Overview of best prospect sectors, major infrastructure projects, significant government procurements and business opportunities
The growing public and private investments resulting from the government’s export oriented and import substituting industrialization agenda may create more opportunities for U.S. businesses. Increasing prospects may be found in the following areas:
The government plans to transition the banking industry from public to private capital, with a target of expanding the share of private sector to 60% by 2026. The income tax rate for banks will be lowered from the current 20% to 15% starting from 2023. State-owned banks are in the process of modernizing their client service systems, transitioning to international financial reporting standards, and improving corporate governance to increase their attractiveness to foreign investors. The finance minister announced that three large state-owned banks would be privatized in 2022. In September 2021 OTP Bank (Hungary) signed a non-binding Memorandum of Agreement on the potential acquisition of the majority stake of Ipoteka Bank, Uzbekistan’s 5th largest bank, with the Ministry of Finance of Uzbekistan, but decided not to proceed with the acquisition after the Russian invasion of Ukraine affected its business. The President’s decree of March 2022 set the following schedule for full or partial privatization of large state banks:
IPO of QishloqQurilish Bank (7th largest bank) - before October 2022
Auctioning of the state shares of UzSanoatQurilish bank (Construction Industrial Bank of Uzbekistan - 2nd largest bank) and Asaka bank (3rd largest bank) with the involvement of International Finance Corporation, European Bank for Reconstruction and Development, and Asian Development Bank - by the end of 2022
Organization of work on IPO of Halk bank (6th largest bank), Microcredit bank (8th largest bank), Aloqa bank (9th largest bank), Agro bank (4th largest bank) and National Bank of Uzbekistan for Foreign Economic Relations (the largest bank) - before July 2023
Privatization of state-owned enterprises:
IPO of at least 49% of Uzbekneftegaz JSC (state oil and gas company) – by the end of 2022
IPO of 51% or more of Thermal Power Plants JSC – by the end of 2022
IPO of 51% or more of Uzbekistan Airways JSC – by September 1, 2022
IPO of 10% of UzAutoMotors JSC and preparing a strategy for the sale of the rest 90% of the company, UzAutoMotors Powertrain JSC and Samarkand Automobile Plant LLC to strategic investors – by August 1, 2022
Privatization of Universal Mobile Systems LLC – by April 1, 2023
The government intends to increase the number of students attending university (particularly in technical fields) to 50% of all high school graduates by 2030 and plans to build 30 new universities to accommodate them. The government wants to attract foreign universities interested in establishing branches in Uzbekistan or creating dual degree programs with local universities.
Developing tourism is among the major priorities of the Government and the number of foreign tourists was rapidly increasing until the pandemic. Tourist visits fell by more than 77% in 2020, slightly rebounding by 25% to 1.8 million in 2021. Uzbekistan’s development strategy for 2022-2026 set the target to increase the number of foreign tourists visiting the country to nine million by 2026. The stoppage of direct flights between the West and Russia due to the Russian military aggression against Ukraine may raise the number of western and Russian tourists coming to Uzbekistan. In March 2022 Russia and Uzbekistan signed an action plan to increase the tourist flow. The Government created incentives for construction of international class hotels and other infrastructure in the Great Silk Road cities of Samarkand, Bukhara and Khiva, and for connecting them to Tashkent. The management of international airports of Uzbekistan will be transferred to the private sector on a public-private partnership basis.
Oil and Gas
Projects in the oil and gas industry are intended to attract about $36.5 billion in investment from various sources through 2030. These projects may represent good export opportunities for U.S. suppliers of oil and gas extraction, transportation, processing technologies, and oil services.
Under Uzbekistan’s law on Public-Private Partnerships, there are new opportunities for foreign investors to participate in large projects, with tenders operated by the Public-Private Partnership (PPP) Development Agency under the Ministry of Finance of Uzbekistan. Since 2018, foreign bidders have signed PPP agreements to implement several fossil fuel and renewable energy projects. The Government wants to attract investments in the amount of $14 billion on a PPP basis to the energy, transport, healthcare, education, ecology, utilities, water management and other sectors in 2022-2026.
Food Processing and Packaging
Growing external demand for food products produced in Uzbekistan and efforts to improve the productivity of the agricultural sector create export opportunities for suppliers of food preservation, processing, and packaging technologies as well as transportation and logistics solutions.
Construction is one of the most promising industries in Uzbekistan, which demonstrated a continual growth rate of 15-20% per year until the pandemic. The industry’s growth slowed down to 6.8% in 2021.
An ambitious government program aimed at developing a national information-communication system and upgrading communications infrastructure to the 5G standard creates increasing demand for IT solutions in both the public and private sectors of the economy. The government adopted its “Digital Uzbekistan – 2030 Strategy” in October 2020 to intensify work in this direction.
Chemical industry: The 2019-2030 national program for the development of the chemical industry has identified 31 projects with a total value of $12 billion. The government plans to increase production of higher value-added goods through mineral processing.
SOE procurement: Starting from July 5, 2021, President Mirziyoyev obliged large state-owned enterprises and several ministries to conduct their procurements only through public tenders.