One former Soviet Republic is showing there is life after the “motherland”
and is paving a bright new future for itself. Uzbekistan was a Soviet socialist republic from 1924 until 1991 but has since moved politically away from the Russian Federation. Nowadays, it is part of the Commonwealth of Independent States (CIS), a regional intergovernmental organization in Eastern Europe and Asia.
It was formed after the dissolution of the Soviet Union in 1991 and has
given rise to impressive economic growth and the emergence of some go-ahead
These include Artel, one of the unsung success stories of Central Asia’s
Bektemir Murodov, Artel’s CFO, has given what is believed to be the
company’s first ever interview with the international press.
In it, he seeks to explain what is behind its success story and outlines
his plans for the future.
Looking back to when the company built its first factory in 2006, he said,
“The business went well and one of our strengths was a very loyal
distribution network for the doors and frames we were producing, which
allowed the business to grow steadily. We ploughed all the profits back
into the business as investment.”
Fast forward four years and it had to decide which route to go down. He
recalls, “There was a lot of competition in textiles but little in
manufacturing. Uzbekistan has the biggest population in Central Asia and
everyone wants household appliances.”
By 2011 it was making household goods like cookers and air conditioners and
he says, “At the same time Samsung was opening a rep office in Tashkent and
approached us to make vacuum cleaners under licence. A couple of months
later we added microwaves to the deal.”
He said, “From then on every year we added a new product to the line:
vacuum cleaners, cookers, TVs, fridges, etc. Fridges were one of the most
complicated of the new products to develop and required a lot of our own
investment , but we started to produce them in 2013. Our distributors were
pushing us to expand, as they saw an opportunity in the sale of a whole
range of household appliances.”
There are now plans to enter the international markets, he says, adding,
“We are exploring entering the capital markets in the next couple of years.
We have already done most of the preparation work for a possible Eurobond
and last year completed our first set of three-year IFRS accounts.
“We are working on other parts of our business that need strengthening to
ensure that any issuance is right for our business,” said Murodov, speaking
to *bne IntelliNews*.
Growth has been slowed by the health crisis and he admits “the pandemic got
worse in 2021 vs 2020.
“It disrupted our supply chains and sent the cost of inputs up. So we saw
no growth last year in the domestic market. Nevertheless, exports continued
to grow by around 30Q% year on year. We should return to growth this year.”
From importing goods to exporting them the company is on an upward spiral.
“We are exporting the same goods as we sell in the local markets but we
decided to export with 0% profit while we build up our market share. In
Kazakhstan we already earn profits, as we have a strong presence there now,
but most of the other markets are still in development.”
Murodov adds, “The ‘Stans are easy to penetrate but we have to go further,
and then transport costs become a problem. Uzbekistan has no access to
waterways and we have to send everything by trucks and train. That makes to
harder to make a profit.”
With plans to export to Nigeria and Tanzania he predicts, “Next year we
will further build on our export to MENA countries as well and expect good
growth there too.”
Despite this, there are still some hiccups to be expected along the way,he
accepts, adding, “More steel is needed and is mostly imported from Russia
and China. Uzbekistan has little in the way of iron ore deposits, although
there is a project underway to develop what we have, but inputs remain a
“We have begun developing our own unique products since 2016 that are
totally owned by us, which has really helped export growth,” said Murodov.
Labour is another issue.
“Before the work force was about 300-400,000 people but only 50,000 were
university graduates. But the state has opened several more universities,
and in 2021 alone there are 130,000 new students enrolled in university.
It’s continuing to grow from year to year,” Murodov said.
With planned further investment in R&D and higher education, the future, he
believes, is decidedly bright.