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3rd Meeting of India-Kazakhstan Joint Working Group on Textiles Held India-Kazakhstan


Sign MoU on Cooperation in Textiles Sector
The Third meeting of the India- Kazakhstan Joint Working Group on Textiles took place on the 78th June, 2012 at Gurgaon. The Indian side was headed by Shri V Srinivas, Joint Secretary (Exports),
Ministry of Textiles, Government of India. The Kazakhstan side was headed by Ms. Natalia
Komogortseva, Head of light Industries Division, Committee of Industry, Ministry of Industry and
New Technology of Kazakhstan. The two parties reviewed programme of action charted out in the 1st
meeting.
The JWC in its 3rd Session considered the issues at length like: incentives available for Textiles and
Clothing sector for investment; development of textiles sphere of cotton and MMF blends,
particularly through setting up of JVs in the SEZ Ontustyk, profile of Kazakhstan imports of
textiles and clothing and its major source of such imports along with the investment opportunities in
SEZ Ontustyk. The issue of training to Kazakhstan nationals in various levels of textiles and
clothing manufacturing traders was discussed in details. The JWC also discussed the training facilities
available in the Kazakhstan and the bilateral exchange programmes that it has currently with other
countries
in
the
field
of
textiles
and
training.
As a result of the discussion both side agreed for cooperation in wool and cotton sector including the
technology exchanges. Kazakhstan will consider enhancing their imports of apparel and clothing from
India and also source other textiles products from India. Indian side agreed to provide training
facilities in the textiles sector. The next JWC meeting will be held in Shymkent in 2013.
After JWG meeting, Kazakhstan side met Apparel Export Promotion Council. For this meeting, Shri
H K L Magu, Vice Chairman (NR) was the Head of the Delegation from AEPC.
An MoU between State Authority Directorate of SEZ Ontustyk Mr.B. R Maulenov and Apparel
Export Promotion Council represented by Mr. H K L Magu was also signed. MoU is focused on the
exchange of information and knowledge and to promote development in the field of the domestic and
international textiles, in particular manufacturing of the readymade garments. Both parties agreed to
send their representatives in seminars, conferences, business forums and other events.
Dr. A sakthivel Chariman AEPC congratulated both sides on the signing of MoU, in his statement he
remarked, The purpose of the MoU is expression of desire for the furthering mutual trust and
cooperation so that both sides benefits from each other and simultaneously grow.

http://commerce.nic.in/pressrelease/pressrelease_detail.asp?id=2054

KAZAKHSTAN SEEKS INDIAS COOPERATION IN TEXTILES, HIGH-TECHNOLOGY AND


FINANCIAL SERVICES ASHWANI KUMAR MEETS KAZAK FOREIGN MINISTER
Date : 23 May 2007
Location : New Delhi

Kazakhstan has sought Indias assistance in setting up of industrial clusters in textiles and
cooperation in areas of hi-technology and financial services. This was stated by Mr. Marat Tazhin,
Foreign Minister of Kazakhstan in a meeting with Shri Ashwani Kumar, Minister of State for Industry at
Atmaty yesterday. Shri Ashwani Kumar assured Mr Tazhin of Indias willingness to collaborate with
Kazakhstan to share its experiences in building strong and vibrant industrial clusters.
The Minister further highlighted Indias need for energy security in view of Indias dependence on oil and
gas imports. Participation of Indian oil and natural gas companies in Kazakhstan would be a winwin situation for both Kazakhstan and India, Shri Kumar said.
He complimented the Government of Kazakhstan for strong economic growth in the recent years and
hoped that Kazakhstan would play a significant role in bringing peace, stability and prosperity to Central
Asia.
Shri Kumar also met Ms. Zhanar Aitzhanova, Deputy Minister of Industry & Trade and Chief Negotiator on
WTO Issues. Ms. Aitzhanova made a brief mention of the current status of negotiations with India for
WTO accession. Recalling the support pledged by Mr. Kamal Nath, Commerce and Industry Minister, for
Kazakhstans WTO accession, she urged Shri Kumar to expedite Indias signing of the Protocol in
this regard. India fully supports Kazakhstans accession to the WTO. I hope that not only would
outstanding issues be resolved but the bilateral relations also be further strengthened during the
forthcoming bilateral meeting between India and Kazakhstan, Shri Kumar said.

