Tajikistan - Market ChallengesTajikistan-Market-Challenges
Tajikistan has mountainous, land-locked terrain bordering China, Afghanistan, Uzbekistan, and Kyrgyzstan. The most accessible sea ports are located in Poti (Georgia), and Riga (Latvia). Geographically closer ports in Bandar Abbas and Gabahar (Iran) and Karachi (Pakistan) are difficult for Tajikistan to use due to sanctions against Iran and the lack of a transit trade agreement with Pakistan and Afghanistan. Instability in Afghanistan adds to high risks for transit of cargo from Pakistani seaports but some local businesses and distributors use Karachi ports and pay informal fees to groups controlling different parts of Afghanistan.
Tajikistan has non-transparent, cumbersome and predatory customs and tax administration. The Tajik government heavily invested in road infrastructure through state guaranteed loans from China and ADB funded projects, but it still needs major investments to upgrade transportation infrastructure in the regions, including railroads and airports, and there are certain geographical and security difficulties accessing markets in Tajikistan and neighboring states. Conducting business may be complicated by cumbersome standardization and certification regulations, poor consumer and business purchasing power, an unpredictable investment climate, underdeveloped and small banking and insurance sectors, currency fluctuations, potential liquidity concerns, and difficulty obtaining domestic loans. Interpretation of laws and regulations by local officials may be different from the centrally approved legislation, especially in the areas of taxation, collection of revenues, application of fees and penalties and customs procedures. Tax policy has a predatory nature.
The Tajik government has shown a general preference for state-led loans and investments, mainly from China and lacks experience dealing with private businesses and investment. Economic reforms in Tajikistan are often initiated by the donor community and poorly implemented by the Tajik government.
Tajikistan identified in its 2030 National Development Strategy the need to shift from an agricultural economy to an industrial economy, but this will be difficult to achieve. Tajikistan is not a member of Eurasian Economic Union (EEU), which was established on January 1, 2015 between Belarus, Kazakhstan, Armenia and Russian Federation. Competition for some U.S. goods and services comes primarily from China and to a lesser extent Russia. While Russia is the main import partner for Tajikistan, China is the major investor and lender to the Tajik economy. Corruption remains widespread on all levels of government despite the government’s anti-corruption activities. Tajikistan ranked 161 out 180 countries in Transparency International’s Corruption Perceptions Index for 2017
(https://www.transparency.org/news/feature/corruption_perceptions_index_2017).
The National Bank of Tajikistan provides national currency floating regime and devalued the national currency (Somon) in 2017 by 11.7 per cent to the U.S. dollar and 20 per cent to Russian ruble. Recent substantial devaluation of national currency Somoni happened in 2014-2015 by almost 30 per cent to a dollar as the aftermath of crisis in Russia from where Tajik labor migrants mostly work and send money back home.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
Tajikistan has non-transparent, cumbersome and predatory customs and tax administration. The Tajik government heavily invested in road infrastructure through state guaranteed loans from China and ADB funded projects, but it still needs major investments to upgrade transportation infrastructure in the regions, including railroads and airports, and there are certain geographical and security difficulties accessing markets in Tajikistan and neighboring states. Conducting business may be complicated by cumbersome standardization and certification regulations, poor consumer and business purchasing power, an unpredictable investment climate, underdeveloped and small banking and insurance sectors, currency fluctuations, potential liquidity concerns, and difficulty obtaining domestic loans. Interpretation of laws and regulations by local officials may be different from the centrally approved legislation, especially in the areas of taxation, collection of revenues, application of fees and penalties and customs procedures. Tax policy has a predatory nature.
The Tajik government has shown a general preference for state-led loans and investments, mainly from China and lacks experience dealing with private businesses and investment. Economic reforms in Tajikistan are often initiated by the donor community and poorly implemented by the Tajik government.
Tajikistan identified in its 2030 National Development Strategy the need to shift from an agricultural economy to an industrial economy, but this will be difficult to achieve. Tajikistan is not a member of Eurasian Economic Union (EEU), which was established on January 1, 2015 between Belarus, Kazakhstan, Armenia and Russian Federation. Competition for some U.S. goods and services comes primarily from China and to a lesser extent Russia. While Russia is the main import partner for Tajikistan, China is the major investor and lender to the Tajik economy. Corruption remains widespread on all levels of government despite the government’s anti-corruption activities. Tajikistan ranked 161 out 180 countries in Transparency International’s Corruption Perceptions Index for 2017
(https://www.transparency.org/news/feature/corruption_perceptions_index_2017).
The National Bank of Tajikistan provides national currency floating regime and devalued the national currency (Somon) in 2017 by 11.7 per cent to the U.S. dollar and 20 per cent to Russian ruble. Recent substantial devaluation of national currency Somoni happened in 2014-2015 by almost 30 per cent to a dollar as the aftermath of crisis in Russia from where Tajik labor migrants mostly work and send money back home.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.