operating report - EBRD

SECRETARIAT OF THE CONSULTATIVE COUNCIL ON IMPROVEMENT OF INVESTMENT CLIMATE UNDER THE PRESIDENT OF REPUBLIC OF TAJIKISTAN

OPERATING REPORT (II half of 2008 and I half of 2009)

Dushanbe, 2009


CONTENTS INTRODUCTION ...................................................................................................................3 I. CREATION OF THE CONSULTATIVE COUNCIL

........................................................5

1.1. The Council’s place within the government system 1.2. The Council’s aims, objectives and activities

..................................5

.............................................6

1.3. Composition of the Council ..............................................................................8 1.4. Organization of the Council’s work

......................................................12

II. ACHIEVEMENT OF THE COUNCIL’S AIMS AND OBJECTIVES.......................................15 2.1. Council meetings

.......................................................................................15

i) First Council meeting ......................................................................................15 ii) Second Council meeting ............................................................................16 iii) Preparation of documents for the third Council meeting ........................18 2.2. The Secretariat work between meetings .......................................................20 CONCLUSION

............................................................................................................27

Abbreviations

............................................................................................................30

ANNEXES

............................................................................................................31

OPERATING REPORT (2-nd half of

2008 and 1-st half of 2009)

| 2


Introduction The Government of the Republic of Tajikistan has in recent years implemented a number of major economic reforms aimed at improving business environment in the country. Government initiatives aimed at improving business regulation and attracting investment have included the adoption of a Tax Code and a Customs Code as well as laws on the Registration of Legal Entities and Individual Entrepreneurs, Bankruptcy, Pledge of Movable Assets, Licensing, Business Inspections in Tajikistan, Investment, Free Economic Zones and others. Of special importance among measures taken to improve the investment climate is the Tajikistan National Development Strategy up to the year 2015 and the Tajikistan Poverty Reduction Strategy 2007-2009. In spite of this, it must be said that the reforms have not been completely successful or effective. Entrepreneurs continue to experience excessive government regulation. Improvements to the investment climate are hampered (not only) by the poor infrastructure, but also by the imperfection, incompleteness and complexity of the legislative framework, problems with corporate governance, insufficient protection of ownership rights and unnecessary administrative barriers. Attempts to improve the business environment encounter incomprehension and resistance to change on the part of govern-


ment bodies. Tajikistan’s business climate indicators are lower than those of other transition countries. The private sector share of the GDP is only 43 per cent and is the lowest among the former Soviet countries. Tajikistan has only one small business per 1000 people, compared to 6 in Russia and at least 30 in EU countries. To implement a unified policy of improvement of the business environment and investment climate, Presidential Order No. 356 of 19 December 2007 created a Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan (“the Council”). The creation of a Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan is also envisaged by the Tajikistan Poverty Reduction Strategy 2007-2009. The Council is a consultative body attached to the Office of the President of Tajikistan, based on the concept of public-private partnership. The Council’s mission is to encourage government bodies to take an active part in improving the business environment, attracting investments into the economy and in the conduct of a consistent and coordinated investment policy, and to establish a


| 3


constructive public-private dialogue (Poverty Reduction Strategy 20072009). Under the terms of its approved Statutes, the Council’s main objective is to prepare agreed recommendations and proposals on improvements to the business environment and the investment climate for the President and Government of Tajikistan. The Council’s work is organised and supported by its Secretariat, responsible for the preparation of the materials required for the Council to conduct its meetings and reach its decisions. The Secretariat is responsible both for preparing Council meetings and for advancing the Council’s recommendations to the practical decision stage, for monitoring their implementation etc. The provision of information forms the core of the Secretariat’s activities. The Council’s Secretariat attaches great importance to issues of awareness and transparency, which is vital to the public-private dialogue. The purpose of this report is to provide the EBRD and the donor community with information about the results of the Council’s efforts to promote private sector reform and achieve convergence between government and business interests. It also describes the Secretariat’s work on the achievement of these objectives.



| 4


I. Creation of the Consultative Council 1.1. The Council’s place within the government structure National development at a time of global change requires coordinated government decision-making based on accurate, broad-ranging and thoroughgoing information about the status of the various sectors of the economy, which is more readily available to the private sector. Against this background and in view of the traditional vertical relationships prevailing within the government

structure, it becomes increasingly relevant to establish horizontal links with partners (civil society organisations) and thus to enable the government to create opportunities for an exchange of information and for coordinated decision-making. The impetus for the creation of the Council was provided by the need to establish a permanent dialogue and a platform for consultations between government authorities and the various non-governmental organisations.

THE PLACE OF THE CONSULTATIVE COUNCIL ON IMPROVEMENT OF INVESTMENT CLIMATE UNDER THE PRESIDENT OF REPUBLIC OF TAJIKISTAN WITHIN THE GOVERNMENT STRUCTURE

Adminstrative system

Business organisations

Multilateral donor organisations

Council Chairman, The President of Republic of Tajikistan

Consultative Council on improvement of investment climate

Bilateral donor organisations

Foreign investors


The Prime Minister of Republic of Tajikistan

State Committee on Investments and State Property Management Head of Council Secretariat


| 5


The Constitution of Tajikistan and its other laws do not provide for a Consultative Council. Nevertheless, the President thought it appropriate to create the Council as a body for the preliminary scrutiny and preparation of management decisions on the improvement of our country’s business environment and investment climate. The Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan (“the Council”) is a consultative body attached to the Office of the President of Tajikistan. Its task is to prepare recommendations and proposals on improvements to the business environment and to the investment climate for submission to the President and Government of Tajikistan and other government agencies. The Council has institutionalised the informal government-business dialogue and put it on a permanent footing. Tajikistan has found the idea of “consultative bodies” quite an attractive one. In addition to our Council, it has created a number of others, also attached to the Office of the President, granting them advisory powers. They include the National Development Council, Information and Communication Technologies Council and others. Nevertheless, in spite of organisational and institutional difficulties, it has been the Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan that has


achieved the highest profile. 1.2. The Council’s aims, objectives and activities The Council aim is to facilitate publicprivate dialogue on the development of a unified national policy leading to an improved business environment and investment climate capable of ensuring social progress. The Council main objectives is to prepare agreed recommendations and proposals on improvements to the business environment and the investment climate for the President and Government of Tajikistan (the Statute of the Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan, Presidential Order No. 356 of 19 December 2007). To this end, the Council has been granted specific powers. It has the right to: - receive presentations on improvements to the business environment and the investment climate from government agency representatives; - submit recommendations and proposals on further improvements to government policy on improving the investment climate to government agencies. However, practice has shown that the lack of alignment between these powers and the current administrative system forms a barrier to the successful


| 6


implementation of the Council’s decisions. The administrative system is in need of radical reform. The range of Council's activity is determined by the Secretariat in a process of consultation with Council members, business bodies and donor organisations. It is based on the priorities of the National Development Strategy up to the year 2015 and the Poverty Reduction Strategy 2007-2009. Bearing in mind the strategic priorities and the logic of doing business, the range of the Council’s activities is determined as follows: The Council prepares recommendations on: 1. Simplifying business start-up and closing procedures 2. Improving tax and customs administration 3. Improving licensing and inspection procedures 4. Improving investor rights legislation, including property rights 5. Introducing and developing corporate governance 6. Improving foreign trade, standardisation and certification procedures 7. Improving lending, leasing and insurance procedures 8. Demonopolising and improving public services 9. Government support of business development and access to world markets



Long-term priorities of the National Development Strategy up to the year 2015: • Public administration reform; • Private sector development and attracting investments; • Development of human potential The main objectives of the Poverty Reduction Strategy 20072009 (relevant to improving the investment climate): • Implementation of institutional reforms; • Mitigation of general investment and business risks; • Reducing barriers to market entry for investors and entrepreneurs; • Reducing the cost of doing business and investing; • Offering government support to business and investment

| 7


1.3. Composition of the Council The Council consists of a Chairman and Council members. The ex-officio Chairman of the Council is the President of Tajikistan. The composition of the Council is based on the principle of voting parity. Its exofficio permanent members are: • The Prime Minister of Tajikistan; • The Chairman of State Committee on investments and state property management of Tajikistan; Non-permanent membership consists of representatives of the most active national business associations, foreign investors involved in large local investment projects and representatives of bilateral and multilateral donor organisations. To ensure wide representation, Council membership is based on the principle of rotation of non-permanent members representing the non-governmental sector. Rotation is based on the following pattern: -- Business representatives (local and foreign investors) rotate every two to three meetings; -- Representatives of multilateral donor organisations rotate every year; -- Representatives of bilateral donor organisations rotate as appropriate for the subjects to be discussed at Council meetings.


The composition of the Council was determined and approved taking into account other countries’ experience of the creation of similar Investment Councils financed by European Bank for Reconstruction and Development. Based on the approved mechanism, the Council Secretariat initiated the process of nomination and selection of candidates from the non-governmental sector for the first three Council meetings by holding a series of events, round tables and forums in a number of cities. The events resulted in the nomination of: • 16 candidates representing business associations; • 16 candidates representing private entrepreneurs. This was narrowed down to two representatives of national business associations, proposed the Business Associations and Non-Governmental Organisations Coordinating Committee (KSBAOOT) and selected from among the heads of business associations and local company directors. The Chairman of LLC «Rukhom» and Chairman of Tajikistan National Small and Medium-Sized Enterprises Association have joined the Council. Nominations for Council members representing the non-governmental sector were approved by a minuted decision of the first Consultative Council meeting, held on 16 August 2008.


| 8


The Business Associations and Non-Governmental Organisations Coordinating Committee (KSBAOOT): KSBAOOT was formed in December 2007 with the aim of consolidating the efforts of the business community aimed at economic reform and at the creation of an effective, stable market economy. The membership of the Coordinating Committee currently includes 20 business associations and non-governmental organisations, representing every region of Tajikistan. Its Chairman rotates every year. In 2007, the Committee was chaired by the head of the Tajikistan Entrepreneurs and Exporters Union (SPET). The Union was formed in 2005. Its key objective is to combine the forces of the business community in the creation of effective market mechanisms. Its membership includes over 300 individual businessmen and approximately 10 industry and corporate associations.

Council members representing national business associations: The Tajikistan National Small and Medium-Sized Enterprises Association is a nongovernmental, not-for-profit voluntary association of business bodies. Its interests include protecting entrepreneur rights, lobbying on their behalf, professional development, providing information on corporate growth, identifying partners and lowering administrative barriers. The Association has been an active participant in many working parties on the improvement of Tajikistan’s business environment and in the preparation of strategic documents, including NDS and PRS. It has also carried out research on the business environment, employer competitiveness and child labour and participated in drafting the current Tax and Customs Codes. LLC «Rukhom» - makes gemstone products, including folk craft ornaments and souvenirs. It also specialises in assembling mineral collections. It is a gemstone market leader, employing over 120 people.



| 9


The foreign investors’ representative was selected from among nominations submitted by foreign companies, «Kryso Resources plc.», «Diplomatix Bau-Engineering u. Organization Ltd» and «Tethys Tajikistan Limited», which expressed a wish to join the Council.

Candidates were selected on the basis of their involvement in large investment projects in priority sectors of the economy.

The nominations were received in response to an approach made by the Secretariat to all embassies and foreign organisations.

Following consultation with permanent Council members, «Tethys Tajikistan Limited» was selected to act as the foreign investors’ representative in the Council.

Six candidates representing large foreign investors were put forward.

Foreign investors: «Tethys Tajikistan Limited» is an open joint stock company operating in the oil and gas industry. It has considerable experience of oil and gas exploration and production in Kazakhstan, Georgia, Ukraine, Syria and elsewhere, as well as experience of drilling deep high pressure wells and horizontal wells. Tethys is the first private company to have been involved in developing Kazakhstan’s gas fields. «Diplomatix» is a German building operations and building materials company which uses high-performance equipment in its manufacturing processes. It also supplies brick-making equipment and finishing materials as well as metalworking and mining machinery. In 2005-2008, Diplomatix supplied the equipment for two quarries – one in the Isfarinsky and one in the Shakhristansky region (Sogdiskaya Province) of Tajikistan. It has also signed a consortium agreement with an Isfarinsky region company to invest their own funds and funds borrowed from various financial institutions, a total of €10 million, in a project to manufacture brick, cement, and dry mix building materials and to install a crushing plant using local raw materials to produce natural masonry blocks. «Kryso Resources plc» (Kryso) is a mining company focussing largely on the development of gold and other precious and base metal deposits. Its management has considerable experience of work in Tajikistan and believes that Kryso is the first foreign company with a 100 per cent interest in the mining industry and in an exploration programme in Tajikistan.



| 10


Two donor community representatives – one from the EBRD and one from USAID, were chosen by mutual agreement of the parties and introduced at the Donors’ Coordinating Committee. Council members representing the nongovernmental sector were approved by a minuted decision of the first Consultative Council meeting, held on 16 August 2008. In accordance with the Council’s rules of procedure and to ensure transparency, other representatives of business associations, foreign investors and donor organisations may also be present at Council meetings. The following were present as observers at the first Council meeting: • EBRD Director for Central Asia, М. Honma; • DeputyDirector,UnitedStatesAgency for International Development (USAID), S. Kelly; The following were present as observers and invitees at the second Council meeting: • Director, IFC Tajikistan Business Enabling Environment Project, W. Werner; • Presidential economic policy adviser, М. Davlatov;

MEMBERSHIP of the Consultative Council on Improvement of Investment Climate under the President of Tajikistan at the time of its first two meetings Public sector representatives: The President of Tajikistan - E. Rakhmon Chairman; The Prime Minister of Tajikistan - А. Akilov; Chairman of the Tajikistan Investment and State Property Management Committee F. Khamraliev – Executive Secretary; Bilateral and multilateral donor organisation representatives: EBRD Head of Office, Tajikistan - Matthieu Le Blan; Director, Tajikistan Office of the United States Agency for International Development (USAID) - C. Brian; Local and international investor representatives: General Director, LLC «Rukhom» - М. Мukhabbatov Chairman, National Small and MediumSized Enterprises Association - М. Uljabaeva; President, «Tethys Tajikistan Limited» – D. Robson; Others: Head of Consultative Council Secretariat – Sh. Zardov;



| 11


1.4. Organization of the Council's work Council meetings The Council’s work is conducted through its meetings. Section 7 of the Council’s Statutes requires the meetings to be held as necessary, but at least once every quarter. Council meetings are quorate if 2/3 of its members are present. Between April 2008 and May 2009 the Council held two meetings, and made preparations for a third one (cf. section 2.1. below). The Council’s rules of procedure require every meeting to start with a Secretariat report on the implementation of the previous meeting’s decisions. Council members may receive ministry or departmental reports on the implementation of its recommendations. The reports are required to include information on the implementation of Presidential decisions relating to issues concerning the development of the private sector and improvements to the business environment and investment climate (previously discussed at Council meetings). Council decisions The Council’s rules of procedure require its decisions to be made by a majority of votes and to be minuted; the minutes must include recommendations made by the Council to the relevant Ministries and Departments and to other organisations involved in the process. They must be


approved by the President of Tajikistan as Chairman of the Council. In practice, Minutes approved by the President are forwarded by the Head of the Executive Office of the President to Ministries and Departments for implementation. Council decisions are given wide coverage by the media. The minutes are prepared by the Secretariat and signed by its Executive Secretary and Head of Secretariat following each meeting. The ex-officio Executive Secretary of the Council is the Chairman of the Tajikistan Investment and State Property Management Committee (“Goskominvest”). Organisational and technical support of the Council’s work Organisational and technical support of the Council’s work is provided by the Council’s Secretariat, which is its operating arm. The Secretariat’s main task is to support the work of the Council. This includes: -- Preparing materials for the meetings and for decision making by the Council (i.e. determining and agreeing the topics to be discussed at Council meetings, preparing proposals and recommendations in the form of specific management decisions (Presidential and Government decisions), preparing information on improvements to the business


| 12


environment and investment climate for Council members and preparing memoranda on the implementation of Council decisions; -- Dealing with the organisational and technical aspects of Council meetings (i.e. deciding on the venue, arranging for translation services, distributing documents etc.); -- Coordinating and liaising between international organisations, business associations and government agencies as well as working parties preparing materials for the meetings and for the decision-making process; -- Summarising proposals for improvements to the business environment and investment climate put forward by government agencies, business bodies and international organisations submitted to the Council;

To enable it to carry out these tasks, the Secretariat has the following resources at its disposal: -- It enjoys political support (the Head of the Secretariat is a permanent member of the Council; the Secretariat can take independent action). -- The Secretariat has sufficient human resources to organise its work (its personnel includes a legal, an economic and a financial expert, an Assistant Head of Secretariat and a Head of Secretariat, both of whom were selected on a competitive basis and are independent of the authorities; the Secretariat has the right to involve other experts in its work). During the period under review, the Assistant Head of Secretariat, and the Legal and the Economics Experts were appointed and contracts have been signed with them.