http://texmin.nic.in/sector/note_on_indian_textile_and_clothing_exports_intl_trade_s
ection.pdf
Kazakhstan: A JWG in textiles sector cooperation was formed between both the
countries in
2008. The 3rd meeting of the JWG was held in India on 7 th June, 2012. The two sides
agreed
to press forward on areas of mutual interest and concern as well as mutual
assistance and
cooperation in the field of textiles and clothing and particularly in Wool, Cotton and
MMF
sectors. The issue of training to Kazakhstan nationals in various levels of textiles
and clothing
manufacturing was also discussed during the JWG meeting. The next round of JWG
will be

held in Shymkent in 2013.

India, Kazakhstan to Enhance Textile Cooperation


Category: Kazakhstan

(SME Times) At the third meeting of the India- Kazakhstan Joint Working Group on
Textiles at Gurgaon, officials from both side agreed for cooperation in wool and cotton
sector including the technology exchanges. Kazakhstan will consider enhancing their
imports of apparel and clothing from India and also source other textiles products from
India. Indian side agreed to provide training facilities in the textiles sector.

The Joint Secretary, Ministry of Textiles, Government of India, Shri V. Srinivas meeting the Kazakhstans Head of Light Industries
Division, Committee of Industry, Ministry of Industry and New Technology of Kazakhstan, Ms. Natalia Komogortseva, at the 3rd
meeting of the India- Kazakhstan Joint Working Group on Textiles, at Gurgaon, Haryana on June 07, 2012.

A cotton textile cluster, which is based on Ontustik SEZ was created in Kazakhstan for recovery and development of competitive
environment in the textile industry. The main purpose of Ontustik SEZ is to create conditions for the development of textile and
sowing industry, as well as to create prerequisites for a shift to production of value added competitive goods, which exempts the
investors from income tax, property tax and land tax, customs duties up to 2030.
According to Ontustik SEZ development programme, the integrated service engineering centre (ISEC) is expected. It will train and
improve skills of experts on newest equipment, researches, certification in compliance with international standards of textile
products. The laboratory research centre is planned to be opened at ISEC for the purpose of research works and experimental
production. By end of 2012, 15 textile industry enterprises are planned to be finished and about 11 new working places are planned
to be created. The initial term of validity of Ontustik SEZ was fixed until 2015. However, taking into account the capital capacity of
textile industry and consequences of economic crisis the term of validity was extended until 2030. In broad terms, operation of
cotton textile cluster will promote rehabilitation and development of Kazakhstan textile industry.

The Indian side was headed by Ministry of Textiles Joint Secretary (Exports) V. Srinivas while the
Kazakhstan side was headed by the nation's Head of light Industries Division, Committee of Industry,
Ministry of Industry and New Technology Natalia Komogortseva.
The JWC considered the issues at length like: incentives available for Textiles and Clothing sector for
investment; development of textiles sphere of cotton and MMF blends, particularly through setting up

of JVs in the SEZ Ontustyk, profile of Kazakhstan imports of textiles and clothing and its major source
of such imports along with the investment opportunities in SEZ Ontustyk.
The issue of training to Kazakhstan nationals in various levels of textiles and clothing manufacturing
traders was discussed in details. The JWC also discussed the training facilities available in the
Kazakhstan and the bilateral exchange programmes that it has currently with other countries in the
field of textiles and training.
After JWG meeting, a MoU between State Authority Directorate of SEZ Ontustyk B.R. Maulenov, and
Apparel Export Promotion Council represented by H.K.L. Magu was also signed.
The MoU is focused on the exchange of information and knowledge and to promote development in the
field of the domestic and international textiles, in particular manufacturing of the readymade
garments. Both parties agreed to send their representatives in seminars, conferences, business
forums and other events.
The next JWC meeting will be held in Shymkent in 2013.

