President Islam Karimov has signed a law that promises to do something new in Uzbekistan: “On the defense of private property and guarantee of the rights of owners.”
“Every entrepreneur should know that he can without fear invest in his own business, expand production activities, increase production and generate income [...] keeping in mind that the government is guarding the legal rights of the property owner,” Karimov said two years ago when proposing the law.
The new law, signed on September 24, even has a special section on the rights of foreign businesses in Uzbekistan.
Try telling that to Russian mobile giant MTS.
In June, Uzbek authorities began investigating senior officials at MTS for tax evasion and money laundering. Within two months, the company’s entire Uzbekistan operation was seized, 9.5 million users were left without service, and the company was forced to write off $1 billion. MTS denies wrongdoing and observers believe the company was simply plundered by well-connected Tashkent elites.
Could the timing of the new law have anything to do with the seizure -- a “we’re sorry, we won’t do it again,” wink and a nod to foreign investors? Or is someone in Tashkent just having fun? Because takeovers of private businesses are nothing new in Uzbekistan and aren't doing anything for the country’s standing with foreign investors. This year, the World Bank ranked Uzbekistan 166 out of 183 in terms of “ease of doing business” – two spots down from 2011.
In conjunction with the announcement of the new law (and maybe to rub salt in MTS’ wounds), the news outlet that announced the law on September 25 also cheered the beginning of “Information-Communication Technologies Week,” a conference to discuss the potential of telecoms. The conference organizers say they welcomes foreign companies to attend. But if they’ve learned anything from the MTS debacle, those foreign companies won’t plan on staying.