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Uzbekistan: Conversation with Capital Market Development Agency Director

Uzbekistan: Conversation with Capital Market Development Agency Director
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Uzbekistan's Capital Market Development Agency Director Atabek Nazirov, during his recent visit to Washington, talked to VOA's Navbahor Imamova about how he wants to build a new space for domestic capital and investment, and how the United States can support his country to succeed in its unprecedented journey. Below is the full transcript.

Uzbekistan: Conversation with Capital Market Development Agency Director
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Navbahor Imamova, VOA: Hi, we have Atabek Nazirov with us, he's the Director of the Capital Markets Development Agency of Uzbekistan. It's a brand new government entity focusing on creating something quite new for the country. Something that has never existed before...

Atabek Nazirov, CMDA: Indeed.

Navbahor Imamova, VOA: You have recently said that they have been things sort of evolving, right? And you have that but what should we imagine now when we hear about the capital markets of Uzbekistan?

Atabek Nazirov, CMDA: First, you think of the bells on the New York stock exchange before the stock market opening. And then trades start and the equities people buy and sell, it's a market... That's where people exchange the ownership of assets.

Navbahor Imamova, VOA: So, that's your vision?

Atabek Nazirov, CMDA: That's the vision. Absolutely.

Navbahor Imamova, VOA: That's exactly what you wanna see happening in Uzbekistan.

Atabek Nazirov, CMDA: I have a little sign of the Wall Street in my office too, to remind me where we wanna be aiming for.

Navbahor Imamova, VOA: So, there are various models and obviously global experience about how to build such markets and how to run them, you just told the American audience here that you think the American model is the ideal, and that's what you want to replicate. It's going to be very difficult.

Atabek Nazirov, CMDA: Absolutely.

Navbahor Imamova, VOA: What's the timeline like, what do you wanna see next here? A year after?

Atabek Nazirov, CMDA: Well, right now we're building a foundation [inaudible 00:03:48] it's important for us to make like a diagnostic, identify all key problems and do kind of screening of the current situation in the system. So I can say probably we're almost done with that process. We know the problems with the industry. We know how and where we need to fix. And the main goal is now to ensure that everybody takes a deep breath, pause and we'll start implementing these reforms and necessary changes of laws in a systematic and gradual way. Time-wise, if we can complete our strategy development program by the end of the year it will be great story and then we can start building little puzzles like, increasing the participation from local investors, introducing new financial products in the market. Working on IPUs and privatization of standard enterprises, engaging professional industry like intermediaries broker dealers in Uzbekistan. That takes time too because we need to grow talent locally. Or what we're doing in the moment importing from abroad, repatriates the coming back to Uzbekistan...that's why we're here in Washington.

Navbahor Imamova, VOA: Assuming that these people who are returning know what these things are right -

Atabek Nazirov, CMDA: Exactly. Which is why I want to bring specialists wanna bring in people that know what they're doing.

Navbahor Imamova, VOA: So, it has to be a mix of things obviously. You were also dealing with a very primitive environment when it comes to banking, when it comes to monetary systems, when it comes to even I would say the private sector. The private sector is quite opaque -

Atabek Nazirov, CMDA: Well, I wouldn't call it primitive. I wouldn't call primitive I'd call probably something... we have a different model that evolved from the Soviet past and never had a chance to restructure fully. We now facing a win of capitalism around the world as a model for economic development. Socialism is no longer.

Navbahor Imamova, VOA: You have to understand what capitalism IS though right? You have to be -

Atabek Nazirov, CMDA: It's a property rights, it's private capital, it's allowing entrepreneurship to flourish. Reducing state involvement in economic affairs. Making sure that there is clear separation between let's say the ownership of assets and regulation of the activities. And all that requires a lot of work.

Navbahor Imamova, VOA: And trust in the system, trust in the banking system for example.

