T
he rich history of the Republic of Uzbekistan’s textile industry includes involvement in
the ancient Silk Road, a series of trade routes crisscrossing Eurasia. This area in the heart of
Central Asia became an important trading and cultural center by the fourth century B.C. when trade
increased along the Silk Road.
Russia, which conquered Uzbekistan in the late 19th century and set up a socialist republic
in 1924, later impacted the industry. Under Soviet rule, the country — bordered by present-day
Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan — focused on the production of
cotton, known in the region as white gold, and grain.
Cotton And Its Impact
Cotton has been grown in Uzbekistan for more than 2,500 years, according to a report from
the Switzerland-based International Textile Manufacturers Federation (ITMF) Spinners Committee. The
Soviet emphasis on cotton cultivation, however, led to the overuse of agrochemicals and the
depletion of water supplies. Today, the Aral Sea and certain rivers are half-dry, and there are
growing concerns about the concentrations of chemical pesticides, increasing soil salination and
water pollution from industrial waste.
These environmental factors, along with the fact that Uzbekistan is doubly landlocked —
making trade difficult and expensive — have challenged the country’s textile industry.
Despite these challenges, the country’s cotton crop generated about 15 percent of its gross
domestic product (GDP) and 25 percent of its foreign exchange revenues, the World Bank reports in
its August 2005 study entitled “Cotton Taxation in Uzbekistan — Opportunities for Reform.”
Uzbekistan’s GDP was US$12 billion in 2004, according to the World Bank, and $8.8 billion from
January to September 2005, according to the State Committee of the Republic of Uzbekistan on
Statistics.
According to a trip report from the Washington-based US Department of Agriculture (USDA)
Foreign Agricultural Service (FAS), water supplies for irrigation are plentiful. Overuse in the
eastern part of the country, however, has led to shortages in some western regions.
Nevertheless, Uzbekistan has become the world’s second-largest cotton exporter, behind only
the United States, and relies heavily on cotton production as a major source of export earnings.
Uzbekistan’s exports have increased by 12.7 percent from the 2000-01 to 2005-06 marketing seasons.
The FAS, in its January 2006 edition of “Cotton: World Markets and Trade,” said the country
exported 3.1 million, an estimated 3.95 million and a forecasted 4.45 million 480-pound bales in
the 2003-04, 2004-05 and 2005-06 seasons, respectively. Uzbekistan’s figures, however, represent
only a quarter of the volume of cotton the United States exported during the same period.
December 2005 US Cotton Market Monthly Economic Letter of the USDA and Cary, N.C.-based Cotton
Incorporated. Ahead of Uzbekistan are China, the United States, India, Pakistan, Brazil and the
African Franc Zone.
Additionally, the world’s largest cotton producers are China, the United States, India,
Pakistan and Uzbekistan, according to a November 2005 paper titled “The World Cotton Outlook,” by
Terry Townsend, executive director of the Washington-based International Cotton Advisory Committee.
Townsend notes that shifts in priorities following Uzbekistan’s independence from the Soviet Union,
which occurred in 1991, caused production to fall.
The aforementioned USDA/Cotton Incorporated economic letter also allows insight into
Uzbekistan’s cotton consumption. Uzbekistan holds a spot near the bottom of the list of major
players, with China, India, Pakistan, Turkey, the United States, Brazil, EU countries, Indonesia,
Thailand, Mexico, Bangladesh, Russia and South Korea ahead of it. Only Taiwan ranks below
Uzbekistan.
The Industry’s History
Murod Madjidov, formerly with the US Embassy in Tashkent, the country’s capital, noted in a
2003 report on Uzbekistan’s textile machinery and equipment market that a developed cotton
processing industry did not occur until 1920, and the first industrial garment factory was built in
the capital city in 1924. The knitting sector began to develop in the 1930s and 1940s with the
construction of large textile mills that could produce 80 million square meters of fabric. Between
1940 and 1960, cotton fabric production increased by 89 percent.
Furthermore, Madjidov notes, such a growth rate could have enabled Uzbekistan to become a
leading textile manufacturer. However, Uzbekistani officials decided in the 1960s the country would
specialize in cotton growing and thus halted the construction of additional textile plants and the
country’s development as a Soviet textile hub.
