RТ investment climate in opinion of the international experts

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The investment climate of the country - as set of conditions and rules of business dealing, is defined by the majority of foreign potential investors, proceeding from data of so-called country ratings. Certainly, methods of their drawing up, and also a set of used variables are ambiguous and often can be challenged. At the same time, as a rule, investors are not interested in the methodology, but in the position of the country in this or that rating. Very often decision-making on investment of means in economy is based on the analysis of various rating estimations. We have tried to generalize most popular of them.

1. One of the most known and popular ratings for the investor are annual reports of the World Bank “Doing business”, published from 2003. In these reports the countries are rated by the experts of the World Bank on a degree of transparency of processes, openness of economy and efficiency of economic mechanisms. According to last report of “Doing business”, Tajikistan occupies 153rd position in an index of ease of business dealing among 178 countries of the world.

2. According to the same institute, Tajikistan occupies 99th place in a rating of the World Bank among 178 countries of the world on a degree of the termination of business through procedure of bankruptcy.

3. American analytical center Heritage Foundation and the first business newspaper of the USA – “The Wall Street Journal” make an annual Index of economic freedom. According to a rating of 2008, Tajikistan is on the 114th place from 157 countries of the world - in a category of “basically not free countries”. The level of economic freedom in Tajikistan is estimated in 54,5 %. Freedom of business is estimated in 43,4 %, a freedom of commerce in - 77,8 %, fiscal freedom in - 89,3 %, freedom from the state in - 84,1 %, monetary freedom in - 65,8 %, investment freedom in - 65,8 %, financial freedom in - 40 %, the right to the property in - 30 %, freedom from corruption in - 22 % and freedom of employment in - 62,1 %.

4. Brookings Institution - the American analytical center, has estimated a rating of weakness of 141 countries. Tajikistan has occupied 42nd place in a rating, having got in group of “weak countries”.

5. In the end of June, 2008 magazine Forbes publishes a rating of the Best Countries for Business. The magazine estimated 121 countries by such criteria, as a level and growth of gross national product, gross national product per capita, a condition of trading balance, a rate of inflation and unemployment, a degree of economic and personal freedom, system of the taxation and the legislation. A position of Tajikistan is 118th place from 121 possible.

6. The organization “Global economic forum” - the independent and noncommercial international organization created in 1971 in Geneva with the purpose of improvement of a condition of the world economic, counts a number of ratings. In particular, two indexes on the basis of which ratings of the countries are made; it is Global Competitiveness Index (GCI), and Business Competitiveness Index, (BCI). According to these indexes, each of the countries is estimated on quality of institutes, an infrastructure, macroeconomic stability, health and an elementary education, higher education and vocational training, efficiency of a commodity market and services, efficiency of a labour market, development of the financial market, a technological level, the sizes of the market, competitiveness of the companies and innovative potential.

According to last report (the report 2007-2008 included 131 countries). Tajikistan occupies 117th place from 131 on Global Competitiveness Index and 104th place from 131 on Business Competitiveness Index.

7. The world economic forum also rates the travel and Tourism Competitiveness Index. At calculation of this index it is taken into account: legal regulation of sphere, development of business-environment and infrastructure, human, cultural and natural resources for tourism, and also safety, quality of hygiene and health, etc. The International tourist rating of Tajikistan in 2008 is 110th place from 124 countries of the world.

8. In June 2008 the world economic forum has published the report and a corresponding rating the Enabling Trade Index 2008. The report is made on the basis of the analysis of such factors, as access to the market, customs regulation and a transparency of activity of regulating bodies on border, transport and communication infrastructure, and also business-environment. A trading rating of Tajikistan in 2008 is 104th place among 118 countries.

9. From the reports of the World economic forum, which characterizes business image of the country, we shall note the Global information Technology Report 2007 - 2008. In the Networked Readiness Index 2007-2008 rankings, Tajikistan occupies 98th place among 127 countries of the world.

