Uzbekistan: Economic developments

Aug 15, 2019

Discover the recent liberalisation and development of this historically important country. In a significant move towards a new, more open Economy, the country is implementing ambitious market-oriented economic reforms, trade liberalisation and significant tax changes, which combined is making Uzbekistan an incredibly interesting investment opportunity.

With a renewed commitment to the World Trade Organisation (WTO) and improving economic statistics, Uzbekistan’s progress has been impressive and are at a time which allows the country to benefit from lessons learned by other transition economies.

Recent Political & Economic Reform Highlights

September 2017: Currency liberalisation

In September 2017 the currency was liberalised, devaluing 48% against the dollar overnight as full convertibility was introduced

2017-2019: Normalising relations

Mirziyoyev has made 33 international trips since coming to power, seeking to normalise relations with all the country’s neighbours and re-engaging with the international community

2017-2019: Improving ease of doing business

The country has improved from 164 to 76th in the World Bank’s Ease of Doing Business rankings, and was ranked in the top 10 global improvers in the 2018 report; the president has set the target of reaching the top 20 by 2022

April 2018: Encouraging trade

Uzbekistan has harmonised its tariffs with the Eurasian Economic Union (EAEU), and has simplified the registration process for the import and export of goods

May 2018: International Soum

The IFC issued its inaugural local currency denominated bond – the first ever Uzbek Soum-denominated transaction issued in the international markets – raising UZS 160bn (US$20mn) in two tranches

December 2018: Inaugural credit rating

S&P and Moody’s issued BB– and B1 credit ratings respectivelywith a stable outlook for Uzbekistan in December 2018

January 2019: Visa simplification

As of January 2019, visa free travel has been extended to a further 45 countries, including the UK, many European countries, Australia, and Canada, while the country has introduced a simplified e-visa system for other visitors

January 2019: Land ownership

Private land ownership introduced, for all property other than agricultural land

February 2019: Debt bond offering

Uzbekistan issued its inaugural Eurobond raising $1 billion, with 5-year paper priced with a 4.75% yield and 10-year 5.375%, and more than 4x over subscribed

March 2019: Removal of capital controls

It is now possible to fully repatriate capital gains from investments in Uzbekistan

International Investors Return

Since the reforms began in 2017, a large number of international brands have either returned to or entered the Uzbek market for the first time. KPMG opened an office in Tashkent in April 2018 after almost 10 years outside the country. Global food brands, including KFC, Wendy’s and Baskin Robbins, as well as regional ones such as Russian Shokoladnitsa and Turkish Black Star Burger, opened their first stores in the capital. Major regional banks Halyk Bank (via its subsidiary Tenge Bank) and TBC established an initial presence in the country, while Yandex has launched its ecosystem of products and services, including Yandex Taxi and Yandex Money. Other brands such as Toyota, LC Waikiki and Ritz-Carlton have also entered the market.

In 2017 the EBRD reopened its office in Tashkent and approved its first financing in the country since 2007; a $10 million loan to an agribusiness near Samarkand

The World Bank committed nearly US$1.44bn to Uzbekistan in 2018, up from US$450 million in 2017

The ADB has committed to lending about $3.2 billion during 2019-2021 to support Uzbekistan’s development priorities

Lukoil recently commissioned its new gas processing plant at its Kandym gas field in Uzbekistan, which has annual capacity of eight billion cubic metres of gas

In September 2018 Turkish bottler Coca-Cola Icecek held discussions with the Uzbek government to explore a potential investment in Coca-Cola Ichimligi Uzbekistan, 57% of which is owned by the government

British Petroleum (BP), together with Uzbekneftegaz, is exploring promising hydrocarbon fields in Ustyurt plateau, and is reportedly interested in exploring other fields in Uzbekista

In April 2019 Georgian TBC Bank acquired a 51% stake in a leading local payment platform Payme for US$ 5.5m, as part of its planned expansion in Uzbekistan