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Uzbekistan, a potential source of textile products and cotton

Uzbekistan, a country with 447,400 square kilometers area and around 33 million population, is a landlocked country in Central Asia. With a rich culture and heritage, the country also renowned for its trading history since it was one of the most important business hubs of the great silk route which connected China with Europe and the Middle East.

Uzbekistan cotton

The region also has a long track record of producing world class cotton. It is the sixth largest cotton producer in the world. Cotton production in Uzbekistan is important to the national economy of the country.

The Uzbek government has announced plans to reduce the export of raw cotton and increase the processing in the domestic market as local value addition. The capacity of yearly cotton production is 1.4 million tons, of them about 60 percent is used to meet the demand of domestic textile companies. However, in 2017-18, Uzbek produced 0.838 million ton cotton, according to a Statista report.

According to a report published in Textile Excellence, its recent raw cotton export is worth around US$ 300 million, accounted for 28% of the country’s total textile exports. Cotton yarn exports reach US$ 500 million accounted for 44% of total textile exports.

Uzbek Textile Minister with Mehdi Mahbub
Figure: Uzbek Textile Minister with Mehdi Mahbub.

One of the policy priorities of Uzbekistan is further development of its textile industry. Currently, about 7,000 various types of enterprises are involved in textile-related industries in Uzbekistan.

Uzbekistan exports its textile products to more than 55 countries. The main export markets are the CIS countries, primarily Russia, as well as the countries of European Union, Latin America, Korea, China, Bangladesh, India, Singapore, Iran, Israel, the United States, etc.

In 2018, some new markets were developed like Pakistan, Georgia, Croatia, Nigeria and a number of other countries.

For many years, Uzbekistan Textile Industry has suffered for the embargo on its products due to alleged forced labor. Many international brands have stopped using Uzbek cotton.

Uzbek President Shavkat Mirziyoyev signed a decree in February to extend reforms in the textile industry to fully reprocess raw cotton domestically and increase the export potential of the country.

Uzbekistan textile industry

Thanks to a successful dialogue between Uzbek government and the International Labor Organization as well as other stakeholders, the issue has been resolved and Uzbekistan has started to get its benefits.

Foreign Direct Investment (FDI) has been growing in the country due to policy reforms and government initiatives. Foreign investments in the textile industry of Uzbekistan for the last years amounted to $3.1 billion. Over 80% of the foreign investments came from South Korea, Turkey, India, Switzerland, Singapore, Britain, and Germany.

Textile products’ export in Uzbekistan amounted to $316.9 million in the first quarter (1Q) 2018, which is 14.7% more compared to the 1Q17, the State Statistics Committee of Uzbekistan said. As reported by UzDaily.com, Uzbekistan intends to change the structure of textile production and increase exports to US$7 billion by 2025.

Presently more than 150 textile and garment manufacturing facilities are active in Uzbekistan, of them 50 is running with 100% foreign capital. Textile and garment enterprises account for 4.6% of the country’s GDP.

Due to its abundance of easily available raw materials, moderately educated good number of workforce, attractive energy price, proximity to markets of Russia and Eastern Europe/former Soviet Republics, global textile and readymade garment (RMG) players have been showing a  positive interest on Uzbekistan which is ready to be the next hub of world textile and apparel industry.

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