Europe & Central Asia
Tajikistan risk report
Corruption is a serious obstacle for companies operating or planning to invest in Tajikistan. It permeates almost all sectors of the economy. Networks of patronage and clientelism also impede a competitive business environment, and bribery and gifts are widespread practices and an established way of doing business. The government has established the necessary legal anti-corruption framework to curb corruption, criminalizing passive and active bribery, extortion, money laundering and other offenses. Nonetheless, enforcement of the law is poor and selective, and government officials engage in corruption without fear of repercussion, provided they do not fall out of favor with the ruling elite.
Judicial system Very high risk
Corruption is rife in the judiciary (HRR 2015). Patronage networks and the arbitrary application of laws impede the effective functioning of the courts (BTI 2016). In the same vein, judicial impartiality is challenged by pressure from the executive (HRR 2015). Companies report the courts are inefficient in settling disputes and challenging government regulations (GCR 2015-2016). Enforcing contracts is less time-consuming than the regional average, taking 430 days (DB 2016).
Shurat Quadratov, a human rights lawyer who had defended jailed former minister of industry Zaid Saidov, was sent to jail for nine years on charges of attempted bribery and fraud (NiT 2016; Advox, Jan. 2015). However, the verdict spurred outrage as lawyers defending opposition members often face detention and prosecution (NiT 2016). Quadratov is one of two members of the legal team representing Zaid Saidov to face imprisonment on alleged fraud (Advox, Jan. 2015). The other lawyer was freed under amnesty (Advox, Jan. 2015).
Tajikistan is not a member of the International Centre for Settlement of Investment Disputes (ICSID) or the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.
Police Very high risk
The police are plagued by rampant corruption, and officers engage in corruption with impunity (HRR 2015). There are reports of police officers arbitrarily stopping cars to extort bribes from drivers (HRR 2015). Companies do not trust the police to protect them from crime or to enforce law and order (GCR 2015-2016).
Public services Very high risk
The public services sector presents businesses with a very high risk of corruption; companies can expect to pay bribes when applying for utilities and licenses. More than one-third of businesses expect to give gifts to officials to ‘"get things done," and almost the same percentage expect the same when applying for an operating license (ES 2013). Nepotism and cronyism are also widespread, limiting individuals' access to basic rights if they lack connections (BTI 2016). Inefficient government bureaucracy also puts a strain on businesses and is mainly the result of widespread corruption, insufficient resources, and incompetent staff (BTI 2016).
Starting a business is a quick process, requiring 4 procedures and taking approximately 11 days (DB 2016). Dealing with construction permits, however, takes 242 days and requires 27 procedures (DB 2016).
Land administration Very high risk
The land administration carries a high corruption risk. By law, property rights are protected in Tajikistan, yet enforcement of these rights is undermined by a weak private property protection system, judicial corruption and state intervention (BTI 2016). Tajikistan's government has a history of expropriation, primarily related to properties illegally privatized following Tajikistan’s independence from the Soviet Union (ICS 2016). Compensation for properties has been below market value (ICS 2016). Moreover, there have been several reports of authorities pressuring companies and individuals into ceding properties and business assets (ICS 2016).
Registering property more time-consuming than the regional average taking 37 days and requiring 6 procedures (DB 2016).
Tax administration Very high risk
Corruption is rampant within the tax administration. Extortion by tax officials is one reason why businesses refrain from investing in Tajikistan (BTI 2016). Almost one-third of companies expect to offer gifts when meeting with tax officials (ES 2013). Moreover, the tax system is inconsistent and burdensome; rates and regulations are among the most problematic factors for doing business (GCR 2015-2016).
Customs administration Very high risk
Corruption is rife in the customs administration and presents businesses with high risks (ICS 2016). Customs procedures are burdensome, and additional informal barriers such as bribes and irregular payments are common (GCR 2015-2016; BTI 2016). Patronage networks and corruption impede foreign companies from trading in certain products monopolized by members of the presidential family and senior government officials (BTI 2016).
Public procurement Very high risk
Companies contend with high corruption risks when dealing with government procurement. More than a third of companies expect to give gifts to secure a government contract (ES 2013). Favoritism among procurement officials towards well-connected companies also represents an obstacle to competitive bidding (GCR 2015-2016). In the same vein, companies with close ties to the ruling elite enjoy preferential treatment compared to foreign investors (ICS 2016). The privatization of state-owned companies has been inconsistent and plagued by corruption (BTI 2016).
