NAPP’s Vyacheslav Pak: Uzbekistan Must End ‘Toothless Regulator’ Era to Attract Investors
The number of joint-stock companies in Uzbekistan has fallen by over 80% in the past two decades. From around 3,500 in 2004–2005, only 650–680 remain today.
This figure was revealed by Vyacheslav Pak, First Deputy Chairman of the National Agency of Perspective Projects (NAPP), during the panel session «Where Is the Investor’s Focus Shifting?» at the Kursiv Uzbekistan conference «Capital Market in Uzbekistan: New Opportunities for Investment» held in Tashkent.
«We saw the paradox: the market kept pushing equity instruments while the issuer base collapsed,» said Pak.
Bonds rise as regulator shifts focus
With equity issuance limited, NAPP redirected its strategy to bonds. At the start of reforms, only UZS 300 bn worth of bonds were in circulation. Today, the figure stands at UZS 1.9 tn.
«If we look at the global trend, say on the Moscow Exchange, about one-third is equities and two-thirds are bonds,» Pak noted. But in Uzbekistan, we ended up with a distorted structure: limited tools, weak infrastructure, and technological constraints,” Pak noted
Banks and microfinance institutions are now the main issuers, using bonds as alternatives to loans and deposits.
Regulatory gaps limit investor protection
Despite progress, Uzbekistan lacks key elements for a robust bond market. There is no centralised risk evaluation. Investor obligations are not reflected in credit bureau data.
«If we compare ourselves with other countries — the SEC in the U.S. or the Bank of Russia — we are a ‘toothless regulator’,» Pak said. «Even financial penalties were once removed from the law, all in favour of liberalisation and protecting entrepreneurs.»
FX bonds and foreign securities: What’s next for local investors?
Pak pointed to ongoing efforts to expand access to international instruments. Uzbek investors currently rely on risky offshore platforms to buy shares like Apple or Tesla.
«People look for workarounds, go to questionable platforms — Libertex, Global Trader, and othersThat results in financial pyramids and fraud. And we ask ourselves: why not make this legal on our own exchange,» he explained.
A presidential decree now supports a pilot exchange platform for foreign securities. In parallel, NAPP is working on enabling FX-denominated bonds.
Mortgage-backed bonds to support growing housing demand
With Uzbekistan’s population growing by about 1 mln a year, demand for housing is rising fast.
«We need capital market tools to support construction. One is securitisation and mortgage bonds,» said Pak.
Together with the Central Bank, the Ministry of Economy and Finance, and the Mortgage Refinancing Company, NAPP is drafting temporary regulations and preparing pilot deals.
Outdated fund and JSC laws hold back capital flows
Although a law on investment funds exists, few operate in practice due to strict rules.
«Funds are limited to securities with tight restrictions. But there’s demand for investing in SMEs, property, and more. We’re revising that,» he said.
On joint-stock companies, Pak noted that the recent increase in numbers was artificial. It stemmed from mandatory re-registration of insurance and payment firms.
«This isn’t organic growth. We’re preparing a new version of the law on JSCs. We need to simplify it and remove excessive obligations. In Russia, for example, non-public JSCs aren’t required to publish audits,» he said.
NAPP urges market players to engage in reforms
Pak ended with a message to market participants.
“We distribute proposals via NAII, the exchange, and other channels, and ask for feedback. The response? Almost nothing. Or just isolated remarks. We want to hear from you: what tools are missing? What legal barriers exist? What needs to change? Talk to businesses and come to us with proposals. We are ready.
In general, we see demand from the public. We see demand from business. But the infrastructure and legislation still lag behind. We need to build this together“
