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Investment opportunities / By Province

Surkhan-Daryo province

1.Geographical location, territory, climate

SurkhandaryaProvince is located in the south of the Republic of Uzbekistan in the Surkhan-SherabadValley. It borders with Afghanistan on the south along the AmudaryaRiver, with Tajikistan on north-east, with Turkmenistan on south-west, and with Kashkadarya Province of Uzbekistan on north-west.

The area of SurkhandaryaProvince is 20.1 thousand sq. km, population is above 2 million people. It consists of 14 administrative districts: Angor, Bandihan, Baysun, Denau, Muzrabad, Altinsay, Sariasi, Termez, Uzun, Sherabad, Shurchi, Kizirik, Kumkurgan, as well as 8 towns: Baysun, Denau, Jarkurgan, Termez, Shargun, Sherabad, Shurchi, Kumkurgan. Administrative center of the province is Termez.

The territory of the province is extended mainly from north to south almost for 200 kilometres, from west to east almost for 140 km. Central and southern parts are plains bordered with Gissar ridge on the north, its branches – Baysuntau and Kugitangtau on west and north-west, Babatag ridge on the east and Amudarya valley on the south. The main water passage of the province is SurkhandaryaRiver.

2. Historical excurcus

Termez is one of ancient cities of the world. On the basis of excavations performed in the old Kurgan part of Termez as well as analysis of written sources, it became known that the city was founded in the middle of I millenium B.C. on the bank of Oxus (Amudarya). Trade and economical relations were established with such ancient state formations in the Asia as Sogdiana, Khoresm, Margiana and Parphia as well as with India.

In IV – III centuries B.C., a settlement of people was on the place of ancient fortress of Termez on the area of 10 ha. According to the writings of Hofizi Abruy, the name of the city originates from the word “Raramastha” (“place on another bank”), and further in various epochs it was called in different ways: Antiochia, Demetrias, Tarmid, Tarmiz, Tami, Tamo, since X century it had had its present-day name of Termez.

In III – II centuries B.C., Termez was of the most developed political, economical and cultural centers. According to material evidences, a number of lines of architecture and handicrafts (pottery, casting and metallurgy, vitreous handicraft) were developed in the city in this epoch, that affords ground to state that commodity and money relations here were on a higher level than in other places of Maveranahr.

The period of rule of the Kushans in 105 – 250 years A.D. is deemed as the time of the greatest prosperity of the city of Termez. According to one of the theories, the KushanKingdom was founded by the Yuechzhi people who had come from the territory of present-day Chinese province of Sinkiang.

The Kushan civilization had left a noticeable imprint in the history of the world culture. At that time Termez was considered as one of the centers of Buddhism. The chessmen figures of ivory found in the Dalvarzintepa dated to II century B.C., are the most ancient ones in the world as of today.

In the early medieval age, Termez was a separate domain including Termez city and adjacent areas. In pre-Islamic time, kings of Termez were bearing title ‘termezshah’, the last of which ruled in the second half of VII century. The city of Termez was the capital of Termezshahs. By the time of occupation of the city by the Arabs (686-704), the territory of the city covered 70 ha.

In X century the city was known with its huge bazaar and fortress on the bank of Jayhun (Amydarya).

In the period of X – XII centuries, Termez was prosperous, large center of handicrafts and trade of Toharistan. By that time, the area of the city was exceeding 500 ha. A number of gigantic buildings were erected in the city, the one of then which survived to present time is the palace of Termezshahs.

In various times, Termez was within various states: Gaznavids, Karahanids, Karahitais, Saljukids, Khorezmshahs.

In 1220, Termez was ruined by the Mongolian invasion. In XV century, Termez had been reinstated again on the reverie part of Surkhandarya river.

After Tamerlane had taken the power over Maveranahr in 1370, Termez together with Surkhandarya was included in the state of Tamerlane. In 1407, under the order of Temurid Halil Sultan, the Termez fortress was reinstated. After some time, Termez became a large city with its Mint.

