5) Lack of essential types of manufacturing.

Contemporary economy of Kazakhstan still lacks of cotton and woolen fabrics, leather shoes and own knitted goods. For now, import seems like the only way to meet the needs of people in their demand of garment and knitwear. Essential types of manufacturing, like for the production of yarn for knitwear, woolen and worsted cloths for clothing, lining and blended fabrics, sewing threads, zippers, auxiliary materials, insulation, etc. seems to be non-existent. Because of that, businesses have no other option but to import most of these goods which leads to increased production costs.

6) Significant drawbacks in legal and regulatory environment.

Kazakhstan’s progress in recent years in reforming its legal and regulatory environment is evident, though the investor community expects further reforms. In particular, more than a half of investors feel that the level of legal and regulatory transparency and stability remains unattractive. Major reasons were that government does not make sufficient assessment on what future impact on businesses and textile economy will be, when they issue new law or regulation. Another reason is that application of the law is done inconsistently. And last, but not least is some law enforcement agencies have no business-like approach.

7) Lack of skilled manpower.

Unfortunately, a deficit of qualified personnel and high level of expenses related to hiring experienced staff are both threats for the growth of the industry. As statistics shows, in higher and secondary special educational institutions only a little part of students are directing in engineering or technical speciality. Which is even more troubling is that the quality of this education is rather poor because models and equipment used is outdated and is not reflecting the current technologies anymore. Another dimension of the issue is that even though the number of such technical and industrial institutions is growing, the quality of emerging ones is under the question. There is also no guarantee that education is reflecting current market and technology situations. It has to be reassured that skills and practices that are being taught are relevant to current market and technological conditions.

Policy recommendations to overcome those challenges/barriers:

1) Increase the amount of investment into industry.

Government should make textile industry and its major representative – cotton, as our source of export-based government revenues. The weight of textile and clothing industry in Kazakhstan in total comprises only 0.4%. In comparison, developed countries like Germany, France and USA show the statistics that in the industrial production volume shares of textile industry are equal 6-8%, and even higher in Italy with 12%. It means that 20% of budget as well as internal market replenishment on 75-85% is provided with goods of own production. As we can conclude, there is an obvious recommendation- to significantly increase the support and development of the textile and clothing industry by allocating budget money onto industry’s needs.