PRESIDENTIAL DECREE OF THE REPUBLIC OF UZBEKISTAN

of April 8, 2022 No. UP-101

About the next reforms on creation of conditions for stable economic growth by improvement of the entrepreneurial circle and private sector development

For the purpose of strategy implementation of development of New Uzbekistan for 2022 - 2026, reducing poverty twice by achievement of inclusive and stable economic growth, ensuring the competition in economy, creations of equal conditions to subjects of entrepreneurship, acceleration of full transition to the market relations, increases in competitiveness of national economy, and also sharp increase in amount of private investments and further enforcement of trust of business community:

1. Determine the main directions of increase in role of private sector in ensuring economic growth, creating favorable conditions for private sector development in all industries and spheres:

continuation of institutional and administrative reforming in the field of guaranteeing immunity of private property and freedom of business activity, and also ensuring rule of law in this direction;

use of mechanisms of privatization of the parcels of land of nonagricultural appointment on transparent basis, first of all as important factor of attracting investors, and also creation of infrastructure and other necessary conditions for increase in attractiveness of lands in case of their exposure to auction;

liberalization of commodity market and services in which the state participation, creation of conditions for promotion of private sector in these spheres, and also forming of healthy competitive environment by strengthening of institutional potential and powers of antimonopoly authority remains;

cancellation of privileges, exclusive rights and benefits by means of address application of method of "regulatory guillotine";

acceleration of transformation and privatization of the companies and commercial banks with participation of the state, stimulation of increase qualitatively new, in particular inefficiently functioning companies based on the principles of ecological, social and corporate management (ESG), investments and highly effective production technologies due to reduction of share in economy;

giving of impulse to development of different segments of the financial market due to further liberalization of the money market and the capital market, creation thus conditions for forming by the companies of alternative financing sources of the activities privatized and being in process of transformation;

acceleration of involvement of foreign investors to exploration works, processes of production and conversion for the purpose of providing with the guaranteed source of raw materials of industries - economy drivers, in particular the ore mining, oil and gas, chemical industry, the industry of construction materials and other spheres, and also support of increase in inventories of mineral resources;

market development of energy resources, transport, communications and creation of conditions for attraction of private investments into these spheres;

sharp increase in projects of public-private partnership in the field of providing with drinking water and the sewerage, heat supplies, improvements, road construction and aviation infrastructure;

the intolerant relation to any manifestations of corruption and uncompromising struggle with it in all spheres and industries;

prevention of corruption by widespread introduction at the companies and in commercial banks with participation of the state of modern corporate management methods, including system of "komplayens-control", ensuring transparency of purchasing system.

2. For the purpose of acceleration of processes of privatization, increase in attractiveness of the investment climate and creation of additional conveniences to the investors who acquired the state assets (the state blocks of shares, shares, real estate objects):

grant the right to payment by installments in case of realization of the parcels of land of nonagricultural appointment on the basis of the property right through auction in the procedure established by the legislation;

in case of not realization within three months of the parcels of land exposed on biddings (except for the city of Tashkent and the regional centers) to reduce their starting price to 30 percent which are not implemented within six months - to 10 percent step by step on 10 percent and to give opportunity of payment of 15 percent of redemption value within three months, and other part - by installments for a period of up to 10 years;

if the amount of initial payment for the state assets in case of their realization with payment term by installments to the subjects of entrepreneurship of category "AA" above performing activities in the areas referred to categories 4 and 5, constitutes less than 35 percent, annual interests on the main rate of the Central bank on remaining balance of the amount not to charge, and also to determine payment due date by installments 7 years (equal shares) irrespective of the amount size, except as specified, in case of which buyer are economic societies in which authorized capital the state share constitutes 50 percent and more;

provide to buyers of the state assets and parcels of land of nonagricultural appointment implemented with the payment term by installments which made initial payment in the amount of at least 35 percent (at least 15 percent on the parcels of land on the property right located in the areas referred to categories 4 and 5) in a month from the date of the conclusion of the purchase and sale agreement, right of disposal of the state assets and the parcels of land as credit providing.

To the Cabinet of Ministers to develop and approve procedure for provision of the right on transfer to pledge of the state assets and the parcels of land as the credit providing implemented by the paragraph third this Item in a month.

3. Provide since May 1, 2022 to citizens of the foreign states the right of introduction of investments in the form of acquisition of new following real estate units under construction (except for the parcels of land) which list affirms the Cabinet of Ministers, without reclamation of the residence permit as the Republic of Uzbekistan:

in the Tashkent region, the cities of Tashkent and Samarkand - real estate units which cost according to the agreements signed in the period of construction constitutes at least equivalent of 150 000 US dollars, the real estate units accepted in operation, cost the equivalent of 180 000 US dollars suffices;

in other regions - real estate units which cost according to the agreements signed in the period of construction constitutes at least equivalent of 70 000 US dollars, the real estate units accepted in operation, cost the equivalent of 85 000 US dollars suffices.

