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Tajikistan’s Customs Gives a Go for the Inner Circle’s Cargos

President Emomali Rahmon reiterated customs corruption, which leads to smuggling and budget losses. Parliament hopes for electronic invoices, experts believe that this problem cannot be solved without political will.

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Do the Numbers Lie?

In the mid-June, the difference in the statistics of trade turnover between Tajikistan and China became apparent once again.

According to President Emomali Rahmon, in 2018 this figure was about $2 billion.

PRC Chairman Xi Jinping and President Emomali Rahmon. Photo: president.tj

The president reported on this on June 15 at a press conference following the state visit of the President of the People’s Republic of China Xi Jinping to Tajikistan.

“Last year, the trade turnover between our countries amounted to about $2 billion”, Rahmon said.

However, according to the Agency on Statistics under the President of the Republic of Tajikistan and the Customs Service of the Republic of Tajikistan, the volume of foreign trade turnover of Tajikistan and China in 2018 was just over $651 million. Thus, the difference in figures is more than three times.

For the first time this issue arose in 2013. Then, the Ministry of Commerce of China’s data were about 2.5 times higher than Tajikistan’s statistics. In the Customs Service under the Government of Tajikistan, the difference in statistical data was then explained by different customs accounting rules, as well as the export of Chinese goods to Afghanistan through Tajikistan.

According to the National Bureau of Statistics of China, the trade turnover between Tajikistan and China in 2017 amounted to more than $1.3 billion. However, according to the Agency on Statistics of Tajikistan, it was $591 million. This time the difference was 2.1 times.

The difference in the statistics of trade turnover between Tajikistan and Uzbekistan also exists. According to the Agency on Statistics of Tajikistan, in 2018 the trade turnover between the countries amounted to $290 million. However, according to the State Statistics Committee of the Republic of Uzbekistan, the trade turnover was more than $389 million.

The situation in Tajikistan’s neighboring countries is similar. For example, the difference between the statistics of China and Kyrgyzstan is also 2-3 times.

Analysts from Kyrgyzstan, based on four years’ data, concluded that the difference in indicators was not only due to the fact that different accounting principles and reexport volumes (export of Chinese goods through Kyrgyzstan to other countries) are applied in the two countries. In their opinion, in many respects this difference arose due to the problem of corruption and goods undervaluation.

“The high level of variance in cost indicators of imports from China, dozens of times higher than those of Russia and Kazakhstan with similar accounting methods, indicates the presence of corruption risks in determining customs value. Significant discrepancies in physical volumes of imports to the Kyrgyz Republic from China at the level of 2 points of HS (custom) codes indicate an inaccurate declaration”, analytical study “Comparative customs statistics of the Kyrgyz Republic: 2008-2012” states.

Official Statistics Is 50% of Imports

According to Tajik experts, a big difference in statistics speaks not only about the difference in accounting methods, but also about the volume of contraband traffic.

According to economic observer Pairav Chorshanbiev, “a threefold difference between the statistical data (in terms of Chinese goods imports) of Tajikistan and China, which is one of the main trading partners of the Republic of Tajikistan, may indicate smuggling volumes”.

“Our officials explain this with the “different methodologies for gathering these statistics of the customs authorities of the two countries”. However, our figures also differ, for example, from Uzbekistan’s data. Uzbeks report higher figures for the export of their products to Tajikistan”, Chorshanbiev told CABAR.asia.

According to him, contraband traffic of goods to some extent exists in any country of the world, but in Tajikistan this problem is complicated by corruption.

“Along with the illegal goods imports (contraband), which are delivered secretly through various parts of the border, goods are passing through customs checkpoints without customs clearance or they are processed at a lower cost”, Chorshanbiev said.

Who Can Smuggle?

Other experts also stress that the difference in statistics arises from the import of large volumes of smuggling into the country.

“Chinese statistics are a bit exaggerated, since it is profitable for Chinese companies to show large export turnovers (they get tax privileges). Nevertheless, the smuggling volume can be 50% or more of official volumes. Now it reduced, but there are other ways of smuggling – under-declaration of customs value or changing the product position. The budget is losing quite a lot”, an anonymous economic expert told CABAR.asia.

According to him, “typically, people connected with influential officials or their relatives are smuggling”. The expert called these people “inner circle”.

“In addition, the inner circle has official privileges that function from year to year”, the expert said.

Businessman: There Are Bypasses on the Border

According to entrepreneurs, many Tajik businessmen are smugglers to some extent.

“Unhealthy competition, as well as a desire to earn more money force them. There are very few entrepreneurs who show the full volume and real cost of the goods”, a businessman Sharaf Salimov (not his real name) says.

Salimov says that there are areas on the border where it is very easy to transport goods without customs clearance.

“For example, in the Sughd region there are a lot of such spots on the border with Kyrgyzstan. Of course, our and Kyrgyz customs officers are aware of this, but they turn a blind eye to it for a fee. Mainly Kyrgyz, Russian and Kazakh goods are delivered through these spots”, Salimov said.

According to him, it is also possible to transport goods through customs checkpoints without clearance or at a low cost, but this requires a “friend” in the Customs Service.

