Constitutional foundations for the development of a free market
In recent years, the state has implemented large-scale reforms in Uzbekistan on sustainable economic development, comprehensive support for entrepreneurs, protection of private property and reform of the tax system. New regulatory legal acts have been adopted in this area, appropriate measures have been taken to improve the economic infrastructure, increase the country's export potential, develop the digital economy and improve the investment climate of the territories, as well as enhance cooperation with foreign countries.
As a result of the implementation of reforms to improve the tax system, the number of types of taxes was reduced from 16 to 9, and the tax authorities turned from a supervisory authority into a body providing assistance to taxpayers.
Все эти меры непосредственно или опосредованно направлены на развитие рыночной экономики страны и создание необходимых условий для развития предпринимательской деятельности.
It should be noted that in recent years, the head of state has put forward a number of initiatives to develop a market economy.
First of all, reforms were implemented to liberalize monetary policy. According to these reforms, individuals have the right to freely sell and buy foreign currency through commercial banks and dispose of purchased funds without any restrictions, the requirement for the mandatory sale of foreign exchange earnings of all exporting enterprises, regardless of ownership forms, has also been abolished, and such a system has been introduced on the basis of which payments for goods, works and services on the territories of the Republic of Uzbekistan will be produced only in the national currency.
This was a serious step towards the development of the country's free market economy.
Also, at the suggestion of the Head of State, a special body was created – the Commissioner under the President of the Republic of Uzbekistan for the protection of the rights and legitimate interests of business entities in order to ensure reliable protection of the rights of business entities. This body is currently actively functioning, protecting the rights and interests of entrepreneurs.
At the same time, since 2021, a new system has been introduced in the economic sphere to hold an annual meeting (open dialogue) of the President with entrepreneurs. This system provided entrepreneurs with a unique opportunity to address the President of the country on systemic and problematic issues and find solutions to them.
In addition, public-private partnerships are actively developing, through which major projects in the socio-economic sphere are being implemented. Both local entrepreneurs and foreign investors are actively involved in this system on mutually beneficial terms, and this area makes its worthy contribution to the development of the economy.
It should be noted that the reforms implemented recently in the socio-economic life of society have required appropriate changes to the Basic Law of the country.
In particular, the articles (Articles 65-68) The constitutions concerning the socio-economic foundations of society have been significantly enriched with the necessary norms.
According to article 65 of the Constitution of the Republic of Uzbekistan, the basis of the Uzbek economy aimed at improving the welfare of citizens is property in its various forms. The state creates conditions for the development of market relations and fair competition, guarantees freedom of economic activity, entrepreneurship and labor, taking into account the priority of consumer rights.
The updated Constitution of the Republic of Uzbekistan has created a solid foundation for the formation of a truly free market economy by strengthening guarantees of entrepreneurial activity, developing market relations, creating conditions for fair competition, a favorable investment and business climate, establishing a system of fair taxation, and limiting monopolistic activities.
In the economic part of the previously valid Constitution, it was rather vaguely stated that "The basis of the economy of Uzbekistan, aimed at developing market relations, is property in its various forms. The State guarantees freedom of economic activity, entrepreneurship and labor and legal protection of all forms of ownership. Private property, along with other forms of ownership, is inviolable and protected by the State."
As can be seen from the wording, they were general in nature and far from specifically defining the functions and responsibilities of the State on the listed issues.
In the updated Constitution, all these issues are clearly outlined. Thus, the state creates conditions for the development of market relations and fair competition. Private property is inviolable, and the Constitution establishes mechanisms to ensure its reliable protection. It is established that the owner cannot be deprived of his property except in cases and in accordance with the procedure provided for by law and on the basis of a court decision (article 65). This formulation clearly defines the role of the state in the development of market relations, which consists in creating the necessary conditions for this. Constitutional guarantees of private property have also been significantly strengthened.
This updated provision of the Constitution, first of all, strengthens guarantees for the protection of the rights of owners who play an important role in the country's economy, and on the other hand, serves as a solid legal basis for the further development of property relations, which, in turn, will positively affect the development of the entire economy of the country and occupy a worthy place in the international arena.
The second part of Article 67 of the Constitution states that entrepreneurs, in accordance with the law, have the right to carry out any activity and independently choose its directions.
