Several factors contributed to this decline, including poor performance on some indicators such as tax administration, lack of progress in regulatory reform over the past year as compared to other countries, and the addition of three new countries to the Doing Business report list in 2008.
Doing business in Tajikistan did not change significantly in 2007, especially for small and medium enterprises, and several key issues continue to hinder progress. For example, Tajikistan has no credit bureaus, which makes lending risky, and conditions for cross-border trade and the legislation that protects investors are in serious need of improvement.
Not all indicators were negative, however. Due to recent reforms in licensing, in 2007, staring a business has become easier. Tajikistan has risen 10 points in this area from the previous year.
The Tajikistan Private Sector Development Strategy, in turn, has been prepared by the World Bank, at the request of the Government of Tajikistan, in coordination and close consultation with the Ministry of Economic Development and Trade and the members of the Donor Coordination Council, which represents the bilateral and multilateral development institutions active in the country.
Despite Tajikistan's significant and consistent economic growth in recent years and its progress in various areas of economic reform, the private sector accounts for only about 50 percent of GDP private sector investment.
In Tajikistan, the private sector faces an array of issues that hamper their growth. Legal and regulatory barriers often stifle the establishment and development of new firms and constrain enterprise access to finance. The country's weak institutions and poor governance do not provide an environment conducive to domestic and foreign private investment or efficient public service delivery.
Thus, one key objective of the Government's strategy for private sector development should be to focus on those risks and costs that are under the control of Government and specifically those policies, laws, regulations and administrative procedures that result in the greatest risk, pose the greatest barrier to entry or to cost of dealing with Government, for the firm and thus are the greatest impediment to investment and private sector development.
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