Textile Industry Report
About the Research
Strategy and Research department of RB ASIA conducted research in collaboration with Uzbekistan-Oman Investment Company
of Textile industry of Uzbekistan, which includes current condition of the market and dynamics, recent reforms and future potential of the industry.
The objectives of the research were to review the volume of the textile market, its structure, to analyse foreign trade operations, as well as a overview of the ongoing reforms in this sector in the Republic of Uzbekistan.
As of 2019, Uzbekistan ranks 7th in the world largest producer of raw cotton (more than 3.5 million tons of raw cotton and, accordingly, about 1.2 million tons of cotton fiber). Besides, the republic also produces about 533 million m2 of fabric, 60 tons of stockinet, 319 million garments, and 117 million pairs of hosiery, and 583 thousand tons of yarn.
Uzbekistan’s Textile Industry Overview
Today, the textile and sewing-knitting industry of Uzbekistan is one of the leading and dynamically developing industries. According to the the Committee of the Republic of Uzbekistan on Statistics, in 2018, the industry accounted for 10.8% of the total industrial volume of the country, its share in GDP was around 4%, and more than 44% in the production of non-food consumer goods and exports - 10%.
The annual growth of industry output in recent years has been approximately 18%. As for the amount of textile products in the total of industrial products, it was over 10 %, whereas the proportion of textile products in the structure of manufacturing industry, for the last five years, has been on aggregate 16.6 %.
It is clear that production focus shifting from raw material such as cotton yarn to the value added products in the cotton textile production chain such as fabrics, knitwear and hosiery. To date, amount of manufactured finished fabrics increased almost two times over the period of 2017-2019 (from 284 to 533,3 million sq.m respectively). Also, there is notable growth in the production of knitwear showing 150 % increase.
As it has been noted above, increase in the number of enterprises specialized in the production of cotton yarn doesn’t correspond to the tempo in the industry overall. Number of knitwaer, fabrics and hosiery production enterprises is increasing at a significant rate and their total number increased from 1670 in 2016 to 2942 at the end of 2018.
In January-September 2019, the volume of exports of textile products amounted to 1,174.9 million USD and increased, compared to the same period in 2018, by 21.4%, which reached 8.6% of its total volume. In the structure of textile exports, the main share is cotton yarn (56.3%), as well as finished knitwear and garments (23.1%). Since the beginning of the year, more than 384 types of textile products have been exported to 56 countries and the number of exporting enterprises amounted to more than 780 enterprises, 120 new enterprises were involved in export activities.
There is stable growth dynamics that are result of active government policy of import substitution by stimulating the export potential of enterprises. The Decree of the President of the Republic of Uzbekistan No. PP-4453 “On measures for the further development of light industry and stimulating the production of finished products” dated September 16, 2019, export volumes are expected to increase to approximately 4 billion USD by 2021.
As a result of practical work to diversify the textile industry of the country and stimulate the export of finished products, our country's potential in this area is growing. The largest share of textile exports is to the Russian Federation (443.0 million US dollars - 37.7%), China (316.7 million US dollars - 27.0%) and Turkey (131.2 million dollars US - 11.2%).
In order to increase the international trade turnover, the realization of the signed intergovernmental agreements and agreements reached during the state visits of the President of the Republic of Uzbekistan Mirziyoyev SH.M., there has been approved the "road map" for the intensification of relations in political, trade-economic and cultural-humanitarian spheres of Uzbekistan with Germany, USA, China, Republic of Korea, Russia, Turkey, Kazakhstan, Belarus, Kyrgyzstan, Tajikistan, Turkmenistan, etc.
In order to diversify foreign sales markets, expand the range of export products this year, enterprises took part in exhibition events abroad (China, Russia, Kazakhstan, Belarus, Turkmenistan, Tajikistan, Korea, Turkey Germany, etc.), where participated more than 300 republican manufacturers. Also, exhibition events were organized in the regions of the republic for foreign partners, as a result of which additional export contracts worth more than 200 million USD were concluded.
Investment activities in the industry
Attracting new investments, combined with effective management, introducing the most modern equipment and technologies are the most important factors in the development of the textile and sewing-knitting industry in Uzbekistan and contribute to increasing its export potential.
Over 20 years, more than 2.5 billion USD of foreign investments from South Korea, China, Russia, India, the UK, and Germany were attracted to the textile industry, as part of the implementation of 180 investment projects, including 575 over the past 3 years.
Over 80% of attracted foreign investment falls to countries such as South Korea, Switzerland, Singapore, the UK, Germany, India and Turkey. The indicators of technical equipment of production facilities have increased. More than 1.6 million spinning spindles, 100 thousand chambers were commissioned, which amounted to 89.3% of the existing technological equipment fleet.
Most of the projects will be implemented within the framework of the Program of Measures to Ensure Structural Transformations, Modernization and Diversification of Production for 2018–2021, developed by «Uztekstilprom».
At the end of 2018, the program actually disbursed 124.1 million USD, or 132% of the forecast for the year.
The program includes projects to create vertically integrated textile complexes in all regions of the country. It is also planned to modernize and expand existing facilities with the participation of technological leaders in textile machinery.
Also, it should be noted that over the past 10 years, the production capacities of textile enterprises have been updated 100%. The equipment of the latest generation was installed, which contributed to improving the quality of products and increasing their competitiveness in the world market.
Reforms & Regulations
The Decree of the President of the Republic of Uzbekistan of 14.12.2017. No. DP-5285 regarding liquidation of JSC “Uzbekyengilsanoat” and creation of “Uztuqimachiliksanoat” (Uzbekistan Textile Industry) Association. Reforms and the correctly chosen strategy and competent management of “Uztuqimachiliksanoat” Association allowed domestic textile companies to demonstrate positive growth dynamics. As of September 2019, 1 716 industrial enterprises are functioning in the system of the Uztekstilprom Association, of which 419 are textile enterprises and 1293 are enterprises of the sewing and knitting industry. Including 29 large enterprises, 1 613 enterprises classified as small and private businesses. The Association's enterprises also produce other products of a wide range and assortment of specific profile, including medical products, nonwovens, meeting the need for cotton products, special work clothes, terry products, as well as ensure the development and implementation of new generation products – new innovative products.
As follows from the decree of the Cabinet of Ministers of Uzbekistan dated September 19, 2018 “On additional measures for the further development of cotton textile production”, in 2019 cotton-textile clusters will occupy 300 thousand hectares of sown area and their number will increase to 44.
In the framework of the Resolution of the Cabinet of Ministers on January 25, 2018. “On measures to introduce modern forms of organizing cotton-textile production” 15 projects are being implemented in 20 regions of the republic, over an area of more than 160 thousand hectares.
Textile enterprises are exempted from customs payments (except for customs clearance fees) for imported technological equipment and components not made in the territory of the Republic of Uzbekistan. This will provide tremendous help for the modernization of production equipment.