Minutes of the first meeting of the Consultative Council on improvement of investment climate under the President of the Republic of Tajikistan
(dated July 31, 2008)

Chairman

President of the Republic of Tajikistan E. Rahmon

Members:

Prime-Minister of the Republic of Tajikistan- O.Okilov

Chairman, State Committee on Investments

and State Property Management of the Republic of Tajikistan- F. Khamraliev

Deputy Head of the EBRD Country Office - B. Faiziev

Director, United States Agency on
International Cooperation (USAID) in Tajikistan - C. Bryan

Director General of the LLC "Rukhom" - M. Mukhabbatov

Chairman of the Board of the National Association

of Small and Medium Enterprises - M. Uljabaeva

President, «Tethys Tajikistan Limited» - D. Robson

Head of Secretariat of the Consultative Council - Sh. Zardov

Participants:

EBRD Director on the Central Asian Region - M. Honma

Deputy Director, United States Agency on

International Cooperation (USAID) in Tajikistan - S. Kelly

In the opening speech at the first meeting of the Consultative Council, the President of the Republic of Tajikistan set forth the goals and objectives of the Consultative Council.

In particular, the President of the Republic of Tajikistan noted that the activities of the Council will be focused on the resolution of issues pertaining to the improvement of the business environment and investment climate, and that the establishment of this Council is an important and practical step in building a constructive dialogue between the government and businesses. The President has expressed hopes that the efforts of the Consultative Council will yield in positive results to support businesses.

The President emphasized the contribution of the European Bank for Reconstruction and Development and the Government of the Republic of Tajikistan in the arrangement and provision of technical assistance to the working organ of the Consultative Council - the Secretariat of the Council.

The President proposed to hold the meeting of the Council in a businesslike and informal atmosphere and jointly formulate specific recommendations of normative and organizational nature in order to improve the investment climate and business environment in the country.

The head of the state emphasized the important role of the Secretariat of the Council in the preparation to the meeting of the Consultative Council and its responsibility for informing the business community on the decisions of the Council, as well as for the efficient monitoring of the implementation of recommendations and decisions of the Council.

The President charged the Executive Secretary and the Head of the Secretariat with the responsibility for ensuring active participation of business associations and private sector representatives in joint working meetings, as well as for the arrangement and holding of press-conferences in order the to inform the results of the Council meetings for the wider audience with the participation of all stakeholders.

The head of the state committed to discuss the issues pertaining to entrepreneurial activities causing major concerns with the representatives of business structures, domestic and foreign investors.

In conclusion, the President expressed a hope that the Council activities will result in specific decisions that will entail pivotal improvements of the business environment and the overall investment climate.

The Executive Secretary of Council proposed the members of the Council to consider the following organizational issues pertaining to the functions of the Consultative Council:

- approval of the structure and procedural issues of the Council;
- consideration and approval of the Regulations of the Council Secretariat;
- approval of the appointment of the Head of the Secretariat;
- issues pertaining to the election and approval of non-permanent members of the Council, as well as approval of the rotation of non-permanent members of the Council from business structures and donor organizations.

In particular, regarding the structure and procedures, the Executive Secretary of the Council considered the structure and composition of the Council, regulations of the Council, working language of the Council meetings and organizational issues, including preparation of the Council meetings, and monitoring the results of its activities.

Considering the regulations of the Council, the Executive Secretary noted that the work of the council will be arranged in the form of quarterly meetings, each no longer than 1,5 - 2 hours. Meetings of the Council shall be considered legitimate if two thirds of members are present; decisions are taken by the majority of votes and drafted in the form of minutes with proposals or recommendations to the President, the Government, and other government bodies.

Russian language is proposed as a working language, taking into account participation of the representation of the Council members - business structures, foreign investors and international donor organizations, as well as participation of high level officials of international financial institutions, as well as for the purpose of quality translation.

Regarding organizational issues, the Executive Secretary noted that in its work, the Consultative Council shall be supported by the permanent body of the Council, which is the Secretariat providing organizational, methodology and technical support.

Further, the Secretary of the Council submitted the Regulations for the Consultative Council Secretariat to the participants of the meeting for consideration and further approval.

