Uzbekistan was “almost untouched by Western capital” until recently, according to Laurence Fletcher in the Financial Times.
As a dictatorship, the country ranked on political rights and civil liberties alongside North Korea. With widespread corruption and controls over currency, “most investors had no limits.”
Few expected that when he took over in 2016, President Shavkat Mirziyoyev–who served as prime minister under the former president–would change a lot. But by embarking on major reforms, he “shocked the international community.”
The new government has released political prisoners and simplified the tax code, “to turn it into a tax collection mechanism rather than bribes,” says The Economist. It restructured state-owned firms and devalued the currency, bringing alignment between official and black-market rates.
Uzbekistan has leapt from 166th in 2012 to 76th in 2019 in the Ease of Doing Business rankings of the World Bank. In its first international bond offering, it raised $1bn last month. But there are still serious hurdles.
The public float of the Tashkent stock market is only $300 m (compared to the $3.3trn of the FTSE All-Share). And corporate governance, as with many frontier markets, is a “major risk,” says Fletcher.
Cronyism endures and political opposition does not exist. Still, to keep an eye on this is a frontier market.