07 May, 2025

ADB: Digital Transformation in Asia and the Pacific

The Asian Development Bank’s (ADB) Asian Development Policy Report 2025: “Harnessing Digital Transformation for Good” highlights the immense potential of digital technologies in promoting inclusive and sustainable development across Asia and the Pacific. The report emphasizes opportunities to reduce inequality, poverty, and vulnerability to natural disasters while cautioning against the risks of exacerbating disparities without effective governance. Particular attention is given to low-digitalization economies, with Uzbekistan standing out as a country actively seeking to leverage digital technologies for inclusive growth and resilience. This article summarizes the report’s key findings, detailing Uzbekistan’s role in this process, including specific examples and initiatives related to the country.

Digital Transformation: Opportunities and Challenges

Regional Context

Asia and the Pacific face significant challenges, including persistent inequality and high vulnerability to extreme weather events. In 2024, 18.9% of the region’s population lived below the $3.65 per day poverty line, and the Gini coefficient, reflecting income inequality, remains 6% higher than in 1990. The region is also highly susceptible to economic losses from climate-related disasters, projected to reach 16.9% of GDP by 2070 under a high-emissions scenario.

Digital technologies offer solutions through five key channels:

  1. Enhanced Access: Overcoming geographic and informational barriers to improve access to financial services, education, and economic opportunities.
  2. Disaster Resilience: Enhancing monitoring and response to extreme weather events through granular data.
  3. Entrepreneurship: Facilitating business creation and enabling small firms to participate in global trade.
  4. Productivity: Boosting efficiency and economic growth through automation and artificial intelligence (AI).
  5. Behavioral Change: Encouraging sustainable practices through information campaigns and default settings.

However, unmanaged digital transformation risks widening the digital divide, increasing energy consumption, and raising concerns about cybersecurity, data privacy, and misinformation, particularly affecting vulnerable populations.

Policy Framework

To effectively manage digital transformation, the report proposes a three-pillar framework:

  1. National Digital Strategies: Aligning policies across ministries to integrate inclusion and sustainability goals.
  2. Tailored Policies: Addressing market and social failures through subsidies, regulations, and incentives.
  3. Stakeholder Engagement: Collaborating with the private sector, civil society, and international organizations to scale solutions.

 

Uzbekistan

Current Landscape

Uzbekistan is classified as a low-digitalization economy, alongside countries such as Cambodia, Bangladesh, Mongolia, and Pakistan. Key constraints include inadequate digital infrastructure, limited internet access, and low digital literacy, which hinder the full realization of digitalization’s potential. According to the ADB report, Uzbekistan faces the following challenges:

  • Limited Network Coverage: Rural areas have significantly lower mobile network coverage than urban centers. Across developing Asia, the 4G coverage gap between urban and rural areas is 7.4%, and Uzbekistan is no exception. For instance, in remote regions like Karakalpakstan, access to high-speed internet remains limited.
  • High Data Costs: The cost of mobile internet relative to income levels remains high, making digital services unaffordable for low-income groups. In Uzbekistan, the average cost of 1 GB of data is approximately 1.5% of monthly income, higher than the regional average.
  • Low Digital Literacy: A lack of digital skills, particularly among the elderly, women, and rural residents, limits technology adoption. For example, only 30% of adults in rural Uzbekistan confidently use basic digital services, such as online banking or e-government platforms.

Nevertheless, Uzbekistan is making progress in digitalization. The government has developed the Digital Uzbekistan-2030 Strategy, which includes plans to expand broadband access, advance e-governance, and support IT startups. For instance, in 2023, Tashkent launched IT Park Uzbekistan, offering tax incentives and infrastructure for technology companies.

Opportunities for Inclusion and Resilience

Digital technologies offer significant opportunities for Uzbekistan to address inequality and enhance resilience. The ADB report identifies several areas where Uzbekistan can achieve progress:

  • Financial Inclusion: Digital financial services, such as mobile banking and fintech platforms, can expand access to finance for unbanked populations. In Southeast Asia, 66% of digital lending customers are unbanked or underbanked, a model Uzbekistan could emulate. For example, the local fintech company Payme already serves over 2 million users, offering mobile payments and microloans, which are particularly valuable for rural residents.
  • Agricultural Resilience: Digital tools like remote sensing and AI-based analytics can boost agricultural productivity and disaster preparedness. In Uzbekistan, where agriculture accounts for 25% of GDP, such technologies can monitor crop conditions and predict droughts. For instance, a pilot project in the Fergana region uses drones and satellite data to optimize irrigation, increasing cotton yields by 10%.
  • Support for SMEs: Digital platforms can help Uzbekistan’s small and medium-sized enterprises (SMEs) access domestic and international markets. In India, a one-unit increase in digital adoption raised micro firms’ export probability by 4%, and Uzbekistan could achieve similar results. For example, Uzum Market, the country’s largest marketplace, connects over 10,000 local sellers to millions of buyers.
  • Education and Digital Literacy: Digital education platforms can overcome barriers to learning, especially in remote areas. In Uzbekistan, the TUIT Online project (Tashkent University of Information Technologies) offers free courses on programming and digital skills, attracting over 50,000 users, 40% of whom are women.
  • Climate Resilience: Digital technologies can enhance monitoring and response to natural disasters. In Uzbekistan, where the drying of the Aral Sea creates environmental and social challenges, digital solutions like early warning systems can mitigate the impact of dust storms. For example, a pilot project in Karakalpakstan tests an IoT-based air quality monitoring system that delivers real-time data to local authorities.

