TAJIKISTAN

2TAJIKISTANthe european times CLOSED JOINT STOCK COMPANY

Established in: 2008

The spinning company Olim Textile completely new company (Mastcoh district) launched in March 2011.In a later stage it should cover the full cycle of cotton processing up to nal products (garment and knitwear).

Ownership/Private: 100% (local)

Factory capacity: 5,200 tons/year

Type of spinning: Ring spinning

Equipment: Supplied by famous brands Textima, Trtzscler, Schlafhorst full option, Uster (Laboratory), SSM, Oerlikon and Volkman.

Sourcing: Local raw material (cotton) from own ginneries

Number of employees: 400

Potential export markets: Russia, Turkey, EU countries

Total area: 11,000 m

Address: 734001, Shotemur str.36, Dushanbe, TajikistanTel: +992 3722 01 89E-mail: info@olimtextile.tjWebsite: www.olimtextile.tj

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Introduction

extremism, drug trafficking, a lack of adequate supplies of clean water and other challenges. Based on a proposal the president made, the UN declared 2003 the Inter-national Year of Freshwater, the period 2005 to 2015 the Interna-tional Decade for Action: Water for Life, and 2013 the Interna-tional Year of Water Cooperation. Emomali Rahmon has received awards from many countries for his far-sighted leadership. He discusses his vision for Tajikistan.

European Times: What image would you like the world to have of Tajikistan?

Emomali Rahmon: I would like people to know that we have estab-lished the rule of law, secular government, democracy, stability, and a market economy with great development potential in which economic freedoms and private property are protected. I can con-fidently say that Tajikistans insti-tutional transformation, which has totally altered the economic and social life of our people, has borne fruit. We have created favourable conditions to tap our countrys great resources and have

laid a solid foundation for entre-preneurial activity.

We have established

the rule of law, secular

government, democracy,

stability, and a market

economy with great

development potential in

which economic freedoms

and private property are

protected.

We have privatised most state property, implemented new laws to protect economic freedoms, reformed registration and licensing procedures, abolished many administrative barriers, declared a moratorium on the inspection of business activity, and fought against crime and corrup-tion, all of which have improved our business climate and invest-ment appeal. These efforts

were recognised in the World Banks Ease of Doing Business report, in which Tajikistan was ranked among the worlds top 10 countries in business reforms for two straight years.

Our Consultative Council on Improving the Investment Climate, which offers a forum for fruitful dialogue between gov-ernment and the private sector, continues to upgrade our business environment. We are making great progress in reaching three main goals: energy independence, ending the countrys communica-tions isolation and ensuring food security.

European Times: How would you define Tajikistans relationship with the EU?

Emomali Rahmon: Tajikistan regards the EU as a major inter-national partner and is interested in furthering the development of beneficial relations with the EU under the framework of the EU Strategy for Central Asia for 2007 to 2013 and beyond. In 2009 Tajikistan became the first Central Asian country to sign a coopera-

Khovar - National Information Agency

Palace of Nations in Dushanbe

Government

Business & InvestmentOpportunities

eu helping Government Jump-start Development programmes

Continued steady GDp Growth anticipated

Germany a Dedicated, Long-term partner

French ambassador urges eu to support tajikistan

I advise investors to visit Tajikistan. I think they will be

pleasantly surprised.Eduard Auer, EUs Ambassador to Tajikistan

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International FinancialInstitutions

World Bank Focusses on enhancing investment environment

eBrD Focussing on private-sector Growth

iFC helping Government upgrade Business environment

imF promoting macroeconomic stability

This is a young country at a crossroads, poised for investment.

Marsha McGraw Olive, World Banks Country Manager for Tajikistan

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World Bank Focusses on Enhancing Investment EnvironmentMarsha McGraw Olive, Country Manager, discusses the World Banks priorities in Tajikistan.

European Times: What are the World Banks goals in Tajikistan?

Marsha McGraw Olive: This is a young country at a cross-roads, poised for investment. The World Bank aims to help Tajikistan focus on the virtuous circle of creating the conditions to attract investors which bring not just money, but also technologies, jobs, and new ways of working. More broadly, we support public policies to increase the well-being of the population and improve productivity.

European Times: What are Tajikistans investment attractions?

Marsha McGraw Olive: Three main draws are the young, talented, and growing population that is eager to work; considerable untapped potential in agricul-ture, hydropower and mining; and spectacular scenery and cultural attractions that can be developed for sus-tainable tourism. Although connections are currently a challenge, Tajikistan is well positioned geographi-cally to export to South Asia, China and Russia. With transport links improving it will become a good base for cross-border trade. My bottom-line messages for the Tajik government are: use your public resources wisely and attract foreign investment. We fi nd the current government very open to all partners and hungry for outside ideas as well as increasingly respon-sible in managing its fi nances.

