Tashkent, Uzbekistan (UzDaily.com) — A video conference chaired by President Shavkat Mirziyoyev was held to review the progress made in 2024 and outline key objectives for 2025 in the development of the service sector.

It was noted that the large-scale program for the development of the service sector, adopted three years ago, is now yielding tangible results.

An additional 1.5 million people have secured stable incomes in the service industry. The volume of services has increased from US$19 billion in 2018 to US$65 billion, marking a 3.5-fold growth.

A particularly significant "leap" has been observed in IT, financial services, tourism, aviation, education, and healthcare.

Over the past seven years, household incomes and purchasing power have doubled, driving demand for new types of services.

In this regard, it was emphasized that ministers and regional leaders must develop the service sector in line with the evolving needs of the population.

It was also noted that there are varying approaches among ministers and regional authorities to service sector development, and there is a lack of coordinated efforts in this area.

For instance, despite plans to attract 6 million domestic and international tourists to Khorezm, passenger traffic remains at 800,000 per year, even though the region has 52 weekly flights and 23 rail routes. Many tourists arriving in Bukhara and Samarkand are forced to leave the country due to the lack of flights to Khiva.

Another example is the tripling of private clinics over the past seven years. However, many of them express dissatisfaction with the prolonged registration process for imported medical equipment, which can take up to six months. In response, a proposal has been made to simplify the registration process for imported medical equipment.

Additionally, entrepreneurs spend months obtaining accreditation to open medical laboratories due to excessive bureaucratic obstacles. Preliminary estimates suggest that in every region, at least 10 entrepreneurs are ready to invest US$1 million each in setting up such laboratories.

The volume of private sector projects in healthcare, aviation, and energy has exceeded US$20 billion.

However, it was noted that there are virtually no similar projects in drinking water supply, sanitation, and road construction. Meanwhile, many local entrepreneurs are willing to invest US$1 billion and create 10,000 jobs, provided the necessary conditions are in place.

Three years ago, incentives were introduced for the construction of commercial and service facilities exceeding 5,000 square meters. Since then, 209 such facilities have been built. However, progress in this area remains unsatisfactory in the Bukhara, Jizzakh, Kashkadarya, and Navoi regions.

Over the past four years, US$700 million has been attracted from international financial institutions for livestock development, with plans to secure an additional US$350 million this year. As a result, the demand for veterinarians is expected to rise significantly, with Bukhara alone already needing 250 specialists.

By the end of the year, the goal is to increase the volume of private veterinary and paraveterinary services fivefold.

It was noted that the development of the service sector varies across regions. For example, in Nukus district, service sector revenues reached 363 billion soums last year, marking a 22% increase from the previous year. However, in Gulistan district, which has twice the population, service sector revenues were 30 billion soums lower than in Nukus.

Additionally, in Namangan, per capita service sector revenues do not exceed 13 million soums, while in Jizzakh, this figure stands at 33 million, indicating a still significant level of the "shadow economy."

Furthermore, criticism was directed at underdeveloped IT services in Nishon, Yangikurgan, and Narpay districts, declining financial services in Samarkand, Yangiyer, Mirzaobod, and Mirzachul, and stagnation in retail trade in Karshi, Urgench, as well as the Jomboy, Urgut, and Uchtepa districts. Seven districts in Fergana region have reported a decline in medical service volumes.

All ministers and regional leaders were instructed to work daily on introducing new types of services.

This year, an ambitious goal has been set—to increase the service sector volume by 15%, bringing it to US$82 billion, boost service exports to US$8.5 billion, and expand the workforce in the sector to 2.5 million people.

Over the past three years, 3,000 apartment buildings have been commissioned, along with 38 million square meters of non-residential space.

Developers have been allowed to reclassify 10–15% of newly developed residential areas for non-residential use. While developers are interested in selling these properties, commercial and service businesses are interested in leasing or renting them. However, there is currently no system connecting the two parties.

To address this, a proposal was approved for banks to directly purchase real estate from developers and lease it to entrepreneurs under favorable terms.

This initiative will bring 50,000 square meters of non-residential real estate into circulation, generate 70 billion soums in budget revenues, and create 100,000–150,000 jobs. Most importantly, leasing terms will be at least 15–20% more favorable than rental agreements.

Responsible agencies have been tasked with collaborating with developers to create a package of projects worth 4 trillion soums for leasing non-residential properties in connection with specific business activities.

Specific plans have been established to expand financial services by 30%.

The President noted that state banks are lagging behind private banks in developing online services and offering attractive financial products to the public.

For example, last year, the number of users of remote banking services in private banks increased by 32%, while in state banks, the growth was only 13%.

As a result, emphasis was placed on expanding remote banking services by at least 30% this year. The integration of cadastral, tax, and legal databases with banking systems is expected to eliminate the need for in-person visits to notaries for collateral registration.

Additionally, responsible agencies were instructed to develop and implement a simplified procedure for obtaining online loans.

