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Tajikistan: Measures Taken Not Enough to Support Business 

The authorities of Tajikistan have announced the measures to support businesses and the poor amid new coronavirus pandemic. However, according to experts, these measures are not enough.

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Trade center in Dushanbe. Photo: ansor.info

At the end of March this year, the government of Tajikistan prepared a plan of action to prevent the impact of potential risks of the coronavirus pandemic on the national economy.

The government’s plan contained measures to supply consumer markets with basic consumer goods, to increase their produce and stock, and to prevent the increase in their prices, measures to support the vulnerable population.

Also, the plan was to develop a draft of relevant regulation on provision of tax relief and tax holidays to the vulnerable small and medium business entities, postponement of non-tax inspections.

The same industrial plans were developed by the National Bank of Tajikistan, ministry of economic development and trade and other ministries and agencies. However, according to experts, these documents contain no specific supportive measures.

For example, the plan of action of the NBT has it that credit organisations have been advised on growth of lending to industrial entrepreneurs, as well as on restructuring loans, providing grace periods to borrowers with financial problems.

However, the National Bank did not reply to the written request of the CABAR.asia journalist regarding specific planned actions.

Only 4 of 17 banks in the country have implemented the listed and clearer numerous planned measures.

Many governmental measures have remained unimplemented.

For example, the paragraph about the supply of the market with basic consumer goods has not been fulfilled, but the deficit of such goods has led to the record high inflation rate from January to May: 5.4 per cent (in 2019, inflation rate was 8 per cent per year).

Market in Khujand city. Photo: advantour.com

Also, experts have been severe on the measures of the authorities regarding the financial support of the vulnerable population.

First, the low-income people of 28 districts and towns of the country (the country has 63 towns and districts) receive aid from June 1. The governmental decree on the mechanism of allocation and payment of direct social benefit lacks all districts of GBAR for some reason. This region is deemed the poorest region in the country.

Second, experts emphasise the size of the aid – every low-income family receives as little as 116 somoni every three months (nearly 12 dollars).

Measures on provision of tax holidays to business circles have been fulfilled in part: such exemptions have been granted to touristic facilities, medical facilities, hotels, public catering facilities, recreation and athletic centres, resorts, international passenger transportation and air navigation, as well as small and medium business entities who have stopped their activities due to coronavirus. The income tax rate on the interest rate of individuals’ deposits has been decreased from 12 to 6 per cent to support the return level of people from June 1 to December 31, 2020.

President Emomali Rakhmon ordered in his decree, which was signed in early June, to regulate consumer goods prices, including medications, medical purpose goods, masks, sanitizers, as well as flour and pastries, sugar, vegetable oil, legumes, potato, soap and fuel in the country.

Also, the document orders not to increase prices of utilities until the end of this year.

What about neighbours?

Meanwhile, the neighbouring countries have already taken integrated measures to support the people, the most injured sectors, taxpayers and others.

For example, in Uzbekistan President Shavkat Mirziyoyev signed decree on support of people and businesses during the lockdown in early April. The document that contains over 20 various issues exempts small businesses and a range of other business companies from paying property tax and land tax.

Small businesses will not have to pay property tax and land tax for April and May, and penalties and fines on these taxes accumulated from January 15 to May 15.

Earlier, entrepreneurs were entitled to obtain a delay in payment of VAT when importing goods (work, services) for up to 120 days.  Microcompanies and small enterprises that carry out foreign economic activity at least for one year before applying to the customs authorities will have a right to delay payment of customs dues and excise tax imposed at the entry of commodities, except for consumer goods, until July 1 with further payment of delayed amount by equal parts within 120 days.

The authorities of this neighbouring republic have taken over 80 specific measures to support the people of the country.

Integrated measures of support of people and businessmen have been available in Kazakhstan and Kyrgyzstan for a few months.

For example, in Kyrgyzstan all vulnerable groups of people, without exception, receive specific social assistance since early April. 

“Necessary total reforms”

Economist Ayub Ergamov. Photo: Ozodandishon.org

Economist Ayub Egamov thinks that measures contained in the president’s decree are not enough for business. According to him, tax authorities demand that entrepreneurs pay taxes in advance, which is unacceptable, according to Egamov. He believes that state in today’s conditions should not only exempt businessmen from taxes during the pandemic, but also should prolong the repayment term.

“We all know that small and medium business in Tajikistan is surviving now. If we don’t support businessmen in this difficult time, it will lead to deplorable results, closure of thousands of enterprises and to mass unemployment. It will hit the budget, and increase social and economic instability in the company,” the economist said.

According to Egamov, businesses will not benefit from such measure as an exemption from rental payment of rented space that is the ownership of the state.

“We all know that few entrepreneurs lease out the area from the state. In general, entrepreneurs rent out premises that belong to commercial structures. This topic is not covered in the decree,” Egamov said.

Also, he emphasised that the decree provides for exemption from customs duties from July 1 to September 1, 2020 (value-added, excise and customs tax) of imported materials used for production of disinfecting agents, medications and protective clothing, as well as equipment, tools, equipment for medical laboratories and materials necessary for identification of COVID-19 disease.

“This activity is performed by certain companies that are closely linked to the authorities. It means that this paragraph of the decree is ‘assistance to related parties,” Egamov said.

Egamov forecasts hard times for the economy of Tajikistan and thinks that the authorities should refuse from unnecessary expenses, including for the celebration of the Independence Day, and to allocate the money saved to support the population.

“We need to revise the volumes of money allocated to the construction of Rogun HPP. It’s doubtful that donor countries and international financial institutions will accept the proposal of Tajikistan on investment to this project this or following years. Now, as far as I know, the negotiations with Ukraine on supply of pipes led to nothing. Ukraine is not ready to provide the pipe against a loan,” the economist said.

He doubted that the decree would be implemented in all paragraphs “if its fulfilment is not controlled by the media, non-governmental organisations and some independent structures.

“To eliminate the damage caused by coronavirus pandemic and the following economic recession, Tajikistan will need to carry out total and comprehensive reforms in all spheres,” the economist said.

This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project

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