|
Mortgage in the Countryside
stimulates domestic demand, a mainstay of economic growth
Venera Baybulatova
Forty two residential areas are to be erected in Uzbekistan, with 850 houses of model projects and contemporary communications and utilities constructed within the Program on Rural Development and Improvement.
 Expansion of individual housing on approved model design as well as socio-cultural and sanitary facilities in rural areas is assigned one of the top priorities in 2010. Comfortable, technologically advanced and well-equipped houses dramatically improve the living conditions of rural population, and they also stimulate domestic demand – the core of economic growth.
Program’s underlying logic
In 2009, President Islam Karimov approved seven resolutions aimed at implementing effective financial and investment mechanisms of government support for the construction industry and housing market. The documents initiated establishment of a design and research institute, Qishloq Qurilish Loyiha, as well as Qishloq Qurilish Bank.
The bank’s central objective is to introduce an extensive system of long-term soft lending for housing construction and qualitative improvement in the appearance of countryside and living conditions of rural population. The goal includes also the development of manufacturing industry and social infrastructure in rural areas. Ministry of Finance and the Fund for Reconstruction and Development instituted a statutory fund as well as a resource base of the bank for funding large-scale construction works in provinces and districts.
In 2009, Uzbekistan developed lending and construction mechanisms of model projects, organized a national exhibition of model projects of individual housing and community facilities.
 There is an efficient interaction mechanism of all parts of rural mortgage. Mortgage loans are issued for construction of residential houses for villagers in rural areas in compliance with established norms and rules of construction based on model projects. Such projects are developed by design institute Qishloq Qurilish Loyiha.
There are areas defined for integrated housing development on 22 standard housing projects and 16 community facilities projects.
The actual result of the measures taken was the establishment of an industrial and construction, engineering capacity designed for long-term construction of housing in rural areas. This helps address such important tasks as creating new jobs, organization of new industries and new related industries in regions.
As a customer of individual housing, Qishloq Qurilish Bank has established a subsidiary specialized engineering company Qishloq Qurilish Invest with an authorized capital of 1 billion soums.
Based on their choice (design of the house), villagers submit their preliminary applications to local branches of Qishloq Qurilish Invest and Qishloq Qurilish Bank for initiating the construction. Here they need to make an initial contribution of at least 25 percent of the cost of the selected model project. Then, they file an application and documents for a loan. After studying the financial condition of the borrower, the bank issues the loan, then the borrower enters into a contract with the contracting engineering company to perform the function of the customer for the construction of individual housing in rural areas. The contractor provides a complete construction.
As can be seen, future owners of these houses provide their own means for the construction. The greater part of the costs is covered by long-term soft loans of Qishloq Qurilish Bank.
What is the advantage of such loan? There are a number of benefits: first, it is the term of the loan of 15 years, second is the interest rate. The bank charges interest at a rate of 50% of the refinancing rate of Central Bank of the Republic of Uzbekistan. Today it is 7% per year. In addition, the borrower is given a six-month grace period. The amount of the mortgage loan does not exceed 1,000 times the minimum wage. In other words, the real government support for the construction of individual residential houses based on model projects constitutes 37,680,000 soums. Moreover, if the borrower transfers his wages to repay the loan and interest, this amount is exempt from income tax.
After completion and acceptance of a dwelling house, municipal administration of the district grants the plot to the customer in lifetime inheritable possession without an auction. Rural population has already appreciated the benefits.
 According Qishloq Qurilish Bank, the program of individual housing construction attracted 58.5 billion soums in 2009, where the bank’s soft loans constitute 32.1 billion soums.
Incentives for growth
Qishloq Qurilish Invest and its regional subsidiaries provide technical supervision of construction of individual housing on standard projects. In addition, under the auspices of the company, new enterprises have been established for the production of walling and other building materials.
It is already obvious at the initial stage of the long-term house construction program that it provides a large-scale work and creates many new jobs. Large construction works need raw materials, building materials and products. Each specialist provides a year-long job for a few more people in the production of building materials, transport infrastructure and trade, thus addressing an important employment challenges and improving living standards of people.