10. Transparency International, engaged in estimation of a corruption level, counts a so-called index of perception of corruption. In annual monitoring a degree of corruption perception in 2006 Tajikistan has occupied 9th place on a level of corruption, and 5th place in 2007 of 179 countries of the world. In 2007 data have been included in an index of corruption perception about corruption in public sectors of 180 countries of the world.

11. The index of development of human potential is calculated by the United Nations and is intended for comparison of a level of literacy, for average life expectancy and specification of actual incomes in the country. In published by the United Nations “Report on human development 2007-2008” Tajikistan was given 122^nd place from 177 countries of the world. The country has got in group of the countries “with an average level of development of human potential”.

12. In May, 2008 the mass-media have distributed the information, that, according to data of experts of the Food and agricultural organizations of the United Nations (FAO), Tajikistan was included into the list of 22 countries of the world, to which because of increase of the world prices for the foodstuffs threatens famine.

13. In March, 2008 the International organization “Reporters without borders” has published the traditional annual list of the “enemies of the Internet”, i.e. the list of the countries supervising the Internet. The list of the basic countries recognized as enemies of the Internet included 15 countries. Tajikistan is enlisted to the so-called additional list of 11 countries supervising the Internet.

14. Foreign Policy magazine and research center Fund for Peace in 2007 published “the Rating of instability of the states of the world – 2007” in which 60 countries have entered. The rating is made on the basis of twelve criteria - political, economic, military and social. In particular, demographic situation, presence of refugees, position with observance of human rights, power and control of special services, unity of the state elites and presence of external factors, for example, foreign occupation were estimated. On a level of instability in 2007 Tajikistan has 29th place from 60.

As we see, the international business ratings of Tajikistan continue to remain one of the lowest in spite of the fact that the state policy in the field of investments and business is open enough.

If to speak about the sum of "impressions", which is received by an analyst preparing materials for businessmen, it becomes obvious that we shall not expect positive changes. Here it is necessary think of drawing up of own ratings of an estimation of investment appeal of Tajikistan, based on objective factors, which can interest foreign businessmen, first of all from the point of view of reception of the maximal volume of profit.

One of the facts confirming low interest of the world business-community in capital investments in the Tajik economy can serve the volume of direct foreign investments for the last five years. We shall consider, what countries (and in what size) put direct investments into Tajikistan. From 2002 till 2007 direct foreign investments (DFI) for the sum of 918 165,2 thousand US dollar have been involved. The sum of DFI of the CIS countries for all period has made 428 052,9 thousand US dollars -46,6 of %, and of the countries of the far abroad - 490 112,3 thousand US dollars - 53,4 %.

For the considered period the lowest inflow of DFI to Tajikistan was observed in 2004 (in same year the minimal volume of the Russian investments has been recorded also). In 2006 the size of DFI has grown in comparison with the last year in 7 times, including due to increase of Russian DFI - almost in 84 times. At the same time it is necessary to note, that very good parameter describing positive dynamics for 2006-2007, till today does not allow achieving an average level of investments counting upon the inhabitant across the CIS, in Russia, Kazakhstan, Azerbaijan. In 2006 the volume of cumulative foreign investments on one inhabitant in Russia has made about 300 US dollars, and in Tajikistan - 71,4 US dollars, i.e. it is less in 4,2 times. If to speak about foreign investments saved for years of independence, this gap increases up to fifteen times. Growth in DFI in economy of Tajikistan for 2005-2007 has been caused basically due to the Russian investments in water-power engineering (construction of Sangtuda HPS-1 - 137 million US dollar in 2007).

If to analyze priority branches of attraction of DFI within the last several years the certain displacement of investment interests is observed. For example, in 2004 the largest DFI have been directed in:

1) activity of banks - 2115,2 thousand US dollars, or 9,5 %;

2) services of communication - 2881,5 thousand US dollars, 12,8 %;

3) extraction of precious metals and ores of rare metals - 3380,8 thousand US dollars, 15,2 %;

4) the chemical industry - 4060,0 thousand US dollars, 18,2 %;

5) extraction of precious and semiprecious stones - 6426,0 thousand US dollars, or 28,7 %.

