TRENDS IN THE DEVELOPMENT OF LIGHT INDUSTRY - "QazTrade" Trade Policy Development Center" JSC
TRENDS IN THE DEVELOPMENT OF LIGHT INDUSTRY

TRENDS IN THE DEVELOPMENT OF LIGHT INDUSTRY

DEVELOPMENT OF LIGHT INDUSTRY

The light industry is of particular socio-economic significance, as it provides high employment among the population, particularly women. The importance of the industry lies in the fact that the light industry is in second place after the food industry in terms of consumption.

The main world producers of light industry products are countries such as China and India. China accounts for 40% of the world’s cotton production, 64% of the world’s thread production, 41% of the world’s fabric production, and 50% of the world’s clothing production. Light industry in India is the second largest employer in the country, employing 45 million people.

The share of light industry in the world GDP is about 3%, while in the largest producing countries the value exceeds 10%.

In Kazakhstan, the impact of the industry on the economy is almost insignificant – 0.2% in the structure of GDP relative to other sectors of the economy and 0.3% of total employment, as well as its share in the manufacturing industry – no more than 1.2%.

PRODUCTION OF LIGHT INDUSTRY

Over the past 10 years, the light industry in Kazakhstan has grown in real terms by 1.5 times.

In 2019, the volume of production of domestic light industry products increased by 13.5% compared to 2018 and amounted to 112.7 billion tenge. The industry’s share in the industry was 0.4%.

In the production of light industry products, the main share is accounted for textiles (36.6%) and clothing (35.2%), leather products (16.2%) and shoes (8.2%).

Currently, Kazakhstan carries out both primary processing of raw materials and production of finished products. This is a complex sphere in which three main groups can be combined: textile, clothing, as well as leather, fur and footwear. The largest share in the structure of light industry is occupied by textile products (36.6%) and clothing (35.2%).

Since 2009, there has been a stable trend of increasing production of light industry products in the direction of growth. For example, the production of textiles increased from 18.1 billion tenge in 2011 to 60.2 billion tenge in 2019, which exceeds the growth of 3.3 times.  

The index of physical volume of light industry products in January-June 2020 compared to January-June 2019 was 108%. Growth in the industry is observed due to an increase in the production of textiles (8.4%), clothing and leather goods (2.1%) and footwear (6.6%).

Production of light industry products is mainly concentrated in Almaty, Turkestan regions and in the cities of Shymkent and Almaty. The lowest production rate is 886.9 million tenge in the West Kazakhstan region

LIGHT INDUSTRY TRADE INDICATORS

In the first half of 2020, due to the introduction of quarantine measures due to the spread of COVID-19 in the world, exports of Kazakhstan’s light industry products decreased by more than 50% compared to the same period in 2019. However, the trend to reduce product exports has been noticeable since 2018 due to systemic problems in the industry. In Kazakhstan, about 10% of light industry products are exported. About 30 Kazakhstani light industry enterprises are active exporters.

Moreover, in the first half of 2020, imports of light industry products to Kazakhstan decreased slightly (-13.2%) due to the COVID-19 pandemic.However, since 2017, imports still show a significant increase (43%) compared to the same period in 2019. 93% of light industry products on the consumer market are imported goods.

LIGHT INDUSTRY TRADE INDICATORS

In the structure of exports of light industry, the main share is taken by textiles – more than 70%, then leather and leather products – 12% and clothing – more than 11%.

The main markets for Kazakh products are China (39.4%), Russia (37.4%), Kyrgyzstan (5.2%), Italy (4.8%), Lithuania (4.4%), Uzbekistan (1.5%).

The main export-oriented regions of light industry products in Kazakhstan are: Shymkent and Almaty. In 2019, a total of  73.7 million USD worth of products were exported from these two cities. The lowest figure in the Kyzylorda region is 22.6 thousand USD.

MAIN CONSTRAINTS TO THE DEVELOPMENT OF LIGHT INDUSTRY IN KAZAKHSTAN

#CASE: OVERVIEW OF THE IMPACT OF BANS ON THE EXPORT OF CATTLE SKINS

In order to support Kazakhstan’s tanneries from October 2016 to April 2017 (6 months) there was already a ban on the export of unprocessed cattle skins (Ministry of Investments and Development No. 607 dated 15.08.2016).

In this regard, according to statistics, there is a decrease in exports by 10.8%, but also an increase in imports by 43.9% in 2017 compared to 2016.

However, after the ban was removed from 2017 to 2018, the export of cattle skins from Kazakhstan was sharply increased by 44.1%. In addition, the import of skins from 2017 to 2019 decreased sharply (-82.2%).  However, from 2018 to 2019, there is a decrease in exports by 16.3%.  

According to the statement of Kazakhstan’s tanneries, they were on the verge of closing due to a shortage of raw materials. In this regard, in order to provide domestic processing enterprises with raw materials and load idle production capacities, since February 19, 2019, for a period of 6 months (until September 10, 2019), Kazakhstan has imposed another ban on the export of unprocessed cattle skins (Ministry of Investments and Development No. 89 dated 19.02.2019).

In addition, in August 2019, Kazakhstan will introduce a new ban on the export of cattle skins by road from the territory of the Republic of Kazakhstan for up to 5 years.

Due to the ban on the export of skins, as well as the introduction of quarantine measures due to the spread of COVID-19, exports of skins decreased by 61.4%, and imports fell from 74.4 thousand US dollars up to 2.2 thousand US dollars .

However, on July 7, 2020, the ban on the export of cattle skins from Kazakhstan was suspended for a period of 3 months.

It should be noted that to date, the ban on the export of cattle skins from Kazakhstan has not had the desired effect. Loading of domestic tanneries remained at the same level.

According to the State Revenue Committee of the Republic of Kazakhstan at the moment, the export duty on exported unprocessed cattle skin for the free trade area countries is 20%, but not less than 200 Euros per ton and to other countries 300 Euros per ton (from 30.11.2019 to 29.11.2020). The export to the countries of the EEU are free.

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