Robust private sector is an important engine of economic growth and development. In order to succeed in the modern world, governments not only focus on macroeconomic conditions, but also pay attention to the laws, regulations and institutional arrangements that shape daily economic activity. The World Bank and IFC’s “Doing Business” report, launched 7 years ago, measures and compares the regulations applying to the domestic small and medium-size businesses against the 10 specific indicators, now in 181 countries of the world.

On September 17th 2008, the World Bank, the International Finance Corporation and the State Committee for Investments and State Property Management of the Republic of Tajikistan held a presentation of the“Doing Business 2009” report and discussed in more detail the ratings of Tajikistan on various indicators of business regulation, and the future reforms to make the business environment in Tajikistan easier and more conducive for operation of private companies. 

The event brought together over 60 participants representing the Tajik Government, businesses,   donor organizations, civil society, academia and mass media. Presenters at the event included Ms. Chiara Bronchi, the World Bank Country Manager for Tajikistan, Ms. Wendy Werner, Project Manager for the IFC Business Enabling Environment Project, Mr. Farrukh Khamraliev, Chairman of the State Committee for Investments and State Property Management and Mr. Sherali Zardov, Head of the Investment Council Secretariat under the President of Tajikistan.

On the overall ease of doing business, Tajikistan ranked 159 out of 181 countries covered by the report this year. It means an overall decrease by 3 points as compared to the last year. Nonetheless, looking by individual indicators, there was one positive reform which was an enactment of the Joint Stock Companies Act that enhanced investor protections by requiring that transactions between interested parties be approved by a shareholders meeting at which interested directors cannot vote. This reform made Tajikistan jump by 29 points from 179 to 150 place on the indicator of protecting investors.

For the past several years, the Government of Tajikistan has taken a number of important steps to improve the business environment and investment climate. With more focus on implementation and impact over the coming year, it is expected that Tajikistan can improve its overall investment climate and its Doing Business rankings.  Mr. Farrukh Khamraliev, Chairman  of the State Committee for Investments and State Property Management, highlighted the commitment of the government to achieve concrete improvements over the coming months.  The Investment Council, an advisory group to the President of Tajikistan, will approve an action plan for improvement of Doing Business indicators in the meeting in October, commented Sherali Zardov, Head of the Secretariat of the Investment Council.

This table provides ratings on each indicator of doing Business in Tajikistan and gives comparisons to the last year:

Reportedly, there was one negative change in Tajikistan’s business environment during the last year: administrative backlogs in obtaining location permits added 160 days to the overall time for dealing with construction permits. Ratings on this indicator, as well as the indicator of starting a business, the Tajik Government has found disputable and called for the Doing Business team to review again the procedures pertaining to these indicators and reconsider the ratings.

To make the conditions more favorable and attractive for Tajiks to embark and succeed in private business and improve the Doing Business ranking for 2010, it is paramount to undertake collective and concerted efforts to ensure that reforms speed up, are implemented efficiently, and consider the needs and interests of the private sector and Tajikistan economy in the first place. As Wendy Werner of IFC has stated, “acceleration of reforms” is the right term for what needs to be done in Tajikistan. A lot of work is already ongoing, including the establishment of the “one-stop-shop” for business registration, improvement of legislation regulating the private sector and moratorium introduced on state inspections of small and medium enterprises.

The World Bank and IFC had proposed the Government to prioritize and make an immediate focus on three to four areas of reforms that can be in place relatively soon. These will include: starting a business, protecting investors, construction permits and licenses, and getting a credit.  

Kyrgyz Republic has been named one of the top reformers globally and regionally this year. Due to the so called “100 days of Reform Program”, the Kyrgyz Republic made it to 68 place from 99 last year.  It was able to strengthened investor protections through
legal amendments allowing minority investors to take legal actions as shareholders, set up the new one-stop shop which made it easier to start a business by streamlining and
simplifying business registration processes and eliminating certain requirements such as proof of residence. Obtaining a company seal became optional for companies and dealing with construction permits also became easier in Kyrgyz Republic.

As Olga Moreva of USAID Project has indicated based on her recent experience in Kyrgyz Republic, all the reforms there were implemented virtually within two months. It demonstrates that positive change is possible in a place where good political will is in place to create incentives and favorable conditions for private sector, which is ultimately going to benefit the economy and ordinary people.

Closing the meeting, Mr. Khamraliev reiterated strong commitment and determination of the Government of Tajikistan on the highest level to carry out positive reforms in the private sector development and improve Tajikistan’s ranking in the Doing Business.

For more information on Doing Business, please check this website: http://www.doingbusiness.org