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

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

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