Garment industry. Problems and perspectives
08/02-2012 11:56, Bishkek – 24.kg news agency , by Nargiza KOZHOMKULOVA
While the best experts of Kyrgyzstan wrestle with a subject how to raise the country’s economy, the garment industry holds its own. In recent years, a real breakthrough happened in this sector. The volume of production reached 50 million units and in monetary terms 4 billion soms per year.
At present Kyrgyzstan tries to join the economic union of Russia, Kazakhstan and Belarus. The country’s entry into the Customs Union can reflect on the garment industry. How may it maintain its position in these conditions?
Meanwhile, this is just one of the factors in the industry development. Large businesses are already facing global challenges. Only state can contribute to their solution.
Our garment industry showed itself good not only in the domestic market. Over 90 percent of output is exported to Russia, Kazakhstan and even Europe. This is a remarkable example of how to lift the economy in a given industry. But 10-15 years ago it all began trivial - with the same dozen sewing machines in rented premises. Now companies have risen to another level: they have staff of more than a hundred people, have their own experimental laboratory. They participate in international exhibitions of fashion.
Elena Dobryak, head of one such enterprises, says despite all this, it became difficult to work year after year. “The global crisis and powerful competitors - China and Turkey - put themselves on the map. However, Kyrgyzstan marches in step with fashion. Our country produces quite complex and interesting models. So we have already proved that our products affordable through the use of cheap Chinese textiles. If we use expensive Korean, Turkish, Italian fabrics, risks will be paid. We have, for example, constants customers in Moscow and St. Petersburg, as well as other cities - Novosibirsk, Yekaterinburg,” Elena Dobryak says.
“Of course, the main question that workers of the garment industry are concerned about is the influence of Kyrgyzstan’s entry into the Customs Union (CU). Being the WTO member, it has reduced rates for transportation of fabric, accessories from China. If we join the CU, the rates would be raised, and our products will go up by 20-40 percent. Certainly, this will affect the marketing of products. So far no expert can say for sure whether we will be able to maintain preferential tariffs,” she added.
CU, WTO – what will we have?
Meanwhile, branch department gives an explanation. “The application of CU tariff rates on Chinese fabric at the amount of 10-11 percent will increase the cost of garments for domestic consumers. This will reduce the comparative advantage of Kyrgyz garments in the market of CU countries. This will be a significant negative factor for the economy of the republic,” the Ministry of Economy and Antitrust Policy recognizes.
In this regard, as 24.kg news agency was explained in the Investment Policy Department under the Ministry of Economy, “the country must negotiate the preservation or reduction of customs duties of the fabric and accessories made in China for the Kyrgyz Republic within the framework of the Customs Union”.
“Taking into account that Russian joined WTO a common customs tariff should be changed in the direction of reducing customs duties. So during negotiations we have to mention commodity items. We will not have to raise our rates. Also, when joining the CU Kyrgyzstan has the right to specify the list of goods for which customs duties profitable for the domestic market will remain. In this regard, Kyrgyzstan may require a delay for application of import duties to meet the significant social needs of the population or production development,” explained in the Ministry of Economy.
Thus, we may conclude: Kyrgyzstan has an opportunity to retain the current tax rates. However, the results of negotiations will show whether the government recaptures these positions.
As in the best houses of Paris
Another, but also very important question for every industry is production expansion.
According to deputy director Legprom Association Pharkhad Raimzhanov, the problem can not be solved even by a single large room. “We put the question globally and we ask the authorities to allocate nine hectares of land within the city to organize the techno polis. We do not ask for money – we will build everything by ourselves. Give us land! Mr Raimzhanov says. The creation of a techno polis will allow our products to meet international requirements, open the way to the West.
The Association allows evaluating the extent of the garment industry. By its data, when founding it included only 26 companies. Now it has about 600 enterprises - sewing, textile, carpet and worsted. The Association has 17 sales offices in major cities of Russia.
Adjusting the sewing machine
There is one more urgent problem in the given industry. This is lack of personnel.
“Seamstresses, and the best, go to Russia, Elena Dobrayk complains. There they have the opportunity to save money. But they actually fall into slavery: they live in very cramped conditions, without documents and work all day. At home, they can communicate with family, friends, relax. Finally, they can be close to their husbands and children. But even these arguments do not stop people.”
The light industry of China, India, Indonesia, and Vietnam constituted an empire by themselves primarily due to the fact that the state contributes to its development and export of products. Many Western firms moved their productions there because of the extraordinary cheapness of labor. The same situation can be in Kyrgyzstan. We should only teach people, open courses at schools, increase the budget places for seamstresses in colleges and can even create specialized professional schools.
And of course we should pay attention to the needs of manufacturers. As President Atambayev said, Kyrgyzstan could become a “machine” not only for the CIS countries, but for Europe. And we have potential for this.
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