Interview of the Ambassador of Tajikistan, Dr. Erkinkhon RAHMATULLOZDA for Agefi Luxembourg

Interview with H.E. Dr. Erkinkhon RAHMATULLOZDA, Ambassador of Tajikistan:

Tajikistan has introduced extensive regulatory frameworks to attract investment

Mr Ambassador, are provisions of the Constitution of Tajikistan applicable to investment or trade?

I am very pleased with the opportunity to have an interview with Agefi Luxembourg. These days, Tajikistan celebrates the 25th anniversary of its Constitu­tion's adoption, one of the most im­portant political events in country. Let us begin our conversa­tion from this event. Adopted in 1994, the Constitution of newly independ­ent Tajikistan became vital for our people. It determined the basic foundations for our state and society. After decade of prohibitions and bans under Soviet rule, the Constitution proclaimed the people as the bearers of sover­eignty and the only source of power in Tajikistan. It defined a person, and their rights and interests, as the highest priority.

It is important to emphasize that the development period of our Constitution was complex and challenging, as it came at a time when the country was facing press­ing problems associated with both a civil war and the state building process. The Government of Tajikistan had to solve a number of critical issues to radically change the socio-economic and security situation within the country to lift Tajikistan out of dire crisis. Thanks to the insistent efforts of President Emomali Rahmon, Tajikistan has completed a series of initiatives linked to socio-economic issues, security and stability, the affirmation of universally accepted citizens' rights and freedoms, and the development of democratic institutions. The Constitution consoli­dated these basic principles, laying the foundation for building an open and democratic society. Thus, the common principles of democracy are embodied in our Constitution. The basic economic, social, cul­tural, public, and political rights are guaranteed by the Constitution. According to our Constitution, Tajikistan is a sovereign, independent, democratic, social, and law based state.

It should be noted that, being the most important in­strument of democracy in the modern world, the Constitution plays a huge role in the life of each state by being a central piece in the legal system. The Con­stitution's essence as a legal document consists of its special content, its higher legal force, the role of the Constitution as the legal basis of current legislation, and the procedures for the adoption of its amend­ments, which differ from the usual legislative process.

The Constitution of Tajikistan reflects the acknowl­edgement and affirmation of universal values in the society of our country, containing programmatic pro­visions to ensure the development of our society.

Speaking about the role of our Constitution in the eco­nomic development of the country, I would like to note that the modern market economy requires har­monization between all laws, including national and international, and the creation of mechanisms for their enforcement. Article 10 of the Constitution stipulates that «International legal documents recognized by Tajikistan shall be a component part of the legal sys­tem of the Republic. In case the republican laws do not stipulate to the recognized international legal doc­uments, the rules of the international documents shall apply.» So, the Constitution of Tajikistan gives priority to international norms, which creates conditions for international treaties, including trade agreements.

Additionally, all subjects of domestic law should fa­cilitate the state's effective implementation of its rights in the fulfillment of its obligations. In this sense, the development of the economy in Tajikistan, which fixes the principles of interaction of the state, law, and economy, is reflected in the Constitution of Tajikistan. The Constitution's provisions regulate economic re­lations in the country.

The adoption of the Constitution and key political/legal reforms in Tajikistan were important because they created shifts in the role of the state reg­ulating economic relations, ensuring a transition from an administrative command system of man­agement to a market economy. The constitutional and legal regulation of the economic foundations of our country has a distinctive feature. It is located in Article 12 of the Constitution, and declares that the State guarantees freedom of economic and entrepre­neurial activity.

With the adoption of the Constitution of Tajikistan in 1994, the foundations of a market economy received legislative consolidation at the level of the basic law, becoming the subject of constitutional regulation.

What legislative initiatives have been introduced in Tajikistan to fonn a favorable business and investment environment in the country?

Rapidly changing political and eco­nomic situations in the world oblige us to fulfill many important responsi­bilities, one of which is to determine what is necessary to ensure sustain­able economic development and in­crease the standard of living for the populations of our countries.

