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Republic of Uzbekistan:  World's sixth largest cotton producer (2005/2006 – more than 3.5 million tons)  Second largest cotton exporter after the United.

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Presentation on theme: "Republic of Uzbekistan:  World's sixth largest cotton producer (2005/2006 – more than 3.5 million tons)  Second largest cotton exporter after the United."— Presentation transcript:

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2 Republic of Uzbekistan:  World's sixth largest cotton producer (2005/2006 – more than 3.5 million tons)  Second largest cotton exporter after the United States of America

3 About State Joint-Stock Company “O’zbekyengilsanoat” SJSC “O’zbekyengilsanoat” was established in July 1, 2002 by the Decree of the President of the Republic of Uzbekistan #UP-3102 under the bases of the Association of Light Industry of Uzbekistan (former Light Industry Ministry of the Republic of Uzbekistan); Today SJSC “O’zbekyengilsanoat” provides: - one third of job places in the industrial sector; - more than 50%of the total volume of consumer goods; - approximately 20% of the total volume of industrial production.

4 SJSC “O’ZBEKYENGILSANOAT” SJSC “O’ZBEKYENGILSANOAT” Knitting Branch Knitting Branch Textile Branch Textile Branch Porcelain Branch Porcelain Branch Garments Branch Garments Branch About State Joint-Stock Company “O’zbekyengilsanoat” ORGANIZATIONAL CHART Infrastructure Enterprises Infrastructure Enterprises As of May 1, 2007: total number of enterprises – 202. Silk Branch Silk Branch

5 About State Joint-Stock Company “O’zbekyengilsanoat” Existing Production Capacities of SJSC “O’zbekyengilsanoat” Enterprises: - Cotton yarn (thousand tons) – 282,6; - Knitted fabric (thousand tons) – 37,2; - Woven fabric (million meters) – 274,0; - Apparel (million pieces) – 183,0; - Hosiery products (million pairs) – 30,04; - Silk yarn (tons) – 1900.

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7 mln. USD

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9 Capabilities More than 60 joint ventures established with partners from Germany, South Korea, Japan, Switzerland, Turkey, U.S.A., Singapore, India, etc. More than 30 projects on production of ready- to-wear clothes with annual production capacity more than 30 million pieces of ready-to-wear clothes (sports shirts, underwear, children apparel etc.)

10 Latest Achievements Increase in the share of domestic cotton fiber processing up to 30 % in 2006; Modern textile complexes embracing finishing, knitting and garments lines have been launched; In , 42 new projects with the total value of USD 340 mln. have been implemented; Increase of the EU market share of Uzbek yarn up to approximately 9%.

11 Main Approaches for Investment Projects Financing Direct investments of the project initiators; Direct investments of the project initiators; Acquisition by the foreign participants of the project of shares of Uzbek enterprises offered for sale; Acquisition by the foreign participants of the project of shares of Uzbek enterprises offered for sale; Loans provided by foreign banks & local commercial banks in Uzbekistan; Loans provided by foreign banks & local commercial banks in Uzbekistan; Own loans of the project participants; Own loans of the project participants; Leasing operations & others. Leasing operations & others.

12 Alternatives Proposed for Organization of Textile Production o use existing textile facilities, which are installed with obsolete technological equipments, by their replacement with up-to-date textile technology; To use existing textile facilities, which are installed with obsolete technological equipments, by their replacement with up-to-date textile technology; o use buildings suitable for production, which are not being used, by furnishing them with necessary textile machinery & equipments; To use buildings suitable for production, which are not being used, by furnishing them with necessary textile machinery & equipments; o use incomplete construction objects or carry out construction works for the organization of textile complexes. To use incomplete construction objects or carry out construction works for the organization of textile complexes.

13 Favourable Framework for Foreign Investors Availability of vast stocks of raw materials, specifically, high quality cotton fibre; Low-cost energy resources; Qualified and relatively inexpensive labour resources; Advanced network of communications; Developed system of banking and legal services; Availability of vast international markets for textile products and apparel.

14 Cost for Main Production Factors in Uzbekistan Water – USD 0,022 / m3 Natural Gas – USD 0,04 / m3 Electricity – USD 0,029 / Kw/h Fuel Oil – USD 0,55 / lt Diesel Oil – USD 0,55/ lt

15 Note: Labour costs in Europe comprise around 21-35$/hour, in the USA – around 16$. *2006 data from US$/hour

16 US$/Unit Note: Data on natural gas in India, Pakistan, Korea and Germany is not available International Energy Agency "Key energy statistics 2006 "

17 International Energy Agency "Key energy statistics 2006 " US$/kWh

18 *http://www.unesco.org/water/ US$/m3

19 Textile Production Average Added Value 1,06$/1kg. +1$ 5-10$/3-5 pieces 2$/0.88kg. 2,4$/0.77kg. +0,4$ +2,6-7,6$ + 4-9$ (min.)

20 Support and Special Favorable Conditions Created by the Uzbekistan Government  stable legal framework for economic activity of enterprises;  simplification of licensing, registration and certification procedures;  significant privileges, preferences and guarantees for foreign investors.

21 Privileges for Private Foreign Direct Investments: Starting from July 1, 2005, enterprises, attracting direct private foreign investments are exempted from: income tax, property tax, property tax, tax on development of a social infrastructure; tax on development of a social infrastructure; single tax for micro-firms and small enterprises; single tax for micro-firms and small enterprises; levy to the Republican Road Fund; levy to the Republican Road Fund; at following volume and periods: from $300, 000 up to $3, 000, for the period of 3 years; from over $3, 000, 000 up to - for the period of 5 years; over $10, 000, for the period of 7 years. Starting from June 1, 2006, enterprises, of the SJSC «O’zbekyengilsanoat» are exempted from property tax

22 Special Privileges and Preferences for Enterprises of the Textile Industry until January 1, 2009, the enterprises with foreign investments specializing in production of garments and apparel and hosiery products are exempted from all kinds of budget taxes and duties, except for VAT; enterprises, included into the State Investment Program and undergoing re-equipment process, are exempted from the payment of customs duties on imports of technological and auxiliary equipment, technological accessories and spare parts for industrial needs.

