Cotton and loans: Bad business in Uzbekistan
A complaint against an IFC project sheds light on the opaque financial systems underlying Uzbekistan’s cotton industry...The complaint was filed...to seek the investigation of a $40 million IFC loan to Indorama Kokand Textile...IKT, a joint venture between Indorama, a subsidiary of a Jakarta-headquartered fiber and filament holding company the Indorama Corporation, and the National Bank of Uzbekistan. Indorama is the majority stakeholder. IKT was established in 2011, and Indorama says the benefit of setting up shop in Uzbekistan is “the “natural advantage of sourcing competitively priced raw cotton fiber from domestic sources.” As the complaint lays out, Indorama has been on the receiving end of favorable policies–such as deferred tax benefits, VAT reimbursement, discounts on export pricing, and the provision by the state of some facilities free of cost. But there are significant restrictions as well, which the complaint argues, makes it difficult for the company to get loans and impossible for IKT to operate without using cotton harvested with forced labor.