It is a fact that today's globalized economies create major challenges for economies of developing countries, including Tajikistan. In such circumstances, creat­ing conditions favorable for balanced stable economic growth and the strength­ening of internal and external economic ties is our most important task.

Compared with the first decade of independence, Tajikistan now has different priorities, and investment and export-oriented economic policy is top agenda items for our Govern­ment. The key role in achieving these objectives is given to the National Development Strategy up to 2030, which defines development of the private sec­tor, in particular entrepreneurship and small/medium-sized enterprises (SMEs) key in de­veloping our country. We recognize that SMEs con­stitute a major source of employment and generate significant domestic and export earnings. Their de­velopment would serve as a key instrument for eco­nomic growth.

The Government of Tajikistan understands that de­veloping the private sector and SMEs, improving the investment climate, and attracting investments are important factors for the country's prosperity. Our relevant institutions, with the help of the Govern­ment, have been working diligently to create condi­tions for our entrepreneurs to adapt to globalization and benefit from global trade opportunities.

The Government of Tajikistan has also been under­taking necessary measures to empower producers to increase the level of earnings of the private sector in our economy, possibly creating permanent jobs and further improving the population's living standards. During this process, Tajikistan has introduced exten­sive regulatory frameworks to improve the national legislation in support of entrepreneurship and im­provement of investment climate.

The process started about 10 years ago, and Tajik­istan's efforts to radically change the business envi­ronment in the country have been successful. For instance, the country has jumped up several places in the World Bank's Doing Business Report, making Tajikistan a two-time «top 10 reformer» worldwide. The most recent World Bank's report, which named Tajikistan one of the top reformers, was published on October 23, 2019.

Today, current legislation within the Republic of Tajikistan provides more than 40 types of guaran­tees and privileges to investors. The new Tax Code provides more than 240 privileges and concessions for developing the small/medium-sized business sector.

Overall, the amendments and additions introduced include 30 incentives and concessions aimed at im­proving the business environment and investment climate in both the production and services sectors. With an aim to support production entrepreneurship in 2018-2019, the Government has declared a mora­torium on various inspections and offered a number of tax incentives. Also, in order to improve the tax administration and taxation system, the Government incorporated amendments and additions to the Tax and Customs Codes of Tajikistan last year.

In order to match the international investment cli­mate norms, develop the private sector, and encour­age world economic integration, the Government of Tajikistan undertook a number of serious measures. "Free" competitive conditions were created. In terms of protection of rights for domestic and foreign indi­viduals/companies, there are no significant differ­ences between the two.

Alongside the implemented reforms, the Republic of Tajikistan ratified the United Nations Convention on Recognition and Enforcement of Foreign Arbitral Awards and the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Doc­uments. This could completely ease the conduct of business activities for investors and entrepreneurs, thereby strengthening the basis for the protection of the rights of entrepreneurs.

With an eye toward improving the effectiveness of public administration in the country, there was the es­tablishment of a single-window system for construc­tion permits, registration of immovable property, export, import, and transit transactions. There was also the introduction of electronic public services, and a shift toward electronic documentation and modern­ization of databases for public regulation authorities. For the purpose of facilitating easy travel for investors to Tajikistan, we have introduced the special Investor Visa as well.

Also, the operation of four economic free zones in our country provides encouragement for greater foreign direct investment into our economy. Due to new and positive changes in the Central Asian region, trends of increased cooperation have been ob­served. The cooperation seems to be a contributing factor for the processes of economic and trade devel­opment, and seems to be assisting in laying the foun­dations for regional integration processes.

As you know, our relations with Europe have been developing steadily. The New EU Strategy for Central Asia, which was adopted this summer, focuses on the key challenges and potential factors for development of our region, defining them as mutually reinforcing priorities. The importance of the Strategy is that its de­fined priorities embrace the overarching tasks of our governments and foster the implementation of our strategic goals. Also, the EU-Asia Connectivity Strat­egy has more far-reaching plans aimed at creating net­works across borders, and a comprehensive financial framework for mobilizing investment. The Connec­tivity Strategy puts an emphasis on sustainable and comprehensive connectivity.