This new norm defines the right of entrepreneurs to independently choose areas of activity, expands the possibilities of an entrepreneur to conduct activities not prohibited by law in all spheres and sectors of the economy.
It should be noted that this is a de facto consolidation of the place and importance of entrepreneurship in the socio-economic development of the country, as well as evidence of a purposeful state policy to comprehensively support and protect the interests of business.
By raising the legal status of an entrepreneur to such a high level, the Constitution, first of all, demonstrated commitment to the principle of a state governed by the rule of law, in which the rule of law prevails in all spheres of life, including in the field of entrepreneurship.
Moreover, according to Article 8 of the Law "On Guarantees of Freedom of Entrepreneurial Activity", an entrepreneur, in addition to the chosen type of activity, has the right to indicate in his constituent documents other areas of activity in accordance with the legislation.
Thus, the legislator did not limit the freedom of choice to one type of activity, but created the opportunity, without restrictions and any obstacles, to simultaneously engage in one or more types of activities specified in the constituent documents.
Of course, the above-mentioned constitutional norm will serve as a basis for ensuring that the country's economy is more free.
The fourth part of Article 67 of the Constitution of Uzbekistan is stated as follows: "Monopolistic activity is regulated and limited by law." The phenomenon of monopolism can hinder the development of free competition, therefore, in all countries with market economies, antimonopoly regulation is applied, which is a set of administrative and economic measures implemented by the state to ensure conditions for the formation of a competitive environment and protection of competition. At the present stage of development of the national economy, the protection of competition is of particular importance.
State regulation of competition fulfills two main tasks: preventing monopolization of the market and eliminating unfair competition.
At the same time, for the state, the fight against monopolism is not an end in itself, since the dialectic of the development of economic relations in various spheres and sectors of reproduction can create conditions for the emergence of a monopoly position of certain economic entities. At the same time, the very fact of having a monopoly cannot be attributed to a positive or negative phenomenon. Therefore, according to Part 4 of Article 67 of the Constitution, monopolistic activity can be regulated and limited, but not prohibited.
One of the important innovations in the constitutional norms was that individuals and legal entities were granted the right to privatize land plots and freely use land as an object of market relations under such conditions as ensuring the rational use of land and its protection as national wealth (Article 68).
Prior to that, the Constitution did not provide for the establishment of private ownership of land, while owners did not have the right to fully dispose of land plots as an object of market relations. This limited the rights of the owners to a certain extent.
Now, according to Article 68 of the Basic Law, land can be transferred to private ownership to individuals and legal entities, and owners can use the land as a full-fledged object of civil relations.
This, in turn, will serve as an important basis for the further development of the country's free market economy.
At the same time, legal norms on the possibility of transferring land to private ownership to citizens and legal entities can be seen in the constitutions of such foreign countries as Italy, Greece, Romania, etc.
Without any exaggeration, this legal norm is one of the important innovations in our updated Constitution, filling a huge gap in property relations.
International experience shows that reducing government participation in the economy is essential to ensure a free market economy.
In recent years, planned measures have been implemented by the State in this direction.
In particular, in the regulatory documents, more than 500 functions of the state for business regulation were abolished, 70 were transferred to the private sector on the basis of public-private partnership and outsourcing. Also, 134 licenses and permits were abolished, and a notification procedure was introduced for 33 (a more simplified procedure).
It should be noted that in recent years, the verification of the activities of business entities has significantly decreased. In particular, in the six months of 2023, the number of inspections decreased by 40 percent compared to the same period last year – from 104 thousand to 64 thousand.
In addition, the application of financial sanctions based on the results of tax reporting and desk inspections has been canceled. This was also a logical continuation of ensuring a free market economy.
Do not forget that the national economy of the country cannot be developed without mutual cooperation with the international community.
Appropriate measures are also being implemented in Uzbekistan in this area. In particular, our country actively cooperates on economic issues with such international organizations as the Asian Development Bank, the World Bank, the International Monetary Fund, the EBRD, the SCO, the CIS, OTG, the OECD and others.
In addition, Uzbekistan is developing active cooperation with neighboring countries in various areas of the economy. This, in turn, has a positive effect on the national economy.
Based on the above, it can be said that improving the constitutional and legal foundations of the country's free market economy will enable the development of entrepreneurship in the country, raising the country's economy to a new level, attracting local and foreign investors to the national economy, as well as developing economic cooperation with the international community.
