Doing Business in Tajikistan

Financial & Private Sector Development1

Doing Business in Tajikistan

Dushanbe, TajikistanNovember 15, 2010

Andrea Dall’OlioSenior Economist, Finance and Private Sector

Development Department, Europe and Central Asia

Financial & Private Sector Development

Agenda

2

About Doing BusinessReform Trends: Globally and Regionally

Reform Trends: Tajikistan

Tajikistan’s Reforms in 2009-2010

Conclusion – Next Steps


What does Doing Business measure?

Doing Business indicators:

Focus on regulations relevant to the life cycle of a small to medium-sized domestic business

Are built on standardized case scenarios

Are measured for the most populous city in each country

Are focused on the formal sector

DO NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets

3


Doing Business indicators – 11 areas of business regulation (9 included in the ranking)

Start-up Expansion Operations Closing Starting a

businessMinimum capital

requirement,procedures, time

and cost

Registering propertyProcedures, time and cost Getting creditCredit information

systemsMovable collateral laws Protecting investorsDisclosure and liability in

related party transactions

Enforcing contractsProcedures, time and cost

to resolve a commercial dispute

Dealing with construction permits

Procedures, time and cost

Paying taxesPayments, time and Total

Tax Rate Trading across bordersDocuments, time and

cost Getting electricity

(annex I)Procedures, time and

cost Employing workers

(annex II)

Closing a business

Time, cost and recovery rate

Property rightsInvestor protectionAccess to credit

Entry Administrative burden Flexibility in hiring

Recovery rateReallocation of assets


1. Singapore 16. Korea, Rep.2. Hong Kong SAR, China 17. Estonia3. New Zealand 18. Japan4. United Kingdom 19. Thailand5. United States 20. Mauritius6. Denmark 21. Malaysia7. Canada 22. Germany8. Norway 23. Lithuania9. Ireland 24. Latvia10. Australia 25. Belgium11. Saudi Arabia 26. France12. Georgia 27. Switzerland13. Finland 28. Bahrain14. Sweden 29. Israel15. Iceland 30. Netherlands

Top 30 economies on the ease of Doing Business 2009/10

5

https://www.cia.gov/library/publications/the-world-factbook/flags/ba-flag.html

https://www.cia.gov/library/publications/the-world-factbook/flags/ba-flag.html


Agenda

6

About Doing Business

Reform Trends: Globally and Regionally

Tajikistan’s Global Positioning in DB

Tajikistan’s Specific Reforms


Percentage of countries with at least one positive reform in 2009/10

84%

61%

63%

75%

59%

47%

67%

OECD high Income

Eastern Europe and Central Asia

Sub-Saharan Africa

Middle East and North Africa

Latin America and

Caribbean

South AsiaEast Asia and

Pacific

Strong global pace of reforms making business easier: 216 in 117 economies

7


21 of 25 economies in Eastern Europe & Central Asia improved business regulations this year

Among 49 reforms in 9 areas of business regulation,Paying taxes and Starting a business were the most popular

Paying taxes Starting a business

Closing a business

Trading across

borders

Dealing with construction

permits

Getting credit

Protecting investors

Enforcing Contracts

Registering property

11

9

8

6

5 5

3

1 1

8


9

Many one-stop shops for starting a business in Eastern Europe and Central Asia

More one-stop shops have been established in Eastern Europe and Central Asia than in any other region. Since 2002, 20 economies in the region integrated several registers under one function

freeing entrepreneurs from having to visit separate agencies involved in business start-up.