These initiatives focus on regional connectivity and overall development and provide a great opportunity for us to improve the business and trade environment in the country. So, we expect the New EU strategy and Europe's Asian strategy to have positive impacts on the development of our economy, assisting us in the promotion of business and investment.

I should also admit that despite the above-mentioned efforts and reforms, these advantages have not had the desired effect in some areas. The process of creating new jobs, enabling new manufacturing enterprises and workshops, and the attraction of modern tech­nologies can not satisfy the country's needs. The econ­omy is not creating sufficient jobs for its rapidly growing workforce. There is a need for inclusive re­forms to ensure an effective environment to enable en­trepreneurs to create new businesses.

In general, our Government is continuously exploring effective ways to improve the business environment and investment climate, and it will continue doing so until our private sectors and local producers become internationally competitive and our investment cli­mate is favorable.

What are the priority sectors for investment in Tajik­istan?

Tajikistan has promising opportunities for the pro­vision of sustainable development, including min­eral deposits, hydro-energy and clean water resources, biological and ecological resources, and clean agricultural products which will be of benefit to our trade partners.

Before underlining the key sectors for investment, I would like to note for the purpose of forming a favor­able investment and business environment, as well as attracting foreign investments over the period since the independence, more than 100 normative and legal acts, regulating this sphere have been adopted, includ­ing the laws On State Support of Entrepreneurship, On Investments, On Foreign Economic Activity, On Financial Rent (leasing), On Investment Agreements, On Concessions, On Free Economic Zones, On Pub­lic-Private Partnership and other regulatory acts. These laws are aimed at legal protection of invest­ments, providing investors with fiscal and non-fiscal incentives, ensuring their participation in the privati­zation process and infrastructure development.

Tajikistan has wide opportunities for the involvement of investors in the processing of mineral resources. There are more than 600 deposits of known natural and non-mineral resources that are ready for explo­ration. Currently, one hundred deposits, producing 40 types of minerals are in use. Our country has many types of gemstones, precious metals, and necessary raw materials. Mining and processing is considered an advantageous direction.

The energy sector is one of the important sectors of our reliable economic development and ensuring energy independence is considered to be one of the strategic goals of the Government. It is widely known today that the development of a country's economy, in particular the industrial sector, depends highly on the development of hydropower potential. In the near future, Tajikistan may be con­verted to the largest electricity producing country, pro­viding neighboring countries and regions with cheap and clean electricity. Our country is making steady steps in this direction. In September of this year, Tajikistan launched the sec­ond turbine of the Rogun Hydropower Plant, a megaproject featuring the world's highest dam. This megaproject will ensure our country's energy inde­pendence and bring in export revenue.

The energy sector, especially construction of hy­dropower plants, is one of the most promising sectors in the country because Tajikistan is rich in water re­sources. Annually, there are 115 billion cubic meters of water in the country, mainly within the Amudarya and Syrdarya river systems. About 70% of all drinking water resources in Central Asia are located in Tajik­istan. Tajikistan is the country where the largest rivers of Central Asia originate. The total length of rivers, with lengths of more than 10 km, exceeds 28,500 km. To date, Tajikistan uses only 20% of the available water potential. The country has the potential to produce 527 billion kWh of electricity per year, but today only 6% of this potential is being used.

Tajikistan offers a favorable environment for investors in this field. For example, for the construction of a hy­droelectric power plant, the investor and the general contractor are fully or partially exempted from pay­ment of taxes. Also, import of goods for the construc­tion of hydroelectric power plants, which are especially important objects, is exempted from cus­toms duties.

