Page 63 - bne IntelliNews monthly magazine October 2024
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bne October 2024 Eurasia I 63
the air-conditioned showroom, looking over a wide selection of the large carpets that are made with the cotton from
the Kamalak farm. The walls are lined with a wide selection of shirts, some under the company’s own SET brand and other using the designs of famous international designers.
Upstairs on the third floor is a small factory with lines of women working at sewing machines producing the shirts on sale downstairs.
“Most of the workers are women, but things have changed, as they work in shifts and usually do few days on and then take a few days off,” says Shukhrat Makhsudov, SAG’s director, who oversees the production and sales. The factory is brightly lit with windows all around the floor and a large ventilator blasts out cool air, creating a pleasant breeze on the shop floor where the women work at their machines.
Samarkand SEZ
The ancient Silk Road way station of Samarkand is once again buzzing with foreign visitors. An Uzbek innovation hub, there are more than 600 international companies present and 60 fast growing production facilities that have doubled their output in the last five years, according to the region’s governor, Erkinjon Turdimov.
The state has established a Special Economic Zone (SEZ) that offers tax breaks and other benefits to attract investors. The local entrepreneurs say wryly that the investors have it better than them, as there is a special foreign investment law that gives foreign investors even more rights than they enjoy – the government has been full focused on attracting foreign investment to accelerate the country’s development, but only if they can bring added value.
Uzbekistan has one of the fastest growing populations in the world, adding more than 1mn people a year, and 100,000 per year in Samarkand alone. With a regional population of 4.2mn people, Samarkand is one of more populous regions in the country, the local governor says.
Shafei points out that although the EU markets are only a few days away, one the problems that Uzbekistan still faces is that it remains largely under the radar for most Europeans and Americans firms, and for those that know the country, the legacy of the previous
ban on Uzbek cotton means they are reluctant to do business.
Starting in Soviet times and extending into the regime of former president Ismail Karimov, the first present of independent Uzbekistan who died in
textile production powerhouse. The first multinationals are starting to arrive, with small deals with Nike and Adidas in 2020, but the really big household fashion and apparel names have yet to move in and source large volumes from Uzbekistan.
Key to the initiative has been reaching out to new partners. The government
is now building four industrial zones that are totally dedicated to textiles and include infrastructure such as renewable energy, water treatment plants and other sustainable development elements that
“Uzbekistan has moved very fast in the last five years. A total of 142 clusters have been set up that are responsible for 100% of the country’s textile production”
2016, the government routinely pressed students and children into service to bring in the cotton harvest. This led
to an international boycott of Uzbek textiles. After taking office, one of the first things Mirziyoyev did was end the practice and the ban was eventually lifted in 2019, but it has sullied Uzbekistan’s reputation.
The fact that the ITMA chose to hold its global annual general meeting in Uzbekistan is a testimony that the Republic has been forgiven for its past transgressions and has been welcomed back into the fold of respectable
textile manufacturers as delegates from around the world travelled to Samarkand for the meeting that was not exclusively focused on the rapid growth of Uzbek textiles.
“Uzbek textiles needs to work on its image and showcase the changes. It needs to create a new image as a dynamic, low cost, high quality producer of textiles,” Shafei said. “Uzbekistan [is] not known to EU [or] US buyers or [has] a negative image, so there is a lot of work to inform the world and change the reputation.”
The already vibrant textile sector still has more work to do if the country is to fulfil its ambition of becoming a global
have become essential for the industry. A speaker from the EU at the ITMF event gave a presentation explaining that the EU will implement new sustainable production regulations for textiles in 2025 that will lift the barrier to entry a little higher for the EU’s import partners and force them to implement higher ESG standards.
The US and EU have already become
key export destinations, especially
after Uzbekistan signed a key GSP+ preferential trade deal in 2021, and
it also has free trade agreements
with all of the other members of the Commonwealth of Independent States (CIS) countries. But it is seeking to expand its reach further both in terms of market and investment partners.
“German, Korean, Singaporean companies and many other have invested and playing in our market,” says Samarkand Governor Turdimov. “But we are hoping to attract more investment from other countries.”
Part of the government’s decision to step beyond the cotton sector entirely has been motivated by its efforts to join the WTO; the trade club’s rules preclude countries that subsidise sectors such as textiles.
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