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Business Profile
Economy:
Tajikistan is the poorest of the five former Soviet Central Asian republics, with an estimated four fifths of the population living below the poverty line. Basic services and infrastructure are poor to non-existent. Although less than ten per cent of the country’s land can be cultivated, Tajikistan has a sizeable agricultural sector accounting for one quarter of GDP and employing half the workforce. Large quantities of cotton are produced under ecologically ruinous schemes established during the Soviet era. Grain, fruit and vegetables are also grown. Nonetheless, the country was badly hit by a regional drought, which in the autumn of 2001 forced the Government to appeal for international food aid.
Tajikistan’s economic prospects lie with exploitation of its mineral resources, which include gold, aluminium, iron, lead, tin and mercury ores. There are coal deposits as well as small amounts of natural gas, which together with hydroelectric schemes meet the bulk of the country’s energy needs. There is little heavy industry other than mineral processing (mainly aluminium); light industry is concentrated in food processing and textiles.
The Tajik economy suffered severely from the dislocations caused by the break-up of the Soviet Union followed by two outbreaks of civil war. The 1997 peace accord between the warring factions allowed the Government to concentrate on reform of the economy. Recovery has been slow but is now showing some results: the hyper-inflation which blighted the economy during the civil war has now been cut to 11 per cent. Annual GDP growth in 2002 was a healthy seven per cent.
The Government’s economic reform programme, which is now being implemented, comprises a typical recipe of privatisation, deregulation and fiscal reform. Tajikistan secured membership of the IMF and World Bank in 1993; it also belongs to the European Bank for Reconstruction and Development as a ‘Country of Operation’. It has received substantial aid from Middle eastern donors, including Saudi Arabia, Kuwait and the Islamic Development Bank. Some initial consideration was given to a currency union with Russia, but in May 1995 Tajikistan opted to introduce its own currency, the Tajik Rouble, which was in turn replaced by the Somoni in October 2000. In April 1998, Tajikistan was admitted to the Customs Union of the Commonwealth of Independent States, a loose federation of former Soviet republics, whose members continue to dominate Tajik trade. Further afield, The Netherlands and the UK are important trading partners. In July 2001, Tajikistan acquired observer status at the World Trade Organisation.
Business: Tajikistan is looking for foreign investment in a number of sectors, particularly in aluminium processing, which needs extensive modernisation. Foreign businesses are not barred from any economic sphere: although land, livestock and mineral resources are owned by the Government, it is possible to lease them. Foreign concerns are allowed to participate in the privatisation programme. Foreign investments in certain priority areas, which are as yet undefined, are eligible for tax holidays – including import and export duties – although, in effect, each foreign investor negotiates his or her own terms and many are better than the standard laid down in law. All foreign investors must be registered with the Ministry of External Economic Affairs. Office hours: Mon-Fri 0800-1700.
Commercial Information: The following organisation can offer advice: Chamber of Commerce and Industry, ulitsa Mazayeva 21, 734012 Dushanbe (tel: (372) 279 519; fax: (372) 279 775). Information can also be obtained from the US Department of Commerce, Business Information Service for the Newly Independent States, USA Trade Center, Stop R-Binis, Ronald Reagan Building, 1401 Constitution Avenue, NW, Washington, DC 20230, USA (tel: (202) 482 4655; fax: (202) 482 2293; e-mail: bisnis@ita.doc.gov; website: www.bisnis.doc.gov).
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