23 Special Privileges and Preferences for Enterprises of the Textile Industry until January 1, 2009, enterprises importing chemicals, dyes, accessories and other auxiliary materials not produced domestically are exempted from payment of customs duties; until January 1, 2009, for the enterprises with foreign investments when they purchase cotton fiber for their own production usage, 15 percents discount is given from the price set at the Liverpool Cotton Exchange “A” Index and transaction is made in hard currency; and additional 5 percent discount is granted to the exporter-enterprises for purchase of cotton fiber, which have a full production cycle (from yarn to finished goods).

24 TallinnRiga Klaypeda Brest Chop Ilichevsk Shanghai Nahodka Poti BandarAbbas RUSSIAN FEDERATION KAZAKHSTAN IRAN AFGHANISTAN CHINA UKRAINE BELARUS MONGOLIA INDIA PAKISTAN TURKEY Transport corridors of Uzbekistan

25 TASHKENT (Kazakhstan) (Russia)Black Sea 4 days Istanbul NovorossiyskKandvagash 900km/10 days21 00km/6 days (Russia) (Latvia) (Estonia) 1200km/12 days 1300km/15 days 1400km/17 days Europe St.Petersburg Riga Tallinn Baltic Sea European Port (Kazakhstan) (China) Lianyungang Yellow Sea 3 days 7000km/22 days Busan (Russia) Nakhodka 7400km/25 days Eastern Sea 3 days 4 days Osaka, Imabari (Turkmenistan, Iran, Turkey) Mersin Istanbul Denizli Izmir (Turkey) 4750km/10 days 5100km/12 days 5250km/13 days 5400km/14 days Mediterranean Sea 5 days 3 days Ashdod European Port (Iran) B.Abbas Indian Ocean Indian Ocean, Malaks Channel Karachi Colombo Singapore 15 days 17 days 20 days South-Chinese Sea, East-Chinese Sea Busan Nagoya Ashdod–10 days Leixoes–16 days Bari–21 days Genoa–21 days Onteniente–21ds Trieste–21days Gioia Tauro– 21days Prato–21days Valencia–21days Barcelona Hamburg–4 days Rotterdam–5 days Antwerp–6 days Hull–7 days Leixoes–15 days Valencia–15 days Barcelona Atlantic Ocean Miami–25days L.A.–30 days Rome–6 days Genoa–6 days Valencia–7 days Barcelona–7days Antwerp–8 days Leixoes–12 days Rotterdam–13 days Hamburg–13 days Manchester–14days TRANS ROUTE Sea area Land Main stations and ports

26 State Joint-Stock Company "O'zbekyengilsanot"26 THE LIST of Investments Project Proposed for Establishing Textile Facilities with Participation of Foreign Investments NameProduct RangeAnnual Production Capacity JSC “Bukharatex” Bukhara City Cotton spun yarn, finished woven fabric a) tons of cotton yarn, b) 142 mln. meters of woven fabric JSC “Babur” Andijan City Cotton spun yarn, grey and finished woven fabric a)11,0 thousand tons of yarn; b) 42,8 mln. r. m. of grey woven fabric; c) 71,3 mln. r. m. finished woven fabric;

27 State Joint-Stock Company "O'zbekyengilsanot"27 THE LIST of Investments Project Proposed for Establishing Textile Facilities with Participation of Foreign Investments NameProduct RangeAnnual Production Capacity JV “Lola Model” Gulistan City, Syrdarya Region Apparel/knitwear5,0 mln. apparel items JV “Sharq Model” Tashkent City Apparel/knitwear2,0 mln. knitwear items JV “Iskavutteks” Namangan Region Cotton spun yarn, knitted fabric a) 5000 tons of cotton yarn, b) 2500 tons of knitted fabric JV “Oqsaroy toqimachi” Shahrizabz City Qashqadarya Region Cotton spun yarn, knitted fabric a) 4800 tons of cotton yarn b) 2000 tons of knitted fabric

28 INFORMATION on taxes, payable in Uzbekistan For SMEs simplified taxation system is envisaged on the voluntary basis. It envisages single tax payment instead of all common state taxes including levies to the non-budget Pension Fund, Republican Road Fund and Republican Fund of School Education Development, as well as local taxes and charges, charged by local authorities, excluding: Fee on commercial activity, including licensing fees; Registration fee; Compensation payments for environmental pollution and wastes. Single Tax Payment rate – 10% of volume of sales.

29 INFORMATION on taxes, payable in Uzbekistan Income Tax10% of the income Value Added Tax20% of sales volume, value of imported products, works and services Tax on Development of Social Infrastructure 8% from the net profit of enterprise Tax on Dividends10% of the dividends and interests Property Tax3.5% of the average annual depreciated cost of assets

30 INFORMATION on taxes, payable in Uzbekistan Land TaxThe rate varies Excise TaxThe rate varies Water charge1% of the volume of water resources used

31 INFORMATION on taxes, payable in Uzbekistan Levy to the non-budget Pension Fund 0.7% of the net sales volume Levy to the Republican Road Fund 1.5% of the net sales volume Levy to the Republican Fund of School Education Development 1% of the net sales volume

32 State Joint-Stock Company “O’zbekyengilsanoat ” 45 Babur Str., Tashkent, , Uzbekistan Tel: +998 (71) Fax: +998 (71)

33 Thank you for your attention!


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