-- Analysing regulatory documents relevant to business and investment and submitting proposals on their improvement to the Council;

The Secretariat also receives expert assistance, offered under the terms of the Joint Operations Plan, from the BEI Project (USAID) and the BEE Project (IFC).

-- Drawing up proposals for the creation of new mechanisms to attract inward investment (developing strategies and defining priorities) and to improve the business environment;

The Secretariat has sufficient technical and financial resources to organise the work of the Council (i.e. to prepare materials, conduct Council meetings and discuss project documents).

-- Monitoring the implementation of decisions made by the Council;

The Secretariat has its own office, fully furnished and equipped.

-- Providing information support to the Council;

The official opening of the Secretariat Office took place in November 2008.



| 13


Those present included representatives of the Tajikistan State Property Management Committee, the donor organisations (EBRD, World Bank, the Asian Development Bank, DFID, EC, USAID, IFC, UNDP and others). The Council secretariat is located on the 6th floor of the Sokhibkoron Business Centre, Dushanbe, 3 Loik Sherali str.

THE ORGANISATIONAL STRUCTURE OF THE SECRETARIAT

Head of Secretariat

Assistant to Head of Secretariat

Legal Expert


Economics Expert


Financial Expert

| 14


II. Achievement of the Council’s aims and objectives The organisational framework underpinning the achievement of the Council's aims and objectives (the establishment of a public-private dialogue) consists of: • Council meetings • The work of the Council Secretariat between Council meetings: -- Coordination and liaison between partners; -- Monitoring the implementation of Council decisions; -- Information support of the Council’s work. 2.1. Council meetings During the period under review, the Council held two meetings, and preparations have been made for a third one. i) The first Council meeting The meeting took place on 31 July 2008 in Dushanbe, at the Executive Office of the President. The meeting was organisational issues.

devoted

to

The agenda consisted of four items: the Council’s aims and objectives, the organisational structure and membership of the Council, its role in addressing business issues, and determination of the agenda for the second meeting.


In preparation for the first meeting, the Secretariat carried out the following work: • It organised and held a number of informal meetings with: - Tajikistan business associations - in Dushanbe (29.04. 2008), - Entrepreneurs from Karaikum and Chkalovsk (2.05. 2008г.), - Khodzhent Union of Business Associations (3.05.2008), - Tajikistan Donors Coordinating Council (6.05.2008), to discuss nominations to the Council; • It held consultations on nominations from the non-governmental sector and agreed the agenda for the meeting jointly with the State Committee on Investment and State Property Management of Republic of Tajikistan; • It summarised recommendations and proposals received from business associations, individual entrepreneurs, foreign investors and donor organisations and submitted them to Council members; • It organised a PR campaign to publicise the start of the Council’s work. The following articles were published in the press: -- “ Business and the authorities – the start of a constructive dialogue”, Asia-Plus No 33 (477) of 13 August 2008); -- “We need more radical reforms”, an exclusive interview with Sh. Zardov,


| 15


Asia-Plus No 35 (479) of 27 August 2008. -- “Tajikistan improves its investment climate” written by Council member M Uldzhabaeva, Director of the National Small and Medium-Sized Enterprises Association, Asia-Plus, 12 September 2008. -- “Growing business with ARI”, written by Council member M Uldzhabaeva, Director of the National Small and Medium-Sized Enterprises Association, Asia-Plus No 39 (453) of 24 September 2008. The first Council meeting made the following decisions: • It approved Council membership, the non-permanent member rotation pattern, the Council’s work format and the appointment of the Head of Secretariat; • It determined the agenda for the second Council meeting, devoted to improvements to Tajikistan’s licensing and regulatory framework. Results: The Council launched the public-private interaction mechanism. ii) The second Council meeting The meeting took place on 18 December 2008 in Dushanbe, at the Executive Office of the President. It dealt with streamlining the administrative procedures required to start up and to conduct business. Its agenda included the following items:


I. Approaches to reforming Tajikistan’s permits system. II. Priority government measures to improve Tajikistan’s Doing Business ranking. III. Measures to streamline the administrative procedures relating to construction work in Tajikistan. In preparation for the second meeting, the Secretariat undertook the following work: -- It held working meetings with the IFC Small and Medium-Sized Enterprise Development Project (BEE) and the USAID Business Environment Improvement Project (BEI). The meetings recommended specific items for inclusion in the agenda of the second meeting. -- It held discussions with the USAID BEI Project on offering the Secretariat technical assistance (consultations) on the evaluation of the mechanism for reforming the system of permits. USAID offered the Secretariat the services of its international regulatory system expert from Moldova, who spoke to it about the implementation of reforms in Moldova and provided an expert assessment of the reform project documents prepared by SCISPM RT with technical assistance from IFC. In response to the Secretariat’s request, the expert also held separate consultations with business associations to discuss the mechanism for reform of the permits system.


| 16


-- It organised three rounds of discussions with business associations, which examined project documents submitted to the second Council meeting. The meetings were attended by representatives of SCISPM RT and donor organisations (IFC and USAID). -- It organised a PR campaign to explain the proposed reforms. The daily AsiaPlus published the following articles: --

“Permits system: Reform needed”. Written by the Secretariat, No 44 (458) of 29 October 2008.

--

“To build or to permit”, No 43 (457) of 22 October 2008. The article was written by BEI (USAID) at the Secretariat’s suggestion. It was also published in Tajik in Nuri Zindagi No 24 of 18 December 2008.

--

implementation -- The State Committee on Investment and State Property Management was instructed to agree the approved Draft Presidential Decrees on permitting reform and on streamlining administrative procedures relating to construction work with the relevant Ministries. -- Some organisational decisions were also made: the tenure of the President of Tethys Tajikistan Limited was extended for a further four meetings and the number of members representing local and foreign investors was increased from three to five. -- It determined the agenda for the next Council meeting: -- Implementation status of all decisions made by the second Council meeting; -- Draft “200 Days of Reform” programme.

“Ratings and why we need them”, Asia-Plus No 2 (469) of 14 January 2009, written by Council member M Uldzhabaeva, Director of the National Small and Medium-Sized Enterprises Association.

Results:

“Permit us not to permit!”, Asia-Plus No 43 (457) of 22 October 2008, written by IFC personnel at the suggestion of the Secretariat.

-- The meeting demonstrated the growing interest of the Government (as represented by the President of Tajikistan) in the Council’s work;

The second Council meeting made the following decisions:

-- It determined the Council’s course of action for the immediate future;

-- The President of Tajikistan approved the Plan of Priority Measures to Improve Tajikistan’s International Ranking and forwarded it to the Government for

-- The Council has become a unique forum for addressing a range of issues associated with doing business in Tajikistan;

--



| 17


-- It agreed a mechanism for reforming the system of permits; -- It made a political decision to improve Tajikistan’s World Bank Group Doing Business ranking. iii) Preparation of materials for the third Council meeting The meeting is planned for early June 2009. The agenda will include the following items: I. Presentation of reports on the implementation of decisions made by previous Council meetings by the relevant Ministries; II. Draft “200 Days of Reform” programme. In preparation for the third meeting, the Secretariat carried out the following work: - It approached all interested parties asking for recommendations on improving the business environment and methods of doing business, improving the legal framework and other issues of interest to business for inclusion in the “200 Days of Reform” programme;

- It arranged for extended coverage of the “200 Days of Reform” programme by the media (articles, correspondence etc.); - It organised round tables to discuss the “200 Days of Reform” programme; - It held discussions with the IFC on technical assistance to the Secretariat (consultations) on the establishment of a public-private dialogue. IFC offered the Secretariat the services of its international expert (Senior Specialist from the World Bank Group’s Private Sector Development Department, Benjamin Herdberg), who spoke to the management and personnel of GKI, the Secretariat and several business associations about other countries’ experience of establishing public-private dialogue. Based on his comments on the Council’s work, the Secretariat prepared a proposal for amending the existing Statutes.

- Acting in cooperation with GKI, it organised a series of meetings with business associations to discuss the draft “200 Days of Reform” programme; - It held working meetings with donor organisations to discuss technical support for the “200 Days of Reform” programme;



| 18


The Programme «200 days of reforms» The idea of the “200 Days of Reform” Programme was first mooted by the President at the second Council meeting, and was included in the agenda for the third meeting. In his annual address to the Majlis Oli (the Parliament of Tajikistan), delivered on 15 April 2009, the President assigned State Commettee on Investment and State Property Management of Republic of Tajikistan (SCISPM RT) the task of developing the programme with the direct participation of the business community. SCISPM RT developed the programme with the direct participation of the business community and international organizations involved in technical assistance projects relevant to private sector development. The Secretariat played an active part in drafting the programme, providing technical (expert) and information support to SCISPM RT. In particular, it prepared a summary of private sector issues and an analysis of current international business support projects, compiling a technical assistance map which has formed the basis of the “200 Days of Reform” Programme. The programme is intended to promote administrative and regulatory reform and to support business development. Its measures are a continuation of the Council’s earlier decisions on lowering and removing barriers to business development. Measures to streamline administrative procedures envisage the introduction of the “One stop shop” principle in several areas, including business registration, licensing, issuance of permits and foreign trade operations. Some measures included in the programme are directed at increasing the number and defining the advantages of “simplified taxation forms”, and creating a business development infrastructure. The programme also includes laying the foundations of long-term reform aimed at protecting business interests. When implemented, these measures will improve Tajikistan’s World Bank Doing Business ranking.



| 19


2.2. The Secretariat work between the Council meetings To ensure implementation of the Council’s aims and objectives, its Secretariat undertakes the following work between Council meetings: - Coordinates and maintains liaison with partners; - Monitors the implementation of Council decisions; - Provides information support of the Council’s work. Objective: To work together with government authorities, businesses and not-for-profit organisations, NGOs and other partners to improve the business environment. а) Working together with government authorities: • The Secretariat has established close cooperation with SCISPM RT: - The Secretariat and SCISPM RT have cooperated on the preparation of Council recommendations on management decisions aimed at improving the business environment (draft Presidential Decrees and Government Resolutions); - The two organisations have developed mechanisms for joint monitoring of the implementation of Council decisions. • The Secretariat participates in the work of governmental and interdepartmental working parties, in particular those associated with monitoring observance


of the terms of the moratorium, the introduction of one-stop-shop registration of legal entities and licensing reform. As part of its work on monitoring observance of the terms of the moratorium, the Secretariat has promoted the procedure for improving the legislation on inspections, participated in discussions and promoted the Draft Presidential Decree on a Moratorium on All Business Inspections and the Draft Law on the Moratorium on Business Inspections. Participating in the working party on the introduction of one-stop-shop registration of legal entities, the Secretariat contributed to drafting and debating the Draft Law on State Registration of Legal Entities and Private Entrepreneurs and to the information campaign on one-stop-shop registration of businesses. Participating in the working party on licensing reform, it contributed to developing the procedures for revising regulatory documents governing the issue of permits to businesses and conducted a vigorous campaign promoting licensing system reform. • The Secretariat works to establish cooperation with the Executive Office of the President of Tajikistan and with other departments: - It holds working meetings with the managers of the relevant Executive Office units; - It provides them with a monthly information bulletin (cf. below).


| 20


в) Dialogue with business associations • To achieve its objectives and support the work of the Council, the Secretariat works to establish a dialogue with business associations: -- I t participates in KSBAOOT meetings. It has formed a working party consisting of heads of associations which are members of KSBAOOT; -- It maintains continuous contact with Council members representing the private sector (heads of business associations); -- It invites the associations’ representatives to debates on issues submitted to the Council for its consideration; -- It summarises proposals and recommendations put forward by business organisations. As part of the preparation of the “200 Days of Reform” programme, the Secretariat, having summarised proposals received from business associations and individual entrepreneurs, published them in its monthly bulletin and whenever possible took them into consideration when preparing the draft programme. -- It offers consultancy to businesses on request (explaining how to deal with government authorities).


с) Working together with international partners An important area of the Secretariat’s work is collaboration with international partners. The collaboration covers a number of areas: • The Secretariat participates in the Donors’ Business Enabling Environment Working Group (BEE WG). As part of its work with ВЕЕ WG, the Secretariat has assumed the role of catalyst in promoting the idea of onestop-shop registration of legal entities (by preparing a Draft Law), and of regulatory reform. • The Secretariat has held bilateral and multilateral discussions of the issues within the Council’s terms of reference: -- As part of its work on the preparation of Council meetings, it has held a series of discussions on the items on the agenda for the second Council meeting with IFC and USAID (cf. Item 2.1); -- It has consulted ADB and World Bank representatives on matters of private sector development strategy; • The Secretariat has started active cooperation with the World Bank Group on improving Tajikistan’s international Doing Business ranking:


| 21


-- Acting on the Secretariat’s initiative, USAID has arranged for a Government delegation to attend a World Bank Group Doing Business2009 presentation on Kyrgyzstan, which served as a venue for discussions with World Bank representatives (Simeon Dyankov and Umar Shavurov) which led to an agreement in principle on cooperation with the World Bank team on improving Tajikistan’s ranking; -- The Secretariat keeps its partners up to date on the progress of reforms contributing to the improvement of Tajikistan’s Doing Business ranking; -- It provides explanations of how the rankings are calculated.

