End Xiaoping Led Analysis: Uzbekistan Investment Prospects

On 2-6 May, Duan Xiaoping, vice president of China Textile Industry Federation and President of China Chemical Fiber Industry Association, led a delegation from Central Asia to the second station, Uzbekistan, to inspect the investment and development prospects of the local textile industry.

Uzbekistan is located in the hinterland of Central Asia. It is an important fulcrum country in the construction of "one belt and one road". Its natural resources are very rich. In the past five years, the GDP growth rate has remained above 7%, and the economic and trade environment is good.

At present, there are more than 3500 textile enterprises and more than 4700 garment enterprises in the Ukrainian light textile industry, producing 700 thousand tons of cotton yarn, 1 billion 200 million meters of fabric, 140 thousand and 700 tons of knitted fabrics, 2 billion 200 million garments, 132 million pairs of socks, and 1 billion 257 million dollars of textile and clothing (including cotton).

It is noteworthy that during the development of the textile and apparel industry in the Uzbekistan region, the president made clear that since 2020, Uzbekistan will stop the export of cotton, indicating that Ukraine is determined to pform itself from a traditional cotton producing country to a textile country.

According to the briefing, Ukrainian energy prices are very favorable, electricity charges of about 0.25-0.28 yuan / degree (equivalent to RMB, the same below), natural gas 0.48 yuan / cubic meter, water fee 1.8 yuan / cubic meter, waste water treatment fee 0.9 yuan / cubic meter.

The country has 11 years of compulsory education, with abundant labor resources and high quality, with an average wage of about 1000 yuan per month (before tax).

As a closing point for the trip to Central Asia, the delegation visited the Uzbekistan textile and Garment Association and the investment committee to exchange views and suggestions on the development of China's textile enterprises in Ukraine.

During the talks, FakhruddinJumaniyazov, Vice Minister of Uzbekistan textile and Garment Association, introduced the preferential policies and industrial development direction of Ukraine.

Preferential policies

1, enjoy customs clearance preferences;

2, every country in Ukraine has a free economic development zone. The investment in the park can enjoy 7 years' exemption from all taxes and fees except personal income tax. The specific years of enjoyment can be extended according to the amount of investment.

The amount of investment is over $fifty million, and the energy needed is free of charge from the state. The tax exemption time is extended from 7 years to 10 years.

3, the annual output of Ukrainian cotton is about 1 million tons. Now the purchase of cotton produced in 2017 can enjoy 15% price concessions.

4, the level of local cotton processing equipment is relatively old. At the same time, in order to solve the problem of consistency between production and demand, the state can provide land, encourage enterprises to grow, process and use cotton independently, so as to get cotton that meets production needs and reduce production costs.

It is reported that the cost of self planting cotton is about 900 US dollars per ton, while the market purchase is about US $1500-1600 / ton.

In addition, 60% of the cost of planting cotton will be borne by the state.

If drip irrigation is used, the state will subsidize 50%.

5, the export of domestic cotton processing products will enjoy 20% export tax rebates.

Industry development

1, in the future, 70% of cotton planting land will be allocated to enterprises for independent cultivation.

2, pay attention to industrial upgrading. Since 2016, when enterprises were called on to upgrade their equipment, more than 80% enterprises have completed equipment renewal in two years.

3, privatization of state-owned enterprises has been gradually completed. The Uzbekistan textile and Garment Association is stepping up its efforts to cooperate with international institutions. About 260 projects have been completed or are being promoted.

4, at present, there are about 70 export countries in Ukraine. With the continuous development of the textile and garment industry in the country, it plans to further expand exports to 90 countries.

5, after stopping the export of cotton in 2020, 2020-2025 years will further guide the pformation of export products to the lower reaches, reduce the export of cotton yarn and leave more value-added products in the country.

6, the current Ukrainian printing and dyeing, chemical fiber links are relatively weak, welcome to the related enterprises, environmental protection, the need for an enterprise to deal with the standard, and then unified by the state.

