Tajikistan Open for Business


July 2003 

by Philip H. de Leon

For several years, Tajikistan remained in the shadow of its larger, stabler, oil- and gas-rich neighbors in Central Asia: Kazakhstan, Turkmenistan, and Uzbekistan. A 1992–1997 civil war and later recovery and reconstruction, combined with the absence of a Tajik embassy in the United States and the temporary movement of the U.S. embassy in Tajikistan to Kazakhstan, complicated direct contacts between the United States and Tajik officials and entities. However, recent events, including the long-awaited opening of the embassy of Tajikistan in Washington, D.C., are paving the way to increased exchanges and collaboration with a country that has demonstrated a strong interest in developing a long-term strategic partnership with the United States.

 
Circumstances Improve

In the past 2-3 years, the political and economic situation in Tajikistan has stabilized significantly. The country has been actively fostering economic development via the transition to a market economy, privatization programs, and constitutional reforms, as well as creating conditions more conducive for investment. Several developments have raised the profile and improved the circumstances of Tajikistan, making it more attractive to foreign organizations and businesses. These developments include:

-      Real GDP increased by 10.2 percent in 2001, by 8.3 percent in 2002, and 6 percent growth is expected for 2003.

-      In December 2002, Tajikistan became a member of the World Bank’s Multilateral Investment Guarantee Agency (www.miga.org). MIGA promotes foreign direct investment flows in developing countries and guarantees foreign investors against non-commercial risks, such as transfer/inconvertibility, expropriation, war/civil disturbance, and breach of contract.

-      Also in December, Tajikistan President Rahmonov made an official visit to Washington, and in a joint statement with President Bush pledged to further develop the economic relationship between the United States and the Republic of Tajikistan.

-      In February 2003, the first ambassador of Tajikistan to the United States, Hamrokhon Zaripov, presented his credentials and, in March, the embassy of Tajikistan opened.

-      At a donor conference in May, representatives of governments and international agencies pledged $900 million in assistance to Tajikistan over the next three years, with two-thirds pledged in grants, to intensify partnerships in fighting poverty.

-      In June, Ambassador Zaripov gave a presentation, hosted by BISNIS, on the business climate in Tajikistan. He highlighted Tajikistan’s huge hydropower potential (it supplies 55 percent of the water for Central Asia), the country’s improved security situation, the greater accessibility to the country via new, regular flights from Europe, and the key role it could play in assisting in the reconstruction of Afghanistan (with which it shares a 750-mile border), through joint energy and irrigation projects. To see a video of this event, visit www.bisnis.doc.gov/av.

-      June 2003 also saw the launch of construction of a new U.S. chancellery in Dushanbe. In the meantime, embassy personnel, though formally resident in Almaty, Kazakhstan, are now primarily working out of Dushanbe.

-      For more information on recent developments in Tajikistan, visit BISNIS Online at http://bisnis.doc.gov/Tajikistan to view a June 2003 PowerPoint presentation by Djamoliddin Nuraliev, advisor to the executive director, the World Bank Group.

 
Opportunities for U.S. Companies

Multilateral financial institutions, such as the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB), the World Bank Group, and donor countries are implementing projects and providing financing in a number of sectors in Tajikistan. They remain, for the time being, the main source of financing for projects, as the local financial system is still weak and the private sector is unable to finance medium-sized and large-scale projects. The International Finance Corporation (IFC) provides technical assistance for capacity and institution-building, as well as managing programs for the development of SMEs through micro-finance, particularly in agribusiness sector, and financing for investment projects.

 

Some sectors worth considering are:

-      Telecommunications: With only 3.6 telephone lines per 100 inhabitants, much remains to be done. Wireless communications has good potential. Improved Internet services would help connect Tajikistan with the rest of the world. Air navigation equipment is also needed to upgrade several key airports.

-      Hydropower: Blessed with abundant rivers and mountains, Tajikistan has several hydropower projects, the largest being the 3,600 MW Rogun and the 700 MW Sangtuda plants.

-      Infrastructure: Road/runway repair and construction is another area that would greatly enhance Tajikistan’s accessibility and transit grid. The ADB is particularly active in road rehabilitation and infrastructure projects in the country.

-      Food processing: Food processing and packaging equipment would enable the country to make better use of its fruits and vegetables production, and export it. The ADB and other multilaterals have several projects aimed at improving this sector.

-      Cotton/textiles: Cotton is one of the major commodities produced in the country and one of its biggest exports. A Tajik-Italian-American joint venture to produce garments, financed in part by the IFC, is an example of achievements in this sector. The IFC is focusing part of its efforts in the country on improving agricultural production and processing. IFC’s pilot Farmers’ Ownership Model aims to alleviate the poverty of Tajik cotton farmers in Tajikistan by empowering them to take control of their commercial activities. The goal is achieved by establishing a private sector company completely owned by the farmers and providing technical assistance to farmers on improving the yields and quality of cotton produced, as well as diversifying the crop base.     

-      Tourism and eco-tourism: Tajikistan is 93 percent mountainous, with Somoni Peak in the Pamir Mountains reaching 24,591 feet, and is a unique destination for mountain climbers, trekkers, whitewater rafters, and nature lovers.

-      Financial sector: There is a lot of interest in developing micro-finance structures, and help is needed to restructure credit institutions and to establish an insurance system. EBRD has been active in this sphere.

-      Mining: Aluminum is the country’s main export, and large gold and silver deposits as well as uranium, mercury, zinc, antimony, and tungsten have potential for development. A major British-Tajik joint gold project is currently under way.

 
Joint ventures with European and Asian participation have also been established in Tajikistan for bottled water production, supermarkets, and other activities. However, many obstacles to investing and working in the country remain, including a lack of concerted regional cooperation in several spheres, severe transit and trade restrictions (non-tariff barriers such as import/export licenses and double taxation), and the weak financial system.

 
One potential method of initial exploration of the Tajik market is to monitor projects being implemented by multilateral development banks for procurement and consulting opportunities. To learn about country assistance strategies and opportunities, visit the Web sites of the ADB (www.adb.org/Tajikistan), EBRD (www.ebrd.com/country/index.htm), IFC (www.ifc.org/europe), and World Bank (www.worldbank.org).

 

New Embassy Opens

 

The embassy of Tajikistan can address economic questions, is ready to assist U.S. businesspeople interested in traveling to Tajikistan with logistics, and will expeditiously process visa requests.

Embassy of the Republic of Tajikistan

1005 New Hampshire Avenue, N.W., Washington D.C., 20037

Phone: 202-223-6090; Fax: 202-223-6091

email: tajikistan@verizon.net
tjusconsulate@verizon.net (Consular section)

URL: www.tjus.org

The Embassy is open from 09.00 am to 06.00 pm, Monday-Friday.

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