Tajikistan

GDP (US$ Billion)

7.28 (2017)

World Ranking 146/192

GDP Per Capita (US$)

824 (2017)

World Ranking 168/192

Economic Structure

(in terms of GDP composition, 2016)

Services
(42.25%)
Industry
(27.24%)
Agriculture
(20.38%)

External Trade (% of GDP)

52.8 (2015)

Currency (Period Average)

Tajikistani Somoni

8.55 per US$ (2017)

Political System

Republic

Overview

Remittances from Russia account for half of Tajikistan's economic output, with the economy under pressure from its gross external debt. The country’s debt levels are expected to rise further as it ramps up construction of the Rogun dam. Adding to the state’s fiscal woes is the banking sector’s struggles with a high number of non-performing loans. A potential International Monetary Fund deal could reduce downside risks to the Tajikistani economy if agreed in 2019. In the medium term, Tajikistan's economic stability will be increasingly tied to the timely construction of the Rogun Dam. The dam will make Tajikistan an electricity surplus country, while a failure to complete the project risks complicating debt situation further.

Sources: World Bank, Fitch Solutions

Major Economic/Political Events and Upcoming Elections

May 2016

A referendum supported constitutional changes which removed presidential term limits.

October 2016

Work began on the Rogun hydroelectric dam on the Vakhsh River. Downstream neighbour Uzbekistan has strongly opposed the dam, fearing the impact on its agriculture.

September 2018

Representatives from the International Monetary Fund visited Tajikistan in September 2018 raising the prospects of reaching an agreement with the government. The deal would focus on fiscal consolidation, reducing the economy's external vulnerabilities and securing a sustainable growth path.

February 2019

The CASA-1000 project was launched, which is an interregional electricity transmission project in Central and South Asia to connect four countries: Kyrgyzstan, Tajikistan, Pakistan and Afghanistan. The project is expected to be completed by 2021 and to generate an annual income of more than USD150 million.

Sources: BBC Country Profile – Timeline, Fitch Solutions

Major Economic Indicators
Graph: Tajikistan real GDP and inflation
Graph: Tajikistan real GDP and inflation
Graph: Tajikistan GDP by sector (2017)
Graph: Tajikistan GDP by sector (2017)
Graph: Tajikistan unemployment rate
Graph: Tajikistan unemployment rate
Graph: Tajikistan current account balance
Graph: Tajikistan current account balance

e = estimate, f = forecast

Sources: IMF, World Bank - World Development Indicators, Fitch Solutions

Date last reviewed: August 15, 2019

External Trade

4.1 Merchandise Trade

Graph: Tajikistan merchandise trade
Graph: Tajikistan merchandise trade

Source: WTO

Date last reviewed: August 15, 2019

Graph: Tajikistan major export commodities (2018)
Graph: Tajikistan major export commodities (2018)
Graph: Tajikistan major export markets (2018)
Graph: Tajikistan major export markets (2018)
Graph: Tajikistan major import commodities (2018)
Graph: Tajikistan major import commodities (2018)
Graph: Tajikistan major import markets (2018)
Graph: Tajikistan major import markets (2018)

Sources: Trade Map, Fitch Solutions

Date last reviewed: August 15, 2019

4.2 Trade in Services

Graph: Tajikistan trade in services
Graph: Tajikistan trade in services

Source: WTO

Date last reviewed: August 15, 2019

Trade Policies
  • Tajikistan has been a member of the World Trade Organization (WTO) since March 2, 2013.


  • Tariff rates range between 0 and 15%, with the overall trade-weighted import tariff averaging out to around 7.18%. The tax rate of 0% is granted to certain types of goods (such as for some types of printed publication, unwrought wool, gaseous hydrocarbons, and electricity). The country has kept an export promotion trade policy with little to no export duties.


  • Tajikistan is signatory to several free trade agreements (FTAs), primarily among the following Commonwealth of Independent States (CIS) countries: Russia, Belarus, Kazakhstan, and Kyrgyzstan.