http://www.srtepc.org/html/exporter/market-report-detail.php?rid=9

KAZAKHSTAN A GATEWAY TO CENTRAL ASIAN COUNTRIES


INTRODUCTION
Kazakhstan is the second largest of the former Soviet Republic in Central Asia and is
Indias largest trading partner among the Central Asian Republics. It has
common borders with Russia and China in the South and occupies an area of
27,24,900 square kilometers (about 80% of India) with a population of about 15
million. The Country possesses vast fuel reserves (major petroleum and natural gas
deposits). The proven reserves of Kazakhstan stand at 4 billion tones of oil & gas
condensate and 3 trillion cubic meters of gas. It is the most secure and politically
stable country in Central Asia. Since its Independence in 1991, Kazakhstans
economy has been continuously experiencing an expansive growth. GDP of
Kazakhstan in 2006 totaled US$ 77.3 billion with 10.6% GDP growth rate while
inflation level and unemployment level decreased by 7.5% and 8.1% respectively.
SPECIAL ECONOMIC ZONE
Kazakhstan is making conscious efforts to develop its textile industry. The Kazakh
Government is keen to attract investments from the major textile Indian companies,
so as to draw from their rich experience, technical and managerial expertise. A
Special Economic Zone Ontustik has been created in South Kazakhstan
region as one of the first initiatives for creation of textile clusters. It is located in an
area of 200 hectares in the vicinity of Shymkent city which is the administrative
center of South Kazakhstan region and has proximity to good infrastructure and raw
material. Investment in this SEZ is intended to cater to domestic textile market and
also for export-oriented purposes. The facilities assured by the SEZ authorities will
be:

Imports into SEZ are duty free

100% Foreign Investment allowed

No limitation for profit repatriation

Domestic sales can be done from SEZ. Buyer to pay VAT @ 14%.

Investors are fully exempted from VAT, income tax, land and property taxes,
customs duties for the period of 10 years.

Kazakh Government may extend the tax free regime till 2025.

Necessary engineering networks and services are provided near the Special
Economic Zone.


Additional service facilities, such as temporary storages, certification
centers accredited in international organization, bank departments, service
companies on repair and maintenance of textile equipment, warehouses for dyes
and chemicals, Aid posts and fire station are being created in Ontustik for creating
favorable conditions for investors.

Land is free can be brought subsequently at US $ 1500 per Hectare.

Water will be available at 23.4 cents per cubic meter. However, water cost
can be zero if bore-well is dug.

Effluent Treatment Plant in the initial stage is not planned by SEZ on


common basis. But the SEZ may allow discharge of water into the city sewage pipe
which is closer to the SEZ and the Oil Refinery which is next door.

Charges for sewage will be 8.4 cents per cubic meter

Electricity will be made available at 4.1 cents per KWH

Gas will be supplied at 9.6 cents per cubic meter

Residential Accommodation to migrant workers to be provided by the


employer preferably at the site for which land will be given free by SEZ.

Interest rate from KDB for leasing of equipment up to US $ 50 Mn between


2-4%. Normal rate of interest for bank loan is 7-10% depending upon the
partys strength.

Normal Debt-equity ratio is 30:70. But can be negotiated to 15:85.

The cost of construction is estimated to be between US $ 200-250 PSq.M

Salaries: Technical Supervisors and Administration US $ 500 600 per


month Minimum (excluding Managers)

Wages: US $ 150-200 per 8 hour working with 1 hour lunch break. Labour
can work up to 12 hours with mutual consent with them at single overtime.

Number of outside labours to be brought in can be put in the agreement,


though under the law, there is no restriction.
KAZAKH TEXTILE SECTOR
The Kazakh textile sector mainly consists of the enterprises built during Soviet
Union times. However, during the last 2-3 years several new textile mills equipped
with modern textile machines have been installed.
Voskhod is a 51 year old Garment manufacturing company having a turnover of US$
12 Million per year. They have installed 480 sewing machines in 2 units with total

work force 600 workers operating in one shift of 8 hours. Average wage of a labour
is US$ 170 per month. The fabrics are cut manually and the garments are produced
on a group basis with a small assembly line for each group. The company produces
500 to 550 pieces of uniforms per day for Customs, Military and Police force.
Additionally, they produce 270 jackets per day. The Shell fabrics of Jacket consist of
Synthetic material, imported from China, while fusing is imported from Russia and
the interlining is sourced from Kazakhstan. They import 67/33 Polyester Cotton
Fabrics from Russia and China. The indicative import price (FOR) for Russian
Polyester Cotton Fabric with 1.5 meter width is US$ 1.55 per meter. The company is
expanding their production in mens/womens suit by installing additional
250 sewing machines and employing 300 workers under the Italian franchisee
arrangement.

