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The impact of the coronavirus pandemic on the business enterprises in Uzbekistan - Embassy of the Republic of Uzbekistan in the United Kingdom of Great Britain and Northern Ireland

The impact of the coronavirus pandemic on the business enterprises in Uzbekistan

The impact of the coronavirus pandemic on the business enterprises in Uzbekistan

July 15, 2020, Tashkent. In June 2020, the Center for Economic Research and Reforms (CERR), with the support of the United Nations Development Program in Uzbekistan (UNDP), conducted a survey of enterprises on the impact of the pandemic and the government’s preventive measures.

The quarantine measures undertaken by the Government of the Republic of Uzbekistan influenced both the country's economy as a whole and individual enterprises. Despite the introduction of a package of measures to support the business community, companies continue to experience significant impact in connection with the pandemic.

The study, initiated by CERR with the support of UNDP, conducted interviews with entrepreneurs about the impact of the spread of COVID-19, and the preventive measures introduced by the Government on small and medium-sized businesses.

The aim of the study was to analyze the impact of the spread of COVID-19 and related preventive measures on enterprises as well as the assessment of the needs of enterprises in further external support.

The survey involved 887 business managers from 14 regions of the republic aged 18 to 79, of whom the vast majority (79%) were men. On the same token, women-managers of organizations accounted for a fifth of the total number of respondents (21%).

The analysis showed that the majority of organizations did not stop their business operations amid the COVID-19 pandemic and quarantine measures. Employees mainly continued their work. Layoffs were rarely practiced.

Among the sectors of the economy, the most affected was the sector of housing (hotel business) and food services. In matters of personnel management, this area is characterized by a massive suspension of activity, the inability to transfer work to a remote format, frequent sending on vacation (especially unpaid), and layoffs, reduction of salaries and additional payments.

The least affected sector is agriculture, forestry and fisheries. Here, mainly, the continuation of work and the preservation or even increase in wages were observed. Demand for agricultural products remained at the same level. Among indicated problems, there were only moderate difficulties in accessing sales markets.

Key findings

The impact of the pandemic on the business operations. The survey showed that the vast majority of respondents (78%) indicated that their organization continued to conduct business operations in the context of introduced preventive measures related to the pandemic.

For reference: the highest proportion of organizations that stopped business operations during the quarantine period were in Tashkent (31%) and in the Republic of Karakalpakstan (31%).

In all sectors, the share of entrepreneurs, which reported the continuation of operations in epidemic conditions, is at least 65%, the only exception being housing and food services (30%).

The most popular answer among enterprises to the question of changes in the level of demand for goods and services over the past 30 days is that the demand remained unchanged (35%), while only 24% of respondents indicated a decline in demand.

For reference: the highest rates regarding the significant decrease in demand were noted in the Namangan region (38%), the Republic of Karakalpakstan (35%), and the city of Tashkent (41%).

The largest drop in demand was observed in the housing and food services sector (47%).

Actions taken by enterprises during the spread of coronavirus infection

On the issue of changes in the organizational policy of enterprises regarding suppliers during the pandemic, a significant number of respondents (55%) did not note any changes. However, 7-8% of enterprises indicated a search for new suppliers and agreements on fewer acquisitions.

For reference: the most frequent values of the answer “has not changed” were observed in the field of transportation and storage - 68%. In the sphere of housing and food services - 16% of enterprises declared the suspension of acquisitions.

In the direction of reducing business expenses after the introduction of COVID-19 related measures, 67% of enterprises replied that there were no changes. Only 1% of respondents ceased operations and applied for subsidies from government.

For reference: the absence of any changes to the question of reduction in business expenses, quite often, was chosen by representatives of small and medium-sized businesses from the sectors of agriculture, forestry and fisheries (85%) and information and communications (80%). For the sector of housing and food services, the indicator was only 48%.

59% of the total number of respondents indicated the absence of any changes to the question of changes in the business operations regarding sales markets after the introduction of measures related to the pandemic. However, 7-8% of participants said they agreed with customers about delays in delivery times and decline in prices for goods and services.

A significant number of small and medium-sized businesses (64%) have not changed their business development plans since the beginning of the pandemic. Only 5-6% of enterprises started the development of new forms of doing business and accelerated the development of new types of goods and services.

Assessment of government business relief measures

The group of effective measures includes a significant decline (by 20-50%) in interest rates on short-term loans (up to 1 year), reduction of rents for state assets for the required period, decrease in social deductions and taxes on labor income for the required period, VAT and excise tax reductions for the required period. The list is also complemented by subsidies and grants to support businesses and lump sum payments of social assistance (5 million soums each) to employees of companies.

A package of relatively effective measures consists of credit payment and tax holidays, extension of state guarantees (all for a period of 1 year), raising import tariffs and tax breaks for employees.

Credit payment and tax holidays in the transportation and storage sector are considered to be ineffective according to the perception of some representatives.

Necessary measures to support enterprises

When asked about the measures that are most needed to support enterprises, entrepreneurs most frequently noted tax deductions (42%) and interest rate declines on loans (38%). Next options were deferral of taxes and fees (24%), and deferral of loan payments (19%). Only 6.5% of entrepreneurs stated that their companies do not need any type of support.

Respondents showed a very high level of confidence in the further development of their enterprises.

CERR Public Relations Service