Regarding the approval of the appointment of the Head for Consultative Council Secretariat, the Executive Secretary of the Council read the information on the competitive selection of candidates to the positions of the Head of the Council Secretariat in accordance with the Procedures of the European Bank for Reconstruction and Development, which resulted in selecting Mr. Sh. Zardov. Based on the procedures, the Head of the Secretariat of the Council must be approved by the decision of the Consultative Council.

Regarding the selection and approval of the non-permanent members of the Consultative Council from among the domestic business structures and foreign investors, the Executive Secretary emphasized that candidates to the Consultative Council from business structures of the Republic of Tajikistan were delegated based on applications by business associations and private entrepreneurs of the Republic of Tajikistan; candidates to the Consultative Council representing foreign investors were delegated based on individual suggestions out of the number of foreign investors involved in major investment projects in priority sectors of national economy of the Republic of Tajikistan; candidates to the Consultative Council from international donor organizations were delegated based on coordination between bilateral and multilateral donor organizations operating in the Republic of Tajikistan.

Based on stipulated procedures, out of total number of candidates the Council Secretary has recommended to include following candidates for the first three sessions of the Council:

From business structures:

Muhabatov, Mufarrakh- General Director of RUHOM LTD - to take part in the first and second sessions of the Council.

From business association:

Matluba Uljabaeva (Board Director of the National Association of small and medium business) - to take part in the first three sessions of the Council;

From foreign investors:

David Robson (President, Board Chairman of « Tethys Petroleum» group) - to take part in the first and second sessions;

Aurelia Lovisa Beem (General Director of «Diplomatix») to take part in third session of the Council.

From bilateral and unilateral donor agencies:

Matthew Le Blan - resident representative of EBRD Regional Office.

Caroline Brian - USAID Director in Tajikistan.

Executive Secretary emphasized that in compliance with the Regulations of the Consultative Council on improving investment climate under the President of the Republic of Tajikistan, head of the Secretariat is also a Council member.

Rotation technique of members of Consultative Council

In order to ensure democratic, open and transparent approach in the work of the consultative Council, the Regulation of the Consultative Council shall envisage a non-permanent member rotation procedure that is to be endorsed by the Council. Executive Secretary hence has suggested following non-permanent member rotation approach:

1. 16 candidates by business associations.
2. 16 candidates by private sector.
3. 6 candidates by major investors
4. During the first session will be selected one representative of business association, one representative of private sector and one of foreign investors that shall be approved as Council members with the voting rights.
5. One foreign and one local investor will rotate every two-three sessions. One representative of business association will rotate every three sessions
6. Selected representative of multilateral international donor agencies will rotate every next year.
7. Selected representative of bilateral donor organizations will rotate depending on the issue to be discussed at the Council sessions

Pursuant to the selection procedure, candidates to the Council shall be approved by the Council members representing public authorities and international donor agencies

Council sessions can involve other candidates from business associations, business structures, foreign investors and donor agencies in capacity of observers without voting right.

In conclusion, the Secretary of the Council proposed the following, through voting:

1. approve the structure and organizational and procedural matters pertaining to the Council's activities;
2. approve the Regulations of the Council Secretariat;
3. approve the appointment of the Head of the Council Secretariat;
4. approve nominations of the three selected representatives of business structures and foreign investors as members of the Consultative Council;
5. approve the submitted scheme for the rotation of non-permanent members of the Council.

The Secretary also suggested confirming all decisions taken by the Council in the Minutes of the First Council Meeting.

In the introductory part of his speech, Mr. Honma congratulated all the participants of the first meeting of the Council, which will focus on the development of the private sector and attraction of foreign direct investments.

Mr. Honma noted that the EBRD provided technical assistance in the establishment of similar councils in Kyrgyzstan, Armenia and Mongolia, whose experience showed their usefulness for the establishment of a dialogue between the government and the business community and for the reforms enhancing development of the private sector. Mr. Honma emphasized that for the effectiveness of the Council it is important to let the Council members realize that the Council will become a venue for open exchange of views on urgent issues.

