Shah-i-Zinda, Samarkand; image: TCA

16 Apr 2024
Central Asia, Opinion Head, Home, Uzbekistan, Uzbekistan Opinions

Uzbekistan: From Silk Roads to New Horizons

Cradled by the embrace of the Syr Darya and Amu Darya Rivers, Uzbekistan boasts a rich tapestry woven from the threads of history. Being home to trade hubs like Samarkand and Bukhara, this land has been at the center of cultural exchange for over a millennia.

From the Turkic-Mongol tribes creating the foundation of Uzbek civilization to the fall of the Soviet Union giving birth to the nation we know now, the history of Uzbekistan consists of a captivating blend of conquests and resilience.

In 2016, following the demise of Islam Karimov, who ruled the country for 25 years, Shavkat Mirziyoyev came to power promising to lead Uzbekistan into a new and more progressive era. With a focus on modernization and reforms, Mirziyoyev envisioned bringing the nation out of his predecessor’s repressive tenure and propelling it forward while honoring the country’s cherished traditions. With Uzbekistan trying to find its place in the modern world, the President has a significant duty to realize the nation’s potential found in its youthful population and strategic location.

Mirziyoyev’s time in office has allowed the country to witness the beginning of a new chapter, with a special focus on economic and social reforms. The economy is on its way to becoming a modern market economy as reforms have opened the doors for foreign investors to direct their money into the country.

Uzbekistan’s per capita income tells the story of a rising nation, reaching $1,705 in 2023, an increase of $100 compared to the previous year and a testament to the government’s commitment to transforming towards a market-oriented economy. To create a conducive environment for businesses and especially foreign investors, the foreign exchange market was liberalized, and exchange rates were unified, bringing down tax rates for people and firms. The country has also allowed visa-free entry to attract tourists from around the world to their turquoise-domed cities and promote business and tourism.

Coupled with all this, the country is also moving towards more relaxed trade policies, where it has opened previously closed borders with neighboring nations, including Kazakhstan, which is currently one of Uzbekistan’s top export destinations. With this modified attitude, the country’s role in international trade has dramatically evolved, making it a significant player in the Central Asian market. Over the past few years, the nation has shown great interest in joining the World Trade Organization (WTO), which will further improve its access to the global landscape.

However, until Uzbekistan gains member status, the government hopes to boost their export capabilities by attracting foreign capital and technology through liberalizing trade and investment. Along with this, export permit and licensing requirements were also abolished for wholesale traders. While these measures have allowed the country to take a decisive step towards progression and development, several areas still necessitate immediate action, such as transportation networks and communication infrastructure, which are required to facilitate international trade. Previously, the country primarily focused on the export of cotton but is now expanding into other areas, including oil, gas, and gold. Another area of interest for Uzbekistan is maintaining its status as Central Asia’s leading machinery and heavy equipment producer.

The government has introduced significant tax reforms to allow for major socioeconomic developments, such as establishing a unified tax rate for personal income tax, corporate income tax and payroll tax for both large and small firms. Uzbekistan also adopted a Strategy for Innovative Development, which is heavily aligned with the Sustainable Development Goals, comprising 81 indicators the country wishes to fulfill by 2030.

These reforms also include fostering a conducive environment for not only tech giants, but also start-ups. The government has taken several steps, such as creating IT parks, introducing tax incentives, and educational reforms that will generate a tech-savvy population fully equipped for the challenges of the future.

The government has also taken strident measures to battle corruption by strengthening its judiciary and increasing accountability for its officeholders. Such measures have created an environment beneficial for economic growth and businesses.

Uzbekistan’s multi-faceted approach towards development also considers sports and their role in fostering bilateral relations between countries. Just recently, the Uzbek Ambassador to the United Kingdom brought together cricketers from both nations to discuss cricket diplomacy. The government has also increased its investment in sports infrastructure and training facilities to provide a better environment and encourage broader participation.

The government also hopes to use media coverage to promote a positive image of the country to the international world. The administration recently announced its full support for young people entering the sphere of journalism who are working on covering the new Uzbekistan. However, with no private media channels, it should be noted that the country still has a long way to go in terms of media freedom. Interestingly, with 60% of the population under the age of 30, people have seen a rise in the use of social media to share stories that are hardly covered by official outlets.

