The winds of change are blowing strong in Uzbekistan as President Shavkat Mirziyoyev announced a series of sweeping reforms aimed at opening up the country's economy and attracting foreign investment with emphasis on green energy as a top priority for the country's future. 

Speaking at the Second Investment Forum in Tashkent, the Uzbek president highlighted the country's efforts to liberalise foreign trade and reduce bureaucracy, corruption, and taxation.

One of the most significant measures announced by the President was the reduction of the value-added tax rate from 20% to 12%. This is a bold move that will likely stimulate business activity and create a more favourable fiscal environment for investors. The country also introduced a seven-day VAT refund system for exporters, a welcome initiative that will speed up the refund process and make it more efficient. The dividends received from shares of foreign investors in the country will also be exempted from taxation for a period of three years.

Alongside tax reforms Uzbekistan is also liberalising foreign trade by abolishing customs duties on more than 7,000 types of raw materials and goods.

To reduce bureaucracy and eliminate corruption, Mirziyoyev announced administrative reforms that will streamline the government and its functions. The number of ministries has been reduced from 61 to 28, and their responsibilities and powers have been clearly defined. Uzbekistan also abolished 500 functions of the state in business regulation and transferred 70 to the private sector through public-private partnerships and outsourcing. 

The Uzbek Ministry of Investment, Industry, and Trade has also set up a "Single Window" system under Mirziyoyev’s direct supervision to assist investors from project initiation to launch. 132 licences and permits have been withdrawn, and an integrated investor engagement system has been introduced.

“I am keen to communicate more with foreign companies and business people. Your ideas, proposals and initiatives give me strength and encourage me to make new reforms. Therefore, I am ready to hold frequent meetings with new investors and personally guarantee you success in our country,” Uzbek president said at the forum.

Nearly 100,000 new enterprises had been created in Uzbekistan, with an annual volume of attracted foreign investment reaching $10bn. The country reportedly lifted nearly 1mn people out of poverty since 2017, with the poverty rate dropping from 17% to 14%. 

Green Future

Uzbekistan is now eyeing green energy, with plans to quadruple its renewable energy capacity. The country is to produce 2,000 MW by the end of 2023 and 8,000 MW by 2026, creating around $8bn worth of investment opportunities. The Renewable sector currently accounts for just 4% of the country’s energy mix. 

 

“We are inviting you to implement these projects, and are ready to create all the necessary conditions for this,” the Uzbek president said addressing forum participants. 

However, despite the progress made, there are still concerns about the level of bureaucracy, corruption, and lack of transparency in the country. Uzbekistan is ranked 153rd out of 190 countries in the World Bank's Ease of Doing Business index, and there is still much work to be done to improve the country's investment climate.

Private investments are also flowing into previously "closed" industries, including the civil aviation sector, where five private airlines have been set up, and the management of four airports has been transferred to the private sector.

Uzbekistan's renewable energy efforts feature prominently with the construction of a 1,000 MW wind farm in the Navoi region, developed alongside Masdar, a UAE-based renewable energy firm. This massive undertaking is expected to furnish enough electricity to supply 3mn homes and reduce carbon emissions by 2.5mn tonnes yearly. Another 500 MW solar power plant in the Samarkand region, developed with Saudi Arabia's ACWA Power, will reportedly generate sufficient electricity to power 600,000 homes and reduce carbon emissions by 430,000 tonnes annually.

For now, the country is planning ahead its nationwide referendum on the renewed Constitution of the “New Uzbekistan”. 

“There is no doubt that the New Constitution will continue the reforms we have launched, and most importantly, it will make them irreversible”, Mirziyoyev noted. 

Mirziyoyev’s reforms might grease the wheels of business and make conducting business in Uzbekistan more attractive than ever before. These reforms are a step in the right direction, but as the saying goes, "Rome wasn't built in a day." Anyhow, Mirziyoyev’s bold actions may ease the path for foreign firms to enter the Uzbek green energy sector.