SMEs in Uzbekistan: Achievements, Challenges and the Future
CONTENTS
Abbreviations................................................................................................................................................... Preface.............................................................................................................................................................. Part I: SMEs in Uzbekistan and the World ....................................................................................................... Part II: Challenges facing SMEs...................................................................................................................... Internal Problems......................................................................................................................................... External Problems........................................................................................................................................ Political Problems......................................................................................................................................... Part III: Recommendations............................................................................................................................... Summary.......................................................................................................................................................... Bibliography..................................................................................................................................................... Annexes............................................................................................................................................................ Annex A: Main aggregates of SME development in Uzbekistan................................................................. Annex B: Official Definition of SME.......................................................................................................... Annex C: Calculations.................................................................................................................................. Annex D: Deficiencies of Analysis............................................................................................................... .......................................................................................................................................................................
Abbreviations
CEEP
– Center for Effective Economic Policy
CER
– Center for Economic Research
CIS
– Commonwealth of Independent States
CPD
– Commission on Private sector and Development
ER
– Economic Review Journal
GDP
– Gross Domestic Product
IE
– Individual Entrepreneurship
IFC
– International Finance Corporation
MDG
– Millennium Development Goals
OECD
– Organization of Economic Co-operation and Development
RCSE
– Resource Center of Small Entrepreneurship
SME
– Small and Medium Enterprises
UN
– United Nations Organization
UNIDO
– United Nations Industrial Development Organization
3
Preface
On the commencement meeting of the Commission on Private sector and Development (CPD
General Secretary of the UN, Kofi Annan, stated that Millennium Development Goals 1 could achieved without the help of Private sector (Namazov & Fedyasheva, 2005).
This report investigates the role that Private sector plays in the economy of the Republic of U
in the light of recent developments of Small and Medium Enterprises (SME). The first part o analyzes motives that force governments around the world and, particularly, in Uzbekistan
interest in this promising, but once forgotten, source of economic growth and development the discussion of weak and strong sides of business environment of the country is followed.
part examines and proposes measures, possibly to be undertaken by the government of Uzb
stimulate SME and the whole Private sector’s growth in the nearest future. Annexes A to C c
supplementary information for the main parts of the Report and Annex D pays attention to m deficiencies of the carried analysis.
1
Millennium Development Goals are part of the Millennium Declaration, which was approved by world leaders in September 2000. MDG are an ambitious agenda for reducing poverty and improving people’s lives ( MDG, 20 4
Part I: SMEs in Uzbekistan and the World
In many respects success of the country’s development depends on the rightness of the cho
The government of Uzbekistan aims at increasing SME share of GDP up to 45% by 2007. Som
organizations say that this is an ambitious project (IFC, 2005a), but this could be mistaken
According to the official definition (see Annex B), SME include individual entrepreneurs, mi
(up to 20 persons), small businesses (100), dekhan farms and private farms. But this tends t
underestimate the real weight of this sector in the economy. For instance, in Europe (with m
labour-intensive production!) organizations with less than 250 people could be classified as
America the number is even higher (500) ( RCSE, 2004 & IFC, 2005b), even Uzbekistan’s neigh
Kyrgyzstan, has the limit of 200 (Tokochev, 1999). Therefore, if the European definition was ap
SME share of the country’s GDP could already equal to (or even exceed) the set objective 1.1: SME share of GDP (in total and by type) But even with this narrow definition, itFigure is easy
to see that this sector plays a significant role
SME
Individual Entrepreneurship
Total
in Uzbekistan. During the last 5 years, its) 20
36
GDP share rose from 31% to 35.6% (see
35
(% e p 18 ty y b P 16 D G n i 14 e r a h S
Figure 1.1). Besides, in his speech on final
34
results of 2005 at the Cabinet of Ministers, the
33 32
President of Uzbekistan mentioned that SME
31
share of GDP was as large as 38.2%, what is 12
approximately 5 times more than that in 2000, 2000
) (% P D G n i e r a h s l ta o T
30 2001
2002
2003
2004
2005
in absolute terms2 (Karimov, 2006). While thisNote: Data for 2005 are for the first 3 quarters figure is well above that in Belarus or Russia , 3
Source: CEEP, 2003-2005; CERE, 2006
it is still considerably lower than that of developed countries and CIS on average (see Table Table 1.1: Comparison of SME share of GDP in different countries Europe
CIS
Uzbekistan
Tajikistan
Kazakhstan
Russia
Georgia
Belarus
60
40
38.2
38
13
12
10
9
Note: SME share of GDP was found based on the country’s official SME definition, which varies between countries. Source: IFC, 2005c; IFC, 2005d
2 3
Calculations were made according to the following formula: (SME Share 2005 x GDP2005) / (SME Share2000 x GDP2000) Who are they, individual entrepreneurs in Russia? See Box 1.1 at the end of Part I.
