June 27, 2019
State of Clusters (by the Example of Agroklaster)
LLC Bukhoro Agroklaster was established on the basis of the Resolution of the Cabinet of Ministers (No. 500 of 06/14/2019).
This new major regional player in cotton production business was incorporated on the assets of JSC Buhoropahtasanoat hududiy Birlashmasi with its twelwe subsidiaries.
It is noteworthy that Buhoropakhtasanoat was the subsidiary of JSC Uzpaxtasanoat which had 148 affiliates throughout the Republic (see. appendix No.36 to PD №2422 from 28.10.2015).
Now in this region Agroklaster, along with commercial corporations like WBM Romitex , Merganteks , Parvoz Humo Ravnaq Trans , Qorako’l Kumush Kalava , Bahor Chance Textile , Buxoro Zarhal Teks, has become the Organizer of the Cotton-Textile Production within the cluster form of the organization of cotton-textile production.
This Resolution on incorporation extends the provisions of four previous Resolutions of the Cabinet of Ministers to Agroklaster (and to those subsidiary corporations thereof). Among the provisions of a purely public (administrative) nature, one can find a sufficient number of legal norms that are of value for entrepreneurship in cotton production. The followings are the significant provisions of those Regulations:
(1) №53 of 01.25.2018 “on Measures to Introduce Modern Forms of Organization of Cotton and Textile Production” [according to which
- Agroklaster became the Organizer of Cotton and Textile Production and
- Agroklaster can receive loans to finance the cultivation and supply of raw cotton from the Fund of State Support of Agriculture at the Ministry of Finance of the Republic of Uzbekistan on the interest rate of not more than 3% per year, and the procedure and terms of crediting is similar to crediting of cotton farmers (i.e. para. 6,7 of RCM No.149 of February 28, 2019);
- local authorities determine these suppliers of raw cotton and practically facilitate to the conclusion of a model contract for the cultivation and supply of raw cotton;
- moreover, strict prosecutorial control is established for strict compliance with the terms of the standard contract;
- primary processing of raw cotton is carried out on a give-and-take basis
- and finally, twenty two types of goods for the needs of the organizers are exempt from customs duties until January 1, 2020.];
(2) №149 of 02.28.2018 “on Measures for the Widespread Introduction of Market Mechanisms in Agriculture” [in accordance with which the State provides guaranteed
- purchase prices for raw cotton and guaranteed distribution of credit resources for financing the costs of growing raw cotton from the crop of 2018 and
- the purchase of mineral fertilizers is carried out exclusively on exchange trading.];
(3) No. 744 of 09/19/2018 “on Additional Measures for the Further Development of Cotton and Textile Production” [in this Regulation
- revolving (renewable) credit lines are opened for the introduction of drip irrigation and for replenishment of the working capital (turnover means) of the Agrokluster
- loans are provided from the State Support Fund for Agriculture in the amount of not less than 60% of the estimated need through commercial banks with the provision of an insurance policy as collateral;
- also apply to the organizations specified in this Regulation the provisions of PCM No. 53 of January 25, 2017;
- state buildings and facilities of cotton ginning enterprises and cotton harvesting centers are are disposed (sold)
- at an estimated cost
- in installments for a period of 5 years (with equal annual payments)
- with investment
- on the terms of paragraph 2 of the RCM No. 253 of 03/31/2018, namely, with the modernization carried out within no more than two years.];
(4) №230 from 18.03.2019 “On Measures for the Further Development of Cotton-textile Production” [, in the provisions of which it is fixed that
- cotton textile organizers have the right to freely use concessional loans allocated to them within the framework of approved agricultural technology cards;
- combustive-lubricating materials, mineral fertilizers, plant protection products, plant development regulators, defoliants and other chemical means transferred by the organizers of the cotton-textile production to farms are not subject to taxation.].
The Ministry of Labor assists Agroklaster in attracting highly qualified foreign specialists. For more information about this procedure see Foreign Labour in Uzbekistan.
Sources of financing of investment projects of Agroklaster are dividends paid by its subsidiaries. RCM No. 53 enumerates the exact quantity and code of the TN VED of goods imported without customs duties till January 1 of 2020, but PCM “Five Hundredth” (up to 1.07.2020) indicates exclusively the category of necessary goods. Moreover, the Government recommends that commercial banks open concessional loans with the involvement of international financial organizations to finance investment projects of Agroklaster. It is predicted that within four years Agroklaster implements seven such projects.