In the framework of the second Tashkent International Investment Forum (TIIF-2023), held in the capital on 27-28 April this year, the Director of the State Assets Management Agency Akmalkhon Ortikov participated in the panel session on "Transformation of corporate governance in state-owned enterprises, "quick steps" for development". Full text and abstracts of the speech:

Speech by A.J. Ortikov, Director of the State Assets Agency at Tashkent International Investment Forum

I. Introductory part:

Good afternoon, dear participants and guests of the Forum!

In recent years, under the leadership of our Head of State we have been implementing the accelerated reforms aimed at the development of our economy!

An integral part of these systemic reforms has been the transition of enterprises with state participation to full-fledged market mechanisms, the introduction of modern methods of corporate governance, and a sharp reduction of their number in the sectors where private enterprise is developing.

II. On the reform of state-owned enterprises:

In order to ensure efficiency and transparency in the operations of state-owned enterprises, the following systemic reforms have been implemented:

The term of office of members of the supervisory board and the executive body was extended by three years.

For the first time, the practice of recruiting candidates for state-owned shareholding members of the supervisory boards of enterprises with state participation was introduced on a competitive basis, in accordance with competitive principles!

For the first time, on 20 April this year, UzSAMA announced a tender to attract 306 candidates for membership of supervisory boards of 61 state-owned companies, such as Trest-12 JSC, Kishlok Kurilish Invest Ltd. and Uzogirsanoatloiha JSC.

At the same time, from now on, the appointment (election) of the head of an enterprise with state participation and its deputies will be carried out on a competitive basis.

The decision has been made to include at least one independent member on the supervisory board of an enterprise due to the reduction in the number of state-owned employees. To date, there are 87 independent members in 57 enterprises, such as the Navoi Mining and Metallurgical Plant JSC, the Uzbekiston Aeroportlari JSC and the Navoiuran State Enterprise;

The special right of the state, i.e. the Golden Share, to participate in the activities of the enterprise was abolished;

UzSAMA for the first time in 2022 introduced the practice of publishing the analysis of annual financial reports of enterprises with state participation on the official pages of UzSAMA.

Thus, according to results of analysis of financial reports for the end of 2021 among 1770 enterprises with state participation, a list of 20 enterprises with the highest profit was formed, such as Navoi Mining and Metallurgical Plant JSC, JSC Almalyk mining and smelting plant and JSC Uzbekneftegaz, 10 enterprises with the most dividends paid, and 20 enterprises with the most losses, such as JSC Uztransgaz, JSC Uzbekiston Milliy Elektr tarmoklari and JSC Toshissikkuvvati.

From now on, this report will be formed on a permanent basis and will be published annually by 1 August on the official website of UzSAMA.

For the first time in the history of independent Uzbekistan, the Law on State Property Management has been adopted and the following has been put into practice:

• The functions of ownership and regulation are separated;
• State property is divided into republican and municipal property;
• Equal conditions for public and private enterprises have been created, and no additional privileges or preferences have been granted to state-owned enterprises;
• Establishment of enterprises with state participation is restricted and they are created if they meet the ownership criteria of state property;
• UzSAMA implements a unified state policy in the management of state assets;
• UzSAMA reports at least once a year to the President of the Republic of Uzbekistan and the Cabinet of Ministers and the Chambers of the Oliy Majlis of the Republic of Uzbekistan on the effectiveness of state property management;
• The list of enterprises to be sold under the state property criteria is approved annually by 1 October;

III. On reducing State participation in the economy:

The Head of State address to the Oliy Majlis and the people of Uzbekistan on 29 December 2020 and stressed the need to reduce State participation in the economy.

In order to achieve this goal, much has been done in the last two years in our country in this area. In particular, during the last ten years (2010-19), proceeds from sales of state assets made up 1.2 trillion soums and in 2022 the volume of privatization reached 11.3 trillion soums. In other words, 10 times more results were achieved in the last year than in ten years.

As a result of these efforts, the number of enterprises with state participation has decreased by 40 percent by privatizing over 500 enterprises with state participation, as well as by reorganizing and liquidating some 600 enterprises.

The Head of the country addressed to the Oliy Majlis and the people of Uzbekistan of 20 December 2022:

• emphasised the need to make full and effective use of privatisation and public-private partnership opportunities in attracting active investment;
• the sale of about 1,000 enterprises as part of the next big privatization;
• the emergence of hundreds of thousands of owners and shareholders among our compatriots, as well as the organization of a people's IPO to invest their savings and achieve high profits.

Accordingly, more than 30,000 state-owned enterprises and state institutions were accounted for, and a new large-scale privatization program was created according to the "sell or explain" principle.

According to it, a privatisation programme "1000 + 1000 + 40" was developed. It includes the sale of shares in 1,000 enterprises, 1,000 real estate objects, and the placement of shares in 40 strategically important enterprises on the IPO.

The fact that this programme covers all sectors of the economy testifies to the strong political will of the state to continue systematic privatisation processes and is irreversible.

Appropriate work has begun on the privatisation of large state enterprises; for example, the International Finance Corporation, Rothschild & Co., Deloitte and KPMG have been engaged as a strategic consultant to develop a privatisation strategy for enterprises such as JSC Uzbekneftegaz, JSC TPP and JSC Navoiazot.

The requirement for foreign nationals to obtain a residence permit in Uzbekistan in order to invest in real estate (other than land) has been abolished;

The orientation of these privatisation processes towards the interests of the people will lead to a new phase of reforms.

In particular, within the framework of the "people's IPO" on the principle of "one share - one lot" will be put up for open and transparent auction for our citizens an average 2 per cent of blocks of shares of 40 largest companies in our country.

In order to create opportunities for all segments of the population to participate in the "people's IPO", the current capabilities of the E-auksion electronic trading platform, which has become popular among citizens and user-friendly, will be used.

The "E-auksion" trading platform acts as a public "bridge" between our citizens and the stock market. At the same time, it creates the opportunity to:

• Identification of applicants 24/7 through the platform (EDS, One ID and Mobile-ID);
• opening of a securities account;
• choosing a professional broker and concluding an agreement with him;
• involvement of professional stock market participants and the Central Securities Depository, as well as international consultants.

Applicants' rights when purchasing shares on the platform are guaranteed through the Escrow system.

Payments and settlements are made through the platform's billing system without the involvement of the human factor.

The E-auksion trading platform is expected to be a positive change in the development of the stock market by leveraging its current capabilities, popularity and infrastructure.

New resources that are in high demand are being introduced to the country's stock market through the people's IRO.

Also, in line with other privatization programmes, the public offering of a part of shares of over 20 entreprises, such as Uzbekistan Metallurgy Combine JSC, Uzbekistan Havo Yullari JSC and Microcreditbank JSC, will be held through initial public offering (IPO) and (or) through secondary public offering (SPO) of their shares at Tashkent Stock Exchange.

At the same time, an opportunity has been created for customers who are residents or non-residents of the Republic of Uzbekistan to remotely open securities accounts without their personal involvement.

IV. Concluding part:

We take this opportunity to urge all investors and active entrepreneurs not to miss convenient and profitable investment opportunities of these privatisation reforms.

As the Head of our state in his Address to the Oliy Majlis and the people of Uzbekistan from 20 December 2022 said, "If the people will be rich, then the state will be rich and powerful", so we urge all our compatriots to actively participate in the "people's IPO" and receive an additional source of high income, investing their savings!

Thank you for your attention!