Tashkent, Uzbekistan (UzDaily.com) — A videoconference chaired by President Shavkat Mirziyoyev discussed measures to mitigate the consequences of global economic and trade restrictions for Uzbekistan.

First and foremost, the President addressed the current situation in the world economy.

“Today’s world is no longer the same as before. It’s not about tariffs or their amounts. International institutions, which for many years ensured stable relations and mutual trust between states, as well as the norms and rules they developed, are becoming increasingly ineffective.

These processes undoubtedly may trigger a chain reaction, leading to a slowdown in the global economy and a decline in international trade volumes,” the President stated.

According to forecasts, the increase in tariffs alone could reduce international trade volumes by $3.5 trillion, and the global inflation rate could rise to 7.5-8 percent.

“The fact that international financial markets lost $10 trillion in just three to four days should serve as a serious ‘signal’ for us.

The greatest danger lies in the disruption of global supply chains and value-added creation — as we saw during the pandemic.

Key industries that account for a significant share of global exports, such as the textile industry, electrical engineering, automobile manufacturing, and food production, will be particularly vulnerable,” the President emphasized.

It was noted that countries with the highest import duties may begin to pursue an aggressive trade policy in order to penetrate the same market segments that Uzbekistan exports to. This means that fierce competition will intensify in markets for yarn, fabrics, textiles, finished products, and household appliances, where Uzbekistan operates.

According to a Harvard University analysis, over the past five years, Uzbekistan’s position in the Economic Complexity Index has improved by 25 points, rising from 105th to 80th place.

To date, 162 types of domestic products are recognized as having “competitive advantages in global markets.”

As a result, over the past few years, export volumes have increased 2.2 times, and foreign trade turnover has reached 57 percent of the gross domestic product.

“This is a very large number that shows how much our economy depends on external markets,” the President noted.

“I repeatedly say — those who believe that ‘the current situation in the world won’t affect us’ are deeply mistaken. In these conditions, we must move forward confidently and decisively, relying only on our own strengths and internal capabilities,” the head of state emphasized.

However, it was noted that many leaders still fail to grasp the seriousness of the situation and do not understand the need to work twice as hard. It was emphasized that the heads of ministries, industries, and regions must have clear plans and personally engage in production and export issues.

During the week, responsible officials held meetings with over 3,000 experienced entrepreneurs. Business owners raised new and urgent issues that need to be addressed promptly in order to adapt to fluctuations in international markets. Ministers, khokims, and heads of banks and industries have many unresolved issues.

Criticism was directed at those leaders who, instead of studying trends, objectively assessing risks, and supporting entrepreneurs, themselves become obstacles to their progress.

In regard to such cases, it was stated that strict measures must be taken.

The discussion highlighted that outdated requirements and bureaucracy in the standardization and certification system stifle entrepreneurial activity and create conditions for corruption in this area.

More than 25,000 standards and 41 technical regulations do not meet international market requirements. Currently, 6,500 of nearly 13,000 product types are subject to mandatory certification, which leads to an increase in production costs.

“When ministers or khokims inquired about the opinion of entrepreneurs on which standards should be updated, which should be canceled, or which products should be excluded from the mandatory certification list, unfortunately, there was no positive answer,” the President said with harsh criticism.

Specifically, investors note that many laboratories in the country do not meet necessary requirements, and the standards of developed countries are often not recognized.

It was also pointed out that in the current system, certification bodies simultaneously perform market supervision, which creates a conflict of interest.

The President listed a number of problems within the certification system and outlined possible solutions.

As mentioned, enterprises engaged in the production of dairy and meat products express dissatisfaction with the current procedure for obtaining sanitary-epidemiological conclusions for their products.

For example, children’s food products worth about $100 million are imported into the country annually. However, an entrepreneur who has brought modern equipment and built a factory cannot start production due to the lack of a sanitary-epidemiological conclusion. At the same time, there is no relevant standard for its issuance.

The committee’s leadership was criticized for not taking the initiative to develop a standard in collaboration with the entrepreneur, and instead, merely stating: “we don’t have a standard for this product,” and adopting a passive stance.

Some district sanitary-epidemiological services still require separate testing for each batch of the same product if it is packaged in different containers. This leads to additional time and financial costs.

The question arises: how is the different packaging of simultaneously produced products related to its quality?

Also, mineral water producers must obtain conclusions for 45 indicators. For 43 of these indicators, entrepreneurs apply to laboratories in the Sanitary-Epidemiological Committee system, while for the remaining two, they must turn to other laboratories.

The Committee was tasked with organizing all checks in one place.

To verify the quality of fruits, vegetables, and legumes, entrepreneurs must also visit three different laboratories. The most alarming part is that the conclusions from these laboratories are not recognized in developed countries.

As a result, exporters send samples of their products abroad to obtain certificates before entering higher-value markets.

It was pointed out that no internationally recognized laboratory has been brought to the country so far, and the outdated, redundant certification system remains in place.

The President listed several problems within the certification system and presented possible ways to resolve them.

Entrepreneurs producing soft drinks note that the certification of display refrigerators imported from abroad is delayed for up to three months.

Courier service companies buy mopeds and provide jobs for people. However, despite the fact that the cost of one moped is about $300, the cost of its certification and obtaining the relevant documents amounts to the same amount.

Private clinics report that registering certain medical devices, newly imported into Uzbekistan, with the Pharmaceutical Committee costs ten times more than their actual value. Additionally, the registration of both a simple thermometer and an MRI machine takes from four to five months.

The President questioned how well thought-out these payments and procedures are by the responsible bodies.

