The Asian Development Bank's (ADB) forecast for Uzbekistan is 'very positive,' with the bank's interest in investments increasing amid ongoing reforms in the country. This was stated on May 4 in Samarkand by Isabelle Chatterton, Director General of the Private Sector Operations Department at ADB.
Responding to a Gazeta correspondent's question about the most significant risks for investors in Uzbekistan, Chatterton emphasized that ADB assesses a combination of risks rather than a single factor. 'When considering investments in all countries, including Uzbekistan, we evaluate the overall risk aggregate. As a credit-investment institution, we approach this issue similarly to other private creditors and investors. We analyze country risk, sponsor risk (who exactly stands behind these investments? which company?) and specific project risk. By combining these three factors, we structure a framework that allows us to mitigate some of the risks,' she said.
According to her, in some cases investors must enter projects with full awareness of potential risks. 'In some cases, we have to enter investments with our eyes wide open. As for Uzbekistan, the government is undergoing an amazing transformation, which is reflected in the assessments of rating agencies. As you can see, due to the improved situation, our interest and 'appetite' for risks in Uzbekistan have increased,' the ADB representative noted.
Chatterton stressed that when evaluating potential partners, the bank focuses on their readiness for long-term work and systemic changes in the economy. 'When evaluating sponsors, we choose those oriented toward a long-term perspective and systemic changes in the industry and economy. That is why we invested in the energy sector — conditions have formed that allowed many investors to see a portfolio of reliable long-term projects. One project is not enough for investors — they need a long-term perspective. The energy sector provided this, and we are pleased with our cooperation with the government in this direction,' she said.
The department head added that ADB is also interested in other sectors included in the government's transformation program, where a 'clear reform strategy' is visible. She also noted that one of the main risks remains execution risk. 'When it comes to risks related to specific projects — and this applies not only to Uzbekistan but to all 50 member countries where we operate — it is essentially execution risk. It is very difficult to assess. It is related to the depth of the sponsor's expertise in a particular industry, the potential of the management team, and how stable and predictable government policy in that area is in the long term. Then investors can see a clear path for making investments and recovering funds,' the ADB representative said.
'Overall, our forecast for Uzbekistan is very positive. Our interest in investing in the country remains at a high level,' she emphasized.
Chatterton also answered whether Uzbekistan's status as a landlocked country surrounded by similar states is considered a risk. 'Not now. It was so before — before the technological revolution that brought personal computers, the internet, and Wi-Fi. Today, physical dependence is certainly no longer decisive, because countries can connect virtually. Perhaps you remember that yesterday our president launched the 'Digital Silk Road for Asia' initiative,' she said.
According to her, digital connectivity allows countries to participate in global supply chains and develop new economic directions. 'It should also be noted that digital connectivity enables countries to become part of global supply chains and access sectors where regional demand hubs exist. This creates conditions for capital to move across borders, and for workers to participate in the gig economy and work remotely. Therefore, today we essentially see no disadvantage in this [lack of sea access],' Chatterton said.
At the same time, she acknowledged that geographical location still creates certain limitations in transporting goods. 'For example, one has to depend on others for using port capacities and delivering goods whose transport by plane is very expensive. Heavy cargo is always shipped by sea because it is much cheaper for companies. However, today, as long as countries have physical connectivity such as railways and highways, as well as the ability to export their products through other ports, there should be no problems,' she said.
The ADB department head noted that digitalization is changing previous perceptions of countries' competitive advantages. 'In fact, the notions of comparative and competitive advantages of countries that have been in place for decades are now being largely reconsidered due to digitalization. Countries can actually 'rediscover' themselves, relying on the opportunity to become part of the digital economy. Therefore, in the modern era, I do not consider a country's lack of sea access to be a problem,' said Isabelle Chatterton.
Recall that on May 3, Shavkat Mirziyoyev met with ADB President Masato Kanda in Samarkand. The negotiations discussed a new strategic partnership program worth $12.5 billion until 2030. It envisages modernizing the social sphere, reducing poverty, and supporting green energy. The current project portfolio amounts to about $16 billion.
Source: www.gazeta.uz