The diversion of public funds to individuals or companies due to corruption is also widespread in Tajikistan (GCR 2015-2016). In one case, an audit of the National Bank carried out by Ernst & Young revealed that the National Bank’s chief, Muradali Alimardon, had taken USD 550 million in undeclared loans in 2009 (NiT 2016). Alimardon has managed to take an additional USD 120 million since then (NiT 2016). This case is only one of many; public officials have reportedly siphoned USD billions from state-owned enterprises and banks into offshore accounts (NiT 2016).
Natural resources Very high risk
Tajikistan enjoys vast natural resources with over 400 mineral deposits, including one of the largest silver deposits in the world (EITI, Jan. 2015). Nonetheless, the sector is riddled by corruption. The government is reluctant to provide companies with mining licenses – a legacy from the Soviet-era legal code, which views anything beneath the land’s surface as a potential state secret (ICS 2016). Tajikistan was accepted in 2013 as a candidate country to the Extractive Industries Transparency Initiative.
Tajikistan has a legal anti-corruption framework in place, but the government does not implement the laws effectively (HRR 2015). Enforcement is selective, and public officials engage in corruption with impunity (ICS 2016; HRR 2015). Attempted corruption, extortion, active and passive bribery, bribing a foreign official, embezzlement, and money laundering are criminalized under the country’s Criminal Code and its Law of the Republic of Tajikistan on Fighting Corruption. Public officials are not subject to public financial disclosure laws (HRR 2015). A reporting system is in place that allows individuals to report on corruption, yet whistleblowers' anonymity is not guaranteed (U4, Jan. 2013).
The institutional framework to combat corruption is also inefficient and is itself plagued by patronage. For instance, in 2015, the president appointed his eldest son to head the country’s anti-corruption agency (Radio Free Europe, Jun. 2016). Likewise, several senior government officials hold secondary positions in businesses and own extensive property both in Tajikistan and abroad (BTI 2016). A behavior that is tolerated in the government, as long as an official does not fall out of favor (BTI 2016).
Tajikistan is a signatory to the UN Convention against Corruption but is not a signatory to the OECD Anti-Bribery Convention.
Freedoms of speech and press are protected under the constitution but are restricted in practice (HRR 2015). Authorities curtailed the work of independent journalists by imposing restrictive legislation and regulations (FotP 2015). Journalists investigating high-level corruption often face libel and defamation charges; consequently, self-censorship is common (BTI 2016; NiT 2016). Internet freedom was severely limited during 2014; the government often blocked online press and social media websites including Facebook, Google and independent Tajik news portals (FotP 2015). The government adopted the ‘Ethics Code for an e-Citizen’ to outline guidelines for internet users (e.g., respect for "norms of the state" and "national values") which some perceive as a means to crack down on criticism (FotP 2015). The media environment in Tajikistan is considered "not free" (FotP 2015).
Civil society traditions in Tajikistan are weak (BTI 2016). Freedom of assembly is provided for by the law, however, the government puts restrictions on this freedom in practice (HRR 2015). All NGOs receiving foreign funding are required to obtain pre-approval from the government (NiT 2016). NGOs involved in combating corruption do not enjoy protection from the government, and there is a general lack of cooperation between the government and NGOs in fighting corruption (ICS 2016). Large NGOs are also becoming increasingly corrupt as there is insufficient monitoring of the funds they receive from abroad (BTI 2016).
- World Bank & IFC: Doing Business 2016.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- Bertelsmann Foundation: Transformation Index – Tajikistan 2016.
- Freedom House: Nations in Transit – Tajikistan 2016.
- US Department of State: Investment Climate Statement – Tajikistan 2016.
- US Department of State: Human Rights Practices Report – Tajikistan 2015.
- Freedom House: Freedom of the Press – Tajikistan 2015.
- Radio Free Europe: ‘Tajik President Appoints Son to Head Anticorruption Agency’, 9 June 2015.
- Extractive Industries Transparency Initiative: Tajikistan – April 2015.
- Advox: ‘I am Shuhrat: Tajiks Come to Jailed Lawyer’s Defence on Facebook’, 17 January 2015.
- World Bank Group: Enterprise Surveys – Tajikistan 2013.
- U4 Expert Answer: Overview of Corruption and Anti-Corruption in Tajikistan, Jan. 2013.