In a move aimed at boosting economic growth and attracting investments, Uzbekistan has unveiled a comprehensive set of measures to accelerate the privatization process in the country.
President Decrees No. 162 and No. 163 mark progress in the nation's ongoing economic restructuring. Decree No. 162 outlines strategies to diminish state intervention in economic activities, while Decree No. 163 simplifies the privatization of key state-owned enterprises.
The newly announced measures represent a continuation of Uzbekistan's commitment to modernizing its economy and fostering a favorable investment climate. Over the years, the country has progressively expanded its privatization agenda, adhering to international standards of financial reporting and transparency.
A key aspect of the latest decree is the planned auction of 247 enterprises with state-owned shares. These auctions will be conducted online, facilitating transparency and efficiency in the privatization process. Foreign investors will be permitted to make payments for acquired assets in foreign currency through the Tashkent Stock Exchange, thereby encouraging foreign investment in the Uzbek market.
Furthermore, the decree outlines plans to organize Initial Public Offerings (IPOs) and Secondary Public Offerings (SPOs) for 12 large enterprises on the local market. Four companies are earmarked for international IPO/SPO, signaling Uzbekistan's intention to attract global investors and expand its economic reach beyond national borders.
To ensure the success of the privatization program, international consultants will be engaged to oversee the process. This strategic move is aimed at leveraging global expertise to optimize the privatization efforts and maximize investor interest.
In addition to the sale of enterprises, the decree emphasizes the importance of privatizing state-owned real estate. Over 1,000 properties will be put up for auction, with entrepreneurs given the opportunity to directly purchase state assets at appraised values.
The decree also introduces price reduction mechanisms to expedite the privatization process and mitigate risks for potential investors. State assets that remain unsold for a certain period will undergo price reductions, incentivizing timely transactions.
Uzbekistan's journey towards privatization dates back to 2019, with decrees outlining the gradual transition towards a market-driven economy. Each decree has built upon the foundations laid by its predecessors, culminating in the latest measures aimed at fostering sustainable economic development and attracting new investments.
While the new decree represents a step forward, its success will ultimately hinge on effective implementation, transparency, and investor protection. Moreover, it is imperative to address the social implications of privatization to minimize any adverse effects on workers and society as a whole.
President Shavkat Mirziyoyev's extensive privatization campaign, launched in 2020, stands as a cornerstone of his reform agenda, aiming to accelerate the transition to a market economy. Since his inauguration in 2016, President Mirziyoyev has been steadfast in his commitment to opening up the once tightly regulated Uzbek economy to international investors, as part of the overarching vision of "New Uzbekistan."
In the same vein, the government's pledge in 2020 to privatize a total of 620 state-owned enterprises, whether fully or partially, underscores its determination to embrace market-driven reforms. Notable entities slated for privatization include Uzbekneftegaz, the state oil and gas company, and the Navoi Mining and Metallurgical Company, renowned for operating Muruntau, the largest open-pit gold mine globally.
In 2021, State Assets Management Agency of Uzbekistan (UzSAMA) oversaw the rapid privatization of state-owned enterprises (SOEs) to domestic and international investors, achieving significant progress. The cotton sector was fully privatized, and wheat production was on track for completion by end-2022. The successful privatization of the Coca-Cola bottling plant by Turkish Coca-Cola İçecek (CCI) Group, along with over $250mn worth of deals closed during an economic forum in September 2021, demonstrated the government's commitment to privatization.
In December 2022, a privatization agreement for Ipoteka Bank was finalized. OTP Bank, participating in the privatization of Uzbekistan's banking industry, has purchased 75% of the shares of Ipoteka Bank, the country's leading financial institution, formerly held by the Ministry of Economy and Finance of Uzbekistan. Efforts extended to sectors beyond traditional industries, including real estate assets like Hotel Uzbekistan.
The banking sector saw reforms, with Poytaxt Bank already privatized and plans for digital banking services. UzSAMA prioritized transparency and fairness, adhering to high governance standards and engaging international consultants. Legislative reforms aimed at refining the privatization framework were ongoing, with ambitious targets to reduce the government's share in the economy by 75% by 2025, including privatizing major state-owned companies like the Navoi Mining and Metallurgical Combinat through IPOs.
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