“If the volumes are small, then it is possible to agree with ordinary customs officers, and if they are large, then it is necessary to find “protection”. Typically, entrepreneurs agree on the clearance of goods at the low cost. There are other ways: to hide the full volume, to use several identical cars with the same state number, and others. It is possible that the cars of influential people pass the checkpoint without any clearance”, says Salimov.

Unhealthy Competition

Experts say that this practice (the goods imports without any customs procedures), first, negatively affects the country’s budget, which misses large funds as a result. Second, the principle of healthy competition is being destroyed.

“This situation does not allow entrepreneurs to work on an equal conditions. One group earns well, while others do not. There is no fair competition. In addition, “preferential” importers create unhealthy competition in the domestic market, which force honest suppliers of goods to terminate their business”, Pairav Chorshanbiev says.

According to Salimov, he witnessed how businessmen terminated business due to unhealthy competition in goods importing.

“Young entrepreneurs who started the business not knowing all the pitfalls, very often close it. Only motivated and active people remain in business, who eventually find the necessary protection among authorities to continue the work”, Sharaf Salimov said.

President Is Informed

President Emomali Rahmon has repeatedly spoken about the problems of smuggling goods and corruption of customs officers. However, on May 10, at a meeting with employees of the financial, tax and customs services of the country, he sharply criticized the work of those departments and publicly interrogated one of the employees.

Shahboz Rajabzoda. Screenshot from Youtube channel TV “Tajikistan”

In the footage of the meeting, which was broadcast on state TV channels, the President invites the customs officer to the microphone and asks about his biography and property. Particularly, Emomali Rahmon asked the customs officer how many houses and cars he had and where he studied.

After Rajabzoda answered, the President convicted him of lying and repeated: “Tell the truth! I have information”.

Emomali Rahmon told that Rajabzoda was expelled from the university for academic failure, and that he did not obey anyone.

Also, during the meeting, Emomali Rahmon several times accused the departmental management of inactivity, while its employees divided the checkpoints among themselves and control the goods transportation how they wish.

He called the smuggling scheme “Tajik Nanotechnology”, which destroys the latest technologies. Emomali Rahmon also exposed the smuggling of goods schemes through the checkpoint.

“There are two ways to smuggle goods: 1. When the car passes, the camera shoots. They remove the state numbers and install them on the second and third cars. In fact, two cars are passing, but only one is registered. 2. When a product arrives at a checkpoint, employees agree with the goods owners, reduce the cost, set prices as they wish”, the President said at the meeting.

Rahmon also said that, at the same time, “one type of goods is indicated in the documents, while there are different goods in the car”. According to him, all this smuggling “is carried out with the support of senior customs officers”.

President Rahmon’s Criticism of Customs Service

According to the Customs Service, in 2018, more than 4.3 thousand facts of violations were registered. Of these, 72 cases were qualified as a crime.

After consideration of 4,208 cases of administrative offenses, 3,956 individuals and legal entities were brought to administrative responsibility. About 16 million somoni (about $1.6 million) of customs duties were collected and fines of more than 7 million somoni (about $700 thousand) were issued.

To Change the System

Customs Service of Tajikistan. Photo: ozodi.org

After the President’s criticisms at the end of May, The parliament of Tajikistan, ratified the Additional Protocol to the Convention on the Contract for the International Carriage of Goods by Road, concerning the electronic consignment note. The electronic consignment note is a document for the international goods carriage, which contains comprehensive information on the transportation and provides tracking of the goods transfer.

On May 29, addressing the deputies of the lower house, Transport Minister Khudoyor Khudoyorzoda noted that switching to electronic invoices will reduce the time for cargo transporting and the customs payments collection while crossing the borders. According to the Minister, “it is not possible to change the volume of goods using an electronic invoice, which makes the new invoice system a suitable mechanism against the goods smuggling”.

However, according to the expert, automation is unlikely to help, since, in addition to controlling electronic invoices, it is necessary to control the costs and customs codes of the goods during customs clearance at the checkpoints.

“There is also the price, quantity and code smuggling, which is difficult to keep track of. In any case, they go to work in the customs with the purpose to make a profit and wealth”, said the expert.

However, entrepreneurs still hope for equal rights and transparent systems. According to them, transparency can reduce corruption.

“Unhealthy competition also exists in other business-related systems. I think it is worth giving everyone the same opportunities and reducing the burden. So that everyone can work and make a profit to the country’s budget. If everything is transparent, no one will shrink from paying duties and taxes. Naturally, corruption will be reduced, and the money will go to the budget”, says Sharaf Salimov.

The expert noted that for positive changes, there is not enough political will to remove the influence of “inner circle”.

“If there is a strong political will, then, probably, this problem can be solved. However, with the current employees and the current government it will be a temporary phenomenon. The goods of persons associated with influential officials will be smuggled as it is now. All major import movements are monopolized. Therefore, if the entire structure of customs will not change, and the influence of “inner circle” people will not be removed, smuggling will remain”, the expert concluded.

This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project implemented with the financial support of the Foreign Ministry of Norway. The opinions expressed in the article do not reflect the position of the editorial or donor.

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