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Is Tajikistan Ready for the Economic and Social Impact of the COVID-19 Pandemic?

“The impact of the pandemic for Tajikistan will disperse into two stages; the negative impact on a global scale – at first, and the spread of COVID-19 domestically along with the imposed quarantine – at second,” notes independent analyst Doryush Soliev in his article for CABAR.asia.


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The coronavirus epidemic has crossed over into pandemic and became a challenge for humanity. The pandemic not only jeopardized the health systems of countries across the globe but also emerged into a major challenge for the global economy and people’s lifestyles. The COVID-19 was confirmed in 213 countries and territories[1], and the number of infected has already exceeded 1,900,000[2] people. The virus has not spared Central Asia, and Kazakhstan, Kyrgyzstan, and Uzbekistan have introduced quarantine measures. As of today, there has not been a single case of the coronavirus infection confirmed in Tajikistan. As of late April, there are more than 1800[3] people in quarantine, implying that risk is pending in Tajikistan.

With a thorough analysis of the situation, we might assume that the impact of a pandemic for Tajikistan will disperse into two stages. The first stage is the negative impact on a global scale, in light of the quarantine measures introduced in other countries. The second is the direct impact of COVID-19 on the people in the event of its spread and the imposition of quarantine in Tajikistan.

Stage 1: Coronavirus put an end to tourism?

Tajikistan’s entire tourism sector that is initially fragile would be affected by the suspension of all civilian flights from/to Tajikistan. The President of Tajikistan, in his messages,[4] often highlights the importance of tourism development in the country and instructs the government to promote tourism and create facilities for it.

According to the Tourism Development Committee[5] under the Government of the Republic of Tajikistan, more than 1,250,000 foreign tourists visited Tajikistan in 2019. The main touristic flow[6] has come from neighboring countries and Russia.

Which countries sent the most tourists to Tajikistan in 2019? Photo: Sputnik

The coronavirus epidemic will change the situation as it is not uniform across various epicenters. While China was able to stop the outbreak, the COVID-19 epidemic continues to escalate in Italy, Spain and the USA, where the confirmed number of infected people is rising day by day. Tourism has been already halted all over the world. An indefinite quarantine for international flights might get extended up to six months, marking a serious blow to Tajikistan’s tourism industry in high season. Not only will the government’s efforts be undermined, but the already underdeveloped industry that has brought $ 23 million to the country in 2019 will mightily suffer.[7] Hotels and hostels already suffer losses and temporarily halt their activities, as the Hilton Hotel recently did.[8] But if large hotel chains like Hilton can weather the crisis, then smaller hotels might have to close for good.

Migrants

Labor migrants that are held hostage by safeguard measures taken by Russia and Tajikistan particularly, pose another threat to the Tajik economy. Since the introduced self-imposed isolation in Russia, Tajik labor migrants are not able to work, whereas Tajikistan-Russia and vice versa no-fly order allow no movement.

Labor migrants that are held hostage by safeguard measures pose another threat to the Tajik economy. Photo: Sputnik / Vitaliy Nevar

On the one hand, seasonal migration, i.e. a massive outflow of young people from Tajikistan to work in Russia, became impossible[9], at least until May 2020 due to the closure of borders for foreign citizens and stateless persons. On the other hand, Russia introduced a regime of self-isolation in various regions[10], affecting labor migrants who are already in Russia.

Introduced quarantine deprived many of their work, whilst no social guarantee is provided for labor migrants since Tajik migrants mainly work under contract (piecework basis) in private enterprises, and some do it illegally. According to the law, Russia only allocates funds to public employees (citizens) and only in the event of a lockdown, which is currently not the case in Russia. In other words, migrants will not get any social benefit for forced weekends that will last at least until the end of April[11], as this is not provided for by Russian law.

Is the Russian government ready to provide “tax holidays” for labor migrants? An important matter since migrants generate income both for Tajikistan and Russia.

Depending on the duration of the self-isolation, migrants will suffer from payments for patents and registration, not to mention a basic survival in a pandemic. This creates an impasse, on the one hand, because migrants cannot earn and pay for their patents and registration, and on the other hand, since they cannot return to their homeland with the closure of Russian borders. The “freezing” of migrants will have massive consequences for the Tajik economy, where remittances from Russian labor migrants constitute 30% of GDP. Based on data for the last two years, labor migrants transferred 600 to 800 million dollars for the second quarter[12] of 2018 and 2019.