“Is this the right approach? Of course not. Depending on the complexity and degree of risk, different registration timelines should be set for medical equipment, medical products, and medicines,” the President emphasized.

The President outlined measures for further improving the certification and standardization system.

A special decree will clearly define the powers of bodies such as the Agency for Technical Regulation, the Sanitary-Epidemiological Service, the Veterinary Committee, and the Quarantine Agency concerning the issuance of product certifications.

In this process, repetitive and excessive procedures will be gradually abolished. For example:

The Sanitary-Epidemiological Service will be responsible for monitoring the quality and safety of food products;

The mandatory nature of technical regulations and standards for food products will be abolished;

The Committee will align sanitary rules and norms for major food products with international requirements – the Codex Alimentarius.

Other systems will also be reviewed in a similar manner.

The practice of state registration for products in seven high-risk commodity groups will also be abolished.

The list of products for which certification is mandatory will be significantly reduced, and a mechanism for product compliance declaration will be introduced.

For the import of equipment, raw materials, special machinery, and vehicles, criteria will be developed to recognize high-quality foreign control systems that are recognized in our country. If products meet these criteria, obtaining a national certificate will not be required upon import.

"In a word, we will simplify the access of products to the market but will strengthen control during their sale. This practice has proven its effectiveness on the international stage," the President stated.

Responsible authorities have been tasked with developing a bill on "Market Surveillance."

In general, it was noted that transferring government laboratories for testing and certification to the private sector, with the condition of attracting investments, will ensure quality and competition in the industry, as well as lead to a reduction in service costs.

The President paid special attention to creating equal conditions for business.

"It is necessary to open the path for our local enterprises by increasing production and creating conditions for access to more expensive markets with new products," said the head of state.

However, it was noted that some goods are entering our market at artificially low prices, which weakens the position of local producers.

For example, if a refrigerator made in our country costs $220, it is sold on the market at an average price of $250, and VAT of $30 is charged on it.

The same refrigerator, imported at an artificially low price of $25, is subject to VAT of only $3. In other words, the domestic manufacturer pays ten times more taxes than the importer.

According to the new decree, the process of determining the customs value of imported goods will now be fully aligned with international standards.

A marking system for such products as soft drinks, household appliances, pharmaceuticals, alcoholic beverages, and tobacco products has already been introduced.

However, at the same time, there are cases where products that comply with all laws and regulations are being sold without labeling. Some stores do not use labeling, which disrupts control.

Tax and customs authorities have been instructed to develop measures to minimize the negative impact of labeling on production volume and to strengthen control over the implementation of labeling requirements.

It was noted that the export of some goods in demand on expensive markets is restricted, leading to missed opportunities.

As of July 1, it was announced that there would be no restrictions on the export of goods. Export duties will only be applied to raw materials and products of high social importance, falling within 86 commodity groups.

This will open new opportunities for our entrepreneurs.

"It is important to understand one thing. If entrepreneurs work in expensive markets, they will strive to increase production, improve quality, increase their interest, and benefit," noted the President.

Currently, the confectionery and soft drinks industries have become the driving forces of local industry, and it was emphasized that supporting them is important.

For this reason, the excise tax on sugar will be abolished. Restrictions on the import of dry milk will also be lifted.

This will significantly increase the turnover of 5,500 enterprises involved in the production of confectionery and soft drinks, employing nearly 40,000 people, with an annual turnover of no less than 50 trillion soums.

Currently, around 2,500 restaurants and cafes pay VAT. Since the beginning of the year, a system of VAT refunds, ranging from 20 to 40 percent, in the form of "cashback" has been introduced for them. However, it was noted that only 69 restaurants have used this favorable mechanism.

For example, if more than 200 products, such as soft drinks, cakes, and ice cream, are sold separately, "cashback" is not provided, although VAT was also paid on these products.

The tax service has been tasked with resolving misunderstandings and establishing a fair system.

The President also drew attention to another issue that concerns entrepreneurs.

When setting the coefficient for increasing land tax and rental payments, it was emphasized that it is important to study its impact on business and make decisions based on the capabilities and financial state of entrepreneurs.

"Increase in revenues should not happen through higher tax rates. On the contrary, if we help entrepreneurs and expand the tax base, revenues will grow, and entrepreneurs will also be satisfied," the President said.

Entrepreneurs will now be allowed to pay these taxes twice a year.

The meeting noted that there are deficiencies in the tax and customs areas that require further reforms in these systems.

The responsible authorities have been instructed to involve qualified experts, scientists, and entrepreneurs in a public council to present well-founded proposals for bringing tax, customs policy, and administrative management to a new level.

It was also emphasized that the powers of ministers in terms of issuing instructions and other departmental documents in their respective areas should be clearly defined.

"The most sustainable relationships are established by law, new reforms by presidential decree, and the development of sectors and regions by government resolution. To implement them, only departmental documents will be adopted. Only in this way will the results of reforms reach our citizens faster," said the President.

The meeting noted that the criticism given regarding 3-4 agencies applies to other ministries and sectors as well.

It was emphasized that bureaucracy is still high in such ministries and agencies as the Ministry of Ecology, Agriculture, Construction, Energy, Higher Education, as well as in the State Cadastre system, the Committee on Motor Roads, the Committee for Industrial Safety, and the Construction Inspection.

The heads of these ministries and agencies have been instructed to draw conclusions from today’s meeting and ease the provision of services to the public and entrepreneurs.

Overall, the task has been set for leaders at all levels to engage in continuous interaction with producers and exporters.

During the meeting, reports from regional and sectoral leaders were heard, along with opinions and suggestions from entrepreneurs.