In Said Ergashev,
Deputy Director of the Institute of Legislation
and Legal Policy under the President of the Republic of Uzbekistan,
Candidate of Law, Professor
As a result of the implementation of reforms to improve the tax system, the number of types of taxes was reduced from 16 to 9, and the tax authorities turned from a supervisory authority into a body providing assistance to taxpayers.
Все эти меры непосредственно или опосредованно направлены на развитие рыночной экономики страны и создание необходимых условий для развития предпринимательской деятельности.
It should be noted that in recent years, the head of state has put forward a number of initiatives to develop a market economy.
First of all, reforms were implemented to liberalize monetary policy. According to these reforms, individuals have the right to freely sell and buy foreign currency through commercial banks and dispose of purchased funds without any restrictions, the requirement for the mandatory sale of foreign exchange earnings of all exporting enterprises, regardless of ownership forms, has also been abolished, and such a system has been introduced on the basis of which payments for goods, works and services on the territories of the Republic of Uzbekistan will be produced only in the national currency.
This was a serious step towards the development of the country's free market economy.
Also, at the suggestion of the Head of State, a special body was created – the Commissioner under the President of the Republic of Uzbekistan for the protection of the rights and legitimate interests of business entities in order to ensure reliable protection of the rights of business entities. This body is currently actively functioning, protecting the rights and interests of entrepreneurs.
At the same time, since 2021, a new system has been introduced in the economic sphere to hold an annual meeting (open dialogue) of the President with entrepreneurs. This system provided entrepreneurs with a unique opportunity to address the President of the country on systemic and problematic issues and find solutions to them.
In addition, public-private partnerships are actively developing, through which major projects in the socio-economic sphere are being implemented. Both local entrepreneurs and foreign investors are actively involved in this system on mutually beneficial terms, and this area makes its worthy contribution to the development of the economy.
It should be noted that the reforms implemented recently in the socio-economic life of society have required appropriate changes to the Basic Law of the country.
In particular, the articles (Articles 65-68) The constitutions concerning the socio-economic foundations of society have been significantly enriched with the necessary norms.
According to article 65 of the Constitution of the Republic of Uzbekistan, the basis of the Uzbek economy aimed at improving the welfare of citizens is property in its various forms. The state creates conditions for the development of market relations and fair competition, guarantees freedom of economic activity, entrepreneurship and labor, taking into account the priority of consumer rights.
The updated Constitution of the Republic of Uzbekistan has created a solid foundation for the formation of a truly free market economy by strengthening guarantees of entrepreneurial activity, developing market relations, creating conditions for fair competition, a favorable investment and business climate, establishing a system of fair taxation, and limiting monopolistic activities.
In the economic part of the previously valid Constitution, it was rather vaguely stated that "The basis of the economy of Uzbekistan, aimed at developing market relations, is property in its various forms. The State guarantees freedom of economic activity, entrepreneurship and labor and legal protection of all forms of ownership. Private property, along with other forms of ownership, is inviolable and protected by the State."
As can be seen from the wording, they were general in nature and far from specifically defining the functions and responsibilities of the State on the listed issues.
In the updated Constitution, all these issues are clearly outlined. Thus, the state creates conditions for the development of market relations and fair competition. Private property is inviolable, and the Constitution establishes mechanisms to ensure its reliable protection. It is established that the owner cannot be deprived of his property except in cases and in accordance with the procedure provided for by law and on the basis of a court decision (article 65). This formulation clearly defines the role of the state in the development of market relations, which consists in creating the necessary conditions for this. Constitutional guarantees of private property have also been significantly strengthened.
This updated provision of the Constitution, first of all, strengthens guarantees for the protection of the rights of owners who play an important role in the country's economy, and on the other hand, serves as a solid legal basis for the further development of property relations, which, in turn, will positively affect the development of the entire economy of the country and occupy a worthy place in the international arena.
The second part of Article 67 of the Constitution states that entrepreneurs, in accordance with the law, have the right to carry out any activity and independently choose its directions.
This new norm defines the right of entrepreneurs to independently choose areas of activity, expands the possibilities of an entrepreneur to conduct activities not prohibited by law in all spheres and sectors of the economy.
