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Uzbek Private Sector Hampered by Corruption

Recent moves to protect businessmen’s rights in Uzbekistan ignore the wider problem of corruption that often stifles commercial activity, NBCentralAsia analysts say.

At a February 13 cabinet meeting, President Islam Karimov instructed the anti-monopoly agency, the justice ministry and the prosecution service to clear away bureaucratic obstacles that face anyone trying to run a business.

The president also called for the creation of a new commissions which would engage with businessmen to find out what the major obstructions to their work are.

The president’s instructions follow the announcement last November of a programme designed to counter the impact of the international financial crisis on local businesses, for example by reducing taxes on small industrial enterprise by one per cent and freeing service-sector companies of taxes for three years. In addition, businesses are to be offered more loans on preferential terms and official inspections are to be reduced by 33 per cent.

Yet all these positive steps to reduce red tape and create a more liberal business climate are unlikely to stimulate greater commercial development because one major area remains unaddressed – corruption.

The international watchdog group Transparency International listed Uzbekistan as one of the world’s most corrupt states in its most recent listing.

Commentators say starting up a business can be fraught with difficulties if you operate within the law.

Tashkent resident Dilshod Ghulomov recalled how the local authorities placed obstacles in his way when he was setting up the beauty salon he owns, and delayed granting him an operating license for a long time.

“People from the hokimiat [city government] warned me that I’d need to pay 5,000 dollars to obtain all the right documents,” he said. “I had to fix things with money.”

A businessman based in the eastern city of Andijan agreed that it there was no getting around the need to bribe officials. You simply had to pay for patronage in order to avoid running into problems later on. “Otherwise the taxmen, police, local government officials and mahalla [neighbourhood committee] representatives will drive you crazy with regular inspections, after which you will have to pay them ‘ransom money’.”

It is this local-level corruption, and the failure of national government to address it, that analysts blame for curbing the growth of the private sector.

Tashpulat Yoldashev, an Uzbek political scientist who now lives abroad, said systemic change is essential if the government is to realise its ambition to rein in the bureacrats who stifle the business sector.

He thinks the authorities would do well to revive the Soviet-era law banning corruption, and to embark on a broad anti-corruption strategy. Then and only then would there be a possibility of reducing the bribe-taking which blights the lives of ordinary people as well as businessmen.

“Currently, nothing gets done without a bribe – you won’t get a single signature or document unless you pay up,” he said.

(NBCentralAsia is an IWPR-funded project to create a multilingual news analysis and comment service for Central Asia, drawing on the expertise of a broad range of political observers across the region. The project ran from August 2006 to September 2007, covering all five regional states. With new funding, the service has resumed, covering Uzbekistan and Turkmenistan.)

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