In recent years, Uzbekistan, a Central Asian nation with a population of 36 million, has emerged as a pivotal international player. Under the leadership of Shavkat Mirziyoyev, the country has undertaken significant strides in expanding international trade while actively seeking to attract tourists and foreign investments. It’s astonishing to consider that just a decade ago, Uzbekistan was a closed authoritarian state, where foreign investors encountered hurdles, and women and children were subjected to forced labor during the cotton harvest.
The transformative journey commenced in 2016 when Shavkat Mirziyoyev assumed office. His tenure marked the initiation of comprehensive reforms that have turned Uzbekistan into an open society with a burgeoning economy. Mirziyoyev, born in 1957 into a family of medical professionals, brought extensive administrative experience to the presidency. His strategic ascent through various administrative levels acquainted him with the challenges facing Uzbekistan’s economy and its citizens.
The President’s sweeping changes included releasing political prisoners, liberalizing the Sum currency for easy conversion into US dollars or Euros, streamlining bureaucratic hurdles for businesses, and, with IMF support, establishing reliable economic statistics while issuing US dollar-denominated bonds for the first time in many years. Mirziyoyev revitalized Uzbekistan’s relationships with neighboring countries like Kyrgyzstan and Tajikistan, which had been neglected by his predecessor. He also expanded cooperation with the European Union, China, and the United States.
Mirziyoyev’s Economic Vision and Foreign Investment
Uzbekistan inherited a Soviet-era economic structure characterized by large, outdated industrial enterprises and an underdeveloped consumer goods sector after its independence in 1991. Moreover, the nation faced a scarcity of jobs despite a rapid population growth and a high proportion of young people. Traditionally, many Uzbek citizens sought employment in wealthier neighboring countries.
To revitalize Uzbekistan’s economy and create new job opportunities, Mirziyoyev aimed to attract foreign investments and privatize state-owned assets. Notably, Germany stands as Uzbekistan’s primary European partner in this endeavor. Over the past two years, German investments totaling over $2.5 billion have flowed into Uzbekistan, with around 200 German-affiliated companies currently operating in the country. Renowned companies like MAN, CLAAS, Knauf, and Falk Porsche Fiberglass have established production bases in Uzbekistan.
Collaboration with major European banks such as Deutsche Bank and Commerzbank has further bolstered Uzbekistan’s economic growth. This collaboration encompasses credit provision to industries, state bank privatization, and support for Uzbek corporations’ initial public offerings. The issuance of shares aims to attract additional investments for the modernization of Uzbek enterprises and increase the trading volume on Uzbek stock exchanges, including involvement from small investors.
Expanding International Trade as a Catalyst
Uzbekistan is a significant supplier of cotton, uranium, gold, fruits, and vegetables. However, the production and export of many goods were previously state monopolies. This led to public sector employees and students being deployed as cotton pickers from September to December, resulting in schools and hospitals remaining closed for months, depriving children of education. Mirziyoyev abolished this internationally condemned practice, emphasizing cotton processing, the development of the textile industry with private and foreign investments, and market-oriented approaches to cotton harvesting.
The nation engages in trade with various countries, including its Central Asian neighbors and China, with Germany emerging as its largest European trade partner. Last year, the German-Uzbek trade turnover amounted to $1.2 billion, having already reached $929 million in the first half of this year. Germany exports industrial equipment to Uzbekistan while importing fruits, nuts, textiles, and apparel. Uzbekistan benefits from the European Generalized Scheme of Preferences (GSP+), availing itself of tariff preferences to boost exports of these and other commodities to Europe.
Germany also provides technical support to Uzbekistan in its efforts to join the World Health Organization (WHO), intending to further stimulate the expansion of international trade.
Green Energy and Sustainable Development
Uzbekistan aims to reduce its dependence on fossil fuels and modernize its economy. President Mirziyoyev has set a target to increase the share of renewable energy in the country’s energy mix to 40% by 2030. However, the country faces limited hydropower potential due to the diversion of water from the Amu Darya and Syr Darya rivers for agricultural irrigation, making it imperative to modernize irrigation systems and minimize water losses.
In advancing its energy capacities, Uzbekistan places a special emphasis on green energy, with support from partners in Europe, China, and the Middle East. The country actively inaugurates new solar and wind power installations. The “green” approach to energy, inspired by leading nations like Germany, has led to competitive bidding in projects aimed at undercutting competitors’ electricity prices. Furthermore, households installing solar panels on their rooftops receive government subsidies.
Uzbekistan’s Vision for Development
In September, Mirziyoyev endorsed the new Uzbekistan 2030 development strategy, crafted collaboratively by various stakeholders in the country. The strategy aims to double the GDP by 2030, stimulate export growth, enhance education and healthcare, and elevate citizens’ incomes above the global average.
To achieve these objectives, Uzbekistan seeks to attract $110 billion in foreign investments and bolster its exports. Germany remains a reliable partner in realizing these ambitions.
Mirziyoyev’s leadership and visionary strategies have brought about profound changes in Uzbekistan, transforming it into a more open and globally competitive nation. Collaboration with countries like Germany and other international partners is crucial for the nation’s future.