European Times: What are some of the World Banks current projects?

Marsha McGraw Olive: The World Bank has invested 571.8 million in 85 operations in Tajikistan since 1992, and this year we have invested just under 40.7 million. We do not spend the money ourselves; we entrust it to the government to carry out projects that we help them prepare and implement. Every project includes three elements: policy reforms, technical assistance to build capacity, and large productive investments. Our portfolio has been evenly divided

Marsha McGraw Olive, World Banks Country Manager for Tajikistan

among energy, agriculture and human development. Our current projects include ensuring a reliable water supply for Dushanbe, a land-registration effort, and a 8.1 million project on enhancing private-sector com-petitiveness. This includes a new regulatory framework for the mining sector, further reductions in red tape, and a card-processing centre for the banking sector. We are also involved in other investment projects concerning education, health, and energy, including an exemplary public-private partnership, the Pamir Energy Project. Among our knowledge products, we are assessing a range of power supply investment options, aside from the Rogun hydropower plant.

European Times: What about future initiatives?

Marsha McGraw Olive: We will invest in business-friendly efforts, for example, in boosting competitiveness in the Khatlon region in partnership with the IFC, and support better tax administration. We are also exploring a new investment fund for water-supply development in part-nership with the EBRD. Overall, we are supporting the governments strategy for the next three years and coor-dinating our activities with its goals.

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THE EUROPEAN TIMES

EBRD Focussing on Private-Sector GrowthUlf Hindstrm, Head of the Tajikistan offi ce of the European Bank for Reconstruction and Development (EBRD), outlines the banks diverse programmes.

European Times: Can you describe the EBRDs activities in Tajikistan?

Ulf Hindstrm: Since 1992 when Tajikistan became a member of the EBRD, we have provided assis-tance to the Tajik economy across a wide array of sectors and provided 255.5 million in financing. The EBRD not only offers funding, but also ideas and technical support to ensure economic growth. Our objective is to foster the private sector and to make sure that financing for private-sector projects is available through the banking system. We support credit lines targeting small businesses, such as the Tajikistan Agriculture Finance Facility (TAFF) which supports farmers. The EBRD has loaned a total of around 46 million (US$56 million) to Tajikistans banks for supporting small businesses, and the effect of this has been to make around ten times this amount available in financing. The banking sector here still needs improvement since obtaining loans is difficult and interest rates are high.

European Times: How is the EBRD helping to improve private-sector financing?

Ulf Hindstrm: The EBRD and other donors have provided grass-roots training for farmers and bank officials to help them make the most of the loan process. In the beginning there were many losses, but now agricultural lending has been set on a sound footing and is very profitable for banks. We are promoting financial literacy among Tajikistans farmers. The government is making progress in land reforms and the EBRD has supported this process. We have also organised two international agricultural forums here to help put Tajikistan on the map and to create interest among potential investors.

Ulf Hindstrm, Head of the Tajikistan offi ce of the European Bank for Recon-struction and Development (EBRD)

European Times: What are the EBRDs goals for Tajikistan over the next fi ve years?

Ulf Hindstrm: The latest country strategy we approved in March this year focuses on four areas: upgrading the fi nancial sector, supporting private-sector growth and agriculture, building infrastructure ensuring supplies of clean water, and providing reliable energy.

European Times: What about the business climate for foreign investors?

Ulf Hindstrm: Red tape is defi nitely a problem. The government needs to trust the private sector and help it grow and prosper. Many areas have excellent potential, such as hydropower, agriculture, mining, and eventu-ally tourism. The hydropower sector needs world-stand-ard equipment and technologies while the agriculture sector requires modern machinery and know-how. Energy supplies are unreliable, infrastructure needs upgrading and other challenges inhibit growth, but Tajikistan is defi nitely making signifi cant progress on many levels.

International Financial Institutions

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IMF Promoting Macroeconomic StabilityAri Aisen, the IMFs Resident Representative in Tajikistan, discusses the countrys economic development.

European Times: What are the IMFs priorities in Tajikistan?

Ari Aisen: Our objective is to support Tajikistan in its effort to achieve macroeconomic stability. Through our Extended Credit Facility, we have disbursed roughly 129.2 million (US$160 million) to Tajikistan over the past three years to support the countrys balance of payments and add to its stock of inter-national reserves, thus reducing its vulnerability to external shocks. We have also been working with the Ministry of Finance to further promote fi scal sus-tainability. We are involved in macro-critical areas in Tajikistans reform process, such as public-fi nancial management, improved governance and transparency in state-owned enterprises, the National Bank and the fi nancial sector. The cooperation with the Tajik gov-ernment is very constructive, and our engagement is conducive to an atmosphere of open debate and mutual learning. Our advice has been generally very well received.

