BAKU, Azerbaijan, August 25. Uzbekistan is
accelerating its investment drive as the government seeks to expand
industrial capacity, attract foreign capital and deepen the role of
private investment in the economy. With 338.9 trillion soums ($28.6
billion) invested in fixed capital in the first half of 2026, a
17.5% year-on-year increase, and $32.9 billion in foreign
investments and loans utilized in the period from January through
July, the scale of capital formation is becoming a defining feature
of the country's growth model.
The government is now moving beyond simply attracting
investment. It is attempting to build the financial, industrial and
human-capital infrastructure needed to turn inflows of capital into
higher productivity, stronger exports and sustainable economic
growth.
This shift is increasingly visible in the composition of
investment. Manufacturing, construction and energy-related
activities accounted for nearly half of fixed-capital investment in
the first half of the year, while the government is simultaneously
preparing new industrial and infrastructure projects worth billions
of dollars and expanding companies' access to international capital
markets.
However, the key question is whether Uzbekistan will be able to
turn this investment boom into long-term productive capacity,
rather than simply an increase in capital inflows.
Investment becomes a central pillar of
growth
Uzbekistan's investment expansion is taking place against a
backdrop of sustained economic growth.
Speaking at the Silk Road Finance & Technology Forum, Deputy
Prime Minister and Minister of Economy and Finance Jamshid
Kuchkarov said average annual GDP growth had remained around 6–7%,
while the economy had tripled in nominal terms from approximately
$60 billion to $180 billion.
The country's economic expansion has been accompanied by
improving macroeconomic indicators. Kuchkarov said inflation, which
had previously remained in double digits, is expected to reach
around 6.5% this year, with the government targeting the 5% level
next year. External public debt has remained around 27% of GDP,
while budget deficits have stayed below 3% of GDP in recent
years.
This combination of relatively rapid growth and improving
macroeconomic stability is important for investors. A predictable
macroeconomic environment reduces some of the risks associated with
long-term projects, particularly in infrastructure and
manufacturing, where investment returns often depend on conditions
over many years.
At the same time, Uzbekistan is seeking to improve its sovereign
credit standing, complete accession to the World Trade
Organization, and further reduce the state's role in the
economy.
These reforms suggest that the government sees foreign
investment not as a temporary source of financing, but as part of a
broader transition toward a more market-oriented economic
model.
Manufacturing is at the heart of the investment
drive
The distribution of fixed-capital investment in the first half
of 2026 provides an important indication of where Uzbekistan's
growth strategy is heading.
Manufacturing attracted 100.5 trillion soums ($8.5 billion),
making it by far the largest recipient and accounting for almost
30% of total fixed-capital investment.
Agriculture, forestry and fisheries followed with 32.9 trillion
soums ($2.7 billion), while construction attracted 32.5 trillion
soums ($2.7 billion).
Electricity, gas, steam and air-conditioning supply received
29.9 trillion soums ($2.5 billion), residential construction
accounted for 27.3 trillion soums ($2.3 billion), and mining and
quarrying attracted 21.8 trillion soums ($1.9 billion).
Transportation and storage received another 16.3 trillion soums
($1.4 billion).
Taken together, manufacturing, construction and energy-related
activities attracted approximately 162.9 trillion soums ($13.8
billion), or about 48% of all fixed-capital investment during the
first half of the year.
The concentration is significant. It suggests that Uzbekistan is
prioritizing sectors that can directly expand physical production
capacity and address infrastructure constraints.
Manufacturing investment alone was more than three times the
amount allocated to agriculture, forestry and fisheries, the
second-largest recipient.
For Uzbekistan, this could support a gradual transition from an
economy reliant on commodity production and domestic demand toward
one with a larger industrial and export-oriented base.
But the size of investment will not by itself determine whether
that transition succeeds. The critical issue will be whether new
factories and infrastructure generate sufficient productivity
gains, exports and local value creation.
$27 billion project pipeline signals continued
expansion
The investment drive is also being reinforced by a large
pipeline of new projects.
Uzbekistan plans to launch 105 industrial and infrastructure
projects worth $27 billion this year, covering energy, transport,
manufacturing, logistics and urban development.
Among the major projects are a nuclear power plant in Jizzakh, a
fourth copper processing plant in Almalyk, new highways connecting
Tashkent with Samarkand and Andijan, an environmentally friendly
aviation-fuel complex in Khorezm, a large greenhouse complex in
Surkhandarya and the New Tashkent airport in Yukori Chirchiq.