Eastern Europe and Central Asia is the second best performing region in 2009/2010

139 Tajikistan

10


Agenda

11



Reform Trends: TajikistanTajikistan’s Reforms in 2009-2010



Tajikistan among the 10 economies improving the most in the ease of doing business in 2009/10

Economy Starting a business


permitsRegistering property

Getting credit


Paying taxes

Trading across borders

Enforcing contracts

Closing a business

Kazakhstan

Rwanda

Peru

Vietnam

Cape Verde

Tajikistan

Zambia

Hungary

Grenada Brunei Darussalam

12


… however Tajikistan has still a long way to go

GeorgiaEstonia

LithuaniaLatvia

CyprusMacedonia, FYRKyrgyz Republic

ArmeniaBulgaria

AzerbaijanRomania

KazakhstanTurkey

MontenegroBelarus

ECA averageAlbaniaCroatiaSerbia

MoldovaBosnia and Herzegovina

KosovoRussian Federation

TajikistanUkraine

Uzbekistan

1217

2324

3738

4448

5154

5659

6566

6871.72

8284

8990

110119

123139

145150

13


Tajikistan is among the top 20 economies which improved the most their business regulation over the past 5 years …


… and in particular over the past two years

Tajikistan made considerable

improvements over time

Croatia made of lot of progress in DB08 with a

vast program of reforms

Ukraine reformed with a steady pace every year from DB09 to DB11

15

Total business easing reforms after DB06: 10 13 13 20

Egypt Arab Rep. jumped into the reform

race from DB07

5-year measure of cumulative change


Agenda

16







17

Tajikistan’s progress in improving regulatory environment for the private sector since DB 2007

DB Report

Year

Starting a business


permits

Registering property

Getting credit


Paying taxes

Trading across

borders

Enforcing contracts

Closing a business

2011 2010 2009 2008 2007

Tajikistan has been one of the top 10 economies that improved the most in the ease of doing business for two years in a row


18

Tajikistan’s global rank in each Doing Business indicator

Topic World’s top ranked 2009/10

Eastern Europe and Central Asia’s top ranked 2009/10

Tajikistan’s global rank

Tajikistan’s regional rank*

Starting a business New Zealand Macedonia, FYR (5)Belarus (7) 136 23

Dealing with construction permits

Hong Kong SAR, China

Georgia (7)Estonia (24) 178 23

Registering property Saudi Arabia Georgia (2)Armenia (5) 87 18

Getting credit Malaysia Latvia (6)Bulgaria (6) 168 25

Protecting investors New Zealand Kyrgyz Republic (12)Albania (15) 59 10

Paying taxes Maldives Estonia (30)Cyprus (32) 165 23

Trading across borders Singapore Estonia (4)

Latvia (16) 178 24

Enforcing contracts Luxembourg Belarus (12)Latvia (14) 40 9

Closing a business Japan Cyprus (22)Kosovo (31) 64 7

*Out of 25 economies in the Eastern Europe and Central Asia region


One stop shop allows a business owner to register a company with the state,

the tax authority, the statistics body and the

social fund in one place

New law eliminated previously required

documents: permission for making a company seal,

confirmation and information letters, and Charter of a legal entity

Starting a business in Tajikistan became easier, improving its Starting a business rank from 151 to 136

Time (days)

Procedures

0 5 10 15 20 25 30 35 40

27

8

11

4

Impact on sub-indicators

DB11 DB10


Tajikistan strengthened investor protections by requiring greater corporate disclosure

Tajikistan amended its Joint Stock Company law in January 2010 requiring detailed disclosure of transactions between interested parties in the annual report, and granting shareholders access to all corporate documentsExtent of dis-

closureEase of

shareholder suits


rank

DB10 DB11

8

659

108

6

5


21

Tajikistan has reduced the tax burden on businesses by lowering corporate income tax

Series10%

5%

10%

15%

20%

25%

30%

Corporate income tax rate

DB11 DB10

Effective January 1, 2009 tax rates were changed across industries. Applicable tax rate for TaxpayerCo is now 15%, reduced from 25% in 2008.


Agenda

22







Moving Forward…

23

Implement Single Registration Number

Complete the process of harmonization of existing legislation with the Law on State Registration

Modernize the existing system to facilitate the use of moveable assets as collateral, to improve access to credit for SMEs

Ensure that the credit bureau is operational

Streamline procedures relating to trade, payment of taxes, and registering property

Ensure adequate implementation of the reforms already completed


Thank you. For more information please visit:www.doingbusiness.org

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