APPENDIX I: The Evolution of the Privatization Process in Uzbekistan
Before independence, virtually all economic sectors were owned by the state and managed by branch ministries. Only agriculture had a different set-up, with a large part of the sector being organized as collectives. As an initial step in the reorganization of this structure, branch ministries were abolished and replaced by holding companies, associations, and national corporations. For example, the Ministry of Light Industry was transformed into Uzbeklegprom association, the Ministry of Trade into Uzbeksavdo association, and the Ministry of Oil and Gas into Uzbekneftegas national corporation. Although these entities were separated from the existing ministries and agencies, and in some cases legally established as voluntary amalgamations of enterprises, in many respects they continued to behave like branch ministries in relation to the individual member enterprises. However, a few sectors, including communications, electricity, and communal services (natural gas supply) have remained directly managed by ministries.
Steady progress has been made since the privatization process was initiated in late 1992. The first step in privatization has been to establish enterprises as financially and managerially autonomous entities, a process referred to as denationalization. Denationalization has been implemented through different means, including outright sale of enterprises to the general public and the creation of new legal entities, i.e., joint-stock companies, collective companies, and leased enterprises. Many enterprises were initially set up as closed joint-stock companies (i.e., the shares were reserved for the state, management or employees). The next step in the privatization process has been the conversion of such companies into open joint-stock companies, followed by the sale of stocks owned by the state to the general public. To facilitate this process, a stock market has been established. Another avenue for privatization has been the withdrawal of economic units from the established legal entities.