Atabek Nazirov, CMDA: Well banking system is one anchor, we compete with banking system. Capital markets need to be an additional anchor for financial infrastructure, through which you can finance economic activity. So, the banking sector itself already has done a good job in Uzbekistan in terms of providing capital but it in itself unfortunately dominated by state players, large state banks. So we can use this opportunity now to bring in capital market infrastructure as an alternative sourcing of financing for companies, small businesses and large corporations.

Navbahor Imamova, VOA: When I think of capital markets and of course I'm not an expert, I think of long term investors -

Atabek Nazirov, CMDA: Absolutely.

Navbahor Imamova, VOA: I think of committed people who want to be -

Atabek Nazirov, CMDA: You're absolutely right... Sounds like you've been involved in the capital markets.

Navbahor Imamova, VOA: Whoa.

Atabek Nazirov, CMDA: You're talking like expert.

Navbahor Imamova, VOA: But we don't really see major players, I don't at least hear from the Uz bank businessmen that they understand or they are interested in getting into that market. Who are the players now that you want to engage investors domestic investors obviously? But then also there are several state players right who want to be in this.

Atabek Nazirov, CMDA: Look, I would probably disagree with you a little bit when it comes to lack of interest from local investors. There are sophisticated entrepreneurs in Uzbekistan who understand how capital markets should be functioning -

Navbahor Imamova, VOA: But do they want to invest in Uzbekistan?

Atabek Nazirov, CMDA: Absolutely! Where else would they invest? You know the people of Uzbekistan very linked to their home country okay. Yes they might have an interest in repatriating or taking capital of the country related to trust which you mentioned before, but the government is doing massive job now trying to bring trust back into the government and it will take a lot of effort. It will start working when there will be cases and tested cases of dispute, resolution, going in favor of justice, going in favor of protection of interests. And we as a regulator our main job is to protect investor rights. So we have daily cases often investor complaints that coming our way and we try to find justice and enforce the resolutions in favor of those whose rights have been let's say... diminished. Again raising the credibility of the regulator is important to show the investor community that there is kinda independent watchdog looking after the rights and they can use the legal system legal infrastructure in Uzbekistan, to utilize the investor protection right.

Navbahor Imamova, VOA: And you were in conversation with them and they like what you're doing?

Atabek Nazirov, CMDA: Well, I don't know if they like what we're doing but we -

Navbahor Imamova, VOA: They're talking to you -

Atabek Nazirov, CMDA: I mean helped just for information over the course of first three months of our job to kind of reclaim almost 100 billion soms for the minority investors. Dividends that they've been trying to get, you know nobody was there to collect those dividends. So we at our new capacity as a market watchdog have the authority to go after these companies and have the minority interest to take the dividends. This one of the small examples and on top of that we will also regulate our intermediaries and the broker dealers. So we need to create conditions for them to draw and bring in capital to the market which means facilitating investments and allowing private companies to issue securities like bonds, equities and allow for wider ownership of companies.

But again, the mentality shift needs to happen and I'm afraid it might take five six or more years until we raise the new generation of the investment community, entrepreneurs community, who will understand the concept of the corporate governance, being fair with your partners, doing proper disclosure of your accounts. But as a regulator our job is to kind of enforce everything through laws. So for example one thing that happened in March is that we ensured that independent work members are elected for listed companies. Yeah that's one. Second... that was introduced that minority shareholder have the first right of refusal on new capital injection, that's also a very important point. What we'll also try to induce now is the dividend collection, to use our centralized depository system for dividends to be paid through that system. Right now what needs to happen each shareholder needs to have his record updated with his banking account information on records of the company before they receive the dividends. But with people constantly moving and changing information that's difficult to maintain.

So these are kinda small things that we need to collectively review and introduce in law amendments.

Navbahor Imamova, VOA: And it's a learning experience for everyone right? It's a journey taken together. We know that you started this trip with New York. You were at the Columbia University. And then you came to Washington, you met with the Wall bank and then the-

Atabek Nazirov, CMDA: IMF.

Navbahor Imamova, VOA: The IMF and then the -

Atabek Nazirov, CMDA: Treasury.

