Uzbekistan’s legal and business environment: anticorruption agenda

By: Syeda Manal Tirmizi

It is noteworthy that in recent years, Uzbekistan has demonstrated a relative improvement in combating corruption through enhancing legal and institutional measures. In recent years, under the leadership of the current president Shavkat Mirziyoyev, who assumed the presidency in 2016, the country set out to reform the economy, enhancing governance and strengthening the rule of law. One of the priorities of this agenda is the anticorruption drive that is geared toward improving the conditions for doing business in the country and attracting foreign investment to Uzbekistan.

Originally, corruption had been ingrained beneath the previous government, thus harming economic development and efficiency. Corruption is understood as a major obstacle to be overcome to bring Uzbekistan to the level of new economic development. Secondly, Mirziyoyev understands that eradicating corruption is vital to changing the image of Uzbekistan and connecting with the external world after the country was closed off under the previous president.

In a bid to fight corruption, Uzbekistan has adopted new laws and regulations to enhance the transparency and accountability of governmental and state bodies. Legal acts, that regulate the combat against bribery, enhance financial management, and introduce more rigorous standards of audit and reporting requirements for the entities of the public sector, were approved. Uzbekistan also has some other specific anti-corruption institutions including the Anti-Corruption Agency and special prosecutors’ office dealing with corruption offense investigations and trials.

The above reforms are not strictly legal but are part of the governmental reform campaigns. Efforts have been made to encourage ethical standards and professionalism in all aspects of society, mainly because it has been realized that by the mere passing of laws, corrupt practices cannot be eradicated that have developed over the years in organizational sub-groups and corporate cultures. This includes the codes of ethics in government organizations, the education system, and social campaigns that aim at making people understand that corruption is more than a crime but a violation of ethics.

However, it should be noted that legal measures can only be effective if backed by culture and tradition. Here, the following challenges exist, which are traditional for many transitional environments where corruption is a major issue. Informal ways of work relationships override the official controls which are further encouraged by low wages paid in the public sector. Additionally, while political will to combat corruption seems to be highly developed at the core executive level, middle-ranking civil servants and junior politicians may remain anchored to old practices such as receiving kickbacks on contracts and nurturing client lists.

In this respect, the attention and involvement of the domestic business community is paramount for anti-corruption reforms to take root. Hence, the response to the market from the businesses and investors locally has not been encouraging, though it is still a developing market. While corruption impacts the overall business environment and hinders economic growth on one hand, on the other hand, entrepreneurs and foreign investors can see direct benefits of cutting the reoccurring corruption they face in their interactions with officials complicated customs, bureaucracy, taxes, etc. Therefore, the government’s anti-corruption campaign has enjoyed significant support from large domestic enterprises and multinationals wishing to invest in Uzbekistan.

But, smaller firms and the investors with their stakes at stake in the conventional manner of carrying out business affairs have been skeptical. For such players, the crackdown on corruption poses a radical threat to tried and tested ways of coping with a difficult business climate. Some therefore witness reforms as encroaching on their business models while not effectively providing sufficient comfort to them via enhanced governance. However, a good anti-corruption campaign should in one way or the other seek to capture these constituents into aligning to a culture that protects all parties involved in economic transactions through consistent implementations of laws and policies and not the individualistic discretions of officials. This can only be achieved if there is constant and equal application of laws that discourage corruption.

In conclusion, it can be made certain that Uzbekistan has achieved immense progress in creating institutional and legal conditions to counteract corruption and enhance integrity in political authorities and economic relations. This can be attributed to the growing awareness among the leadership of the country that corruption has raised to become a significant impediment to the development of Uzbekistan.

However, the effectiveness of the anti-corruption measures in this case is highly dependent on the willingness of the lower-tier civil servants and the domestic companies who may stick to their previous rather opaque and informal ways. Sustainability therefore lies in convincing these stakeholders that it is in their self-interest to support the setting up of just, transparent, and responsible economic institutions even if this means the elimination of corruption opportunities and shortcuts.

This just goes to show the relevance of compliance and creating a new organisational culture rather than just orders from the authorities and legislation. The government has ambitions for reform but the ability to translate these into substantive change needs to remain focused on the importance of good governance, even in the face of resistance.

Web Desk