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Kyrgyz garment sector at crossroads
Feb '12
Kyrgyzstan garment industry is at an important juncture in its history as the country's Government is trying to join the Customs Union (CU) of Russia, Belarus and Kazakhstan.

The economic integration of Kyrgyzstan with the economic union would mean removal of all existing customs borders between the member countries. It would also mean that a common tariff would become applicable for imports into any of the member country from outside the CU.

Currently, Kyrgyzstan produces about 50 million pieces of garments per annum worth 4 billion soms. More than 90 percent of this output is shipped to Russia, Kazakhstan and some European countries.

The garment industry in Kyrgyzstan began around 10-15 years ago with firms taking rented premises to install about a dozen sewing machines. Over the period, Kyrgyz garment companies have grown to employ more than a hundred people and they promote their products through participation in international fairs.

In the midst of powerful competition from countries like Turkey and China, Kyrgyzstan garment industry was able to survive due to use of low-priced Chinese fabric imports and using intricate and interesting designs.

At present, Kyrgyzstan has access to fabrics and accessories from China at lower duties. However, Kyrgyzstan garment sector may lose this advantage, as CU import tariff rates would become applicable, once the country joins the CU.

There would be a 10-11 percent duty applicable on Chinese fabrics post Kyrgyzstan joins the CU. This would lead to an increase in the cost of production as well as the prices of final products, thus lowering the current comparative advantage Kyrgyz garment sector has in CU countries.

Experts suggest that Kyrgyzstan Government should negotiate, within the framework of the CU, for continuation or reduction of customs duties on Chinese fabrics and accessories imported by Kyrgyzstan.

They recommend that Kyrgyz Government should preferably push for reduction of customs duties, as Russia has also joined the WTO.

Thus, the future of Kyrgyz garment sector would depend on how its Government handles the situation while negotiating its membership in the CU.

Garment enterprises in Kyrgyzstan are also demanding that the Government should allocate a separate nine hectares of land to set up a garment city, where garments can be produced that meet international standards and further boost the sector's exports.

Entrepreneurs point out that a major problem being faced by Kyrgyz garment sector is lack of skilled personnel. To address this problem, the Government can frame policies to train people, introduce courses in schools, enhance budget for establishing colleges to train seamstresses and can even set up specialized schools for imparting training in garment technology, they add.

Fibre2fashion News Desk - India

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