Uzbekistan: Polish firms find old friends in new country
Now, although direct Uzbek-Polish economic relations are in their infancy, bilateral trade is growing.
"Poland has shown a great deal of interest in Central Asia," says Alisher Abdualiev, senior expert on European trade at Uzbekistan's Foreign Economic Relations Ministry.
"Of all the countries of Central Europe, I would say Poland is probably the most economically developed; this is undoubtedly why (Polish firms) have been the most aggressive in their efforts here."
Of Central European countries, Poland and the Czech Republic figure largest in the Uzbek government's trade and development plans, Abdualiev says.
Polish investment
Poland currently ranks seventh among Uzbekistan's European trade partners (14th overall), accounting for just under 2% of the former Soviet republic's $3 billion total annual foreign trade. The total volume of trade between the two countries was $41.1 million in 1994, up from $30 million the previous year. Larger Polish firms doing business in Uzbekistan include Kolmex, Polcoop, Textilimpex, Pezetel, Ciech and Polimex-Cekop.
Uzbekistan takes its name from the Uzbeks, a Turkic, predominantly Muslim people who make up about 70% of the country's population. Absorbed by Tsarist Russia in the 19th century, its present-day borders were drawn by the Soviets in 1924. Along with its sister republics, Uzbekistan declared independence from the Soviet Union in 1991.
A few months later, in 1992, Poland and Uzbekistan signed the first of several trade agreements. A regular exchange of visits by Polish and Uzbek trade ministry officials and businessmen during 1992-94 culminated in a two-day visit to Warsaw by Uzbek President Islam Karimov in January of this year.
The two countries' economies might have been made for each other. Uzbekistan's economy is dominated by agriculture. Polish machinery has been at work in Uzbekistan's under-developed food processing industry since the 1960s, and the Uzbeks would like to acquire much more to lift themselves up from the status of raw-materials producers.
White gold
But cotton is the commodity on which both Uzbekistan's economy and Uzbek-Polish trade are based. "White gold," as the fiber is nicknamed here, was introduced as a cash crop by Tsarist colonizers in the 19th century, and later Soviet economic planners created a virtual cotton monoculture in the republic. Now the world's No. 4 cotton producer, independent Uzbekistan is trying hard to diversify its economy, but there is no doubt that cotton will remain king, at least in the near term. So important is the crop that university classes are suspended in early fall so students can help with the harvest.
During the Soviet period, the Polish textile industry bought 100,000 tons of Uzbek cotton a year, or about 2.5% of the republic's harvest. Since the dismantling of the Moscow-imposed socialist community, Polish purchases have dropped by more than two thirds.
Uzbekistan is taking steps to reassert its position on the Polish cotton market. A group of 40 Uzbek cotton specialists from various ministries recently attended a special training course at the cotton chamber of commerce in Gdynia, and Uzbekistan will be the featured exhibitor at the international cotton conference next month in Gdynia.
The first Polish firm to begin doing business in newly-independent Uzbekistan was the Warsaw-based engineering conglomerate Polimex-Cekop. In fact, the company had been selling food-processing equipment to the Soviets for use in plants in Uzbekistan since 1967. With the coming of independence, the company saw a chance to renew old contacts from the Soviet period, and to find new clients. By 1993, Polimex-Cekop had a permanent office here, staffed by a representative sent from Poland. The company's main interest right now is modernizing Uzbekistan's edible oils industry, whose chief product is, not surprisingly, cottonseed oil.
Doing business in Tashkent
Mariusz Napiorkowski, Polimex-Cekop's representative in Tashkent, says making money in Central Asia depends on understanding the Central Asian way of doing business.
For one thing, negotiations take longer here than they do in Europe. A contract that gets signed after two or three meetings in Poland may take months to hammer out in Uzbekistan.
"You have to have a lot of patience," he says. "There's none of the haste that I associate with Europeans. We like to do everything fast, because 'time is money.' Here the feeling is, 'Let's wait, there's plenty of time, let's think this thing through.'"
Cultural niceties must never be ignored and personal connections are particularly important in Uzbek society, Napiorkowski says. Living and working here means thinking and behaving in ways most Europeans find unfamiliar. 'The East has its own way,' Napiorkowski says in Russian, the international business language in Tashkent.
