Uzbekistan, central Asia’s most populous country, saw an unprecedented number of greenfield foreign investments in 2018, attracting 52 projects that mark a 477% annual increase in FDI, according to fDi Markets.

To put this in perspective, over the last eight years Uzbekistan received an average of 12 projects a year, while capital expenditure averaged $2.49bn, finds fDi Markets. However, in 2018 foreign investment hit $5.02bn – the second highest amount over the last 15 years – while attracting the largest single FDI project in Uzbekistan’s history. Canada’s SkyPower invested $1.3bn to build 1000 megawatts of solar energy generation capacity throughout the country.


Reform and return

“There’s a direct correlation between rising FDI and the comprehensive economic reforms being implemented in Uzbekistan. The country is emerging from a long period of self-isolation and is now realising its potential. Business people from the Uzbek diaspora are returning,” says Alisher Djumanov, founder and president of UZGlobal Inc, a New York-based investment management firm focused on Uzbekistan and other frontier markets. The International Monetary Fund has forecast 5.1% gross domestic product (GDP) growth for Uzbekistan this year, and 5.5% in 2020.

Also noteworthy is Uzbekistan’s recent inaugural foray into the international bond markets. Launched at the London Stock Exchange in February 2019, Uzbekistan’s sovereign bonds provide a fixed coupon rate of $500m with maturities of five years – and now 10 years due to the high level of international interest since their first announcement.     

“The order was very high and oversubscribed. We received $8.7bn [bookings] and the final sum of orders was $3.8bn [with around 150 institutional investor orders],” Uzbekistan deputy prime minister and finance minister Jamshid Kuchkarov told fDi.

Uzbekistan’s debt-to-GDP currently hovers around 20%. “We don’t need to raise money and finance budget deficit. [Therefore, we debuted] the bonds to showcase accountability from Uzbekistan’s government in front of investors and business people and to [encourage] stable prices,” says Mr Kuchkarov.


Two years have passed since the death of Uzbekistan’s long-time ruler, Islam Karimov, whose strict 27-year control over the country curtailed foreign investment. Since then, new president Shavkat Mirziyoyev has launched significant economic reforms, courting foreign investors and opening up the economy, for example, by liberalising the foreign exchange.

“The government must continue the momentum of the reforms, a lot needs to be done over many years. Investors would like to see certain sectors reformed, such as mining and energy, which are too heavily centralised. Early steps for privatisation have begun. Investors will also be watching how the government treats foreign investors,” Mr Djumanov says.

Mr Kuchkarov says the reform of state-owned companies is one of the government’s main goals for 2019. “As a first step, we’re going to deeply restructure them, introducing international standards of corporate managing, reporting, accounting and auditing. After that they will go for privatisation”, he adds.

Under Mr Karimov, investor confidence in the country was hit by several highly publicised disputes involving the nationalisation and forced takeover of various private sector assets. “The philosophy of the new leadership of Uzbekistan is completely different. This bond issue is evidence of what we’re doing to provide certain guarantees to investors,” says Mr Kuchkarov.

Range of opportunities

Other than Uzbekistan’s largest sectors, such as oil and gas and chemicals, Mr Kuchkarov hopes to see more foreign investment in tourism (hotels and infrastructure), as well as electricity generation.

“Our power plants are very old and inefficient. We are working with the Asian Development Bank, and others, in order to implement public private partnership for electricity generation. We would go for privatisation as a next step. Billions of dollars of investment are needed,” adds Mr Kuchkarov.

China and Russia were the first and third most active investors in Uzbekistan last year, in terms of project numbers, according to fDi Markets. Of the 17 other nations that undertook greenfield FDI in Uzbekistan in 2018, eight hailed from Europe while the rest flew in from central and southeast Asia, excluding the US and Israel.   

“The government really wants to diversify its economic partners around the world, hence the president’s visits to Europe and the US in 2018. So it’s a very mercantalistic approach. China and Russia have close economic, political and geographic relationships with Uzbekistan,” says Mr Djumanov.