European Times: What are some crucial issues for Tajikistans economy?

Ari Aisen: Tajikistan has a small but open transition economy which is vulnerable to global economic con-ditions and currently dependent on remittances, par-ticularly from Russia. Remittances are a blessing in the short term, but could turn into a curse over the long term. The government is committed to coping with this problem through fostering private-sector growth and job creation. Tajikistan has huge potential in many sectors but it needs surrounding countries to be able to take full advantage of them. An example of such regional projects is the World Banks energy-trading programme for Central and South Asia, CASA-1000, which we hope could be implemented soon. The IMF is highly involved in stimulating regional coopera-tion and trade, particularly through the Central Asia Regional Economic Cooperation Program (CAREC).

Ari Aisen, IMFs Resident Representative in Tajikistan

European Times: Why should international investors target Tajikistan?

Ari Aisen: Tajikistans GDP has been growing at above 7% lately and infl ation is currently under 5%, which points to a stable macroeconomic environment. The potential to sustain this performance is there, for example in hydropower, mining and agribusiness, yet in 2011, Tajikistan roughly attracted only 8.87 million (US$11 million) in FDI, while receiving around 161 million (US$200 million) in foreign aid (foreign grants) and over 2.42 billion (US$3 billion) in remittances. I am confi dent that, over time, we will see a strong increase of investment in Tajikistan, as investors learn more about this countrys rich prospects. Tajikistan is a remarkable country, with amazingly hospitable people and breath-taking natural beauty. I urge investors and travellers to come here and see its tremendous potential.

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the european times

Finance

First Deputy Finance minister Cites economic openness

national Bank ensuring World-Class standards

ambitious reforms upgrading Financial sector

I would like potential investors to know that Tajikistan is a very

open economy.Jamoliddin Nuraliev, First Deputy Minister of Finance

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National Bank Ensuring World-Class StandardsAbdujabbor Shirinov, Chairman of the National Bank of Tajikistan, discusses recent developments in the countrys fi nancial sector.

European Times: What are the National Banks priorities?

Abdujabbor Shirinov: Like all central banks, we focus on price stability, fi nancial stability, and maintaining an effective payment system. Part of our task is to provide the right conditions for Tajikistans fi nancial institutions to perform well, and we have established an effective regulatory environment which we continue to improve.

European Times: Can you describe Tajikistans fi nancial sector?

Abdujabbor Shirinov: We have 14 banks, of which only one is state-owned, and over 140 micro-fi nance institutions. The National Bank oversees the fi nancial sector to make sure that all organisations meet international standards. For the past ten years the fi nancial sector has seen stable growth, with double-digit growth in banking assets, capital, and numbers of customers.

European Times: What are some of the National Banks current projects?

Abdujabbor Shirinov: In 2008, with the help of the World Bank and the IMF, we created a road map of strategies to deal with

Abdujabbor Shirinov, Chairman of the National Bank of Tajikistan

problems, through which we improved the banking sector in 2009 and 2010. In 2011, we drafted new laws to further improve the regulatory environment. We are steadily upgrading the finan-cial-system framework to attract investors to the sector. In partner-ship with the IMF, we launched an ECF Program for 2009-2012 which has been concluded successfully. This assistance helped us to design and implement stability and growth-oriented macroeconomic and structural policies, which in turn provided the necessary assur-ances to the broader international donor community. Cross-border capital flow has been liberalised, and operations in the FOREX market have been improved and brought to international standards. We have also improved our FATF standards, adopted a special law on AML/CFT, and established the Financial Intelligence Unit within the National Bank, which recently joined the Egmont Group.

European Times: What are some of the challenges the National Bank faces?

Abdujabbor Shirinov: The biggest challenge for us is the small size of the domestic banking system, which does not allow us to provide all the long-term investments the economy needs. We want our banking sector to expand to counter this problem, and we aim to continue to upgrade the perfor-mance and services of our banks. We have formed productive part-nerships with the World Bank, the EBRD and the IMF. Attract-

Finance

ing long-term and direct invest-ments in key sectors is extremely important for Tajikistan.

European Times: What is your personal message to potential investors?

Abdujabbor Shirinov: Tajikistans fi nancial-services sector has been growing by 25% annually. Tajikistan has a very free market with free movement of capital, and this is a very good time to invest here. The National Bank is ready to partner with you.

