Catalog

Felt and Glass
ADB Review [ October 2005 ]

Isolated, mountainous, and sparsely populated, the Kyrgyz Republic faces formidable challenges as it morphs into a market economy. But a village cooperative and an industrial firm show how to succeed with initiative—and a regional reach

By Ian Gill, (igill@adb.org)
Principal External Relations Specialist

KEMIN, KYRGYZ REPUBLIC

Two women are beating tufts of wool with wiry metal sticks, pounding it into felt. Others squat on the grass, fashioning different colored felt patches into a quilt. Finally, the women wrap the quilt in rattan and roll it on the ground.

REGIONAL SALES Quilt-making provides much-needed cash for the rural poor

These are elements of a ritual that is bringing much-needed income to remote and impoverished mountain villages of the Kyrgyz Republic. It is also an example of how entrepreneurial skills can be introduced among the poorest sections of this formerly controlled economy—and how eagerly they are being taken up.

In the spring, the village of Shabdan-Ata, in the northeast district of Kemin, looks like a picture postcard, set amid green pastures with snowcapped mountains in the background. The women work in the sun, as the children play. But in winter, it is a different story. Snow envelopes the village and many inhabitants, who subsist on vegetables, have a hard time getting through the cold months.

In 1998, an official from a United Nations Development Programme (UNDP) poverty reduction program asked some women here if they would like to form a self-help group to make kurak (felt mats).

From those beginnings now exist several such groups—each typically comprising 8–10 women—in Shabdan-Ata and nearby villages.

“We just thought we would see what happens,” says Gulasel Nogoibaeva, a United Nations volunteer.

“The women, who are poor, like it as it gives them a sense of community and it provides cash during winter.”

The women soon diversified from mats to toshok (quilts) as well as toys, slippers, and souvenirs. They organized themselves into a nongovernment organization, and UNDP organized seminars on how to make natural dyes and how to price and market their products.

Today, the women are casting their eyes regionally and selling their crafts in markets as far afield as Almaty in Kazakhstan.

“We earn on average 500–600 som ($12.50–$15 at the rate of 40 som to $1) a month, which could triple in peak months. It provides cash to supplement our diet and buy other essentials for the family,” says Altyn Janyshbaeva, leader of one of the groups.

Quilt making is also attracting teenage girls, who come on weekends to learn the skill so they can be assured of an income when they finish high school. Besides helping women work with felt, UNDP’s poverty reduction program also supports activities such as needlework, fruit drying, and tourism training.

THE FACTORY'S RAIL YARD has helped recapture markets in Russia and Central Asia

Meanwhile, a ritual of another kind is taking place in a factory in the town of Tokmok, 75 kilometers east of Bishkek.

It is temperate outside, but sweltering inside the plant, where men and women tend blazing furnaces that are burning sand and gas to produce glass. From large machines emerge expansive sheets of the transparent material. These are carefully scrutinized for defects, cut into smaller sheets, and packed onto a railway line for dispatch.

This once-ailing operation—rejuvenated by foreign capital and technology— has brought jobs for 1,500 workers.

It started life in the 1970s as Ainek (which means glass), one of the biggest producers of sheet glass in the Soviet Union. Following the breakup of the Soviet Union in 1991, it became a joint stock company but had difficulty adjusting to new economic conditions. In 1999, its gas supply from Uzbekistan was cut off and, in January 2000, Ainek went bankrupt.

In September that year, Steinert Industries GmbH of Germany bought the company at an open auction for $2.25 million and renamed it Inter-Glass. Over the next 2 years, Steinert invested millions to upgrade the plant and bring in high-tech equipment. After investments totaling over $20 million, the factory restarted production in 2002.

Today, Inter-Glass produces highquality glass—and in far greater volumes than before. In 2004, its capacity was 12 million square meters of glass a year, compared with 1 million before the makeover.

From the beginning, the revamped venture has had a regional perspective. For the gas on which its production depends, Steinert has secured a long-term supply from Uzbekistan.

WORKERS doing quality control at the Tokmok glass factory

It is also recapturing the markets it lost after independence, and today over 95% of its products are exported to Russia and other parts of Central Asia.

Key to its exports is that it sends its products by rail. The glass is transported in wooden pallets from the plant’s own rail yard to join the Central Asian rail network.

“Our pricing strategy is to offer glass at competitive prices to distant customers, with the customers paying for transport costs,” says Viktor Steinert, a German who is the owner’s uncle and representative of the company in the Kyrgyz Republic.

Mr. Steinert expects sales to be up 25–30% this year over 2004, due to an increase in capacity.

He adds that the factory’s average wage is $150 a month, more than double the national average.

Regional cooperation clearly helps the growth of such businesses, large and small, which is key to developing transitional economies.

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