Many opportunities are opened for small business and private entrepreneurship. Representatives of the private sector create specialized mobile repair and construction companies, the major partners of the engineering company. Their main task is implementation of a full range of housing construction on a turnkey basis. Small businesses have gained rich experience during the implementation of a large-scale program of construction of professional colleges and academic lyceums in the republic.
Construction of 850 houses is carried out by the competitively selected 44 contractors. One of the major requirements is quality complete construction of residential houses in due time. Each construction company employs 120-150 workers on average.
Estimates show that construction of housing in the republic engages about 5,000 builders. Besides the program involves specialists engaged in the construction of external engineering infrastructure (electricity, gas and water supply, roads and other facilities), constructed and maintained at the expense of local budgets and sponsors, as well as maintenance organizations.
Focusing on the demand, construction industry of Uzbekistan provides new varieties of building materials: plasterboard, dry construction mixtures and others. Production of wall building materials is expanding with the support of the government. Presidential decree of June 19, 2009 “On additional measures to stimulate production and improve the quality of wall materials” opens up great opportunities for increasing the output of low-cost baked bricks. Energy-efficient technologies are implemented to reduce the production costs, “thrifty” producers enjoy tax incentives and preferences.
In 2009, thirty one enterprises were established in the country to produce construction materials, which is also a positive step. These include 6 plants in rural areas with production capacity of 2 million square meters of modern roofing material per year, as well as new factories manufacturing gypsum, plaster, drywall and other construction and finishing materials, prefabricated elements. Twelve new brick plants were launched with the total capacity of 81 million bricks per year. Given the growing needs of the rural mortgages in finishing materials, it is planned to establish a new ceramic tiles factory.
There is a growing demand for quality doors and windows. Estimates show that construction of new houses requires more than 6,000 doors. Demand encourages offer. Companies raise the output of doors and windows.
The national program of housing construction in rural areas increased the workload of domestic producers engaged in production of metal roofing, water heating boilers and other building materials and equipment.
Tashkent Pipe Plant has become one of the first suppliers of metal tiles for construction companies engaged in construction of residential houses in rural areas. Roofing material were supplied to customers on the basis of the model project.
The national program of housing construction in rural areas actively involves cement and brick plants. Uzmetkombinat and Kvartz provide contractors with cement, brick, metal and glass on the manufacturer prices. This helps lower the cost of construction of housing.
New homes, new opportunities
The program for 2010, as reported at the engineering company, provides for increase in the construction works in 159 rural areas at least 8 times. The construction of housing will be conducted on 215 areas to locate 6,800 houses. The total construction cost amounts to 472.5 billion soums, of which over 256 billion soums constitute preferential bank loans.
Moreover, local budgets and sponsors will fund building of modern facilities, including kindergartens, secondary and music schools, sports facilities, medical establishments, services and more. Extension of the construction works urges the selection of new construction companies to be active participants in the rural mortgage.
In its turn Qishloq Qurilish Bank, together with relevant organizations, takes drastic measures to reduce the cost of housing, particularly in basic construction materials. Cost reduction is ensured through local subsidiaries engaged in wood processing, production of wall and roofing materials. Qishloq Qurilish Invest is constructing 12 new enterprises in all regions for the production of baked bricks and a factory for manufacturing metal tiles, windows and doors.
Countryside mortgage is gaining momentum.
Home for mortgage
Jasurbek Kambarov, strategic development department, Qishloq Qurilish Bank:
 Open Joint Stock Commercial Bank Qishloq Qurilish Bank was established in accordance with the decree of the head of state of March 30, 2009. The bank is the successor of G’allabank on property, financial and other obligations, as well as a requirement to ensure the safety and timely return of funds from legal entities and individuals. The decree stipulates the authorized capital of the bank of $150 billion soums.
