Uzbekistan is undergoing transformative economic reforms aimed at modernizing its economic policies and enhancing competition. Over the past five years, the country has implemented several significant changes, with the 'Yellow Pages Rule' serving as a cornerstone of this reform agenda.
The 'Yellow Pages Rule' prohibits the establishment of state-owned enterprises (SOEs) if five private-sector entities already operate within the same industry. This benchmark was established following thorough market monitoring, indicating sufficient non-concentration with the presence of these five entities. The implementation of this rule signifies Uzbekistan's commitment to reducing state presence and fostering fair market practices.
Khalilillo Turakhujaev, the Chairman of the Committee for the Development of Competition and Protection of Consumer Rights, has been instrumental in these reforms. He highlights the importance of aligning Uzbekistan's competition framework with international standards and ensuring independent decision-making free from potential conflicts of interest.
To strengthen governance and competition, Uzbekistan has made the competition authority accountable directly to the President and Senate. This shift ensures transparency and effective oversight over market practices. State entities and public bodies now must adhere to competition compliance tools, which include implementing ethics codes and corporate governance rules. Companies must designate internal officers responsible for reporting compliance annually to the government, increasing both transparency and accountability.
Non-compliance with these new tools incurs heavier fines, which act as powerful deterrents against anti-competitive behaviors. Importantly, SOEs are now barred from engaging in public procurement, effectively eliminating conflicts of interest and enabling clearer market operations.
Uzbekistan's reforms also encompass substantial revisions to state aid provisions. The government has committed to canceling privileges and tax benefits across several sectors, thereby ensuring a level playing field for all market players. So far, tax and customs benefits have been abolished across 24 sectors, reflecting the government's resolve to minimize distortions in competition.
Alongside this, Uzbekistan has initiated the cancellation of numerous licenses and permits, streamlining operations for businesses. Previously, 130 types of licenses were needed, but now the government has moved to replace 33 types with less cumbersome notification procedures.
The adoption of the Competition Development Strategy for 2020-2024 highlights Uzbekistan's broader objectives of stimulating economic growth, attracting investments, creating jobs, and enhancing consumer welfare through fair competition practices. The introduction of new competition laws, particularly enacted in July 2023, gives way to the establishment of frameworks for digital market regulation—the first of its kind for the region. This law also strengthens penalties against anti-competitive practices and encourages compliance among small- and medium-sized enterprises (SMEs).
Looking forward, Uzbekistan plans to abolish 17 state monopolies by 2030 across various sectors, including energy, oil and gas, and infrastructure management. The government aims to transition these services to private operators, significantly reducing the number of SOEs. Currently, the anticipated outcome is to lower state presence dramatically, and the government's efforts are already reflecting positive shifts within the economy.
To cement this operational efficiency, independent economic regulators are being established across key sectors. The first regulator was set up recently within the energy sector, with additional regulatory bodies expected to become operational across railways, telecommunications, and aviation by 2025.
Uzbekistan's alignment with World Trade Organization (WTO) principles is another significant aspect of these reforms. The government is actively reviewing state trading enterprises (STEs) to eliminate exclusive procurement and export rights for metals and resources, such as natural gas and electricity. From January 2025, new licensing procedures will roll out to facilitate fair competition and curtail existing market distortions.
Since commencing these reforms, Uzbekistan has seen progressive outcomes. Examples include the liberalization of 13 regulated prices for key commodities, such as wheat and fuel, indicating growing integration with the global economy. Notably, the state’s financial assistance has decreased significantly, dropping from over 22% to 12%, with state participation also declining from 55% to 37%.
Critically, the number of SMEs has risen by 25%, and competition has markedly improved across sectors previously dominated by SOEs. The aviation sector exemplifies this, particularly following the implementation of the 'open skies' policy, which has diluted the longstanding monopoly held by Uzbekistan Airways on international flights.
Through all these initiatives, Uzbekistan is firmly establishing itself as a nation committed to cultivating competitive markets, fostering innovation, and integrating effectively with global trade networks. The continuing reforms aim to shape and sustain Uzbekistan's economic future, ensuring transparent, equitable conditions for growth and development.
