TEXTINATION NEWSLINE 10-08-2013 T URKMENISTAN' S T EXTILE I NDUSTRY IS PLANNING NEW P ROJECTS S ECTOR REMAINS AN IMPORTANT I NVESTMENT A REA FOR M ANUFACTURING / C ENTRALISTIC P LANNING BRAKES CLEAR B OOST nationalflaggen.de The textile and clothing industry remains an important pillar of the manufacturing sector in Turkmenistan. There are only two industries in the country, whose emission worth is still greater: oil processing and the food industry. Turkmenistan ranks among the top ten of the world's largest cotton fiber producers (share of global annual output: an average of 1.2 to 1.3 %). According to official reported data about 1.24 million tons of raw cotton were harvested in 2012 compared with 1.05 million tons in the previous year (target for 2013 at least 1.05 million tons). The acreage is, according to the Ministry of Agriculture, 550,000 ha. The main growing areas are the regions of Mary (165,000 ha) and Dashoguz (140,000 ha). In the administrative regions of Achal and Lebap the fiber is growing on 120,000 ha each and in the western country part of Balkan on 5,000 ha. The light industry of the Central Asian Republic of Turkmenistan promises new opportunities for equipment suppliers and investors. These are offered mainly in the fields of cotton fibers, textiles and clothing. In total up to USD 1 billion should flow from 2012 to 2020 in project planning, design, construction and technical equipment of new factories, into the modernization of existing capacities and the promotion of sales. w.r.wagner / pixelio.de Dieter Schütz / pixelio.de At the time of the former Soviet Union the CIS Republic supplied their cotton almost entirely over the Moscow headquarters to textile factories in the European part of the country or to foreign buyers. According to the Ministry for the Textile Industry annually up to three-fifths of the cotton fibers (about 300,000 to 350,000 tons,in the forecast for 2014 to 2016: an average of at least 315,000 t / year) are processed in the country. The by the statistics committee for the period 2010-2012 indicated quantitative exports under the provisions of Textination GmbH 1
stocks show rather to a real average annual consumption of around 50 %. The in comparison to the official data lower figures ratio does not change anything to the fact that Turkmenistan today obtained among all cotton producers in the Central Asian CIS Republics the highest processing rate. Cotton production in the CIS (Central Asia and Azerbaijan) in the seasons 2012/13 and 2013/14 (acreage in 1,000 ha, production and export of cotton fiber in 1,000 t) 1) 2012/13 2012/13 2012/13 2013/14 2013/14 2013/14 Country Acreage Production Export Acreage Production Export Central Asia 2) 2,158 1,547 1,045 2,127 1,507 1,012.Uzbekistan 1,285 1,000 653 1,246 1,000 653.Turkmenistan 525 335 198 550 311 177. Tajikstan 196 108 105 186 100 98. Kazakhstan 133 90 74 126 83 69. Kyrgyzstan 19 14 15 18 14 15 Azerbaijan 33 19 11 33 16 10 For comparison: World total 34,114 26,360 9,693 33,112 25,089 9,041 1) Estimates for the 2012/13 season and forecasts for the 2013/14 season, 2) Central Asia CIS republics Source: International Cotton Advisory Committee (ICAC, Review of the World Situation, May-June 2013) Klicker / pixelio.de The processing of cotton fiber into yarn and fabrics, as well as the majority of garment manufacturing Turkmenistan is focused on companies that are subordinate to the Ministry of the textile industry. The authority coordinates not only the production but also the exports and investments in the industry. Under the umbrella of the ministry there are 74 companies currently active, including various joint ventures. Among these are 32 fully integrated companies (production of both yarn and fabrics, cotton spinning and weaving mills, 17 apparel factories, seven companies of silk industry, two wool processing factories and three manufacturers of hosiery and other apparel. As it is said in government circles, state owned blocks of shares of some of the industry may be sold in a foreseeable future to interested private investors. Textination GmbH 2
Marko Greitschus / pixelio.de The Textile Ministry estimates the total output of all associated establishments for 2012 to an equivalent of USD 379 million. The sales increased in 2012 compared to 2011 with a realized profit of USD 63.3 million (profit after tax) by 11.3 % to USD 410.4 million. The foreign exchange inflow from the sale of yarn, fabrics, clothing and other textiles, the authority estimates USD 148.2 million. For 2013, a production of up to USD 400.0 million and currency revenues of up to USD 160.0 million are expected. The installed capacity as of July 1 st 2013 of the at the Ministry of Textiles registered companies allow at full capacity production of up to 177,000 tons of cotton yarn, 186 million square meters of fabrics, 11,000 t of knitted fabrics, 7,200 t of terry fabrics and 80 million pairs of stockings. About four -fifths of the finished manufactured