  • The importation of alcohol and tobacco products in Tajikistan may be subject to quantitative restrictions and excessive requirements for health, safety and security.

Sources: WTO - Trade Policy Review, Fitch Solutions

Trade Agreement

6.1 Multinational Trade Agreements

Active

  1. Armenia (effective date: March 1994): Tajikistan's main exports to Armenia were other made-up textile articles, sets, worn clothing, and worn textile articles and rags in 2016. Tajikistan's main imports from Armenia were pharmaceutical products in 2016.


  2. Belarus (effective date: 1998): Belarus exports to Tajikistan include sugar, tractors, carpets and flooring, construction materials, medications, malt, refrigerators and freezers. Tajikistan exports to Belarus include cotton yarn, untreated cotton fibre, dried fruits and nuts.


  3. Kyrgyzstan (effective date: January 2006): Tajikistan mainly exports fruits, nuts and tobacco to Kyrgyzstan. Tajikistan's imports from Kyrgyzstan include coffee, tea, milk, preparations of cereals, spirts and vinegar.


  4. Russia (effective date: April 1993): In 2017, Russia’s trade with Tajikistan totalled USD717.6 million, up 4.31% compared to 2016.


  5. Ukraine (effective date: July 2002): The main imported goods from Ukraine to Tajikistan are foodstuff, canned goods, sugar, confectionery, pharmaceuticals, cement, bauxite, coal, coke, pitch, oil, synthetic corundum, aluminium oxide, aluminium hydroxide, motors and generators, turbines, paper, building materials, metal products, home appliances, agricultural equipment, tractors, machinery, products used in the electrical, railway cars, furniture and accessories. The main exported goods from Tajikistan to Ukraine are raw cotton and food products, including fruit and vegetables, and dried fruit.


  6. Uzbekistan (effective date: January 1996): Uzbekistan exports to Tajikistan are mainly transportation services, mineral fertilisers and food products. The list of exported Tajikistani goods includes cables, carpet products, building materials and coal. With a growing range of products traded, it is hoped that bilateral trade will reach USD500 million by 2020.


  7. CIS Free Trade Area (CISFTA) (Effective date: September 2012): This is an FTA between Russia, Ukraine, Belarus, Uzbekistan, Moldova, Armenia, Kyrgyzstan and Kazakhstan. The free trade zone area was designed to reduce all trade fees on a number of goods between participating countries.


  8. Economic Cooperation Organisation Trade Agreement (effective date: 2008): Free trade region formed between the countries of Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan and Uzbekistan. Intra-regional trade accounts for around 7.64% of the total trade of the member states.

Under Negotiation

  1. Pakistan-Tajikistan Preferential Trade Agreement: Pakistan’s major exports to Tajikistan include sugar, dairy products, medical and pharmaceutical products and construction material including cement. Raw cotton, chemical materials and products and glass and glassware are imported from Tajikistan.


  2. Eurasian Economic Union: Consists of Russia, Kazakhstan, Belarus, Krygyzstan and Armenia. No customs are levied on goods travelling within the customs union and members of the customs union impose a common external tariff on all goods entering the union. In a step towards joining this union, Tajikistan has decided to apply a zero rate of import duty for the goods originating from the member states.

Sources: WTO Regional Trade Agreements database, Fitch Solutions

Investment Policy

7.1 Foreign Direct Investment

Graph: Tajikistan FDI stock
Graph: Tajikistan FDI stock
Graph: Tajikistan FDI flow
Graph: Tajikistan FDI flow

Note: Outward FDI data not available

Source: UNCTAD

Date last reviewed: August 15, 2019

7.2 Foreign Direct Investment Policy

  1. The Tajikistani government continues to publicly advocate for increased foreign investment, particularly in energy and transport infrastructure. All sectors of Tajikistan’s economy are open to foreign participation with the exception of aviation, defence, security, and law enforcement which require special government permission for the operation of such types of businesses or services.


  2. Among the key foreign investors are Nelson Gold Corporation (mining of gold and silver), Gulf International Minerals (mining of gold fields), Kabool Textiles and Adjind International (textile industry).


