Rahmon turns his attention to state of Tajik economy

Rahmon turns his attention to state of Tajik economy

President of Tajikistan Emomali Rahmon ordered to give space to almost two thousand businessmen engaged in production and not to pester them with any inspections until January 1, 2021. The Tajik presidential press service published a special commentary to Rahmon’s decree, clarifying that "a moratorium is being declared on all types of inspections of activities of business entities in the areas of production of Tajikistan."

All the experts contacted by Vestnik Kavkaza said that this measure was timely, forced and unexpected, taking into account the Tajik leader's conservative nature. But Rahmon realized that it can wait no longer, there needs to be major changes in the business environment, entrepreneurs need more freedom in their activities, because the backlog of the Tajik economy from those of its neighbors was felt almost daily and the chasm was widening.

According to one of the experts, the decree openly states that a moratorium on inspections is being introduced as state support for entrepreneurship in the areas of production, job creation, an improvement of the investment climate and facilitation of export-import operations. It is fair to say that Emomali Rahmon in his public speeches often spoke negatively about the incredible number of various controllers and their inspections. But before the decree on the moratorium was issued on January 15, nothing was done in this area, so the president's criticism was perceived by businessmen as deliberate, and therefore ineffective.

For Tajik entrepreneurs, the existence of 28 controlling structures was a hell of a test in the context of a semi-paralyzed economy. Another inspection arrived faster than first  inspection left. As the businessman from Khujand said on condition of anonymity, inspections hampered the enterprise's work, while the inspectors pursued a single goal - to get a piece of the object being checked. "Foreigners simply began to fold their activities - one wants something, second wants something, then the third. It was alien to them, and many of them did not want to get used to this," the source said, expressing hope that the presidential decree will be strictly implemented, which will provide an opportunity to take a breath and work normally. "In this case, the authorities, seeing how progressive the new approach is, can extend the moratorium beyond 2021," an entrepreneur from Khujand hopes.

Rahmon’s relaxing the rules is especially timely in the view of statistics and concise conclusions of World Bank experts. In the medium term, they predict a low level of foreign investment and an increase in capital outflows from Tajikistan, while calling the business environment unfavorable for business. The World Bank reports constantly state that the pace of economic reforms is far from the target, which widens the gap between the country's economy and economies of other states in the region. And this also pushes entrepreneurs to withdraw capital, or even the entire business from Tajikistan to neighboring countries at least. Probably, the fact that even Uzbekistan has become more attractive than Tajikistan in terms of doing business can be particularly offensive for the Tajik authorities, and yet, unlike Tajikistan, Uzbekistan has long been a much more closed country.

According to the latest World Bank report, Doing Business 2019, over the past year Tajikistan's business environment position has worsened in 7 out of 10 sub-categories, it ranked 126th, strongly lagging behind its neighbors - Kazakhstan (28th), Kyrgyzstan (70th), Uzbekistan (76th).

An expert on Tajikistan, Andrei Zakhvatov, commenting on Rahmon’s decision, told Vestnik Kavkazka that "without any doubt, Emomali Rakhmon's decree banning any inspections of business activities for two years, even if not all those engaged in production, but only 1930 companies included in registry, will significantly improve business activity in Tajikistan." "Money, like people, strive to where they are treated well. Therefore, it is possible that the guarantees provided by the Tajik authorities to local manufacturers will be attractive to foreign investors, which will necessarily affect the growth in the number of joint ventures and the volume of products for domestic use and export," Zahvatov believes.

But the main purpose of the decree, according to him, should be considered from a wider perspective. In December 2016, a National Development Strategy until 2030 was adopted in Tajikistan. "The total amount of the Strategy's financial resources is $118.1 billion, including $54.7 billion of private sector investments, $56.1 billion of budget funds and $7.3 billion of development partners' resources. The numbers are considerable - the average annual expenditures for the implementation of programs until 2030 exceed $8 billion, which is more than 3.5 times more than the total volume of the 2018 state budget of Tajikistan," Zakhvatov said.

There is plenty of free money in the global financial system, but Tajikistan needs ideas and projects to attract them. The republic has already begun to look for internal and external financial resources. At the same time, Emomali Rahmon, who has made many trips to Qatar, Jordan, India, Saudi Arabia, and met with the leaders of Russia, Belarus, Armenia, and Uzbekistan, has been highly active over the past two years. According to Zakhvatov, all the embassies of Tajikistan in rich European countries are also searching for potential investors. Therefore, Rahmon’s "not to interfere" decree can be considered as part of quite reasonable measures, which may be followed by others."

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