The development of the agriculture industry and rais­ing the production and export potential is a strategi­cally important goal of the country. Tajikistan has all conditions for the improvement of this industry, in­cluding appropriate water, climate, soil, raw materials, and cheap workforce. This industry may be one of the most beneficial directions, highlighting our coopera­tion with Europe.

It is noted that the cotton currently continues to make up the significant part of Tajik exports. That is why this agricultural crop occupies 1/3 of the entire ploughed area of the country. Due to suitable conditions, in which 10 months of sunny days and abundant water resources play an important role, the country can pro­duce up to 400,000 tons of high-quality cotton per year.

The opportunity to implement projects in the sphere of agro-products and textiles, production of high qual­ity products, and their export to regional and world markets is considered beneficial for our partners.

In our country there are opportunities for the pro­duction and sale of various types of ready products, and products manufactured from aluminum. Tajik­istan has the largest aluminum manufacturing plant in Central Asia.

Our country has numerous natural mineral and medical herb resources that create good opportuni­ties for the promotion of the chemical industry, and medical/pharmaceutical industries. The develop­ment of these fields may be seen as promising fields for the attraction of investors, as well as mutually beneficial cooperation.

The Republic of Tajikistan also possesses a rich histor­ical and cultural heritage, prosperous wildlife, gor­geous landscapes, high mountains, extraordinary lakes, and rare flora and fauna that are very important for the expansion of tourism. Therefore, the Govern­ment of the country pays special attention to the growth of tourism through the attraction of small and medium entrepreneurships and foreign investments. This may be considered another broad field of suc­cessful cooperation for our countries.

Furthermore, we pay distinctive attention to the im­provement of economic structures, construction of new industrial enterprises, attraction of foreign in­vestments, the implementation of modern technolo­gies, and customizing the activities of existing industrial facilities.

Another direction of interest for investors is small and large projects in the infrastructure, transportation, and communication sectors. The Republic of Tajikistan, together with its interna­tional partners, is implementing a number of huge in­frastructural projects regarding the construction of regional highways, railways, electricity and gas trans­mission lines, and small and medium power plants. One such regional projects is CASA-1000, connect­ing Tajikistan's energy transmission system with South Asia and creating a basis for the promotion of the energy market.

Tajikistan provides different opportunities for entre­preneurs and investors to produce competitive goods in our country, and export to other countries of the world.

We heard about your country's efforts and pro­gresses in the tourism sector. Can tourism efforts in Tajikistan impact the economic development?

At the center of the Eurasian continent and the histor­ical Silk Road, Tajikistan strives to reclaim its position as a crossroad for civilizations. The breathtaking land Marco Polo crossed during the 13th century holds end­less new opportunities and prospects for new devel­opments. Tajikistan is home to an impressive amount of mountain formations, which occupy around 90 per cent of its territory. Steppes are a destination for trav­elers in need of thrilling and authentic adventure. The Tajik people are known for being one of the most wel­coming people. It is a quality their ancestors have rooted in the culture, and it played a crucial role for merchants of the ancient Silk Road.

Tajikistan offers tourists different opportunities, how­ever, focus leans toward mountaineering and hunting, since the country has one of the highest peaks in the world. The peak is about 7,500 meters above sea level and part of the Pamir Mountains, called the Roof of the World. There are many glaciers, lakes, and rivers to be found among the mountains. Also, the longest, most powerful glaciers of Central Asia are nested here. There are about 1,450 lakes in the territory of Tajikistan.

Some of them are located at a height of more than 4,000 meters above sea level. The country is rich with wonderful lakes that have various origins. There are also many unique areas in Tajikistan, such as the Seven Lakes, which have different colors.

Ancient cities and vast uninhabited lands, unique cul­ture and customs, the most interesting markets (which have, no surprise, given its Silk Road Trading Route legacy), spices, dried fruits, and delicious cuisine make the country one of the fastest growing tourists desti­nations. Lonely Planet has placed Tajikistan among the top tourist destinations in the world to visit in 2020.

