Small and Medium-Sized Enterprise Finance in Uzbekistan: Challenges and Opportunities

Figure 18: Leasing Market in Uzbekistan 
Source: Association of Lessors of Uzbekistan.
Table 8: Leasing Services Market in 2017 
 
Leasing 
Portfolio 
(billion SUM) 
Market 
Share 
Volume of New 
Leasing Deals 
(billion SUM) 
Market 
Share 
Leasing companies 
2,098 
78,2% 
963.8 
62.0% 
Commercial banks 
585.1 
21.8% 
589.8 
38.0% 
Source: Association of Lessors of Uzbekistan.
There is no licensing of leasing services, except for commercial banks that provide 
leasing services who are licensed as banks. There is no obligatory ratio of leased asset 
value to collateral value and no regulation on interest rates. Lease objects are exempt 
from property tax and lease payments are exempt from value-added tax (VAT); small 
enterprises had a holiday from lease profit tax until January 2017. Leasing contracts must 
be greater than 12 months’ duration. 
Although the regulation of leasing companies is fairly light, banks face some constraints 
in undertaking leasing operations. The Central bank of Uzbekistan limits leasing activity 
to no more than 25% of banks’ Tier-1 capital, making leasing relatively more costly for 
banks. Many banks split the activity into a child-company to avoid 
this limitation. Leasing companies owned by banks benefit from easier access to
low-cost funding.
At the same time, the leasing market faces some growing pains that require further 
development, and some improvements in the legal framework would help. Like 
microcredit organizations, leasing companies often struggle to find long-term funding and 
there is a disproportional regional distribution of leasing services: compare the share of 
Tashkent city of 30% with regions that have from 3% to 9%.
In addition, there is a lack of knowledge among many potential customers about
how leasing works and its potential benefits. One leasing company has conducted a 
market analysis and estimates that 80% of the potential market does not understand the 
product (the same company derives more than a third of its customers through deals 
with suppliers). Also, clear and comprehensive rules for priority over property 
are needed.

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ADBI Working Paper 997 
D. Tadjibaeva 
19 
In order to further promote growth of leasing, it is advised to consider building up a 
secondary market for leased objects and amending the Leasing Law to allow for 
secondary leases. Adoption of the law will provide a major boost to the industry. The 
regulator can support leasing further by relaxing regulations defining eligible lease 
objects to allow for greater variety of equipment and machinery.