A new World Bank report provides policy recommendations for Uzbekistan on how to boost foreign direct investment (FDI) and create new sources of economic growth. The study, released recently, will contribute to the preparation of the country’s new FDI strategy in support of its development goals over the next five years.
Recommendations for a National FDI Strategy and Roadmap for Uzbekistan: New Sources of Growth comes at an important time for the government of Uzbekistan, which has recently launched the National Development Strategy for 2022-2026, outlining key transformational priorities to accelerate the country’s economic growth. Among the Strategy’s main goals is attracting $5 billion in FDI on an annual basis.
“We hope that this new report will serve as an important foundation for government agencies responsible for developing the national strategy for attracting, facilitating, retaining and expanding FDI over the next five years. We also hope that the roadmap identified in the report will help unlock new sources of growth in critical sectors,” said Marco Mantovanelli, World Bank Country Manager for Uzbekistan.
The impacts of the COVID-19 pandemic, climate change, the war in Ukraine, and shifts in global production patterns have changed how multinational corporations think about their global investment strategies. In this context, the World Bank report offers a strategic vision and specific objectives for Uzbekistan on attracting FDI, identifies sectors with high growth potential for FDI attraction, and proposes an ambitious reform program to help maximize the contribution of FDI to the country’s overall economic development goals.
The combination of Uzbekistan’s ambitious forward-looking goals and analysis of its historical FDI performance demonstrates an urgent need to attract more and higher quality FDI sourced from advanced countries, particularly in more complex and knowledge-intensive sectors. Attracting additional FDI can contribute to increasing the performance of domestic firms, addressing critical gaps in innovation, enhancing global value chain participation, and creating higher skilled employment opportunities for Uzbekistan’s citizens.
To inform a targeted investment promotion program, the World Bank report identifies a set of target sectors that have the highest potential to meet Uzbekistan’s FDI attraction objectives.
Based on an in-depth sector competitiveness benchmarking exercise leveraging the World Bank Group’s FDI Sector Scan methodology, the report proposes a set of “ready-to-promote” sectors, where FDI is possible to attract in the short- to medium-term. And “aspirational” ones, which will require additional policy reforms to unlock their full potential for investment attraction.
Electrical equipment production, packaging materials, banking, and renewable energy make up the most promising, ready-to-promote sectors, while food processing and construction materials fall into the aspirational category.
The report also outlines a set of critical reform areas to further strengthen the country’s competitiveness to attract high quality investments. Leveraging the government’s past successful reform programs aimed at improving Uzbekistan’s investment climate, the report proposes key priority areas for future reforms including the following:
Modernizing investment legislation; streamlining investment incentives; enhancing the investment climate in priority sectors; strengthening investment promotion, including related institutions and processes; and leveraging the full potential of SOEs privatization and public-private partnerships (PPPs) for FDI attraction. To facilitate effective reform implementation, the report offers a detailed implementation plan and roadmap to achieve concrete results.
The report is part of a larger effort by the World Bank Group to encourage private sector-led growth, investment, and cross-border trade in Uzbekistan.
