In early May, Uzbekistan’s capital played host to the Tashkent International Investment Forum. The third installment of the annual event, which cost an estimated $1.2 billion to organize in 2022, was a chance for Uzbek President Shavkat Mirziyoyev to once again present the country’s credentials as a vibrant and reforming emerging economy to foreign investors.

Since ascending to the presidency in 2016, Mirziyoyev has promised to throw open the once-tightly locked doors of the Uzbek economy to international investors – part of a wider liberalization and reform agenda, widely dubbed by Uzbek authorities as “New Uzbekistan.” In 2020, the government promised to sell – or partially sell – 620 state-owned enterprises, including some of the country’s biggest firms, such as state oil and gas giant Uzbekneftegaz and the Navoi Mining and Metallurgical Company, operator of the world’s largest open-pit gold mine, Muruntau. 

The positive fundamentals of the Uzbek economy are hard for investors to ignore. Uzbekistan has a population of 36 million, the largest in Central Asia, which is projected to reach 40 million by the end of the decade. Over 60 percent of the population is under 30, the majority of whom are well educated compared to other lower middle-income countries. While still significantly underbanked, the population is showing increasing purchasing power, with real income per capita reaching approximately $1,500 in 2023, a 34.7 percent increase on 2017.

However, so far, many of the promises of the privatization agenda are yet to materialize. Deadlines on the sale or public listings of major enterprises have consistently been delayed. In 2021, Economy and Finance Minister Jamshid Kucharov said that the state expected to sell 10-15 percent of the Navoi Mining and Metallurgical Company in 2022, yet this was later postponed to 2024. The latest government decree has pushed the deadline back further to 2025 and the stake up for sale has shrunk to 5 percent via a would-be international listing.

Meanwhile, the privatizations of two large state banks, the Uzbek Industrial and Construction Bank (SQB) and Asakabank, originally set for 2022 and 2023, have been postponed twice, most recently to year-end 2024 and 2025, respectively. International ratings agency Fitch has said it expects further delays amid concerns over the banks’ asset quality, among other factors.

Moreover, the success stories of privatization so far have come with caveats. In 2022, the outbreak of the war in Ukraine meant the state abandoned a deal to sell UzAgroExportBank’s to Russia’s Sovcombank, instead selling it without public tender to a company owned by Olimjon Chodiev, a relative of politically well-connected Uzbek billionaire Patokh Chodiev. In June 2023, the state sold a 73 percent share of Ipoteka Bank to Hungary’s OTP Group. Yet almost a year since the deal, Ipoteka has disclosed a worrying increase in the share of non-performing loans in its books, increasing from 2.7 percent to 11.9 percent between the start and end of 2023 – likely a result of improved financial disclosure brought by OTP revealing a troubling amount of poor-quality legacy loans. 

Eight years into Mirziyoyev’s tenure, some are wondering whether Uzbekistan’s privatization agenda will ever reach its lofty goals. Nevertheless, while Uzbek authorities may have been slow to move, there is also an element of the “chicken and egg” dilemma. Without concrete commitments from investors first, there is little motivation for Uzbek authorities to upset the status quo and sell off assets.

International financial institutions, such as the European Bank of Reconstruction and Development (EBRD), have sought to bridge this gap. After resuming its operations in the country in 2017, the EBRD has provided billions in loans to Uzbek state-owned companies. These include so-called “convertible loans,” which can subsequently be transformed into ownership stakes. The idea is that the entry of institutions like the EBRD into the share capital of Uzbek companies will give private investors the peace of mind that reform is occurring and incentivize a sale.

With geopolitical instability in Uzbekistan’s neighborhood and growing uncertainty over the Mirziyoyev administration’s commitment to reform, the investment case for Uzbekistan is under question. Nevertheless, the country’s potential is hard to ignore, and the promise of access to Central Asia’s largest market means all eyes will be firmly fixed on Tashkent in the years to come.