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IFC Invests in Indorama Agro to Promote Sustainable Cotton and Improve Livelihoods in Rural Areas in Uzbekistan
Tashkent, Uzbekistan, May 27, 2021—A new investment by IFC in Uzbekistan's cotton sector will help further develop a sustainable model for private sector development and modernization of the industry while improving the livelihoods of farmers in the cotton supply chain and giving them access to new skills and technologies.
IFC's $60 million long-term loan to Indorama Agro LLC, a wholly-owned subsidiary of Indorama Corporation, will help finance the development of about 50,000-hectares of farmland in two regions of Uzbekistan- Syrdarya and Qashqadarya, while also supporting independent farmers through contract farming. The European Bank for Reconstruction and Development (EBRD) is providing a parallel $60 million long-term loan and a $10 million short-term loan to the project.
Since 2018, IFC has been working with Indorama Agro to create and implement an example of a private sector-led cotton farming and ginning business based on best international environmental and social practices. IFC and Indorama Agro's approach focuses on introducing sustainable cotton farming and ensuring proper work practices within the company's supply chain. IFC is supporting Indorama Agro to pilot a Better Cotton Initiative (BCI) approach to promote sustainable and decent work practices and standards in cotton farming. BCI is a global third-party cotton licensing body.
Indorama Agro was established in the wake of the government of Uzbekistan's agricultural reforms particularly targeting the cotton sector, which aim to encourage new private investments by leasing large tracts—or clusters—of land to private players who are integrated into the cotton value chain.
Amit Lohia, Vice Chairman of Indorama Corporation, said, "We are proud of our roots in Uzbekistan since 2010 and are excited about our first farming investment in the country. Our goal is to grow sustainably farmed cotton and other crops with traceability, which shall align with the needs of global apparel brands and our consumers' expectations. This project also integrates with our existing cotton spinning and fertilizer manufacturing activities in the country. The financing of this project in the current global environment reflects Indorama's strong and trusted partnership with IFC, spanning three decades, and with EBRD as a long-term partner."
Indorama Agro's operations aim to achieve sustainable cotton production in Uzbekistan in a financially viable manner and successfully integrate social and environmental sustainability measures into its operations.
"In line with the government's modernization efforts, IFC's investment will help Indorama Agro establish cotton farming and ginning operations using modern technology and meeting international environmental and social standards," said Georgina Baker, IFC Vice President for Europe, Central Asia, Latin America, and the Caribbean. "This investment will also showcase the use of technology to help address some of the cotton sector's sustainability challenges in Uzbekistan, and potentially support reopening of the country's cotton industry to the international textile market."
IFC's work with Indorama is part of the broader country-level work of the World Bank Group to support the Uzbek government in its efforts to use sustainable farming practices in the country's cotton sector. IFC continues to collaborate with all relevant stakeholders to develop and implement market-driven solutions for sustainable cotton production, which is fundamental for the development of the textile industry and for building on Uzbekistan's recent success in eliminating systemic forced labor in the cotton sector.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In the fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
About Indorama Corporation
Indorama Corporation (IRC) is one of Asia's leading chemical holding companies based in Singapore. IRC has over 20 manufacturing sites in eight countries manufacturing a multitude of products including nitrogen fertilizers, phosphate fertilizers, polyethylene, polypropylene, polyester, textiles, cotton fiber, and medical gloves. Indorama is the largest producer of Urea and Phosphate fertilizers in Sub-Saharan Africa, the largest producer of polyolefins in West Africa, and the third largest producer of synthetic gloves in the world. Indorama is also an integrated producer of cotton and synthetic spun yarns. IRC employs over 18,000 people worldwide.
IRC's associate, Indorama Ventures Public Company Limited, is the largest producer of PET Resin/Polyester in the world and also one of the biggest producers of polyester feedstocks. For more information, visit www.indorama.com.