opportunities for crediting the purchase of furniture, TVs, refrigerators, washers, home appliances and other electronics.
We should make more vigorous the activity of all banks in this regard. The Central Bank along with commercial banks and Trade-Industry Chamber within one month period should submit to the Cabinet of Ministers proposals on measures on the significant expansion of the crediting of population for purchasing goods of domestic producers and on measures on credit-back guarantee.
As you see, perspectives of reinvigorating and eliminating a lot of shortcomings in the development of economy and its liberalization are intertwined with reforming the bank system.
Today one should admit that the activity of banks raises serious reprimands on the part of business entities, representatives of small business, farmers and private entrepreneurs.
In the banking system latest instruments of providing the balanced development of the fiscal-credit policy as well as mechanisms of managing market and fiscal aggregates are poorly used.
There is lack of progress in improving of capitalization and financing reliability of banks as well as in increasing of resource bases of banks by attracting free funds of population and business entities.
The Central Bank and commercial banks should make maximum efforts to strengthen the trust of population and business to the bank system. First and foremost, this should be achieved through unimpeded withdrawal of cash from deposit accounts of clients, full unification of cash and non-cash circulation.
In the center of attention should remain issues of significant decrease of non-bank circulation and strengthening the cash flow, increasing the reliability of national currency, expanding the use of plastic cards for the payment in retails stores and for services.
We should take all steps to create environment for competitiveness in the bank market, develop segments of banking and leasing services, significant expansion of micro-creding.
We all should be mindful of the fact that the economic growth directly related to the continuing our work on eliminating red tapes, decreasing risks of having business and providing freedom of entrepreneurship. Within administrative reforms we should continue work on significant cut of volume of licenses and various permissions.
The Ministry of Justice, State Committee of Demonopolization, Trade-Industry Chamber in a two-month period should carry out additional thorough inventory of the existing system of registration, license and permissions providing for business operations. Submit to the Cabinet of Ministers proposals on transition from the current system of registration of new enterprises and business organizations to a system of advice registration.
The second most important priority ? to continue the process of furthering and broadening the scale of the structural reforms and economy modernization. To provide all necessary conditions for the attraction of foreign investments. We have to achieve in 2006 stable volumes of production in oil and gas sector, electroenergetics, as well as non-ferrous metallurgy. We should increase the development of engineering and light industries and first of all, cotton and clothing industries.
In order to achieve these priorities we have to provide qualitative leaps in structure of the economy. We need to make partial increase the share of the industry, including the construction one, in GDP by 24-26% and share of service by 45-47% by 2010.
Attention should be paid to the attraction of foreign investments for the fast and large-scale geological explorations. This would provide advanced growth of hydrocarbon resources and the development of energy sector.
There is urgent need for the streamlining the territorial structuring of industrial production. The priority should be given to the establishment of small enterprises and microfirms that involved in reprocessing of domestic raw materials and producing finished competitive products.
The Cabinet of Ministers, regional governors in a two months period should work out a special program on creating in populated areas, where modern production is not well-developed, small enterprises or branches of big factories that localizing their production. They should be given systems of incentives and preferences, including transferring to them facilities on zero cost for promoting such small enterprises.
Once again I would like to emphasize the importance of attracting of foreign investments that are aimed at the creation of new joint ventures, modernization and technological renewal of acting production.
We should take additional steps to strengthen the legal base, create a transparent mechanism of the application of incentives and preferences, expand the implementation of new forms of attracting investment, and inform foreign business circles and potential partners for the investment opportunities in certain sectors of our economy. It is important that we should eradicate red tapes, complacency and corruption among officials.
It should be noted that we don?t see active role of recently created the Ministry of Foreign Economic relations, investment and trade in the addressing these tasks.
Third priority ? a large scale expansion of the private property sector, strengthening guarantees and formation of favorable climate for the business.
What needs to be done to achieve these goals?
Approaches to the privatization of enterprises need a fundamental change. A special attention should be given to privatization of a large-scale enterprise, and most of all to those that need heavy influx of investment and modern technologies.
One cannot disagree that the shares of state in the collective investment funds of holdings and stock companies are still unjustifiably high, even when there is no need for this. We need to carefully review our approaches to privatization of many enterprises that hold a monopoly in the market of Uzbekistan, such as ?Uzselhozmash-holding?, ?Uzbekenergo?, ?Uzbekiston temir yullari?, ?Uzbekneftegaz? and others.