The scale and diversity of these projects illustrate an
important feature of Uzbekistan's investment strategy: capital is
being directed simultaneously toward production, energy security,
transport connectivity and urban infrastructure.
This matters because infrastructure bottlenecks could otherwise
constrain the country's rapid economic expansion.
Electricity and gas supply attracted almost $2.5 billion in
fixed investment during the first half of 2026, while
transportation and storage received around $1.4 billion. These
investments can provide the underlying infrastructure required for
industrial expansion.
The challenge is to ensure that infrastructure investment
remains closely linked to productive economic activity rather than
creating excess capacity or placing unnecessary pressure on public
finances.
The next stage: bringing private companies to
international capital markets
One of the most significant developments in Uzbekistan's
investment strategy is the government's attempt to diversify the
sources of corporate financing.
Uzbekistan aims to attract at least $1 billion in foreign
capital annually through IPOs, creating an alternative to
traditional bank lending.
The initiative follows the listing of a 30% stake in the
National Investment Fund, which holds assets in 13 strategic
companies, on the Tashkent and London stock exchanges.
The government plans to select 50 companies each year with
annual revenues exceeding 1 trillion soums for an IPO acceleration
program. It will cover half of the costs associated with preparing
companies for listings and bringing their financial reporting into
line with international standards.
This could become an important structural change for
Uzbekistan's economy.
The country's investment boom has so far relied heavily on large
projects, bank financing and foreign investment. Developing equity
markets could broaden access to capital and allow successful
domestic companies to finance expansion without relying exclusively
on bank loans.
The policy is also consistent with the government's wider
objective of reducing the state's presence in the economy.
If more Uzbek companies become capable of raising capital
internationally, the result could be greater corporate
transparency, stronger financial reporting and increased
participation by institutional investors.
However, turning the initiative into a sustainable source of
foreign capital will require Uzbek companies to strengthen
transparency, corporate governance and financial reporting while
demonstrating strong growth potential to international
investors.
The banking system is also being redirected toward
smaller businesses
While the government is developing equity markets for larger
companies, it is simultaneously attempting to improve access to
finance for small and medium-sized businesses.
The share of small businesses in banks' loan portfolios has
increased from 45% to 63%, while 76.5 trillion soums ($6.4 billion)
was allocated to SMEs during the first half of 2026.
A new digital portal allows entrepreneurs to submit a single
credit application while banks compete to provide financing. New
entrepreneurs can apply online for loans of up to 5 billion soums
(about $423,026).
The government is also introducing three programs — Business
Start, Business Lift and Business Rise — designed to support
businesses at different stages of development.
Under Business Start, entrepreneurs will receive assistance with
project development, loan documentation and financial reporting,
including through artificial intelligence. The program will have
100 billion soums ($8.4 million) in funding and offer ready-made
business plans and unsecured loans of up to 200 million soums
(around $16,921).
This approach is important because a sustainable investment
economy cannot rely exclusively on large foreign-funded
projects.
The development of domestic SMEs is necessary to create local
suppliers, services and employment around major investment
projects. If small businesses can scale into larger companies, the
benefits of foreign investment could spread further through the
domestic economy.
Human capital may become the next investment
bottleneck
One of the more important aspects of Uzbekistan's current
investment policy is the growing emphasis on skills.
President Shavkat Mirziyoyev has highlighted the need to link
investment in advanced technologies with workforce development,
noting that Uzbekistan is implementing $50 billion worth of
high-tech investment projects annually and that training must form
part of such projects.
This is an important consideration because the productivity
gains from foreign investment depend not only on the arrival of new
equipment or technology, but also on the ability of local workers
to operate and maintain it.
A vocational training model based on German and Chinese
experience has already been introduced in Urgench, covering
professions including green energy, construction, nursing, agronomy
and electrical engineering.
The government aims to train 1 million young people in modern
professions and help them secure higher-paying jobs.
For an economy experiencing rapid industrialization, this could
be decisive.
Uzbekistan can attract factories, power plants and
infrastructure projects relatively quickly. Building a workforce
capable of supporting increasingly sophisticated industries takes
considerably longer.
A shortage of skilled workers could therefore become a
constraint on the country's ability to absorb foreign technology
and move into higher-value manufacturing.
Logistics is another piece of the investment
equation
Uzbekistan's investment strategy is also increasingly linked to
its ambition to become a regional logistics hub.