  3. Tajikistan’s legislation allows for 100% foreign ownership of local companies, but the government can legally expropriate property under the terms of Tajikistan's Law on Investments, Law on Privatisation, Law on Joint Stock Companies and Criminal Code.


  4. The State Committee on Investments and State Property Management of the Republic of Tajikistan chiefly facilitates FDI in the country.


  5. Tajikistan’s Investment Law (Article 4) guarantees equal rights for both local and foreign investors. According to this law, foreigners can invest by jointly owning shares in existing companies with other Tajikistani companies or Tajikistani citizens, by creating fully foreign-owned companies; or by concluding agreements with legal entities or citizens of Tajikistan that provide for other forms of foreign investment activity.


  6. Tajikistani law allows foreign firms to acquire assets, including shares and other securities, as well as land and mineral usage rights. Foreign firms may also exercise all property rights to which they are entitled, either independently or shared with other Tajikistani companies and citizens of Tajikistan.


  7. The State Investments and Property Management Committee is responsible for filing and coordinating foreign investment project proposals as they pass through the review pipeline.


  8. Tajikistan has a history of expropriating land based on the grounds that the properties involved were illegally privatised following Tajikistan's independence.

Sources: WTO - Trade Policy Review, ITA, US Department of Commerce, Fitch Solutions

7.3 Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive ProgrammeMain Incentives Available
Free Economic Zones (FEZs): Sughd, Pyanj, Ishkoshim and DangaraIn these zones, investors benefit from:



- Free transfer of income abroad



- Import of goods to the FEZ is exempt from customs and taxes, as well as application of prohibitions and restrictions of an economic nature, established in accordance with the Tajikistani law; export abroad of goods from FEZ is exempt from customs and taxes, as well as application of prohibitions and restrictions of an economic nature, established in accordance with the Tajikistani law



- Profits of foreign investors and wages of foreign employees, resulting in a foreign currency, may be freely repatriated



- Simplified procedure of entry and exit for foreign employees - including 50% decrease of consular fees



- Exemption from all taxes, except the individual income tax (from 8% to 13% withheld from employee salary) and social tax (25% from payroll budget)



- Businesses have the right to attract foreign workers, mainly in the position of managers and technical advisors; however, the number of foreign employees should not exceed 20% of the total number of employees in the FEZ



- The one-stop registration process speeds up the process of opening a business

Sources: US Department of Commerce, Fitch Solutions

Taxation – 2019
  • Value Added Tax: 18%
  • Corporate Income Tax: 13-23%

Source: Tax Committee under the Government of the Republic of Tajikistan

8.1 Important Updates to Taxation Information

The Tajik tax system is still relatively new and many tax concepts and issues that are standard in most market economies are just emerging. The process of paying taxes is complex, resulting in high administrative costs for businesses, except for goods producing industries such as manufacturing as they benefit from low corporate income tax.

8.2 Business Taxes

Type of TaxTax Rate and Base
Corporate Income Tax- 23% on operating profits

- 13% for companies involved in production of commodities
Capital Gain Tax

Part of business income (gains derived by investors and issuers from trade at a stock exchange are exempted for five years from the beginning of participating on the stock market)
Withholding TaxRoyalties: 15%



Interest, Dividends: 12% on net earnings (dividends received by investors on securities traded at the stock exchange are exempted for five years from the beginning of participating on the stock market)
Branch Remittance Tax15% on net earnings
VAT (standard)18% on the value of the products
Social TaxSocial tax is withheld by the employer at the rate of 1% of the employment income, 25% contribution on gross salaries by employer

Source: Tax Committee under the Government of the Republic of Tajikistan

Date last reviewed: August 15, 2019

Foreign Worker Requirements

9.1 Localisation Requirements

The employment of foreign nationals is not discouraged, but there are few jobs available. According to the Tajikistani Law on Audits, local companies require at least 70% of all employees to be Tajikistani. If the CEO of the company is foreign, then the percentage of staff which should be Tajikistani is increased to at least 75%.

