: Measures to develop the service sector discussed
President Shavkat Mirziyoyev led a meeting on February 7 to discuss the development of the service sector in different regions. The meeting acknowledged the positive results of the large-scale program initiated three years ago, with 1.5 million people gaining stable income in the service sector and a significant increase in the total volume of services from $19 billion to $65 billion. The most notable growth was observed in industries such as information technology, finance, tourism, aviation, education, and healthcare.
Despite these achievements, there is still a high potential for further growth, and the coordination of opportunities in regions and industries needs improvement. For example, Khorezm aims to attract 6 million tourists, but the region lacks adequate transportation connections. Additionally, while private sector investments in healthcare, aviation, and energy have exceeded $20 billion, similar initiatives in basic infrastructure like drinking water supply, sewage systems, and road construction are lacking.
The meeting addressed these issues and identified significant growth opportunities. It was noted that in the past seven years, household incomes and purchasing power have doubled, leading to an increased demand for services. To meet this demand, ministries and regional authorities were directed to explore ways to expand the range of services and create a conducive environment for entrepreneurs.
The meeting set key targets for the current year, including a 15% increase in the volume of services, reaching $82 billion, expanding service exports to $8.5 billion, and providing employment for 2.5 million people in the service sector. The banking and financial sector was highlighted as having strong growth potential, with plans to convert 10-15% of newly developed areas into non-commercial real estate. To facilitate this, it was suggested that banks directly purchase properties from developers and offer them to entrepreneurs through favorable lease or rental agreements. This initiative is expected to create 100,000 new jobs and bring 50,000 square meters of non-commercial real estate into circulation.
The meeting also discussed increasing the volume of financial services by 30% and introducing new mechanisms to expand access. One such initiative is the introduction of mahalla-based bankers who will work closely with local communities. The integration of cadastral, tax, and justice department data into the banking information system was also proposed to improve the quality and volume of financial services.
A new approach to regional service sector development will be implemented starting this year. Local councils have approved 1,156 key projects, with 1 trillion UZS allocated for their implementation. These projects include creating coastal recreation areas, round-the-clock tourism and gastronomy streets, amusement parks, roadside service facilities, and other infrastructure projects.
In 2018, a 1% social tax rate was introduced for trade and service enterprises, leading to a 1.5-fold increase in the number of such businesses. This has also resulted in a 3.2-fold increase in the wage fund and additional budget revenues of 2.1 trillion UZS due to more transparent reporting of monthly salaries by entrepreneurs. To continue this positive trend, the meeting proposed extending this tax incentive for another three years. It will now apply to employees under 30 who earn at least 3 million UZS monthly in the service sector. Construction, trade, and catering businesses will also be allowed to sign short-term, simplified employment contracts with their workers.
In the past three years, 27 types of government services have been outsourced to the private sector, but there is still potential to outsource more services under various ministries. By 2025, 29 state services are planned to be transferred to the private sector.
The meeting also emphasized the need to create open, transparent, and favorable conditions for renting or privatizing land plots and state-owned property. According to a Presidential Resolution, starting from March 1, 2025, state-owned properties up to 10,000 square meters that remain unsold for six months will be offered for direct lease to entrepreneurs for 10 years. If the entrepreneur pays rent on time for four years, they can then privatize the property. Additionally, young entrepreneurs who train youth in IT and foreign languages with international certification will receive one year of free rent.
The President also stressed the importance of expanding exports of remote services. To achieve this, a task has been set to study foreign service markets and train specialists to meet their demands. This year, $50 million has been allocated to support startup projects in the creative economy and attract Uzbek professionals working in foreign companies.
The meeting also focused on the need for a well-developed transport infrastructure to support the growth of the service sector. While transport services grew by 8.6% in 2020, reaching 145 trillion UZS, this growth is still insufficient to sustain high economic growth rates. To address this, additional measures will be implemented, including increasing the number of flights and train routes between cities, constructing multimodal logistics centers, raising the share of transit cargo, and expanding the taxi network. These initiatives are expected to boost the volume of transport services to 185 trillion UZS and export revenue to $2.3 billion by 2025.
Tourism is the largest segment of the service sector, with Uzbekistan establishing connections with more than 90 countries, leading to a fourfold increase in foreign tourist arrivals. However, there is still potential for growth, such as catering to the demand of Malaysian and Indonesian citizens to visit the mausoleums of Uzbekistan’s great scholars before performing Umrah. The country plans to launch a new tourism package, “Umrah Plus,” to cater to this demand. Hosting international concerts and forums in major tourist hubs is also expected to attract more visitors and stimulate growth in the hospitality, dining, retail, and entertainment sectors.
The social sector also presents new opportunities, with the launch of the “Medical Hospitality” program last year to attract foreign patients and increase medical service exports. Despite the establishment of 125 new higher education institutions in the past eight years, education exports remain below potential. Additionally, several unused cultural and arts centers could be transferred to the private sector for more effective use.
The President listened to reports from sector leaders and engaged in dialogue with entrepreneurs at the meeting. Industry executives presented plans to create jobs for 2.5 million people in the service sector across regional areas by 2025. The meeting concluded with the aim to develop open, transparent, and favorable conditions for the service sector, and to continue the positive growth trend in various industries.
UzA: Discussion on Measures to Boost the Service Sector