The government has abolished import duties and recycling fees on
trucks and plans to reduce VAT on the provision of railway wagons
for international transportation to zero.
A logistics center with a capacity of 500,000 tons is expected
to begin operations at Georgia's Poti port next year, while work on
the Anaklia port project is also planned.
Major logistics hubs are planned in Alat, Termez, Yangiyul,
Akhangaran and Khanabad.
For a landlocked country, improvements in logistics can have an
economic impact extending far beyond the transport sector. Lower
transportation costs and improved access to international markets
can make Uzbek manufacturing more competitive and encourage foreign
companies to use the country as a production base.
The development of transport links therefore complements
investment in manufacturing.
A factory can increase production, but without efficient access
to export markets its potential remains limited.
Azerbaijan-Uzbekistan investment cooperation adds
another dimension
The growing scale of Uzbekistan's investment needs is also
creating opportunities for bilateral investment partnerships.
During the third meeting of the Supreme Interstate Council of
Azerbaijan and Uzbekistan, President Ilham Aliyev said the projects
already envisioned and contracted between the two countries
significantly exceed the capacity of the $500 million
Uzbekistan-Azerbaijan Investment Fund.
According to Aliyev, around $160 million of the fund had already
been allocated, while the overall portfolio of projects is
considerably larger.
He specifically pointed to plans for approximately $5 billion in
investment in Uzbekistan's tourism sector alone, in addition to
hotel and residential projects in Tashkent that fall outside the
investment fund's current scope.
The comments indicate that the existing investment mechanism may
need to expand if bilateral projects continue to grow.
More importantly, the Uzbekistan-Azerbaijan example illustrates
how foreign investment is increasingly moving beyond individual
projects toward broader investment ecosystems involving funds,
infrastructure, tourism, logistics and real estate.
For Uzbekistan, diversified bilateral investment partnerships
can provide additional sources of capital while reducing dependence
on any single investor or financing channel.
The diversification question
Despite the positive momentum, Uzbekistan's investment figures
also reveal areas where diversification could go further.
Investment remains heavily concentrated in manufacturing,
construction, energy, mining and infrastructure.
By comparison, sectors such as finance, healthcare, information
and communications, professional services and other
knowledge-intensive activities attracted substantially smaller
amounts.
Financial and insurance activities received only 2.4 trillion
soums (about $203 million), while information and communications
attracted 5.8 trillion soums (around $490.7 million), and
healthcare and social services received 4.6 trillion soums (approx.
$389.1 million).
This does not necessarily indicate weakness. In a rapidly
industrializing economy, infrastructure and manufacturing naturally
require substantial capital.
However, as Uzbekistan's physical infrastructure expands, the
next stage of growth could require greater investment in digital
technologies, financial services, healthcare, education,
professional services and other high-value sectors.
Greater diversification would also make the economy less
dependent on capital-intensive industries.
The real test is what happens after the investment
arrives
Uzbekistan has already demonstrated that it can attract
substantial capital.
The more difficult question is whether the investment will
generate sufficient economic returns.
The country's 17.5% increase in fixed-capital investment, $32.9
billion in utilized foreign investments and loans during
January-July, and a $27 billion project pipeline demonstrate strong
investor and government activity.
But the ultimate success of the strategy will depend on several
factors.
First, new projects must generate higher productivity and
exports, rather than simply increasing domestic capacity.
Second, foreign investment needs to create stronger links with
Uzbek companies through local procurement, technology transfer, and
workforce development.
Third, the expansion of capital markets must give successful
domestic businesses access to financing beyond bank credit.
Fourth, investment in infrastructure must keep pace with
industrial expansion.
And finally, the country must continue strengthening
macroeconomic stability and regulatory predictability.
Uzbekistan's government appears increasingly aware of this
shift. Its policies now connect investment with privatization,
IPOs, SME financing, logistics, vocational education, and
international market integration.
That suggests the country is moving from an
investment-attraction model toward an investment-conversion
model.
The objective is no longer simply to bring more dollars into
Uzbekistan. It is to turn those dollars into factories, exports,
technology, skilled workers, competitive domestic companies, and
higher incomes.
The scale of investment now being mobilized allows Uzbekistan to
accelerate its transformation into a more diversified and
productive economy.
But the size of the opportunity also raises the stakes.
The success of Uzbekistan's investment boom will ultimately be
measured not by how much capital enters the country, but by how
effectively that capital changes what the economy produces, exports
and earns.