In recent years, significant attention has been given to the development of the "night economy."

An initiative was approved to transform 7.3 kilometers of streets in the Almazar district into a gastronomic cluster, where 250 commercial and service establishments will be set up, creating at least 1,500 jobs.

It was noted that Tashkent has the potential to establish 26 additional bustling 24-hour zones and increase the number of round-the-clock retail outlets by 1,000.

Considering tourist preferences, the need for service and tourism facilities to operate during evening hours was emphasized.

Starting this year, a new approach will be applied to service sector development in districts.

A total of 1,156 "driver" projects have been selected and approved, with 1 trillion soums allocated for infrastructure development.

In collaboration with entrepreneurs, plans for this year include launching 72 coastal recreational areas, renovating 62 parks, creating 154 round-the-clock tourist and gastronomic streets, and constructing 364 road and service facilities.

Despite improvements in main roads and intra-district streets, the issue of inter-district road development remains unresolved, although such infrastructure could significantly boost the service sector.

As a result, regional authorities have been tasked with improving infrastructure on 50 inter-district roads.

Two years ago, a social tax rate of 1% was introduced for businesses in the trade and service sectors. During this period, the number of enterprises grew by 1.5 times, and the number of employees increased by 220,000.

Importantly, many businesses have emerged from the "shadow" economy and started officially reporting salaries, leading to a 3.2-fold increase in wages and an additional 2.1 trillion soums in tax revenues.

In light of this, many entrepreneurs have requested an extension of the tax benefit for another three years. This proposal has been approved, and the benefit will now apply to employees of service businesses under 30 years old earning at least 3 million soums per month.

At the same time, oversight of businesses engaged in shadow activities and paying wages "off the books" will be strengthened.

Construction, retail, and food service businesses will be permitted to offer short-term and simplified employment contracts (hourly or task-based).

Over the past three years, 27 types of public services have been outsourced to the private sector. However, it was noted that ministries still have much work to do in this area.

For example, the Agency for State Asset Management may transfer the administration of exams and the issuance of qualification categories for realtors and appraisers to the private sector, the Tourism Committee may delegate the certification of guides, and the Agro-Inspection may hand over the mandatory technical inspection of agricultural and special equipment. Many other ministries and agencies also provide services that entrepreneurs could manage independently.

In this regard, it was instructed to transfer 11 types of public services to the private sector by March 1 and another 18 by October 1.

Each ministry has been tasked with preparing proposals for transferring certain services to the private sector, including outsourcing, as well as introducing new services. The role of the Antimonopoly Committee in this process will also be determined.

As entrepreneurs continue to face many questions regarding the terms of leasing and privatizing land plots and state property, it was instructed to develop and publish transparent, favorable, and clear conditions.

Special attention was given to the development of creative industries such as IT, tourism, design, engineering, and project planning. The importance of concrete actions and measurable results was emphasized.

According to the new decree, starting from March 1, state-owned properties of up to 10,000 square meters that have not been sold will be leased to entrepreneurs for 10 years.

If the rent is fully paid within four years, the property will be privatized in favor of the entrepreneur.

Companies that train young people in IT and foreign languages and provide them with international certification will be exempt from rent payments for the first year.

As a result, each region will lease out five state-owned properties, allowing at least 100,000 young people to receive training in IT and foreign languages.

It was emphasized that the time has come to elevate the export of remote services to a new level.

It was noted that Uzbekistan should not limit itself to technical services but should also establish exports of accounting, consulting, insurance, legal, and other professional services.

Officials were instructed to analyze service imports and foreign market requirements, adapt educational programs accordingly, and train the necessary specialists.

This year, US$50 million has been allocated for startup projects in the creative economy sector.

For instance, Beknazar Abdukamolov, who previously worked at Amazon and returned to Nukus, secured US$3 million in funding for his startup from Facebook, bringing his assets to an estimated US$15 million today.

Currently, hundreds of young Uzbek professionals are employed at leading global IT companies. The Ministry of Digital Technologies was tasked with launching startup projects in collaboration with these specialists.

Overall, it was emphasized that in 2025, the volume of IT services must increase by 30%, reaching 80 trillion soums, while IT service exports must exceed US$1 billion.

The President noted that the competitiveness of the service sector is directly linked to the level of digitalization in regions and industries.

The Cadastre Agency was instructed to expedite the creation of a unified real estate address registry, while the Ministry of Transport was ordered to eliminate delays in launching a unified platform for purchasing tickets for all types of passenger transport.

"I repeat once again: any leader who delays digitalization is acting against our policy of openness," the President stated.

The Cabinet of Ministers was tasked with setting specific KPIs, clear objectives, and deadlines for digitalization for each minister and regional governor.

For example, the Tourism Committee must create a single platform allowing tourists to remotely book hotels and resorts, purchase tickets for flights and railway transport, visit museums and theaters, and hire guides and translators.

Meanwhile, the Ministries of Foreign Affairs and Justice must ensure that electronic visas for entry into Uzbekistan can be processed within three days.

