Independent economist and scientific director of the Center for Promoting Economic Development, Yuli Yusupov, believes that continuing the privatization process of state property is critically important for Uzbekistan. The expert also insists on significantly increasing the level of transparency and competitiveness during public auctions.
According to available information, under the new privatization program, state shares in 84 business associations, 1,242 real estate objects, and about eight thousand hectares of land are planned to be put up for auction. The total estimated value of these assets is 100 trillion soms. Among the assets the state intends to sell are 98.9% of Turonbank shares, 91.83% of 'Uzexpocenter', and 79.27% of the International Cooperation Center. Furthermore, enterprises such as the Xalq Sug’urta insurance company, the Tashkent Passenger Car Construction and Repair Plant, the Andijan Mechanical Plant, and others are subject to full privatization.
Emphasizing the scale of the upcoming sale, Yusupov noted that the state currently holds shares in many financial institutions and enterprises operating in sectors that potentially allow for competition and which should function as private commercial entities. He stated that the current state ownership harms economic development because the state often acts as an inefficient owner and manager, especially in the absence of proper public control over officials managing state enterprises. The expert stressed that 'property must have a true owner who is deeply interested in the effective use and increase of this property.'
In Yusupov's opinion, the presence of state companies hinders the formation of a healthy market environment. He recalled that competition is the main stimulus for economic growth and ensuring its competitiveness. Therefore, as long as the state's share in ownership and business processes is not significantly reduced, the economy of Uzbekistan cannot be considered market-based, which gives continued privatization enormous importance for the country.
The Importance of Improving Sales Rules
The economist separately drew attention to the need to improve the rules for conducting sales. Although the proposed benefits may be useful as they simplify access to auctions and reduce costs for potential buyers, the key issue remains ensuring their fairness.
Lessons from the Past
Yusupov links the need for reforms to negative experiences recorded in previous stages of privatization, when serious questions arose regarding the transparency and terms of transactions. As an example, he cited the sale of a state share in Coca-Cola Uzbekistan. Initially, the asset was expected to be sold for approximately 70 million dollars, but after reviewing the terms and holding open auctions, the share was acquired by the Turkish company Coca-Cola İçecek for $252.28 million, demonstrating the potential for price growth with real competition.
Other examples that raised questions include the sales of state shares in Perfectum and Uzcard, which were transferred to private owners at their appraised value despite initial plans to put them up for public auction. The privatization of 85.58% of the shares of JSC 'Photon', which was sold for 151 billion soms through a public invitation to negotiate, was also noted. Yusupov believes that given past experience and emerging problems, additional mechanisms must be introduced to enhance the transparency and competitiveness of public auction processes.
Five Rules for Fair Auctions
To prevent abuses, the expert proposes implementing a number of fundamental measures. Firstly, auction rules must be established in advance and remain unchanged throughout the entire process. Secondly, the maximum bid price must be the sole criterion for determining the winner. Furthermore, Yusupov opposes granting buyers additional investment and social obligations, as this creates corruption risks and grounds for revising transaction results. It is also necessary to completely exclude the transfer of state property to private co-owners outside of a tender based on appraised value. Finally, a crucial condition for fair auctions is constant public oversight—from the approval of regulations to the review of appeals—by representatives of parliament, experts, business associations, and civil society. Yuli Yusupov concluded his remarks with hope for the successful conduct of privatization in an atmosphere of complete transparency, equal access for all potential buyers, and fair competitive struggle.
