Uzbekistan has spent nearly a decade trying to convince global investors it is open for business. The country has lifted capital controls, floated its currency, and eased visa rules since President Shavkat Mirziyoyev took office in 2016. But as the initial wave of enthusiasm fades, the question on many investors' minds is simpler: will the reforms stick?
The stakes were highlighted in May, when the Franklin Templeton-managed National Investment Fund raised $690 million in London, the exchange's biggest IPO since 2021. The offering drew more than $2.8 billion in orders, a sign of real appetite for Uzbek assets. Yet investors say the next test is not about flashy deal announcements—it is about the plumbing: whether privatizations driven by presidential decrees get backed by clearer laws, and whether contracts and dispute resolution will feel predictable over time.
From closed economy to cautious opening
For years, Uzbekistan was notoriously difficult for outsiders to invest in. Tight capital controls and a heavily cash-based economy kept foreign money at bay. The shift began in earnest after Mirziyoyev came to power, with a series of reforms aimed at modernizing the economy and attracting outside capital. The som was floated, digital payments began to take off, and visa rules were relaxed—all moves that helped foreign investment grow.
But the state still dominates large parts of the economy, from banking to energy and mining. According to the IMF, state-owned enterprises' assets were over 100% of GDP at the end of 2024. That means many companies are tied, directly or indirectly, to government decisions. For investors, this creates a unique risk: even if a company looks attractive on paper, its fortunes can hinge on political will rather than market forces.
What investors are watching now
The focus has shifted from headline reforms to the details of implementation. Investors want to see whether privatizations are backed by consistent legal frameworks, and whether the rule of law will hold up over time. They are also watching how disputes are resolved—whether foreign investors can expect fair treatment in local courts or arbitration.
Moody's underscored these concerns in June, warning that a reform slowdown could pressure Uzbekistan's credit rating. That warning is not just about sovereign debt. It is about the cost of borrowing for the entire economy.
What it means for investors
For everyday investors, the practical impact comes down to something called a "policy-risk premium." When investors worry that rules might change, they demand higher interest rates to compensate. That premium shows up in the gap between Uzbekistan's borrowing costs and US Treasury yields. Even if you never buy a government bond, that gap matters because it flows through to companies that are state-owned or rely on the state.
In an economy where state-owned enterprises are so large, a wider risk premium can raise funding costs across the board. It can also push investors to demand lower valuations for new listings. That is why future foreign deals—such as potential London floats of the national gold and uranium miners, or a separate TBC Uzbekistan IPO—may hinge as much on legal consistency as on growth potential.
For now, Uzbekistan's reform story is still intact, but it is no longer a one-way bet. Investors are looking for evidence that the government will follow through on its promises, not just announce them. The next few quarters will be telling.