Information on BEE WG: BEE WG was established to coordinate the donors’ current and future work on the creation of a business enabling environment by establishing a dialogue between the participants. It was launched on 4 April 2008. It holds monthly meetings. Its members include representatives of the Investment and State Property Management Committee, the Head of Secretariat and of donor organisations – the European Commission, USAID, DFID, SECO, the Asian Development Bank and others.

• The Secretariat involves donor project experts in its work. • As required by the minuted decision made at the second Council meeting, the Secretariat has analysed the progress of donors’ technical assistance projects on the institutionalisation of the business environment.



| 22


The Secretariat’s partner organisations USAID- funded Business Environment Improvement Project (BEI): This project promotes economic development by: assisting with capacity building within public and private sector organisations to enable them to participate in effective dialogue, to strengthen a modern free market supported by commercial law, to improve implementation of business and government-related legal reforms in order to reduce the cost of doing business, and to remove barriers to the development of small and medium-sized enterprises (SME). BEI is designed to run for four years. The project works directly with the Government, local administrations, the private sector, service providers and business associations. Its main goals are the reform of commercial law, streamlining regulatory processes, strengthening associations and promoting dialogue. The project aims to reform the following areas: • The issue of licences and permits • Government inspections of business activities • Land site acquisition and real estate construction and development • Registration and winding-up of businesses; • Procedures for and practices of government procurement of goods and services; • Tax policy and tax administration The project provides consultative assistance and training and in some cases uses subcontractor services to provide limited financial support to associations and select private sector partners to carry out specific reforms aimed at improving the legal environment for business.



| 23


International Finance Corporation (IFC) Business Enabling Environment (BEE) Project The aim of this project is to support the development of small and medium-sized businesses (SME) in Tajikistan by improving the business environment. The project was launched in 2003 and is financed by SECO and DFID. It offers assistance to the Government of Tajikistan in reforming inspection and licensing procedures with the aim of improving the business environment for small and medium-sized enterprises (SME) and promoting their development. The project monitors the business environment by conducting regular surveys of the SME sector and collecting factual information from entrepreneurs in all regions of Tajikistan. Based on the information gathered by the surveys, the project provides support to the Government of Tajikistan in implementing legal reform and removing administrative barriers. It places special emphasis on the reform of legal and inspection procedures. The project has assisted with the drafting of the Inspections Act and amended the Tax Code accordingly. The project conducts a targeted information campaign through the media and training courses for entrepreneurs and for government personnel, chiefly in their rights and duties in the regulatory process.



| 24


Objective: To monitor the implementation of the Council decisions. A Council decision of 18 December 2008 required the Secretariat to monitor the implementation of its decisions. The Council’s decision requires every meeting to start with a Secretariat report on the implementation of the previous meeting’s decisions. Monitoring the implementation of Council decisions consists essentially in monitoring the progress of project documents through the administrative process, and of their implementation following approval by the President or Government of Tajikistan. Quantitative data are used to prepare progress reports for the information of Council members. These reports are then published in the Secretariat’s bulletin. Monitoring risks: • The Secretariat’s limited power to demand the release of the required information; • Lack of sufficient discipline to enforce performance on the part of the authorities Objective: Information support for the Council's work. In addition to providing the Council with organisational and technical support, the Secretariat disseminates information on its work.


Information support is seen as one of the Secretariat’s priority concerns. A major component of information support consists in encouraging businesses to take an active part in the Council’s work. This is necessary work, because Tajikistan’s private sector still lacks the organisation and the structure required for it to become the Government’s equal partner. During the period under review, the Secretariat’s main activities in the area of information support included: • Information support for the Council's work (PR compaign). -- The Secretariat conducted a series of fact-finding meetings with regional business organisations at the start of its operation. The meetings took place in Sogd Province, in the Shaartuz Region of Khalton Province and in Dushanbe. (cf. section 2.1.); -- It organised a presentation to mark the opening of its office in Dushanbe; -- The Secretariat published a number of articles and notices dealing with the work of the Council in the local media. • Dissemination of information about Council decisions Under this heading, the Secretariat has undertaken the following activities:


| 25


-- Publication of short summaries and press releases about Council decisions in all news, information and analysis media;

• Draft Presidential Decree on streamlining administrative procedures relating to construction work in Tajikistan;

-- Holding press conferences;

• Discussion, with the Doing Business team, of the Recommendations on improving Tajikistan’s rankings;

-- Holding working meetings with representatives of business associations and international partner organisations to inform them about Council decisions;

• Draft 200 Days of Reform Programme

-- Regular publication in the press of analyses (own articles) and of correspondence on matters within the Council’s terms of reference; -- Distributing a monthly bulletin with information about Council decisions and their implementation, business news etc. In addition, acting on the Secretariat’s suggestion, technical assistance projects have been publishing explanatory notes and articles on matters within the Council’s terms of reference. Preliminary consultations with stakeholders on agenda items have become a permanent feature of the Secretariat’s work. The Secretariat has held meetings to discuss: • Draft Presidential Decree on Permitting Reform and Draft Regulations on the Revision of Regulatory Documents Governing the Issue of Business Permits;



| 26


Conclusion The results of our work in the second half of 2008 and the first half of 2009 have demonstrated that although the national development system remains imperfect, the creation of the Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan has served as an important stimulus and a catalyst for the initiation of a meaningful dialogue between business and the Government of Tajikistan. The creation of the Consultative Council on the Improvement of the Investment Climate has contributed to: -- energising organisations:

non-governmental

• T he Tajikistan Business Associations and Non-Governmental Organisations Coordinating Committee (KSBAOOT) as been established; • Local non-governmental organisations and business associations have intensified their promotion of the principle of social partnership between business and government and of the creation of business organisations to address emerging issues; • Business associations now take an active part in drafting laws and in debates about them. -- working towards convergence of interests between the authorities and business associations


• B usiness associations and the Tajikistan Investment and State Property Management Committee have signed a Memorandum of Cooperation on improving Tajikistan’s international ranking; • The authorities and their senior personnel are now developing a clear understanding of the role of business in the country’s economic development and of the barriers to doing business they have created. • A minuted decision of the second Council meeting increased the number of members representing business organisations (local and foreign) from three to five. -- encouraging international partners to join forces to promote business interests: • A new Donors’ Business Enabling Environment Working Group (BEE WG) has been set up to coordinate the work of international projects on improving the business environment; • The Secretariat holds regular consultations with international partners on their participation in the work of the Council; • Many donor organisations intend to continue promoting their initiatives through the Council and have expressed a wish to support the Council’s work.


| 27


However, in spite of these positive results, the Council’s has encountered a number of subjective and objective problems which impose constraints on its work. These risks include: • Weak political support of the Council’s work – The relevant administrators are not fully aware of the important role played by consultative bodies able to ensure horizontal policy coordination. Initiatives to create consultative bodies originate mainly from international partner organisations (EBRD, JICA, UNDP and others) and are perceived by government officials as temporary measures in the nature of projects. • A lack of understanding and reluctance on the part of government officials to change their relations with business – The authorities’ overwhelming model of government-business relations is a hierarchical one. Reducing the “administrative burden on business” deprives officials of powers and of a source of income. • Weak support on the part of business bodies – On the one hand, business is very mistrustful of the proposed policies, while on the other it is itself very poorly consolidated: the existing business associations (seen as the main structural unit) cannot effectively represent the interests of the business community. The culture and mentality required for the successful operation of business associations has not yet


been formed. • No interest on the part of GKI – GKI’s management, perceiving the Council as duplicating its own functions, prevents prompt implementation of the Council’s initiatives. The Council’s own Statutes do not make a sufficiently clear distinction between the roles of its Head and its Executive Secretary. • Lack of interest on the part of international partner organisations – Many international organisations are unwilling to commit to contact and coordination. There exists tacit competition between international projects. To impart greater stability to the Council’s work, the Secretariat plans to: • Continue increasing public awareness of the importance of the Council’s work; • Broaden dialogue with government departments (in particular with the Presidential Executive Office, the Ministry of Economic Development and Trade, the Ministry of Finance, the Justice Ministry, and the Tax and Customs Committees) as well as with business associations and individual business people, partly within the framework of KSBAOOT; • Expand its cooperation international partners;

with

• Encourage regional business bodies


| 28


to take an active part in the Council’s work; • Promote the measures included in the “200 Days of Reform” programme and ensure their successful implementation. From the organisational point of view, and wishing to improve the quality of its work, the Secretariat plans to: • Design a Council website, which will be launched in the first ten days of June (to be called: www. investmentcouncil.tj); • Review the roles within the Secretariat, adding a new post of “Information and Feedback Specialist”, who will combine the role with that of the Assistant Head of Secretariat.



| 29


ABBREVIATIONS

BEE

Small and Medium-Sized Enterprise Development Project

BEI

Business Environment Improvement Project

BEE WG

Donors’ Business Enabling Environment Working Group

DFID

UK Department for International Development

ЕС

European Commission

EBRD

European Bank for Reconstruction and Development

GDP

Gross Domestic Product

SCISPM RT State Commetee on Investment and State Property Management RT IFC

International Finance Corporation

JICA

Japan International Cooperation Agency

KSBAOOT

Tajikistan Business Associations and Non-Governmental Organisations

Coordinating Committee

LLC

Limited Liability Company

RT

Republic of Tajikistan

SECO

State Secretariat for Economic Affairs, Switzerland

SPET

Tajikistan Entrepreneurs and Exporters Union

UNDP

United Nations Development Programme



| 30


ANNEXES 1. Annex 1 Presidential Decree On the Creation of a Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan; 2.

Annex 2 Statutes of the Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan;

3. Annex 3 Minutes of the first meeting of the Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan, held on 31 July 2008; 4. Annex 4 Minutes of the second meeting of the Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan, held on 18 December 2008; 5. Annex 5 Presidential Decree on Measures to Streamline the Administrative Procedures relating to Construction Work in Tajikistan; 6. Annex 6 Presidential Decree on the Reform of the Licensing System in Tajikistan; 7.

Annex 7 Matrix of donor-supported technical assistance projects on the institutionalisation of the business environment and potential areas of cooperation within the framework of the Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan;

8. Annex 8 Information bulletins published by the Secretariat of the Consultative Council on the Improvement of the Investment Climate under the President of Tajikistan; 9. Annex 9 Secretariat presentations; 10. Annex 10 Secretariat publications list.



| 31

Annex № 1

DECREE OF PRESIDENT OF REPUBLIC OF TAJIKISTAN On creation of Consultative Council on improvement of investment climate under the President of Republic of Tajikistan

In accordance with article 20 of the Law of Republic of Tajikistan “On normative legal acts” and with the aim to conducting the sigle state policy for improvement of business environment and investment climate as well as development and provision of state support to private sector, inner and foreign investments attraction to the country economy resolve to: 1. Establish the Consultative Council on improvement of investment climate under the President of Republic of Tajikistan.

2. Approve the enclosed Regulation of the Council.

President of Republic of Tajikistan

Dushanbe 19 December 2007, № 356

E. Rakhmon

Annex №2 Approved by Decree N 356 of the President of the Republic of Tajikistan dated December 19, 2007 REGULATION of the Consultative Council on improvement of investment climate under the President of the Republic of Tajikistan I. General provisions 1. The Consultative Council on improvement of investment climate under the President of Republic of Tajikistan (hereinafter named the Council) is a consultative-deliberative body under the President of the Republic of Tajikistan responsible for developing and preparing recommendations and suggestions to the President of Republic of Tajikistan, Government of Republic of Tajikistan and other state agencies concerning problems of improving the business environment and investment climate in the Republic of Tajikistan necessary to accelerate the social-economic development of the country. 2. The Council in its activity shall be guided by the Constitution of Republic of Tajikistan, the Law of Republic of Tajikistan “On investments” and other laws of Republic of Tajikistan, Resolutions of Majlici Oli of Republic of Tajikistan, decrees and instructions of the President of Republic of Tajikistan, government resolutions, international legal acts recognized by Republic of Tajikistan and this Regulation. 3. The Council includes: from state agencies according to occupation: - the President of the Republic of Tajikistan – the Chairperson of the Council; Members of the Council: - Prime Minister of the Republic of Tajikistan; - the Chairman of State Committee on investment and State Property Management of Republic of Tajikistan (hereinafter named the SCISPM RT) – the Executive Secretary of the Council; from multilateral international donor organizations (upon agreement): - one representative; from bilateral international donor organizations (upon agreement): - one representative from foreign and local investors in the Republic of Tajikistan (upon agreement): - one representative of foreign investors; - two representatives of local investors; - Head of the Council Secretariat. 4. The procedure for electing members of the Council who are not representatives of state agencies is based on the following: Representatives of international financial organizations (donors) are proposed by multilateral and bilateral international donor organizations as agreed between them. - The representative of foreign investors shall be included to the Council membership

out of foreign investors implementing the most large investment projects in the priority economic branches of the country. - The representatives of the business structures of Republic of Tajikistan shall be included to the Council membership upon agreement between them or upon proposal by business associations of Republic of Tajikistan out of entrepreneurs working in the priority branches of the economy. - the Head of the Council Secretariat is appointed based on the procedures of the European Bank for Reconstruction and Development. The Executive Secretary of the Council shall submit a list of candidates from international donor organizations, foreign investors and local business organizations to the Council consideration for inclusion to the Council composition. The candidatures shall be approved by a majority vote of the Council members. The Members of the Council from international donor organizations and foreign investors and local business associations of the Republic of Tajikistan shall rotate according to the established by the Council procedure. II. Tasks, functions and rights of the Council 5. The main task of the Council is to rendering assistance to the Government of Republic of Tajikistan and other state agencies in drawing up and implementing measures aimed at improving the business environment and investment situation in the country. To achieve this, the Council is charged with the following functions: - studying and analyzing the business environment and investment situation in the country; - developing recommendations to the President of the Republic of Tajikistan, Government of the Republic of Tajikistan and other state agencies concerning improving the business environment and investment situation; - developing suggestions and recommendations on reforming the state management system aimed at improving the regulatory functions of the state; - preparation of suggestions on issues related with improving the current legislation and state regulative functions in investment and business activity; - preparation of suggestions and recommendations concerning development of the strategy and defining the priority branches aimed at attraction of investments. 6. The Council has the right: - to hear, in the course of meetings, heads of state management agencies’ reports on issues related with improving the business environment and investment situation; - under the defined procedure, to involve consultants, specialists and scientists, including foreigners, to carry out expert assessments on the process of conducting measures to improve the business environment, attracting and using foreign investments, reforming the state management system to improve the regulatory functions of the state and defining a strategy and priorities in attracting foreign investments; - to develop and introduce, as necessary, recommendations and suggestions to the Government of the Republic of Tajikistan and other state agencies on further improving state policy concerning the business environment and investment situation; - upon submission by State Committee on investments and State Property Manage-

ment to approve the Regulation of the Council Secretariat. III. Organizing the activity of the Council 7. The organization of the Council activity as follows: - the meetings of the Council are to be held as needed but not less than one meeting per quarter. - the meetings of the Council are considered to be valid if two thirds of members are present. - the resolutions of the Council on considered issues in the agenda are approved by a majority vote and noted in the Minutes; - the organizational-methodological and technical support to the Council activity is carried out by the Executive Secretary of the Council (who is the Chairperson of the State Committee on Investments and state property management of Republic of Tajikistan) and head of the Council Secretariat; - the activity of the Council Secretariat is funded by grants. IV. Tasks, functions and powers of the Head of the Council Secretariat 8. The main functions of the head of the Council Secretariat as follows: - organization of the Council Secretariat activity; - informing the Council Chairperson and other members on implementation progress of the the recommendations and suggestions by the Council; - summarizing the suggestions by ministries, state committees and agencies, and private sector representatives on improving the business environment and investment situation; - carrying out of monitoring on performance and implementation of the Council decisions; 9. According to the defined procedure the Head of the Council Secretariat has the right: - to ask state agencies for information necessary for the work of the Council; - to participate in preparing the Council meetings. 10. The functions, powers, structure and a list of members of the Secretariat’s staff are determined by the Executive Secretary of the Council within the limit of his powers. 11. The Secretary of the Council has an individual letterhead. V. Concluding provisions 12. The Council can be abolished according to the procedure laid down by the legislation of the Republic of Tajikistan.