Kazakh-Russian Textile Alliance LLP consumes 8000 tones of cotton per year to
produce yarn and grey fabric which are exported to East Europe and Russia. This
company has 12 spinning machines with 320 rotors each (3840 spindles) producing
cotton yarn of an average count of 34.5. They have installed 10 Picanol looms for
Terry fabrics and 100 Picanol looms for plain weave cotton fabrics. The production
capacity is 45 Mn SQM of cotton fabrics. On an average 1 worker is deployed for 9
to 10 looms. The Ginning plant is based on Rieter Technology.
Textile-KZ is a Textile Corporation consisting of 2 units Melange-JSC & Yutex-JSC
established in the year 2001 with a small spinning facility for producing 100%
cotton open in yarn. The Company restructured and made new investments in the
year 2004-05.
The Melange-JSC unit has OE-Spinning, Doubling and Twisting, Yarn Dyeing,
Weaving, Fabric Dyeing and Finishing house. Yutex-JSC unit has cotton ginning, ring
spinning, knitting and sewing departments. The OE Spinning plant with Rieter
machines has 3740 spindles and produces 6000 tones of cotton yarn annually. The
Ring spinning plant with 20,400 spindles based on Rieter and Murata Technology
produces 4000 tones of combed cotton yarn annually. The doubling and twisting
machinery with Savio, Italy Technology has 3280 spindles with a production capacity
of 2200 tones per annum. The yarn dyeing machines based on Thies, Germany
Technolgy has the production capacity of 1800 tons per annum.
The Company has installed Mayer-Cie circular knitting machines with the production
capacity of 600 tones of knitted fabric per annum. They have 64 Dornier and
Benninger looms with the production capacity of 12 Million square metre of fabrics
per annum. The dyeing and finishing house has modern machines from Monforce,
Germany; Benninger, Switzerland; Kisters, Germany and Zimmer, Austria
Technology with the production capacity of 35 Million running metres of bleached
and dyed fabrics annually. The sewing department has Juki, Gerber machines with

Tajima and Naomoto embroidery machines and has a production capacity of 3 Lakh
sets of Bed sheets and 15 lakh units of clothes and Home textiles per annum. The
company produces 100% cotton, grey and dyed yarn from NE 8/1 to 40/1, cotton
grey and dyed fabrics, terry cloth (250 gsm to 650 gsm) Bed sheets, knit wear,
yarns, sports and active wear. 1 worker handles 6 to 8 looms and the average wage
for a worker is US$ 150 per month.
Kaz Centre Ltd. has already worked with few Indian companies for last two years
and produces special Uniforms for Military & Police. They are planning to produce
and expand into Home Textile Sector and seeking the partners /joint ventures for
the same purpose.
Kazspo-N produces the special wear for professionals engaged in Oil and Gas sector.
80% of their production is of special apparels for Oil and Gas professionals. They are
seeking oil and fire resistant cotton fabrics for production of apparels meant for
workers in oil sector. They also produce Foot Wear for labour and have visited
Chennai Leather Exhibition as well as several Leather factories in Chennai for
sourcing their requirements.
Semiramida, established in 1997, is a Sewing company engaged in production of
coats for ladies and gents and Jackets for military. They import fabrics from Korea,
Russia and Belarus and are keen to import fabric from India too. They are also
seeking joint venture for production of mens shirt.
ABHK is a Kazakh Company located in east Kazakhstan, having joint venture with
Nimex and produce cotton fabrics and suiting. They have Rieter and Trutzschler
machinery and process 12,000 tons of cotton annually. They are planning to
produce Synthetic fabrics and new products like work wear.
ARGO produces PVC Foot Wear and work wear for workers and professionals. They
use polyamide and cotton threads for making foot wear and are also interested in
sourcing wool and synthetic fabrics for production of work wear. Presently they
source their requirement from France, Italy & Russia.
KAZAKHSTAN OUTLOOK
The population of Kazakhstan is 15 Million and the population of main towns in
Kazakhstan is Almaty- 2 Million, Astana- 0.5 Million, Shymkent- 0.7 Million,
Karaganda- 1 Million. Kazakhstan has duty free market access to Russia, Uzbekistan,
Belarus, Ukraine and Kyrgyzstan. The cost of 92 Octane petrol in Kazakhstan is 70
Tenge (US$ 0.57) while the cost of diesel is 55 Tenge (US$ 0.45). Kazakhstan
produces ample electricity through hydro, gas and coal.
Kazakhstan is a land locked country and the nearest sea ports are Bandar Abbas in
Iran, Riga (Baltic Port) in Lativia and Ilichevsk Port in Ukraine. While there is a direct
rail connection for Riga port and Ilichevsk Port, the transit to Bandar Abbas involves

