The Japan Bank for International Cooperation (JBIC) and the Mitsubishi UFJ Financial Group (MUFG) will lend nearly $145-148M in funding to Uzbekistan’s largest state-owned telecommunications company, Uzbektelecom. The agreement, signed on January 27, will kick off the JBIC export loan agreement of $87.5M. MUFG Bank will lend an additional $52.8 million. Japan’s Nippon Export and Investment Insurance (NEXI) will insure MUFG’s loan contribution. 

The deal will allow Uzbektelecom to purchase “high quality” equipment from the Toyota Tsusho Corporation. Such equipment will be used to build data centers and telecommunication networks. In addition to providing equipment, the money will be used to develop logistical “know-how” provisions for the project.

The funding initiative is part of a larger strategy to support infrastructure development in Uzbekistan. Specifically, the deal follows the December 2019 memorandum of understanding signed by Uzbekistan and JBIC for “structuring projects in the Uzbek telecommunications sector” with the Ministry of Digital Technologies of Uzbekistan (formerly called the Ministry for Development of Information Technologies and Communications). So far, projects worth over $2.6 billion have been initiated in collaboration with JBIC—$1.4B of which was provided by JBIC. 

In 2020, Uzbekistan approved a "Digital Uzbekistan-2030" strategy aimed at pushing the country forward into the new digital economy, with “improved telecommunications infrastructure with faster speeds and increased capacity.” Last year, Japan hosted a meeting between Director General of the Agency for Strategic Reforms of Uzbekistan, Shukhrat Vafayev, and the Chairman of the JBIC, Nobumitsu Hayashi. The leaders discussed continuing work in areas such as energy, science, technology, and communication. The recent telecommunications deal aligns with the bilateral goals set by the two countries in recent years.

Uzbekistan and Japan have established strong and long-standing relations in other trade fields such as cotton. Japan’s investment in Uzbekistan’s telecommunication capabilities is yet another indication that the countries are interested in strengthening and expanding their relations.

In general, Japan has maintained a close relationship with the countries of Central Asia. What has evolved from Japan’s “Silk Road diplomacy”—relations-based historical “connections and cultural similarities” between Japan and Central Asia – are relations centered on a commitment to technological and infrastructural investment in the region. 

Beyond mere investment initiatives, Japan’s collaboration with Central Asian countries over the decades has proven to be a catalyst for diversification and decolonization. “Unique in its intention to assist in decolonization by supporting the voluntary efforts and mutual help of Central Asian countries,” Japan was the first foreign partner to implement the multilateral “5+1” dialogue with Central Asian countries that is now widely used by other nations and known as the C5+1 Ministerial format.

In December 2022, Japan also jointly signed a $4.1M initiative with the United Nations Development Program (UNDP) to “promote resilient communities in all countries of Central Asia” in an effort to prevent the rise of violent extremism. 

At times, China and Russia’s sweeping involvement in Central Asian energy, trade, and security sectors has overshadowed this. However, Japan has countered this by reaffirming its desire to uphold rules-based international order in its relations with the region. Foreign Minister Yoshimasa Hayashi, met with counterparts from Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan at the end of last year to confirm that they mutually remain committed to principles of international law. 

In some ways, Japan’s investment in Central Asia is viewed to be in rivalry with China’s “Belt and Road Initiative.” However, Japan’s longstanding history of investment, not only in the region’s economy but also in its social and structural development, points to a more nuanced relationship aimed at strengthening Central Asia’s shift towards diversification and greater independence.