Annex №3 Approved by the President of the Republic of Tajikistan Emomaly Rakhmon August 16 , 2008

MIINUTES OF THE FIRST MEETING OF THE CONSULTATIVE COUNCIL ON IMPROVEMENT OF INVESTMENT CLIMATE UNDER THE PRESIDENT OF THE REPUBLIC OF TAJIKISTAN dated July 31, 2009 Chairman President of the Republic of Tajikistan

E. Rahmon

Participants: 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. Brian

Director General of the LLC “Rukhom”

M. Mukhabbatov

Chairman of the Board of the National Association of Small and Medium Enterprises

M. Uljabaeva

Head, Secretariat of Consultative Council

Sh. Zardov

President, «Tethys Tajikistan Limited»

D. Robson

EBRD Director on the Central Asian Region

M. Honma

Deputy Director, United States Agency on International Cooperation (USAID) in Tajikistan

S. Kelly

Agenda: 1. Goals and Objectives of the Consultative Council on Improvement of Investment Climate under the President of the Republic of Tajikistan. An opening speech of the Chairman of the Consultative Council – President of the Republic of Tajikistan Mr. E. Rahmon. 2. On organizational issues pertaining to the functioning of the Consultative Council (approval of the Regulations on the Secretariat, appointment of the Head of the Secretariat, election, approval and rotation procedures for the non-permanent members of the Council) – Chairman of the State Committee on Investments and State Property Management of the Republic of Tajikistan Mr. F. Khamraliev. 3. On the investment climate in the Republic of Tajikistan – Director of the EBRD for Central Asia Mr. M. Honma and the Chairman of the State Committee on Investments and State Property Management of the Republic of Tajikistan Mr. F. Khamraliev. 4.

On the approval of the agenda for the second meeting of the Consultative Council.

5. On the draft paper with the decisions and recommendations of the Consultative Council. Conclusions of the Chairman of the Consultative Council (Minutes).

1. On the Goals and Objectives of the Consultative Council under the President of the Republic of Tajikistan (Mr. Emomali Rahmon) 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 representa-

tives 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. 2. On Organizational Issues Pertaining to Functioning of the Consultative Council (F. Khamraliev)

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 Bryan – 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. 2.

16 candidates by business associations. 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. 3. On the Investment Climate in the Republic of Tajikistan (Mr. Masaru Honma) 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. 4. On the Approval of the Agenda for the Second Meeting of the Consultative Council.

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. 5. On the Draft Decisions of the Council Meeting and Recommendations. Closing Speech of the Chairman of the Consultative Council. 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

Annex№4

Approved by the President of the Republic of Tajikistan Emomaly Rakhmon December 30, 2008

MIINUTES OF THE SECOND MEETING OF THE CONSULTATIVE COUNCIL ON IMPROVEMENT OF INVESTMENT CLIMATE UNDER THE PRESIDENT OF THE REPUBLIC OF TAJIKISTAN dated December 18, 2008 Chairman President of Republic of Tajikistan

E. Rahmon

Participants: Prime-Minister of Republic of Tajikistan

O.Okilov

State Adviser of the President of Tajikistan on economical policy

M. Davlatov

Chairman, State Committee on Investments and State Property Management of Republic of Tajikistan

F. Khamraliev

Head of the EBRD Country Office

M. Le Blan

Country Director United States Agency on International Development (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

Head, Consultative Council Secretariat

Sh. Zardov

President, «Tethys Tajikistan Limited»

D. Robson

Project Manager Business Enabling Environment Project in Tajikistan

W.Werner

Agenda: 1. Progress report on implementation of the resolutions by the first Consultative Council meeting dated August 16, 2008. ( Reporter: Head of Secretariat of the Consultative Council - Sh. Zardov) 2. Progress on implementation of the Presidential Decree “On declaration of moratorium for inspections of small and medium sized enterprises” . (Reporter: Chairman of the State Committee on Investments and State Property Management of Republic of Tajikistan, F. Khamraliev) 3. On measures for reforming the permits system of Republic of Tajikistan. (Reporters: Chairman of the State Committee on Investments and State Property Management of Republic of Tajikistan, F. Khamraliev and Project Manager of IFC, W. Werner) 4. On first priority measures in improving the Tajikistan international ratings. Presentation for improving the Tajikistan international ratings in the “Construction” indicator. (Reporters: Chairman of the State Committee on Investments and State Property Management of Republic of Tajikistan - F. Khamraliev, Chairperson of the National association of Small and Medium Businesses in Tajikistan - M. Uljabaeva, Director of USAID - C. Bryan). 5. On donors supported projects of technical assistance oriented on improvement of investment climate and business environment implemented in Tajikistan. (Reporter: Head of Secretariat of the Consultative Council - Sh. Zardov) 6. Approval of the Agenda for the third Consultative Council meeting and draft resolutions by the second Council meeting. The President of Republic of Tajikistan has opened the Council meeting and declared the Agenda. When consideration the first issue of the agenda the Chairman of the Council has noted that the efficiency of the Council activity depends on proper and timely implementation of the approved resolutions. He has also said that during the first Council meeting the corresponding resolutions have been made in regard to six considered issues. Mr. Zardov, the head of the Council Secretariat has updated the Council members on progress in implementation of the resolutions by the first Council meeting. Particularly, the reporter noted that the working group under the State Committee on investments and state property management of the Republic of Tajikistan has developed the correspondent drat law aimed at effective and timely implementation of the moratorium for inspections of small and medium sized enterprises. The Council members have been also informed on the activity by the working group comprising the representatives of state bodies, business associations and donor organizations which dealt with review of normative legal acts regulating the issuance of permits documents using the method of quick deregulation. The head of the Secretariat has informed the participants that the Law “On state registration of immovable property and rights of ownership” has been adopted in the country in March 2009. He has also noted that the work on development of normative legal acts directed on protection of entrepreneurs’ and foreign investors’ property rights. In regard to the second issue of the agenda concerning the implementation of the Presidential Decree “On declaration of moratorium for inspections of small and medium sized enterprises” - Mr. Khamraliev, the Chairman of the State Committee on Investments and State Property Management of Republic of Tajikistan made a report.

The reporter has noted that business structures of the country have perceived the given law with great inspiration. He has also informed the Council members that the broad PR-company and direct meetings with private sector representatives explaining the main goals and objectives of the given Decree have been conducted. He also added that during the meetings with regional branches of the State Committee on investments the business associations of the country take active part, too. All the state agencies involved in the inspections process have made effective measures for this Decree implementation. The reporter has said that along with the presented measures the activity on protection of the consumers’ rights and interests as well as implementation of the anti-monopoly legislation, has been carried out resulted in reduce of the prices for the fuel and main food items. The inter-agency working group under the Goscominvest where private sector is also presented was established and has already developed draft Law “On moratorium for inspections of small and medium sized enterprises in Republic of Tajikistan”. This draft law has been submitted to the Government of Tajikistan in an established order. The Chairman of the Consultative Council has stressed that during the moratorium period the corresponding normative legal acts have to be improved and inspection bodies should bring their internal acts into line with the Law requirements. The business associations should also carry out active work among entrepreneurs of the country on their strictly performance of all law requirements when doing business. It was noted that when breaking the law and nonpayment of taxes the correspondent measures shall be used to punish unfair businessmen. The moratorium has been declared not aiming to carry out illegal activity but for the reasons to concentrate entrepreneurs’ efforts for improving the services and goods provided. When considering the third issue of the Council agenda Mr. Khamraliev stressed that the issue of permits system reforming was initiated by business community itself, supported by the Council members during the first meeting. Taking into account the complexity of the existing permits system this issue is rather topical for private sector development and strengthening. In this regard the draft normative legal acts, directed to reduce in a number of administrative procedures and permits system reforming in the country, have been submitted to the Council members for consideration. The IFC Project Manager, Mrs. Werner has talked on the same topic and noted that the state budget spends much money to maintain the permits system instead of receiving advantages form this system activity. She has also presented the results of the business environment study in CIS countries. The Council members, taking into account the worldwide practice, have emphasized the necessity of implementation of the Analysis of regulative impact (ARI) in the Republic of Tajikistan, on the basis of which the analysis of all governmental and institutional decisions in the area of entrepreneurship regulation should be conducted. The Chairman of the Council in regards to this issue has noted that it is crucial to further improve the existing permits system for the purposes to private sector development and improvement of investment climate as well as to promoting direct foreign investments. The proposed mechanism of reviewing the documents for permits issuance is to be considered the timely and needed activity. Based on this the Chairman of Goscominvest together with involved ministries was charged to submit the draft normative legal acts on reforming the permits system to the Government of Republic of Tajikistan in an established order. The Council members have also considered the Plan on implementation of specific measures directed to Tajikistan rating improvement that was developed by the working group under the Goscominvest together with the Council Secretariat, USAID funded BEI Project and active representatives of business associations of the country. The Chairman of Goscominvest has informed the participants that presented Plan covers the specific measures and its timing terms for improving the main “Doing Business” indicators such as: “Starting a business”, “Licensing”, Protection of investors” and “Closing the business”. It is anticipated to approve the normative legal acts aimed at improvement of Tajikistan ratings and investment climate by the March – May, 2009.

Then Mrs. C. Bryan, the Director of USAID in Tajikistan made a speech where she informed the Council members that suggestions on Tajikistan ratings improvement in construction area have been developed by the Goscominvest based on “Analysis of legislation of Tajikistan in construction area” which was conducted by USAID project together with involved construction associations. The Analysis has shown that it is very important to improve the existing legislation in construction area. M. Uljabaeva, the Chairperson of National association of small and medium sized business has noted that presented suggestions being based on “One-stop-shop” system implementation are directed to reduction of in number and timing of administrative procedures and cost of permits documents required for construction activity. M. Uljabaeva has thanked the President of Tajikistan in the name of business associations of the country for supporting the “One-stop-shop” system when registering the companies and informed the Council members that the draft law “On state registration of legal entities and individual entrepreneurs” has been developed. She has also expressed the opinion by business community that it would be reasonable to give effect to this law form 1 March, 2009. The Prime Minister of Tajikistan, Mr. A. Akilov has made a speech regarding implementation of the proposed Plan in the part of sequence and time of performance in conducting the measures of the Plan in construction area. When summarizing the results of the meeting the President of Tajikistan has noted that the proposed Plan will promote the investment climate improvement and particularly to foreign investments attraction in the construction area. The Chairman of Goscominvest was charged to finalize the Plan further to be submitted for approval in an established order. He was also entrusted together with corresponding ministries to submit the draft laws for improvement of administrative procedures in construction area to the Government of Tajikistan. Then head of the Council Secretariat, Mr. Zardov has informed the participants on donors’ projects of technical assistance implemented in Tajikistan. Particularly, he has stressed that there are three kinds of donors’ projects implemented in the country the activity of which is focused on institutional changes, capacity building of state bodies and finance support. In the whole, the aims and objectives of the projects involved in institutional changes are matched with the aim and objectives of the Consultative Council aims. The analysis of these projects implementation has showed that most of studies and researches prepared by this projects are not used under various subjective and objective reasons. The Council Chairman in regard to this issue has emphasized that social and economic achievements in Tajikistan have made a sound foundation for a new stage of accelerated implementation of economical reforms. He has also said that donor’s support has played a significant role in solving a wide range of burning problems. Taking into account the changes in social and economic requirements of the country and with the purpose to implementing the Paris Declaration on aid effectiveness, the time when donors and the Government should jointly and interactively implement the reforms oriented to improving of investment climate in the country and to be jointly responsible for anticipated results. In the framework of Consultative Council activity there would be reasonable to study the recommendations given by donor organizations and also adapt donors’ new programs to prioritized directions of Tajikistan’s strategies. In conclusion of the Consultative Council meeting the President of Tajikistan has stressed that Tajikistan along with other early transition countries has been on the threshold of serious economic reforms which should be implemented in terms of world financial crisis. Economic reality and today’s indicators require effective measures from Tajik Government to support the private sector and conduct the modernization of the economy itself. Decisions of the second meeting of the Consultative Committee on improvement of the investment climate under the President of the Republic of Tajikistan

1. To consider the Resolutions by the second Consultative Council meeting as a whole executed; 2. To recommend the Government of Republic of Tajikistan to strengthen the control over execution of the approved resolutions by the Council; 3. To approve the attached Plan on first-priority activities of the Government of Republic of Tajikistan in improvement of Tajikistan international ratings and recommend to hold the Government RT responsible for performance and implementation of the present Plan in established dates; 4. To charge State Committee on Investments and state property management of RT jointly with the corresponding ministries to submit in established order draft normative legal acts on reforming the permitting system of Republic of Tajikistan to the President and Government RT; 5. To charge State Committee on Investments and state property management of RT jointly with the corresponding ministries to submit in established order draft normative legal acts on improvement of administrative procedures related with conduction of the construction activity in Republic of Tajikistan; 6. To consider the submitted by the Secretariat information on projects on business environment improvement implementing by various donor organizations in Republic of Tajikistan as being taken into account in order to be used during next Council meetings; 7. To recommend the Government of Republic Tajikistan and donor organizations being guided by Regulations of Paris Declaration on effective aid delivery for more intensive use of technical assistance in the area of improvement of business environment and to promote effective coordination and harmonization of the put forward recommendations/resolutions by the Consultative Council; 8. To prolong the President of the company «Tethys Tajikistan Limited», Mr. D. Robson’s membership for 4 next Council meetings; 9. To charge State Committee on Investments and state property management of RT jointly with Secretariat of the Council: - to present as the key issues to the third Council meeting: «Assessment of execution of all resolutions approved during the second Council meeting» and the draft program “200 days of reforms»; - to submit to the next Council meeting the proposals on modification of the Council structure and increase the membership of local and foreign investors from 3 to 5 persons by submitting the list of candidates for membership in the Consultative Council; - to prepare together with donor organizations the plan on promoting implementation of the large projects on improvement of business environment and investment climate via the Council meetings with participation of heads of projects and corresponding ministries and institutions; - to present for the next Council meeting the map of donor’s aid and proposals on effective use of projects recommendations in the Council activity; - to constantly conduct monitoring on implementation of the Resolutions by the Consultative Council and on a regular basis to inform the Council members on their execution. Chairman of the State Committee on Investments and State Property Management of Republic of Tajikistan

F. Khamraliev

Head of the Council Secretariat

Sh. Zardov

Annex № 5

DECREE OF THE PRESIDENT OF THE REPUBLIC OF TAJIKISTAN On measures to improve the administrative procedures related with the construction activity in the Republic of Tajikistan In order to improve the investment climate and the international rating of Tajikistan in the area of construction and to implement the Law of the Republic of Tajikistan “On architecture, town planning and construction activity” decree the following: 1. Consider that the improvement of the administrative procedures in construction in the Republic of Tajikistan is the priority policy direction of the Government of the Republic of Tajikistan for 2009. 2. The Government of the Republic of Tajikistan should: - within the one month period develop and approve the Regulation on the order of administrative procedures passing related with construction activity and acceptance into operation of completed construction objects that stipulates the reduce of the number and, terms of administrative procedure, the costs of obtaining the permitting documents required for the implementation of the construction activity - within the two months period develop and approve the Plan on improving the construction legislation stipulating abolishment of impeding administrative procedures. 3. Entrust the deputy Prime Minister of the Republic of Tajikistan with the control over the implementation of the Decree.

