Uzbekistan: Investing

FDI in Figures

Reforms in Uzbekistan during recent years, such as liberalizing the foreign currency market and establishing seven special economic zones with tax breaks for investors, have made the country a more appealing destination for international capital. According to UNCTAD's World Investment Report 2024, FDI inflows decreased from USD 2.49 billion in 2022 to USD 2.18 billion in 2023 (-12.5%), but were still higher than the 2019-21 average (and up by 86% compared to 2016). At the end of the same period, the total stock of FDI was estimated at USD 14.8 billion, around 16.3% of the country’s GDP. In 2023, Uzbekistan’s economy absorbed over USD 30 billion in investment, with 13% coming from public sources and 87% from private or corporate sectors. This included USD 7.2 billion in FDI, led by China (25.6%), Russia (13.4%), Saudi Arabia (7.9%), Turkey (6.4%), the UAE (5.8%), and Germany (4.3% - data U.S. State Department). According to the Central Bank, foreign direct investment in Uzbekistan reached USD 11.9 billion in 2024. Investments in fixed capital rose by 27.6%, driven mainly by a 32.8% increase in non-centralised investments, whose share in total investment grew by 3 percentage points to over 90%. The main countries investing in Uzbekistan are China (more than 65% of the total stock), South Korea, Russia, Kazakhstan, and Turkey (data from U.S. Department of State), with the energy, metallurgy, and chemical industry being the primary sectors (data Ministry of Investment). Key FDI projects in recent years include the USD 2.4 billion, 1.5 GW Karakalpakstan wind project by Saudi Arabia’s ACWA Power—one of the world’s largest. While most FDI remains focused on energy and oil and gas, the government is expanding into new sectors. In September 2023, China’s BYD partnered with UzAuto Motors to produce electric vehicles, with the factory opening in July 2024. Uzbekistan has also become the top recipient of EBRD lending in Central Asia since 2020, further enhancing its appeal. The underbanked financial sector is attracting investment as digital banking and e-commerce gain traction.

Uzbekistan, situated in the heart of Central Asia, is an emerging lower-middle-income economy undergoing a significant transformation. Since the launch of an unprecedented reform program in 2017, the country has shifted from an isolated and highly centralized economy to one that is more welcoming to private investors and resilient against external factors. Investors are attracted by abundant raw materials and labour resources, direct access to markets across Central Asia, and various incentives and preferences, including state subsidies in some cases. Despite improvements in the legal framework, success in business still depends on support from the government due to weak contract enforcement and dispute resolution mechanisms. Uzbekistan's legislation, such as the Law on Investments and Investment Activities, ensures the free transfer of funds out of the country and protects investments from nationalization. Discrimination against foreign investors based on nationality, residence, or origin is prohibited by law. However, the government maintains control over capital flows in key industries, promoting investments in preapproved projects, particularly those focused on exports. The National Investment Program for 2023-2025, outlined in Presidential Resolution 459 of December 28, 2022, encompasses 768 projects valued at USD 55.4 billion. The Ministry of Investment, Industry, and Trade oversee the registration of investment projects, while the Investments Promotion Agency offers foreign investors consulting services, information and analysis, assistance with business registration, and other legal support. In 2022, the Government of Uzbekistan persisted in its efforts to diminish government intervention in the economy by privatizing state-owned enterprises and assets across various sectors including chemical, transportation, construction, and banking. Throughout the year, monopolies held by state-owned enterprises in the air transportation and chemical industries were effectively dismantled. Overall, Uzbekistan ranks 83rd among the 133 economies on the Global Innovation Index 2024 and 100th out of 184 countries on the latest Index of Economic Freedom.

What to consider if you invest in Uzbekistan

Strong Points

Uzbekistan's key assets attracting FDI include:

- abundant and diversified natural resources (gas, gold, cotton, hydropower potential);
- low level of debt and comfortable foreign exchange reserves;
- ambitious public investment program;
- important size of the domestic market (population of 32 million)
- strategic position between China and Europe ("New Silk Road").

Weak Points

The major obstacles to FDI in Uzbekistan are :

- low economic diversification and dependence on commodity prices;
- low competitiveness;
- underdeveloped banking sector;
- state interventionism and difficult general business climate;
- autocratic regime.

