TASHKENT

Uzbekistan divested itself of one of the most tangible reminders of its Soviet past by selling the former KGB headquarters to a developer who plans to turn it into a shopping mall, an entertainment venue, or an office.

The once-feared, huge four-storey building in the city, next to well-known Saylgoh street (called locally Tashkent’s Broadway) was purchased by Metropol Group for 210 billion Uzbek soums ($19.8 million), the State Assets Management Agency (UzSAMA) said. It was part of a government sale of several state-owned properties. After the collapse of the Soviet Union, the building served as the HQ of the Uzbekistan Service for National Security (SNB), which moved to a new building over a year ago.

According to local media reports, Metropol Group was registered in Uzbekistan in February. The list of possibilities for the building’s future purpose was part of the auction conditions announced in April this year.

One of the other buildings, also in the same area, a former Soviet-era publishing house which issued all local and national Soviet dailies, was sold for $7.3 million, UzSAMA said. The agency said it would start the process of drawing up a purchase agreement with the winners, which included a local company that paid the best price for a hotel in Tashkent.

Uzbekistan is taking steps to improve its investment climate after more than two decades of economic isolation,  trying to leave behind its past as an autarkic system that viewed most foreign investments as a threat. The death of Islam Karimov, who had led Uzbekistan since before the Soviet breakup, in 2016 gave his successor, Shavkat Mirziyoyev, the opportunity to open the country to the outside world, through an ambitious reform plan geared to attracting foreign investors.

President Mirziyoyev issued a decree in October 2020 ordering the full or partial privatisation of over 620 state-owned companies and properties. The list includes state-owned companies in the energy, mining, chemical sectors, as well as Uzbekistan Airways.

In April, Uzbekistan appointed internationals Deloitte, Grant Thornton, and KPMG to advise UzSAMA on the sale of 18 state-owned companies and to ensure transparency in the privatisation process.

As well as offering state assets for sale, Uzbekistan has also sought to improve its investment climate and restore foreign investors’ trust by setting up a special legal panel for investment and competition issues.

The country’s reform drive has not gone unnoticed. The World Bank has rapidly scaled up support to Uzbekistan, with 21 projects totalling around $3.5 billion – the second largest World Bank programme in the Europe and Central Asia region.  The European Bank for Reconstruction and Development (EBRD) re-engaged with Uzbekistan in September 2018 after a long hiatus, raising its portfolio to 1.8 billion Euros.