President of Republic of Tajikistan Dushanbe, 18 March 2009 №638

Annex №6

DECREE PRESIDENT OF THE REPUBLIC OF TAJIKISTAN «ON REFORMING PERMISSIVE SYSTEM IN THE REPUBLIC OF TAJIKISTAN» In order to improve and establish state regulation of business activities, regulate and decrease the number of types of activity subject to issuance of permissive document and to implement strategy reform of the State Governance and taking into account Article 69 of the Constitution of the Republic of Tajikistan, I decree: 1. The reform of permissive system is a state policy priority in the sphere of regulation of business activities for 2008-2010 and will be carried out on the basis of increasing transparency in the of issuance of permissive documents, decreasing the level of state regulation of business activities and establishing unified requirements for the issuance of permission document procedures. 2. The Government of the Republic of Tajikistan will: - establish a Governmental Commission on review of normative legal acts that regulate the issuance of permissive documents and approve its Regulation in two month period; - develop and submit to Majlici Oli Majlici Namoyandagon of Republic of Tajikistan the draft law on permission system in nine month period; - review normative legal acts that regulate the issuance of permissive documents to economic entities aimed at bringing them into line with the laws of Republic of Tajikistan, and in case of need to develop draft laws on making corresponding changes and amendments to the existing laws of the Republic of Tajikistan, and approve a List of permissive documents in nine month period; 3. The State Committee on Investments and State Property Management of the Republic of Tajikistan together with the State Committee on TV and Radio under the Government of the Republic of Tajikistan and other involved ministries and state agencies have to conduct explanatory work on the implementation of this Decree.

President of the Republic of Tajikistan Dushanbe, 7 March 2009 № 633

Annex №7

BULLETIN №1 SECRETARIAT OF THE CONSULTATIVE COUNCIL ON IMPROVEMENT OF INVESTMENT CLIMATE UNDER THE PRESIDENT OF RAPUBLIC OF TAJIKISTAN

BASIC THEMES OF THIS RELEASE: • The second meeting of the Consultative Council on improvement of investment climate under the President of Republic of Tajikistan; •

Decisions by the Consultative Council.

CONSULTATIVE COUNCIL MEETING On December 18, 2008 the second meeting of the Consultative Council on improvement of investment climate under the President of Republic of Tajikistan was conducted at the office of President Administration. In the work of the meeting the President of Republic of Tajikistan, Chairman of the Consultative Council - Emomali Rahmon, Prime-Minister of Republic of Tajikistan - O. Okilov, Head of Secretariat of Consultative Council - Sh. Zardov, Chairman of State Committee on Investments and State Property Management of Republic of Tajikistan - F. Khamraliev, Head of the EBRD Country Office - M. Le Blan, Country Director of the United States Agency on International Development (USAID) in Tajikistan - C. Bryan, General Director of the LLC “Rukhom” - M. Mukhabbatov, Chairman of the Board of the National Association of Small and Medium Enterprises M. Uljabaeva, President of «Tethys Tajikistan Limited» - D. Robson, Project Manager of IFC Business Enabling Environment Project in Tajikistan - W.Werner took part. Three packages of documents have been brought for consideration during the meeting: • Draft Decree of President RT on reforming the permitting system; • The action Plan on first-priority activities of the Government RT for improvement of the international rating indicators of Republic of Tajikistan;

January, 2009

1

Contact information: [email protected], Address: 3 Loik Sherali str. , Business-Center «Sohibkoron», 6-th floor Tel. : (992 44) 610 60 04; Tel./Fax: (992 44) 610 60 06;


• Draft Decree of President RТ on improvement of the administrative procedures related with construction activity. The package of documents on reforming of permitting system has been prepared on the basis of the «Business environment in Tajikistan» survey prepared by the International Financial Corporation (IFC). The anticipated reforms will be oriented to reduction and simplification of the complicated and none-transparent administrative procedures which are presently followed by businessmen while creation and doing business. High costs of business activity as result are directly connected with lack of clear legislation regulating the system of permits issuing, contradictions in normative legal acts, insufficient execution of laws, non-differentiation/delimitation of powers of the bodies which are in charge for giving out permits and also non-transparency and limited access of businessmen to legislation acts. Existing administrative procedures promote corruption in the bodies which are giving out permitting documents to entrepreneurs. Based on results of the spent studies, presently, the general income to the state budget received upon all permits is 1.9 million US dollars a year and expenses for maintenance of the permits system - 2.5 million US dollars. Reforming of permits system will be based on review of the existing legislation to meet the criteria of legality and necessity of all procedures for business development. Fast review will allow reducing business activity regulation and in the shortest periods to cancel the normative legal acts impeding free economic activities and development of competitive business climate. Besides, during the meeting the issues related with necessity of development of draft Law on “Permits” and upcoming introduction of the method “Analysis of regulatory impact” (ARI) have also been considered. The given method will allow carrying out fast and profound analysis of benefits and expenses from adoption of the normative legal acts promoting business activities and as a whole to review all legislation to meet the market economy principles. In the course of the meeting the presented package on reforming the permitting system was approved by the Council members and sent to the corresponding ministries for final agreeing further to be submitted to the President RT for approval.

January, 2009

2



The second package of the documents representing the Plan of first-priority activities of the Government RT on improving the international rating indicators of Republic of Tajikistan was prepared at direct support by PRAGMA BEI Project (USAID). 4 indicators have been included to the present plan: o Starting a business o Dealing with construction permits o Protecting investors o Closing a business The plan provides the development of new draft laws which will be focused on using the «One-stop-shop» principle, simplification of procedures on enterprises liquidation and closing, procedures on conducting construction activity including simplification of licensing mechanisms and giving out other kinds of permits for construction activity. In the given plan the measures on protecting investors are defined and also it is planned to make amendments to the Law of Republic of Tajikistan on «Joint-stock companies» and others. The implementation of the approved Plan will allow Tajikistan to considerably raise its ratings according to the World Bank Report «Doing Business» and to create competitive conditions for doing business as well as improve investment climate in the country and as result to promote direct foreign investments attraction. During the Council meeting the presented Plan was approved by the President RТ who in particular has told: «I approve this Plan not for the Council activity, but for execution by corresponding state bodies as implementation of the given plan is their direct task». Upon instructions given by the President RТ the Plan on improving Tajikistan international ratings was sent to the Government RT for execution. The third package of documents on improving the administrative procedures related with conduction of construction activity was also prepared at direct support by USAID Project on Business Environment Improvement. The justification for presenting the given package of documents at the Consultative Council meeting became the Republic of Tajikistan low position in international ratings which is one of the worst across other countries as it occupies 178-th place out of 181 represented in the report countries.

January, 2009

3



The Republic of Tajikistan according to its ratings is rather on lower position compared with its nearest neighboring countries – Kyrgyz Republic, Kazakhstan and even Uzbekistan which represented considerable progress in reforming of administrative procedures. Presently, the current legislation of Republic of Tajikistan contains requirements on repeat passing the same procedures in one body for several times that leads to increase in unreasonable financial and time expenses both by entrepreneurs and the state budget. The presented proposals being based on introduction of «One-stop-shop» principle are focused on reduction in number and timing of administrative procedures and in cost of the permitting documents required for carrying out of construction activity. The proposals also include measures on increasing responsibility for breaking of the norms to be established in construction sphere. At timely implementation of proposed reforms the Republic of Tajikistan can improve its construction ratings by 50-60 positions. Ms. Carolyn Brian, the Director of USAID expressed readiness of the Agency on providing technical support of proposed reforms. xxx The main result of the second Consultative Council became the instruction given by the President of the country on development of the program «200 days of reforms». The proposed program «200 days of reforms» - is the program of reforms for carrying out quantitative and qualitative changes of parameters of improvement of business environment in the country. The final goal of the given program is development of the whole package of legislative and administrative reforms oriented to protecting investors, simplification of administrative procedures and creation of favorable conditions and new forms of business dealing. It is anticipated that upon implementation of this program the Republic of Tajikistan will considerably improve its positions in the international ratings. The process of the present program development will be based on principles of partnership and taking into account the points of view which will be expressed by all interested parties.

January, 2009

4



It is planned that foreign investors and donor organizations implementing their projects on improvement of business environment will be also involved into the process of the given program development. With the aim to execute the President’s RT instruction reflected in the Minutes of the second Consultative Council meeting the State Committee on investments and state property management RT and the Secretariat of the Consultative Council have developed the joint action plan on development of the program of reforms which is to be prepared within 90 days period by the moment of the next Consultative Council meeting conduction (preliminary in the middle of April, 2009). The Secretariat has started consultations with business structures and donor organizations on issues of potential and resource mobilization for development and implementation of the given program. The corresponding interdepartmental working group will be created with a view of comprehensive development of the present program of reforms.

• • •

•

•

•

RESOLUTIONS BY THE SECOND CONSULTATIVE COUNCIL MEETING (According to the Minutes dated from December 30, 2008) To consider the Resolutions by the second Consultative Council meeting as a whole executed; To recommend the Government of Republic of Tajikistan to strengthen the control over execution of the approved resolutions by the Council; To approve the attached Plan on first-priority activities of the Government of Republic of Tajikistan in improvement of Tajikistan international ratings and recommend to hold the Government RT responsible for performance and implementation of the present Plan in established dates; To charge State Committee on Investments and state property management of RT jointly with the corresponding ministries to submit in established order draft normative legal acts on reforming the permitting system of Republic of Tajikistan to the President and Government RT; To charge State Committee on Investments and state property management of RT jointly with the corresponding ministries to submit in established order draft normative legal acts on improvement of administrative procedures related with conduction of the construction activity in Republic of Tajikistan; To consider the submitted by the Secretariat information on projects on business environment improvement implementing by various donor organizations in Republic of Tajikistan as being taken into account in order to be used during next Council meetings;

January, 2009

5



• To recommend the Government of Republic Tajikistan and donor organizations being guided by Regulations of Paris Declaration on effective aid delivery for more intensive use of technical assistance in the area of improvement of business environment and to promote effective coordination and harmonization of the put forward recommendations/resolutions by the Consultative Council; • To prolong the President of the company «Tethys Tajikistan Limited», Mr. D. Robson’s membership for 4 next Council meetings; • To charge State Committee on Investments and state property management of RT jointly with Secretariat of the Council: - to present as the key issues to the third Council meeting: «Assessment of execution of all resolutions approved during the second Council meeting» and the draft program «200 days of reforms»; - to submit to the next Council meeting the proposals on modification of the Council structure and increase the membership of local and foreign investors from 3 to 5 persons by submitting the list of candidates for membership in the Consultative Council; - to prepare together with donor organizations the plan on promoting implementation of the large projects on improvement of business environment and investment climate via the Council meetings with participation of heads of projects and corresponding ministries and institutions; - to present for the next Council meeting the map of donor’s aid and proposals on effective use of projects recommendations in the Council activity; - to constantly conduct monitoring on implementation of the Resolutions by the Consultative Council and on a regular basis to inform the Council members on their execution.

January, 2009

6



BASIC THEMES OF THIS RELEASE: • Implementation of the decisions by the second Consultative Council meeting • Suggestions by business community on the Programme «200 days of reforms» • Secretariat conclusions based on the put forward initiatives EVENTS February 6, 2009 - Meeting of the Coordination Council of business-association and public organizations of Republic of Tajikistan on Programme “200 days of reforms” discussion February 25, 2009 - Round Table on simplification of the custom procedures conducted by the Ministry of economic development and trade of RT supported by USAID Project on regional trade development. February 26, 2009 - Meeting of the Coordination Council of business-association and public organizations of Republic of Tajikistan on discussion of the candidatures to be included to the Consultative Council structure. IMPLEMENTATION OF DECISIONS BY THE SECOND CONSULTATIVE COUNCIL MEETING During the second Council meeting three packages of documents have been approved: • Draft Decree of President RT on reforming the permitting system;

February, 2009

1



• The action Plan on first-priority activities of the Government RT for improvement of the international rating indicators of Republic of Tajikistan; • Draft Decree of President RТ on improvement of the administrative procedures related with construction activity. Draft Decrees of President RT on reforming the permitting system and on improvement of the administrative procedures related with construction activity are being under consideration by the President Apparatus. Regarding Plan on first-priority activities of the Government RT for improvement of the international rating indicators of Republic of Tajikistan the following activities have been carried out: The Government of RT has approved and submitted the draft Law on “Making amendments and modifications into the Law of RT on “Joint-Stock Companies” to Majlicy Namoyandagon of Majlicy Oli of RT. The Government of RT is also considering: • Draft Law of RT on “Bankruptcy” • Draft Law of RT on “State registration of legal entities and individual entrepreneurs”» Besides, the Majlicy Namoyandagon of Majlicy Oli as follows: • has entered modifications and amendments into the Laws of RT on “Limited liability companies” and on “Joint stock companies” regarding reduction in the amount of nominal capital for JSC/LLC establishment; • has passed the Law of RT on “Moratorium for inspections of small and mediumsized enterprises in RT”; • has passed the Law of RT on “Credit histories”; SUGGESTIONS /PROPOSALS BY BUSINESS COMMUNITY ON PROGRAMME “200 DAYS OF REFORMS” During the second Consultative Council meeting the President of RT has obliged the State Committee on investment and state property management (SCISPM) jointly with Secretariat of the Council to develop and submit the Programme “200 days of reforms” aimed for carrying out quantitative and qualitative changes of parameters of improvement of business environment in the country.