Duan Xiaoping, vice president of the China Federation of textile industry and chairman of China Chemical Fiber Industry Association, said that the inspection of the Ukrainian countries has been fruitful and increased the confidence of Chinese enterprises in Ukrainian investment. Combined with past experience, it is very optimistic about the future development prospects.

Liu Yanwei, vice president of China Textile Construction Planning Institute, introduced the results of the visit.

China's textile enterprises are the result of their own development needs and external environment. The Ukrainian countries are rich in cotton resources, attractive energy prices, high-quality and cost-effective labor force, plus the stable political situation in Ukraine and an important hub linking Europe. These factors will make Ukraine a major choice for Chinese enterprises.

Li Jie, Secretary General of the China Cotton Textile Industry Association, said that the members of the association covered more than 70% of China's cotton textile production capacity, and organized nearly 10 industrial exchange activities each year. The China Cotton Textile Industry Association and the China Council for the promotion of international trade, the textile branch, are willing to build a communication platform for both sides, jointly organize investment negotiations and provide on-the-spot investigation opportunities for interested enterprises.

The delegation also went to the two most representative industrial parks invested by China and a spinning enterprise invested by Turkey enterprises in Ukraine.

Peng Sheng Industrial Park was invested and built by Wenzhou Jinsheng Trade Co., Ltd., and started construction in 2009. In 2016, it was selected as China's state level offshore economic cooperation zone.

By the end of 2017, Peng Sheng Industrial Park has invested 138 million US dollars, and 16 Chinese enterprises have settled in the park, involving ceramics, valves, mobile phone manufacturing, casing, leather, steel rolling and other fields.

The park and the Cotton Research Institute of the Chinese Academy of Sciences cooperate to carry out the cotton planting trial project, and plan to focus on the fields of modern agriculture, textile and knitwear in the future.

The park has more than 1500 employees and 85% local employees. According to the person in charge, local workers have strong skills and willingness to learn, and their production skills and work progress are better.

Jinsheng Group has invested in the Uzbekistan Uzbek Industrial Park in the investment of Carl Xi, in 2014. The project signed an investment agreement in 2014. The first phase of the project, the 120 thousand spindle combed compact spinning project, was put into operation in July 2016, with an annual output of up to 22 thousand tons of cotton yarn.

The two phase of 120 thousand spindles modern spinning and 150 looms project is expected to be put into operation in the first quarter of 2020.

Jinsheng Group also plans to set up an industrial park in Tashkent, capital of Uzbekistan. At present, it has signed an agreement of intent, and the project is under examination and approval. Meanwhile, it plans to launch cotton cultivation business in Ukraine in 2020 for production needs.

The representative of the enterprise said that the Ukrainian State is in the early stage of reform and opening up, and has many opportunities for development. Jinsheng Group Industrial Park hopes to find more downstream partners to join hands in developing Ukraine.

The delegation also visited Buchan textile, which was invested and built by Turkey enterprises. The company owns 63 thousand spindles of spinning production capacity, and the former and the back spinning adopt the special process automation equipment of the special Lu and Jin Shengquan, and the products are mainly 20-30 pure cotton yarns.

Finally, President Xiaoping made a summary of the Uzbekistan survey and made some suggestions.

It is hoped that the Ukrainian side should adopt administrative restrictive measures prudently, such as the restrictions on the export of cotton yarn should not be taken lightly. The development of the industrial chain will take time, and the restrictions will stifle investment and play a counterproductive effect. It is hoped that the import of the excipients needed for downstream industries should be encouraged, not only from the tariff aspect, but also with the reduction of the administrative examination and approval links and related surcharges, so as to promote the formation of the industrial chain as soon as possible; in addition, in the process of the development of the parks, Chinese enterprises will communicate more conveniently with the Chinese built parks, and will also tend to choose the Chinese parks, especially the Chinese textile enterprises, and hope that the Ukrainian side can step up the landing construction of the related parks.

In the past five years, when the Chinese textile enterprises "go out", the China Cotton Textile Industry Association and the China Textile Council of the International Trade Promotion Committee will further strengthen communication and strive to make Uzbekistan the best investment country to safeguard the interests of both sides and create a new model of win-win cooperation.