We cannot tolerate a situation, when State Property Committee focuses its main attention on secondary issues, and does not propose any initiatives on important strategic directions of privatization and support for enterprises in post-privatization period, or in streamlining the system of corporate management, fundamental review of the role of joint-stock companies and their supervisory boards, as well as stimulating their activities.
We need to pay a special attention to the development of equity market, and especially a secondary market. It is necessary to adopt an effective strategy of development of competitive stock market for the near-term outlook, and substantially raise transparency of the trade of stock and enterprises in exchanges.
A fundamental change and introduction of a new effective system of pre-sale preparation of each enterprise for exchange and off-exchange trade is required, as well as development of systemic approach for the post-privatization monitoring, increasing economic responsibility of new owners for the management of privatized enterprises and implementation of investment commitments.
State Property Committee along with Ministry of Economy and State Demonopolization Committee, as well as with other concerned agencies, in a two-month period should develop and introduce to the Cabinet of Ministers a new Privatization program for 2006-2008. In the Program enterprises of natural monopoly that does not have a strategic importance should be included and the list of enterprises that offered for sale with zero redemption value should be expanded, given that investors take specific investment commitments.
A number of principal issues that require their solutions must be on the agenda.
First. Ministry of Economy, Ministry of Finance, Uzgoskomgeodezkadastr, State Property Committee, Ministry of Justice, and State Demonopolization Committee in a one-month period should introduce to the Cabinet of Ministers proposals on expanding the list of enterprises for privatization by allowing investors - private owners to privatize the buildings and structures together with a land where they are located.
At the same time, the value of land must be determined by the market. Today many privatized enterprises, the value of which amounts to only a few millions of Sums, are located on a vast areas of many hectares of land. The majority of lands have not been used by the new owners since they received it for indefinite use free of charge.
Second. Further expansion of privatization process can be achieved by privatization of land for the individual house-building within established norms. This will serve as a strong stimulus for the development of mortgage and other forms of deposits in private and family business. At the same time it provides legalization and transparency of existing in reality, but outside of government control real estate business.
Third. In order to strengthen guarantees of private business and create favorable climate for its development, we need to review towards reduction of still high expenses of businesses for administrative procedures in state run public authorities and market institutions.
State demonopolization committee, Ministry of Finance in cooperation with the Chamber of Trade and Industry and concerning ministries and agencies should thoroughly analyze the current state of affairs and submit their proposals to the Cabinet of Ministers on the amounts of reduction on expenditures of businesses to go through the above mentioned procedures by April 1, 2006.
Besides that the work on improvement of legislation, which envisages the reduction of penalties on businesses should be completed in the first quarter of current year, since excessive penalties are becoming in certain cases one of main reasons for corruption among officials of controlling agencies.
Fourth. Strengthening the judicial system and further deepening the judicial reforms to protect the legal rights of entrepreneurs and to provide them with greater freedom should be a priority task in the process of formation of favorable business climate.
The Ministry of Justice, Supreme Court of the Republic of Uzbekistan and Economic Court should submit their proposals on above matters within one month.
A special attention must be paid to the strict implementation of the adopted measures on stimulating the development of small businesses and farmer entities. The process of reorganization of 657 shirkats (agricultural cooperatives), including 447 cotton and grain and 210 fruit and vegetable production cooperatives into farmer entities should be completed in 2006.
I would like to make a special emphasis on the fact that the development and strengthening of farmer entities and concerning structural reforms connected to this process in rural areas should be based on a simple, but very important principle ? the priority of personal interest and motivation of farmers.
This objective should serve as a foundation and main engine in all reforms on reorganization of rural communities.
The establishment of actual mechanisms of cooperation by and among farmers to set up reprocessing plants for the produced agricultural goods, in the first place for fruit and vegetables as well as live stock is becoming of a vital importance at current stage.
The fourth priority ? providing employment opportunities as a key condition in increasing the income and improving the well being of population. Addressing this urgent problem has not only an economic, but also social and political significance. It is directly related to increasing the income and improving the well being of our people.
For this very reason none and especially local authorities, should not stay away from the implementation of these contemporary and vital tasks. Primarily it is a question of implementation of recently adopted decrees and decisions of government and specific complex programs on:
-creation of new micro-firms, development of family business and small private enterprises, stimulation of the micro-crediting system;
-extension out-works in cooperation with the large industrial enterprises;
-acceleration of the development of labour-consuming spheres of light and food processing industry focused on deep processing of local raw material and manufacture of ready, competitive production;
-development of the sphere of services for the period until the year 2010, first of all in a countryside;
-stimulation of raise of livestock population, first of all of cattle, in private subsidiary, dehqan (peasant) and farm economies.
