The change in the country's position in various economic international ratings is one of the important indicators that give an idea of the development of economic processes in the format of global and regional comparisons.
Rankings such as the World Bank's Doing Business and the Heritage Foundation's Index of Economic Freedom have a high degree of credibility and serve as a guide for foreign investors in investing in certain countries.
Uzbekistan took 69th place in the international business rating "Doing Business 2020", rising from 76th place to 7 positions. The republic is also among the top 20 countries that have made significant progress in improving the business environment. In terms of business registration, our country ranks 8th among top 10.
The Doing Business 2020 Index includes changes in the business climate of 190 countries from May 2018 to May 2019. During this period, the government of the Republic of Uzbekistan carried out 94 reform actions.
However, the World Bank Doing Business team counted only 17 reforms in the minority investor protection, taxation, international trade and contract enforcement components as implemented. The main reasons for the incomplete recognition of the adopted reform actions can be attributed to time delays, insufficient awareness of business entities, organizations providing public services and directly working with entrepreneurs.
The Republic of Uzbekistan is expected to make significant headway in the next Doing Business report due to the following factors.
The bureaucratic procedures for registering and running the business are being simplified, the tax burden has been reduced, export operations have been facilitated, comprehensive programs of concessional lending and business subsidies have been launched.
Thus, international rankings also record significant changes in the area of bureaucratization and liberalization of the economy, the emergence of greater freedoms for local entrepreneurs and foreign investors.
How the rating is calculated
To improve the business environment and investment climate, it is important to reduce unnecessary bureaucratic procedures that business entities face.
The conditions for doing business in various areas are combined into 10 indicators, each of which is calculated according to a number of specific indicators.
- Establishment of enterprises. This indicator looks at the number of registration procedures, the number of days it takes to register, the costs required to register, and the minimum share capital, expressed as a percentage of per capita income.
- Obtaining building permits. This indicator also considers the number of procedures, timing and cost as a percentage of construction cost. Indicator of construction quality control on a 15-point scale is added.
- Connection to the power supply system. It looks at the number of procedures required. The index of reliability of electricity supply and transparency of tariffs are also added.
- Property registration. This indicator evaluates the process of registration of title to property and also includes indicators of the number of procedures, timing and cost of registration as a percentage of the property. Here, a 30-point index of the quality of the land administration system is determined.
- Obtaining loans. This indicator is based on the definition of an index of the effectiveness of legal rights (0-12 points), the index of depth of credit (0-8 points) and indicators calculated as a percentage of the adult population.
- Protection of minority investors. The indicator for the protection of minority investors is calculated based on the calculation of a number of indices - disclosure of information about the transaction, liability of directors, favorable conditions for prosecution of company executives by shareholders, shareholder rights, development of the management structure and corporate transparency.
- Taxation. In determining this indicator, the following indicators are taken into account: the number of payments per year, the time in hours per year spent on paying taxes, the total tax burden (rate on taxes and social charges) as a percentage of income, as well as the index of post-reporting and tax payment procedures (determined on a 100-point scale).
- International trade. This indicator is calculated based on the parameters of the time in hours spent on preparation of documents and on customs clearance of export and import documents, as well as the cost of export and import procedures in US dollars.
- Enforcement of contracts. This indicator is based on the performance of contract terms in days, value as a percentage of the value of the claim, as well as an index of the quality of litigation, determined on an 18-point scale.
- Insolvency resolution. This indicator is calculated on the basis of terms in years, value as a percentage of property value, debt repayment ratio (cents per dollar) and a regulatory effectiveness index on a 16-point scale.
Speaking about the factors of positive dynamics in the ranking, analysts of the World Bank note that a lower level of poverty contributes to the formation of more favorable environment for business and an increase in the efficiency of regulatory regulation has a beneficial effect on the development of entrepreneurship, start-ups, innovation, and on facilitating the availability of loans and investments. It is especially emphasized that the leaders of the ranking implemented online procedures for registering a business and transferring property, as well as electronic platforms for filing tax returns.
It should be noted that ratings and indices are often closely related to each other. For example, Doing Business composite scores are used by other international rankings as a reliable source of aggregated data. This includes rankings such as the Global Innovation Index from INSEAD, Cornell University and the World Intellectual Property Organization, the Economic Freedom Index from the Heritage Foundation, the Global Competitiveness Index from the World Economic Forum and more.
The consistent improvement of Uzbekistan's positions in the Doing Business rating is due to the profound economic transformations carried out in recent years in the field of improving the business environment and creating a more favorable business climate. Much has already been done in this direction in recent years.
From January 1, 2017, all types of unscheduled activities in business entities, as well as counter inspections, including in criminal cases, limiting the legal rights and interests of entrepreneurs were canceled.
Since January 2018, a two-year moratorium has been declared on conducting inspections of the financial and economic activities of business entities, which was extended in 2020 due to the crisis caused by the coronavirus pandemic.
Since June 1, 2018, 6 types of licenses and permits in the field of entrepreneurial activity have been canceled and the issuing time of 15 licenses and 10 permits have been reduced.
The mechanism for allocating microcredits to newly registered individual entrepreneurs and family entrepreneurs without forming a legal entity has been simplified.
The State Fund for Supporting the Development of Entrepreneurship has been created, which provides financial assistance to business entities.
A ban has been established on the use of criminal punishment against business entities in the form of deprivation to engage in entrepreneurial activity. An independent institution - the Commissioner under the President of the Republic of Uzbekistan for the protection of the rights and legitimate interests of business entities was also established.
And precisely great work carried out over the past 5 years to improve the business environment for business that is reflected in the international rating of the World Bank.