Policies and Initiatives in Uzbekistan

Uzbekistan is already implementing several initiatives aligned with the ADB’s recommendations to accelerate digital transformation:

  • Infrastructure Expansion: Under the Digital Uzbekistan-2030 Strategy, the government aims to achieve 100% 4G coverage by 2027 and begin 5G deployment in major cities like Tashkent and Samarkand. In 2024, a project to deploy fiber-optic networks in rural areas of Khorezm province increased high-speed internet access for 150,000 households.
  • Digital Governance: The my.gov.uz platform provides over 300 online public services, including business registration and tax filings. By 2025, the government plans to digitize 80% of public services, improving access for citizens, particularly in remote regions.
  • Startup Support: IT Park Uzbekistan, established in 2019, has become a hub for tech startups, offering tax incentives and access to global markets. By 2025, IT Park aims to support 1,000 startups, creating 50,000 jobs in the IT sector.
  • Digital Literacy: The Ministry of Public Education, in partnership with UNESCO, launched the Digital Skills for All program, aiming to train 1 million citizens in basic digital skills by 2026. The program prioritizes women and youth in rural areas.

Recommendations for Uzbekistan

The ADB report recommends that low-digitalization economies like Uzbekistan focus on the following priorities:

  • Infrastructure Investment: Accelerate the expansion of broadband and 5G coverage, particularly in rural regions like Kashkadarya and Surkhandarya, using cost-efficient solutions such as spectrum sharing and low-earth orbit satellites. For example, Mongolia’s use of satellites to connect remote schools could be adapted for rural Uzbekistan.
  • Digital Literacy Programs: Implement nationwide training initiatives targeting vulnerable groups. The Digital Skills for All program should be scaled up through private-sector partnerships, as seen in Bangladesh, where local IT firms train rural residents in digital skills.
  • Affordability Measures: Introduce subsidies or universal service funds, as in Thailand, to reduce internet costs for low-income groups. For instance, subsidies for mobile data for farmers in Andijan province could improve their access to digital agricultural platforms.
  • Green Digital Infrastructure: Develop data centers powered by renewable energy, following China’s model, where public data centers will transition to green energy by 2032. In Uzbekistan, where solar energy is rapidly developing, such projects could be implemented in the Navoi region, a solar-rich area.
  • Fintech Development: Encourage the growth of fintech companies like Payme and Click through tax incentives and regulatory sandboxes to expand digital financial services in rural areas, such as Bukhara province.
  • SME Support: Create a national digital platform for SMEs, similar to India’s ONDC (Open Network for Digital Commerce), to integrate local sellers into the digital economy. For example, expanding Uzum Market to support the export of handicrafts from Samarkand could boost local entrepreneurs’ incomes.

Uzbekistan can also strengthen international cooperation, leveraging technical and financial support from the ADB and other organizations. Participation in regional programs like the Central Asia Regional Economic Cooperation (CAREC) Digital Strategy could accelerate digital infrastructure development.

Regional Success Stories and Lessons for Uzbekistan

The ADB report highlights successful digital policies in other Asian economies that Uzbekistan can adapt:

  • India’s Digital Infrastructure: The Unified Payment Interface (UPI) and the Digital Competition Law of 2024 have boosted financial inclusion and SME protection. Uzbekistan could develop a similar platform to streamline payments, such as expanding Payme to support cross-border transactions.
  • Republic of Korea’s Green Digital Strategy: A comprehensive approach to greening the digital sector, including carbon pricing and renewable energy adoption, could be applied in Uzbekistan to create sustainable data centers in solar-rich regions.
  • Thailand’s USF Program: Collaboration with social development ministries to target vulnerable populations has improved digital inclusion. Uzbekistan could implement a similar fund to subsidize internet access in rural areas like Jizzakh province.
  • Fintech in Indonesia: Platforms like GoPay and OVO have increased financial access for 70% of the unbanked population. Uzbekistan could scale its fintech solutions, for instance, through partnerships between Payme and international payment systems.

Conclusion

The ADB’s 2025 report underscores that digital transformation can be a powerful catalyst for inclusive and sustainable development in Asia and the Pacific, provided it is guided by targeted policies and stakeholder collaboration. For Uzbekistan, a low-digitalization economy, key priorities include investing in digital infrastructure, developing digital skills, and enhancing service affordability. Initiatives such as the Digital Uzbekistan-2030 Strategy, IT Park, and platforms like Payme and Uzum Market demonstrate the country’s potential in this area. By learning from regional success stories and leveraging international support, Uzbekistan can effectively harness digital technologies to reduce inequality, enhance resilience, and build a sustainable future, contributing significantly to the region’s prosperity.

References

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