The interviewee stated that the business climate will not get better without large-scale reforms.
This year in Tajikistan can hardly be called successful, at least in terms of business development. As of September, more than 10 000 small and medium-sized businesses have closed. Analysts of the World Bank noted that Tajikistan is in the last «ten» of the list of states in terms of comfort and doing business. In addition to misguided tax policies, the coronavirus pandemic has made the situation worse. CentralAsia.news editors asked an independent expert Yevgeny Kudryats to assess the situation with the business climate in Tajikistan.
The roots of the problem
According to the expert, there are really high taxes for businessmen in the republic. Kudryats stressed that tax policy does not allow them to «survive» in the business world.
— Indeed, the high taxes strangle the entrepreneurs of the republic and don’t let them develop. Moreover, due to the «draconian» taxes, businessmen often have to close their business at the initial stage, — said the interviewee.
Describing the development of business in the republic, the expert noted its static nature. It also had an impact on the sad statistics mentioned earlier. Businessmen are afraid of risks and shocks. In addition, the pandemic hit the market, which led to a drop in the level of demand for expensive items. People have no money for this.
Kudryats also highlighted that the republic has a complicated procedure for opening an enterprise or starting a small commercial activity. And those who nevertheless started their own business will face a series of inspections that simply slow down their activities.
Then the expert named two more problems closely related to the business.
— And, of course, the most important reason for the slowdown is corruption, which hinders the development of the entrepreneurial activity, as well as excessive bureaucracy, — said the expert.
Mistakes of businessmen
According to Yevgeny Kudryats, it is not only the state that is responsible for the problems in the business area. Entrepreneurs make mistakes as well.
— According to statistics, the majority of small and medium-sized businesses are closed in the first year of operation. This is due to non-effective planning and management mistakes. When there is no profit, then the business usually is closed without waiting for better times, — marked the interviewee.
Many entrepreneurs also start a business without studying the market situation. They try to sell unsalable goods. Instead of doing marketing research, they have a strong belief that their product would be very popular. And that strategy in most cases doesn’t work.
What’s next?
To improve the business situation, the Tajik authorities need to implement major tax reform. However, the new tax code will not be enough.
— Without tax reform, there is no need to talk about any development of small and medium-sized businesses. The Tajik authorities have already prepared a new tax code, but the government does not have a clear plan that could regulate the industry, — noted the expert.
Kudryats believes that one of the measures to «revive» business is reducing the tax burden.
In addition, good tactics and strategies are needed for a successful business. It is necessary to adopt the successful experience of other states. At the same time, attention should be paid to ensuring compliance with market rules.
— First of all, we are talking about the service sector, where private businesses can develop. But at the same time, there should be fair competition, when companies or individuals do not artificially lower or raise prices, — underlined the expert.
He admitted that for older people with a Soviet mentality it is not easy to «rebuild their mind» within the foreign innovations, but young people are able to master the laws of capitalism.
The implementation of only a set of measures can change the situation with business in the republic. Tajikistan needs to seriously work on improving the business and investment climate, otherwise, the owners of large capital will not risk investing in the local economy.
Commenting on the statistics of the World Bank, Kudryats noted that they admit the existence of many problems in the republic. In Western countries, small and medium business is one of the important components of the economy. The expert added that the Tajik authorities must understand that ensuring a good level of economic development is impossible without small and medium-sized businesses.
