Why Invest In Uzbekistan?

State-owned enterprises still dominate its industrial and financial sectors, and foreign trade centres on commodities. The declared goal of its current economic policy is to achieve sustainable growth and overcome underemployment and poverty as soon as possible. Fast growing external public debt limits the availability of public funds and loans to support economic growth, so attraction of private and foreign investment (FDI) has become a vital priority. Five years ago, the Government of Uzbekistan (GOU) launched a program of radical market reforms, with a focus on improving the business environment. Notable progress has been made so far in addressing a rage of systemic business regulation problems and overcoming the dominance of state monopolies, but more is yet to be done to completely unlock all benefits of FDI for the economy. a dynamic and entrepreneurial population, the largest in Central Asia; relatively good infrastructure; and a large potential consumer market. In the past, most FDI was directed into the oil, gas, and mining sectors. In recent years, however, there has been a trend towards increasing FDI in manufacturing, production and distribution of electricity, tourism, and banking. Such diversification was facilitated by positive changes in state regulation and the beginning of a privatization program. Further advancing privatization, as well as implementation of a longexpected capital market development policy, may create unique investment opportunities. Over the past five years, the GOU has made efforts to improve the investment attractiveness of the country.
The GOU has modernized its legislation through the adoption of the Law on Investments and Investment Activities and other acts that streamlined interactions of investors with the state, reduced the tax load, liberalized access to certain commodities, and started the privatization of major state-owned enterprises. As a result, the inflow of FDI has grown from about $2 billion in 2017 to over $8 billion in 2021. Notable progress has been made in development of renewable energy capacity. Uzbekistan already attracted FDI to develop nearly 4,000 MW of solar and wind capacity and plans to build another 4,000 MW in generation capacity by 2026, which will increase the share of renewables to 25 percent and displace 3 billion cubic meters of natural gas usage annually. The GOU’s current environmental policy goal is to achieve a 35 percent reduction of greenhouse gas emissions per unit of GDP from 2010 levels by 2030. At the same time, the GOU still attempts to channel foreign investments into predetermined import-substituting or export-oriented projects. In some cases, transparency is sacrificed for the urgency of investment. Pandemic-related challenges and the subsequent disruption of global of supply chains have slowed the progress of liberalization reforms because the GOU expanded the use of direct administrative control methods. Another restraining factor is the lack of experience among middle and lower-level government officials in working transparently and properly enforcing legislation that protects the rights of entrepreneurs.