products in the country are produced under international trademarks and trade names (for example under the trademarks Bonton, Debenhams, H & M, Ikea, JC Penney, Levi's, Miss Erika, Nautica, Polo, Puma, Sears, Wal-Mart, Wrangler and Zara). The bulk of the exports go to North America, Russia, Western Europe, Turkey, China, the Baltic States and Ukraine. The production of cotton yarn has increased almost tenfold in the past more than fifteen years from 11,324 t in 1995 to 104,900 tons in 2012. But the stated target for some time of up to 115,000 t in 2012 has not yet been reached. The output of cotton fabrics rose to 147 million square meters by 2012 against 24 million tons in 1995, but to the before 2009 several times already achieved more than 170 million square meters it is still a long way to go. Dr. Klaus-Uwe Gerhardt / pixelio.de The since the independence of Turkmenistan from 1991 to early July 2013, into the textile and clothing factories flown investments add up to USD 1.7 billion to USD 1.8 billion (including USD 0.2 billion for the equipment of good a dozen factories with German textile technology and USD 4 billion of foreign direct investments). The lion's share of the assets is attributable to the construction of 30 large and medium-sized textile enterprises with an annual processing capacity of 150,000 tons of cotton fibers. Claudia Hautumm / pixelio.de The flagships of the industry today include such companies as the textile complex Turkmenbashi, Balkan region (number of employees: 3,300, annual capacity of 8000-9500 tons cotton yarn, 1,500 to 2,000 t hosiery, 40 to 50 million square meters of cotton fabrics, 13 to 16 million pieces of clothing, (essentially T -shirts and 9 million pieces bed linens), the denim complex Turkmenbashi Gap Turkmen near Ashgabat (3,000, 12,000 tons of cotton yarn, 15 million square meters of Textination GmbH 3
cotton fabrics, 3 million units finished products ), the textile complex SA Niyazov Gypjak near Ashgabat (2,700 processing 4,000 tons of cotton fiber into yarn, knitted fabrics and up to 14.6 million pieces of clothing), the textile complex S. Turkmenbaschi Baýramali, Mary region (800, 9.7 million towels and 216,000 robes), the textile complex Ashgabat / ADT ( n.a., 4,900 t colored terry fabrics, 19 million pieces of towels and other other terry fabrics,), the spinning company Gurbansoltan Atamyradowa Sakarcäge, Mary region (n.a., up to 10,500 tons cotton yarn), the weaving company Vekilbazar, Mary region (n.a., up to 63.7 million sqm cotton fabrics) or the factory for the production of medical and cosmetic cotton wadding products Ashgabat (140, 4,200 t of medical wadding, 12.6 million wadding products such as cotton swabs and tampons). The majority of foreign investors comes from Turkey. Alone the company Norsel International Dis Ticaret Insaat Sanayi Ltd.operates today in collaboration with the textile ministry six joint ventures (spinning mills, weaving mills and factories for cotton ginning). According to the Ministry until 2010 another USD 1 billion should be invested in the modernization and capacity expansion and into sales and marketing (forecasts for the years 2014 to 2016: USD 94.48 million and USD 81 million; these figures include carpet, leather and leather goods.) In the public sector program for 2012-2016 the medium-term production targets are defined for the sector. Market observer judge these targets as too ambitious. The aim is, among others, an increased output of cotton yarn by 2016 of 160,000 tons (2014: 146,900 tons, 2015: 153,900 tons). The production of cotton- and terry cloth is set on 215,0 million sqm (2014: 311.7 sqm, 2015 213.8 million sqm. For cotton wadding products an increase of 34% compared to 2011 is expected. Strong growth is advised for the production of sewing Wilhelmine Wulff / pixelio.de products and finished knitted goods (+750 % compared to 2011). The export of light industry products should increase until 2016 to hardly realizable USD 266 million (2014 USD 260 million, 2015 USD 263 million). The entire light industry includes next to textiles and clothing the small volume product groups like carpets, leather and leather goods. Currently implemented are a few larger projects for the production of cotton yarn, cotton fabrics and clothing. This includes the construction and modernization of three cotton mills by the Turkish company Norsel International (scheduled completion: mid 2014). Thomas Max Müller / pixelio.de Textination GmbH 4
