Minutes of the third meeting of the Consultative Council on improvement of investment climate under the President of the Republic of Tajikistan
(dated 18 June, 2009)

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

Head of the EBRD Country Office M. Le Blan

Acting Director, United States Agency on International Cooperation (USAID) in Tajikistan - K. Dean

Chairman of the Board of the National Association of Small and Medium Enterprises - M. Uljabaeva

Chairman of the Association of Producers and Entrepreneurs Z. Saidov

Chairman of the Union of Entrepreneurs andExporters of Tajikistan N. Zabirov

Chairman of the Association of Banks of Tajikistan I. Lalbekov

President, «Tethys Tajikistan Limited» D. Robson

Head of Secretariat of the Consultative Council Sh. Zardov

Invitees:

State Advisor to the President of the Republic of Tajikistanon Economic Policy M. Davlatov

EBRD Director in Central Asia, M. Khonma

Project Manager, BEE Project in Tajikistan W. Werner

ADB Deputy Country Director Jiji Takeshi

World Bank’s Country Manager Chiara Bronchi

The meeting was opened by the Chairman of the Council – the President of the Republic of Tajikistan, Emomali Rakhmon, who addressed all of the participants with the welcome message and introduced special guests and new members of the Council representing the non-government sector (please, see Table on page 12).

Heads of responsible ministries and agencies (such as SCISPM RT, Tax Committee, Agency on Construction and Architecture) spoke on the first item of the agenda, and indicated that all of the decisions made during the previous meeting have been implemented, that is:

- adoption of the Presidential Decree of the Republic of Tajikistan “On reforming permit system in the Republic of Tajikistan” and “On measures to improve administrative procedures to carry out construction activities in the Republic of Tajikistan”.

- Adoption of the Law of the Republic of Tajikistan “On state registration of legal persons and individual entrepreneurs”, introduction of amendments to the Laws of the Republic of Tajikistan “On Insolvency (Bankruptcy)” and “On Joint Stock Companies”.

- regarding the implementation of the Presidential Decree of the Republic of Tajikistan “On measures to improve administrative procedures to carry out construction activities in the Republic of Tajikistan”, the Government has established new and simplified “Order of following administrative procedures to carry out construction activities” (Resolution of the Government of RT, dated May 6, 2009, N#282) and ”Plan to improve normative legal acts in the construction sector” (Resolution of the Government of RT, dated June 11, 2009, N#338).

- regarding the implementation of the Presidential Decree of the Republic of Tajikistan “On reforming permit system in the Republic of Tajikistan”, the Government has established the commission to work on the improvement of normative legal acts regulating issuance of permit documents to business entities, and its Regulations and Guidelines on improvement of normative legal acts have been approved.

- regarding the implementation of the adopted Law of the Republic of Tajikistan “On state registration of legal entities and individual entrepreneurs”, the Tax Committee has completed some preparatory activities (trainings for the specialists of the Committee, purchase of equipment for the registration offices with the EC funds). The Committee also has plans to conduct a series of workshops for the entrepreneurs.

The speakers emphasized that despite the positive progress of the implementation of the Council’s decisions, the Decisions taken by the Council have not been always supported by the sectoral agencies.

According to the agenda, the second and the major item was the approval of “Improving Business Environment - 200 days of Reforms” Draft Programme”. In general, the Programme provides for the improvement and simplification of administrative procedures based on the “One Stop Shop” principle to register businesses, to obtain licenses, to issue permits and to carry out foreign trade operations.

The President of the Republic of Tajikistan was quite supportive towards the proposed Programme, and referred to its measures as timely, necessary and aimed to simplify the procedures for doing business; and has commissioned the Government to review it fully by the end of June and to adopt for implementation.

According to the opinion of the Council’s members, if administrative procedures would be streamlined it will facilitate improvement of business climate, expansion of investments’ volume and increase in the overall efficiency of economic activities throughout the Republic.

The EBRD Director on Central Asian countries, Mr. M. Khonma, and the President of the Company «Tethys Tajikistan Limited», Dr. Robson, shared their views on the third item of the agenda.

The speakers have expressed their satisfaction with the process of investment climate’ improvement in Tajikistan, under personal supervision of the President of the country, Emomali Rahmon. In the same time, it was noted that the volume of foreign investments attracted to Tajikistan, is very small compared to other countries.

Mr. Khonma gave some data on five countries, such as Armenia, Georgia, Uzbekistan and Kyrgyzstan, just as an example.

For comparison sake, when $180 mln. was attracted to Tajikistan in 2008, the same figure for Armenia amounted to $500 mln.

In his speech, Mr. Khonma has recommended to the Government of the country to undertake additional measures on improvement of investment climate. To enhance the international ranking of the Republic and to create favorable investment environment, one of the major issues to be tackled here is elimination of all existing administrative barriers, including corruption in state agencies.

«Foreign investors are interested in such legal environment where all entrepreneurs with no exceptions possess equal rights, regardless of the intentions some officials might express” – indicated Mr. Khonma.

He also stressed the importance of building the investment policy upon mutually beneficial cooperation between an investor and a state. The speaker has directed the attention of the attendees to the need to settle matters related to the privatization of specially large-size state enterprises, including OJSC “Tajiktelecom”, SUE “Tajikcement” and “Tajikgaz”. Mr.Khonma believes that the privatization will result in the increased interest of foreign investors and will positively impact the investment climate in the country.