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TAJIKISTANthe european times

Industry & Construction

national Development strategy Focusses on sustainable Development

Chamber of Commerce serves as Local partner for Foreign investors

agency helping to Build tomorrows tajikistan

We are ready to give additional incentives to investors who are

ready to create jobs and help us to continue to develop our economy.Sharif Rahimzoda, Minister of Economic Development and Trade

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TAJIKISTANthe european times

Energy

spurring on industrial Growth while Boosting energy production

eighth in the World in hydropower resources

Tajikistan is a modern, forward-thinking nation which

is playing a key role in promoting regional partnerships.

Pulat Muhiddinov, First Deputy Minister of Energy and Industry

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around 35,000 sq km. according to tethys, this area contains recoverable oil resources of 27.5 billion barrels of oil equivalent (Boe).

two new oil refineries under construction

tajikistans ministry of industry and energy announced on July 30 that it is building two oil refineries and is considering a third. the refiner-ies under construction in shakhri-nav and Kanibad districts will be able to refine up to 100,000 tonnes of oil annually each and should be completed by the end of 2012. the potential third refinery is a private-sector endeavour with a capacity of 500,000 tonnes per year.

along with its minerals and petroleum deposits, tajikistan has hydropower resources ranked eighth in the world. in fact, around 60% of the regions water resources originate in the mountains of tajikistan, yet the countrys hydro-power potential is under-utilised. tajikistan has the potential to produce annually around 527

billion kWh of energy through hydropower and currently produces only around 3% of that total. power outages are common, particularly in the winter months.

the government is well aware of the potential to develop hydropower plants, not only for the domestic market but also for green energy exports. the state-owned tajik utility Barki tojik exported more than 190 million kWh of power to afghanistan in the first half of 2012, according to Ceo abdullo Yorov. he adds that Barki tojik generated about 7.3 billion kWh in the first half of 2012, 6.8% more than in the first half of 2011.

Casa-1000

tajikistan is participating in the Central asia/south asia regional electricity market (Casarem) ini-tiative to develop regional energy trading. Four countries in the region tajikistan and the Kyrgyz republic in Central asia and afghanistan and pakistan in south asia have agreed to develop Casa-1000 as the first Casarem project. Casa-1000 aims

to establish the necessary transmis-sion facilities, trading infrastruc-ture and systems to enable trades of an estimated 1300 mW of elec-tricity between Central asia and south asia.

World Bank package

tajikistan has installed new high-voltage electricity-transmission lines and established a national electricity grid, and Barki tojik will scale up its new metering system and improve the reliability of supplies, particularly during the critical winter months, thanks to a new funding package from the World Bank. the 38.7 million (us$48 million) package will finance four new projects, one of which aims to reduce electricity and gas losses. announcing the new package in February, World Bank Country manager marsha olive said, the energy sector is crucial for the growth of tajikistans economy, and more importantly, for the well-being of the tajik people. We hope that this additional financing will help further the governments energy-security agenda.

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energy

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Transport

new projects Keeping transport on the move

streamlining Local and international transport Connections

Investors will find outstanding opportunities here in Tajikistan

for investments that will bring in significant returns.

Khudoyer Khudoyerov, Deputy Minister of Transport

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TAJIKISTANthe european times

Communications

massive Growth in telecom services

Bringing modern technologies to media sector

Tajikistans Communications Service ensures world-class communications services in

Tajikistan.Zuhurov Beg Saburovich, Chairman Communications Service

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Agriculture & Food

new incentives for investment in agriculture

agricultural Development to ensure Food security, Fight rural poverty

The agriculture sector helps ensure Tajikistans food security,

provides raw materials for industry, and increases the countrys export potential.

Kasim Kasimov, Minister of Agriculture

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TAJIKISTANthe european times

Health

providing World-Class healthcare for all

The well-being of any countrys population depends greatly on the activities and services of health

institutions.Saida Jobirova, First Deputy Minister of Health

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Education

education system Based on european model

World-Class education for all

Tajikistan has attracted students from all around the region

and beyond, including India, Afghanistan, Iran, Russia and

many other countries.Nuriddin Saidov, Minister of Education

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TAJIKISTANthe european times

Culture

national Library Fosters Cultural exchange

tajik Culture: a Force for national unity

We invite European travellers to come to Tajikistan and get to

know our rich cultural heritage.Mirzoshohrukh Asrori, Minister of Culture

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Tourism

tajikistans tourism Goal: one million Visitors by 2020

a natural for ecotourism

spectacular scenery and rich Cultural appeal

Come to Tajikistan and feel the friendship.

Lochin N. Faizulloev, Vice-Chairman Committee of Youth Affairs, Sports and Tourism