14th Central Asian International Textile Machinery Exhibition – CAITME 2022
07 - 09 September 2022 Tashkent, Uzbekistan
As you know, the agrarian orientation of certain regions and the specialization of agriculture in the development of animal husbandry, the experience of local artisans in processing leather, producing products from it, expanding entrepreneurial activity in this direction become prerequisites for the development of the leather and footwear industry in places. The Institute for Forecasting and Macroeconomic Research reports.
In his last message to the Oliy Majlis, the President of the Republic of Uzbekistan Shavkat Mirziyoyev said that "Economic growth will be ensured primarily through the creation of competitive production chains and increased investment for these purposes." The President noted the leather and footwear industry as an industry that has all the conditions to become a "driver" of the national economy.
Thus, the key achievements in the development of the industry in 2017-2020 were:
Significant growth of enterprises in the industry: 3 times to 1,556 enterprises in 2019 compared to 2017.
Increase in finished goods production by 6.2 times to 105.8 million pairs of shoes in 2020 compared to 2017.
The share of footwear exports in the total exports of the industry’s products increased from 10.8% in 2016 to 45.2% in 2020.
In the republican volume of production in 2020, the highest concentration of leather and leather goods production is concentrated in Andijan (36.1%), Ferghana (16.8%), Samarkand (12.2%) and Namangan (10.1%) regions.
State support for the industry
The volume of state support for the industry is increasing in the country.
The starting point of a new stage in the development of the industry was the adoption of the resolution of the President of the Republic of Uzbekistan dated 03.05.2018 No. PP-3693 "On measures to further stimulate the development and growth of the export potential of the leather and footwear and fur and fur industries." The leadership of the Uzcharmsanoat Association notes that in recent years the state has provided the industry with unprecedented support, which did not fail to affect the improvement of its economic indicators.
To maintain the pace of development and facilitate the further development of the industry’s potential, additional benefits for manufacturers are identified, as well as measures aimed at increasing the sales of leather and footwear products in the domestic and foreign markets and introducing international standards in the production of leather and footwear products.
For the implementation of priority tasks and approved programs from the Fund for Reconstruction and Development in 2021, it is planned to allocate 550 billion soums to finance credit lines for projects for the production of finished leather goods, leather goods, as well as products with high added value from fur and wool.
The Association "Uzcharmsanoat" is constantly working to expand sales markets for leather and footwear and fur products, expand the geography of exports. In 2021, it is envisaged to allocate US$100 million from the Export Support Fund for exporting organizations for the purchase of raw materials and the production of export-oriented products, which will become an important basis for further increasing the export potential of the leather, footwear and fur industry.
Over the past three years, the leather and footwear industry has made a colossal leap forward in its development. So, if in 2017 only 523 enterprises operated in the industry, then by the end of 2019 their number increased almost 3 times and amounted to 1,556 enterprises.
The most important area of using the internal reserves and capabilities of the industry was the gradual increase in the depth of processing of domestic raw materials, as well as the expansion of the volume and range of production of products with high added value.
At the end of 2020, compared to 2017, the volume of footwear production increased 6.2 times to 105.8 million pairs (Fig. 1), leather production increased almost 2.7 times to 1460 million dm2 , and the volume of production of leather goods in 2018-2020 alone increased 3.7 times to 92.7 billion soums.
In January-April 2021, the industry produced goods for a total amount of 1.16 trillion soums, and the production of localized products amounted to 15.1 billion soums. 3.1 million pieces were procured. leather, finished leather produced 531.7 million dm2, footwear - 26.7 million pairs and leather goods for 23.6 billion soums.
In recent years, the state policy of Uzbekistan to stimulate the export activities of Uzbek manufacturers, especially the non-primary sector of the economy, is aimed at a consistent increase in the export of finished products in the foreign market, as evidenced by a significant increase in the share of exports of finished products. As a result, the export of footwear in 2020 increased from 13.33 million pairs to 30.73 million pairs, or 2.3 times.
The share of footwear exports in the total export of industry products increased from 10.8% in 2016 to 45.2% at the end of 2020, and the share of finished leather goods exports - from 0.5% to 4.5% (Fig. 3).
In January-April 2021, industry enterprises exported goods worth US$110.7 million, which is US$40.4 million or 57.5% more than in the entire 2020.
An impressive dynamic of growth in the export of footwear to neighboring countries is noted. For example, Afghanistan - 4 times, Tajikistan - 3.4 times, Kazakhstan - 2.2 times. In addition, it was possible to expand the geography of supplies to 14 countries, including the USA, Latvia, Moldova, the United Arab Emirates, Kuwait, Singapore.
Thus, the development of the leather and footwear industry over the past four years has proved the existence of a sufficiently powerful potential for the development of its production and export.
Regional development context
In general, structural changes in the leather and footwear industry in the regions are characterized by the following features:
It should be noted that Andijan (36.1%), Ferghana (16.8%), Samarkand (12.2%) and Namangan (10, 1%) areas that are distinguished by rich experience and entrepreneurial activity in this direction (Table 1, Figure 1).
At the same time, due to the increase in production capacities for the production and processing of leather, for 2016-2020. there are tangible shifts in an increase in the share of the region in the republican volume of production in Kashkadarya (up to 3.1% in 2020), Syrdarya (up to 5.9%), Navoi (up to 2.7%) and Tashkent (up to 4.7%) %) areas.
As a result of the sectoral and territorial distribution of production, the industry specialization in the production of leather and leather goods was formed in Andijan (specialization coefficient is 5.502), Kashkadarya (1.186), Namangan (5.079), Samarkand (3.697) and Syrdarya (4.092) regions.
At the same time, the increase in the coefficient of specialization for the production of leather and leather products in Bukhara (from 0.073 to 0.095), Navoi (from 0.002 to 0.226) and Tashkent (from 0.136 to 0.397) regions indicates an increase in the importance of the industry, deepening the processing of rich local raw materials.
As the production efficiency of the leather and footwear industry, one can note an increase in the production capacity of the production of leather of the second and third processing against the background of a decrease in the share of its primary processing, as well as the export orientation of raw materials and leather goods (1706.2 thousand US dollars or 0.2% of the total export of goods and services) and footwear (2182.8 thousand US dollars or 0.3% of the total export of goods and services).
Instead of a conclusion
A feature of the industry is the saturation of the market with food products, meeting the needs of the population with consumer goods for non-food purposes, as well as for the sectors of the economy in raw materials and auxiliary materials. In addition, by providing employment for the population, including the rural population, increasing the income of the population, this industry is of particular importance in social development, reducing poverty of the local population.
Today, in order to ensure production efficiency, livestock complexes are being created, as well as high-tech specialized clusters with a full production cycle.
The industry is becoming the most attractive for doing business, as evidenced by an increase in investments by more than 4.0 times, as well as an increase in the industry’s share in the total volume of investment funds utilization.