February, 2009

2



In this regard Secretariat has conducted the series of meetings with entrepreneurs and also applied with request via mass-media to set forth problems/issues to be included into the Programme “200 days of reforms”. Having summarized the submitted materials, Secretariat is bringing forward the standpoints expressed by business community: «What does business think of this Programme … » Business structures took the new Government initiative with enthusiasm and expressed the hope that the Government will support businesses in reality via acceptance and implementation of the given Programme which, in turn, will give a powerful incentive to private sector development. Business structures also want to know about interaction of the Programme “200 days of reforms” and the declared governmental Programme of anti-crisis measures. During the conducted meetings there was always asked a question: “Will the Programme 200 days of reforms include the anti-crisis measures?” At the same time entrepreneurs stated their concern on qualitative implementation of the given Programme. Their motivation was a wide range of strategic and tactic Programmes which directly or indirectly related with the problems of private sector development. Actually, most of these Programmes are inactive and being poorly implemented not reaching the targeted goals. When using the existing implementation and monitoring instruments which are not connected with decision making process - the Programme “200 days of reforms” will not achieve the general goal - to improve business environment. With respect to the Programme’s “200 days of reforms” content the entrepreneurs put forward a number of ideas as follows: National Association of small and medium sized enterprises – has offered to include into the Programme the issue of Tax and Customs legislations improvement which will provide protection for local manufacturers. According to their point of view, it is not profitable to be a manufacturer due to lack of laws stimulating local manufacturing development as Tax Code of RT does not promote

February, 2009

3



any manufacturing or commodity production. Our manufacturer is not competitive both in internal and external markets. The entrepreneurs attribute developing a new Tax Code to major measures of the tax system reforming, and which should be understandable and accessible to both tax authorities and entrepreneurs. Incidents arising from time to time as a result of regular changes in the Tax Code of Tajikistan are illogical and directed only at deterioration of the tax climate. Measures on improving the tax administration should be taken in view of division of powers and accountabilities between the tax structures and the Ministry of Economic Development. An experience of the state working group on preparation of draft Law “On registration of legal entities and individual entrepreneurs” according to “One-stop shop” principle would be applicable for drafting a new Tax Code when a group of the government employees and representatives of business community with technical assistance of donors managed to prepare and submit a draft law to the Government of RT on tight timetable. It is necessary to continue working on improving Tajikistan international rating indicators according to “Doing Business” WB report showing that investment climate in the country remains too much unattractive at present. The Programme “200 days of reforms” should take into consideration the Action Plan of measures of first–priority actions for improvement of international rating indicators of the Republic of Tajikistan approved by the President of Republic of Tajikistan. This refers to conducting such important reforms as reforming the permitting system in general and simplification of the administrative procedures related with construction activity in Republic of Tajikistan. Special attention should be paid to issues of job creation and local manufacturing development which are closely interrelated. The Association of advertisers, having faced problems with discrepancies and gaps in the normative legal acts regulating the advertising activities – proposed to make amendments into the Law of the Republic of Tajikistan “On Advertising”, as the passed Law on advertising has started conflicting with the new Government resolutions.

February, 2009

4



Aimed to justify the put forward initiative, the example was given in the situation after practical application of the Government of RT Resolution № 546 dated of November 6, 2007 on fees approval for giving out the permits to using natural resources. The Law “On other compulsory payments to the budget” dated of July 28, 2006 and effective from January 1, 2007 defines the individuals and legal entities that place external advertising items as state dues payers. However, the Law of the Republic of Tajikistan “On Advertising” dated of August 1, 2003 does not provide definitions to “external advertising item” and “person who places an external advertising item”. Thereby the definition or the “person who places external an advertising item” can be referred both to advertisers and advertisement distributors. The passed Resolution by the Government RT further specifies the matter and gives approval to rates for internal and external applicants whose legal status is not defined likewise. In such situation it is not clear who is local and who is foreign applicant. If the notion “applicant” implies ‘an advertisement distributor’, then s/he is always local as the advertisers including foreign companies that disseminate their advertisements through the local advertising agencies in the country. The inconsistent government resolution has brought to the conflict situation when nobody knows who should pay and at what rate. Apart from the above stated this Resolution encloses some other provisions complicating activities of the advertising agencies. Analysis of compulsory payment rates indicates that charge for one advertisement billboards (3x6m) is 28 800 Somoni a year while the registration of the biggest aircraft is 2000 Somoni a year. Under existing incomes (average 100-200 thousand Somoni a year), the advertising agencies are not able to pay for maintenance of ten similar advertisement billboards. Undertaken measures are not promoting the development of advertising business in the external advertising area, and vice–versa can completely wind up this activity. There is no action logic in this as the world’s experience shows that advertising is a very good driving force for the economics and promotes attraction of the local and foreign investments. In addition to the above mentioned the Association submitted to the Secretariat more detailed steps on improving situation in the sphere of the advertising business.

February, 2009

5



The Public Foundation “Civil Initiative of Internet Policy” - for the purpose of ensuring the accessibility and transparency in the Information and Technology markets - proposed to include measures on activating work of the Council on Information and Communications Technology (ICT) into the Programme. In 2006 the Decree of the President of RT (№ 1707 dated of 27.02.2006) “On creating the Council on Information and Technology under the President of the Republic of Tajikistan” was adopted. The ICT Council is the high governing and coordinating body in the area of the state information policy. No one initiative can be effectively performed without use of modern Information Technology facilities. As an example one can refer to the initiative on establishing “Onestop shop” system aimed to simplify the registration of permitting documents for the entrepreneurs. Moreover, incorporation of the Information Technology in the custom and tax agencies will allow increasing their efficiency, and also to save time and reduce expenses both for these government structures and entrepreneurs. In general, incorporation of the Information Technologies and their efficient use will ensure transparency of state bodies’ work resulting in improving the quality of provided services and raising the population confidence. ххх As a continuation of the theme of Information Technology development, the recent appeal by the non-state electric communication operators to the President RT should be noted. In the given appeal they made a request for revising the project on establishing “single switching center”. The appeal also pointed incompetence and groundless of the project that was submitted to the Government. Electric communication operators draw President’s attention to the point that during the formation of the market relations – the government of the country was following the course on abandonment of state’s monopoly in the information sector what ensured provision of equal conditions in the market, absence of discrimination and free competition in the market of electric services to benefit of the customers. This course was specified by the Decree of the President of RT, Emomali Rahmon “On State Strategy on Information and Communications Technology development of the

February, 2009

6



Republic of Tajikistan” dated of November 5, 2003, when a dynamic growth and welldirected development of the sector was initiated. As a result of the above-mentioned strategy, Tajikistan has become one of the leading CIS countries on development of Information and Communications Technology. The appeal states that implementation of the proposed project on establishing “single switching center of electric communication” can lead to detrimental consequences, and whittle away all development achievements and market relations in telecommunication sector for the last twenty years. The Association of Pharmacists - proposed to review issue on simplifying licensing procedures for pharmaceutical activities, as currently the licensing procedures are quite complicated, especially under the given situation of diarchy. Recently in the regions the licenses have been issued by the inspections agencies, and in Dushanbe – the Ministry of Health itself was dealing with licenses’ issue. But not a single license has been issued for the last five months. The Association considers that necessity of creating the private laboratories for examination of quality standard compliance of medical products in the country has approached. According to the Government decision the majority of medical products are freed from VAT payment. In order to support the local manufacturers it is proposed to free the importing pharmaceutical substance from VAT payment. The Association proposes: • to work out measures on motivating entrepreneurs to pharmaceutical production of medical products according to doctor’s order; as this area is not sufficiently developed in the country; • to initiate development of manufacturing pharmacy network; • with the purpose of regulating issue on receiving the permission for importing medical products, to establish the Marketing of drug market Unit under the Department of the State Control over the pharmaceutical activities; • to introduce the permanent license for running the pharmaceutical activity. • The entrepreneurs suggested organizing a TV Programme “Entrepreneur”, on a continuing basis, where discussion on various business fields with the focus on issues of self-appraisal by entrepreneurs of their own business activity could take place.

February, 2009

7



ххх The representative of the Limited Liability Company “Babilon” – proposed some measures on simplifying the taxation system. One of these measures is redistribution of authority between the Tax Committee and the Ministry of Economic Development and Trade. Another proposed measure refers to motivating big companies, for instance, in case if company’s turnover runs to 10 million Somoni, then tax remissions should be granted to this company. This measure will stimulate the merging of small-sized companies and thereby the tax proceeds will increase, and at the same time the corruption will decrease drastically. xxx The Association of Banks – raised a question on improving the quality of rendering bank services. In this respect the Association proposed to review the issue on freeing all types of equipment that destined for development of service sector from a VAT. The Association also proposed to review the issue on freeing the equipment from VAT not only in bank sector, but also in all other spheres of rendering services to the population what in turn will lead to lowering services costs and securing the access of population to the services of high quality. xxx The Association of Constructors – is concerned about the existing situation in the market of construction services. 90% of construction companies that capable to provide 10 thousands of builders with job are not functioning. The Association receives letters from the construction companies where the companies reflect the challenges and difficulties they encounter in their work. Summarizing builders’ suggestions, the Association raised the issue of improving the legislation that regulates the construction business in the republic. The builders pointed at gaps and contradictions in the normative legal acts regulating the construction area. At present, the existing laws do not promote the construction sector development implying use of high technologies. Therefore the builders support the decision of the second Consultative Council meeting on improving the administrative procedures related with construction activity in the republic.

February, 2009

8



In this connection the builders are anticipating the great changes; however they realize that all problems in construction sector cannot be solved at once. The builders suppose to consider the issue on abolishment of fixed remuneration rates and introduction of rates for different kinds of construction works to be based on free construction labor market conditions. At the moment the construction cost is determined in terms of resource method worked out by the Agency on construction and architecture under the Government of the Republic of Tajikistan. In the judgment of the builders, the shortcomings and mistakes of this method do not allow them to work and succeed in the sector properly. Although the resource methodology has a recommendation nature, but it is practiced by the parties of investment process as a mandatory for implementation. According to the builders, this methodology turned into punitive tool of the inspecting bodies. Thus, according to the approved resource methodology – an average hourly remuneration rate of 3.83 Somoni per hour for any type of construction works (remedial, building, erections, including concrete and finishing works) doesn’t meet the reality demands when actual costs for the salary are exceeding this rate four times. In addition, average price for the construction materials according to the given methodology (every three month) does not meet the market prices, when some of costs for the construction materials rise every 10 days. When paying a real not the fixed by the methodology wages to the workers, as well as being obliged to pay a lot of taxes and contractors’ payoffs, the builders have no opportunity to renovate and conduct modernization of construction equipment and to strengthen the resource-and-technical base of building production, and most important, to raise the workers’ wage. In addition to the quarterly Digest of Average Estimated Prices (AEP) for the main construction resources, the builders also suggest to release a monthly bulletin on prices for locally produced construction materials, and separately for the imported items. The bulletin should have a recommendation nature. Abolishment of the fixed remuneration rates and introduction of market oriented rates for various kinds of construction works will promote increase of remuneration tax receipts/ proceeds that will have a positive impact on the state budget.

February, 2009

9



The builders also raised the issue on improvement the procedures on land allotment for construction which is always a problem they face in local executive authorities. They propose to revise procedures on allotting lands for the construction. The builders or common entrepreneurs in order to receive the permission to land allotment for construction have to pass through several duplicating each other endorsement steps what is very unreasonable. Besides, the process of obtaining this permission is complicated by the current contradictions between the Land Code of the Republic of Tajikistan and the Law of the Republic of Tajikistan “On Architecture and city planning”. The builders mentioned that self-supporting activity of the ministerial structures also negatively affects the development of the construction sector. The Ministries often impede the development of the whole sectors while lobbying their corporative interests. Another particular issue highlighted by the builders is the taxation for the construction companies. Specifically, the builders proposed instead of the existing tax package to introduce a simplified tax rate of 4 % out of value of performed works - with the annual amount (scope) of performed works of up to 1.5 million Somoni a year. Another option for improving taxation is to free the private investment projects in area of the hydropower industry, agriculture, including fish industry, production of construction materials, including housing and communal sector (multistory buildings) at the initial construction phase, i.e. before selling/realization starts - from all forms of taxes with the exception of social taxes during ten years. Taking into consideration that the Programme “200 days of reforms” cannot cover all problems of the construction sector, the Association of Constructors proposes – to organize a separate Round Table with the participation of construction companies and officials of concerned ministries and agencies, where they will be able to discuss and argue the positions by both parties. The Center for the Entrepreneurship Support and Development in Dushanbe city - proposed to include into the Programme measures on forming due ethic attitude to the businessmen among the state structures as many state agencies roughly handle the entrepreneurs.

February, 2009

10



A number of proposals came from entrepreneurs of Khatlon Oblast, including Limited Liability Company “Farna” – regarding issue of protection of internal market from the dominance of the imported products. The entrepreneurs propose to introduce the excises for some types of manufactured products. For thorough analysis of this issue it is necessary to study feasibilities of domestic manufacturers and their manufacturing capabilities on production of qualitative and competitive products. The Association of Enterprises and Cooperatives (AEC), being oriented on promoting the development of small-size enterprises, primarily in rural areas, has raised burning issue of the rural areas. The Association proposes to direct land reform’s institutional development to the generally accepted course in world experience, and for this purpose to reorganize all Dehkan Farms into Limited Liability Companies (LLC). It is well-known that organizational-legal form of farms’ management is a local invention that is not pertinent to individual entrepreneurship or to legal entity, but possesses shortcomings of both. In addition to that, this form of management: • Does not reflect existing internal property relations in the farm; • Not attractive for the investing; • Not self-reliant, and practically subordinated to the local executive authorities; • Cannot ensure its employees’ social security • Has a difficulty in fulfilling usual economic operations, for example, export-import operations, creating its branches, etc. At the suggested reform scheme – the property shares during the reorganization shall be declared equal with the possibility of revision by the general meeting at the first organization meeting. The Chapter shall be passed as standard reserving the opportunity for Limited Liabilities Companies (LLC) to carry out all types of legal activities (that is currently used by the dehkan farms). The Decree of the President of RT “On reduction of initial capital rate” facilitates legitimacy of such reorganization. And what is most important, the established out of former dehkan farmers LLC-s will meet rating indicators, such as: • Extremely simplicity of establishment • Simple taxation

February, 2009

11



The Association has also initiated the issue on improving the Super-patent. In this connection the Association proposes, in the first place, to conduct survey on ways of improving Super-patent among the individual entrepreneurs. In Association’s opinion, the survey results should answer the following questions: • To what extent actual entrepreneurs’ income and turn-over meet the Super-patent requirements? • What opportunities exist for the entrepreneurs, working under the Super-patent, to use means of the state social insurance? • How far the dynamics of increase in number of entrepreneurs has changed as a result of the Super-patent introduction? • What is the number of businessmen who have legalized their activity? The Association proposed to improve the social insurance legislation in order to make it feasible for the practical use by the patentees. The core of this improvement should be indication of the amount of patentee‘s income in the normative documents, which is to be the base for the tax charges and social taxes. The benefits under the medical certificate and retirement pension will be also calculated on basis of this amount. Some private entrepreneurs have responded to the Secretariat’s appeal to all interested persons in order to receive their recommendations on improving terms and forms of conducting business, on perfection of normative legal acts regulating the entrepreneurship and on other topical for business issues. Among them is Mr. Ismailov Pulat from Shaartuz district who proposed to activate Trade Union’s work in the sphere of small and medium-size business. According to the view of this entrepreneur, currently there is no an agency in the country which is capable to stand up for the entrepreneurs, especially in the regions. In his letter, the entrepreneur admits that in spite of importance of the problems related to the imperfections of the legislation, the entrepreneurs should think on creation of the Trade Union in the sphere of small and medium-size business since this issue also requires its solution. Existence of the Trade Union organization in either company is an indication of the civilized way of business organization.