Amidst ruble devaluation, caused by a fall in oil prices[13] and a pandemic, remittances will be significantly reduced this quarter. The President of the Federation of Migrants, Vadim Kozhenov and the Ambassador of Tajikistan to the Russian Federation, Imomuddin Sattorov, turned to the Russian government asking for grace period[14](providing tax “holidays”) for patents of migrants while the self-isolation regime is in force. Another aspect of the problem is the frequent inspection of migrants for registration lists and patents. Many migrants are not able to complete their documents in this situation, and in the case of inspections, will be detained for violating the laws of the Russian Federation. Is the Russian government ready to take that step and provide labor migrants with tax holidays? This is an important matter since migrants generate income for both Tajikistan and Russia.

Stage 2: Impact of COVID-19 spread

Quarantine

The obvious and effective way to control the spread of coronavirus is an imposition of quarantine. This includes isolation (self-imposed isolation) of all people from each other, cancellation of mass events, closing schools and workplaces, among other measures. In other words, it will limit the social activity people known all along. Nevertheless, the practices of other countries have shown the subsequent impact on the entire socio-economic environment in the country. I would like to highlight several critical points (except for the healthcare system, which is obviously the most important one) that are hard to ignore: food security, business, the Internet, and education. All areas of life will be a subject for change, yet, the above points are core to maintaining the functioning of both society and the state.

Food security

The Eurasian Economic Commission has recently imposed a ban on the export of certain goods. Due to the spread of coronavirus from the Eurasian Economic Union member states, rye, rice, buckwheat, groats, cereal, onions, garlic and list of products are temporarily suspended from exports[15]. Besides, Kazakhstan restricted the export of wheat and flour[16]. Tajikistan is not an EEU member and annually supplies wheat from Kazakhstan in the amount of 60% of total consumption. Kazakhstan has now set a monthly quota for the sale of wheat for 200 thousand tons per month until August 2020 for Tajikistan, Kyrgyzstan, Uzbekistan, and Afghanistan.

The monthly demand for wheat in Tajikistan is 90 thousand tons.[17] Entrepreneurs from each of the mentioned states will now compete for wheat to sell in their respective countries. Tajikistan might also try to import wheat from Russia, but according to entrepreneurs[18], flour prices will be higher in this case due to transportation costs. Among suspended from export products is rice, which Tajikistan also imports from Kazakhstan and Russia. Although, Tajikistan received humanitarian aid from Kazakhstan in 5,000 tons of flour, which slightly facilitates the needs of this product.[19]

Another problem concerns the people’s solvency in the case of quarantine. How prepared are the government and mainly the budget to allocate for payments to public employees? People working in the private sector are likely to be sent on unpaid leave and forced to survive on their own. The problem is that migrants are also in quarantine and cannot financially assist their families, which aggravates it even more. And those who rely on themselves and work on a piece-rates salary will be left without means of survival.

Business

What about small and medium businesses that are already in a difficult situation[20] due to the tax burden? The quarantine’s aftermath will be fatal for many entrepreneurs in several ways. First and foremost, the quarantine will halt the functioning of many enterprises with no workforce. Secondly, those enterprises that sustain through proceedings will have to put the business into liquidation. The loan payments will also be greatly affected. Thirdly, the population deprived of their earnings simply wouldn’t afford any tax payments. Many countries have already announced a “tax and repayment holiday” to somehow mitigate the losses incurred by the business. The National Bank of Tajikistan is currently analyzing the situation and considering the option of declaring a “repayment holiday”.[21]

It will be important to ensure rapid support from the Tajik government to individuals and entities. Photo: Sputnik / Amir Isaev

In this case, it will be very important to ensure rapid support from the Tajik government to individuals and entities. The decision to declare a tax holiday would be timely and crucial to somehow facilitate the risk assessment and its impact on individuals and entities in the country. The real question is, can the government afford to take this step? Problem is, remittances sent by labor migrants in Russia will halt indefinitely, while taxes will remain the only source to replenish a budget. If the government decides to stick to this year’s budget replenishment plan, it won’t likely to abolish taxes. I want to believe that it wouldn’t come to that. After all, this can lead to a widespread closure of enterprises and rising unemployment in the country. In its turn, this can result in a rise in crime and public discontent.

The Internet

The coronavirus pandemic forced everyone to switch to online mode, which could be a problem in Tajikistan. The issue with the speed and price of the Internet in Tajikistan is widely discussed in Central Asia. The country ranks 103rd in the world[22]. Starting May 1, 2020, the monthly tax of 80 dirhams[23] (0.8 USD) per subscriber will be canceled, and this amount will be paid by mobile companies. In early April, some mobile operators even raised their tariffs prices.[24] If quarantine to be introduced in Tajikistan, providers and the government will be challenged by quality and access to the Internet. Not everyone has it[25] and thus not everyone can afford to work from home. Now more than ever, it’s important to recognize that the current Internet situation harms all actors: the state, entities and the individuals. The quarantine will only prove that society is not able to function productively with expensive Internet at a low speed.

