Uzbekistan: Next frontier for UAE companies

As the largest consumer market in Central Asia, Uzbekistan is a country ripe with business opportunities.

By Bakhtiyor Ibragimov

Published: Tue 18 May 2021, 11:49 PM

In recent years the Republic of Uzbekistan has been opening up to the world. The country is on the path of accelerated dynamic development as it strengthens its relationships with foreign partners in trade, investment, innovation, green energy, tourism and other fields.

As the largest consumer market in Central Asia, Uzbekistan is a country ripe with business opportunities. Government-led reforms have brought positive changes to the nation’s business landscape with the retail sector already seeing growing activity from foreign investors and multinational companies.

The UAE has long been an important trading partner of Uzbekistan. However, bilateral relations have developed considerably following the official visit of the President of Uzbekistan Shavkat Mirziyoyev to the UAE in March 2019.

During the visit, a Joint Statement was adopted between the two countries. Nine intergovernmental and interdepartmental documents were signed, as well as investment agreements for the implementation of 11 joint projects.

Partners in food security

Uzbekistan occupies a leading position in the world for the production and export of a number of crops, such as apricots, carrots and cherries. Food products account for a large share of Dubai-Uzbekistan non-oil trade, which has grown steadily to reach Dh1.42 billion ($386 million) in 2020.

There is enormous potential for Uzbekistan to support the UAE and the wider GCC region with food security. The Central Asian country is developing the new logistics, as well as transport corridors for the supply of Uzbek fresh and processed fruit and vegetable products. In addition, other types of food products from Uzbekistan’s saline can easily compete in the UAE market.

Thanks to structural reforms and the implementation of measures to support sustainable development and modernisation of the agricultural sector, gross agricultural output grew by almost 7.2 per cent in 2016-2020. The average annual growth rate of agricultural, forestry and fishery production during the analysed period was about 2.6 per cent.

Looking to capitalise on this growth opportunity, several UAE companies, including Abu Dhabi-based Sura Holding have invested in projects designed to modernise Uzbekistan’s agricultural sector.

Energy investments

Another high-potential sector of mutual interest to the UAE and Uzbekistan is energy. Uzbekistan has seen an increase in the volume of UAE investments in energy projects across the country, reflecting a growing interest and business confidence in the market.

In November 2019, Masdar signed a power purchase agreement (PPA) and government support agreement (GSA) with JSC National Electric Grid of Uzbekistan (NEGU) and the Government of the Republic of Uzbekistan to design, finance, build, own and operate the 100MW photovoltaic plant, located in the Navoi region. In December, 2020 Masdar reached financial closure of the first PPP project — the Nur Navoi Solar Project.

During the visit of the President of Uzbekistan to the UAE in March, 2019, both sides agreed to develop by Masdar a 500 Megawatt wind farm project in Uzbekistan. On April 2, 2021, Abu Dhabi renewable energy company agreed to extend the capacity of this project to as much as 1.5GW. The wind farm, the second-largest utility-scale project in the country, will be the largest in Central Asia and help Uzbekistan reach its goals of generating 3GW of power from wind energy by the end of the decade.

In April, 2021 Dubai-based ‘Phanes Group’ signed a Power Purchase Agreement (PPA) and Investment Agreement (IA) for a 200 MW grid-connected solar PV plant in Uzbekistan. The Agreements include the technical and commercial terms for building, owning and operating a 200MWAC solar PV project including facilities connecting to Khimiya 220/110 kV Substation.

Tourism and retail opportunities

The government of Uzbekistan pays special attention to modernising the tourism industry, developing the regulatory framework for the sustainable development of the industry, organising services for foreign guests in accordance with international standards. Plans are in the pipeline to introduce halal certification, training of halal tourism guides and the construction of halal hotels.

Since February 2018, a visa-free regime has been established for citizens of Indonesia, Malaysia and Turkey, so that they can come without unnecessary hassle to visit the Muslim shrines of Uzbekistan. In March 2019, UAE citizens and residents were added to this list.

This is an important development that will facilitate business and tourism exchange between the two countries in the post-Covid era and beyond.

The UAE’s Majid Al Futtaim (MAF), the Middle East’s leading mall operator, last year established its presence in Uzbekistan as it opened its first of upcoming several Carrefour supermarkets in Tashkent. Such a strategic move sends a clear message of confidence to other companies in the GCC region that Uzbekistan is open for business and ripe with opportunity.

The expansion also highlights the vast potential that Uzbekistan’s retail sector has to offer, in which UAE companies can play a crucial role in developing modern retail in the country and creating value for the industry and the Uzbek economy.

Aligning ambitions

Looking ahead, Expo 2020 Dubai will be a prime opportunity to showcase Uzbekistan’s economic potential to the world, while Uzbek companies are expected to leverage the platform to boost their global reach.

The embassy of Uzbekistan in the UAE will continue to work closely with public and private sector stakeholders to ensure that bilateral relations continue to develop and flourish. We have benefited from the valuable support offered by Dubai Chamber’s representative office in Azerbaijan to identify bilateral business opportunities and forge new partnerships that create mutual benefits and economic growth.

Bakhtiyor Ibragimov is Ambassador of the Republic of Uzbekistan to the UAE.

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