Uzbek State Sells 'Fonon' Jewelry Plant Amid Financial Struggles and Debt Burden

The Uzbek government has placed the entire 100% state-owned stake of the "Gold Moon Tashkent" company, which owns the "Fonon" jewelry plant, up for auction with an initial price of 316.7 billion soms. The auction is scheduled for September 28, with participation requiring a deposit of 9.5 billion soms and an initial bid increase minimum of 15.8 billion soms.

Financial Performance and Liabilities

Despite reporting a net profit of 33.4 billion soms in the first half of 2026 and a revenue of 281.9 billion soms, "Gold Moon Tashkent" continues to wrestle with a complex financial landscape. Its total assets as of July 1 stand at 443 billion soms against liabilities exceeding 550 billion soms, resulting in a negative net asset position of 107.3 billion soms.

"The financial condition cannot yet be considered fully restored despite improved earnings and reduced losses compared to previous years."

Comparatively, the negative net assets have improved from 140.8 billion soms at the end of 2025. The company’s creditor debt amounts to 305.9 billion soms, which the buyer will assume along with all other debts and receivables. The discrepancy in employee numbers—459 employees according to auction documentation versus 309 reported in the company passport—remains unexplained.

Asset Base and Legal Constraints

"Gold Moon Tashkent" controls 2.56 hectares of land in Tashkent’s Chilonzor district, housing buildings and facilities totaling 11,370 square meters. The balance sheet value of fixed assets is 110.7 billion soms with a depreciation rate of 33.2%. However, these assets are encumbered; a commercial bank has placed restrictions on the buildings, although the details remain undisclosed.

The buyer has the option to pay in installments up to 36 months, with the initial payment required to be at least 35% of the purchase price; any deferred payments will incur interest at the Central Bank’s main rate. Notably, the auction terms do not mandate additional investments or job retention commitments from the new owner.

Background and Structural Challenges

The "Fonon" jewelry plant was established in 2021 on the foundation of a former scientific-production enterprise of the same name, with an estimated project value of approximately $21 million and an annual jewelry production capacity of six tons. While "Fonon" is a recognized brand, the auction involves only the "Gold Moon Tashkent" company's state stake. The related chain of stores and the "Empire Jewelry" company, which operates as the brand’s retailer, are not included in the sale.

This fragmentation between manufacturing and retail raises questions about the future operational integration and brand control post-sale. The government's decision to divest this strategic asset follows a history of losses and restructuring efforts but leaves significant financial risks and asset encumbrances to the prospective buyer.

Economic Implications and Broader Context

The sale of "Fonon" occurs against the backdrop of Uzbekistan’s ongoing efforts to optimize state asset management and stimulate private sector participation in industry. The plant’s financial rehabilitation remains incomplete, reflecting challenges in transitioning legacy state enterprises to market efficiency. The debt burden and asset liens complicate value realization and may impact investor interest.

Historically, similar privatization efforts in post-Soviet states often encountered hurdles due to opaque liabilities and operational inefficiencies. The "Fonon" case exemplifies the structural economic consequences of state-owned enterprise reform in emerging markets, highlighting the balance between fiscal pressures and industrial policy objectives.