Characteristics of the Turkmenian textile and garment industry 1) Code 2000 2007 2008 2009 2010 2011 Production (in Mio. US$) 221.2 1,034.0 1,159.4 1,078,2 1,199.3 1,374.1.Textile industry 200.1 684.1 925.3 778.1 907.9 1.035.6.Clothing industry 21.1 349.9 234.1 300.1 291.4 338.5 Share of total industrial production (in %) 18.8 19.8 10.4 9.9 10.7 6.9. Textile industry 17.0 13.1 8.3 7.1 7.8 5.2. Clothing industry 1.8 6.7 2.1 2.8 2.8 1.7 Capital expenditure (in USD Mio) 2) 22.4 46.2 55.1 243.9 106.0 43.1 Share of total industrial investments (in%) 6.7 5.6 2.3 6.0 2.9 0.8 Cotton fiber (in 1,000 t) 235.1 273.5 297.5 297.5 336.4 355.2 3) Wool, washed (in 1,000 t) 5.1 5.7 4.5 3.9 4.2 4.4 Cotton yarn (in 1,000 t) 49.1 85.6 88.7 72.2 92.4 104.7 Fabrics (in Mio. sqm) 55.3 185.8 186.0 166.1 158.3 159.4. Cotton fabrics in total 55.1 185.4 185.6 165.7 157.5 157.8.. Cotton fabrics (excluding terry) 55.1 177.1 173.9 154.5 145.0 145.3.. Cotton terry fabrics 0.0 8.3 11.7 11.2 12.5 13.3. Silk fabrics 0.2 0.4 0.4 0.4 0.6 0.8 Nonwovens (in Mio. qm) 8.6 7.8 8.5 8.5 8.5 8.5 Textile fabrics (in 1.000 t) 7.0 7.7 7.1 5.6 4.3 3.4 Hosiery (in mio. pairs) 11.4 11.0 9.2 9.8 11.9 16.5 Knitted products (in mio. pieces) 19.4 18.7 20.7 17.3 14.8 12.1 1) Revised data, no data for 2012 are available yet; 2) Data refer to the entire light industry, i.e. they include the product groups carpets, shoes and leather. However - the investment in these two sectors are minimal; 3) 324,000 tons according to the State Group Türkmenpagta (Turkmenian cotton) Sources: Compiled according to internal data of the State Committee for Statistics of the Ministry of Textile Industry. Textination GmbH 5
Aka / pixelio.de Business opportunities are also in the cotton gin (production of cotton fibers) and in the production of carpets. These are compared to the textile and clothing industry less investment intensive but still interesting. Cotton ginning is happening in the premises of the National Group of 36 Türkmenpagta (Turkmen cotton, Türkmenpagta döwlet konserni, Internet: http://www.turkmenpagta.gov.tm). Among the current projects which are being planned by mid 2015, the construction of two turnkey factories in the districts Garabekewül and Beýik Türkmenbaşy (both Lebap region) by the Company Engin Group SA Consorcium (Turkey / British Virgin Islands) are especially important. These should get an annual processing capacity of 40,000 and 60,000 tons of raw cotton. Beginning of 2013 the since 1992 in Turkmenistan operating company was awarded the contract for further three projects namely for the construction of cotton ginning factories for the processing of cotton seed with an annual capacity of 40,000 tons each in the counties of Altyn (Region Achal) and Sakarcäge (Mary region) and for the design and construction of additional cotton ginning capacity in the district of Akdepe (Dashoguz region). The start of operation of all three objects is planned for April 2015. Also the in the small but for its skilled culture of the land significant sector woolen carpets should be greatly expanded. In 2012 the ten companies (with approximately 100 work-shops) of the National Association Türkmenhaly (Turkmen carpets; Türkmenhaly döwlet birlesigi, Internet: http://www.turkmenhali.gov.tm) produced 41,950 sqm hand knotted rugs (2011: 40,750 sqm). The value was around USD 12 million. 2012 the export increased in volume about 74 % to around 11,300 sqm (2011: 6,500 sqm). However- the corporation still continues to struggle with its sales problems. The reason is the overregulation of the industry by the state, in particular for the exports. Aka / pixelio.de Currently the most important project of the carpet division is the in summer of 2013 started construction of a modern rug combine in Abadan. The private contractors Aga gurlusyk received by the Company Abadan haly the contract for the design and construction of the plant, which will have an annual capacity of 800,000 sqm carpets and carpet goods. Funding is provided by the investor's own funds and with a bank loan. Production should start end of 2015. Planed is to develop the Textination GmbH 6
capacity for processing and the production of high quality yarn from the wool of Saradscha sheep. The Turkmen textile and clothing industry has certainly done a good clear leap forward over the past 20 years. However the progress does neither meet their potential nor the previous government targets. This is due mainly to the strong centralized planning, the direction and control of the entire sector, including the trade. Economic freedom is very limited for the textile and clothing companies. The exceptions are few joint ventures with a strong foreign participation. The vast majority of enterprises has virtually little or no right to conclude own contracts, to quickly adapt production to individual customer requirements and to calculate their own prices. They hardly can respond to current demands. Some companies are still operating at a loss and are subsidized by the state. Small private flexible operating companies in the sector are still rare. Source: Uwe Strohbach, Germany Trade & Invest www.gtai.de Translation: Textination-Team Contact address: Türkmenistanyn Dokma senagaty Ministrligi (Ministry of Textile Industry of Turkmenistan ) Garassyzlyk saýoly, 96, 744000 Aschgabat, Turkmenistan Tel.: 00993 12/21 03 03, -40 71 71, -40 71 77, Fax: 0093 12/35 54 42 E-Mail: tmtextile@mail.ru Contact person: Saparmyrat Batyrov, Minister. Textination GmbH 7