At the same time acquisition by citizens of the foreign states of the real estate units provided by this Item is not the basis for receipt of permanent registration and the residence permit in the Republic of Uzbekistan.

4. Reduce the amount of real estate value required for receipt of the residence permit in the Republic of Uzbekistan by citizens of foreign countries on condition of real estate acquisition according to appendix No. 6 to the Presidential decree of the Republic of Uzbekistan of January 5, 2019 No. UP-5611 in the city of Tashkent and the Tashkent region from 400 000 US dollars to 300 000 US dollars.

5. For the purpose of further improvement of competitive environment in economy and reducing bureaucratic barriers to private sector to approve offers of the Ministry of Economic Development and reducing poverty, Committee on development of the competition and consumer protection, the Ministries of Finance and the Ministries of Justice about:

a) non-recognition as holding dominant position in the goods or financial market and non-use of anti-monopoly measures to legal entities or individual entrepreneurs or group of persons (except for subjects of natural monopolies, participants of public procurements and the exchange biddings, and also business entities which price of products is regulated by the state) which proceeds from sales of goods (services) for the last calendar year do not exceed the ten-thousand size of basic settlement size;

b) application since September 1, 2022 of financial sanctions against the business entities who made anti-competitive actions:

agreements (coordinated actions) and coordination of economic activity which led to restriction of the competition in the goods and financial market;

abuse of the dominating (exclusive) provision in the goods and financial market and excellent negotiation force, unreasonable overestimate of prices for products, having social and strategic importance, and also unfair competition;

violations of the law about the competition in case of merge, accession, and also the conclusion of agreements on share acquisition (shares) in authorized capital (authorized capital) of business entities;

making of anti-competitive actions at the public biddings and violation of anti-monopoly requirements.

To the Cabinet of Ministers till July 1, 2022 to introduce the bill "About the Competition" in the new edition providing the specific sizes and procedure for application of financial sanctions to Legislative house of Oliy Majlis. At the same time to provide the complete direction of the collected amounts of financial sanctions of the Government budget, and also responsibility for other types of anti-competitive actions;

c) strengthening since September 1, 2022 of the administrative responsibility for:

illegal restriction by state governing bodies free movement and realization of raw materials, goods and rendering services;

decision making, limiting the competition, the state unitary enterprises or organizations, associations of the legal entities given authority of licensing, registration, accreditation and issue of permissions;

non-presentation upon the demand of antimonopoly authority of necessary documents and data, and also representation of false or unreliable information.

To the Cabinet of Ministers till July 1, 2022 to introduce the draft of the relevant law to Legislative house of Oliy Majlis;

d) elimination of the operating monopolies by broad attraction of private sector and cancellation of exclusive rights according to the plan of the measures provided by appendix No. 1;

e) implementation since January 1, 2023 of the Index of development of the competition to annual representation by Committee on development of the competition and consumer protection of information in the Senate of the Oliy Majlis.

6. To the Ministry of Economic Development and reducings poverty together with the Antimonopoly Committee, the Ministry of Finance and the Ministry of Justice to introduce the draft of the resolution on acceleration of broad attraction of private sector to rendering the state services and implementation of the state functions to two-month time.

7. To the Ministry of Finance and Agency on management of the state assets together with the interested departments till the end of 2022 to create possibility of remote opening of custody accounts for securities to the clients who are residents and nonresidents of the Republic of Uzbekistan without their personal participation, taking into account requirements of the legislation on counteraction of legalization of income gained from criminal activities and to terrorism financing.

8. Approve the offer of the Ministry of Finance on establishment since May 1, 2022 of rate of income tax according to the income received by physical persons - nonresidents from sources in the Republic of Uzbekistan (except for dividends, percent and the income from the freight), in the amount of 12 percent.

To the Ministry of Finance together with the interested departments in two-month time to introduce to the Cabinet of Ministers the bill on the changes and amendments in the Tax code following from this Item.

9. For the purpose of creation of equal competitive conditions for subjects of entrepreneurship, and also settlement of provision of privileges on tax and customs payments:

a) since May 1, 2022:

extend the tax and customs privileges applied to limited circle of subjects for all subjects of the industries provided by appendix No. 2, for the purpose of creation of equal competitive conditions for subjects of entrepreneurship;

cancel tax and customs privileges on goods (services) acquired at the expense of means (loans, the credits) of the international financial institutions and foreign government financial institutions according to the international treaties of the Republic of Uzbekistan approved till July 1, 2020, refinanced or refinanced through commercial banks of the Republic of Uzbekistan. This regulation extends to goods (services) acquired on the basis of again signed agreements (irrespective of form and method of registration) between commercial banks and subjects of entrepreneurship;

b) cancel step by step separate taxes and customs privileges according to appendix No. 3;

c) To the Cabinet of Ministers critically to review need of prolongation of action of the separate tax and customs privileges provided by the President of the Republic of Uzbekistan and the Government of the Republic of Uzbekistan, revealed as a result of inventory count and till August 1, 2022 to make offers on their cancellation;

d) since July 1, 2022:

to provide privileges on customs duty only based on the laws of the Republic of Uzbekistan. At the same time to consider receipt of the conclusion of Council for tariff and non-tariff regulation obligatory;

annually till March 1 to represent to heads of the industry ministries and departments, public authorities on places to the Ministry of Finance and the State Tax Committee reports on efficiency of the separate tax and customs privileges provided for development of the sphere and (or) the territories following the results of every year.

