Expanding the scope of services in Uzbekistan

The services sector in the modern world occupies a more stable position every year. Countries with economies centered around the service sector are considered more developed than industrial or agricultural economies. It is no coincidence that in the advanced countries of the world the share of services in total GDP exceeds 75%. More than 80% of knowledge workers and 87% of highly qualified personnel are concentrated in the service sector. Services contribute to the social orientation of the economy and improve the quality of life of the population.

Since the beginning of reforms in Uzbekistan, the service sector has become one of the important areas of economic development. In the development of this area, the main part of market services by type of economic activity was contributed by trade, transport and financial services. In particular, the share of trade services in 2022 amounted to 24.8%, transport services – 22.7%, financial services – 22.5%. A significant share of services was also provided in the field of information and communications – 6.4%, education – 4.3%, accommodation and food – 3.2%. Today, finance, transport, trade, tourism, education, medicine and communications sector provide 85% of total services.

This year, the share of services in the economy will reach 43.5%, but, as the President noted at the last meeting, this is not enough, since in many countries this figure is 50%, reaching 57% in Korea, 59% in Malaysia, 60 in Georgia %, in Kazakhstan 62%. Therefore, in Uzbekistan it is necessary to ensure an increase in the volume of services by at least 17% per year. There is great potential for the development of the service sector in the fields of finance, transport, tourism, education, medicine and information technology.

Financial services

The financial services sector has shown significant growth in recent years. As a result of the implementation of reforms in the financial sector, over 6 years the volume of financial services increased 5 times and amounted to 80 trillion. soums The share of financial services in the total volume of services increased from 18.1% in 2017 to 22.5% in 2022. Over 11 months of this, the growth rate compared to last year was 120.2%, and the share in the total volume of these services amounted to 23%.

The development of the financial services sector is primarily associated with the development of business and the expansion of its financing. For this purpose, the Entrepreneurship Development Bank to support small businesses and the Entrepreneurship Development Company for medium-sized businesses were recently created. $300 million and 1 trillion soums were transferred to the created bank, and 1.5 trillion soums to the created company, which will expand the volume of business financing. Based on this, it is expected that next year the volume of financial services will increase by 30%, to 140 trillion soums.

To stimulate entrepreneurship, it was also decided to allocate, within the framework of the “Family Entrepreneurship” program, unsecured loans in the amount of up to 50 million soums to persons who opened their own small business and have a positive credit history, and up to 100 million soums to those wishing to expand their activities.

A proposal was also approved to provide loans to self-employed citizens taking their first steps in business, of whom there are currently 2.4 million people. Citizens who have paid 340 thousand soums of annual social tax will be allocated a preferential loan and transferred to an online bank card.

In general, due to the measures announced at the meeting, 2 million people should be involved in business in 2024. In addition, as the President noted, work is underway to place Eurobonds worth $500 million, which should also become an important incentive for expanding the financial services market.

Transport services

In recent years, transport services have played an important role in supporting the overall economic growth of Uzbekistan. Thanks to improved infrastructure and communications, the volume of transport services over 6 years increased by 1.5 times and amounted to 81 trillion. soums Today, a quarter of the total volume of services in our country comes from the transport sector. The sector’s growth this year was 8.8%.

At the same time, half of transport services are provided by road transport. In 2024, it is planned that by July 1, at least 1,200 more buses will be purchased and put on routes, which will create 4 thousand jobs. In addition, during the year, bus service with Kazakhstan, Kyrgyzstan and Tajikistan will be doubled.

In the field of railway transport, tariffs were revised in 2023 and unnecessary benefits were cancelled. At the meeting, it was noted that 6 high-speed trains and 30 electric trains are in the process of delivery. This will ensure 20 percent growth in this area next year.

Significant reforms were also carried out in the aviation services market in 2023 – competition appeared, 6 private companies began operating. In addition, since the beginning of the year, 25 new aircraft have been delivered and 17 new air routes have been opened. But, nevertheless, the volume of services in this sector increased only by 7.7%. Therefore, it was instructed to increase the volume of air transportation by 20% in 2024.

Medicine and education

Medical and educational services are rapidly developing in Uzbekistan. Over 6 years, the number of hospitals increased by 187 or 16% compared to 2017, and at the end of 2022 this figure was 1322 units. Accordingly, the number of hospital beds increased by 25% from 135.7 thousand in 2017 to 170 thousand in 2022.

But most importantly, during the reforms, the private sector of medicine and education is developing. In order to fully use the potential of these industries, as indicated by the President at the meeting, it is enough to provide land in places close to the population, where comprehensive services can be provided, and the entrepreneurs themselves will do the rest.

IT services

In recent years, the IT services sector has also been developing dynamically. Over a 6-year period, the volume of services in this sector tripled – from 8 trillion. soums in 2017 to 23.5 trillion. sum in 2022, the growth rate averaged 20% per year. The volume of exports of information technology services doubled from $151 million in 2017 to $306 million in 2022. Over 6 years, a total of $3 billion of investments were attracted. Today, the share of IT services in Uzbekistan’s GDP is 3-3.5%.

As the President noted at the meeting, the IT services sector gives a great impetus to the development of not only this industry, but also other industries thanks to the digitalization of the economy. Thus, the share of the digital economy in Uzbekistan’s GDP in 2022, compared to 2020, increased from 1.99% to 2.77%.

The meeting emphasized the importance of increasing the volume of services in this area in 2024 to 41 trillion soums with an increase in exports by 2 times compared to $300 million in 2023, nevertheless ensuring a 30 percent increase in IT services during the year.

Tourism

During the meeting, significant attention was paid to the development of tourism. Our country has great tourism potential, which is being consistently realized. The volume of exports of tourism services in 2022 amounted to $1.61 billion. In just 6 years, the total volume of exports of tourism services amounted to $5.13 billion.

At the meeting, it was noted that in order to realize the existing potential of tourism, it is necessary to ensure a flow of 32 million tourists next year. To achieve this, it is necessary to build at least 600 hotels and guest houses.

As foreign experience shows, in countries such as the United Arab Emirates, Egypt, Turkey and Italy, tourists are often attracted by the opportunity to purchase jewelry. Although our country has sufficient conditions for this, over the past two years only 4 tons of gold ($500 million) have been sold, while the annual jewelry market in Uzbekistan is more than $1 billion.

In this regard, it has been instructed to organize modern jewelry complexes in each region starting next year.

It was also noted at the meeting that it is necessary to improve the convenience of our markets for tourists. The importance of turning them into complexes where tourists can spend a long time – into a “calling card” reflecting our culture was emphasized.

Conclusion

In conclusion, it is worth emphasizing that based on economic trends in other countries, the development of the service sector in Uzbekistan has a very high, but still not fully realized potential. The potential for development of the service sector is especially high in regions where, due to underdeveloped infrastructure, all available opportunities for the development of the service sector are not fully used. And it was on the development of regional potential in the service sector that the main focus of the meeting was focused.

At the same time, special attention should be paid to those areas of the service sector that, based on global trends, are becoming increasingly in demand in the future. Firstly, these are IT services – the basis for the development of a digital economy, covering all aspects of life. Secondly, educational services, without improving the quality of which it is impossible to prepare competent personnel for the digital economy. And thirdly, medical services, which are becoming increasingly in demand as the population’s life expectancy increases.

And in order for the quality of human capital to improve and life to become more comfortable for people throughout Uzbekistan, it is necessary to ensure high quality and availability of these services in all mahallas of the country.