On behalf of the EBRD as one of the largest private sector investors in Tajikistan, the reporter supported the new initiative of the Government on the announcement of a standstill agreement on the inspections of small and medium businesses, which will become a reliable foundation for the development of entrepreneurial activities, and its implementation will facilitate creation of jobs and improve attractiveness of the country in terms of improving the business environment.

Mr. Honma expects that the Consultative Council will become a peculiar forum, where we can resolve various problems related to the doing business improvement in Tajikistan. Based on the experience of the neighbor countries, the speaker proposed to the participants of the meeting to consider such issues as reduction of administrative and bureaucratic barriers, simplification of licensing procedures, facilitation of tourism and simplification of export-import procedures, and what is also important, improvement of the country's indicators in international ratings in order to increase the flow of foreign direct investments in the economy of Tajikistan.

To conclude, Mr. Honma appealed to the participants to maintain dynamic pace of the Council meetings and include new issues in the agenda of further meetings, as well as conduct monitoring of previous meetings' decisions.
Speakers were also encouraged to use the capacity of the Secretariat supported directly by the donors and business structures for holding possible preliminary consultations and information of the whole business community of the country on the results of the activities of the Consultative Council.

Summarizing the speech of the EBRD Director for Central Asia Mr. Honma, the President of the Republic of Tajikistan emphasized the role of the EBRD in supporting and developing private sector of Tajikistan through increased financing of commercial projects.

The head of the state appealed to the participants of the Council to merge efforts of donors, with direct support from the EBRD and other international financial institutions, to develop a common approach for supporting private sector development in Tajikistan.

During the discussion of the agenda for the second meeting of the Consultative Council, the President of RT noted that based on the results of meetings and round table discussions with the business community, donor organizations, domestic and foreign companies arranged by the Secretariat, 35 proposals were presented on issues causing concern such as government regulation of entrepreneurial activities in Tajikistan for the consideration of the Consultative Council.

The President of RT suggested that the participants select one of two first priority issues of the four priorities presented below to include in the agenda of the second Council meeting:

- improvement of the licensing regulatory system in Tajikistan;
- simplifying the procedures of state registration of legal entities through introduction of a one stop shop system;
- simplifying export-import transactions;
- improvement and optimizing government regulation of entrepreneurship in the Republic of Tajikistan.

The Prime Minister of the Republic of Tajikistan Mr. Okilov suggested that the first issue on the improvement of the licensing regulatory system in Tajikistan should be included in the agenda of the second meeting. This proposal was supported by all the Council members.

Ms. M. Uljabaeva spoke in continuation. She thanked the President for the moratorium on all types of inspections of small and medium enterprises for two years. She emphasized that representatives of the business associations recognize credit and support to the entrepreneurs of the country and that regardless of the moratorium entrepreneurs will meet their obligations and ensure rigid implementation of the legal provisions.

On behalf of all business associations Ms. M. Uljabaeva committed to assist the constructive dialogue and cooperation between the government bodies and business community.

When making proposals for the agenda of the second meeting on the improvement of the international investment rating of the country Ms. Uljabaeva noted that Tajikistan possesses tremendous reserves, and given implementation of a specific plan of actions on only 4-5 indicators, as was suggested by the State Committee on Investments and State Property Management of the Republic of Tajikistan, our country will be able to improve its rating significantly by 2010, and considerably improve business environment. At that, she emphasized that reforms will not require significant financial resources, and that the Government will have to undertake legislative initiatives for the reduction of bureaucratic barriers and ensure their timely implementation.

Concerning the issue of registration based on the "one stop shop" principle, it was suggested to complete consideration of the second issue prior to the second meeting in order to start its implementation from 2009. It was also stressed that the business community of the country is committed to active participation in the development and implementation of this principle.

Regarding the complexity of obtaining licenses and permits for entrepreneurial activities, it was noted that in their day-to-day activities they have to go through conformance, approval and permission procedures in 10 various agencies in average. To resolve this issue, it was proposed to apply the same "one stop shop" principle and propose it for extended discussion at further Council meetings.

After Ms. Uljabaeva, the President of the Country and participants of the meeting offered to support proposals on the improvement of international ratings of Tajikistan.