Education

We might as well ask ourselves whether Tajikistan’s education system is well-prepared to switch to online education. The personnel training and Internet availability leave no room for confidence. The transition might be ineffective for the moment due to no practice in the past and the lack of the corresponding scenario in the Education Ministry’s program. We should also consider that pupils and students in the regions will not be able to study online. Internet access in the regions is a major challenge due to the mountainous terrain and no Internet in distant regions. Besides, the high cost and low speed of the Internet will make online study an additional financial burden that many cannot afford.

We might as well ask ourselves whether Tajikistan’s education system is well-prepared to switch to online education. Photo: Sputnik / Stas Etves

The problem is, Tajikistan is focused immediately on the direct social impact of the pandemic. These are raising awareness activities, preventive measures, accepting foreign assistance, such as medical supplies from other countries. In economic terms, Tajikistan is about to receive 1 million euros from the German government[26] for the purchase of medical equipment; 11.3 million US dollars  – from the IMF;[27] and48 million euros – from the European Union[28] to maintain the country’s economy and combat the aftermath of coronavirus. Although the money is not sufficient to mitigate the economic and social consequences, the government must make every effort to minimize the impact.

Recommendations

The COVID-19 pandemic is bringing the world to another crisis. Tajikistan, as part of the global system, will be confronted with the consequences in any of the scenarios. It is best, nonetheless, to take premature measures and prepare for the economic impact of the pandemic. The following recommendations could be proposed at this stage:

First, the Tajik government should attempt negotiations with Russia on the introduction of patent exemptions for migrant workers during the self-isolation regime. This step would be beneficial both for Tajikistan and Russia since migrants make huge contributions both to the host country and country of origin. With Russia’s self-isolation, migrants find themselves in a very difficult situation and need the support of their state.

Second, food security. Despite certain stocks of essential products, EEU member states have limited the export of goods for at least several months. Tajikistan should agree on the import of essential products and curtail attempts of speculations in the market. The introduction of a quarantine might create a social panic and, the commodity boom will result in higher prices.

Third, if quarantine to be introduced in Tajikistan, the government might find useful to prepare special tax holidays for small and medium-sized businesses to facilitate their market survival. Enterprises working in the tourism industry require tax incentives right now, as they first fell under the impact. Domestic tourism might develop concurrently. After all, this can jump-start this industry. It is essential to support the citizens as well. The state should assess its preparedness for various exemptions, for instance, for utility bills. If a self-isolation or a strict quarantine to be introduced, the support of citizens in an insolvent time should be obvious.

Fourth, increase Internet speed and make it more available for the people. The current situation requires adaptation and the Internet is essential for remote work, study or doing business online. The world has switched to online mode, and Tajikistan might get left out from the processes that happen online.

Fifth, it is paramount to invest now in the health care system and prepare for the worst-case scenario in Tajikistan. The government should rapidly examine the statistics of the virus spread in different countries and the level of the exponential growth of infected people in the region and the world. Medical supplies, equipment, and doctors are not enough in the case of epidemic spread in Tajikistan. The government certainly has to accept voluntary assistance, but it also must purchase the necessary equipment from the budget money. Another important aspect is to be prepared for the rapid set up of temporary camps if all hospitals to be overloaded. It is vital to either find suitable facilities and be prepared for their conversion or set up the temporary camps.


This material has been prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project. The opinions expressed in the article do not reflect the position of the editorial board or donor.


[1] Coronavirus disease (COVID-19) Pandemic, WHO, https://www.who.int/emergencies/diseases/novel-coronavirus-2019

[2] COVID-19 Dashboard by the Center for Systems Science and Engineering, Johns Hopkins University, https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

[3] 1836 people are quarantined in Tajikistan, Sputnik, https://tj.sputniknews.ru/country/20200413/1031055939/tajikistan-karantin-nakhodyatsya-1836-chelovek.html

[4] Emomali Rahmon and the Year of Tourism and Crafts. Chronicle of the Leader of the Nation-2018, State Committee on Investments and State Property Management, https://investcom.tj/ru/novosti/502-jemomali-rahmon-i-god-razvitija-turizma-i-narodnyh-remesel-letopis-lidera -nacii-2018.html

[5] Shirin Amonzoda: “1 million 257 thousand 300 foreign tourists visited Tajikistan last year”, Committee for Tourism Development under the Government of the Republic of Tajikistan, https://traveltajikistan.tj/ru/%d1%80%d1%83%d1 % 81% d1% 81% d0% ba% d0% b8% d0% b9-% d1% 88% d0% b8% d1% 80% d0% b8% d0% bd-% d0% b0% d0% bc% d0 % be% d0% bd% d0% b7% d0% be% d0% b4% d0% b0-% d1% 82% d0% b0% d0% b4% d0% b6% d0% b8% d0% ba% d0% b8% d1% 81% d1% 82% d0% b0% d0% bd /