Most of that directions aimed at the creation of workplaces does not require a significant capital investment and it is very important, that these programs are to be fully implemented. It will allow to occupy tens thousand people, especially women and village youth, considerably increase the incomes of the families and improve well-being of the whole population nationwide.
The Cabinet of Ministers of the Republic of Uzbekistan, Council of Ministers of the Republic Karakalpakstan, regional, cities and districts authorities have to develop specific measures on implementation of the adopted programs, create the utmost conditions for the employment of population, provide necessary premises and micro credits for organizations, in one word, to render all possible support and help.
The course of realization of these programs should be a subject of the most careful consideration at quarterly-hold sessions of government and local authorities.
The fifth priority ? comprehensive stimulation of export and ensuring saving of currency resources, as well as their rational and effective use.
Inculcation of this priority envisages further liberalization of foreign trade and currency market, creation of an export-oriented structure of the economy, raise of private sector participation share in the growth of an export potential. Comprehensive stimulation of export of the country, development of infrastructure, ensuring integration and expansion of domestic production on the external markets are on the foreground in this extend.
The primary task of government in this direction is the scrupulous analysis of current administrative, customs, bank procedures and elimination of all barriers for export of competitive products manufactured at our enterprises.
I would like to point out one problem that demands solution. Not every small enterprise or private businessman, and we are having more and more of them, can independently and effectively export their products. They lack not only material and financial resources, but also skills and in the global market there is a severe competition for the markets.
In international experience specialized foreign trade organizations, professionals are dealing with export activities. The only division of labour and specialization, modern technologies allow competing on the world market, increasing considerably export of small enterprises products and raising their efficiency. Therefore there a necessity for the Ministry of Foreign Economic Relations, Investments and Trade along with the Chamber of Trade and Industry, Ministry of Finance, Ministry of Economy and State committee on de-monopolization to reconsider existing legal framework regulating activity of the foreign trade companies, and in a month time to submit proposals to the Cabinet of Ministers on expansion of the privileges and preferences granted to the domestic exporters-manufacturers on the private traders, regularly working on external market.
In contemporary conditions of a stiff international competition it is necessary to expand the export crediting mechanisms for our manufacturers, insurance of export deliveries, provide all possible assistance and stimulate the enterprises introducing international quality control system and certification of manufactured products.
The Ministry of Foreign Economic Relations, Investments and Trade along with the Ministry of Finance, Association of Transport and Transport Communications to work out and submit in a month time to the Cabinet of Ministers specific proposals on creation of the logistic centres in the nationwide with the purpose of the most rational and effective organization of transportation of export cargoes, study of the most effective routes and transport corridors on transportation of the Uzbek goods on international markets.
In view of Uzbekistan?s membership into the Euro-Asian Economic Community it is necessary to realize required measures aimed at the unification of the customs procedures.
Due to this Cabinet of Ministers in two weeks should set special task force including the international experts for the development of the new edition of the Customs Code. The Code should envisage transparency in administering of the all customs procedures, and protecting the domestic market from the low quality illegal goods. It has to become a legal document of a direct effect.
Further liberalization of the currency market and external trade must be closely linked with the observance of tough economy regime in the usage of the currency resources. Currency resources must be channelled in the first place into the technical re-equipment, industrial renovation and modernization, which ensures enhancement of the export possibilities of the companies.
Sixth priority to which we must pay special attention, is dealing with the issues of the housing and communal services reforms.
First of all, the major improvement of the housing and communal management system, enhancement of the status, organizational and financial self-sufficiency and efficiency of the activities of House Ownership Associations. Today there are more then 2,5 thousand House Ownership Associations nationwide.
Their main aim is to become genuine institutes of self-governance for the house owners, endowed with sufficiently big powers, necessary privileges and preferences.
Having accumulated house owners? money in the first place, House Ownership Associations should act as the united customer, using collected means strictly for set purposes, i.e. for the renovation, fixing up and preserving the housing fund.
However we should regretfully mention, that notwithstanding some job done in the last year in renovating and fixing the housing in the city of Tashkent and Tashkent province, work of House Ownership Associations still could not be accepted as satisfactory.
They are almost have no differences from previously functioned housing and communal Committees and cooperatives. There main deficiency is a lack of the necessary control from local authorities, and accumulated payments are used aimlessly, there is a major management and technical staff despite the absence of the capital, quality of the regular and capital renovation works is very poor, admitted number of money appropriation and deceit. Alien people take the managerial positions within the House Ownership Associations.
