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Opinion
Road to Change
Uzbekistan embraces political and economic reform to better integrate with globalization
By Li Ziguo | NO. 23 JUNE 7, 2018

A woman works at a faucet factory in an industrial park in Syr Darya states Uzbekistan, on May 1, 2017 (XINHUA)

Shavkat Mirziyoyev, the second president of Uzbekistan since its independence in 1991, has proven to be a genuine reformer since he assumed office in December 2016. Under his leadership, the most populous Central Asian country is witnessing profound changes that are set to reshape its role in regional and international affairs.

A reformer

Mirziyoyev kick-started his reforms by seeking to change official attitudes toward government service, epitomized by his slogan that the government should serve the people, not vice versa. But the reform program is not limited to slogans, and concrete efforts have duly followed, instigating changes from the president's office all the way down to primary-level government organs. Mirziyoyev has also ordered the establishment of a public comment board on the president's website. As of May 25, 1.89 million people had left comments on the board, with 1.84 million receiving a reply. Under Mirziyoyev's instructions, governments at various levels are required to set up complaint receptions on and offline.

Mirziyoyev believes that public comments about officials can provide feedback with which to assess their performance, and the verdict of the people will lead to the dismissal of inept officials. This new measure is welcomed by society, while at the same time motivating officials to work harder and rid themselves of inertia and laziness.

Another of Mirziyoyev's reforms is to crack down on corruption. In January 2017, having recently been sworn into office, Mirziyoyev signed an anti-corruption law in a bid to gradually enhance the legal awareness of the public, increase the transparency of government activity and reinforce legal and public supervision of government workers. The law also introduced performance reviewing and rating systems to appraise the government's work in a quantifiable way.

Mirziyoyev has also promoted younger officials, including a 23-year-old vice minister of education in July 2017, and retired some long-serving senior administrators, in an attempt to freshen up Uzbekistan's political landscape.

Economic restructuring

Yet the most profound reforms initiated by Mirziyoyev have focused on the country's exchange rate regime. In the past, three different exchange rates existed concurrently in Uzbekistan: the official rate, a separate rate in securities exchanges and the black market rate. Huge disparities existed between the three, with the securities rate usually the highest at around 9,300 Uzbekistani Som (UZS) to $1, followed by the black market rate at 7,300:1 and the official rate at 4,210:1.

This bizarre system led to rampant corruption, choked exports and imports, and imposed hardship on businesses and ordinary people, while others with powerful vested interests inevitably profited from the chaos. In response to this entrenched problem, Mirziyoyev signed an executive order on currency liberalization in September 2017 after several months of preparation, announcing the abolishment of limits on foreign exchange trading and the introduction of a market-oriented exchange rate regime according to which legal entities and individual citizens can freely buy and sell foreign currencies.

A sharp depreciation of the UZS following the relaxation of controls boosted the official exchange rate to 8,100:1. To a certain extent commodity prices and public finances were negatively affected by the reform, but after a year, the UZS stopped weakening and the economy began to stabilize, leading to a rise in the country's foreign exchange reserves. At the end of 2017, Uzbekistan's net gold and foreign exchange reserves stood at $26.6 billion, up 40 percent compared with the beginning of the year. Prior to the changes, the country's foreign exchange reserves were considered state secrets, while now they are open to the public.

Uzbekistan is also actively engaged in the development of free economic zones, increasing the country's overall number from three to nine. All of these zones enjoy preferential customs and taxation policies, which are set to last for three decades and can be extended upon expiration. It is clear that Mirziyoyev is eager for the economic development of his country.

In the past, many of Uzbekistan's policies and practices were out of sync with international rules and norms. Now, integration into the international system is widely encouraged. The country is bringing in ISO quality management systems and employing international financial experts to help the government apply for sovereign credit ratings. Uzbekistan's ranking in the World Bank's Doing Business 2018 report jumped to 74th from 166th in 2017, proof of the international community's recognition of the country's economic reform. Uzbekistan's Government has expressed its intent to find its way into the top 20 countries worldwide for business environment by 2025.

Tourism is being given priority in attempts to boost Uzbekistan's economy. At the end of 2016, Mirziyoyev signed an executive order to enhance the country's tourism sector through the relaxation of visa policies. Domestic backlash has not weakened his determination to press ahead with reforms. In August 2017, Mirziyoyev issued several more executive orders aimed at promoting the tourism industry, announcing the simplification of entry procedures for citizens from some countries and emphasizing the importance of designing and advertising for tourism products. He has also called for cooperation among Central Asian countries in jointly developing regional traveling routes.

Friendlier neighborhood

For many years, Uzbekistan's relationship with its neighbors has been far from harmonious, particularly concerning Tajikistan, with whom some analysts say Uzbekistan was engaged in an "undeclared Cold War." In addressing the UN General Assembly in 2017, Mirziyoyev made it clear that Central Asian neighbors would be given priority in Uzbekistan's diplomacy.

Frequent exchange of high-level visits over more than a year has greatly improved Uzbekistan's relations with its neighbors. The country has signed a border delimitation treaty with Kyrgyzstan and has resumed direct flight service with Tajikistan, which had been suspended for more than a decade. In February, Mirziyoyev visited Tajikistan, returning their relationship to one of fraternity.

At Mirziyoyev's proposal, in March 2018, the leaders of the five Central Asian countries held their first summit, ushering in a new era of cooperation.

Mirziyoyev paid his first visit to China as Uzbekistan's president in May 2017, attending the Belt and Road Forum for International Cooperation in Beijing. According to Uzbekistan's media, the two countries signed a set of cooperative deals worth $26 billion.

In his presidential address delivered at the end of 2017, Mirziyoyev mentioned China three times. In his list of Uzbekistan's economic partners, China came immediately after other Central Asian nations, followed by Russia, South Korea and the United States. Mirziyoyev stressed that cooperation with China under the framework of the Belt and Road Initiative must be implemented so as to upgrade infrastructure in Uzbekistan. Further efforts toward this end are likely on the way, with Mirziyoyev set to attend the Shanghai Cooperation Organization Summit in Qingdao, east China's Shandong Province, on June 9-10.

Mirziyoyev's political and economic reform is in line with a wider trend of economic globalization as well as the aspirations of the Uzbek people. As the architect of Uzbekistan's reform, Mirziyoyev has a historic opportunity to usher in a new era of development for his country.

Copyedited by Laurence Coulton

Comments to yulintao@bjreview.com

 

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