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Legal Market Overview

Until recently, Uzbekistan was one of the world’s most isolated countries. Three years since Uzbekistan’s President Shavkat Mirziyoyev assumed power after the death of authoritarian leader Islam Karimov, there have been notable improvements in Uzbekistan’s human rights record. These include the ordered closure of the notorious Jaslyk prison and lifting a ban on several critical websites, breaking with the long history of censorship of the internet in the country. The government has removed 17,000 people from its infamous blacklist, which heavily restricted the rights and freedoms of people suspected of having associated with “Islamic extremists”.

Uzbekistan has also improved its ranking in the World Bank’s “Doing Business”. It was ranked 76th among 190 countries in 2019 compared to 154th place in 2012. Although many impediments remain to foreign investment, there are notable changes, particularly in the investment sector. Among others, for example, the registration of firms is now mainly done through an automated system and state services are provided through “a single window”. Additionally, there are newly introduced legal safeguards relating to administrative and criminal laws to limit business intervention by governmental authorities.

Recent reforms of judiciary, public administration, liberalisation of the economy, along with education, health, social protection reforms, are illustrative of the changes over the past decade. Some examples include the removal of currency and visa restrictions for foreign visitors, including cutting VAT from 20% to 15%, and the announcement – by presidential decree – of an Investment Visa available to eligible foreigners and stateless persons, who invest over $183,100 in the country. Additionally, there are plans for a ‘Silk Visa’, an EU-style visa-free travel zone. Furthermore, the Central Bank of Uzbekistan has proposed to increase the authorised capital of the Uzbekistan Central Bank from UZS2bn to UZS1tn, while JPMorgan Chase and Ashaka Bank have signed a €36.4m export credit line agreement to Uzbekistan.

Uzbekistan has continued to expand its connections with other countries. The UK and Uzbekistan recently signed a landmark Memorandum of Understanding between the two countries. The European Investment Bank and Ministry of Investment and Foreign Trade of the Republic of Uzbekistan also signed a Memorandum of Understanding for a €100m investment programme, designed to recover the Aral Sea and the restoration of agricultural land in the area. It will reduce water drawn from Amu Darya River, thus allowing the river to contribute more water to the Aral Sea.

Further developments have occurred in the energy sector: the Asian Development Bank approved a $60m loan to construct hydropower plants in an attempt at diversifying the country’s energy mix. Currently only 1.9GW or 20% of available hydropower potential has been used. The new plants will add a further 25MW. Joint-Stock Company Uzbekhydroenergo will oversee the government’s $2.6bn investment programme to increase hydropower. There are also plans to develop a water-cooled atomic power station under the Uzatom state agency, in a joint nuclear project with Russia. The plant will be situated at Lake Tuzkan in the Kyzylkum desert. Furthermore, the bidding process is underway on a significant PPP for the country’s first-ever competitively tendered solar power plant, tendered under World Bank Group’s Scaling Solar programme, which will add 100MW of clean energy. Additionally, a $1.8bn wind farm is expected to be erected in Bukhara province with the backing of Chinese corporation Lionaing Lide.