5
Wojciech Huebner, in his research for the UNIDO, says that “SME sector is important for po
and governments because it can replace the government in the difficult task of job creation,
one of the most sensitive issues during the transition period, when thousands of people lose
(Huebner, 2000). Data for Uzbekistan confirm the verity of his assumption and show that SME
accounted for about 66% of total employment in Uzbekistan at the end of 2005 (from 56% in
see Figure 1.2) and 85% of newly created working places. “Small businesses and individual
entrepreneurship became the prime source in providing employment and improving living s
our country” said Karimov in his February speech (Karimov, 2006). Moreover, unlike in many
countries of the former Soviet Union, SMEs in Uzbekistan play the same social role as they d Europe (see Figure 1.3) and other OECD member-countries4 (IFC, 2005b & RCSE, 2003-4). Figure 1.2: SME share of EmploymentFigure 1.3: SME share of Employment Worldwide
Source: CEEPCERE, , 2003-2005 2006 Source: 2006 & CERE, IFC, 2005b
SME
Individual Entrepreneurship Employment share
6000
66 65
) 0 0 5000 0 ' n (i 4000 e p ty y 3000 b t n e 2000 m y o l p 1000 m E
64 63 62 61 60 59 58 57
0
56 2000
2001
2002
2003
2004
2005
) (% e r a h s t n e m y o l p m e l ta o T
70 60
) (% 50 e r a h s 40 t n e m30 y o l p m20 e E M10 S
65
65
63.2 49
7.5
0 Europe
UzbekistanKyrgyzstan
RussiaGergia
5.4
Ukraine
SMEs are especially numerous in Agricultural sector, where about 67% of all registered SM
(see Figure 1.4).Their share in Agriculture is constantly increasing, having reached about 13
2005 and made up 85.5% of the total sector’s production ( CERE, 2006). This growth can be p
explained by the adopted Government Program for transformation of former collective farm
(Shirkats)5 into Private and Dekhan ones (CER, 2004). As can be seen from Figure 1.5 signific
growth of SME share is also tracked in Fee-based services. The decline in Industry sector co explained by the strong world competition and necessity to have big scales of production to economies of scale and stay competitive, what is practically impossible for SMEs to do.
4
Organization for Economic Co-operation and Development include all most industrialized countries in the world, except Russia, China and India (OECD, 2006). 5 Legally, Shirkats are independent of the Government. But in reality, Shirkats are obliged to accomplish government’s orders and subjected to the thorough control by district or regional administrations ( CER, 2004 & Centrasia.org, 200
6
In addition to all said, it is commonly accepted, that small businesses could provide flexibilit
quality services, innovation and product development for the country ( Sloman, 2001). SME s
stimulates economic growth, by creating new working places and promoting competition an productivity growth (Namazov & Fedyasheva, 2005). Figure 1.4: Distribution of SMEs by industry Figure 1.5: Change in SME share by industry Agriculture 67%
Others 6% Industry 7%
T&PC 15%
T&C 1% Construction 4%
r to c e s y b e r a h s E M S n i s e g n a h C
140
Agriculture Fee-based Services
130 ) s r 120 e b m u110 n x e d100 n (i
90 80
2000
Note: T&C – Transportation & Communication, T&PC – Trade & Public catering Source: CERE, 2006
Industry Retail Services
2001
2002
2003
2004
2005
Note: see Annex C for appropriate calculations and explanation Source: CERE, 2006
Referring back to the productivity and flexibility of small businesses, it is interesting to note
instance tomato yields increased by only 5% in Shirkats and more than 22% in Dekhan farm
1999-2003, while share of unprofitable businesses among them was 37.2% and 3.9% in 200 accordingly (CER, 2004; Pugach & Abdurazakov, 2004).
But the most important role, that was given to SMEs in developed countries and which they
Uzbekistan and other developing countries is “formation of new, prosperous middle class la
best-proven factor of a country’s long-term stability and development” ( Huebner, 2000 & ER, 2 Box 1.1: Individual entrepreneurs in Russia, who are they? “… According to the latest data by ROSSTAT, half of Russia’s trade is realized by one and
million of individual entrepreneurs. They are especially active in the countryside, whe retailers, but also highly developed trading companies come rarely and exclusively.