Tajikistan has a rich historical and cultural heritage, abundant natural resources, and great potential for more tourists to the country. The Government of Tajik­istan has identified tourism as a priority for its eco­nomic policy. President Emomali Rahmon signed a decree declaring 2018 as the Year of Tourism and Folk Crafts in Tajikistan. The decree helped promote the development of tourism in the country, which greatly contributed to the development of the industry.

The tourism industry does face a number of chal­lenges, such as poor management and a lack of in­frastructure, however, the situation has been improving tremendously over recent years, as wit­nessed by the growing number of tourists. Accord­ing to statistics, over one million tourists visited Tajikistan in 2018. These tourists were mainly from Europe and the United States. Also, the number of tourists coming to Tajikistan from the Benelux coun­tries has been increasing.

Despite the challenges, Tajikistan has been making a lot of efforts to develop tourism infrastructure by con­structing new terminals and hotels. We have launched the electronic e-Visa system to increase the number of tourists visiting Tajikistan. This system will allow for­eign citizens to receive the Tajikistan visa online, re­lieving them from unnecessary arrangements in the Tajikistan consulates or at borders.

As for tourism's benefit to the economy, this sector def­initely impacts the growth of gross domestic product (GDP). Tourism creates jobs, drives exports, and gen­erates income earnings. It really affects the life of our people in a positive way. For instance, due to an in­crease in the number of foreign tourists, 75 new tour agencies were established in 2018, making a total of 145 tour agencies within the country. All of these create jobs and earnings for our people.

Appropriate policies and a favorable environment for investment make the tourism sector a key contributor to the economy. If tourism is managed well, and the majority of the tourist money is spent at local busi­nesses, the economy will experience a direct boost. This can have major, positive implications on our economy over the long run. Most tourists visit Tajik­istan's mountainous regions, and this would have a direct contribution to our local economies, as a major­ity of our people inhabit remote areas.

As a result of an inclusive approach to the tourism sec­tor in our country, the tourism potential is being widely promoted. Tajikistan is taking steady steps to­ward becoming one of the best tourist destinations.

What would be your suggestions for Luxembourg and European tourists to visit in Tajikistan?

Tajikistan offers travelers a wide variety of opportu­nities to experience mountain peaks, clear lakes, an­cient ruins, modern cities, delicious cuisine, and many more attractions. Tajikistan is famous for the most im­pressive, high-altitude landscapes in the world. The capital of our country, Dushanbe, is surrounded by multi-hued lakes and high passes that thrill any trav­eler. With 93% of the country being mountainous area, including the Pamir Highway and the Fann Moun­tains, Tajikistan is a paradise for nature lovers. The country is rich with wonderful lakes that have various origins. For example, the Seven Lakes are unique, and several of them have different colors.

A visit to ancient cites such as Penjikent, Khujand, Istaravshan, and Hissar Fortress, which were once im­portant historical towns on the Great Silk Road, will give you an unforgettable experience. By the way, 15 km west of the Tajik northern city of Panjakent, Sarazm - one of the world's oldest city is located. In antiquity, Sarazm had an important strate­gic location in Central Asia, a contact point between nomadic tribes and the first agrarian settlers of Tran- soxania, which was the key to its unique development during the 4th-3rd millennium BC. Through the or­ganization of trade between different tribes, Sarazm contributed to the development of civilizations, be­coming the main trading center in Central Asia, which established relations with the settlements of the Eurasian steppe. Tajikistan will celebrate the 5,500th anniversary of this ancient city (mid-4th-3rd millen­nium BC) in 2020. The celebrations will take place in the city of Panjakent on September 12, 2020.

Tourists also can enjoy the beauty of Dushanbe, which is known for its full-grown tree lined avenues, public parks, museums, and traditional tea houses. The world's largest wooden Buddha and the grandest tea house in Central Asia are in Dushanbe.

I take this opportunity to invite your readers to visit Tajikistan, to enjoy adventures, and have the most ful­filling memories.