Huge Uzbek budget losses - due to ailing auto industry?

Baku, Azerbaijan, June 28

By Fikret Dolukhanov – Trend:

The budget of Uzbekistan lost lots of money because of protectionism and monopoly in the automobile industry, as factories do not pay taxes, and prohibitive customs payments do not allow receiving budget revenues from the sale of imported cars, Director of the Center for Economic Development in Uzbekistan Yuliy Yusupov told Trend on June 28.

Yusupov said that the automobile industry of Uzbekistan is a classic example of harm of monopoly and protectionism, which should be mentioned in all textbooks on economy.

“We have been protecting our automobile industry from competition since 1996 if I'm not mistaken. As a result, the economy suffered significantly. The buyer is deprived of choice, forced to buy one product, overpaying money, time and social capital. Exporters and farmers, who were forced to sell currency and cotton at low prices to actually give currency to the auto industry, suffered multi-billion losses,” Yusupov said.

On top of that, the automobile industry certainly received huge concessional loans at the expense of other economic entities, since if someone gets a free or cheap resource, that means the resource has been taken away or sold cheaply by from or by someone else according to the elementary laws of the economy, he said.

Yusupov added that all of the above is a clear illustration of consequences of monopoly and protectionism.

The expert dismisses the argument about newly created jobs in the industry, since, according to him, money spent on the project could be invested in creating tens or even hundreds of times more jobs.

Yusupov expressed hope that what has happened in the automotive industry of the country for the last 20 years will serve as an example and a lesson to not to repeat such mistakes in the future and “not to play a worn out record about the ‘benefits of protectionism"”.

President of Uzbekistan Shavkat Mirziyoyev during a special meeting on June 27 delivered a serious blow to the country's automobile industry. He noted that the automobile industry plays a vital role in the country's economy, however, production and exports have recently declined. The head of state criticized the widespread corruption, bribery, nepotism at all levels in the sphere.

The president reminded that there are a lot of debts in the structure of Uzavtosanoat JSC (the country's major car manufacturer). Several enterprises of the company completed 2017 with losses. For a number of years the export of cars was carried out at a price lower that the prime cost and no action was taken to actually reduce the latter.

During the meeting, Chairman of the board of Uzavtosanoat Umidjan Salimov was dismissed from his position for shortcomings in his work and unsatisfactory state of affairs in the automobile industry.

At the same time, Uzavtosanoat JSC also announced that it intends to increase the statutory fund by 529.945 billion soums by issuing and placing more than 529.945 billion common shares with a par value of one soum each.

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Follow the author on Twitter: @FDolukhanov

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