Uzbekistan’s foreign direct investment (FDI) inflows increased from $2bn in 2017—the year the nation started transitioning to a free market from a centrally planned economy—to $9.8bn in 2021, according to the country’s investment agency.

Under its 2022-2026 development strategy, the former Soviet Central Asican country is seeking $120bn in investments over a five-year period, including foreign investments of $70bn. There is a particular emphasis on sectors including power, transport, the green economy, utilities, water management, healthcare and education. A government objective is attracting $5bn of FDI annually by 2026. Maintaining good, workable relations with all the key global players, in a world riven by the differing geopolitical imperatives of Russia, China and the West, could be key to fulfilling that goal.

The national currency, the sum, is liberalised, floating freely, a 2020 investment law brought in greater protections for foreign investors—for instance, they can freely transfer funds in and out of the country—and the investment approval process has been simplified. Though the wheels of privatisation continue to turn more slowly than many hoped for, President Shavkat Mirziyoyev can still realistically push for the private sector's share of GDP to amount to 80% by 2030.

Most of Uzbekistan's FDI comes in the shape of public-private partnerships (PPPs), Investment Monitor (IM) on June 2 cited Odilbek Isakov, CEO and co-founder at Infrasia Capital, a London-based finance advisory focused on Uzbekistan and Central Asia, as saying.

“While there has been greenfield investment, there has also been some M&A FDI taking place," said Isakov, who served as Uzbekistan's deputy finance minister from 2019 to 2023.

“For example, FerghanaAzot, a large chemical company, was acquired by Indorama. Ipoteka-Bank, the fourth largest lender [in Uzbekistan in the period 2022-2023], was acquired by OTP Bank. These deals followed a highly successful Coca-Cola privatisation in 2021.”

Significant FDI projects in Uzbekistan in recent years include the $2.4bn 1.5GW Karakalpakstan wind project being delivered by Saudi Arabia’s ACWA Power. It will be one of the biggest single-site onshore wind projects globally.

Isakov was further reported as saying: “We have several Gulf entities, including Masdar, ACWA Power, as well as Mubadala and Taqa investing in Uzbekistan. 

“We also have a lot of European investment – from the likes of EDF, Siemens, Veolia, Voltalia, Orano and Total Eren – going towards renewables, solar, wind and gas projects, which is upgrading our ageing infrastructure. The Japanese – Toyota Tsusho, Sojits, Mitsubishi and Sumitomo – are also present in Uzbekistan in several projects including solar, wind and combined cycle gas turbine projects.”

With 35mn people, Uzbekistan is Central Asia’s most populous country. Notably, 60% of its citizens are under the age of 30. Multinationals such as Veon, Nestlé, Samsung, General Motors, Isuzu, Claas and Coca-Cola are among big players that were not about to ignore the nation’s potential. There are numerous challenging hurdles for the new Uzbekistan still to overcome, such as a lack of available skilled employees and an overexposure to Russia for trade and remittances, but—with policymakers aware there is no room for a significant slackening of the pace in institutional and economic reform—the door to a rewarding economic future for the many, not the few, has been pushed open.