This report takes a strategic, long-term view of Uzbekistan’s investment climate while also offering practical recommendations for short- and medium-term improvements. It assesses the domestic and foreign investment climate, as well as the challenges and opportunities facing the Uzbekistan in its reform efforts. The analyses covers the legal and institutional framework for investment, tax incentives, and measures to promote responsible business conduct. Furthermore, it explores the trends and impacts of foreign direct investment on Uzbekistan’s economy and society focusing on how investment can support green growth, the digital transformation and stronger participation in global value chains. The roadmap draws on the OECD Policy Framework for Investment, the OECD FDI Qualities Policy Toolkit, the OECD Guidelines for Multinational Enterprises and the Asian Development Bank’s analytical tools on trade and investment.
Roadmap for Sustainable Investment Policy Reforms in Uzbekistan
Abstract
Executive summary
Uzbekistan has experienced strong economic performance over the past two decades, maintaining average GDP growth of 6.4% from 2000 to 2023, outperforming many lower middle-income peers. Growth prospects remain promising, bolstered by a demographic dividend and ongoing structural reforms. To reach its goal of upper middle-income status by 2030, the country should significantly accelerate income growth and address persistent barriers to productivity, private sector dynamism, and labour market participation—particularly among women. Foreign direct investment (FDI) has grown steadily in response to liberalisation since 2017 but remains concentrated in capital-intensive sectors such as energy. Although foreign firms contribute to higher productivity, wages, and innovation, spillovers to the domestic economy are constrained by informality, regulatory uncertainty, and limited SME capacities. An FDI strategy that supports diversification could enhance sustainable development and inclusive green and digital transitions.
Since 2017, Uzbekistan has launched wide-ranging reforms aimed at modernising the economy, improving the business environment, and attracting sustainable investment. Key achievements include the liberalisation of the foreign exchange regime, the adoption of modern investment legislation, judicial reforms, and enhanced e-government services. Strategic frameworks such as the Uzbekistan Strategy 2030 and the 2022–2026 Development Plan guide reform efforts, with numerous supporting sectoral strategies.
In only five years, Uzbekistan has completely restructured the legal framework on investment, adopting new laws that regulate investment activities. Reforms have resulted in the development of the Law on Investment and Investment Activity (LOI) of 2019, the Law on Public-Private Partnerships of 2019, and the Law on Special Economic Zones of 2020, among others. Despite their recent adoption, these instruments have already been subject to significant revisions, including to comply with the requirements of the World Trade Organization. A new draft LOI is under approval. This law should, among others, clarify some restrictions affecting foreign investors.
Despite the breadth of reforms, challenges persist in implementation. Legislative overproduction, unclear regulatory mandates, and heavy reliance on secondary legislation have contributed to institutional fragmentation and legal uncertainty. Co-ordination across agencies remains limited, and staff turnover undermines continuity. A focus on passing new laws often outweighs efforts to ensure their consistent enforcement. Business stakeholders cite regulatory complexity and unpredictability as key constraints, particularly for small and medium-sized enterprises (SMEs) and foreign investors.
The private sector remains constrained by state-owned enterprises (SOEs), which still account for significant portions of GDP and employment. Although reforms are under way, preferential treatment for SOEs—including in access to land, finance, and incentives—distorts competition and may discourage private investment. Informality, especially among SMEs, continues to impede tax revenues and undermines regulatory effectiveness.
Uzbekistan’s commitment to reform has been commendable, laying a solid foundation for sustainable and inclusive growth. To fully realise its potential, a focus on implementation quality, institutional co-ordination, legal clarity, and regulatory stability will be essential. By continuing its reform momentum and addressing persistent governance challenges, Uzbekistan can unlock more and better FDI, support SME growth, and build a dynamic, competitive, and inclusive economy aligned with national development priorities.
Legal and regulatory framework. A more streamlined, predictable, and non-discriminatory framework is needed, with reduced frequency of regulatory changes and improved regulatory impact assessments. Clarify FDI restrictions through a transparent negative list and consolidate overlapping legislation to reduce investor uncertainty. The reliance on secondary legislation should be minimised, with investor protections established in primary laws. Enhancing judicial capacity to handle complex commercial disputes and expanding the use of mediation and arbitration will also improve legal predictability. Stronger co-ordination between ministries, coupled with capacity building for civil servants, will support more coherent and effective implementation of reforms. Stakeholder consultation processes should be broadened, with better integration of SME and foreign investor perspectives. To level the playing field, it is crucial to reduce SOEs’ preferential access to land and finance, strengthen the independence and enforcement authority of the Competition Promotion and Consumer Protection Committee, and improve SOE transparency and governance—including ESG reporting.
Responsible Business Conduct (RBC). Strengthen the integration of RBC principles across public policies and investment frameworks, guided by international standards such as the OECD Guidelines for Multinational Enterprises. A National Action Plan on Business and Human Rights should be adopted with broad stakeholder involvement. Institutional responsibilities for promoting RBC should be clarified, and co-ordination improved across government bodies. Enforcement of labour and environmental standards must be enhanced, and grievance mechanisms expanded to ensure access to remedy. Greater efforts are needed to raise awareness of RBC among businesses, including SMEs, and to integrate RBC expectations into SOE operations, public procurement, and investor engagement.
Investment promotion and facilitation. The role of UzIPA – the investment promotion agency – should be clearly defined and strengthened, with increased resources and responsibility for investor relations, aftercare, and policy advocacy. Co-ordination between UzIPA and the Ministry of Investment, Industry, and Trade should be enhanced through a unified investment strategy and joint prioritisation of sectors. A comprehensive Customer Relationship Management system and an effective monitoring and evaluation framework are essential to track investor feedback and project performance.
Tax incentives. Gradually shift from income-based to expenditure-based tax incentives, which are more efficient and better aligned with development goals. Reducing discretion in the granting of tax benefits and consolidating all incentives under a transparent framework would enhance fairness and investor confidence. Publishing regular tax expenditure reports will help assess the cost-effectiveness of incentives and guide future reforms.
Investment in support of green growth. Phase in renewable energy projects while modernising grid infrastructure and increasing system flexibility. Fiscal risks associated with PPPs in the energy sector should be monitored. Subsidies for fossil fuels should be replaced with targeted expenditure-based incentives for green technologies. Strategic coherence between environmental and investment policies is critical to align infrastructure development with climate goals.
Investment in support of digital transformation. Enhance strategic direction and policy and institutional coherence across the investment and digital areas, including co-ordination between UzIPA and IT Park. Support the digital upgrading of domestic SMEs to expand opportunities for integration into foreign MNE value chains and to strengthen SMEs’ digital skills development.
The trade-investment nexus. Accelerate WTO accession efforts and align trade regulations with international standards to strengthen investor confidence and facilitate market access. Investments in logistics and trade infrastructure—combined with the implementation of a single-window system—will reduce bottlenecks and improve cross-border efficiency. Closer alignment of trade and investment policies will help integrate SMEs into global value chains and support export diversification.
Note: This table summarises the main reform areas and corresponding key policy recommendations of the Roadmap, along with an indicative time horizon and corresponding implementing institutions. The time horizon partly depends on the immediate implementation feasibility of the recommendation – some long-term recommendations could be more important to further improve the investment climate but may require a certain amount of time to be effectively implemented. The inter-ministerial taskforce established in the context of the RSIPR should monitor the implementation of the recommendations, including by developing specific set of indicators to assess progress and policy outcomes. Stakeholder engagement (e.g. private sector representations, trade union and other civil society bodies) is essential to implement the Roadmap.
Source: OECD and ADB elaboration.