The monthly turnover of an average individual entrepreneur is less than $1000 and about $ the countryside. Although this is only the declared rate of turnover, profits of this business miserable. It is impossible to think about investments here – and what for? For a new and b mobile shop? Generally speaking, it is difficult to call this, the business – probably it is one forms of self-employment for the nourishment of a family”. Expert, 2005 7
Part II: Challenges facing SMEs Wojciech Huebner in his report “SME development in countries of Central Asia” ( Huebner
presented to the United Nations Industrial Development Organization in 2000, draws atte following:
“The success of particular transition economies in SME development seems to origina systematic solutions applied within three distinct areas: -
macro-economic conditions that provide incentives to develop business and in whic development barriers are minimized;
-
ability to properly train people and develop their entrepreneurial skills; and
-
ability to create conductive financial and support infrastructure for SME.”
This part of the report analyzes the current economic and legal environment of Uzbe particular attention to the problems that embarrass development of SMEs. It is possible to separate SME problems into 3 broad categorizes: -
Internal problems, arising inside the business itself (e.g. poor management skills);
-
External problems, appearing on the Government and Business level (legal framew
-
Political problems resulted due to the absence of the real cooperation between SMEs and the
Government (inability of government bodies to understand problems of Small busin This is briefly summarized in
Box 2.1: Penalties and their consequences Figure 2.1. The
According following discussion is based on the strong belief that to legislation, the penalty of 10 minimal wages must be paid for each three distinct types of problems are stronglyincorrectly filled invoice. So, for instance, if anthan account gets wrong the telephone interrelated with Political and Internal, rather number of a customer in 10 invoices, it commonly believed External problems, defining thebe necessary to pay 940,000 UZS would ($712)itin fines. success of development of SMEs. So, for instance, is the absence of the real business cooperation andwas a case when the company with There the annual turnover of 400 mil. UZS was non-participation in the political life of the country, obliged to repay 300 mil. of penalties. that allow the Cabinet of Ministers and other Governmental bodies to adopt laws harmful for local
Anoshkina & Minibaev, 2005 8
businesses. It is the absence of sufficient knowledge and trainings that become the m million penalties (for the real example see Box 2.1). Figure 2.1: Problems facing SMEs in Uzbekistan Management Internal
Knowledge Trainings Operation
SME Problems
External
Taxation Information / Support Representation
Political
Cooperation Involvement
Internal Problems
Internal problems are those that arise on the company (business) level. They include such is
management, unclear division of labour, lack of legal and practical knowledge and unwilling
inability to attend refresher courses. While these are only internal problems, they influence
performance of the whole company and hence can considerably distort its competitive ad
Dmitriy Alaudinov, the General director of the Business Consulting company in Uzbekistan,
an effective maintenance of circulation of documents turns into big problems for many local
entrepreneurs. In its turn, this can lead to the loss of quality control, what according to the r
could cost the company up to 60% of its working time just for eliminating products/services defects (Naumov, 2005).
The overwhelming majority of SMEs in Uzbekistan do not use computer technology in their
(IFC, 2004), what limits their abilities to receive, communicate and process detailed and up-t
information about their existing and potential customers, track changes in their tastes and p and carry out a purposeful and reliable marketing research. 9
According to IFC only 41% of SME representatives have adequate knowledge of legislation
inspections (IFC, 2005a) and hence numerous law violations by inspecting officials could sta unnoticed, undetected and undisputed through the courts.
External Problems Mainly, External problems of SMEs come to the difficulty with which they: -
compete with other firms (monopolies, companies with big tax concessions etc.)
-
borrow from and transfer money within financial institutions;
-
convert local currency into foreign;
-
bear huge tax deductions;
-
obtain licenses and certifications;
-
encounter during frequent inspections;
-
receive necessary information.
Frequently, an Uzbek entrepreneur does not have starting capital, except for his diligence and family’s su ort.
Uzbek small entrepreneurs frequently do not have access to starting capital. Banks are lending money (if at all!) at high interest rates and only for big amounts (ER, 2005 & The Economist, 2005). For SMEs and especially individual
entrepreneurs, this is an unbearable burden and many businesspeople refuse to open a business, even not trying to work. Banks also perform functions inappropriate for It seems that Uzbek banks are still alien and
financial institutions, which damage their reputation and for many local businesspeople. unattainable push off many entrepreneurs (IFC, 2005).