9.2 Foreign Worker Permits

Work visas for foreigners are issued in Tajikistan for a duration of no more than three months. Work visas can be extended on the basis of a work permit, provided by the Migratory Service of the Ministry of Internal Affairs of the Republic of Tajikistan. Companies attempting to employ foreign citizens must apply for a corporate work licence in order to receive permission to hire foreign employees. A letter must be submitted to the immigration authority outlining the staff list of the company. A corporate work licence is issued, subject to application as well as the demands of the local labour market. A corporate work licence is usually issued for up to one year, but can be extended on an annual basis. Work permits for foreign nationals must be obtained by a company on the individual's behalf and last for up to one year, with the possibility of extension. Dependents may accompany a main traveller by obtaining a visa on the basis of the main applicant's application.

9.3 Visa/Travel Restrictions

For most foreign nationals, visas must be obtained in their respective home country, prior to entering the Republic of Tajikistan. To receive a Visa upon arrival, a registered letter from the Tajik Ministry of Foreign Affairs, confirming the applicant’s request for a Visa is required. Visa upon arrival will be issued for 45 days only at the Immigration Office at the International Airport in Dushanbe. Tajikistan has a visa free regime with 19 countries including several of its neighbours and also Russia, Mainland China, India, Iran and North Korea.

Sources: Government websites, Fitch Solutions

Risks

10.1 Sovereign Credit Ratings



Rating (Outlook)Rating Date
Moody's

B3 (Negative)10/12/2018
Standard & Poor'sB- (Stable)28/08/2017
Fitch Ratings

Not rated

N/A

Sources: Moody's, Standard & Poor's

10.2 Competitiveness and Efficiency Indicators



World Ranking

201720182019
Ease of Doing Business Index

128/190123/190126/190
Ease of Paying Taxes Index

140/190132/190136/190
Logistics Performance Index

N/A134/160N/A
Corruption Perception Index

161/180152/160N/A
IMD World CompetitivenessN/AN/AN/A

Sources: World Bank, IMD, Transparency International

10.3 Fitch Solutions Risk Indices



World Ranking
201720182019
Economic Risk Index RankN/A188/202184/202
Short-Term Economic Risk Score39.240.242.3
Long-Term Economic Risk Score37.236.336.0
Political Risk Index RankN/A189/202184/202
Short-Term Political Risk Score47.34949.0
Long-Term Political Risk Score36.236.240.2

Operational Risk Index RankN/A126/201124/201
Operational Risk Score44.843.043.7

Source: Fitch Solutions

Date last reviewed: August 15, 2019

10.4 Fitch Solutions Risk Summary

ECONOMIC RISK

Tajikistan is one of the risk-exposed countries in the Central Asian region, as it remains excessively dependent on remittances from Russia. Tajikistan's economic success hinges on an agreement with the Internation Monetary Fund and the construction of the Rogun Dam, which is projected to be completed in 2032. If completed on time, the dam will produce enough electricity to meet Tajikistan's needs and to be sold to neighbouring countries. This would be a boost to the economy, which suffers from recurrent power outages. However, failure to complete the project risks complicating the process of restructuring its debt.

OPERATIONAL RISK

Education levels are very poor in Tajikistan, with most workers in the formal economy being employed within the agricultural sector. The tertiary education sector is underdeveloped and many students choose to move abroad to study and find work, resulting in a brain drain of highly skilled workers. In addition, the country is hamstrung by logistics gaps (disrepair and overburdening of road and rail networks provide limited options for the transport of freight and make inter-regional trade highly costly), the shortages of skilled labour and slow reform momentum in terms of investment policy.