In the years 1504-1505, the city was conquered by the dynasty of Sheybanids which united the Turkic-Mongolian tribes

By the second half of XVIII, due to internal wars, the city was totally ruined. Only neighboring villages Pattakesar and Solihobod were survived.

In the end of XIX Termez was conquered by the troops of the Russian Empire which had built a fort in 1894 in8 km of the ruin of Termez in Pattakesar village. In 1916, after construction of railway Bukhara-Karshi-Termez, economy started to developed in the region.

SurkhandaryaProvince had been formed on 6 March 1941 (from 1925 to 1941 it was Surkhandarya District).

3. Social and economic development

 The volume of gross regional product (GRP) of the province for year 2010 amounted to 2229,3 billion soums. or 111,2% to the figures on the outcomes of  2009ã., and amounted nearly 3,6% of FDP of Uzbekistan. The volume of services in structure of GRP amounted

40,2%. Volume of  GRP  per capita amounted 1061,5 thousand soums.

In structure GRP, prevail the agriculture sector - 40,1% (901,0 billion soums), transport and communication services – 11,5% ( 257,1), trade and public catering – 8,5% (188,9 billion soums), industry -8,0% (179,3 billion soums), building – 7,1% (158,8 billion soums), taxes 4,3% (95,0 billion soums), and others -20,1%.  

As of January 1, 2011, in the region registered 30.7 thousand organizations, enterprises and other business entities (including farms), including small businesses and private entrepreneurship - 27.0 thousand units (87.9 %). In general, the number of registered businesses of the enterprises non-state ownership amounted 90.5 % (27.8 thousand units).

The share of small business has significant predominance in the economy in recent years. A good example is the fact that if in 2009, small businesses produced goods and services 70% of the GRP by the end of 2010 it reached 71.7% and 24.4 thousand units of SMEs carried out economic activity.

In addition, they produced products to 101.0 billion soums (16.4% of the total industrial production) or 110% compared to indicator 2009.

In 2010 foreign trade turnover amounted to 298.1 million of dollars and has increased in comparison with 2009 by 144%. At the same time, has increased in comparison with 2009 to 140.5%, imports – to 185.7%.

In export structure such positions, as a raw cotton - 66%, foodstuffs - 22.4%, energy resources - 3.5%, services - 2.5%, and others, in the structure of imports - machinery and equipment - 39 7%, foodstuffs - 37.4%, chemical products - 5.1%, etc.

In general, 84 industrial facilities put into operation in province in 2010, including 59 production facilities of food, 11 - in the production of building materials, 6 - in light industry, 8 - in the production of non-food items.

The following type of enterprises operate in the province:

The new production facilities for processing of the cocoon with an annual capacity of 300 tons (JV "Amu-Qashqar-Surhon»), cleaning rice – 200 tons. (LLC «Sholi invest»), brick – 20 million items (based on the engineering company "Qishloq Qurilish Invest"), 10 million units ("Fabullo BuildService"), confectionery products - 1 ton items (JSC "Shurchidonmahsulotlari") put into operation in the province. Also, in order to expand production at the joint venture "Shindong Spinning Termez" completed a project to increase production of cotton yarn with an annual capacity of 2.1 thousand tons.

3.1. Population

The population of province as of January, 1st, 2011 makes more than 2 million persons, from them 63 % live in countryside, 37 % are made by urban population. Among them, Termez (133,3 thousand people), Denau (118,2 thousand people), Kumkurgan (62,8 thousand people), Shurchi (63,2 thousand people) Sherabad (47,9 thousand people), Bajsun (41,5 thousand people, Dzharkurgan (38,5  thousand people).

The ethnic composition in Surkhandarya expressed by representatives of various nationalities, including Uzbeks (84.0% of the total regional population), Tajiks (12.9%), Turkmen (1.3%), Russian (1.0%), Tatars (0,3%), Kazakhs (0.06%), Ukrainians (0.05%), Afghans (0.04%), Koreans (0.03%), Belarusians (0.02%) and others.