With Uzbekistan’s independence, however, came change and growth. Uzbekistan began to reform
the textile industry in the mid-1990s, and between 1995 and 2000, nine large textile mills were
built and put into operation, Madjidov writes.
Textiles Today And Beyond
Today, the country — with an estimated population of 25.9 million in mid-2004 and a labor
force that has increased by 2.7 percent between 1998 and 2004, while the labor force has shrunk by
0.5 percent in Europe and Central Asia — has a textile industry that centers around cotton, silk
and wool. Independence also encouraged the resurgence of traditional crafts such as silk dyeing and
carpet weaving, which were discouraged under Soviet rule.
Based on the latest figures from ITMF, Uzbekistan’s installed ring-spinning capacities in
2003 were 1.44 million short-staple spindles and 3,000 long-staple spindles. The country also had a
capacity of 323,800 rotors. For weaving, Uzbekistan had an installed capacity of 25,800 shuttleless
looms and no reported shuttle looms.
a program that emphasizes privatizing state-owned enterprises, encouraging the development of the
private sector and attracting private foreign investments.
From 1992 to 2000, 51,804 state entities were privatized, the Uzbekistan embassy in
Washington reports. In total, 130,000 enterprises, entities and properties have been privatized to
date.
Uzbekistan implemented its privatization program in stages. The first stage occurred from
1992 to 1993 and involved the privatization of state-owned houses, as well as small and
medium-sized enterprises in the retail trade, food, construction and other industries, resulting in
52,268 private owners. From 1994 to 1996, the privatization of many industries, including
agriculture, continued, and a new class of property owners was formed, consisting of 3 million
owners of personal household plots, 14,000 real estate owners, 85,000 owners of private and small
enterprises, and 2 million shareholders of privatized enterprises. The partial or complete
privatization of industrial giants began in 1998 and continues today.
Uzbekistan’s Cabinet of Ministers furthered the development of the textile industry early
last year by approving an investment program through 2008. The main tasks of the program are the
development of modern production facilities with the technology to process cotton fiber; production
of high-quality textile products with high value-added tax (VAT) potential, and the exportation of
at least 80 percent of these products; and creation of jobs in regions with high unemployment.
including the modernization, re-equipping and complete reconstruction of existing enterprises, as
well as the establishment of completely new enterprises.
The cabinet reported it expects production increases of 329,900 tonnes for cotton yarn,
144.4 million meters for cotton fabrics, 34,800 tonnes for knitted cloth, 186.6 million knitwear
units, 65.3 million garment units and 59.5 million hosiery units. These projects will increase
exports by $1.17 billion and create an estimated 46,400 new jobs, according to the cabinet.
Uzbekistan’s Ministry of Economy, the Ministers’ Council of the Republic of Karakalpakstan,
the administrations of Tashkent and the country’s regions, and Uzbekyengilsanoat — the
Tashkent-based state joint stock company and light industry association — developed the investment
program. Uzbekyengilsanoat unites more than 120 undertakings in textiles, garments and apparel, and
porcelain. Sixty-plus textile mills that specialize in cotton and wool products, carpets and
nonwovens are housed under the textile branch; and 40-plus enterprises make up the garments and
apparel branch of the state joint stock company.
As part of the program, Uzbekyengilsanoat’s enterprises are exempt from customs duties when
importing equipment, spare parts and other goods needed for the production process. The cabinet
also voted to prolong privileges granted to Uzbekyengilsanoat’s enterprises — all in an effort to
encourage further investment in the textile industry.
Other leading associations related to the textile industry include Uzpaxtasanoat, the cotton
industry association, and Uzbek Ipagi, the silk production association — both based in Tashkent.
Future Possibilities
Uzbekistan’s textile industry has weathered the test of time and political changes and come
into its own in the new millennium. The country’s cotton industry already has made its mark
worldwide. Additionally, Uzbekistan’s government is eager to expand the industry by attracting new
and courting existing investors by offering governmental support and certain privileges, and
privatizing former state-owned enterprises — remnants of its Soviet past. The industry, however,
will continue to be tested by the country’s environmental, geographical and economic challenges.
Nonetheless, there is the possibility the industry will embrace its potential.
March/April 2006