By Dr.Beruniy Alimov
Investments are a crucial engine of economic growth and progress in any country. They form the foundation for developing key sectors of the economy, improving infrastructure, creating jobs, and enhancing the population’s standard of living. In the context of globalization and digital transformation, the role of investments becomes especially significant, as the stability of an economy in a volatile global environment depends on their availability and effective allocation.
For Uzbekistan, investments are particularly vital during a period of active economic reforms. The country is striving to integrate into the global economy, attract foreign investors, and develop domestic resources. Large-scale transformations are taking place across key sectors, including energy, industry, agriculture, transport infrastructure, and technology.
The inflow of investments contributes to the development of Uzbekistan’s national economy not only through direct financial inflows but also via the transfer of new technologies, expertise, and international best practices. These enable modernization of production processes, improvement in product and service quality, and enhancement of the competitiveness of Uzbek goods in the international market. Moreover, investments help address critical social challenges such as unemployment reduction, workforce skill enhancement, and human capital development.
However, attracting investments necessitates the creation of a favorable business climate. The Government of Uzbekistan is actively working to improve its legislative framework and ensure transparency and stability in legal norms, thus enhancing the country’s attractiveness to foreign investors. Significant efforts have been made to reduce administrative barriers, simplify business registration procedures, and improve overall business conditions.
Key Directions and Achievements in Uzbekistan’s Investment Policy
Uzbekistan’s investment policy has undergone significant changes in recent years, becoming a cornerstone of the country’s economic reforms. The government’s focus on global integration and national economic modernization has led to active measures aimed at creating a favorable investment climate, which has, in turn, attracted both domestic and foreign investments. Key directions include:
Liberalization of the Economy
The government has prioritized reducing administrative barriers to business and liberalizing the economy. Measures include simplifying enterprise registration, reducing tax rates, and eliminating bureaucratic obstacles. Legislative reforms have also been implemented to protect investor rights, ensure legal transparency, and promote confidence among foreign partners.
Creation of Free Economic and Industrial Zones (FEZs)
FEZs play a vital role in stimulating investment activity and accelerating industrial and regional development. These zones provide preferential tax conditions, reduced customs tariffs, and simplified business procedures. Industries such as manufacturing, agro-industry, pharmaceuticals, and light industry benefit from these incentives.
For instance, there are over 20 FEZs in Uzbekistan, including Navoi, Angren, and Jizzakh SEZs, alongside specialized zones such as Nukus Pharma. These zones offer significant tax and customs benefits depending on investment volume, with exemptions lasting from 3 to 10 years. Recent infrastructure improvements in FEZs, such as new roads and energy networks, have made them more attractive to investors. Projects involving international companies from countries such as China, Turkey, South Korea, and Germany are being implemented in these zones, further boosting industrial growth and exports.
Infrastructure Development
Transport and energy infrastructure development is a central focus of Uzbekistan’s investment policy. The government has attracted foreign and domestic investments to modernize roads, railways, airports, and communication systems. For example, Chinese companies have been involved in modernizing railways and constructing high-speed highways, while European and Asian financial institutions have provided loans and grants for infrastructure projects. Investments in energy infrastructure, such as new power plants and upgraded electricity networks, have also been prioritized to enhance reliability and environmental sustainability.
Green Economy and Sustainable Development
Uzbekistan has embraced green economy principles, implementing projects in renewable energy and environmental protection. By 2024, the country’s renewable energy capacity had surpassed 2,500 MW, with plans to reach 40% of total energy production by 2030. Hydropower projects have also contributed significantly, producing 4.1 billion kWh in the first half of 2024 alone. Key international investors include China, Saudi Arabia’s ACWA Power, and other global entities.
Support for Small and Medium-Sized Enterprises (SMEs)
The government supports SMEs by providing preferential loans, tax breaks, and simplified procedures for starting and running businesses. These efforts not only create jobs but also attract local investments, fostering regional economic development.
Significant Investment Projects (2022-2024)
Energy Sector
Energy remains a priority investment area. Key projects include:
- Solar Power Plants: Masdar (UAE) is developing several solar plants with a combined capacity of over 2,000 MW. These projects will significantly increase renewable energy’s share in Uzbekistan’s energy mix.
- Wind Farms: ACWA Power is constructing a 1,500 MW wind farm in Karakalpakstan, the largest in Central Asia, scheduled for completion in 2024.
- Talimarjan Thermal Power Plant Modernization: Foreign investors are modernizing this plant to improve capacity and efficiency, crucial for energy supply in southern regions.
Transport Infrastructure
Uzbekistan is improving its transport networks and modernizing aviation and logistics hubs. Notable projects include:
- Tashkent International Airport Modernization: In partnership with Turkish TAV Airports Holding, this project aims to enhance passenger capacity and infrastructure.
- China–Central Asia–Europe Transport Corridor: New railway tracks are being constructed as part of this corridor, reducing transportation costs and boosting transit potential.
Industrial Projects
Key developments include:
- Chemical Industry Expansion: Agreements with Russian and European firms are modernizing the production of mineral fertilizers and chemical products.
- Cement Industry Growth: New cement plants with Chinese and Turkish investments are meeting domestic construction needs and increasing export potential.
Agriculture
The agro-industrial sector has seen significant investments in modernizing greenhouses and cotton processing. For example, partnerships with South Korea and the Netherlands have increased fruit and vegetable production, while Turkish and Indian investors have enhanced textile manufacturing.
Digitalization and Innovation
The government has prioritized the digital economy, launching programs to digitize public services and develop technoparks for startups. These initiatives aim to foster innovation and attract talent in high-tech industries.
Conditions for Investment
Uzbekistan has implemented measures to create favorable investment conditions, particularly in green energy and infrastructure. From 2023 to 2024, the country’s $78.6 billion investment program has targeted various sectors. Key sources of foreign capital include China ($19.98 billion), Switzerland, and Germany, focusing primarily on renewable energy projects.
Looking ahead, Uzbekistan aims to maintain investment levels at 30% of GDP by 2030. Plans include increasing renewable energy capacity to 27 GW and expanding opportunities in IT, e-commerce, and fintech, reflecting the country’s commitment to sustainable and innovative development.
Conclusion
Uzbekistan’s ambitious investment projects span energy, transport, agriculture, and digitalization, driving economic modernization and increasing export potential. These initiatives, supported by domestic and international investments, create jobs, enhance infrastructure, and position Uzbekistan as a competitive player in the global market. Through continued reforms and a focus on sustainable development, the country is set to achieve long-term growth and prosperity.
About Author:Dr. Beruniy Alimov is a Founder and Director of the New Media Education Center, the newest media NGO in Uzbekistan.He is also a Director of the Media Research Institute at the Uzbek State World Languages University.