Working-age population of the region is 1168.5 thousand (55.1% of total population) of which 784.4 thousand (67.1% of the total working population) is an economically occupied. 75% of total employment in the region's economy accounts for subjects of small businesses and private partnership. The number of pensioners are 203.1 thousand.

There is 74.5% of the employed population (584.7 thousand) occupied in the manufacturing sector 63% of which are employed in agriculture, 17.2% - in trade and catering, 12.3% - in construction, 5, 1% - in industry, 2.2% - in transport and communications, and others (0.1%). The rest of 199.6 thousand (25.5% of the total employed population) are occupied in non-production sector.

The average monthly wage of the region's population by the end of 2010 increased by 136.4% and accounted 607.1 thousand sum, the average pension - 160.9 thousand soums (123.9%).

For the reporting period in the region were created 63.8 thousand new jobs, including in rural areas - 57.0 thousand or 89.2% of the total number of jobs created. With the support of Labour  bodies in January-December 2010, employed 38.8 thousand people, which is 17.9 percentage points higher than for the corresponding period last year. 

Number of citizens registered at the labor bodies, as job seekers at the end of December 2010 amounted to 41.8 thousand people. 

3.2. Banking and financial system

Banking and financial sector of SurkhandaryaProvince is represented with 14 branches of commercial banks, 4 credit unions and 19 insurance companies. Department of the Central Bank of the Republic of      Uzbekistan, branches of the main commercial banks: National Bank for Foreign Economic Activity, Agro Bank, Asaka Bank, Ipoteka Bank, Aloqabank, Hamkorbank, Kapitalbank,Promstroybank and others, operate in the province.

Insurance companies: “Uzagrosugurta”, “Uzbekinvest”, “Kafolat”, “Madad”.

Credit unions: “Farovon”, “Izzat Ravshan”, “Janub Sarmoyasi”and «Bibinur Loan».

In 2010, a growth of credit investments is 26.6%, commercial banks allocated credit facilities totaling 322.7 billion soums or more of 67.8 billion soums, than the fact of 2009. The main areas of investment credit funds: industrial and agricultural sector, infrastructure development and construction.

In particular, small businesses and private entrepreneurship allocated loan funds to build new plants, modernization and expansion of existing facilities totaling 116.0 billion soums, or 140.3% more than in (33.3 billion soums) compared to t2009.

3.3. Development of agrarian sector

The economy of Surkhandarya  has an agrarian orientation.In 2010, agriculture's share in gross regional product amounted to 40.4% and produced agricultural goods and services worth 901.0 billion soums, or 105.4% more than the same indicator of 2009.

In the structure of agricultural production share dehkan economies is 63.2% (790.3 billion soums), farm economies - 35.7% (446.8 billion soums), agricultural enterprises - 1.0 percent.

Surkhandarya has great agriculture land - the main factor in the development of agriculture.1.18 million hectares from 2.01 million hectares of available land are agriculture, 0.86 million hectares set aside for grazing, and 281.3 thousand ha - crop area (grain, cotton, melons, fruit and vegetable gardens).

The basic branches of the agricultural production are: cotton, grain, vegetables, horticulture, and sericulture. In the foothills of the developed dry farming (mainly wheat and barley are grown). The largest quantity of fine-stapled cotton in Uzbekistan is cultivated in Province. In 2010 the region produced 606.0 thousand tons of grain and 335.6 thousand tons of raw cotton and 1.49 tones of cocoons.

In the mountainous areas horticultural and viticulture are developed. In 2010 n 92.3 thousand tons fruit, 486.4 thousand tons vegetables, 127.5 thousand tons of potatoes, 113.9 thousand tons Products melons and 77.1 thousand tons grapes had grown, of which 21.4 thousand tons exported in fresh form. Also, last year exported 2.8 thousand tons of processed, dried and frozen agricultural products or 10.4% of total exports of fruits and vegetables.