transportation by rail and trucks. The Transit times for these ports are Riga 2
weeks, Ilichevsk 10 days and Bandar Abbas 20 days. The approximate freight
(FOR) for Riga is US$ 65 per ton and for Ilichevsk US$ 60 per ton.
The banking sector of Kazakhstan is acknowledged as the most developed one in
CIS countries. The local banks have operating agreements with international banks
and are the members of international payment system. The local currency (Tenge) is
fully convertible and a foreigner can maintain the accounts in foreign currency.
Development Bank of Kazakhstan Leasing (KDB) provides soft loans for cotton
industry and agriculture similar to TUFS Scheme of India. The KDB has a capital of
US$ 50 Million. While the normal interest rate is 7 to 8%, KDB provides loans at 2 %
to 4% interest per year for buying equipments for cotton, agriculture and textile
industry.
DOING BUSINESS IN KAZAKHSTAN
Choosing a Legal Structure
There are a number of business structures available to carry on business in
Kazakhstan. The most common are a limited liability partnership (LLP) and joint
stock company (JSC). Foreign entities may also set up a branch or representative
office, which must, as with most types of business organization, be registered with
the Ministry of Justice or its local departments.
Limited Liability Partnership (LLP): A Limited liability company (LLP) is established
by one or more individuals or entities (participants) and is distinct from its founding
partners. Participants are not liable for the obligations of the LLP and bear the risk of
losses associated with LLPs business activity to the degree of value of their
contributions.
Advantages: (i) less complicated corporate structure (ii) low capitalization
requirement (iii) participatory interests are not deemed to be securities under law
and (iv) more flexibility in decision making, especially when an LLP enters into major
transactions. Also the LLP may keep the dividend on its books until the dividends
have been actually paid.
Disadvantages: The equity interest in an LLPs capital cannot be readily pledged
or assigned as collateral for a borrowers obligations under a loan agreement.
Joint Stock Company (JSC): A joint-stock company (JSC) is a vehicle established by
individuals or entities. The JSCs initial capital must be paid within 30 days from
registration. The shareholders are not liable for the JSC and bear the risk of losses to
the degree of value of their shares.
Advantages: (i) public trading of shares; (ii) number of shares in the JSCs capital
corresponds to the voting power of that shareholder; (iii) additional shares may be
issued to raise funding for the JSC.

Disadvantages: (i) more complex corporate structure; (ii) higher capitalization


requirement; (iii) burdensome process for registration of the share issuance and (iv)
excessive internal requirements to enter into major transactions.
Representative Offices and Branches: Representative offices and branches of foreign
companies can be opened to represent the interests of the foreign company in
Kazakhstan. A representative office may not carry on business that generates
income in Kazakhstan and may be established for marketing or business
development purposes.
Advantage: liberty of paying wages and invoicing in foreign currency.
TAXATION
Companies or foreign entities representatives offices and branches must
register for tax purposes. The national taxes applicable to investors business
include (i) corporate income tax (ii) tax withheld at the source of payment from nonresidents income (iii) individual income tax (iv) social tax (v) value added tax (vi)
customs duties and levies.
There are a number of other taxes such as:

Land property, transport taxes etc.

Compulsory payments including business registration and licence fees for


the right to carry on certain business, environment pollution fees etc.

