Publication: Monitor Volume: 5 Issue: 186

On his October 4-6 official visit to South Korea, Uzbek President Islam Karimov wrapped up an agreement with the Kabool Textiles Company to equip Uzbek cotton-processing plants. Kabool will build 1 million spindles in Uzbekistan, at a cost of US$1 billion, as part of a 10-year program to develop Uzbekistan’s textile industry. A banking consortium, led by Japan’s Export-Import Bank, will partly finance the Kabool project under South Korean government guarantees. Kabool has been operating a cotton spinning and weaving plant in Uzbekistan since 1995.

Uzbekistan is the world’s fourth largest exporter of cotton and has the potential to improve on that ranking. Soviet rule confined Uzbekistan to the role of supplier of raw cotton and blocked the development of a textile industry in the republic. Independent Uzbekistan seeks to build a modern cotton-processing industry for the export of semi-finished and finished products. Cooperation with South Korea is key to that program. By marrying South Korean technology and capital with Uzbekistan’s locally produced cotton and inexpensive labor, both countries expect to boost export revenues and conquer Asian and ex-Soviet markets

South Korea is by far the largest foreign investor in Uzbekistan, with US$910 million worth of direct investments as of 1998–mainly in the automobile and textile industries. The Daewoo company’s automobile assembly plants represent the single largest component of the South Korean investments there. Karimov has paid three official visits to Seoul as president. During this visit, South Korean President Kim Dae-jung agreed to provide a US$36 million loan on concessionary terms to upgrade Uzbekistan’s education system.

In a parallel development, Japan’s Mitsui company has announced the completion of its US$110 million, two-year project to develop telecommunications in western Uzbekistan. That project forms part of a larger program to develop Uzbekistan’s internal and international telecommunications, at a cost of US$670 million from 1995 to 2000. Uzbekistan itself bears 18 to 20 percent of the cost, the lion’s share of which is covered by Japanese loans (Yonhap, Asia Pulse, Kyodo, Comtex, Xinhua, Tashkent Radio, October 5-7). Next week, when the CIS countries’ Prime Ministers gather for yet another pointless meeting on “economic integration,” Uzbekistan’s representatives may with some justification ask just what Russia and the CIS have done for Uzbekistan’s economic development.

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