With all these reforms and initiatives, Uzbekistan is well on its way to becoming one of the fastest-growing nations in the world. However, as previously mentioned, the republic still faces several challenges that gravely threaten its path to progress. The prevailing volatile political environment has threatened its growth, but the current administration hopes to court Western economies to attract more foreign capital, ultimately leading to more development. The country has also been consolidating with the West on critical issues to maintain cordial relations. For instance, the Uzbek government took a strong stance against the Russian invasion of Ukraine and vowed to abide by the sanctions imposed by the West. This stance came as a surprise to some, since the country has previously enjoyed close relations with Moscow.

In conclusion, these reforms have placed the Republic of Uzbekistan at a crossroads, and the vision of a new Uzbekistan has put it on the cusp of a new era. However, the persistent challenges of instability and lack of freedom amongst citizens continues to challenge its growth. The success of this vision ultimately hinges on the administration’s ability to navigate these challenges while capitalizing on its strengths, propelling the nation towards a future brimming with potential.

 

Raza Syed is journalist of Pakistani-descent based in the U.K. with over three decades of international experience; his expertise span several countries, with a particular focus on Central and South Asia.

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Image TCA, Aleksandr Potolitsyn

16 Apr 2024
Home, Kazakhstan Lead Story, Lead Story, Justice, Kazakhstan Justice, Kazakhstan

Kazakhstan President Signs Landmark Legislation on Domestic Violence

On April 15, President Kassym-Jomart Tokayev signed into law amendments and additions passed by Kazakhstan’s parliament on April 11 on legislative acts and the code on administrative offenses on ensuring the rights of women and the safety of children. The initiative represents a first in the CIS in terms of how far it goes to provide protection for women and children in the country. The United States embassy in Kazakhstan said on April 15 through its Twitter (X) account that they welcomed the adoption of the new law, highlighting its strengthened protections against domestic violence. The United Nations Development Programme (UNDP) in Kazakhstan also commended the “legislative initiatives protecting women’s [and] children’s rights,” calling them a “crucial step towards equality, justice [and] safety for all citizens” that “lay a foundation for a stable, prosperous society.”

This is seen as the latest improvement in an upward trend. Since coming to power in 2019, President Tokayev has tightened criminal liability for crimes against women and children, as well as human trafficking. Special units were formed within the Ministry of Internal Affairs to protect women, and in 2021, their number increased to 256. Specialized female investigators were also introduced to investigate violent sexual crimes against women and minors.

The new law, which goes further in introducing additional legal mechanisms to protect women and children, comes on the heels of domestic and international protests following the televised trial for the alleged violent murder of Saltanat Nukenova by her husband, Kuandyk Bishimbayev, in November 2023. In addition to local rallies, the Kazakhstani diaspora in New York, Amsterdam , Milan, and many other place around the globe have also called for increased accountability for domestic violence under the hashtag #ForSaltanat.

Critically, the new legislation criminalizes domestic violence, increases penalties for perpetrators and provides a range of preventative measures alongside punitive ones. It also imposes tougher penalties for all forms of violence against children. Overall, it is an important step in improving the legal, economic, and social foundations of state policy and strengthening the principle of social equality with zero tolerance against violence towards women and children.

The recent amendments and additions largely represent the demands of the public and civil society, who were involved in the process of their development and adoption. The legislation has been widely discussed in the country’s media. Representatives from NGOs took part in parliamentary meetings alongside the National Commission for Women’s Affairs and Family and Demographic Policy, the National Center for Human Rights and the Commissioner for Children’s Rights. In November 2023, Kazakhstanis demanded tougher punishment for domestic violence through an open letter to Tokayev on the Otinish.kz website. This month, a group of activists and human rights defenders launched the “Write a Letter to Parliament” campaign, asking residents to send a letter to in support of the new law. By the time the bill was discussed in the Senate, over 154,000 people had signed an online petition.

 

Some key improvements under the new law

Critically, on women’s rights, the law restores criminal liability for causing minor harm to health and battery, which was abolished in 2017. Intentional infliction of medium and grave bodily harm carries an imprisonment sentence of up to eight years, while causing minor harm to health can result in a fine or up to two years imprisonment. Beating is reclassified as a criminal offense and can result in up to 50 days incarceration.

Moreover, previously it was necessary to prove systematic beatings and other violent acts to hold a person accountable for torture; under the new law, violent acts committed with extreme cruelty and abuse with the aim of causing agony to the victim will be considered under this category and liability for torture can result in up to seven years imprisonment. In cases of rape, the previous requirement that the victim systematically experience such violent actions was removed.