Further, the Council members listened to the representative of foreign investors Mr. D. Robson. The reporter noted that foreign investors face one major problem, which is lack of information on Tajikistan, investment opportunities, and business environment.

On behalf of foreign investors, D-r Robson offered the Government of the Republic of Tajikistan to undertake steps to organize and hold public relations campaign for the improvement of Tajikistan's investment image. In particular, to avoid garbled information on Tajikistan from unofficial sources, it was proposed to consider creation of official sources of information for investors on current regulations, investment opportunities and specific steps undertaken by the Government to improve regulation of investment processes and other important issues.

Mr. M. Muhabatov approached the members of the Council on behalf of the local entrepreneurs with a proposal to include legislative reforms pertaining to the issue of licenses for the development and extraction of minerals in Tajikistan.

At the completion of the discussion and approval of the agenda for the second and further meetings of the Council, the President of the Republic of Tajikistan emphasized the need of regular meetings. It was also proposed to take into account the fact the ministries and international organizations have already contributed to the issues related to improvement of investment climate and business environment, which will be finalized and included in the agenda.

Decisions of the first meeting of the Consultative Committee on improvement of the investment climate under the President of the Republic of Tajikistan

Based on the results of the first meeting of the Consultative Council on the improvement of the investment climate under the President of the Republic of Tajikistan issued the following decisions:

1. Approve the nominations of the business structures representatives and foreign investors as members of the Consultative Council:

Representatives of business structures:

Mufarakh Muhabatov - Director General of the LLC "Rukhom" for the participation in the first and second meetings of the Council.

Business associations of the country:

Matluba Uljabaeva (Chairman of the Board of the National Association of Small and Medium Enterprises) - for the participation in the first three meetings of the Council.

Foreign investors:

David Robson (President, Chairman of the Board of the "Tethys Petroleum" group of companies) for the participation in the first and second meetings of the Council.

Aurelia Lovisa Beem (Director General "Diplomatix") to participate in the third meeting of the Council.

From multilateral and bilateral donor organizations:

Mathew le Blan - Head of Office, Regional Office of the European Bank of Reconstruction and Development.

Caroline Bryan - Director, USAID office in Tajikistan.

2. Approve the proposed rotation scheme of non-regular members of the Consultative Council representing local business structures and foreign investors.

3. Approve the Regulation of the Secretariat of the Consultative Council.

4. Approve Sherali Zardov as the Head of the Consultative Council Secretariat.

5. Approve the topic for the agenda of the second meeting of the Consultative Council - improvement of the licensing and regulation system of the Republic of Tajikistan.

6. The Government of the Republic of Tajikistan:
- within one month to establish a permanent interagency working group with the involvement of the business community and foreign donors for effective and timely implementation of the two-year moratorium on inspection of the small and medium enterprises. During the moratorium this working group shall draft recommendations for the improvement of normative and legal acts regulating issues pertaining to the inspections of economic entities;
- within six months to submit a list of normative legal acts subject to immediate abolishment to the President of the Republic of Tajikistan given justification of their inexpedience;
- within three months to work out draft normative legal acts aimed at the protection of property rights of entrepreneurs and foreign investors, and submit them to the Government of the Republic of Tajikistan for consideration.

7. The Ministry of Justice of the Republic of Tajikistan, jointly with other ministries and departments, within 12 (twelve) months to inventory and evaluate all current normative and legal acts impeding doing business and entrepreneurial activities and present progress reports at the Council meetings.

8. The State Committee on Investments and State Property Management of the Republic of Tajikistan within 2 (two) months shall draft a plan of actions of the Government of RT for the implementation of specific measures aimed at the improvement of Tajikistan's indicators in international ratings with the following presentation of the progress report at the second meeting of the Council.

9. Instruct the Head of the Secretariat to prepare and submit analytical information on the current projects of international financial institutions for business development and improvement of investment environment in Tajikistan.

Chairman of the State Investments and State Property
Management Committee of the Republic of Tajikistan - F. Khamraliev

Head of the Secretariat of the
Consultative Council on Improving Investment Climate
under the President of the Republic of Tajikistan - Sh. Zardov