A well-developed transport infrastructure is crucial for the growth of the service sector.

Last year, transport services grew by 8.6% to reach 145 trillion soums. However, it was noted that this is insufficient to support high economic growth.

To increase the share of local freight forwarders in international transportation, they were exempted from VAT payments. As a result, the Ministry of Transport must raise the share of local companies to 25% this year and to 50% by 2026.

Trucks that meet "Euro-5" and higher environmental standards will be exempt from customs duties and utilization fees for another three years.

It was instructed to enhance cooperation with private airlines and double the number of flights to Samarkand, Bukhara, Urgench, Nukus, and Termez, as well as to serve 15 million passengers this year, increasing the volume of air transport services by at least 20%.

The meeting also highlighted the need to accelerate the launch of modern electric train services between Tashkent and the districts of Yangiyul, Chinaz, and Syrdarya.

Currently, 50% of Uzbekistan’s railway service exports come from transit freight transport.

A target has been set to increase the volume of transit cargo to 22 million tons by 2030.

In this regard, it was instructed to allocate vacant land along highways to entrepreneurs for the construction of 72 modern roadside service facilities and to put them into operation.

Additionally, a three-year program must be adopted to double the number of large multimodal logistics centers and begin its implementation.

To expand service options, one taxi aggregator proposed acting as a guarantor for car loans on 2,000 vehicles, creating jobs for 4,000 people.

This initiative will increase the number of modern taxis. Banks are ready to provide loans amounting to 1 trillion soums for such projects.

Many car dealerships offer discounts for full upfront payment. However, under current regulations, banks do not recognize these discounts when purchasing a car on credit. If banks were allowed to account for these discounts, interest rates on car loans would decrease by 4%.

The importance of lifting this restriction for local automobiles was emphasized.

Overall, this year, the volume of transportation services needs to increase by 15%—to 185 trillion soums, while exports should reach US$2.2 billion.

Last year, the export of tourism services amounted to US$3.5 billion. However, this figure does not align with the existing potential.

For example, in Malaysia and Indonesia, there are about 7 million followers of the Naqshbandi Sufi order. Before performing Umrah, they wish to visit our holy sites.

All the necessary conditions for organizing such trips are in place: pilgrims can be brought from Kuala Lumpur or Jakarta to Samarkand and Bukhara for at least two days and then sent for Umrah on our aircraft.

Relevant agencies have been instructed to develop and launch the "Umrah Plus" tour package for pilgrims from Malaysia and Indonesia.

Despite the presence of tourist hubs such as "Oqsaroy" in Shahrisabz, "Ichan-Kala" in Khiva, "Lyabi-Khauz" in Bukhara, and "Yangi Oʻzbekiston" Square in Tashkent, there is still no plan for holding concerts, exhibitions, and forums there.

If international-level concerts featuring renowned artists are organized in six of the country’s tourist centers, this will lead to an increase in tourist inflow and higher occupancy rates for hotels, restaurants, cafés, and retail establishments.

In this regard, the task has been set to develop a program for organizing concerts, business forums, and exhibitions aimed at attracting at least 1 million tourists.

Additionally, a three-year program for identifying and restoring historical sites, in collaboration with scholars, has been mandated, as many of these sites remain insufficiently studied.

Public organizations should also take a more active role in export activities.

Last year, the "Hospitality in Medical Services" program was launched. While surgical, dermatological, and endocrinological centers generate up to US$1 million in revenue by serving foreign patients, the export of medical services by 18 scientific centers does not even reach US$300,000.

In this regard, it was emphasized that the export of medical services from 24 specialized centers should be increased to US$30 million, and the process of transferring five specialized centers to private management, in cooperation with the Asian Development Bank, should be expedited.

In 60 hospitals near border crossings with neighboring countries, more than 300,000 people received medical services last year. For instance, a private clinic established in the "Ayritom" international trade zone served 15,000 foreign patients in just one year.

However, in Tashkent region, which shares borders with three countries and has seven customs posts, there are no clinics in the border areas. A similar situation is observed in Namangan.

Therefore, regional governors have been instructed to initiate the establishment of 21 multidisciplinary clinics in border regions.

Over the past eight years, 125 new higher education institutions have been established, including 23 branches of foreign universities.

Nevertheless, last year, higher education exports amounted to only US$26 million, which is far below the available potential.

The Ministry of Higher Education has been tasked with expanding cooperation beyond just two universities from the "Top 1000" list and increasing this number to ten in the coming years.

Last year, 15 cultural centers were transferred to the private sector. Entrepreneurs invested 86 billion soums and organized more than 1,500 cultural events.

Within the Ministry of Culture system, 120 cultural and arts centers remain underutilized. In this regard, the Minister of Culture has been instructed to arrange the transfer of these centers to the private sector, following best international practices.

During the meeting, reports from regional leaders and ministers were reviewed, and successful entrepreneurial experiences were examined.