Domestic structural and legislative changes within the region's most populous nation could have far wider implications.

Traditional Uzbakistani jewellery: A treasure lost to the wider world for more than 20 years.

The Uzbekistan jewellery sector is the latest to benefit from the largesse of Shavkat Mirziyoyev, the 60-year-old career politician who became the country's President in November last year. His most recent legislative initiative has seen import tariffs scrapped for jewellery equipment, raw materials, parts/components, and finished items. To crown it all, he has also abolished VAT on the sale of imported and domestically-produced jewellery until at least January 2020.

The move, however, didn't come about without one or two stipulations. Primarily, the government has specified that all of the additional revenue accruing to the industry on the back of these duty cuts must be re-invested in updating the sector's technological resources, with any remaining funds used as working capital, allowing manufacturers and exporters to up their output.

Assuming jewellery businesses adhere to their side of the deal, any such upgrade, coupled with the enhanced cash flow, could prove most timely. As well as boosting the domestic industry, Mirziyoyev's initiative has also opened up the market, with the end of its prohibitive import tariff regime suddenly making Uzbekistan's jewellery sector a tempting prospect for both overseas purchasers and investors, with Russia, Ukraine, China and Turkey seen as the most likely beneficiaries.

While the end of its offputtingly excessive levies may mark something of a new dawn for the country's jewellery trade, another earlier initiative is also set to make a substantial impact. Back in September, the country's 20-year-old policy of pegging the som – the local currency – to the US dollar at an artificially low rate was abandoned, while restrictions on the amount of foreign currency that businesses and ordinary Uzbekistanis could purchase were also removed.

This change was designed to end the country's two decades of virtual economic isolation, with would-be investors long-deterred by the unjustifiable exchange rate and the currency restrictions. It is now anticipated that Uzbekistan – the most populous country in formerly Soviet Central Asia – could see overseas investment levels return to the highs enjoyed prior to 1994, the year that Mirziyoyev's predecessor, Islam Karimov, introduced the fixed-rate currency exchange system.

As a sign of the importance of the jewellery industry within the country's newly liberalized economic regime, the Uzbekistan Jewellery Industry Association (Uzbekzargarsanoati) was launched by presidential decree late last month in Tashkent, the national capital. As well as taking on responsibility for preserving and enhancing the country's centuries-old traditional jewellery styles and craftsmanship, the body will also have a more contemporary mandate, which will see it charged with driving exports, overseeing overall quality standards and ensuring the industry's major players follow through on the government's call for a widespread technological upgrade.

The legislative, structural and technological changes set to reinvent the country's jewellery industry, however, are expected to have repercussions well beyond its borders. In fact, many within the business anticipate that Uzbekistan's re-emergence onto the wider economic scene could transform Central Asia's jewellery sector.

At present, the jewellery scene in the region is dominated by two particular players – Kazakhstan and Kyrgyzstan – both of which bring something entirely different to the market. Kazakhstan has a high proportion of affluent consumers, many of whom are keen jewellery purchasers, attributes that have seen the country develop an admirable distribution network, while also seeing it as home to the Esentai Mall, the region's only truly premium shopping destination.

By contrast, Kyrgyzstan has made itself equally important to the Central Asian jewellery trade by clearly establishing itself as the region's key re-export hub. Overall, the country has its extremely liberal business regime and its accompanying low import tariffs to thank for its strategic – and lucrative – re-exporting role.

Ironically, all of this jostling for position within the region may see many of the countries re-adopt the supplier/distributor roles they held some 2,000 years ago at the time of the classic Silk Road. With the Belt and Road Initiative – China's ambitious infrastructure development and trade facilitation programme, widely seen as the successor to this ancient trade route – set to snake its way through Central Asia and Eastern Europe, it could be most timely that such a venerable hierarchy is about to be restored.

Leonid Orlov, Moscow Consultant

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