Investing in Uzbekistan: How to Start Earning in the Market?

In recent years, Uzbekistan has made significant strides in economic, legal, and social development. This is evidenced by the fact that Uzbekistan's economy grew by 6% in 2023 (over $90 billion). The GDP per capita has increased to 28.98 million soums (over $2,000). According to the Central Bank, the volume of foreign direct investment (FDI) in Uzbekistan's economy reached $7.2 billion in 2023, which is double the amount from 2022.

It is also worth noting that Uzbekistan is in the process of joining the World Trade Organization (WTO), which will open new horizons for the republic.

All these indicators clearly show that today Uzbekistan is a country with a rapidly growing economy, offering a wide range of opportunities for investors: the securities market, real estate investment, precious metals, and more. The investment market is also developing rapidly, providing more opportunities for capital investment and growth. However, successful investing requires knowledge of the basics and strategies. Let's explore what you need to know and how to start investing with the help of industry specialists.

What is Investing?

Investing is the process of allocating resources into various assets with the aim of generating profit in the future. This can include purchasing stocks, bonds, real estate, commodities, cryptocurrencies, and other financial instruments. The goal of investing is to increase capital and ensure long-term financial stability.

It offers several advantages, including the potential for capital growth. Successful investments can protect you from the devaluation of your money. Additionally, income can be generated without the need for daily employment.

However, there is a risk of losing invested funds due to market fluctuations, unsuccessful investments, or economic instability. Therefore, it’s important to be prepared for potential losses and to have a risk management strategy in place.

Where is the Best Place to Invest? Insights from Experts

In the world of finance and investments, where every step can lead to significant changes, having a reliable guide is essential, – believes Andrey Sadykov, an expert in the field and head of the real estate portal in Uzbekistan Realting.uz.

In response to the questions: “Is it possible to start investing in Uzbekistan with $1,000? And where should beginner investors begin?”, Andrey provided the following answer:

First, I would recommend that novice investors focus on education in this field. $1,000 is an excellent starting amount to invest in your education. I believe this will yield the highest return. This will provide a solid foundation for further steps.

Real estate attracts with its stability and potential for long-term value growth, especially in Uzbekistan, where the market continues to develop dynamically.

For example, my forecasts for this year are that the price per square meter on the secondary market will increase by 20-25% throughout 2024, with a maximum increase of 6% per quarter. If a square meter currently costs $1,000, it will be worth $1,200 in a year.

In new buildings, the price per square meter will rise by 30%, from $1,000 to $1,300. The number of transactions in total will increase by 6-7%, – shared Andrey Sadykov.

The market in Uzbekistan offers numerous opportunities, from real estate to agriculture and tourism. It’s important to remember that each sector has its own characteristics and requires a deep understanding. Securities are also of interest to beginner investors due to their low entry threshold and the opportunity to gain valuable market knowledge. Bank deposits are the safest option, although their profitability is typically limited, – stated the expert, analyzing other investment niches.

I want to emphasize that success in investing requires patience and education. One should not expect instant results. It is important to continuously improve your knowledge and skills, – concluded Andrey Sadykov.

The founder and CEO of MELA family Holding, Evgeny Mozheiko, also shared his insights and knowledge with us.

Before embarking on their journey, every beginner investor needs to determine their investment goals. It is essential to assess one’s capabilities in the initial stages. The investment process should not be a one-time event; it requires constant attention and additional funds. Every investor should initially define their strategy and stick to it for at least a year, – said Evgeny.

The expert also noted that the initial capital of $1,000 is best directed towards self-education.

Invest these funds not into stock market instruments, cryptocurrency, or Forex market tools, but invest this money in your education. Enroll in courses to improve your financial literacy in investing, – he advised.

When asked: “Where is it best to invest funds?”, Evgeny responded:

The most common investments are in real estate, starting one’s own business from scratch, or expanding an existing business, as well as bank deposits, cryptocurrency, Forex market instruments, and even investing in what is commonly referred to as a piggy bank, meaning “money under the mattress”.

Let’s start with the piggy bank. What makes it attractive? Undoubtedly, it provides quick access to money, without the need to go anywhere; you know that the money is in your safe, or in a three-liter jar under the mattress, in a chest, and so on. At the same time, it does not require any specific knowledge or skills. What are the downsides of this type of investment? The most significant downside is the devaluation of your money. Inflation simply eats it up!

Now regarding bank deposits. Yes, undoubtedly, bank deposits are one of the most common and accessible forms of savings. Why are they so popular? Because everyone does it. Remember the advertising campaigns from Soviet times that encouraged us to keep money in savings banks. Even then, the public was taught to store money not at home, but in savings accounts, accumulating interest on deposits. What are the advantages of a deposit over a piggy bank? Well, undoubtedly, the bank at least pays some interest for investing in a deposit. Moreover, you also do not need to possess any special knowledge; you simply go to the bank, sign a contract, deposit a certain amount of money at a specified interest rate for a certain period, and that’s it. It is also worth noting that the interest rate on individual deposits in Uzbekistan currently ranges from 23 to 25%. Can you imagine what a wonderful deposit this is in Uzbekistan? You don’t need to complicate things; just bring the money, and the bank will handle everything for you.

What are the downsides of a bank deposit? There is the risk of bank default, meaning bankruptcy. We know many instances of licenses being revoked. For example, last year, two banks in Uzbekistan had their licenses suspended. So, the situation is such that you do not manage your investments, do not know what is happening in the bank, and do not monitor its loan portfolio.

Investing in one’s own business. Undoubtedly, in this case, initial capital is necessary—either your savings or borrowed funds. And if you take out a loan, you must clearly understand that you will need to repay the entire amount borrowed plus pay monthly interest throughout the entire loan period.

For a business to be successful, you will need to invest energy into choosing a business idea, developing a business plan, and assembling a team of like-minded individuals. It is important to understand that a business will require your involvement twenty-four-seven and will be affected by economic cycles, seasonality, and competitive environment. Additionally, all the geopolitical situations currently unfolding in the post-Soviet space can positively or negatively impact your business.

On the other hand, if we talk about the advantages, for some, business is a significant life project that can be passed down through generations and provides certain benefits to residents of a specific region or even the entire country. In such cases, you derive a strong emotional charge from doing what you love. Furthermore, you can establish a system that generates income without your direct involvement, allowing you to receive dividends as a shareholder, detached from operational activities, – explained the expert, elaborating on his position.

The stock market is definitely not a cure for poverty. If it were that accessible and easy to earn income, then probably everyone would be profiting there, and there would be no poor people. The stock market can ruthlessly consume all the money you have invested.

The primary downside of this instrument is that it requires specific knowledge, ongoing practice, and