The chronic shortage of cash among Uzbek firms plagues business transactions. Abdualiev of the Foreign Economic Relations Ministry says many more contracts with foreign firms are signed than are put into operation because the Uzbek partner lacks hard currency.
"We have to wait until the end of the year for the budget estimates for the next year," he says. "If there is money, we go ahead with a contract" (most Uzbek firms are still state-owned).
If not, the contract lies dormant until money can be spared. Goskomgeologia, the Uzbek state oil and gas producer, recently suspended a contract it had already signed with the Polish firm Pezetel for $1.55 million worth of badly-needed equipment which it now cannot pay for.
The common solution is barter. "It's often easiest for a company to pay for needed equipment with what it produces," says Polimex-Cekop's Napiorkowski. His own firm's recent sales of machinery have almost all been barter deals, usually for cottonseed oil, which Polimex-Cekop then sells to Polish food-processing companies for manufacture into margarine.
Foreign firms wishing to do business in Uzbekistan can now deal directly with prospective Uzbek partners. Government officials will help if requested, but deals no longer need bureaucratic approval as in Soviet times. Foreign firms are required to register with the Finance and Justice ministries, but these appear to be pure formalities, and Napiorkowski says his company has had no trouble with the Uzbek government. The state foreign trade bank, VED, recently established links with two Polish banks, Bank Handlowy and Bank Staropolski, to facilitate money transfers and other transactions involving Polish firms.
Looking for a future
Anvar Sultanov, 19, took one semester of Polish at Tashkent State University (Russian Philology students take one semester of another Slavic language for comparative purposes only) and found it "more interesting" than his other coursework. His teacher is trying to arrange a stay at a university in Poland. When Sultanov masters Polish, he says, he hopes to find work, perhaps in a future Polish embassy here, perhaps as an Uzbek diplomat in Poland. Poland currently has no diplomatic representation in Tashkent.
Or perhaps, if things work out, in some firm engaged in Uzbek-Polish trade. "Things in Uzbekistan aren't too clear right now. It's not even clear if Polish companies will be here in the future," he says, contradicting the optimism of Abdualiev and Napiorkowski but echoing the anxiety felt by most people in this country. The future here has become very unpredictable since the breakup of the Soviet Union.
Still, Sultanov is as proud as most Uzbeks of his people's first modern state: "Things will get better here," he says. "Absolutely."
"Poland has shown a great deal of interest in Central Asia," says Alisher Abdualiev, senior expert on European trade at Uzbekistan's Foreign Economic Relations Ministry.
"Of all the countries of Central Europe, I would say Poland is probably the most economically developed; this is undoubtedly why (Polish firms) have been the most aggressive in their efforts here."
Of Central European countries, Poland and the Czech Republic figure largest in the Uzbek government's trade and development plans, Abdualiev says.
Polish investment
Poland currently ranks seventh among Uzbekistan's European trade partners (14th overall), accounting for just under 2% of the former Soviet republic's $3 billion total annual foreign trade. The total volume of trade between the two countries was $41.1 million in 1994, up from $30 million the previous year. Larger Polish firms doing business in Uzbekistan include Kolmex, Polcoop, Textilimpex, Pezetel, Ciech and Polimex-Cekop.
Uzbekistan takes its name from the Uzbeks, a Turkic, predominantly Muslim people who make up about 70% of the country's population. Absorbed by Tsarist Russia in the 19th century, its present-day borders were drawn by the Soviets in 1924. Along with its sister republics, Uzbekistan declared independence from the Soviet Union in 1991.
A few months later, in 1992, Poland and Uzbekistan signed the first of several trade agreements. A regular exchange of visits by Polish and Uzbek trade ministry officials and businessmen during 1992-94 culminated in a two-day visit to Warsaw by Uzbek President Islam Karimov in January of this year.
The two countries' economies might have been made for each other. Uzbekistan's economy is dominated by agriculture. Polish machinery has been at work in Uzbekistan's under-developed food processing industry since the 1960s, and the Uzbeks would like to acquire much more to lift themselves up from the status of raw-materials producers.
White gold
But cotton is the commodity on which both Uzbekistan's economy and Uzbek-Polish trade are based. "White gold," as the fiber is nicknamed here, was introduced as a cash crop by Tsarist colonizers in the 19th century, and later Soviet economic planners created a virtual cotton monoculture in the republic. Now the world's No. 4 cotton producer, independent Uzbekistan is trying hard to diversify its economy, but there is no doubt that cotton will remain king, at least in the near term. So important is the crop that university classes are suspended in early fall so students can help with the harvest.
