COVID-19 and Trump’s indifference helped human rights abusers in 2020
Belarusian government sees $2bn of withdrawals, issues $580mn worth of bonds in 2020
Lukashenko: I am no enemy of the people
Storming parliaments: New Europe's greatest hits
One of Russia’s biggest wood product companies, Segezha could be Sistema’s next IPO
The volume of the Russian National Wealth Fund tops $183.93bn as gold overtakes dollar asset for first time
EU to begin certifying Russian Sputnik V vaccine for use in Europe
New Ukrainian VC firm QPDigital aims to invest up to $100 million in digital startups
EBRD investments reach record €11bn in pandemic-struck 2020
FPRI BMB Ukraine: Most Ukrainians are optimistic about 2021 – poll
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Estonian premier quits after Tallinn development scandal
Top Centre Party official suspected of corruption in Tallinn real estate scandal
Czech Pirates and Mayors approve final coalition agreement for 2021 elections
OUTLOOK 2021 Czechia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
Romanian tech entrepreneurs expand into banking sector
OUTLOOK 2021 Hungary
Hungarian government remains silent after Capitol riots
World Bank expects modest recovery for Europe and Central Asia in 2021
FDI inflows to CEE down 58% in 1H20 but rebound expected
OUTLOOK 2021 Slovakia
Slovakia to invest €1.2bn in digitisation
BALKAN BLOG: The controversial recipe for building up Albania
Heavy flooding causes chaos in parts of Southeast Europe
Vodafone Albania plans €100mn infrastructure investments after AbCom merger
OUTLOOK 2021 Albania
Kyiv accuses Bosnian President Dodik of lying about icon gifted to Russian foreign minister
Bosnia’s real GDP contracts 6.3% y/y in 3Q20
Sofia-based LAUNCHub Ventures holds first close of new fund on €44mn
ING THINK: Growth in the Balkans: from zero to hero again?
OUTLOOK 2020 Bulgaria
Labour demand down 28% y/y in Croatia in 2020
Zagreb Stock Exchange's Crobex10 index at highest level since March 5
OUTLOOK 2021 Kosovo
Arrera Automobili aims to launch Albania’s first supercar
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Moldova’s PM resigns to prepare the ground for early elections
Socialist lawmakers in Moldova scrap settlement on $1bn bank frauds
Montenegro’s new ruling coalition carves up top state jobs
OUTLOOK 2021 Montenegro
Vast tide of floating waste threatens Balkan hydropower plants
North Macedonia's manufacturing confidence indicator down by 8.5 pp y/y in December
OUTLOOK 2021 North Macedonia
Transparency International warns of high corruption risk in CEE defence sectors
Moldova fears flooding from Ukraine's planned Dniester hydropower plants
Romania’s industrial recovery paused in November
OUTLOOK 2021 Serbia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
UK Moneyhub picks Slovenia for post-Brexit European base
Slovenia’s dire COVID-19 situation in 4Q20 caused second economic dip
Slovenia’s Eligma completes €4mn funding round
BEYOND THE BOSPORUS: Let’s tentatively pencil in a date for Turkey’s hot money outflow
Turkish opposition leader lawsuit demands one lira from Erdogan, police probe “bald” interior minister posts
OUTLOOK 2021 Armenia
Armenia’s PM cautions conflict with Azerbaijan “still not settled” after trilateral meeting with Putin
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
Russia, Kazakhstan pushing for oil production increases on the back of coronavirus vaccine-fuelled oil price optimism
OUTLOOK 2021 Georgia
Georgia’s political kingpin Bidzina Ivanishvili quits politics
Modern-day “Robin Hood” inspires Georgians drowning in debt
Iran’s navy conducts missile drill while analyst argues Trump even capable of nuclear strike in final days
TEHRAN BLOG: Who’s more credible? Johnson backing Trump’s Nobel chances or Iran applauding arrest warrant for US president?
STOLYPIN: Scope for limited progress under Biden, so long as the past remains the past
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
OUTLOOK 2021 Kyrgyzstan
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
Mongolia in lockdown after suffering first local coronavirus transmissions
OUTLOOK 2021 Tajikistan
China business briefing: Not happy with Kyrgyzstan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
Turkmenistan: The dammed united
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
OUTLOOK 2021 Uzbekistan
Uzbekistan’s Makro positions itself for growth in a more competitive market
Download the pdf version
In the spirit of openness and transparency, the Uzbek government, represented by State Asset Management Agency (SAMA), has called on a large meeting of stakeholders such as development financial institutions (DFIs), news agencies including popular bloggers and Big Four consulting and audit firms and other interested parties to discuss the large privatization efforts it is undertaking, that were briefly announced in the press few weeks ago.
These are the results of reviews of eight government groups, who delved into analysis of the economy and they recommend these reductions to the President (three versions of potential presidential decrees were presented at the meeting).
From 2,965 companies currently on the list of state owned assets, it plans to keep only 554, reducing its stock of assets by 81%. The number of government unitary companies will go down even more drastically, by a whopping 96% from 1,718 to 70.
