Stop Cotton Exports And Transform Into A Textile Powerhouse, Uzbekistan To Become The Next Investment Hotspo

- Mar 20, 2019 -

The Uzbek government's continuous support policy is also providing a better guarantee for the development of textile enterprises, while also rapidly increasing the attractiveness of foreign capital in this field. In this regard, industry experts believe that risks and opportunities coexist, whether the future textile enterprises will set off the "Benwu" boom remains to be seen. While grasping investment opportunities, textile enterprises must seriously study investment projects and study investment risks.

"Since the development of the domestic cotton textile industry, Uzbekistan will stop exporting cotton from 2020." Uzbekistan’s President Milziyoyev’s clear statement recently showed Uzbekistan’s desire to transform from a traditional cotton-producing country. The determination to upgrade to a textile power.

According to data from the National Statistical Committee of Uzbekistan, Uzbekistan exported 110,000 tons of cotton fiber in the first 11 months of 2018, with a value of US$213 million, accounting for 1.9% of total exports, which continued to decline. At the same time, textile exports maintained a rapid growth trend, with exports of 1.178 billion US dollars in the first 11 months of 2018, an increase of 15.3% over the same period in 2017, accounting for 10.4% of total exports. This set of data reflects the profound transformation of the Uzbek cotton industry under policy guidance.

At the same time, the official launch of the Uzbekistan Textile Industry Development Strategy for 2019-2021 also clarified the development direction of the country's textile industry. The strategy is guided by export-oriented, using high technology to produce competitive technology-intensive products, and encouraging industry to attract investment and innovation.

Obviously, the Uzbek government's continuous support policy is also providing better protection for the development of textile enterprises, while also rapidly increasing the attractiveness of foreign capital in this field. Then, as a key country along the “Belt and Road”, can Uzbekistan be favored by domestic textile enterprises and become a hot country for the next enterprise to invest and build factories?


More measures to improve the industry environment




Encourage foreign investment in building textile mills



As is known to all, Uzbekistan is rich in cotton and is known as the “Platinum Country”. It is one of the major cotton producers and exporters in the world. It is understood that the government's active pursuit of the transition from cotton exports to textile exports is mainly due to two reasons: one is to value the higher added value of textiles, and the other is to see its own huge potential in the textile field. As a traditional cotton growing country, Uzbekistan can develop the textile industry according to local conditions. It can not only give full play to the raw material cost advantage of self-produced cotton, but also quickly realize the upgrading and promotion of local industries through the combination with foreign advanced technology and capital, and promote the economic development of various places.

In order to accelerate the development of the textile industry, Uzbekistan has continuously created important opportunities for itself in the past two years. At the cotton growing end, the country is vigorously promoting cotton planting to improve quality and efficiency. On the one hand, through screening for non-friendly cotton land, cotton planting will continue to be concentrated in suitable areas to increase cotton planting scale and benefits; on the other hand, by tightening the construction of reservoirs and other measures to ensure that cotton is fully irrigated during the growth process to enhance cotton yield and quality. . In October 2018, Uzbekistan obtained twice the amount of cotton produced by adopting China's cotton planting technology.

At the processing and production side, the government's continuous support policies are providing better protection for the development of textile enterprises, while also rapidly increasing the attractiveness of foreign capital in this field. Abu Kasmov, professor of economics at the National University of Uzbekistan, said that in recent years the Uzbek government has provided a number of preferential policies for export enterprises, including the establishment of special funds to support the export of small and medium-sized enterprises, and the provision of export credit and insurance for private enterprises. Driven by the rapid growth of the textile exports, it also unleashed a signal to open the door to friendship for foreign companies.

In addition to policy factors, Uzbekistan's unique location advantage in the hinterland of Central Asia and Eurasian traffic routes is also highly valued by foreign investors. The government has therefore clearly stated that the Uzbekistan Textile Industry Association regional representative body will be established in the process of developing international cooperation to radiate the CIS region, Europe and Southeast Asia markets.