Government Measures to Motivate or Restrict FDI

To improve the business environment, the Governement of Uzbekistan introduced in 2017 a number of legislative changes, including the cancellation of unscheduled, and seemingly arbitrary or punitive, inspections of businesses as of January 1, 2017; elimination of the requirement to convert certain percentages of hard currency export earnings at the official (artificially low) exchange rate; simplification of business registration procedures; creation of a Business Ombudsman office; and a Law on Countering Corruption that attempts to increase transparency in Government of Uzbekistan functions.

By law, foreign investors are welcome in all sectors of the Uzbek economy and the government cannot discriminate against foreign investors based on nationality, place of residence, or country of origin. However, government control of key industries has discriminatory effects on foreign investors. For example, the Governement of Uzbekistan retains strong control over all economic processes and maintains controlling shares of key industries, including energy, telecommunications, airlines, and mining. The government still regulates investment and capital flows in the raw cotton market and controls all silk sold in the country, dampening foreign investment in the textile and rug-weaving industries. Partial state ownership and government influence are common in many key sectors of the economy.

The state still reserves the right to export some commodities, such as nonferrous metals and minerals. In theory, private enterprises may freely establish, acquire, and dispose of equity interests in private businesses, but in practice, this is difficult to do because Uzbekistan’s securities markets are still underdeveloped.

Investment programmes were launched in order to encourage big investments in the priority sectors. Programmes include 86 foreign direct investment projects totaling 1.8 billion dollars, of which more than half is for the energy sector.

To encourage foreign investment, the Government provides tax incentives to joint stock companies for which foreign investment participation accounts for at least 15% of the authorised capital.

Bilateral Investment Conventions Signed By Uzbekistan

The bilateral treaties on investment signed by Uzbekistan may be found on the Investment policy hub website.

Procedures Relative to Foreign Investment

Freedom of Establishment

The freedom of establishment is, in principle, guaranteed, but there are many exceptions.

Private capital is not allowed in some industries and enterprises. The Law on Denationalization and Privatization (adopted in 1991, last amended in 2017) lists state assets that cannot be privatized, including land with mineral and water resources, the air basin, flora and fauna, cultural heritage sites, state budget funds, foreign and gold reserves, state trust funds, the Central Bank, enterprises that facilitate monetary circulation, military and security-related assets and enterprises, firearms and ammunition producers, nuclear research and development enterprises, some specialized producers of drugs and toxic chemicals, emergency response entities, civil protection and mobilization facilities, public roads, and cemeteries.

There are several other official limits on foreign investment. Foreign ownership and control are prohibited for airlines, railways, power generation, long-distance telecommunication networks, and other sectors deemed related to national security. Foreign nationals cannot obtain a license or tax permission for individual entrepreneurship in Uzbekistan.

Acquisition of Holdings

A foreign majority holding interest in the capital of a local company is legal.

Obligation to Declare

Businesses need to be register at the One-Window center of the Ministry of Justice to obtain a Certificate of State Registration. To learn more about the registration process of a new company, please consult the World Bank Report on Uzbekistan.

Competent Organisation For the Declaration

Ministry of Justice website

Requests For Specific Authorisations

The government closely scrutinizes all foreign investment, with special emphasis on sectors of the economy that it considers strategic, such as mining, cotton processing, oil and gas refining, and transportation. There is no standard and transparent screening mechanism, and some elements of the legal framework are designed to protect domestic industries and limit competition from abroad. The government also uses licensing as a tool to control enterprises in several important sectors such as energy, telecommunications, wholesale trade businesses and tourism.

Investment Opportunities

Investment Aid Agency

Authority for foreign investment Uzbekistan
PWC guide to investment in Uzbekistan 2016

Tenders, Projects and Public Procurement

Tenders Info, Tenders in Uzbekistan
Globaltenders, Tenders & Projects from Uzbekistan
Asian Development Bank, Proposed Projects in Asia
DgMarket, Tenders Worldwide

Other Useful Resources

The Chamber of Commerce and Industry of Uzbekistan

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