From year to year we should solve the very same problems of the dissatisfactory securing with heating, gas, drinking water, in highly dissatisfactory conditions places of common usage ? entrances, doorways and house yards.
A lot could be said about the causes of such situation. One of them is that housing fund already 13 years had been privatised. In other words today almost all the housing fund is transferred in to the private hands.
However, we still did not fully understand the meaning of it. Apartments and houses had been privatised, but unfortunately new mechanisms, structures that should be responsible for the management, renovation and inventory of the housing fund still at stage of its establishment.
We must mention, that due to this reasons House Ownership Associations still did not become an association of the true owners of the houses, capable manage the housing fund and timely solve the problems of the tenants.
Besides the reforms of the housing and communal services requires solution of other very important issue, which is a formation of the communal services market, renovation works and contractor market.
Until there would not be competition on the market, till each House Ownership Associations will have the opportunity to choose one appropriate contractor from the number of others and to sign the sub-contract on the renovation and inventory works ? it is difficult to change the situation in this very important for each tenant sphere.
For the solution of all these difficult issues, House Ownership Associations need constant and specific assistance from the state, financial and banking institutions. Responsibilities of the relevant central agencies, as well as district and city Khokims (administration) should be increased.
I consider that it is expedient on the quarterly basis to review during the summing up meetings of Council of Ministers of Republic of Karakalpakistan, province khokimiyat reports of the district and city khokims on these very important and vital matters, which effects the mood of the people directly.
Cabinet of Ministers along with the relevant agencies in two month period must develop and accept specific programme of measures aimed at enhancing the capacity of House Ownership Associations, endowment them with real means, abolishment of the monopoly and formation of the real market of renovation and communal services.
Concluding the speech I would like to outline one more priority ? providing strict saving of energy resources, firstly in the power consuming branches, such as chemical, non-ferrous metallurgy, as well as in electro energy and others. This task is becoming alarming one in the modern conditions, when the prices on world energy resources are permanently rising.
In terms of the energy, Uzbekistan is considered to be self-sufficient country. But it does not give us the right to violate the opportunity of having valuable resources. We should always think and remember what we would remain for our next generation.
Saving energy resources should be considered as an urgent measure on decreasing the costs of goods accordingly, as well as service tariffs and the competitiveness of our economy.
It should be accepted that no systemic work is being done at present. It is no wonder that nowadays, as it was 15 years ago, the industry energy consumption nationwide is 2?2,5 times higher than the average world standard.
Non-rational use, absence of measuring devices, groundless losses as well as frequent robbery, are being met at all stages ? from extracting, processing up to sale and the final consumption of energy resources.
Therefore the implementation of wide range energy saving measures, firstly in the intense spheres of energy, which have 35 percent of the whole energy saving potential, considered to be an as a contemporary problem for coming years.
The Cabinet of Ministers is obliged within two months to work out and adopt the Program of specific measures for saving energy in 2006-2010. The program is to consider the following:
-introduction of modern technologies on extracting of oil, gas, gas condensate, their transportation and reprocessing that provide considerable decrease of losses and capacity of utilizing for its own technological necessities, advance the quality of processing.
-wide scope of work on equipping all branches of economy with energy saving technologies, as well as strict monitoring over the realization of branch measures on energy saving.
-improvement of accounts and control rules of energy consumption, strickt monitoring over the process of installing the measuring instruments, due certification of energy consuming devices to meet the norms of energy expenses according to the world standards.
-further improvement of measures on economic motivation of energy saving, by using the system of financial-economic, tax mechanisms widely.
-extensive use of non-traditional alternative energy sources.
The special attention should be paid to the problem of reforming and strict controlling over the activity of departments and agencies themselves in Khokimiyats, dealing with the provision of electricity and gas to consumers.
The facts of irresponsibility of those departments and agencies can no longer be accepted as well as abuse of power and illegal appropriation in that sphere.
Analysis demonstrates that majority of energy consumers do not either pay for services or make illegal payments to various controllers and payment collectors. There are still many consumers in the regions, who have not been contracted with service providers or they consume the energy, avoiding the measuring devices.
It is high time for the Government (Sh.Mirsiyaev), Council of Ministers of the Republic of Karakalpakistan, regional and city authorities to take all that under the control.
The purpose of all above-mentioned is to create dynamic and stable developing economy, flourishing society, achieving proper standard of living conditions, when the people, living in the land of plenty of Uzbekistan, would look into future with confidence.
I wish you success and all the best in achieving these noble goals.