February, 2009

12



In the West Europe – trade unions together with the state strictly monitor the tax payment process by entrepreneurs and company owners, and also reveal the cases of income concealment and violation of employees’ right. «But in our country - vice-versa the business is organized in the wrong way – writes the entrepreneur. He supposes that the entrepreneurs in close contact with his trade union should assert his rights under condition of continuous changes of “rules of play”. Today one need to solve many issues regarding trade union’s activity in new conditions, and specifically how labor relationships will be formed in the organizations and what kind of tasks will be performed by the trade unions, etc. These and many other issues are not clearly articulated in the laws yet. The above-stated are entrepreneurs’ personal opinions, and the Secretariat is not responsible for the submitted materials and just sets forth the proposed initiatives. SECRETARIAT’S CONCLUSIONS BASED ON THE PROPOSED INITATIVES Having reviewed and summarized all proposed initiatives, the Secretariat highlighted major directions of private sector development that have been stated by the businessmen. Overwhelming majority of the entrepreneurs has raised issues on lowering of the administrative barriers. Many suggestion have been offered in favor of simplifying the taxation system, which is urgent problem in view of current world financial crisis, and accordingly, in view of unsupported enterprises. The problems raised by the business sector are reflected in the international projects activities on private sector development. It appears that the pivot of the Programme “200 days of reforms” is the simplification of the administrative procedures with the leading idea of introduction of “One-stop shop” in the following directions: • Simplification of the registration and re-registration procedures of legal entities; • Simplification of the bankruptcy procedures; • Simplification of the licensing procedures; • Improving the construction legislation; • Simplification of the procedures on issuing certificate for land-tenure; • Simplification of the administrative barriers in the import-export operations; • Simplifications of the system of issuing permits for business activities running;

February, 2009

13



The issues related to the taxation for small and medium-sized enterprises and supporting the local manufacturers require additional researches. These studies should provide feasibility of measures on stimulating the local manufacturers under the existing financial crisis. It is also necessary to conduct a study in the field of labor relations occurring between employer and employee in context of market. Such study should address issues of labor legislation simplification that will enable to utilize all labor potential of every individual. Achieving goals of elimination of administrative barriers is directly linked with the improvement of the public administration system and interest of the state structures in performing these reforms. Effective use of the monitoring is a key tool for achieving final results that will effect on the decision making process. In general, the Programme “200 days of reforms” should become a short term Programme of the administrative and regulating reforms aimed at achieving the fast positive results in the mentioned sectors.

February, 2009

14



BASIC THEMES OF THIS RELEASE: • • •

Further implementation of the decisions made by the second Consultative Council meeting On development progress of the Programme «200 days of reforms» Information on the global practices in organizing dialogue between government and businesses

EVENTS March 2-3, 2009 - Mr. Otorbaev D., EBRD Senior Advisor on CIS countries, arrived with official visit to Dushanbe. The main purpose of the visit was to discuss further development of the activities by the Consultative Council on improvement of investment climate under the President of Republic of Tajikistan. In the course of the visit Mr. Otorbaev together with Head of EBRD office in Tajikistan, Mr. M. Le Blan, met with the Prime Minister, Mr. A. Akilov, State Advisor of the President on Economic Policy – Mr. M. Davlatov, and the Chairman of SCISPM RT, Mr. F. Hamraliev. March 12-13, 2009 - By initiative of SCISPM RT, there was joint discussion held on proposals and recommendations put forward by business and donor community with the purpose to have them included into the Draft Programme «200 days of reforms». The representatives of SCISPM, IFC, Project BEI (USAID), National Association on Small and Medium-size Enterprises and Secretariat of the Council participated in this discussion. As the result of this event, a consolidated document of the Programme «200 days of reforms» was drafted along with designed Programmme’s Action Plan (see details below). March 14, 2009 - The meeting was held by the mayor of Dushanbe city, Mr. M. Ubaidulloev, with business structures of the capital, in regard to the entrepreneurship development issues. March 16-19, 2009 - The World Bank Group mission visited Dushanbe and worked on the matters of reforming business environment. Mission members discussed their recommendations with the Government of RT and facilitated development of reforms implementation plan aimed to create more favorable business environment and at improvement of Tajikistan’s indicators according to the WB Report on «Doing Business». The Mission arrived to Tajikistan upon

March, 2009

1



the request of the Government of the Republic with the purpose of providing support in the implementation of reforms aimed to improve business environment. During the course of the mission, IFC, jointly with the State Committee on Investments and State Property Management and the Executive Office of the President, held a number of workshops for Government agencies primarily focusing on starting a business, getting credit, dealing with construction permits, protecting investors and other areas related to the business climate. The Doing Business 2009 report released in September 2008 ranked Tajikistan 159th out of the 181 economies measured by the Doing Business indicators. The report looks at the cost for a domestic business to meet government requirements in starting and operating a business, trading across borders, paying taxes, closing a business, and other activities. The Mission held meetings with the leaders of a number of ministries and agencies, departments of Executive Office of the President of the Republic of Tajikistan, involved in the process of regulating and implementation of reforms in business sector. In particular, the Mission met with State Advisor of the President of RT on Economic Policy, with Ministry of Justice, State Committee on Investments and State Property Management of RT, and others. The Doing Business Mission provided specific recommendations in regard to potential reforms, which Tajikistan could implement in order to ease doing business for companies working or willing to work in Tajikistan. The Doing Business 2010 report will be released in September 2009. If Tajikistan succeeds in implementation of key priority reforms, its reforms will be recognized in Tajikistan’s scores in that report. We remind you that during the period of 2007-2008, the Doing Business Report registered implementation of only one positive reform in Tajikistan related to protection of investors’ rights. Tajikistan reinforced the measures to protect the rights of investors by adopting new Law on Joint Stock Companies (dated October 6, 2008, № 431). Right after the Doing Business 2009 Report was published, the Government of RT has adopted a number of other reforms including the Law of RT on “Introduction of amendments to the Law on State Duty» (dated December 31, 2008, № 466), as well as adoption by the Parliament of the Country of the Law of RT “On Credit History» and reducing of minimum capital requirements when opening/starting a business. These accomplishments will be reflected in the Doing Business 2010 Report.

March, 2009

2



The adoption of new draft law on registration providing the establishment of «one-stop shop» system at Tax Committee is one of the positive steps taken by the Government of RT to improve international indicators of Tajikistan. The World Bank Group and IFC experts suggested to the Government considering other short-term and medium-term reforms on reducing number of steps, time and costs for opening a business, in addition to ongoing reforms. March 18, 2009 - A separate meeting between the Chairman of SCISPM RT, Mr. F. Khamraliev, and domestic businessmen on the issue of Programme «200 days of reforms» preparation was held at SCISPM RT, with the support of BEI Project (USAID). There were approximately 90 businessmen, representatives of international organizations and mass media attending the meeting. The opening of new web site of SCI of RT called «Investment Opportunities of Tajikistan» (www.tajinvest.tj) was scheduled together with this event. March 31, 2009 - EBRD mission headed by Mr. Olivier Descamps arrived to Dushanbe with the purpose to study the implementation process of current EBRD projects as well as to discuss economic situation within the country and implemented anti-crisis measures. The Mission met with the President of RT and, along with matters of cooperation with EBRD, had discussed the matters of supporting small and medium businesses. In particular, it was emphasized during the meeting that there were 47 ongoing projects in Tajikistan financed by EBRD with total amount of $150,000,000. According to the decision made by EBRD Board of Directors, next year there will be 12 more projects launched in Tajikistan, with total amount of $50,000,000. Mr. Descamps assured the Government of the country of continuing the EBRD policy on providing financial support to agricultural sector, construction of small hydropower stations and to other priority sectors of the economy. The Mission held a number of meetings with other relevant state agencies and individual enterprises.

March, 2009

3



FURTHER IMPLEMENTATION OF THE DECISIONS MADE BY THE SECOND CONSULTATIVE COUNCIL MEETING In February, in the released bulletin, the Secretariat provided information on envisaged activities of the Government of RT on approving Drafts of Decree of the President of RT on reforming the permit system and of Decree of the President of RT on improving administrative procedures related to construction activities. As of to date, the President of RT has signed: • Decree «On Reforming permit system in the Republic of Tajikistan» (dated March 7, 2009, № 633) • Decree «On improving administrative procedures related to construction activities» (dated March 18, 2009, № 638) The Government of RT approved the Draft Law of RT «On state registration of legal entities and individual entrepreneurs». Under the envisaged reform of permit system, it is intended to review current normative legal acts providing issuance of permitting documents required to do business. Review of normative legal acts assumes abolition of the legal acts holding back business development, as well as of the legal acts that are not provided for by the Law of RT. With the purpose to review the above mentioned legal acts, it is intended to establish a commission which would have to accomplish all specified activities within 9 months. The draft law on permits is to be elaborated based on conducted activities. According to the Decree of the President of RT «On improvement of administrative procedures related to construction activities», the Government of RT was assigned with the task to elaborate and to approve new order of administrative procedures, related to construction activities, by April 18, 2009, that would allow to reduce the number of and the time for administrative procedures, and also to lower the costs of permitting documents required to carry out construction works. Reforms in this area will not be limited by only development and approval of new order for administrative procedures in the construction sector. According to the instructions received from the President of RT, the Government has to develop and approve a specific plan of detailed actions on improvement of construction legislation, with focus on reforming administrative procedures and increasing the

March, 2009

4



responsibility for violation of norms which regulate the matters of compliance with administrative procedures in construction sphere. INFORMATION ON THE DEVELOPMENT PROGRESS OF PROGRAMME «200 DAYS OF REFORMS» As mentioned above, on March 12-13, 2009, by initiative of SCISPM RT, the joint discussion was held on proposals and recommendations put forward by business and donor community, with the purpose to have them incorporated into the Draft Programme «200 days of reforms». The representatives of SCISPM RT, IFC, Project BEI (USAID), NASMET and Secretariat of the Council participated in this discussion. As the result, a consolidated document of the Programme «200 days of reforms» was drafted, including the matrix of measures on this Programme. The consolidated version of the draft document included 32 measures, aimed to reduce state regulation in business sector. The measures were sorted out according to the following areas of their application: • Reduction in inefficient administrative procedures; • Adoption of guidelines and procedures based on a principle of applying to «one-stop shop» in the area of business registration, licensing, and foreign trade procedures; • Simplification of taxation system and improvement of tax administration; • Ensuring protection of rights for entrepreneurs, expansion of options for them in managing their assets; • Improvement of country’s image on international level At present, the draft document of the Programme «200 days of reforms» is being worked out at the stage of coordination between the stakeholders. INFORMATION ON THE GLOBAL PRACTICES IN ORGANIZING DUALOGUE BETWEEN GOVERNMENT AND BUSINESSES It’s been over a year since the establishment of Consultative Council on Improvement of Investment Climate and Business Environment under the President of the Republic of Tajikistan. Despite the short period of implementing its activities, the Council became a good incentive for the start up of serious dialogue between businesses and the state. The experience showed that such a dialogue promotes rapprochement of interests between the state and businesses, and reaching consensus on the various issues, because the Council comprises high ranking officials and the most distinguished representatives and leaders of business community. March, 2009

5



However, in the course of its work the Council faces a number of subjective and objective issues. One of the constraining factors is incomprehension of the status and the role of the Council. Many public agencies do not take an interest in the work of the Council, seeing it as their alternative. Due to the existing situation, with support of IFC an expert in PPD (Public and private Dialogue) field was invited to Tajikistan who conducted consultations on this matter with SCISPM RT, Secretariat of the Investment Council and representatives from private sector. Mr. Benjamin Herzberg, Senior Private Sector Development Specialist of the Investment Climate Department (World Bank Group) during his visit has informed the heads and staff of SCISPM, the Secretariat of the Council and representatives from the private sector, on the other countries’ experience in organizing the dialogue between the state and businesses. In the global practice, such Public-Private Dialogue has its rich history and certain experience, and is not a new concept developed and adopted specifically to the conditions of Tajikistan. Such a dialogue turned out to be the most useful and effective instrument for identifying and resolving business-related issues, called to improve investment climate in countries with transition economy, such as Bosnia and Herzegovina, Republic of Belarus, Armenia, Georgia, Cambodia, Vietnam, Uganda, Ethiopia, Zambia and a number of countries in South-East Asia, Africa and Pacific region. The main purpose of organizing such a dialogue is to provide opportunities for promoting the reforms. For example, in Bosnia and Herzegovina the dialogue between the state and businesses was developing under the motto of «bulldozer initiative», and with that purpose «Bulldozer Committee» was established, comprising high ranking officials and business representatives, who have been involved in promoting the reforms of primary importance to support and develop private sector in these countries. The dialogue between the government and businesses can be demonstrated in other formats, it can be structured or unrestricted, formal or informal, comprehensive or covering only specific issues. The dialogue can be initiated by the state or by a business, and even by international institutions. It can be conducted in a format of Forums, Councils, Committees and Round Tables, etc.

March, 2009

6



The most widely spread form of dialogue organization is the Council, having different names such as «National Business Council», «Investment Council», «Consultative Council» etc. In the majority of the countries these institutions are chaired by the President or by the Prime – minister of the country. It’s important to understand that the purpose of establishing such institution is not to replace or duplicate the functions of certain public agencies, but to establish so-called forum where representatives from authorities and businesses have the possibility to discuss jointly the issues of business development and ways of their resolution. The most important condition for organizing such dialogues is the existence of political will of the parties, because any dialogue will be fruitless if one of the parties is not really interested in it. Strategic body ensuring the work of the Council is independent Secretariat/ committee, established with the basic task of organizing and promoting a structured dialogue between the government and representatives from local and foreign business organizations, with the purpose to improve business climate and to facilitate development of the private sector, to increase the employment rate and standards of living of the population. The Secretariat of the Council performs the role of a facilitator, with its main functions as follows: • Conducting consultations with partners to identify their interests, willingness and opportunities to participate in this process, as well as ensuring and supporting better participation of the representatives from private sector in the meetings of the Council; • Ensuring transparency of the process and coordinating the dialogue between the working groups on identifying opportunities ad compromises on raised issues; • Ensuring constant cooperation between the partners on providing necessary technical assistance in a form of analytical and expert support on the various issues related to improvement of business environment etc.; • Developing agendas and possible scenarios for the meetings of the Council, as well as summarizing and disseminating information on outcomes/ decisions made by the Council. It is determined that the Council has to establish working groups out of a number of key people from involved ministries/ agencies, representatives of business entities/ associations

March, 2009

7



and representatives of donor organizations, according to various areas of activities. These working groups normally are set up according to: 1. Sectors; 2. Functions, and/ or 3. Regional principals of organizing Council’s work, depending on the goals and tasks set for the Council. However, to organize the dialogue between the state and business is not the final goal by itself; because it’s primary purpose is development of the specific product. The product of the dialogue is recommendations on legislation reforms, improvement of methods and forms of interaction between the state and businesses. The product of the dialogue should be assessable, visible, scheduled in time and task-oriented. For developing countries with transit economy in particular, in a situation when state should determine its role in the matters of business regulation, and businesses should determine their own role «in the matters of management of state affairs» - this mechanism of dialogue between the state and businesses is a vital integral part of the reforms implemented in the country. Note: Secretariat is prepared to render assistance (as resource-center) in providing necessary materials/ information on the above listed adopted Decrees of the President of RT and other normative legal acts of RT.