The law also allows for the possibility of isolating the offender for 30 days and imposing a ban on contacting the victims, whilst a specialized unit to combat domestic violence will be created within the Ministry of Internal Affairs.

Regarding the provisions in the new law on the protection and safety of children, cases of murder, rape or sexual assault of a minor face the most severe punishment of life imprisonment. For the first time, criminal liability is introduced for the sexual harassment of individuals under the age of 16. Additionally, the prison sentence for child abduction has been raised from 7-to-12 years to 10-to-15 years, and illegal deprivation of the liberty of minors now holds a sentence of 5-to-10 years (previously up to 5 years).

Furthermore, those that commit crimes against minors as defined under the Criminal Code, from causing harm to health, to kidnapping and murder, cannot be released from their criminal liability if they reconcile with the victims. The law’s exclusion of the possibility of reconciliation in crimes related to physical violence and cruel treatment of minors may help take victims out of abusive relationships.

The new regulations aim to reduce the numbers of suicides among minors by including inducement and assistance in committing suicide under criminal liability. It also targets bullying, including cyber-bullying, with the imposition of fines and warnings, which can be imposed on parents if the perpetrator is between the ages of 12 and 16. The law also makes it an administrative offense to forcibly remove children from public transportation.

The law provides a legal framework for the operation of a call center on family issues and the protection of the rights of women and children, as well as the legislative consolidation of the creation and operation of Family Support Centers. It has a provision of mandatory psychological assistance to criminals by court decisions. Additionally, the victims of abuse can receive full protection and support, including in the event of a “loss of the breadwinner.”

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@nesk.kg

15 Apr 2024
Central Asia, Kyrgyzstan, Business & Economy, Kyrgyzstan Local Politics, Kyrgyzstan Business & Economy

Kyrgyzstan’s New Tariff Policy Aim to Solve Problems in Energy Sector

Kyrgyzstan’s minister of economy Daniyar Amangeldiev has told a press conference in Bishkek about his vision for the country’s energy sector. A new tariff pricing policy has been presented to the Kyrgyz parliament, and will be adopted in May this year.

According to Amangeldiev, the new electricity tariff policy will allow for new capacity to be introduced, and for the country to reduce the country’s electricity deficit year by year until the country’s power-demand needs are met. Electricity prices will rise by 10.8% as early as May 2024, and taking into account inflation, this increase will be permanent.

Amangeldiev said that it will now be much easier to obtain permission from the authorities to build energy facilities in the country. Measures have also been taken to make it easier for investors to invest in Kyrgyzstan’s energy sector. “With its adoption (the new law on tariff policy), those capacities that are planned will be introduced, and accordingly, every year we will reduce the shortage of electricity to fully meet the needs of the country, and possibly [lead to] electricity export,” he commented, adding that this year in Kyrgyzstan developers have started 10 small hydropower plants (HPPs).

Earlier, Kyrgyz president Sadyr Zhaparov said that in addition to the construction of large energy facilities, it’s necessary to build small HPPs.

In 2022, the World Bank allocated $50 million to Kyrgyzstan to modernize its energy infrastructure — upgrading transformers, power lines and installing smart meters. A year later, the bank provided another $80 million in concessional loans (at below-market lending rates) to improve the power grid and support small-scale power generation. Last fall, the World Bank allocated $5 million to the republic for a feasibility study of the project of a new large HPP called Kambarata-1.

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Kazakhstan Foreign Ministry

15 Apr 2024
Central Asia, Uzbekistan, International Affairs, Business & Economy, Kazakhstan, Kazakhstan International Affairs, Uzbekistan International Affairs

Central Asian and Gulf Cooperation Council Countries Engage in Strategic Dialogue

The 2nd Ministerial Meeting of Strategic Dialogue ‘Central Asia – Gulf Cooperation Council (GCC)’, hosted by Tashkent on April 15, was attended by top diplomats from Central Asia and six member states of the Gulf Cooperation Council: Saudi Arabia, the United Arab Emirates, Qatar, Kuwait, the Sultanate of Oman, and Bahrain.

Aimed at strengthening comprehensive cooperation between Central Asia and Gulf Cooperation Council states, discussions focused on political, security, trade, economic, investment, transport and logistics, environmental protection, green energy, cultural and humanitarian issues.

In his address, Alibek Bakayev, Deputy Minister of Foreign Affairs of Kazakhstan, emphasized the importance of strengthening trade relations between the two regions and encouraged the Gulf States to actively participate in the implementation of joint investment projects in both Kazakhstan and other Central Asian countries.

