 Employees work at the cotton mill of Daewoo Textile Company in Fergana, Uzbekistan, last month. / Courtesy of Daewoo International |
By Kim Hyun-cheolStaff Reporter
To many here, Uzbekistan is still an unknown place. Some of them might have an impression of a ``land of beauty'' about the central Asian country from a couple of television show panelists who earned nationwide fame.
One, however, might be surprised how South Korea is linked to this mystic land. Most local people also recognize Korea and are friendly to the country.
The Asia-sweeping Korean Wave, or hallyu, holds good there as well, with a lot of Korean television shows still being televised and received favorably. In the streets of the capital Tashkent, over seven out of 10 cars driven are Daewoo. Indeed many people associate the image of South Korea directly to the company.
Korea owes part of its favorable reputation in the country to the now defunct Daewoo Group. Since first advancing into Uzbekistan in 1992, the then conglomerate successfully set up various businesses including automobiles, textile, finance and communication, before going into bankruptcy in 1999 amid Asian the financial crisis.
The legacy, however, has been inherited by Daewoo International, an arm of the group. Now an independent corporation, Daewoo International is aggressively advancing into the newly emerging market.
The company is operating two businesses in Uzbekistan ― textile production and mineral exploration. Its textile manufacturing plants are set to secure the biggest market share in the world's fifth biggest cotton producing country.
Currently it is running two cotton mills, Daewoo Textile Company and Daewoo Textile Fergana, in the city of Fergana, which is located 420 kilometers from Tashkent. It also took over another mill in the city of Bukhara, and will start operations next year. If all goes well, Daewoo will be the biggest cotton producer there accounting for 16.3 percent of the market.
``We are getting full-fledged support from the government as we help add value to cotton produced here,'' DTC president Jung Gi-sup said.
Additionally, Daewoo signed a contract for exploring two oil and gas blocks with Uzbekneftegas, the state-run oil company, in February and plans to start an automobile parts business in a joint venture with a Korean parts firm within this year by building a factory near a plant of Uz-GM, formerly Daewoo Motors, in Andijan, Uzbekistan's fourth largest city.
``The government here wants more Korean companies to come,'' said Jeon Byeong-eel, the company's general director of central Asian operations. "And it's the consequence of our long-term efforts to establish trust with it.''
In the former Soviet Union, Uzbekistan was one of the richest regions with strong political and military power in central Asia. The country's population of 27 million is also bigger than that of neighboring nations.
The country, however, has long lost that leading status. Its gross domestic product was $13.1 billion in 2006, around $500 per capita, which lagged behind Asian countries.
The political doldrums directly led to long-term deterioration, as a long-time dictatorship since 1991 chose an isolation policy with technology, capital and infrastructure seriously needed.
Uzbekistan has long been on bad terms with the Western world, especially the United States, since its appeasement policy came to a halt in 2005, when hundreds were killed in huge civil unrest and the country drove all U.S. military forces stationed there out of the country after criticism of the repression on anti-government demonstrations.
Things are changing, however, as incumbent President Islom Karimov started to take a more soft-lined stance to attract more foreign investment for its economic reinvigoration after securing another seven-year term last year.
A Korean resident there, under condition of anonymity, said the government was ``seeking to attract foreign investment.''
The Uzbek economy is improving due to recent hikes in international energy and commodities prices.
The country posted an average of 7 percent growth over the last four years. Under a long-term development project focused on energy, manufacturing, machinery and information technology, it also overhauled regulations on foreign investment, which led to attracting $1.5 billion in 2006, up 25 percent from the previous year.
The International Monetary Fund made a positive assessment on the nation's efforts in its recent report, saying its economic condition had improved thanks to a series of reform measures.
South Korea and Uzbekistan opened diplomatic ties in 1992 and trade has increased year by year. In 2006, Uzbekistan's exports to Korea were tallied at $649 million and imports at $40 million.
``Korean energy companies are sort of late in entering the market, but they still can lower the risk by keeping a solid relationship with the Uzbek government and state-run corporations,'' said an official at the Korean Embassy to Uzbekistan.
``The nation is favorable to Korea and acknowledges efforts and contributions of Korean-descent people. It is definitely an advantage for Korean companies.''
There are still lingering shortcomings for foreign companies to advance into the country. Rigid bureaucratic systems still remain throughout society and a less developed banking and logistics infrastructure makes it hard for foreign-based firms to perform more economic activities, Daewoo said.
All in all, the company is convinced Uzbekistan is a right place to revive its past glory.
"Central Asia is definitely a blue ocean for Korea. We are sure we made a right choice to come here for business," Jeon said.
hckim@koreatimes.co.kr
This article is a dispatch from Fergana, Uzbekistan.
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