Page 58 - BNE_magazine_10_2019 kolomoisky

58 I Eurasia bne October 2019
Exports of Uzbek textiles grew from under $1bn two years ago to $1.7bn in 2018. They are set to hit $2bn this year.
Cutting the cloth in Uzbekistan
nail the logistics then this could be something pretty special.”
The prospects of the textile sector have also been improved by the removal of Uzbekistan from the international child labour index. Schoolchildren used to be used to bring in the cotton harvest, but that is not supposed to happen any- more. With the designation removed, the way is now open for Uzbekistan to sell T-shirts and denim to global fashion companies and local investors are reporting that many of these compa- nies have been in Tashkent this year to discuss possible deals. Neighbouring Turkmenistan already produces denim for the multinationals, but Uzbekistan could take over this role on a much larger scale with the resources it has
at its disposal.
The country’s exports of textiles grew from under $1bn in value two years ago to $1.7bn in 2018. They are expected to hit around $3.5bn within the next two years. The value of Uzbek textile exports should reach $2bn this year, chairman of the Uzbek Textile Industry Association Ilhom Haydarov said before the opening of the Global Textile Days 2019 forum in Tashkent.
“Everyone is coming to have a look. Things will take off in the next few years,” says Karen Srapionov, a partner at Avesta Group in the Uzbek capital.
Buzz in investor circles
Things are indeed starting to move. Foreign direct investment (FDI) is up 500% in Uzbekistan, albeit from a very low base, according to Osheroff, and the country has certainly caused a buzz in investor circles. The official numbers are a bit more modest, with FDI up fourfold to $5.6bn in the first half of this year.
But the investment picture is still confused by the geopolitical agendas of Uzbekistan main partners. The larg- est part of the government’s funding still derives from development banks such as the EU’s European Investment Bank (EIB), the Asian Development Bank (ADB) and the European Bank for Reconstruction and Development (EBRD). They are pouring in money
Ben Aris in Tashkent
When Uzbekistan’s reform-mind- ed Mirziyoyev administration took office three years ago it quickly moved for a fast transition to an open market-type economy. Fortunately, unlike many of the countries of the Former Soviet Union (FSU), the Central Asian nation already has a relatively diversified economy with strong suits in agriculture, textiles, automotive, min- ing, food processing and manufacturing. With a young and quickly growing popu- lation, however, officials need to create jobs at a rapid rate. So turning to one
of the country’s most famous products, textiles, was one obvious solution.
“Uzbekistan has no choice. It has to open to the world to create jobs, to stop the brain drain, to provide opportunities for the young people,” Scott Osheroff, chief investment officer of Asian Frontier Capital (AFC) told bne IntelliNews
in an exclusive interview.
To drive growth, the government is hoping to promote export oriented industries, but as the country is so far from the rest of the world – Uzbekistan
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and Liechtenstein are the only countries on the planet that are double landlocked – officials have chosen to target valued added exports in particular.
Ban on raw cotton exports on the way
Traditionally, Uzbekistan has always produced and exported cotton. Cotton features on the national emblem and it has long served as Uzbekistan’s main source of foreign exchange earnings, but, in a radical change, the govern- ment is proposing to entirely ban from next year the export of raw cotton. Such exports are annually worth several bil- lion dollars to the country but the plan is to force local enterprises to produce value added products like yarn and textiles rather than simply export cotton as a plain commodity.
“There is a lot of interest in the textile industry. Various big Chinese textile producers are sniffing around in Tash- kent and spinning factories seem to be popping up everywhere,” says Osheroff. “There is everything you need: high quality raw cotton, cheap labour, power that costs 3 cents per kWhr. If you can