[6] How many tourists visited Tajikistan in 2019, Sputnik, https://tj.sputniknews.ru/infographics/20200226/1030777256/Tajikistan-turisty-viza.html

[7] Last year, tourism brought almost $ 23 million to Tajik treasury, Sputnik, https://tj.sputniknews.ru/country/20190208/1028215269/turizm-budjet-tajikistan.html

[8] The Hilton Dushanbe hotel  in Tajikistanwas temporarily closed due to coronavirus, ASIA-Plus https://asiaplustj.info/ru/news/tajikistan/society/20200331/v-tadzhikistane-gostinitsa-hilton-dushanbe-vremenno-zakrilas- iz-za-koronavirusa

[9] Meeting with members of the Government, President of Russia, http://kremlin.ru/events/president/news/63001

[10] In which regions the self-isolation regime is introduced, Meduza, https://meduza.io/feature/2020/03/30/v-kakih-regionah-rossii-vveden-rezhim-samoizolyatsii-spisok

[11] Address to the Russian citizens, President of Russia, http://kremlin.ru/events/president/news/63133

[12] Money transfers from Russia to Tajikistan remain at last year’s level, ASIA-Plus https://www.asiaplustj.info/ru/news/tajikistan/economic/20191219/denezhnie-perevodi-iz-rossii-v-tadzhikistan- ostayutsya-na-proshlogodnem-urovne

[13] Russia will not overcome the crisis in a conventional way due to the pandemic and falling oil prices, Meduza, https://meduza.io/feature/2020/03/19/iz-za-pandemii-i-padeniya-tsen-na -neft-rossiya-ne-preodoleet-krizis-obychnymi-metodami-vot-chetyre-problemy-kotorye-nado-reshit-kak-mozhno-skoree

[14] Migrants in Russia demand to cancel the payment of a quarantine patent, Radio Ozodi, https://rus.ozodi.org/a/30527810.html

[15] How will the EAEU ban impact the export of products to Tajikistan? ASIA-Plus,   https://asiaplustj.info/ru/news/tajikistan/society/20200402/kak-povliyaet-zapret-eaes-na-vivoz-produktov-v-tadzhikistan

[16] Kazakhstan imposes restrictions on wheat exports. Tajikistan will now receive flour under the quota, Radio Ozodi, https://rus.ozodi.org/a/30521468.html

[17] Kazakhstan imposes restrictions on wheat exports. Tajikistan will now receive flour under the quota, Radio Ozodi, https://rus.ozodi.org/a/30521468.html

[18] Kazakhstan imposes restrictions on wheat exports. Tajikistan will now receive flour under the quota, Radio Ozodi, https://rus.ozodi.org/a/30521468.html

[19] Kazakhstan sent 5 thousand tons of flour to Tajikistan, Sputnik, https://tj.sputniknews.ru/asia/20200414/1031062486/kazakhstan-gumpomoshch-tajikistan-muka.html

[20] At the crossroads. What awaits small and medium businesses in Tajikistan ?, Radio Ozodi, https://rus.ozodi.org/a/30240247.html

[21] Tajikistan is considering declaring a “repayment holiday” because of the pandemic, ASIA-Plus,   https://www.asiaplustj.info/ru/news/tajikistan/economic/20200408/v-tadzhikistane-rassmatrivayut-vozmozhnost-obyavleniya -kreditnih-kanikul-iz-za-pandemii

[22] Worldwide mobile data pricing: The cost of 1GB of mobile data in 230 countries, Cable.co.uk https://www.cable.co.uk/mobiles/worldwide-data-pricing/

[23] Antimonopoly service: cellular operators to pay 80 dirhams per month, tariffs will rise slightly, ASIA-Plus, https://asiaplustj.info/ru/news/tajikistan/society/20200317/antimonopolnaya-sluzhba-ezhemesyachnie-80-diramov- budut-platit-sotovie-operatori-tarifi-podorozhayut-neznachitelno

[24] Tajik mobile operators have raised tariffs for some services, Radio Ozodi, https://rus.ozodi.org/a/30527240.html

[25] Tajikistan Telecom Market Overview: Internet Access and Internet Services, Digital.Report, https://digital.report/tadzhikistan-dostup-v-internet/

[26] Germany allocated one million euros to Tajikistan to combat coronavirus, Sputnik, https://tj.sputniknews.ru/country/20200320/1030921598/germany-tajikistan-koronavirus.html

[27] The World Bank will provide Tajikistan with $ 11.3 million to combat the coronavirus impact, Radio Ozodi, https://rus.ozodi.org/a/30527605.html

[28]  The EU will provide Tajikistan with 48 million euros in the fight against coronavirus, Radio Ozodi, https://rus.ozodi.org/a/30552289.html

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