Production and processing of meat and dairy products are developed in the province. In households diluted 689.4 thousand head of cattle, 1 701.0 thousand head of sheep and goats, 14.8 thousand head of horses and herds of 1978.8 thousand heads of poultry. By the end of 2010 produced 113.3 thousand tons of meat, 508.2 thousand tons of milk, 156.1 million eggs.

Taking into consideration the significant role of agriculture sector in the economy of the region, promising direction is the organization of joint projects with foreign partners in production of agro-processing.   

3.4. Mineral and raw materials potential

In Surkhandarya paid much attention to the creation of new industries using modern technology for the production of export oriented and import substituting production. There are over 300 fields, occurrences and outputs in more than 40 types of minerals. The subsoil of Surkhandarya have commercial reserves of coal, oil, natural gas, salt, phosphates, gypsum, non-ferrous and precious metals, etc.

The region contains 30% of predicted resources of potash and 25% of spar revealed significant resources phosphate, bentonite clay, glauconite, glass production. There are good preconditions for the detection of deposits of tungsten, mercury, precious metals, semiprecious materials, zeolite, sulfur, etc. It also produces about 90% of the national production of potassium salt, 10.3% - brick, 5.9 - 0.9% and non-metallic - expanded clay materials.

The region has significant mineral deposits. According to the State Committee on Geology of the Republic of Uzbekistan the province has the following reserves of mineral resources:

- Non-ferrous and rare metals: 2370.1 thousand tons, including lead - 686.1 thousand tons, zinc - 1386.2 thousand tons, strontium - 297.8 thousand tons of celestite lead and zinc ores contain copper - 176.5 thousand tons and gold - 7.1 tons;

- Fuel and energy raw materials: 70.3 million tons of coal deposits at 5 oilfields;

- Mining raw materials: 2380.3 thousand tons of glass production;

- Mining and chemical raw materials: 55.7 million tons, including 11.7 million tons of raw materials 43.9 million tons of mineral salt .

- Raw materials for production of building materials - 707.8 million tons of cement raw materials, 5.1 million cubic meters of natural stones (sandstone, red, pink granite), 4.4 million cubic meters. of saw stones, 17.1 million tons of gypsum and anhydrite, 73.1 million tons of limestone, 57.2 million cubic meters of expanded clay materials, 56.8 million cubic meters meters of sand for construction work and silicate products, 146.9 million cubic meters of sand and gravel, 64.8. cubic meters of brick-tile raw materials. 

3.5. Industrial potential

The industrial potential of the region is represented over a thousand enterprises, 25of which arethe largest enterprises.

In 2010 the total industrial output amounted to 614.3 billion soums, or 112.9% compared to the figures 2009, including the production of consumer goods to 202.7 billion soums, or 105.5% compared to the same indicator of 2009.

The largest share in total industrial production accounted for enterprises in the light industry (48.1% of the total), food industry (15.6%), milling industry (11.2%), construction materials industry (7.3%) and others.

Production capacity in electric power industry, chemical and petrochemical industry, machine building and metalworking industry are also available. The province is one of the leading places in the country for the extraction of "black gold". A significant place is paid by the mining industry.

A special place has the cleaning of cotton and its processing, construction materials, light industry goods and food products.

The basis of the industrial sector of the province is constituted by such large enterprises as: “Jarkurganneft” Joint-Stock Company (oil production), “Surkhantex” JV (production of cotton yarn), "Shindong Spinning Termez", “Jarkurganneftepererabotka” JV (oil refining), “Surkhonozikovkatsanoati” Joint-Stock Company (food industry), “Shurchi don mahsulotlari” Joint-Stock Company (food industry), “Alpomish” JV (production of wheat), Surkhantextile Joint-Stock Company (textile produciotn), AOOT Shargun kumir (mining industry) and AOOT “Hojaikon tuz” (food industry).

120 thousand tones of cotton fiber are produced at the enterprises of the province, where more than 7% of cotton fiber are processed and 7,5 thousand tones of cotton yarn are produced, as well as various garments (T-shirts, workwear, underwear).