Navbahor Imamova, VOA: Yeah the department of the treasury, and then with the security exchange. So department of state you have been holding talks with the business sector, with the academic sector and also the officials here in Washington. How can the US help? How can Columbia University help for example? What are you asking them?

Atabek Nazirov, CMDA: With Columbia University, we have a mutual interest in engagement. Columbia's scholars constantly looking for new markets where they can conduct research, where they can conduct studies in seeing how transformation taking place. There aren't to many countries around the world this moment that going through similar transition that Uzbekistan is in parallel. I'm serious you know, look around the world there aren't to many. So Columbia University clearly interested in becoming a part of this maybe with research exercise. In term what we're asking them for our benefit is ability to help us introduce kind of more developed programs on continued education in finance, because Columbia University located in New York City, they're very close to the financial hub. And a lot of expertise in financial markets start at Columbia University, okay. So this why we're very excited to partner -

Navbahor Imamova, VOA: So it's a great academic asset for you.

Atabek Nazirov, CMDA: It's the best academic institution we could've dreamed for in terms of building cooperation. So let's just start at an engagement we're doing with a school ... and they are excited to come to Tashkent and start with seminars and training programs for all government officials, for our employees and learning more about public finance management for example, accountability, the budgeting exercises things like that. Even in corporate government procedures, so I'm hoping to utilize Columbia's expertise and bring that to Uzbekistan through these training programs initially. Our mid-term goal is to see if we can get Columbia interested to opening up the center in Tashkent. There isn't one in existence in Central Asia but give -

Navbahor Imamova, VOA: So it would be a research center?

Atabek Nazirov, CMDA: It'll be research center and also maybe an academic center.

Navbahor Imamova, VOA: Campus.

Atabek Nazirov, CMDA: Like campus or a small center for one of the schools for example. And obviously my long term dream is to have a full fledged campus of Columbia University in Uzbekistan, but fingers crossed it'll take time.

Navbahor Imamova, VOA: And the government. Obviously technical assistance right?

Atabek Nazirov, CMDA: Not just that. US government is always interested in building right partnerships in order to kind of share the experience and facilitating sustainable economic growth around the globe. And to ensure inclusive economic growth because there are a lot of problems that we are facing as a global economy at the moment, with the environment problems, ruler rights, the inclusions of the youth, unemployment, these are massive problems. And I think United States government given it's the biggest economy in the world, they probably are one of the most efficient economies in the world right? The patents that they produce every year and the government of this country is well positioned to try to export this knowledge around the world. And every government agents that we've been meeting have been so anxious to share the experience with us for the mutual benefit, right?

If we can import to Uzbekistan the best kind of proven international experience in how we manage capital market, how we manage state SOEs, how we allow for more inclusive economic growth, it's very important you know? We have problems with employment in our... unemployment is very high. We have close to 500 thousand children graduating from high school every year unable to obtain high education. So they're out there in the labor force trying to make it find a way to make a living right? And we can, through capital market we can find a way to tackle some of these problems by investing let's say in awareness of public finance, private finance principles and then increasing financial literacy. Helping children how to let's say write a business plan. What does it take to open up a company. How can they open up a bank account. Instead of them having a mentality of an employee we want to build a mentality of the entrepreneur in these children.

All government needs to do is create an environment for businesses and for activities to draw. We don't need to be investing in factories and trying to build jobs, it's not government's job. Government's job is to reduce the involvement, not to interfere, be fair, justice system for these people and... but I will take lot of investments -

Navbahor Imamova, VOA: Create conditions.

Atabek Nazirov, CMDA: US government is very excited about these prospects and they've been very supportive in our initiatives, we're discussing various ways.The problem I have is the process and capacities of all these initiatives. There's so much everybody wanna do but we don't have enough people don't have enough talent to be involved in all these processes simultaneously. So we need to prioritize.

