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Uzbekistan reforms its cotton, textile industry

15 December 2017 12:25 (UTC+04:00)
Uzbekistan reforms its cotton, textile industry

By Kamila Aliyeva

A new scheme for selling cotton to textile enterprises will appear in Uzbekistan starting from next year.

The corresponding decree was signed by Uzbek President Shavkat Mirziyoyev, reported.

“Starting with the harvest of raw cotton in 2018, as an experiment, the system of ordering and advancing the production of raw cotton directly from farms and other agricultural producers by domestic textile enterprises will be introduced,” the presidential decree said.

Over the years, enterprises purchased raw materials from the monopoly supplier Uzpahtasanoatexport.

According to the new order, textile enterprises will finance the basic costs of farming to grow raw cotton by advancing at least 60 percent of the contract’s value.

All delivered raw cotton should be used only for further deep processing and production of finished competitive products, the document noted.

The price for raw cotton purchased by enterprises will be established on a contractual basis based on an analysis of actual costs and profitability of farms.

At the same time, it should not be lower than the cost of cotton purchased for state needs. Therefore, the president instructed the government to establish government procurement prices for the “white gold” harvest of 2018 until January 15, 2018.

Enterprises of the textile industry sell cotton seeds to fat-and-oil enterprises, additional products -- to other consumers through exchange trades. This year Uzbekistan collected more than 2.9 million tons of raw cotton.

President of Uzbekistan Shavkat Mirziyoyev also signed a decree on liquidation of the Uzbekengilsanoat joint-stock company.

Thus, the head of state supported the proposal of the textile industry enterprises, the shareholders of the Uzbekengilsanoat JSC and a number of other departments on the establishment of the Uztekstilprom Association. At the same time Uzbekengilsanoat JSC, which combined state regulatory and economic functions, is liquidated.

As indicated in the document, the current system of management of the industry does not meet the current trends in the development of the textile industry and is not capable of supporting producers.

Uzbekengilsanoat includes 436 enterprises, which makes up only 6 percent of their total number. The activities of this society basically comes down to collecting statistics, holding various meetings, organizing exhibitions. Its organizational form also does not correspond to the legal status of the joint-stock company.

The experience of foreign countries has shown that one of the most effective forms of development of the textile industry is the creation of clusters. This model implies the organization of a single production cycle, which includes the cultivation of raw cotton, primary processing, further processing at cotton ginning enterprises and the production of final textile products with high added value.

Proceeding from this, the special Working Commission was entrusted to develop a draft Concept of development of cotton-textile clusters for the medium-term perspective, taking into account the results of the organization of similar clusters in the Bukhara and Navoi regions.

Along with this decree, measures to support textile industry enterprises, including the provision of privileges for customs payments are envisaged.

For the first time, an advisory body, the Council of the enterprises of the textile and apparel and knitted industries, will appear in the structure of organization. It is interesting that all enterprises included in the association will be obliged to export products with the unified marking Uztextile.

The president also provided members of the Uztekstilprom Association with a number of privileges and preferences. Among them are exemption from payment of customs fees for imported cotton, artificial and synthetic fiber, wool, raw materials and other materials necessary for the production of textile products until January 1, 2021.

Currently, Uzbekistan is the world’s sixth-largest cotton producer among 90 cotton-growing countries. The country exports cotton mainly to China, Bangladesh, Korea and Russia.

Uzbekistan is expected to achieve full processing of cotton fiber in 2021. By 2020, the capacity of local enterprises will ensure the full processing of cotton produced in Uzbekistan, which can lead to a significant decrease in the export supplies of this crop. Only in 2017, the country intends to bring internal processing of cotton fiber to 70 percent.

At the same time, by 2021 the production of textile and clothing and knitted products will increase by 2.2 times compared to 2016, including ready-made fabrics - 2.7 times, knitted fabrics - 3 times, knitted goods – 3.4 times, hosiery – 3.7 times. It is planned to increase the export of products by 2 times.

One of the policy priorities of Uzbekistan, the world’s fifth-largest cotton exporter, is further development of its textile industry. Annually, the country grows about 3.5 million tons of raw cotton, produces 1.1 million tons of cotton fiber.

Uzbekistan takes consistent steps to increase the volume of cotton fiber processing. In particular, it is planned to create 112 modern, high-tech industrial factories, expand, modernize and technologically upgrade 20 operating capacities. All this will increase the export potential of the industry up to $2.5 billion a year and create more than 25,000 jobs.

In the period 2010-2014, the textile industry of Uzbekistan received and spent foreign investments worth $785 million while 147 new textile enterprises with participation of investors from Germany, Switzerland, Japan, South Korea, the U.S., Turkey and other countries were commissioned. Export potential of these enterprises amounted to $670 millions.

Currently, Uzbekistan continues to attract foreign investments for construction of textile enterprises in the country.


Kamila Aliyeva is AzerNews’ staff journalist, follow her on Twitter: @Kami_Aliyeva

Follow us on Twitter @AzerNewsAz

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