Many representatives of SME sector express their anxiety about Taxation system. Specialis
that tax rates in Uzbekistan are not very high, but the complicated and contradictory tax leg
its permanent changes, can make a prosperous firm, needing to pay just 20% tax a bankrupt &IFC, 2005). 10
Political Problems There is a question, why in the country, whose legislation system and economic results are put as an example for other countries (IFC, 2005c,d), SME representatives still say that it is difficult to operate in Uzbekistan ( IFC, 2005). The answer is that, the adopted laws are good on paper, but they do not work in practice. Entrepreneurs do not have any sufficient powerProblems to influence of SME are constantly being discussed, but mainly on paper and without the business itself.
on anything. The Liberal Democratic Party of Uzbekistan,
formed as the party of businesspeople and taking up the second place in the past election to
Parliament, in reality is powerless. All recent decrees and resolutions that had the direct eff and other businesses were issued by the Executive power (President, Cabinet of Ministers,
etc.), rather than Legislature, without their discussion in the Parliament or even the round t
businesspeople. This type of problems would exist until SMEs did really obtain sufficient po start to participate in law-making in all bureaucracy levels.
11
Part III: Recommendations
In the recent work “SMEs, Growth, and Poverty: Cross-country Evidence” of Thorsten Beck
Demirguc-Kunt and Ross Levine (Beck et al., 2003-4) there is a provocative question of whethe
really do what the world community are expected them to do. While the work does not provi
definite answer, it concluded that it is the general business environment of the country, rath sector itself that stimulates economic growth, employment and innovation.
Even if this conclusion is correct, it is SMEs that respond with extraordinary sensitivity to al
positive and negative developments in the business environment ( IFC, 2004). Therefore, the
business environment is first of all the environment with thriving and prosperous SME secto should be done to make it really prosperous?
It is necessary to eliminate or at least reduce and soften problems of SMEs that were d preceding part. It seems appropriate to: 1) 2) 3) 4) 5) 6) 7) 8)
Encourage the education among SME representatives, by providing tax co
businesses, sending members of their staff to refresher courses and conferences; Assist in developing courses adopted for needs of people deciding to open their ow Improve the access of SMEs to financial system by developing microfinance secto
with low interest rates), as India, Brazil and USA already do ( The Economist, 2005); Forbid banks to disclose information about their clients to third persons, exc
established by the law; Improve the tax legislation and forbid introduction of frequent changes that ha (see Box 3.1 for recent developments in this sphere);
Encourage people to open their own small businesses, through educative TV, Inte
media programs; Provide fair rules for all businesses, including monopolies and big companies, pos concessions Encourage the development of new forms of businesses and enterprises in (see Box 3.2 for new promising type of business);
6
The Government is moving in this direction. Since 2004 the new “Management of agricultural enterprises” speciality was introduced in Institutes and Universities of Uzbekistan ( Haitov et al., 2005). However, this course, as the majorit is prepared for those interested in agriculture. Similar courses for other specialities are required. The UK an experience in this sphere seems very successful and appropriate (Sloman, 2001).
12
But this will work and only work if the interests of SME representatives themselves would b
into consideration. Therefore the Government’s prime objective in the short-run must beco
establishment and maintenance of good relations with SME sector and all other businesses
organizing round-tables, encouraging Business Communities and refusing to take actions in without the consultancy with Business.
Box 3.1: New step on the road to local business
According to the latest IFC survey “Business environment in Uzbekistan as seen by small medium enterprises”, 62% of respondents are not satisfied with the country’s taxation sys Permanent tensions between entrepreneurs and Tax regulation officers, numerous compl the vivid slowing down of SME development in 2004 led to January President’s decree “On Drafting a New Edition of the Tax Code of the Republic of Uzbekistan”. The new Tax Code provide: -
-
-
Reduction of the tax burden; Equalization of tax treatment; Enhancement of the role of taxes; Direct action of the Tax Code; Stability of the tax system; and Improvement of tax administration.
Many experts are sure that properly prepared, new Tax Code could solve many today’s que issues and improve the general business environment in Uzbekistan. Meanwhile, before th adoption of new Code, the government of the country, as usual, is trying hard to improve ta system independently. Since 1 of April 2006 businesses, that are engaged in providing aud leasing, insurance services as well as services in education and accounting are free from p on revenue and the unified tax for the period of 3 years. IFC, 2005a; ER, 2005; Centrasia.org, 2006b
13
Box 3.2: Outsourcing. What is it and for whom?