In addition, it is worth noting that the efforts of the Uzbek government in recent years to prohibit compulsory labor and raise the salary of cotton pickers have also been recognized by the international community. The US Department of Labor released the cotton produced in Uzbekistan in the list of child labor and forced labor products announced in late September 2018. Analysts believe that the good news that the United States "eliminates" Umbrella will lay an important foundation for Ukrainian textile exports to the EU, North America and Japan, which is beneficial to the textile companies interested in investing in Uzbekistan.


China's textile enterprises have precedents for investment




"Going out" in exchange for Xintiandi



In recent years, the textile industry in Uzbekistan has developed rapidly. There are more than 7,000 textile enterprises in the country. According to the Uzbekistan Textile Industry Association, China, Turkey, South Korea, Singapore and Switzerland are actively participating in the development of Uzbekistan's textile industry. More than 150 foreign-invested textile companies operate in the country, 50 of which are purely foreign-owned enterprises. The relevant person in charge of the textile industry in Uzbekistan expressed the hope that China will seize the opportunity to increase investment in Uzbekistan and make full use of China's advanced technology and management experience to promote the development of Uzbekistan's textile and apparel industry chain.

In fact, as early as a few years ago, China’s textile enterprises went to Uzbekistan to invest and build factories.

In 2015, Jiangsu Taicang Litai Textile Co., Ltd. began to deploy in the Belt and Road area and invested in spinning projects in Uzbekistan. In July 2015, the foundation of the 120,000-spin combed compact spinning project of the first phase of Litai Textile International Park was started. In July 2017, the first phase of the park was completed and put into operation and put into operation. The annual output reached 22,000 tons of cotton yarn, and the export revenue exceeded US$70 million. Litai Textile International Factory is equipped with the world's most advanced spinning equipment with the highest level of automation, introducing international modern production management concepts to create a modern textile enterprise with high efficiency, ecology, intelligence and circulation. At present, the foundation of the second phase of Litai Textile International Park is under construction and is expected to be put into operation by the end of 2019.

Milziyev spoke highly of the visit to the Litai Textile International Park project, indicating that it is necessary to increase the scale of enterprises in Uzbekistan. At the same time, he stressed the need to meet the conditions of foreign investors who have contributed to the country's economic development. In the future, more Chinese entrepreneurs can be expected to invest in Uzbekistan.

For the overseas investment of the company, Li Xianghua, deputy general manager of Taicang Litai Textile Co., Ltd. said: "There is encouragement to go to Uzbekistan to develop national policies. Relatively speaking, there is an advantage over the raw materials and labor in our side." Facts have proved that it is this step of “going out”, which allows Taicang Litai to break through the bottleneck of development and realize the transformation and upgrading of the company and rejuvenate its vitality.


Risk and opportunity coexistence




The investment boom is still early



In recent years, domestic textile companies have actively carried out the global industrial layout, and it is a big performance to go to Vietnam to invest and build factories. In the face of an increasingly complex international environment, can Uzbekistan become a hot country for the next textile enterprise to invest and build? In this regard, industry experts believe that risks and opportunities coexist, whether it will set off the "Benwu" boom in the future remains to be seen.

According to the reporter's understanding, Uzbekistan's investment has the following special advantages: the purchase of Uzbek cotton, the price enjoys 15% discount; socks and clothing companies enjoy all the tax reductions except VAT; imports of raw materials and accessories that Uzbekistan does not have the ability to produce 100% exemption from customs duties; 100% exemption from customs duties on Uzbekistan's incapable production of equipment and parts; foreign investors enjoy a 10-year tax exemption period; textile export enterprises enjoy property tax exemption; professional textile and clothing technology Colleges and universities provide high-quality talents; the government approves the use of land for 49 years.

Experts believe that the special conditions enjoyed in Uzbekistan investment are very attractive, and the country's decision to stop cotton exports, develop a textile industry accelerated development plan, and transform to a textile powerhouse is an opportunity for domestic textile companies with strength. At the same time, however, it should be recognized that investment in textiles and clothing in Central Asia should be rational and prudent, and should not be rushed together. Textile enterprises must seriously study investment projects, study investment risks, attach importance to religious and ethnic issues in Central Asian countries, and financial and legal risks, rather than investing in a certain aspect of policy preferences. Source: China Textile News

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