Production capacities of joint ventures «Surhonteks» and «Shindong Spinning Termez» with an annual volume of cotton fiber processing 9 thousand tons of the textile industry that does not match the raw potential.

Machine industry is developed in the province, the Termez Factory for Repair of Agricultural Machinery and Tractor Motors operates.

The main direction of further development of building materials industry is creation of new cement production facilities. 2 deposits of cement feedstock are explored in the province, with total quantity of reserves amounting to 707.8 million tones. Along with this, brick factories, lime production workshops and crushed stone factory exist in the province.

3.6. Transportation and communication

The province has a fairly developed infrastructure facilities for the further implementation of investment projects.

Network of railways and roads connected to all major transport connections of national importance. This allows the transportation of export - import goods of all strategically important areas.

The total length of railways in province is approximately 430 km and 14

 railway station operate. In August, 2007 the railroad line of Tashguzar-Bojsun-Kumkurgan connecting the south of Uzbekistan with the centre of republic and Kazakhstan is put into operation. Thanks to this line transport expenses go down when raw materials and finished goods are delivered. ThebigUzbekPathconnectsTermeztoTashkent.

The total length of automobile lines of province - 5836,9 km, including international roads - 395 km and national importance - 809 km.

The only Central Asian international river port on AmudaryaRiver is located in the province. Via this port, as well as railway and the ‘Friendship Bridge’ laid across Amudarya, freights are delivered to various countries of Asia from Germany, Poland, Czech Republic, Russia, Bulgaria and other countries of Europe.

Termez city airport operates, which is capable to receive large transport aircraft. Railway connection with Afghanistan is implemented via Hayraton bridge.

Telecommunication, cellular, radio relay and mail communications function in the province. In all district telecommunication stations, analogue automatic telephone exchanges are replaced with digital ones. Telecommunication and radio-relay communication carriers in the province are Surkhandarya Telecom and “UzI-Termez”, mail operator is Surkhandarya branch of “Uzbekistan Pochtasi”.

Mobile communication services are provided by MTS-Uzbekistan, Beeline, Coscom (U-Cell), Uzmobile.

Transportation services are provided by 3 types of transport – buses, minibuses and taxi.

3.7. Social infrustructure and recreational services

The inhabitants and guests of SurkhandaryaProvince are provided with the services of M. Uygur Musical Drama Theatre, Youth theatre, “Kugirchak” puppet show, parks of culture and recreation, Dustlik resort, sport complexes, archeological museum, cultural centers, libraries and cinemas.

Special attention in the province is paid to sports and physical training development. In province there are 42 stadiums, 30 sports schools for children and youth, 56 tennis courts, 4 swimming pools. 3908 sports constructions in total.

There are considerable opportunities for development of tourism in the province, with a range of historical sights. Among them, architectural complex of Imam At-Termezi, palace of Khorezmshahs in old part of the city, amphitheater, antique Buddhist temples, ancient cult deposition, “Tuprokorgon” fortress and others.

For the recent several years, in Termez, due to preparation of the city to 2500th anniversary, the buildings of archeological museum, theatre for 3 thousand seats, A. Navoi, Babur, Dustlik and 2500th anniversary parks of culture and recreation have been commissioned, new alley built, buildings renovated along central streets of the city.

 

Education:There are 1 high school, 115 professional colleges and 5academic lyceums, 851 schools and 308 kindergartens in the province.436 libraries, 111 clubs, 16 schools of music and arts, 11 parks of culture and recreation operate in Surkhandarya.

Health care:

Special attention is paid to the health of the population. 70 hospitals, 310 outpatient clinics and hospitals, 14 health centerc, 243 rural health units operate in towns and districts.

There are 23 hotels for 1897 rooms operate in the province including: «Meridian Hotel», «Asson Termez», «Ulugbek», «Surhon Atlantik», «Sharq Asliddin», «Akmal-Holis», «Ramz-Charxpalak» è «Denov Evroasia».