It should be noted that this is a de facto consolidation of the place and importance of entrepreneurship in the socio-economic development of the country, as well as evidence of a purposeful state policy to comprehensively support and protect the interests of business.
By raising the legal status of an entrepreneur to such a high level, the Constitution, first of all, demonstrated commitment to the principle of a state governed by the rule of law, in which the rule of law prevails in all spheres of life, including in the field of entrepreneurship.
Moreover, according to Article 8 of the Law "On Guarantees of Freedom of Entrepreneurial Activity", an entrepreneur, in addition to the chosen type of activity, has the right to indicate in his constituent documents other areas of activity in accordance with the legislation.
Thus, the legislator did not limit the freedom of choice to one type of activity, but created the opportunity, without restrictions and any obstacles, to simultaneously engage in one or more types of activities specified in the constituent documents.
Of course, the above-mentioned constitutional norm will serve as a basis for ensuring that the country's economy is more free.
The fourth part of Article 67 of the Constitution of Uzbekistan is stated as follows: "Monopolistic activity is regulated and limited by law." The phenomenon of monopolism can hinder the development of free competition, therefore, in all countries with market economies, antimonopoly regulation is applied, which is a set of administrative and economic measures implemented by the state to ensure conditions for the formation of a competitive environment and protection of competition. At the present stage of development of the national economy, the protection of competition is of particular importance.
State regulation of competition fulfills two main tasks: preventing monopolization of the market and eliminating unfair competition.
At the same time, for the state, the fight against monopolism is not an end in itself, since the dialectic of the development of economic relations in various spheres and sectors of reproduction can create conditions for the emergence of a monopoly position of certain economic entities. At the same time, the very fact of having a monopoly cannot be attributed to a positive or negative phenomenon. Therefore, according to Part 4 of Article 67 of the Constitution, monopolistic activity can be regulated and limited, but not prohibited.
One of the important innovations in the constitutional norms was that individuals and legal entities were granted the right to privatize land plots and freely use land as an object of market relations under such conditions as ensuring the rational use of land and its protection as national wealth (Article 68).
Prior to that, the Constitution did not provide for the establishment of private ownership of land, while owners did not have the right to fully dispose of land plots as an object of market relations. This limited the rights of the owners to a certain extent.
Now, according to Article 68 of the Basic Law, land can be transferred to private ownership to individuals and legal entities, and owners can use the land as a full-fledged object of civil relations.
This, in turn, will serve as an important basis for the further development of the country's free market economy.
At the same time, legal norms on the possibility of transferring land to private ownership to citizens and legal entities can be seen in the constitutions of such foreign countries as Italy, Greece, Romania, etc.
Without any exaggeration, this legal norm is one of the important innovations in our updated Constitution, filling a huge gap in property relations.
International experience shows that reducing government participation in the economy is essential to ensure a free market economy.
In recent years, planned measures have been implemented by the State in this direction.
In particular, in the regulatory documents, more than 500 functions of the state for business regulation were abolished, 70 were transferred to the private sector on the basis of public-private partnership and outsourcing. Also, 134 licenses and permits were abolished, and a notification procedure was introduced for 33 (a more simplified procedure).
It should be noted that in recent years, the verification of the activities of business entities has significantly decreased. In particular, in the six months of 2023, the number of inspections decreased by 40 percent compared to the same period last year – from 104 thousand to 64 thousand.
In addition, the application of financial sanctions based on the results of tax reporting and desk inspections has been canceled. This was also a logical continuation of ensuring a free market economy.
Do not forget that the national economy of the country cannot be developed without mutual cooperation with the international community.
Appropriate measures are also being implemented in Uzbekistan in this area. In particular, our country actively cooperates on economic issues with such international organizations as the Asian Development Bank, the World Bank, the International Monetary Fund, the EBRD, the SCO, the CIS, OTG, the OECD and others.
In addition, Uzbekistan is developing active cooperation with neighboring countries in various areas of the economy. This, in turn, has a positive effect on the national economy.
Based on the above, it can be said that improving the constitutional and legal foundations of the country's free market economy will enable the development of entrepreneurship in the country, raising the country's economy to a new level, attracting local and foreign investors to the national economy, as well as developing economic cooperation with the international community.
In Said Ergashev,
Deputy Director of the Institute of Legislation
and Legal Policy under the President of the Republic of Uzbekistan,
Candidate of Law, Professor