Uzbekistan has reached critical mass, and the initial phase of its reform programme is now paying dividends as the first wave of international capital arrives to capitalise on the Central Asian republic’s blistering growth.

Foreign investment into Uzbekistan has risen sharply since 2016, when Uzbek President Shavkat Mirziyoyev took over as president and threw open the borders to the rest of the world. Inflows have risen nearly tenfold to $34.9bn in 2024, up from $3.5bn seven years earlier, Mansurjon Rasulev, acting executive director of Investment Promotion Agency of the Republic of Uzbekistan, told bne IntelliNews in an exclusive interview on the sidelines of the Tashkent International Investment Forum (TIIF) in June.

“We have reached a tipping point. Investors are reaching out to us,” the youthful Rasulev told bne IntelliNews in immaculate English. “In 2017 the total FDI was $3.5bn and today it is up tenfold to $34.9bn in 2024. Moreover, the profile has changed; then it was largely sovereign money or development banks; today it is more and more private capital.”

The shift comes as Uzbekistan’s improved credit ratings and six years of 6.5% GDP “catch up” growth begin to draw interest from major global firms, especially in the renewable energy sector. At the same time, Uzbekistan has the best demographics by far in the Former Soviet Union (FSU) with 70% of the population under the age of 30 year, putting it on track to overtake Poland in terms of population size in the coming decades. “Better ratings, better track record,” Rasulev said, when asked what was driving the increased confidence. “And a liberal reform programme that delivers on its promises.”

These investments are still dominated by large-scale energy investments. A leading example is Saudi Arabia’s ACWA Power (Aqua), which entered the Uzbek market independently after the government had already worked intensively to attract Masdar, the UAE’s flagship renewables company. Uzbekistan has become the green energy champion of Central Asia as a result.

While Masdar remains a key player in building the country’s green energy infrastructure, and continues to invested billions of dollars, ACWA has since overtaken it to become the largest investor in the sector, with a portfolio exceeding $15bn.

“In 2017 we did a lot of work, reaching out to the big guns and did a lot of work on their behalf – offering exclusivity, which is maybe not the best practice but was necessary to get them in as an anchor investor,” Rasulev said. “Today all of a sudden we have a lot of interest from other companies that are coming to us with proposals.”

And there is a lot to choose from, as the floor of the TIIF exhibition hall testifies to. Amongst the stands are the giants like Navoi Mining and Metallurgical Company (NMMC), Uzbekistan gold mine national champion and the newly established Technological Metal Complex (TMK) that will exploit the republic’s rich trove of critical minerals and rare earth metals (REMs). There is real estate developed, Turkey’s Koc, that has almost 20 residential, mixed-us and hotel projects under construction. Other large textile, food processing, chemicals and banking are all present, catering to Uzbekistan’s large population and rich agricultural traditions. And e-commerce unicorn Uzum is the star of the tech sector, hoping to do an international IPO in next couple of years.

But what has really changed is that after eight years of hard work the privately owned companies are all starting to tap international investors to bring in development capital to accelerate their already fast growth on their own, without the government pushing for deals in strategic sectors like green energy.

The pioneer was white goods manufacturer Artel that makes TVs, fridges and vacuum cleaners, which became the largest private company to place a corporate bond on the Tashkent Stock Exchange in June 2022. Catering to the burgeoning middle class, the company originally hoped to place a Eurobond, but two years ago the international capital market was not quite ready and so the company plumped for a local issue instead.

Two years on and it has become much easier to raise money from abroad. NMMC has already raised $1.5bn in two rounds of financing. During the TIIF conference the leading supermarket chain Korzinka took in $110mn of equity investment from sovereign funds based in Oman and the UAE with a Uzbek mandate. The UzOman fund has been especially successful with partners like Uzbekistan’s Orient Group, and is now planning a region-wide investment fund that will be able to do cross border investments a senior manager told bne IntelliNews at TIIF. The online-only TBC Uzbekistan Bank just raised $200mn with its debut bond issue in June and Uzum also raised $150mn last year and anticipates a second round of funding before its eventual IPO.

The state has issued four Eurobonds between its debut in February 2019 and June 2025 to a total value of $3.04bn. Those issues established a sovereign yield curve baseline that have made it possible for the corporates to better price their bonds and have a total of some $2bn worth of issues to date.

There is some private equity investments, such as into the Xalq Retail supermarket chain that attracted capital from private international inventors, but venture capital investments into Uzbekistan remains in its infancy still. The biggest deals remain corporate bond issues as is normal in early stage emerging market development.

China, Russia and Turkey remain Uzbekistan’s top three investors in that order, but the country is also diversifying its partnerships. A recent investment deal signed during a government-backed conference in Malaysia illustrates Tashkent’s efforts to engage with non-traditional partners.

“Turkey is interesting as the big shots there all talk to each other. Çalık Holding came here with a real estate investment, but now they’re into mining, energy and other things. Once one large Turkish enterprise is working, others have followed as they become interested in markets where their friends are working.”

Russia remains a sensitive subject. Although it was once the top investor, its role has become more complex due to Western sanctions and its increasing political isolation.

“It’s a difficult question,” Rasulev said. “One of the problems is we have some three million Uzbeks living and working in Russia and many Uzbek businesses are deeply integrated in the Russian value chain. If we were to take sides it wouldn’t matter which side we took – the one thing that would happen is we would harm the Uzbek people, so the government has a policy of careful neutrality.”

“We have been asked to pick sides before, but, for example, to try and strip out all Russian influence and rebuild the economy would kill our economy in the meantime, before the new system could work,” he added.

Nevertheless, Rasulev seemed buoyed. The attendance at this year’s TIIF was up on last year’s, and he spent the three days in frenetic meetings with delegations from neighbouring countries’ investment promotion agencies and bevvies of foreign corporate groups, peppering him with enquiries.

While it’s too early to call it an investment boom, Uzbekistan has clearly cross a threshold and is firmly on the emerging markets investors radar now. With the brouhaha that has afflicted the rest of the region, Tashkent probably has the best and most prospective investment story in the patch now.