Mandatory contributions from employers and employees to pension funds


which are equal to 10% of the monthly wage.
Business Taxation: All Kazakhstan entities are treated as residents and are subject
to corporate income taxation on their worldwide income within the reporting period
(calendar year). Non-residents of Kazakhstan are taxed only on their Kazakhstan
sourced income. Foreign legal entities whose business activities lead to creating
permanent establishment in Kazakhstan are taxed on income attributed to that
permanent establishment. The rate of corporate income tax is 30%. The dividends
payable out of Kazakhstan sources are taxed at 15% and may be reduced under an
applicable double tax treaty. The rate of branch profits tax is 15% and may be
reduced by up to 5% under an applicable double taxation treaty.
Personal Taxation: Under the Kazakhstan Tax Code, residents of Kazakhstan are
deemed persons who spend in the country, 183 days or more during any
consecutive twelve-month period ending in the current tax period or during the
current and two preceding tax periods. Resident individuals are taxed on their
worldwide income, while non-resident individuals are taxed only on their Kazakhstan
sourced income. From January 1, 2007, the individual income tax of residents and
non-residents on their Kazakhstan source income is payable at a rate of 10%.

Value Added Tax: Sale of goods and services in Kazakhstan and importation of goods
to Kazakhstan are subject to value added tax charged at the rate of 14%. The zero
rated VAT is applicable on exportation of goods, certain international transportation
services and the sale of specific goods in special economic zones.
Customs Duties: Customs duties are imposed on most goods imported to
Kazakhstan and charged per the customs value of taxable goods. There are some
cases of exemption from import duties in accordance with investment legislation.
Hiring Employees: Employment relations are regulated by an individual employment
agreement, which must contain material terms and conditions (such as
place of work commencement of work, job title, rights and obligations of the
employer and the employee, wage and benefits) and additional conditions
(such as probation term or confidentiality). Foreign employees may be paid in
foreign currency, while local employees are always paid in Kazakhstan Tenge.
Status of Foreigners: Kazakhstan employers must obtain work permits for foreign
nationals, who are either directly employed or seconded to work in Kazakhstan by
foreign companies. A work permit is issued within the limits of quotas established
annually by the Government as a percentage of the domestic economically active
labor force and may be issued for up to one year with subsequent renewal.
To obtain work permits for foreigners, the employer must prove that a foreign
worker will not take a job that Kazakhstan citizen could perform and is required to
advertise the position in the press. The labor authorities must consider an
application for a work permit within 30 days after its registration. A foreigner is not
allowed to start working in Kazakhstan until a work permit is issued. Noncompliance with the work permit requirement is subject to penalties, as well as
potential summary deportation of the foreign national from Kazakhstan at the cost
of the employer.
Exchange Controls: The national currency of Kazakhstan (Tenge) is considered a
relatively stable currency and is fully convertible for current account operations.
Residents and non-residents of Kazakhstan may hold both hard currency and Tenge
accounts in authorized banks and may import and export currency in accordance
with the procedures of the National Bank of Kazakhstan. Generally the Tenge is the
only permitted instrument for conducting payments between residents in
Kazakhstan. However, any currency is a permitted means of payment between
residents and non-resident involved in international transactions in connection with
trade and investments. There is no mandatory requirement to convert foreigncurrency proceeds into Tenge.
Currency Regulation: According to Kazakhstans currency regulation law, all
current account operations, which provide for the payment up to 180 days under
export and import contracts and loan arrangements, may be made without

restriction. Certain out-flowing capital account operations made beyond 180 days
need to be registered with the National Bank of Kazakhstan.
INDIA-KAZAKHSTAN TRADE & ECONOMIC COOPERATION:
India-Kazakhstan relations are friendly and based on certain common values such
as secularism, democracy and rejection of fundamentalism. India-Kazakhstan
relations are traditionally warm and cordial. Overall trade with India has increased
from US$ 120.88 million during the year 2005 to US$ 210.25 million during the year
2006 accounting for increase of 73.93% in one year.
Though, the current volume of textile trade between the two countries is low, there
are enormous possibilities of increasing bilateral trade and cooperation in the textile
sector. Kazakhstan is a part of Focus-CIS group under Indias trade promotion
policy. Kazakhstan is making conscious efforts to develop its textile industry. It is an
important cotton growing country as also a large crude oil producer, an ingredient
for Man-made fibre textiles. This presents great prospects for forging joint ventures
and collaborations between the two countries in the textile sector.
***********

Refe

http://smehorizon.sulekha.com/textiles_industry-news-and-views
http://textilesupdate.com/yarn-importers-devise-route-to-evade-duty
http://commerce.nic.in/trade/international_tpp_cis_11.asp

http://www.performance.gov.in/sites/default/files/departments/textiles/Annual
%20Report%202012-13.pdf

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