Date last reviewed: August 16, 2019

10.5 Fitch Solutions Political and Economic Risk Indicies

Graph: Tajikistan short term political risk index
Graph: Tajikistan short term political risk index
Graph: Tajikistan long term political risk index
Graph: Tajikistan long term political risk index
Graph: Tajikistan short term economic risk index
Graph: Tajikistan short term economic risk index
Graph: Tajikistan long term economic risk index
Graph: Tajikistan long term economic risk index

100 = Lowest risk; 0 = Highest risk

Source: Fitch Solutions Economic and Political Risk Indices

Date last reviewed: August 15, 2019

10.6 Fitch Solutions Operational Risk Index



Operational RiskLabour Market RiskTrade and Investment RiskLogistics RiskCrime and Security Risk
Tajikistan Score43.753.839.138.843.2
Caucasus and Central Asia Average50.456.753.446.644.9
Caucasus and Central Asia Position (out of 8)5

6

8

6

5

Emerging Europe Average57.455.959.158.655.9
Emerging Europe Position (out of 31)2822

31

29

25

Global Average49.650.349.849.049.2
Global Position (out of 201)12481

138

133

120

100 = Lowest risk; 0 = Highest risk

Source: Fitch Solutions Operational Risk Index

Graph: Tajikistan vs global and regional averages
Graph: Tajikistan vs global and regional averages
Country

Operational Risk Index

Labour Market Risk Index

Trade and Investment Risk IndexLogistics Risk IndexCrime and Security Risk Index
Armenia55.258.258.6

49.954.2
Azerbaijan59.161.1

62.559.553.2

Georgia62.264.171.454.958.3
Kazakhstan58.770.258.954.151.5
Kyrgyzstan43.654.2

44.638.037.7
Tajikistan43.753.839.138.843.2
Turkmenistan37.638.739.343.129.4
Uzbekistan43.253.4

53.134.731.7
Regional Averages50.456.7

53.446.644.9
Emerging Markets Averages46.948.645.447.446.1
Global Markets Averages49.650.3

49.8

49.049.2


100 = Lowest risk; 0 = Highest risk

Source: Fitch Solutions Operational Risk Index

Date last reviewed: August 15, 2019

Hong Kong Connection

11.1 Hong Kong’s Trade with Tajikistan

Graph: Major export commodities to Tajikistan (2018)
Graph: Major export commodities to Tajikistan (2018)
Graph: Major import commodities from Tajikistan (2018)
Graph: Major import commodities from Tajikistan (2018)

Note: Graph shows the main Hong Kong exports to/imports from Tajikistan (by consignment)

Date last reviewed: August 15, 2019

Graph: Merchandise exports to Tajikistan
Graph: Merchandise exports to Tajikistan
Graph: Merchandise imports from Tajikistan
Graph: Merchandise imports from Tajikistan

Note: Graph shows Hong Kong exports to/imports from Tajikistan (by consignment)

Exchange Rate HK$/US$, average

7.75 (2014)

7.75 (2015)

7.76 (2016)

7.79 (2017)

7.83 (2018)

Sources: Hong Kong Census and Statistics Department, Fitch Solutions

Date last reviewed: August 15, 2019



2018

Growth rate (%)
Number of Tajik residents visiting Hong Kong60

1.7

Source: Hong Kong Tourism Board



2018

Growth rate (%)
Number of European residents visiting Hong Kong1,961,448

1.7
Number of emerging Europe citizens residing in Hong Kong891.1

Visitor sources: Hong Kong Tourism Board, Fitch Solutions

Resident sources: United Nations Department of Economic and Social Affairs – Population Division

Date last reviewed: August 15, 2019

11.2 Commercial Presence in Hong Kong



2019

Growth rate (%)

Number of Tajik companies in Hong KongN/A

N/A
- Regional headquarters
- Regional offices
- Local offices

Source: Hong Kong Census and Statistics Department



11.3 Treaties and Agreements between Hong Kong/PRC and Tajikistan

A bilateral investment treaty with Mainland China entered into force in January 1994.

11.4 Visa Requirements for Hong Kong Residents

HKSAR passport holders need to apply online for an electronic visa for stays with a duration of up to 45 days. Applicants need to fill in their personal information, upload a copy of their passport and pay a fee of USD50 by credit card via the website. Once this is done, applicants receive an electronic visa by email within two days.

Source: e-Visa Tajikistan

Date last reviewed: August 15, 2019

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