ISLAMIC FINANCE ARRIVES IN UZBEKISTAN

Finance  I  The Investor Uzbekistan 2026  I  Analysis

BACKGROUND

In Kuala Lumpur and Jakarta, Sharia-compliant banks hold close to half of domestic financial assets. In Riyadh and Abu Dhabi, Islamic lenders underwrite sovereign projects running into hundreds of billions of dollars. In London and Luxembourg, Sukuk listings number in the hundreds, and Frankfurt, Dublin and Ireland's Euronext Green Bonds market have built corridors between Gulf capital and European issuers.

On 27 March 2026, President Mirziyoyev signed the law that brings Uzbekistan into this system. Effective from 29 June 2026, the framework gives the country a regulated channel into the fastest-growing segment of global finance.

A GLOBAL ASSET CLASS

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Islamic finance is no longer a regional specialism. The Islamic Financial Services Board reported total global assets of $3.88 trillion in 2024, up 14.9 percent year-on-year, with Islamic banking alone growing 17 percent. Standard Chartered expects the industry to reach $7.5 trillion by 2028. Mordor Intelligence forecasts $9.31 trillion by 2030 on a compound growth rate above 11 percent. The Sukuk market crossed $1 trillion in outstanding debt at the end of 2025, roughly tripling in a decade. In February 2026 Bloomberg launched the Shariah Sukuk Indices, a rules-based benchmark family that puts Islamic bonds on the same institutional footing as conventional fixed income.

Saudi Arabia and Iran each hold 25 to 30 percent of global Islamic banking assets. Malaysia commands 12 percent, the UAE 10 percent. The UAE targets AED 2.56 trillion in Islamic banking assets by 2031. Indonesia is the largest sovereign Sukuk issuer on Nasdaq Dubai, with $24 billion in outstanding listings across 21 issuances. Around 1,400 Islamic financial institutions now operate in more than 80 countries. In every major Muslim-majority economy, Sharia-compliant finance has moved from niche product to central architecture.

EUROPE AS A GATEWAY

The European story is instructive for Uzbekistan. The United Kingdom issued sovereign Sukuk in 2014 and 2021, and London remains one of the world's leading centres for Sukuk listings and advisory work. Luxembourg listed its first Sukuk in 2002 and its first euro-denominated sovereign Sukuk in 2014, since when the Luxembourg Stock Exchange has listed over €100 billion in Sukuk and built the leading European domicile for Islamic investment funds. Germany, Ireland, France and the Netherlands have amended tax codes to create neutrality between conventional and Islamic instruments.

DOMESTIC MEETS FOREIGN CAPITAL

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A UNDP survey commissioned ahead of the law found that 68 percent of the Uzbek population and 60 percent of businesses prefer financial services aligned with religious principles. Roughly 20 percent of citizens have historically declined to use conventional credit for religious reasons, leaving a substantial pool of savings outside the banking system.

The law authorises fully Sharia-compliant banks, Islamic windows within conventional lenders, and Islamic microfinance institutions, together with the full instrument set of murabaha, mudarabah, musharakah, ijara, istisna, salam, wakala and Sukuk. A Council for Islamic Finance under the Central Bank will enforce compliance, with an advisory board drawn from jurists and practitioners in the Gulf and Southeast Asia. Tax amendments exempt VAT on Sukuk and Islamic leasing, and income from Sharia-compliant deposits is exempt from personal income tax.

On the international side, the Islamic Corporation for the Development of the Private Sector is already working with nearly half of Uzbekistan's banks to prepare core banking systems, product sets and staff certification. The sequencing is staged. At least one commercial bank will launch Islamic window operations in 2026, with the first retail services expected in 2027. Between 2026 and 2030, two fully-fledged Islamic banks are expected to be established. The updated Uzbekistan 2030 Strategy raises that threshold to three commercial banks offering Sharia-compliant services by the end of the decade.

THE NEXT PHASES

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The Islamic Development Bank has estimated that full implementation could attract $10 billion in investment and create more than 100,000 jobs. Shorter-term official projections point to $1 billion in additional investment and deposits from the initial phase, rising to a $5 billion annual financing potential once the system is fully operational. The first wave of demand will come from SMEs in agriculture, light manufacturing and construction materials.

Gulf sovereign wealth funds and Malaysian institutional investors have signalled preliminary interest in anchor Sukuk issuances from Tashkent. The pattern matches Türkiye, which now runs a $4 billion Islamic finance initiative in its energy sector, and Kazakhstan, which used the Astana International Financial Center to build a Shariah-compliant corridor to Gulf capital. The Tashkent International Financial Center, announced in March 2026 under a special legal regime drawing on English common law, will provide the capital-markets infrastructure. Green Sukuk, already 10 percent of global issuance, fits directly onto the country's 2030 renewable energy targets.

The 29 June effective date matters. It opens a regulated channel at the moment when the global Sukuk market has institutionalised, when Gulf allocations are diversifying and when European centres are competing for the same flow. Uzbekistan joins the system at full size.