Plans to rebuild Tajikistan's cotton industry have taken a step forward after a new US$30m modern spinning mill, funded by the Eurasian Development Bank, opened last week in the suburbs of Khujand.

The EBD's first investment project in this country was launched back in 2009, when it provided a loan to build a modern spinning facility capable of producing 5,000 tonnes of high quality cotton yarn annually.

The project was implemented by Olim-Textile, and the Bank provided $22.57 of the total cost.

"The project has significant positive effect on Tajikistan's economic growth by supporting agriculture and textile industry and increasing employment and production output in related industries," said Kambar Shalgimbayev, deputy chairman of the EDB executive board.

The project also promotes mutual trade between the Bank's member states, since fine and medium cotton yarn will be supplied to Russian textile companies for manufacturing high quality jersey, terry and hosiery.

The main competitive advantage of the project is the availability of high quality domestic raw materials at low costs. Tajikistan is the CIS' largest producer of fine-staple cotton, and the supply of raw materials to the mill is ensured since the project initiator also owns raw material terminals.

Other benefits are the low cost of electricity and labour in Tajikistan as compared to other cotton-exporting countries. The project is also exempt from income tax, VAT and customs duties on equipment and spare parts, VAT when selling finished products on the domestic market and VAT on export for 12 years.

The new mill is equipped to international standards and uses state-of-the-art technology which was supplied by Textima of Germany.