Tajikistan announces moratorium on business inspections

KHUDZHAND – A recently announced Tajik moratorium on inspections of businesses could increase business development and foreign investment. President Emomali Rakhmon ordered the three-year suspension, to begin October 1.

The goal is to “increase manufacturing, attract investment, import the latest manufacturing equipment and technology, create new manufacturing capacities and jobs, and gradually increase the volume of goods produced domestically,” a presidential statement said.

The moratorium should give new impetus to development of entrepreneurship, Sharif Said, head of Tajikistan’s Chamber of Commerce and Trade, said.

“This initiative will help create the basics of a favourable business and investment climate, support and develop corporate ties and eventually expand the geographic space for (business) co-operation,” he said.

The government enacted a similar moratorium on July 25, 2008, for two years.

Moratorium to attract investments

Investments in Sughd Oblast have declined in recent years, said Latofat Rakhimova of the oblast’s Investments and State Property Management Department.

“This year most of the investment has been by the government (state participation in projects implemented jointly with international donors and in capital construction programmes). … These investments have decreased from US $246.7m (1.2 billion TJS) in 2009 … to US $82.9m (393m TJS) this year,” she said.

“Despite this general slide, however, investments in innovative technology have grown,” Rakhimova said. “The latest moratorium may give them a further boost. Sughd Oblast has developed a total of 134 investment projects worth an estimated US $338m (1.6 billion TJS), which have been proposed for inclusion in the 2012−2014 Programme of State Investments, Grants and Capital Construction.”

Delight among business owners

The moratorium should have a positive effect on work at his company, Anvar Razykov, deputy director of the Poyafzolduzi Huchand shoe factory in Khudzhand, said.

“Of course, any inspection creates a nervous mood,” he said. “You have to collect documents and go to different agencies, which take time and effort. With the moratorium in place, we’ll feel much calmer.”

Sobyr Mamadzhonov, a dairy producer from Khatlon Oblast, has spent 18 months negotiating with a potential Turkish investor.

“I have the money and desire to expand, and there’s a foreign investor,” he said. “But our negotiations were prolonged for so long because he feared our numerous inspections and our corrupt practices – that’s not business; that’s constant stress! He was quite glad to learn about the latest moratorium, and our prospects for working (together) look wonderful now.”

Last moratorium’s results seen as encouraging

Nationwide, the volume of foreign investments has fallen during the past year, Mirzokhon Sharifov, economics lecturer at Tajik National University, said.

“We’re talking about direct business investments, which have decreased nearly 20%,” he said. “I think that’s why the government decided to declare the moratorium again; the previous one helped cause a 25−30% growth in investments and new jobs.”

The previous moratorium also “enabled different oversight agencies to reduce their ‘army’ of inspectors,” economist Bakhriddin Karimov said.

“(It) brought substantial dividends (more than 500m TJS [US $105m]) into the state budget, but most important, it increased the number of owners of small- and medium-sized enterprises,” Sharifov said.

This year alone, the number of small-business owners in Sughd Oblast has grown 20% (or by more than 9,000), Rakhimova said. Taxes on businesses yield TJS 398m (US $84m) (24% of the oblast’s yearly budget), she said.