A street scene in Tashkent: some progress on modernising the economy is evident, but investors remain worried about poverty and human rights
A street scene in Tashkent: some progress on modernising the economy is evident, but investors remain worried about poverty and human rights © Lucas Vallecillos/Alamy

Since Shavkat Mirziyoyev took power as president in 2016, the previously authoritarian Central Asian country has been on a path to reform. Mirziyoyev set a prime goal to make the country attractive for international business, opening up a market that had previously been largely stuck in the Soviet era. 

Five years on, the president is up for re-election in October and widely expected to win a second term. But the election marks a time for review, and for setting more ambitious targets — as even Mirziyoyev admits there is much still to be achieved.

In August, in the first interview he ever gave, Mirziyoyev said not all his aims have been accomplished. “Today’s Uzbekistan is not the Uzbekistan of the past and our people are no longer the same as they were in the past,” he told Yangi O’zbekiston (New Uzbekistan) newspaper. [But] today’s Uzbekistan is not the Uzbekistan we dream about. We still have a long and thorny way to go. Our path was not easy before, and it will not be easy going forward.”

While many of Mirziyoyev’s economic reforms are starting to take effect and are recognised internationally, Uzbekistan’s human rights abuses and social problems, including child labour, remain a block to full investor trust. 

Special Report: Uzbekistan GDP

Experts agree that early reforms — such as liberalisation of the currency market, reforms to the tax system, and better data gathering and publishing — have been effective.

In addition, to help reach western-style business standards, the country has launched a programme to encourage educated Uzbeks who left under the previous regime to return from abroad. It has appointed many to top government positions, to bring the administration more in line with international norms. Mostly young, energetic and believers in the reform cause, these new appointees seem likely to continue the Mirziyoyev agenda. 

“They want to bring them back to strengthen the public administration because that is one of the biggest challenges,” says Dakota Irvin, head of research at Bluestone investment bank, which focuses on Central Asia. “People are bringing with them invaluable experience to the civil service that has in many ways been cut off from the world and international best practices. It’s an uphill battle, but it’s not just for appearances, they are doing real work and they are good at it, too,” he says.

International institutions are also holding the country accountable, now that it has launched joint projects with the World Bank, the European Bank of Reconstruction and Development, Asian Development Bank, and international funds. 

However, Uzbekistan has been moving more slowly than originally expected on more complex targets, such as improving human rights, tackling poverty, ending corruption and privatising state assets. Some observers also note slow progress in the decentralisation of political power.

The coronavirus pandemic led to tough restrictive measures being imposed on citizens by most countries’ leaders — and Mirziyoyev was no exception. Instability in neighbouring Afghanistan, too, after western troop withdrawals, is creating some concern among investors that the Uzbek state’s grip on society may have to tighten.

The question will be: does the status quo remain or does it become a bit more hardline,” one foreign investor in Tashkent told the Financial Times, on condition of anonymity. 

Mirziyoyev’s policy appears to be not only ensuring strong government, but also gaining influence across all of Central Asia. The country has been hosting regional “connectivity” conferences, promoting the idea of a common “silk visa” — an EU-style visa-free travel zone — and most recently attempting to become the neutral host for talks on Afghanistan. Mirziyoyev also promotes Uzbekistan as an example to its neighbours of how to make successful reforms in politics and business. 

In neighbouring Kyrgyzstan, by contrast, the state faces an international legal battle after moving to take control of the gold business developed by Centerra Gold, a Canadian investor. But Uzbekistan has been trying to show it values investors and market principles. 

Only a decade ago, Uzbekistan had forced the retreat of foreign investors such as Canadian mining group Newmont and London listed miner Oxus Gold, after financial and regulatory disputes. It also suspended the operation of telecoms provider Uzdunrobita, an Uzbek subsidiary of Russia’s MTS, which the latter called “an unwarranted attack on the business of a Russian investor”. Now, Uzbekistan seems to have won back investor trust.

Veon, a leading telecoms provider in the Uzbek market, is no longer concerned about history repeating itself, says chief executive Kaan Terzioğlu. “I see competent government officials, bureaucrats, running businesses in a very fast way, open for dialogue, listening to enterprises and really making the right steps in terms of liberalisation of the economy,” he says. 

“I believe the future of Uzbekistan if it stays on that track will be quite bright. It is a point of stability in the region, it has a very strong vision in terms of liberalisation of its key industries and amazing investment in education.”

Uzbekistan has also become the first investment destination in Central Asia for Majid al Futtaim via Carrefour, the French supermarket chain.

“Uzbekistan is . . . really entering the market economy, a lot of reform, wanting to drive growth,” says Allain Bejjani, chief executive of Majid al Futtaim. “This is very encouraging. Whenever we see that, we try to be the first mover and the first adopter of a new economy that’s happening in the market. Uzbekistan is as ready as any market that’s entering a new phase of growth to succeed. If things continue to move in the right direction, we definitely are considering ourselves partners in this direction.” 

The country aims to take leading regional positions on environmental, social and corporate governance issues, as well — especially on green energy. It has attracted investors from the Middle East such as Masdar, the clean energy operator, as well as loans from the EBRD, to help build solar and wind farms to meet its own energy needs and potentially to export to neighbours.

Uzbekistan’s aim is to produce a quarter of its power from renewable sources, and build electric vehicles domestically. But Mirziyoyev says his main goal is reform at home, not praise from outsiders. “We are carrying out these transformations . . . because the democratic processes are vital to us,” he told Yangi O’zbekiston.

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