The report highlights that Uzbekistan remains the only country in Central Asia where PayPal is not available, citing Article 271 of the Law "On Personal Data" as the primary reason. Under this article, personal data of Uzbek citizens must be stored within the country’s borders. This means that international companies wishing to operate in Uzbekistan must establish local data centers, build specific communication infrastructure, hire local staff, and comply with national certification requirements – investments that can cost tens of millions of dollars.
“Given the relatively small size of Uzbekistan’s market, many global companies choose not to enter it at all,” the report notes. “This leads not only to a lack of convenience for consumers but also to direct financial losses. Due to the absence of PayPal alone, Uzbekistan missed out on at least $1.8 billion in revenue over the past five years. More broadly, the data localization requirement causes an estimated annual loss of $3.2 to $4.5 billion, equivalent to 4–5.7% of the country’s GDP. The hardest-hit sectors include e-commerce, banking, IT, startups, and fintech.”
The report underscores that a single vague and poorly constructed article in the law is deterring substantial foreign investment. Tech giants such as PayPal, Stripe, Netflix, Spotify, Amazon Web Services, and Microsoft Azure are absent from the Uzbek market. Even Google Pay and Apple Pay are only partially functional.
The restriction is also stifling the development of fintech, IT, and startup ecosystems, the report argues. Export opportunities are shrinking due to the lack of electronic payment systems and essential digital services. The growth of AI and digital services is also slowing.
“Without international payment systems, Uzbekistan is losing between $500 million and $800 million annually. If digital payment services were fully operational, GDP growth could increase by billions of dollars a year,” the analysis states.
A barrier to artificial intelligence and digital growth
The report concludes that the law poses a serious obstacle to the development of artificial intelligence (AI) in Uzbekistan. This is because many AI technologies rely on cloud servers, APIs, and international platforms, which are effectively restricted under the law. As a result, foreign investors are staying away, startups are stagnating, and the digital market is failing to progress.
Uzbekistan significantly lags behind neighboring countries in terms of digital economy development, cloud technology adoption, and attracting international tech companies.