During the Soviet period, the Polish textile industry bought 100,000 tons of Uzbek cotton a year, or about 2.5% of the republic's harvest. Since the dismantling of the Moscow-imposed socialist community, Polish purchases have dropped by more than two thirds.
Uzbekistan is taking steps to reassert its position on the Polish cotton market. A group of 40 Uzbek cotton specialists from various ministries recently attended a special training course at the cotton chamber of commerce in Gdynia, and Uzbekistan will be the featured exhibitor at the international cotton conference next month in Gdynia.
The first Polish firm to begin doing business in newly-independent Uzbekistan was the Warsaw-based engineering conglomerate Polimex-Cekop. In fact, the company had been selling food-processing equipment to the Soviets for use in plants in Uzbekistan since 1967. With the coming of independence, the company saw a chance to renew old contacts from the Soviet period, and to find new clients. By 1993, Polimex-Cekop had a permanent office here, staffed by a representative sent from Poland. The company's main interest right now is modernizing Uzbekistan's edible oils industry, whose chief product is, not surprisingly, cottonseed oil.
Doing business in Tashkent
Mariusz Napiorkowski, Polimex-Cekop's representative in Tashkent, says making money in Central Asia depends on understanding the Central Asian way of doing business.
For one thing, negotiations take longer here than they do in Europe. A contract that gets signed after two or three meetings in Poland may take months to hammer out in Uzbekistan.
"You have to have a lot of patience," he says. "There's none of the haste that I associate with Europeans. We like to do everything fast, because 'time is money.' Here the feeling is, 'Let's wait, there's plenty of time, let's think this thing through.'"
Cultural niceties must never be ignored and personal connections are particularly important in Uzbek society, Napiorkowski says. Living and working here means thinking and behaving in ways most Europeans find unfamiliar. 'The East has its own way,' Napiorkowski says in Russian, the international business language in Tashkent.
The chronic shortage of cash among Uzbek firms plagues business transactions. Abdualiev of the Foreign Economic Relations Ministry says many more contracts with foreign firms are signed than are put into operation because the Uzbek partner lacks hard currency.
"We have to wait until the end of the year for the budget estimates for the next year," he says. "If there is money, we go ahead with a contract" (most Uzbek firms are still state-owned).
If not, the contract lies dormant until money can be spared. Goskomgeologia, the Uzbek state oil and gas producer, recently suspended a contract it had already signed with the Polish firm Pezetel for $1.55 million worth of badly-needed equipment which it now cannot pay for.
The common solution is barter. "It's often easiest for a company to pay for needed equipment with what it produces," says Polimex-Cekop's Napiorkowski. His own firm's recent sales of machinery have almost all been barter deals, usually for cottonseed oil, which Polimex-Cekop then sells to Polish food-processing companies for manufacture into margarine.
Foreign firms wishing to do business in Uzbekistan can now deal directly with prospective Uzbek partners. Government officials will help if requested, but deals no longer need bureaucratic approval as in Soviet times. Foreign firms are required to register with the Finance and Justice ministries, but these appear to be pure formalities, and Napiorkowski says his company has had no trouble with the Uzbek government. The state foreign trade bank, VED, recently established links with two Polish banks, Bank Handlowy and Bank Staropolski, to facilitate money transfers and other transactions involving Polish firms.
Looking for a future
Anvar Sultanov, 19, took one semester of Polish at Tashkent State University (Russian Philology students take one semester of another Slavic language for comparative purposes only) and found it "more interesting" than his other coursework. His teacher is trying to arrange a stay at a university in Poland. When Sultanov masters Polish, he says, he hopes to find work, perhaps in a future Polish embassy here, perhaps as an Uzbek diplomat in Poland. Poland currently has no diplomatic representation in Tashkent.
Or perhaps, if things work out, in some firm engaged in Uzbek-Polish trade. "Things in Uzbekistan aren't too clear right now. It's not even clear if Polish companies will be here in the future," he says, contradicting the optimism of Abdualiev and Napiorkowski but echoing the anxiety felt by most people in this country. The future here has become very unpredictable since the breakup of the Soviet Union.
Still, Sultanov is as proud as most Uzbeks of his people's first modern state: "Things will get better here," he says. "Absolutely."