In addition, he outlined various initiatives currently in operation in Kazakhstan including expanding the activities of the Islamic Organization for Food Security and exploiting the potential of the International Technopark of IT start-ups, ‘Astana Hub’.

Reporting on the outcome of the Ministerial Meeting, Uzbekistan’s First Deputy Foreign Minister Bakhromjon Aloyev stated that participants had unanimously agreed to a further summit of the Central Asia – Gulf Arab States Strategic Dialogue, to be held in Samarkand in 2025.

The ‘Central Asia – GCC’ dialogue platform was launched in 2022 and the first Ministerial Meeting took place that September in Riyadh, Saudi Arabia.

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@gov.kz

15 Apr 2024
Central Asia, Local Politics, Business & Economy, Kazakhstan, Kazakhstan Business & Economy

Kazakhstan’s Universal Income Declaration Should Be Postponed, Experts Say

Some experts believe that formal income declarations, which are planned to be introduced for most Kazakhstanis in 2025, should be postponed. The effect of declarations by officials and employees of quasi-public sector enterprises hasn’t yet been noticeable, as The Times of Central Asia looks into the situation.

Many officials and employees of quasi-government companies are transferring assets to wives and relatives, authorities said at the start of the tax reform. The filing of declarations was supposed to bring the personal assets of this contingent into the light of the formal government record, but the effect has so far been imperceptible. The introduction of declaration for small and medium enterprises (SMEs) and sole proprietorships is reportedly leading to a further plunge of the private sector into the shadows, as entrepreneurs and business owners look for loopholes.

Additionally, outreach has largely lagged behind the public efforts. In particular, it’s not clear whether persons who receive only a salary or pension will have to submit declarations. Finally, Kazakhs complain that they don’t see the impact of compliance with the law, and in some regions, civil movements like “No Roads – No Taxes” are very popular. It may be added that reforms affecting the entire working population are often deadlocked inside the bureaucracy. The clearest example is the state health insurance system (OSMS), where billions of dollars of violations and imputations are revealed year after year.

In 2021, submissions of income documents began by civil servants and persons of equal stature, as well as their spouses. From 2023, employees of state institutions and the quasi-public sector, as well as their spouses, followed suit. From 2024, declarations will be made by managers and founders of legal entities conducting business, sole proprietorships, as well as their spouses. And culminating in 2025, all Kazakhstanis will start to declare their income. According to preliminary calculations, there will be about 13 million of these declarations.

Trying to bring order in the sphere of taxation, the Kazakh authorities focused on the methods and frameworks in the U.S. and other Western countries. Nevertheless, in the States, earlier noted in the press by tax expert Dmitry Kazantsev, the fiscal base from individuals is about 60% of tax revenues, in some European countries this figure exceeds 90%. In Kazakhstan, the tax base of individuals is about 6%, the expert explained.

In his opinion, although the main purpose of declaration in any country is to fight corruption and bring business out of the shadow economy, most citizens don’t understand the benefits of the reform. “It is necessary to explain to people what it is for, where we spend taxes, where it all goes. Because people don’t understand and don’t believe it. I think the main problem is that the state does not tell all this, financial literacy is at zero, and that’s why there is such resistance to declaration,” explained Kazantsev.

Now, as the universal declaration draws nearer, financial consultant Rasul Rysmambetov suggested postponing its implementation. “I think it is necessary to postpone universal declaration, continuing the declaration of civil servants. The point of declaring is to reduce the invisible (gray) part of the economy, including its illegal part. I am not mistaken if I say that we have the most cashless economy in the CIS [Commonwealth of Independent States]. Therefore, a significant part of the economy is in the foreseeable sector. The largest gray zones are outside Kazakhstan: these are usually intermediary firms in offshore zones, where profits from the export of raw materials are deposited. An attempt to impose forced declaration of individual entrepreneurs and other small firms – will not bring significant revenues to the budget,” wrote Rysmambetov in a social media post.

In addition, he drew attention to the lack of required training. “In my opinion, the introduction is premature because of the lack of preparation of the system of collection and processing of information, and most importantly — because of the lack of awareness of the population. We have to submit the declaration in mid-September, but many people still do not understand why this tool is needed and how to use it for their benefit,” Rysmambetov pointed out. He also referenced the failure of OSMS, which still has many “blind spots.”