March, 2009

8



BASIC THEMES OF THIS RELEASE: • Outcomes of the discussion on the Program «200 days of reforms» • Measure matrix of the Draft program «200 days of reforms» • Progress report on implementation of the « Plan for implementation of specific measures for improvement of international rating indicators of the Republic of Tajikistan» EVENTS April 1, 2009 - The members of the Majlisi Namoyandagon of RT (Lower Chamber of Parliament) adopted the Law of the RT «On measures for protection of economic interests of Republic of Tajikistan when carrying out foreign trading». The Law was developed with the purpose of encouraging domestic producers and prevention of import to the country of low-quality foreign goods. The enactment caused an ambiguous attitude of the society towards it: - Some think that the Law may have a positive effect on the development of domestic production, especially on the growth of agricultural production in the country; - Others support the idea that introduction of antidumping measures regarding some imported goods to Tajikistan will lead to weakening of the competition on the domestic market and to increase in prices for goods which in turn will worsen the situation of the population, where the 50% of people of live below the poverty line. However, all of them agree that protectionist measures on the protection of domestic market will have positive effect only in case if undertaken along with other efforts extended by the government to support domestic producers. April 8-9, 2009 - The deputies of the Lower Chamber of the country amended the Law of the RT «On licensing of certain types of activities», according to which the work with radioactive materials in Tajikistan (import, export, sale, processing, production, use and liquidation) will be permitted only if there is a special license obtained. These amendments in the Law ensure the security of the state, enhancement of the ecological situation and fulfillment of international liabilities of our republic on non-

March, 2009 Contact information: [email protected], Address: 3 Loik Sherali str. , Business-Center «Sohibkoron», 6-th floor Tel. : (992 44) 610 60 04; Tel./Fax: (992 44) 610 60 06;

1


dissemination of nuclear materials, which were supported by MAGATE and other international organizations. April 21, 2009 - There was the discussion held at SCISPM on the draft Program «200 days of reforms», with participation of representatives from the key ministries and agencies and business associations. Representatives from some donor organizations such as DFID, IFC, USAID, Eurasia Foundation, including representatives from Chamber of Commerce and Industry of USA, also attended the meeting. The major objectives and tasks of the Program «200 days of reforms» were voiced out in the course of the discussion, and the presentation prepared by Secretariat jointly with SCISPM was introduced as well. The idea of setting-up the Program «200 days of reforms» was suggested by the President of the RT, Emomali Rahmon, during the second meeting of the Consultative Council on improvement of the investment climate under the President of the Republic of Tajikistan, which took place on December 18, 2008. On April 15, 2009 the President of the Republic of Tajikistan in his address to Majlisi Oli of RT once again raised the issue on enhancement of work on the development of the program aimed to improvement of the business environment. The important thing is that the Program is based on the priorities of the National Development Strategy for the period till 2015 in the part of « reducing administrative barriers for the entrepreneurs when doing business» and is focused on the implementation of the objectives set forth in the strategy. Such short term programs with clearly defined timeframes and brand were widely used in the past and still are being used currently in management practice of various countries, especially during crisis periods. For example, June 11 -September 21, 1898, the Emperor of China Guancui issued 60 decrees which were passed under the motto «100 days of reforms». On March 4, 1933, the Resident Roosevelt F. when taking up his post promised to undertake the most urgent measures to fight the crisis, and this program got a name «100 days of reforms». Among the most recent programs, it worth noting the program «100 days of reforms» in Kyrgyzstan in 2007, which covered the improvement of indicators on «Doing Business» report. As a result of the program, the Republic of Kyrgyzstan has improved its international rating and was included to the list of ten top countries – reformers, thereby increasing its investment


2


attraction. The Government of Kyrgyzstan, as a continuation of this program, intends to further improve the indicators and to be among 50 top leading countries on «Doing Business» report of the World Bank by 2010. In our country, the need for the Program «200 days of reforms» was dictated by the time, because its concept meets the requirements of anti-crisis policy of the country. The Programs aims at the promotion of administrative and regulative reforms to support business development. In times of crisis and in the toughest periods of economic development, the Government should lighten its regulative requirements which do not contain any serious political or economic risks. The Program does not cover all aspects of regulative reforms but focuses only on 2-3 basic vital priorities, considering that it is not easy to carry out overall reforms at the same time. The implementation practice of various programs in the country showed that many good programs (reforms) were not accomplished due to weak implementation and lack of financial and human resource background. As it was mentioned earlier, the Program is focused first of all to simplify the administrative procedures for business registration and liquidation, licensing, issue of permits, including issue of permits for construction and foreign trade operations. Simplification of administrative procedures involves introducing of «One-stop shop» principle. «One stop shop» represents a simplified regulative facility according to which the entrepreneur has to provide required information and/or documents only one time, using the single processing channel. «One stop shop» is called to speed up and to simplify information flows among business participants and authorized state agencies, and to bring tangible benefits to all participating parties. Apart from the procedures of «One stop shop», other regulative mechanisms will be considered, which conform to the principle «Silence is the sign of agreement» meaning that in case the authorized public servant of state agency does not make the positive or negative decision within the time set for certain procedure, the decision is considered as positive. In this case, the public servant will carry strict responsibility for the consequences of the violation of certain time lines. Along with the mentioned above principles, the Program includes some activities which will lay the foundation for implementation of other reforms also, following the Program «200 days of reforms». These measures include the matters of simplifying the taxation system, labor relations, creation of infrastructure for the development of the businesses


3


and etc. It is clear that this Program is just the first step, and in case of successful and timely implementation it is possible and will be necessary to continue administrative and regulative reforms. From the financial point of view, the Program does not require significant budget financing. The implementation of the Program measures is based on technical support of international projects. However the financial support of the Program is not the main sign of the Program success. The positive success of program implementation will directly depend on political factors, specifically - on active participation and responsibility of involved state agencies, and on business activity as well, i.e. the desire of businesses to implement reforms. The most important and turning point will be the leadership and control from the side of the President of the Republic of Tajikistan. During the presentation of the Program «200 days of reforms», Mr. Sh. Zardov touched the matter of Program title, which was not clear for many participants of the meeting. First of all, any reforms should have the beginning and the end, secondly, in the present situation, the quality and the speed of implemented reforms, the regulative reforms in particular, are substantial factors for the development; and thirdly, the brand title of the Program, indicating the exact number of days, is a good incentive for the activating of efforts for its implementation. The participants also raised some questions regarding the Program’ presentation style. Concerning the issues raised about the style, it was emphasized that the program’ presentation does not contradicts the scientific rationale of the program, because it has goals, tasks and specific measures for their implementation. It was proposed to form a special editorial board out of the meeting’s participants. April 28-29, 2009 - The meeting was held in Bishkek, with participation of stakeholders, under the program «Central Asia Invest», during which the projects and also the review of business environment in Central Asia were presented as well as thematic workshops dedicated to key issues of private sector development in Central Asia were conducted. It is anticipated that the outcomes of these workshops will be presented during the plenary meetings of the Bureau for cooperation «EuropeAid», with the purpose of developing recommendations and determining new priorities in the work.


4



5


April, 2009 Contact information: [email protected], Address: 3 Loik Sherali str. , Business-Center «Sohibkoron», 6-th floor Tel. : (992 44) 610 60 04; Tel./Fax: (992 44) 610 60 06;

6



7



8



9


April, 2009

10



Progress report on « Plan for implementation of specific measures for improvement of international rating indicators of the Republic of Tajikistan» The Secretariat, based on the decision taken by the Council on conducting continuous monitoring over implementation of the decisions taken by the Council, presents a summary on implementation of the «Plan for implementation of specific measures for improvement of international rating indicators of the Republic of Tajikistan» We remind you that this Plan was approved by the decision taken during the second meeting of the Consultative Council on improvement of investment climate and business environment under the President of Republic of Tajikistan, dated of December 18, 2008, and directed by the order of the Head of the Executive Office of the President of RT for execution by ministries and agencies. The Plan focuses on implementation of 16 measures on 4 indicators of international rating within 6 months (registration of enterprises, receipt of the construction permit, protection of investors and liquidation of enterprises), according to the report of the World Bank on «Doing Business». As for April 2009, the Plan was accomplished by 87,5%.1


11


1 Note: Progress evaluation covers only matters of development and approval by the Government of draft Laws, while the indicators of «Doing Business» consider adoption and implementation of draft Laws taking into account their immediate impact on businesses. Indicator «Registration of enterprises» Tajikistan moved from place 166 (2008) to place 178 (2009). Georgia, which holds place 10 in the rating, is the leader in post-Soviet area, according to this indicator.

Performance: 1. The Government of Republic of Tajikistan developed, approved and directed for the review by Majlisi Namoyandagon Majlisi Oli of Republic of Tajikistan, a draft Law of Republic of Tajikistan «On state registration of legal entities and individual entrepreneurs», which makes provisions for procedures of registration in «one stop shop»mode and «by silence». Notarization is not required when registration is given. The changes in the registration data do not entail re-registration. The draft Law was reviewed by the Lower Chamber of the Parliament. 2. «The Guidelines of the National Bank «On deposit bank accounts, opened in the banks of Republic of Tajikistan» was developed in new edition, providing for abolishment of notary certification of constitutive documents, when opening deposit accounts/ foreign accounts in the banks. Drafted document is under the review at NBT. Due to some unclear reasons, NBT has not yet approved these Guidelines. 3. Besides, there were prepared some relevant draft documents on introducing alterations and amendments to normative legal acts with the purpose of bringing them to conformity with standards of the draft Law « On state registration of legal entities and individual entrepreneurs». Draft documents will be presented for review to the Government of RT after the adoption of mentioned above Law by the Parliament of the country.

April, 2009

12



Indicator «Obtaining construction permits» Tajikistan moved from place 166 (2008) to place 178 (2009). Georgia, which holds place 10 in the rating, is the leader in post-Soviet area, according to this indicator. Performance: 4. The President of Republic of Tajikistan signed the Decree «On measures for improvement of administrative procedures, related to implementation of construction activities in Republic of Tajikistan». 5. With the purpose of implementation of the adopted decree of the President of RT, the Agency on construction and architecture under the Government of RT has developed and presented to ministries and agencies draft decisions of the Government for approval. Indicator «Protection of Investors» Tajikistan has improved its indicators in the rating, having moved from place 176 (2008) to place 150 (2009). The Republic of Kyrgyzstan, which holds 11th place in the rating, is the leader in post-Soviet area on this indicator. Performance: 6. The Government of Republic of Tajikistan worked out, approved and directed for the review by Majlisi Namoyandagon Majlisi Oli of Republic of Tajikistan, the draft Law «On introducing alterations and amendments to the Law of Republic of Tajikistan «On joint stock companies», focused on the improvement of legal protection of shareholders in minority. The Draft was reviewed by the Lower Chamber of the Parliament. 7. According to the Plan, SCI was ordered to carry out inventory of all normative legal acts, regulating the activities of foreign investors in the Republic of Tajikistan, and to identify the normative legal acts which are to be modified or abolished. Currently, SCI is summarizing recommendations submitted by ministries and agencies on implementation of this assignment. April, 2009

13



Indicator «Liquidation of enterprises» Tajikistan improved its indicators in the rating, having moved from 99th place (2008) to 97th place (2009). Lithuania, which holds 34th place in the rating, is the leader in post-Soviet area on this indicator. Performance: 8. The Government of Republic of Tajikistan developed, approved and forwarded for the review by Majlisi Namoyandagon Majlisi Oli of Republic of Tajikistan the Draft Law « On introducing alterations and amendments to the Law of Republic of Tajikistan «On insolvency (bankruptcy)» in the part of simplification of bankruptcy procedures and time terms. The Draft was reviewed by the Lower Chamber of the Parliament. 9. According to the Plan, after adoption of a draft Law «On insolvency (bankruptcy) », the SCI will conduct explanatory work on bankruptcy procedures among entrepreneurs. Expected results: The adoption of all mentioned above modifications (draft Laws) will allow to substantially increase international ratings of the country according to «Doing Business» report. However, it is important for these draft Laws to be adopted and enforced by the middle of May, for the World Bank to consider and include them in «Doing Business» report for 2010. In this regard, the Secretariat informs that on May 18, 2009 there will be held the next session of Majlisi Milli of RT (Upper Chamber of the Parliament), where they plan to consider the mentioned above draft Laws.

April, 2009

14


Annex №9



Annex №10

List of publications in regard to Consultative Council activity on improvement of investment climate under the President of Republic of Tajikistan

1. Press-release of the first Consultative Council meeting, Khovar, July 31 2008; 2. Press-release of the second Consultative Council meeting, Khovar, December 18 2008; 3. Article «Business and power - the beginning of the constructive dialogue», Asia-Plus dated August 13, 2008 №33 (477); 4. Article «We need more radical reforms», exclusive interview by Sh. Zardov, Asia-Plus № 35 (449) dated August 27, 2008. 5. Article «Tajikistan is improving its investment climate», by the Council member M. Uljabaeva - Director of NASMB, Asia-Plus, dated September 12, 2008. 6. Article «Developing the entrepreneurship along with ARI», by the Council member M. Uljabaeva - Director of NASMB, Asia-Plus №39 (453) dated September 24, 2008. 7. Secretariat article «Permits system: Reform needed», № 44 (458) dated October 29, 2008. 8. Article «To build or to permit», Asia-Plus № 43 (457) dated October 22, 2008. The given article has been also published in the local nespaper “Nuri Zindagi” № 24, dated December 18, 2008 in Tajik language. 9. Article «Ratings and why we need them», Asia-Plus №2 (469) dated January 14, 2009 - by the Council member M. Uljabaeva - Director of NASMB. 10. Article «Permit us not to permit!», № 43 (457) dated October 22, 2008 - prepared by IFC. 11. Article «Business needs investments», Narodnaya Gazeta, № 8 (19666) dated February 18, 2009. 12. Article «One window - the Azerbaijan way on its implementation», Nuri Zindagi № 7(32), dated February 12, 2009. 13. Article «The political will of the President. Small and Medium-sized business hopes for positive changes», Vecherniy Dushanbe, № 13 (592) dated March 26, 2009. 14. Article «The ways to simplify the bankruptcy procedures», Argumenty i Facty, № 15, April 2009.