With regard to supporting and developing business environment, Mr.Khonma has informed the Council’s members on EBRD’ intention to increase funding for business projects by 2-3 times.

When speaking, Dr. Robson has touched upon issues of investors’ access to the country, where direct flights from the world’s economy centers would play an important role. He expressed some kind of disappointment due to the existing visa regime which lately turned to be more burdensome and costly compared to other Central Asian countries. For instance, in order to obtain Tajik visa, foreign citizens pay 145 pounds and wait for 7-9 days; in the same time, visa to Kazakhstan only costs 40 pounds and can be obtained in just 2 days time.

Mr. Khonma supported Dr. Robson in this regard, and recommended to the Government to consider adoption of simplified visa regime for citizens of USA, Europe and Japan.

The President of the Republic of Tajikistan, Emomali Rakhmon, has informed the participants of the discussion on commencement of several direct flights from Dushanbe to Europe, and assured the investors that the work will continue in this direction. In this regard, the President of the country has instructed the responsible ministries (Ministry of economic development and trade and SCISPM RT), present at the meeting, to prepare their proposals on how to eliminate the barriers at the entry points, and on simplification of visa regime.

Having asked the Council’s members to pay attention to the proposed measures under the “Improving Business Environment – 200 days of reforms” Programme, Dr. Robson has indicated his support to the intentions of the government of Tajikistan to join Hague and New-York Conventions. According to the words of Dr. Robson, joining these conventions will initiate positive response from the investors and will become an important step to improve the international image of the Republic.

On behalf of foreign investors, Mr. Robson positively evaluated the performance of the Council, and indicated that efficiency of the Council demonstrates to the investors the seriousness of Government’s intentions regarding implementation of the reforms in coordination with representatives from business and donor community.

In response to the message conveyed by the representative of foreign investors, the President of the country has emphasized the need to concentrate upon the qualitative implementation of the elaborated reforms.

In particular, the Chairman of the Council said:”Today, unless specific administrative and regulatory reforms in the area of entrepreneurship are implemented, it will not be possible to create sustainable investment climate in the country”. In this regard, the Government of the Republic of Tajikistan, and each of its structures individually, should aim their main efforts to reduce unnecessary administrative procedures which are withholding business development. Major objective of the state at the current new stage of development is to unite the society around undergoing reforms designed to further increase and improve living standards of the country’s population”.

The President of the Republic of Tajikistan was speaking about promotion of reforms and recognized the important role of the Council in it, which has more capacity to develop and to promote reforms for the improvement of business environment in coordination with all stakeholders.

During his speech, the President has directed the attention of the participants to a weak agribusiness development in the country and stated that international projects do not pay sufficient attention to this specific sector of the economy.

Touching upon international projects’ activities in the area of business enabling environment, the President Emomali Rakhmon, suggested for the next meetings of the Council to listen to reports from the international projects about their activities on supporting the ongoing reforms, along with the reports from responsible ministries and agencies on progress of implementation of the Council’s decisions. Responsible structures have been commissioned to notify the relevant organizations about this initiative.

Regarding organizational issues of the Council’s activities, the President of the Republic of Tajikistan has supported the recommendation of some members of the Council to increase the number of participants for the Council’s meetings, and to include representatives from business-structures.

In addition, the President of the Republic of Tajikistan has commissioned the responsible ministries and agencies to build active cooperation relationships with businesses.

In the end of the session, the President of the Republic of Tajikistan, Emomali Rakhmon, expressed his satisfaction with the outcomes of the meeting. In the President’s opinion, there was a very useful exchange of views on issues relevant to entrepreneurs and investors today.

BRIEF SUMMARY OF THE COUNCIL’S DECISIONS

As the outcome of the meeting, the Council’s members have:

1. Approved candidacies of new Council’s members representing non-public sector – the Chairman of the Union of Entrepreneurs and Exporters of Tajikistan, N. Zabirov, the Chairman of the Association of Banks of Tajikistan, I. Lalbekov, and the Chairman of the Association of Producers and Entrepreneurs, Z. Saidov;

2. In general, positively evaluated the status of implementation of decisions made during the second meeting of the Consultative Council on Improvement of Investment Climate under the President of the Republic of Tajikistan ;

3. Approved “Improving Business Environment - 200 days of Reforms” Draft Programme;

4. Recommended to governmental bodies to reinforce implementation, as well as supervision over implementation, of decisions taken by the Council on the basis of holding regular working meetings and discussions with the concerned ministries and agencies;

5. Recommended to the government to continue with reforms aimed to eliminate unnecessary administrative procedures, which are preventing the development of entrepreneurship activities;

6. Recommended to the government to simplify the existing visa regime;

7. Determined that during coming Council’s meetings they will listen to the information presented by the international projects, which are providing technical assistance in the area of business enabling environment, along with reports from the ministries and agencies;

8. Recommended to the donor organizations to enhance the implementation of the investment projects;

9. Commissioned the Executive Secretary of the Council, jointly with the Secretariat of the Council, to:

- discuss the list of items, scheduled for consideration by the next session of the Council, in a working format with the members of the Council;

- hold consultations with the concerned ministries and agencies, as well as with the international projects and business entities, with the purpose to prepare materials on items from the list, with the establishment of working groups when needed.

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