During the next two years they would like to conduct 20 major IPOs, including some household names and the version of the Presidential Decree that will be signed will be chosen based on the feedback they receive from the expert community, including International Financial Institutions (IFIs), investors and media.
Currently, the state-owned entities account for 55% of Uzbek GDP, bring in 47% of tax revenues, but only 33% pay dividends and they provide meagre 6% of the employment in the country. These companies provided a return on assets of 1.6% and return on equity of 6.4%. Given the cost of capital in Uzbekistan they are all practically de facto loss-making. Hence, the government wants to dump them, retaining only a handful for strategic reasons.
The Uzbek government is using the Singaporean “yellow pages’ approach on deciding which companies to keep and which to cut; during the meeting examples of road construction were given, where the state-owned Avtoyol has 200 road construction companies, whereas there are 70 private companies that are successfully competing in the sector.
The playing field is not level, with the state-owned enterprises (SOEs) enjoying significant advantages over the private sector. Some 30% or 900 state owned companies have tax and customs duties privileges costing the state budget money, whereas the private companies are competing without any state support. Analysis has showed that in certain areas that require licensing, some SOEs were able to operate without a license. In government tendering process, some SOEs received government orders without onerous tender process, whilst the private companies had to compete to win contracts.
SAMA will be reporting to the Oliy Majlis (the lower house of Parliament) on the progress and justify why certain assets must be kept by the state. If cannot justify, they will sell the asset.
The World Bank, EBRD and Asian Development Bank have provided extensive technical assistance to assist with this review and their technical assistance brought in expertise from international experts SAMA is assisted by ex-senior government officials who have been involved in very successful privatization efforts in Poland, and international experts on corporate governance from Ukraine and the UK.
The World Bank representative pointed out that Uzbek companies are not in dire situation and this transformation is more aimed at improving efficiencies. Uzbekistan Airways, for example, could improve on its the customer experience, but it is capable of maintaining United States FAA certificate and satisfying aviation regulators globally in terms of safety and technical maintenance standards. Navoi Mining and Metallurgical Combine (NGMK) has third of the borrowing capacity of its international peers, however it still produced reportedly 90 tons of gold the last year. However, the number of privatizations within the given timeframe might be too ambitious.
The PwC representative pointed out at the experience of countries such as UAE, where the fully state owned companies such as Emirates Airlines are successful, as they found a good mix of state support and autonomy, well rewarded management team, who can run the businesses without too much corporate interference from the shareholders. So, privatization for the sake of privatization may not bring the desired economic abundance. It is important not to just conduct a fire sales of assets, as for certain companies just changing the management and bring it u p to international standards could achieve desired efficiencies, without selling the company off.
Indeed, Uzbekistan’s privatization efforts is not in the same state of desperation and collapsing industries of 90s in Soviet Union. However, for the economy to grow and adopting international technological innovations, it must modernize and attract private capital and talent.
The Uzbek government is facing the typical conundrum of a country undergoing a privatization: not to sell out too cheap, because the assets belong to the people of Uzbekistan, and at the same time, to make the investment attractive so there will interest from the market. The solution seems to make it a transparent process and involve public discussion.
However, most of these discussions have just started and are on paper. For example, the ADB studied 6 companies and made recommendations on corporate governance and they have not yet been followed. Experience shows that the actual implementation is very important in Uzbekistan and this is not just about giving recommendations. Also, the goals that SAMA set itself maybe too ambitious and to achieve these goals a more hands-on approach from DFIs may help with the process. To see actual progress DFIs may want to participate in the implementation via investments in the actual privatization as investors and provide feedback on the shortfalls of the system to the government. If there is a lack of capacity, then this can be outsourced to private asset managers.
Fiezullah Saidov is the CEO of Uzbekistan Equity Fund and a banking sector consultant for the IFC. He can be contacted here.
here to continue reading this article
and 5 more for free or purchase
12 months full website access including
the bne Magazine for just $250/year.
Register to read the bne monthly magazine for
Password could contain only
and have 8-20 symbols length.
Please complete your registration by confirming your
A confirmation email has been sent to the email
address you provided.
can't be empty.
No user with
this email address.
Access recovery request has expired, or you are using
the wrong recovery token. Please, try again.
Access recover request has expired.
Please, try again.
To continue viewing our content you need to complete
the registration process.
Please look for an email that was sent to
with the subject line
"Confirmation bne IntelliNews access". This email will have
instructions on how to complete registration
process. Please check in your "Junk" folder in
case this communication was misdirected in your
If you have any questions please contact us at email@example.com
Sorry, but you have used all your free articles fro
this month for bne IntelliNews. Subscribe
to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free
digital weekly newspaper to subscribers to
the online package.
Click here for more subscription options,
including to the print version of our
flagship monthly magazine:
Take a trial to our premium daily news
service aimed at professional investors that
covers the 30 countries of emerging
For any other enquiries about our
products or corporate discounts please
contact us at
If you no longer wish to receive
Magazine annual print
Website & Archive
Combined package: web
access & magazine print
Take a trial to our premium daily news service
aimed at professional investors that
covers the 30 countries of emerging Europe: