The President of the Republic of Uzbekistan Islam Karimov on 20 July signed a Resolution "On measures to intensify privatization process and activate the attraction of foreign investments in 2007-2010".

The process of privatization of state owned enterprises and other objects that has been implemented consistently and gradually since 1992 has created the conditions for the class of proprietors. Currently the share of non-state enterprises in the industrial sector exceeds 80%, in construction – 88.4%, in communication – 96.6%, in agriculture – 99.9%, and in trade – nearly 100%.

The creation of private property, expansion of its role and share in the structure of the national economy is one of the priorities of the economic reforms undertaken in the country. As a result of the formation of mixed economy, private sector now prevails in nearly all spheres. Private sector now contributes over 75% of the country’s GDP.

At the same time, as President Karimov mentioned in his report on the result of socio-economic development in 2006 and priority objectives of economic reforms for 2007 "…we need to radically change our attitude to and approaches used in privatization, be firm and set for sale at the auction trades the enterprises of the leading sectors of economy, such as chemical and electrical industries, agricultural machinery production, construction materials production, and others…". Many critical comments were made on the stock market situation. Major problems and shortcomings exist in the system of corporate management of privatized enterprises.

To address the said problems, President Karimov passed a Resolution, which approves the renewed Programme of Privatisation for the next three and a half years.

According to the programme, following measures are to be implemented by 2010:

- fully sell the state’s stake in 994 enterprises and objects of non-production sphere through public auctions;

- sell the state’s shareholdings down to (including) the controlling stock in 363 enterprises and objects of the leading industries (chemical, electrical, construction, energy, etc) through tenders to investors, on the condition that the latter would undertake certain investment obligations on modernization, technical and technological re-equipment of production, and manufacturing of competitive and export-oriented products;

- sell a large number of inefficient, inoperative enterprises and incomplete objects at zero redemption value to investors prepared to take on obligations on their full financing and implementation of investment projects on the recovery and expansion of the activity of these enterprises and objects.

Steps have been taken to liberalise the approaches used in privatization of the enterprises of chemical, electrical, auto- and aircraft-building, agricultural, silk, textile industries, in which the state retains its stake merely in certain enterprises, and fully sells in the rest.

Important, principal provisions of this new resolution concern the solution of the following issues:

a) State Tender Commission is given the right to decide whether to sell at zero redemption value with specific investment obligations the enterprises and objects that do not find demand after several public auctions;

b) the funds and property contributed by the investors as investment obligations are not to be made subject to tax on income (profit), development of social infrastructure and territory, and on value added, and investments in foreign currency – not to be made subject to compulsory sale;

c) a new order is introduced, according to which, throughout the investment period the investors’ contributions are not to be collected as a payment for the privatized enterprise’s previous debts, and the enterprise’s debts to the budget and state funds may be restructured for the investment period stated in the purchase and sale contract. At the same time some of the new norms envisage to raise the responsibility of investors for the performance of the obligations taken on in the process of privatization;

d) the Cabinet of Ministers is instructed to consider and decide on the restructuring of the debts to the budget and state funds of the enterprise the state’s stake in which is sold to investors for investment obligations over the period of the performance of these obligations in accordance with the provisions of the purchase and sale contract;

e) the approved privatization programme envisages the organisation of the "golden campaign" toward the privatized enterprises of the cotton-processing and oil and fat industries. At the same time, State Property Committee is tasked to submit recommendations to the Cabinet of Ministers on the advisability of the use of "golden campaign" toward privatized enterprises of the leading, strategic industries of the economy.

The Presidential Resolution "On measures to intensify the privatization process and activate the attraction of foreign investors in 2007-2010" is not only an important step toward further intensification of the privatization, it also shows the strategic direction on the way to consistent implementation of economic reforms aimed at radical increase of the share of private sector in the country’s economy, increase of the flow of foreign investments for higher modernization and technical re-equipment of the productions, as an important factor of economic growth and Uzbekistan’s integration with the international business relations.