While Uzbekistan's store of valuable natural resources is likely to provide a strong basis for covering the costs of long-term economic development, significant amounts of external funding will be needed to support its short-term development plans over the next decade. To stimulate foreign direct investment, legislation adopted in mid-1991 provides tax incentives and guarantees against expropriation, though falling short of securing the right to repatriate profits and third-party dispute arbitration. By the end of 1992, 450 joint ventures were registered in the country but only 135 were actually operating. The largest of these is with the US-based Newmont Mining Corp. Negotiations over further Western participation in the exploitation of a major oil field discovered in the Fergana Valley in early 1992 are currently underway. Fourteen bilateral agreements with China were signed in 1992.
In 1994, British-American Tobacco, one of the world's largest cigarette manufacturers, announced a $200 million deal to acquire 51% of state-owned Uztobacco. That same year, a Coca-Cola joint venture began operations in Uzbekistan. In August 1996, South Korea's Daewoo Group announced the planned investment of $2.5 billion in Uzbekistan to build telecommunications networks. Daewoo has invested $658 million to produce cars in Uzbekistan. In 2000 Uzbekistan and Israel announced plans to cooperate on the development of solar power technology.
In 1997, the International Monetary Fund, disappointed with Uzbekistan's rapid monetary growth, suspended the $180 million loan program. Many small- and medium-size Western businesses have begun freezing their investments or pulling out. Investors have complained that once the required bribes are paid and an investment is guaranteed, officials begin delaying, lengthening, and altering procedures so much that making a profit is often impossible. Despite the fact that the Uzbekistan economy appeared to be among the strongest in the late 1990s, government intervention in business deals were discouraging foreign companies from investing in the country. Prior to 1998, the government counted foreign credits as investments, greatly inflating investment statistics. The country's lack of currency convertibility, despite many promising opportunities, reduced foreign investment to a low level. The Uzbek government reports FDI of $298 million in 1998 and $188 million in 1999, the latest years for which statistics are available.