Uzbekistan opens up to investors

Few had expected Uzbekistan's president, Shavkat Mirziyoyev, to change much when he took over in 2016. But he has embarked on major reforms, making it a frontier market to watch.

Uzbekistan, until recently, was a market "almost untouched by Western capital", says Laurence Fletcher in the Financial Times. As a dictatorship, the country ranked alongside North Korea on political rights and civil liberties. With widespread corruption and currency controls ,"it was off limits for most investors". Few had expected President Shavkat Mirziyoyev who served as prime minister under the previous president to change much when he took over in 2016. But he has "shocked the international community by embarking on major reforms".

The new government has released political prisoners and simplified the tax code, "to turn it into a mechanism for actually collecting tax, rather than bribes", says The Economist. It restructured state-owned companies and devalued the currency, bringing the official and black-market rates into alignment.

Uzbekistan has leapt up the World Bank's Ease of Doing Business rankings, from 166th in 2012 to 76th in 2019. Last month it raised $1bn in its first international bond offering. But serious hurdles remain. The Tashkent stockmarket's public float only amounts to $300m (compared with the FTSE All-Share's $3.3trn). And as with many frontier markets, corporate governance is a "major risk", says Fletcher. Cronyism endures and there is no political opposition. Still, this is a frontier market to keep an eye on.

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