Here’s why GCC investors should be looking at Uzbekistan

As a country located at the heart of the Great Silk Road, Uzbekistan is currently in the process of transitioning from old paradigms to the ‘New Uzbekistan’.

In 2020, Uzbekistan’s leadership announced a new five-year national strategy and roadmap to enhance its commodity and financial markets to address structural problems inhibiting economic development. As part of the plan, the country is transforming from a closed, state-controlled economic model to an open market economy. The government has undertaken several reforms to integrate comprehensive competition development, privatisation and state-owned enterprise (SOE) transformation strategies.

Led by President Shavkat Mirziyoyev, the country has implemented reforms such as the unification of exchange rates, liberalisation of foreign trade, removal of various administrative barriers hindering the cross-border flow of goods and people, commencing the transformation of the banking sector, radical tax reform and reduction in state intervention. The measures have led to healthy competition in industries such as F&B (soft drinks, juices, bread, bakery, meat and dairy, confectionery), as well as furniture, carpet and carpet products, medical masks and textiles, among others. All of this has provided a great impetus to significantly improve competition in the economy.

These reforms also hold great importance in shaping the future of Uzbekistan and establishing global ties. Prior to the Covid-19 pandemic, Uzbekistan recorded strong growth in foreign trade, which increased from $24bn in 2016 to almost $42bn in 2019. According to the World Bank, foreign direct investment also increased from 2 per cent of GDP in 2016 to almost 4 per cent of GDP in 2019. The country also improved its ranking on the Doing Business Index, jumping from the 87th position in 2016 to rank 69th in 2020.

Meanwhile, some of the new goals that aim to further achieve the country’s vision include reducing the number of monopolies by at least 40 per cent, eliminating distortive legal norms by at least 30 per cent, growing the number of market players by 25 per cent, reducing the share of state intervention by 40 per cent of GDP, and reducing the share of state aid by 10 per cent of GDP.

The strategy also calls for the creation of smart antitrust regulation, the development of effective tools to regulate digital markets, the implementation of new tools of market analysis, and decreasing state price regulation. The roadmap envisages diminishing the domination of SOEs in key sectors such as automobiles, steel manufacturing, telecoms, chemicals, banking and oil and gas.

In all, the key objective of the strategy is to foster economic development, innovation, increase the inflow of investment, create new jobs and ensure the welfare of consumers by ensuring a “level playing field” to all market players.

The country is also creating strong supportive measures to establish a healthy, dynamic and mobile private sector as the driving force and the backbone of the economy; further enhancement of the existing institutions and the introduction of new effective, supportive and reliable conditions to enable employment for women, young people and disadvantaged groups; the opening up the education system; and providing access to financing.

With so much to offer, ‘New Uzbekistan’ will open up a variety of investment and trade opportunities for people from the GCC region, even as the country continues to enact new policies set to serve as the driving force for sustainable progress in the future.

Rustamov Jakhongir is the deputy commissioner general of the Uzbekistan Pavilion at Expo 2020 Dubai