Navbahor Imamova, VOA: And we see the US side also adjusting to that. Like they feel like they can push, they are going to work with the kind of with the level that you have -

Atabek Nazirov, CMDA: Right. But I'll tell you look. I don't have that problem. I think the problem I have now is that I feel like our partners is slower than we are. We [inaudible 00:17:22] more and my team and the agencies they're young they're anxious they have huge interests and we need to find a way how do we increase our capacity to deal with all these reform programs and plans.

Navbahor Imamova, VOA: How many people do you have working for you now?

Atabek Nazirov, CMDA: We have about 100 people in the agency across the country. We have 13 offices in every major city representing us. But 50 people in the head office and most of them are young. Most of these people never had any experience working for a regulator, let alone a regulator in Uzbekistan. But we bring people out from private sector, determined to work determined to learn. So we sit with every single one of them, draft the job description together and off they go.

Navbahor Imamova, VOA: As I said, exciting journey...

Atabek Nazirov, CMDA: It is an exciting journey.

Navbahor Imamova, VOA: Thank you so much for talking to us.

Atabek Nazirov, CMDA: You're very welcome, Navbahor. Thanks for having me.

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    Navbahor Imamova

    Navbahor Imamova - "Amerika Ovozi" teleradiosining yetakchi multimedia jurnalisti. "Amerika Manzaralari" turkumidagi teledasturlar muallifi. Ko'rsatuvlar taqdim etish bilan birga prodyuser, muxbir va muharrir. O'zbekistonda akkreditatsiyadan o'tgan yagona amerikalik jurnalist. "Amerika Ovozi"da 2002-yildan beri ishlaydi. Jurnalistik faoliyatini 1996-yilda O'zbekiston radiosining "Xalqaro hayot" redaksiyasida boshlagan. Jahon Tillar Universiteti Xalqaro jurnalistika fakultetida dars bergan. Ommaviy axborot vositalari bo'yicha bakalavrlikni Hindistonning Maysur Universitetidan (University of Mysore), magistrlikni esa AQShning Bol Davlat Universitetidan (Ball State University) olgan. Shuningdek, Garvard Universitetidan (Harvard University) davlat boshqaruvi va liderlik bo'yicha magistrlik diplomiga ega. Jurnalistik va ilmiy materiallari qator xalqaro manbalarda chop etilgan. Amerikaning nufuzli universitetlari va tahlil markazlarida so'zlab, ma'ruzalar o'qib keladi. "Amerika Ovozi" oltin medali sohibi. Tashkilotda gender va jurnalistika bo'yicha kengash raisi. Toshkent viloyati Bo'stonliq tumani Qo'shqo'rg'on qishlog'ida ziyoli oilasida ulg'aygan.

    Navbahor Imamova is a prominent Uzbek journalist at the Voice of America. As anchor, reporter, multimedia editor and producer, she has covered Central Asia and the U.S. for more than 20 years on TV, radio and online. Since 2018, she has also been reporting from inside Uzbekistan as the first-ever U.S.-based accredited correspondent in the country. During 2016-2017, she was a prestigious Edward S. Mason Fellow in public policy and management, while earning her Mid-Career Master in Public Administration at Harvard University’s John F. Kennedy School of Government. Navbahor played a pivotal role in the launch of Uzbek television programming at VOA in 2003, and has since presented more than 1000 editions of the flagship weekly show, “Amerika Manzaralari” (Exploring America), which covers American foreign policy focusing on Washington’s relations with Central Asia, as well as life and politics in the U.S. She speaks frequently on regional issues in Central Asia, as well as Uzbek politics and society, for policy, academic, and popular audiences. Her analytical pieces have been published in leading academic and news outlets including Foreign Policy, The National Interest, and the Atlantic. Navbahor also is the founding President of the VOA Women’s Caucus. She began her career at Uzbekistan’s state broadcasting company in Tashkent. She holds a Bachelor of Arts in journalism and mass communication from the University of Mysore, India and a Master of Arts in journalism from Ball State University, Indiana.

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