ABOUT DEVELOPING SMALL AND A PRIVATE ENTREPRENEURSHIP IN UZBEKISTAN

Paygamov Rahmon Pasulovich
Research Center at the Tashkent State Economic University, Uzbekistan

Abstract
The article examines the modern aspects of the Small and Medium Enterprises in Uzbekistan. Based on the analysis of the business environment offers directions for further development of private enterprise.

Keywords: business, private enterprise. Бизнес, Small business


Category: Economics

Article reference:
About developing small and a private entrepreneurship in Uzbekistan // Humanities scientific researches. 2014. № 4 [Electronic journal]. URL: https://human.snauka.ru/en/2014/04/6358

View this article in Russian

Small and private enterprise has existed and developed for many centuries in the world arena. Thanks to its specificity of development many entrepreneurs give their preferences to small and private enterprise, particularly those who have just started their economic activity in the market.

In spite of limitations the sole proprietorship is well adapted to many kinds of small businesses and suits the temperament of many people who like to exercise initiative and their own bosses. Some economic contributions of small business are:

  • Small business is often the starting point for developing a new product or service. One person tries out an idea. If it is successful, the business grows, or the product may be bought by a larger firm.
  • The small business can give an individual a chance to gain experience, which the person may use later on a larger scale.
  • Small businesses are particularly well suited for meeting specialized local needs.
  • Artisans can provide individualized products for customers who have grown weary of mass produced goods.
  • Small business provides a service where knowing one’s customers is important.
  • Sole proprietors are reassuring to customers who believe an individual who is accountable will do a good job.

In the beginning some of the main advantages of small and private enterprise were mentioned, but they were mostly economic ones. Now, let’s turn to social aspects of our question. Small and private enterprise forms a middle class, which allows, to some extend, to soften some social tensions between wealthy and poor people. Moreover, creation of small and private enterprise – means creation of new work places, which in its turn, increases level of employment of population and level of real income. In this case, it would be more profitable for government to support small and private enterprise (at least at the beginning of their economic activities) than to allocate subsidies to indigent people endlessly. Besides, government could spend more financial resources to other national purposes. Furthermore, facing the fact that birth rate and, as a consequence, number of dependents is very high, small and private enterprise in this situation plays a role of balance mechanism, which allows to enable work force even in the absence of special qualification. Therefore, one can say, that small and private enterprise is of high importance in diminishing the poverty.

A ten-year development of small and private enterprise in Uzbekistan can be reviewed through three main stages of economic development.

-     First Stage (1991-1995);

-     Second stage (1996-1999);

-     Third stage (1999-up today).

In a ten-year period of independence of Uzbekistan small and private enterprise has been widely adopted and still is on its path to development and prosperity.

Thus, in 2000 total number of microfirms increased to 85 %, in comparison with 47% in 1991.

For last three-four years small and private enterprises were engaged in agriculture, and the main agents were farmers. Besides, an increase in other sectors of economy (transport, communication, health protection, etc.) became perceptible. So, nowadays share of small and private enterprise in GDP amounts to 29%, where 16,5% relates to individual enterprises and 12,5% – to others.

Activity analysis has shown that small and private enterprises have begun to expand their foreign-economic activities. So, in 1999 the share of small and private enterprises in total export increased by 1,8 and in comparison with 1998 reached 29,4%. The main export articles of small and private enterprises were – production of agriculture, textile manufacture, processing of goods, electrical industry and also goods of homecraft.

Currently the development of small and private entrepreneurship (SPE) is one of the most actual problems in Uzbekistan. In 2013 in this sphere there was created around 55.8 percent of GDP compared to 31 percent in 2000. Small businesses now accounts for 23 per cent of the total volume of industrial output, practically the whole volume of market services, 18 percent of exports, 75 percent of all employment in the economy. As it can be seen, despite its small forms, this business is playing an increasingly important role in the sustainable development of the economy, solving the problems of employment and wellbeing of our people. Although the weight and value of SPE in the economy grows, the value of these indicators is lower than in developed countries and some developing countries.

Today, unfortunately, there still some problems deterring the development of small and private enterprise. The main of them can be described below.

Finding startup capital is the first difficult task in establishing small businesses. Of course in comparison with big companies small enterprises need not so much deal, but still they do. While speaking on this problem it is necessary to remind that the citizens of the former USSR on the average were not wealthy, and inflation in the beginning of the 90s covered all private savings and made it impossible even for banks to make credits. The problem connected to lack of money accompanies small and private enterprises at the beginning of their activity as well as during their production cycle. Besides the financial problem there is also another one directly connected to inventories acquisition. Moreover, the cost of equipment, transport and other means of production is so high that small and private enterprises are not able to obtain production basis. Of course, leasing can solve this problem but the level of its development is very low.

Secondly, presence of official circumlocution (bureaucracy) appears together with establishment of small and private enterprises and presents while obtaining credits and entering foreign markets (complex procedures of paper work).

Thirdly, imperfect legal system also causes disorder. Since many normative documents are referential then vagueness in issues emerges. Besides, in some questions there is harmony among state departments and as a result of this variance some documents contradict each other.

Fourthly, non-business use of credits brings to many problems. On the one hand, it leads to increase in the account payable. On the other hand, out-of-sequence repayment adversely affects the activity of credit institution.

Fifthly, nescience and inexperience of small and private enterprises in market, especially in foreign one restrain the development of small and private enterprises. This problem is mostly related to the lack of reliable information.

And, of course the presence of macroeconomic instability (exchange rate, etc.) is the last problem.

In order to eliminate above mentioned problems and shortages and meet some desires of small and private enterprises many measures were taken into consideration.

-     Taxation;

-     Supervision;

-     Crediting.

An alternative solution for the problems… Small enterprises can perform orders of big and even medium enterprises on the basis of subcontract. Franchising can be another form of business.

Besides, it is necessary to set up a center, which would provide small and private enterprises with necessary information or help.

Of course, 10 years is relatively short period of time, and it would be incorrect to reckon up the sum for development of economy, and small and private enterprise in particular. Analysis has shown that tendency of small and private enterprises’ development leads to growth, but on the way of the former there exist certain difficulties, which hamper the development of small and private enterprises. Numerous measures to stimulate and support the participants of small and private enterprises sector have been undertaken, but state-of-the art practice still needs to be improved.

As far as I consider, developing of small and private enterprises is the best way to increase national income for this stage of transition in Uzbekistan.


References
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  2. Курпаяниди К.И. Вопросы налогового планирования субъектов малого бизнеса в структуре институциональных преобразований //Журнал научных публикаций аспирантов и докторантов. ISSN 1991-3087. 2012.-№3. С. 24-26.
  3. Курпаяниди К.И. Экономические институты в условиях институциональных преобразований // Успехи современного естествознания. ISSN 1681-7494, 2013. – № 12 . С. 99-104.


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