Producers of goods and services frequently outsource their work. They hand operations th carry out in-house to outside firms, dividing up growing complexity into more manageable Production companies outsource production of their goods, banks – their services and eve hospitals – some of their functions (such as processing of patients’ medical forms, medica consultancies and simple operations).
According to estimates, outsourcing generates approximately $1.4 trillion worth of goods services, which is only “8 percent of 50 possible” IBM’s report suggests. With transporta communication costs rapidly falling, the distance between consumer and producer does n big role anymore. This opens big opportunities for developing countries.
Malaysia, China and especially India are already exploiting these possibilities. Foreign co opened 60 000 factories in China between 2000 and 2003 and doubled the $200 billion co export. By 2008, outsourcing could employ over 4 million Indians and generate $80 billion of sales for India.
Having cheap and educated labour force in abundance, why not for Uzbekistan to enter th profitable market? Why not to attract new investments and develop this sector at home? I that the start is already given (President’s decree “On measures for stimulation of increas cooperation between big industrial plants and production of services on the base of home from 05.01.2006), but further steps and actions are required. The Economist, 2004
14
Summary
The importance of SME sector in Uzbekistan acquires the increasingly vivid forms. It alread constitutes more than 38% of the country’s GDP, employs two thirds of the labour force and
importantly, shapes the new country’s middle-class, proving its reliability and enormous po
Being aware of that, the Government of Uzbekistan is perpetually trying to facilitate the dev of SMEs. Nevertheless, many problems continue to exist, putting considerable pressure on
businesses and their likely growth. However, not all available instruments have been enable
hence strong prerequisites of future positive changes in SME and consequently Private sec development remain and hold true.
15
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INTERNATIONAL FINANCE CORPORATION (IFC), 2004d. Business Environment in Georgia as seen by small and medium enterprises. Tbilisi: IFC. Available from: http://www.ifc.org/eca [Accesse 18 April 2006].
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Annexes Annex A: Main aggregates of SME development in Uzbekistan GDP (in billion UZS) Percentage share in GDP -Small & Medium Enterprises -Individual Entrepreneurship
2000 3255.6
2001 4925.3
2002 2003 2004 2005 7450.2 9837.8 12190 15100
31 13.1 17.9
33.8 14.8 19
34.6 15.7 18.9
35 16.5 18.5
35.6 18.6 17
34.3 17.7 16.6
Number of Registered SMEs (thousands) -Industry -Agriculture -Transportation & Communication -Construction -Trade & Public catering -Other sectors
149.3 -
177.7 -
215.7 19.7 101.7 1.9 11 32.6 48.8
230.6 21 119.6 2 10.9 41.8 35.3
237.5 20.1 146.2 2.3 10.9 41.9 16.1
261 18.9 172.8 2.6 11.3 39.1 16.3
Employment share (%) Total absolute figures (thousands) -Excluding Individual Entrepreneurships
4462.7 745.3
56.7 60.9 65.64 4842.5 5086.4 5436.7 6038.3 6627 801.8 900.3 1062.2 1349 1347
SME share by industry (% from total) -Industry -Medium Entrepreneurship -Small Entrepreneurship -Individual Entrepreneurship
11.3 4.2 7.1 2.9
14.1 6 8.1 3.4
14.1 5.5 8.6 4
10.9 -
10.7 -
9.1 3.2
-Agriculture -Medium Entrepreneurship -Small Entrepreneurship -Farms -Personal Subsidiary Plot
72.4 0.3 72.1 5.1 66
75.6 0.6 75 6.9 66.3
76.4 0.2 76.2 9.9 65.5
78.1 -
80.9 -
85.5 63.2 -
-Retail Services -Medium Entrepreneurship -Small Entrepreneurship -Individual Entrepreneurship
45.9 3.4 52.5 32.2
45.8 3.8 42 32
43.8 3.7 40.1 30.1
42.4 -
41.8 -
42.9 27.3
-Fee-based Services -Medium Entrepreneurship -Small Entrepreneurship -Individual Entrepreneurship
37.9 1.3 36.6 32.2
39.9 1.1 38.8 34.1
41.3 1 40.3 34.9
45.4 -
47.4 -
50.9 44.2
Number of SME participating in the World Trade
2832
2452
2690
3300
3778
3472
Export share (%) Import share (%)
10.2 27.4
9 26.9
7.5 24.9
6.9 33
7.3 32.7
5.8 32.4
Note: Data for all items in 2005, except GDP, are given for the first 3 quarters of the y
18
Source:
Center for Effective Economic Policy (CEEP), 2003. Uzbekistan Economy: Statistical and Analytical Review. Annual Issue, 2002. CEEP: Tashkent. CEEP, 2004. Uzbekistan Economy: Statistical and Analytical Review. Annual Issue, 2003. CEEP: Tashkent. CEEP, 2005. Uzbekistan Economy: Statistical and Analytical Review. Annual Issue, 2004. CEEP: Tashkent.