10. To the Ministry of Finance together with Agency on management of the state assets, the Department of Energy, the Ministry of Economic Development and reducings poverty, the Ministry of transport and the Antimonopoly Committee:

a) till May 1, 2022 with involvement of experienced investment bank to begin until the end of 2022 work on privatization of JSC Uzbekneftegaz, including by public placement (IPO) of shares in the amount of at least 49 percent, and also the state share in the amount of 51 percent and more in JSC Thermal Power Plants;

b) till November 1, 2022 based on the conclusions of the international consulting company to submit for approval in the Cabinet of Ministers the Strategy of reforming of JSC Uzbekgidroenergo.

At the same time in the course of construction of new small and medium hydroelectric power stations priority to consider projects implementation with participation of private sector, including on the basis of conditions of public-private partnership;

c) till September 1, 2022 to begin work on exposure to the biddings of the state share in the amount of 51 percent and more in the authorized capital of JSC Uzbekistan airways, including by public placement (IPO) of shares;

d) till August 1, 2022 with involvement of the international investment bank and consultants to provide public placement (IPO) in the local stock market to 10 percent of the block of shares of JSC UzAuto Motors and to bring in the Cabinet of Ministers the Strategy of realization to strategic investors of other share of this company and JSC UzAuto Motors Powertrain, Samarqand Avtomobil zavodi LLC.

11. In two-month time to provide to the Cabinet of Ministers:

receipt of the international credit rating of JSC Natsionalnye elektricheskiye seti Uzbekistana - until the end of 2023, JSC Uztransgaz - until the end of 2024, having provided preserving in the complete order of the state of high-level networks of JSC Natsionalnye elektricheskiye seti Uzbekistana and JSC Uztransgaz, and also achievement of independent attraction of financial resources of international banks and the capital market with strict observance of financial discipline;

till September 1, 2022 based on the conclusions of the international financial institutions and consultants - enhancement of activities of JSC Hududgaztajminot and JSC Regionalnye elektricheskiye seti, including increase in operating efficiency and attraction of private sector to these spheres, at the same time decision making about transfer to the private operator of functions of wholesale purchase and realization of natural gas and electrical energy, without increase in the established rates for the population, originally according to the procedure of experiment in fourteen cities and regions of the country.

12. To the Ministry of Economic Development and reducings poverty, to the Ministry of Finance, Ministry of transport, Agency on management of the state assets and Antimonopoly Committee:

a) in two-month time to introduce to the Cabinet of Ministers the draft of the resolution on transfer under management of private sector of the regional international airports and the international airport of the city of Tashkent subordinated to JSC Uzbekistan Airports on the basis of conditions of public-private partnership for upgrade and increase in their operating efficiency. At the same time to provide measures of effective operation of the airports in the Fergana Valley by their optimization;

b) in a month to attract the World Bank and to provide development till June 1, 2022 to the Strategy of transformation, development and privatization of JSC Uzbekiston temir yullari.

Approve the Special working group on transformation of JSC Uzbekiston temir yullari in structure according to appendix No. 4.

To working group (D. A. Kuchkarov) till August 1, 2022 to introduce the draft of the resolution on transformation of JSC Uzbekiston temir yullari providing:

enhancement of tariff policy by creation of the transparent and flexible tariff system aimed at the development of activities of the private operators having the passenger and goods wagons, and also development of the competition in the market of services of rail transport;

increase in efficiency of operating rooms and business processes at the companies of rail transport, including integration of relations of the servicing organizations and consumers by means of digital transformation;

transfer to private sector internal and international railway gruzo-and passenger transportations on the basis of conditions of public-private partnership or the franchize;

c) till August 1, 2022 together with the international financial institutions within the Concept of development of system of public transport of the city of Tashkent till 2025 to provide development and entering into the Cabinet of Ministers of offers on attraction of private sector to work of public transport, including projects implementation on the basis of conditions of public-private partnership.

To the Cabinet of Ministers till December 1, 2022 on the example of the city of Tashkent to develop and begin implementation of the Strategy of development for infrastructure of public transport in the city of Nukus and in all regional centers.

13. Approve the Special working group on reforming of Committee on highways in structure according to appendix No. 5.

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