The core task of the bank is a broad introduction of long-term soft lending for housing construction and improvement of quality of the village and living conditions of rural population, accelerated development of industrial and social infrastructure in rural areas.
Currently, the bank has a vast network in the republic consisting of 41 branches and 62 mini banks, 146 savings banks, 73 exchange offices, as well as 45 points of international remittances. In addition, the bank has established a subsidiary specialized engineering company Qishloq Qurilish Invest with affiliates in all regions of the republic. This infrastructure allows the bank to successfully address the tasks and provide a wide range of quality banking services to business entities of various forms of property and individuals.
Looking forward to house warming
Rano Isaeva, Yangiyo’l city:
 I have decided to buy a comfortable house after representatives of Yangiyul district administration and Qishloq Qurilish Invest at one of our meetings explained me the benefits of rural mortgage. Conditions were acceptable, and we signed a contract with the engineering company Qishloq Qurilish Invest for the construction of a two-storey four-room house with a land size of 0.6 hectare in installments for 15 years.
After we had made the first payment (17,200,000 soums) and selected model projects, the contractor began the construction. Qishloq Qurilish Bank familiarized us with the terms of repayment of loans during the six months grace period and in subsequent years. They also proved to be acceptable. Now the newly built house undergoes finishing work.
We look forward to house warming.
Construction in full swing
Tohir Omonkulov, MPMK-33 LLC:
 From November last year, our company builds a residential block of 20 houses in Chinoz district, Tashkent region. Work goes on well. Two-storey and single-storey houses have already been roofed. Internal networks of water and gas supply, heating, sanitation facilities have been installed. The block got electrified and gasified, contractors started construction of water supply, road.
The construction company employs about 200 people. All the buildings undergo finishing work, internal and external plastering.
No delays. Construction materials, fittings, frames, lumber, water-heating boilers, necessary for the conduct of the construction, are supplied on time.
After plastering, builders begin painting, then flooring wooden floors. Each house will be fenced, and the yards service premises.
Reliable partner of developer
Kambar Tursunbaev, Qishloq Qurilish Invest:
 Functions of Qishloq Qurilish Invest that has 13 branches in the regions were identified in the Rural Development and Improvement Program.
The first aspect of the activity covers the study of the housing market. This marketing research lays ground for proposals for the choice of areas, composition and structure of housing, social facilities and engineering infrastructure.
The company also functions as the customer of the construction of new individual housing, as well as social facilities and engineering infrastructure in rural areas, and runs financing activity and technical supervision of the construction progress. The third aspect includes announcement of tenders for house construction. The fourth area concerns the transfer of individual houses to the populations funded through preferential loans provided by Qishloq Qurilish Bank. Also, objects of engineering infrastructure, socio-cultural and sanitary facilities are transfer to operating organizations with financing and technical supervision of the construction.
Our company is exempt from all taxes and mandatory payments to the National Road Fund and Off-budget School Fund through January 1, 2014.
Single housing policy for rural areas
Zulfiya Mirzaliyeva, chief architect, Qishloq Qurilish Loyiha:
 Design and research institute Qishloq Qurilish Loyiha established in accordance with a decree of the president for the radical improvement of the organization of architectural planning in rural settlements and projecting rural construction. There are special provisions for a unified technical policy on integrated development of buildings in the countryside. It provides for radical improvement of the design and construction of housing and industrial facilities in rural areas.
Besides, our institute develops master plans for villages with a population of more than 10,000 people as well as provides projects and architectural planning rural citizens’ assemblies with the first phase of construction for localities from 5,000 to 10,000 people.
Model projects of rural residential houses developed by the specialists of the institute are designed for I, II and III construction-climatic zones of the country. There are two type of comfort: regular type with 16-18 square meters of space per person, and improved one with 24-26 square meters.
At the exhibitions held in September last year in Tashkent, we presented mockups of comfortable homes to numerous visitors from the regions. We organized visiting regional exhibitions, where potential developers got complete information on model projects of houses.
All our projects include full engineering support for improving the comfort of rural population.
|