According to the analyst, it takes time to train staff — employees of tax authorities, to train those filing declarations — “and this is hardly 70-80 percent online,” as well as the preparation of software. “The failure of the Ministry of Digital Development and Digital Components during the pandemic is forgivable, but now we are dealing with an even more important component of government life. We need to audit the tax systems, there are too many bugs, lags and other issues. I personally don’t trust the identity protection system at EGov and others. There is leakage on all fronts. If the Ministry of Digital Development doesn’t consider data leakage through Chinese equipment to be its problem, then it is deluded. Ministry is the body that should regulate absolutely all aspects of digital security, prescribe the policy of collecting and storing personal data,” Rysmambetov explained.

If those who have something to declare are rightly afraid of data leakage, most Kazakhstanis live from paycheck to paycheck, from pension to pension. They are concerned with two main questions: why must they declare obvious income? Purely on principle, should they even have to?

The answers are still vague. According to past clarifications by the Ministry of Finance, an entry declaration on Form 250 will have to be filed by all Kazakh citizens, even if they live only on earned salary or pension. A total of 13 million people will enter the universal declaration system, the ministry explained, but in, for example, 2026 or 2027, if a pensioner receives only a pension and no business income, then, according to some information, government agencies will consider canceling the need to keep filing declarations.

Compounding the problem is the fact that practically no preparation work is being carried out, and the uncertainty is eliciting nervousness and negatively coloring everyday Kazakhs’ opinion of the plan. Additionally, parallels with the introduction of the flawed OSMS system are inevitably being drawn. Funds have been allocated for a long time, but in February 2024, President Tokayev emphasized that over five years of mandatory social health insurance, the quality and accessibility of medicine in Kazakhstan haven’t improved. OSMS is still confusing and cumbersome, doesn’t meet expectations, and often complicates access to medical care. According to some reports, another reform of the healthcare financing system is being prepared.

Experts believe that everything needs to be carefully considered to ensure that universal income declaration does not share the fate of OSMS. In neighboring Kyrgyzstan, the first stage of transition to mass tax documentation started in 2023. The Unified Tax Declaration (UTD) must now be submitted by legal entities, state and municipal employees, as well as individual entrepreneurs. According to official information, all Kyrgyz citizens will notify the tax authorities of their income until 2026.

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WB supports Kyrgyzstan

15 Apr 2024
Central Asia, Kyrgyzstan, Business & Economy, Kyrgyzstan Business & Economy

World Bank Forecasts Slowdown for Economic Growth in Kyrgyzstan

The World Bank is forecasting a slowdown in economic growth this year for the countries of Central Asia, with Kyrgyzstan a cause for particular caution.

The disappointing forecast, published in a new report, stems from the general weakening of the global economy. Additional negative factors cited were the five governments’ tight credit policies, lower commodity prices, and slowing economic growth in China. The World Bank’s Vice President for Europe and Central Asia Antonella Basani commented: “The states of Europe and Central Asia continue to confront multiple crises, exacerbated by unfavorable dynamics of global economic growth. Restoring productivity growth by fostering business dynamism and building resilience to climate change risks can help protect the region’s [local] population and boost economic growth.”

The World Bank’s outlook for Kyrgyzstan’s economy is particularly muted. The bank said in its report: “GDP growth is expected to slow down to 4.5 percent in 2024 as growth in the services sector slows down. On the demand side, consumption growth will slow despite a slight increase in remittance inflows, while investment and net exports are expected to support growth.”

World Bank analysts say that due to the lack of structural reforms in Kyrgyzstan, the the economy’s growth rate will slow down from year to year. However, with a reasonable monetary policy from the National Bank and stable prices for fuels and lubricants, inflation may fall to 5-7% annually.  The budget surplus, which the Kyrgyz authorities have boasted about, will turn into a deficit by the end of the year due to a decrease in tax revenues. Furthermore, due to increased expenditures on capital investments, the budget deficit may grow to 2.4% by 2026.

“There are external risks to growth, mainly driven by the geopolitical situation and the state of trade flows with Russia. There could be a marked deterioration in the Russian economy and, due to this, a reduction in remittances and exports. Possible spikes in global food and fuel prices may reverse the downward trend and push inflation to double digits,” the World Bank report says.

At the same time, the negative economic trends can be avoided. To do so, the Kyrgyz government needs to undertake radical reforms to improve governance and reduce corruption. The authorities need to help the private sector develop by removing administrative barriers, World Bank analysts have said.

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