Center for Economic Research and Education (CERE), 2006. Uzbekistan Economy: Statistical and Analytical Review. Annual Issue, 2005. CERE: Tashkent. Karimov, I. A., 2006. Speech of the President in the Cabinet of Ministers [online]. Available from: http://centrasia.org/newsA.php4?st=1139898120 [Accessed 15 February 2006]
19
Annex B: Official Definition of SME
According to the Decree of the Republic of Uzbekistan dated August 31, 2003 “On Amendin Expanding the Decree of the President of the Republic of Uzbekistan “On the Development Enterprise, Small and Medium Business” dated April 9, 1998” following businesses and bus entities are counted as SME and granted with all concessions and privileges given to SM •
Individual Entrepreneur
A natural person, without the status of a legal entity, engaging in entrepreneurial activities; •
Micro-firm
A legal entity whose annual average number of employees engaged in manufacturing sectors does not exceed 20, in services and other non-manufacturing sectors does not exceed 10, in wholesale, retail, and public catering does not exceed 5; •
Small Enterprise
A legal entity whose annual average number of employees is greater than that of a micro-firm but is: less than 100 for those engaged in light and food industries, in metalworking, in making instruments, in woodworking, and in manufacturing construction materials; less than 50 in machine building, in metallurgy for fuel/power and chemical industries, in growing and processing agricultural produce, in construction and other industrial-manufacturing sectors; less than 25 in science, provision of scientific services, transportation, communications, services (except insurance companies), trade and public catering, and other non-manufacturing sectors; •
Dekhan Farm
A family enterprise engaged in low volume production and sale of agricultural produce. Its family members produce on a family farmstead which is a heritable possession of the head of the family in lifetime. A dekhan farm may be incorporated or unincorporated; •
Private Farm
An independent economic entity with the rights of a legal entity based on the cooperative efforts of its members who produce agricultural produce on parcels of land rented on a long-term basis;
Source:
International Finance Corporation (IFC), 2004. Business Environment in Uzbekistan as seen by small and medium enterprises. Tashkent: IFC.
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Annex C: Calculations Figure 1.5, presented in Part I “SMEs in Uzbekistan and the World” of this report was build using
the following data (Index numbers): SME share of total production by industry (%) 2000 Industry 11,3 Agriculture 72,4 Retail Services 45,9 Fee-based Services 37,9 Index numbers Industry 100,0 Agriculture 100,0 Retail Services 99,8 Fee-based Services 100,0
2001 2002 2003 2004 14,1 14,1 10,9 10,7 75,6 76,4 78,1 80,9 45,8 43,8 42,4 41,8 39,9 41,3 45,4 47,4
2005 9,1 85,5 42,9 50,9
124,8 124,8 96,5 94,7 80,5 104,4 105,5 107,9 111,7 118,1 99,6 95,2 92,2 90,9 93,3 105,3 109,0 119,8 125,1 134,3
The index number for the year 2000 was taken as 100. The indexes for subsequen calculated according to the following formula:
Index Year n = (Share Year n x Index 2000) / Share Year 2000, where Year n is the year of interest (2001, 2002, 2003, 2004, 2005)
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Annex D: Deficiencies of Analysis
In this report it was tried to discuss the role that SMEs play and problems they encounter, ha operated in the Republic of Uzbekistan. This work does not tend to persuade anybody in the
correctness of the presented argumentation, but merely tries to sum up already stated opini
available statistics for SMEs development, generally, and that of Uzbekistan, particularly, in and consistent way. At the same time, this analysis has its several shortcomings, the main of which are:
1) Usage of secondary data, the accuracy and consistency of which could not be tested o 2) Usage of out-dated information from time to time;
3) Absence of the work experience in SME sector and the real dialogue with local busine government officials; and
4) Simplicity of argumentation with omission of some key facts and appropriate numeric
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