In 2005 already in:

1) manufacture of the refined oil and fats - 2113,4 thousand US dollars, 3,9 %;

2) manufacture of building metal products - 2243,9 thousand US dollars, 4,1 %;

3) services of communication - 3916,4 thousand US dollars, 7,2 %;

4) repair and construction of dwellings under orders of the population - 3978,0 thousand US dollars, 7,3 %;

5) activity of the central bank - 4729,3 thousand US dollars, 8,7 %;

6) retail trade - 6720,1 thousand US dollars, 12,3 %;

7) manufacture of cellulose - 7610,7 thousand US dollars, 19,6 %;

8) extraction of precious and semiprecious stones - 19155,0 thousand US dollars, 35,1 %.

In 2006 DFI in extraction of precious and semiprecious stones have decreased, and power became the largest branch of an investment:

1) extraction of precious metals and ores of rare metals - 18406,6 thousand US dollars, 4,8 %;

2) retail trade in foodstuff - 21065,6 thousand US dollars, 5,4 %;

3) granting of other kinds of services - 32577,2 thousand US dollars, 8,5 %;

4) communication - 49543,6 thousand US dollars, 12,8 %;

5) manufacture, gathering and distribution of the electric power - 228023,2 thousand US dollars, 59,2 %.

In 2007 volume of DFI in power was less, than in previous year on 62, 5 million US dollars:

1) construction - 106863,5 thousand US dollars, 27,5 %;

2) communication - 39206,1 thousand US dollars, 10,1 %;

3) manufacture, gathering and distribution of the electric power - 165446,1 thousand US dollars, 42,5 %.

From 2002 till 2007 the share of DFI of the Russian companies has made - 45,13 % (414 385,5 thousand US dollars). The second country on value - the "direct" investor is Cyprus - 15,55 % (142 735,2 thousand US dollars), i.e. the country with volume of investments, almost in 3 times smaller than in Russian.

Meanwhile, special activity of the Russian investors became obvious only in 2006 and 2007, when the size Russian DFI in total amount of direct investments has made 60,16 %, and 69,12 % accordingly.

Data cited above show, that Russia is not only the major regional political partner for Tajikistan, but also the basic investor in development of the Tajik economy.

As to 2008, that, according to the State committee under investments and management of state property of Tajikistan, for the first quarter of the current year (2008), DFI for the sum of 1699 thousand US dollars have been involved to Tajikistan.

Three largest branches of attraction of total amount of the foreign capital to Tajikistan for the considered period are power, industry and communication. The share of investments in development of power of Tajikistan has made 46,1 %, of industry - 15,3, of communications -10,3 %.

This data testifies that diversification of foreign investments into economy of Tajikistan is at rather low level. There are practically no investments in such most perspective branch, as “the industry of tourism” (international tourism, mountaneering, rock-climbing, international hunting, health programs, etc.), despite of available huge natural resources and the lowest capital investments. Scanty volumes fall to an agriculture, education and trade. The lowest relative density make capitals directed to such key economic branches, as education, public health services and transport. We shall notice in this connection, that at the reasonable approach in conditions of market economy last ways of a direction can certainly provide rather high profitability in Tajikistan. All this, in opinion of authors, is in the big degree consequence of an insufficient favorable investment climate, and also its estimation by foreign analysts. In this connection it is possible to note extremely small participation in investment process in Tajikistan of the countries of the European Union. On the beginning of 2006 subjects of managing of such large country as France did not invest a dollar. Shares of percent define relative density of Germany, the Netherlands, Ireland, and Italy. A little lower volume of investments is in the Great Britain and Cyprus.

All this in no way can be named a casual process, and is a consequence of prospective discomfort for businessmen in Tajikistan ….

Georgy KOSHLAKOV,

Madina TURAEVA,

/economy of Tajikistan: strategy of development/