4. Investment potential

4.1. Foreign investments in the region

In 2010, the amount of foreign investments attracted in the province economy was USD 39.9 million, of which USD 15,6 million are direct foreign loans and USD 8.8 million – foreign direct investments.

The largest scope of foreign investments is raised for public education (13 %), transport and communication (14,1%), agricluture (11,3 %), communal services (6,8%), energy (6,4%), industry (6,4%), health care (5,9%) and other branches of economy (0,4%)

National regime for foreign investments has been established in the Republic of Uzbekistan, which provide for the conditions for foreign investments, no less favorable than relevant conditions for investments realized by legal entities and individuals of the Republic of Uzbekistan.

Enterprises raising direct private foreign investments and located in Surkhandarya Province, as well as realizing business in the following sectors of economy: production of radio electronic products and components to computers, light industry, silk industry, production of building materials, industrial production of poultry meat and eggs, food industry, meat and dairy industry, chemical and pharmaceutical industry, are exempted from payment, for main activity, of income (profit) tax, property tax, tax for development of social infrastructure and landscaping, single tax for microfirms and small businesses, as well as obligatory deductions in the Republican Road Fund.

The shown tax privileges are granted in case if the amount of direct private foreign investments is:

- USD 300 000 to 3 million – for a 3 years term;

- above USD 3 million to USD 10 million – for a 5 years term;

- above USD 10 million – for a 10 years term;

At the same time, the shown tax privileges apply on the following conditions:

- realization of direct private foreign investments by foreign investors without provision of guarantee of the Republic of Uzbekistan;

- the share of foreign members in the enterprise’s authorized capital should be at least 50 percent;

- contribution of direct private foreign investments after governmental registration of such enterprises;

- contribution of foreign investments in form of hard currency or new advanced process equipment;

- directing the income gained as a result of granting such privileges within the term of their application for reinvesting for the purposes of further development of enterprise.

4.2. Enterprises with foreign investments

Enterprises with foreign investments play an important role in economic developmentin the province. 66 enterprises with foreign investment have been registered in province ( 50 of them operate). They carry on their business in the following fields: manufacturing (34 enterprises), trade (12), transport and telecommunication services (8), agriculture (3), building (4) and others (5).

Jarkurganneft” Joint-Stock Company (oil production), “Surkhantex” JV (production of cotton yarn), "Shindong Spinning Termez", “Jarkurganneftepererabotka” JV (oil refining), “Surkhonozikovkatsanoati” Joint-Stock Company (food industry), “Shurchi don mahsulotlari” Joint-Stock Company (food industry), “Alpomish” JV (production of wheat), Surkhantextile Joint-Stock Company (textile production), AOOT Shargun kumir (mining industry) and AOOT “Hojaikon tuz” (food industry).

Out of the number of active joint ventures are: JV “Jarkurganneftepererabotka” (oil refining), JV “Surkhantex” (textile production), JV "Shindong Spinning Termez" (textile production),   ÑÏ “Meridian-hotel» (hotel services), JV “Agrohizmat-Shindongã» (oil production), JV «Alpomish» (flour production).

In 2010 5 enterprises with foreign investments were established, such as, uzbek-china JV «Inter Silk Pro» (silk production), LLC «Bozdemir Inshoat Servis» (building), «Kamol Karvon Trans» (transport services), uzbek-afghan JV «Ufron Invest» (production of construction materials), private enterprise «Sirius Imkon» (computer services).

Enterprises with foreign investment produced goods and services worth 135.3 billion soums, or 6.1% of the total GRP in 2010 in the province.

Foreign trade turnover of FDI in 2010 totaled $ 20.7 million or 57.6%, as compared the figures of 2009, including FDI exports - 19.0 million (7.1% of total exports of the province), imports - $1.7 million (5.8% of the total imports of the province.) 

MFERITMEDEF InternationalInternational Business CenterGov.uzPress ServiceOliy MajlisUzASARIO