China and Anonymous Businessmen – Major Investors in Tajikistan's Economy

In recent years, the investment environment in Tajikistan has been limited to the state sector and entrepreneurs about whom there is almost no information.

In February 2022, the "Tojvik" website reported that over 600 million dollars of foreign investments were attracted to various sectors of Tajikistan's national economy in 2021. In this context, China took the lead with investments amounting to 220 million dollars in Tajikistan's economy in 2021. Representatives of the Ministry of Economic Development and Trade of Tajikistan stated that in 2022 they plan to seek loans and financial aid amounting to 702 million dollars from international and regional financial institutions.

In 2021, Turkey ranked second among investors in Tajikistan's economy with 25 million dollars, followed by Switzerland with 21 million, France with 19 million, Cyprus with 10 million, and the United Kingdom with 6 million dollars. Tajikistan has planned to implement 82 public investment projects over the next five years, with a total value exceeding 42 billion somoni, which is equivalent to 3.7 billion dollars.

It is reported that the main creditor for Tajikistan at present is the Export-Import Bank of China. The World Bank and the Islamic Development Bank follow in subsequent positions. A significant portion of these financial resources will be directed toward infrastructure projects in Tajikistan. This means that much of China's investment in Tajikistan, such as the construction and repair of roads, power lines, and power plants, is aimed at creating conditions for China’s greater presence in the country. In recent years, China has taken control of most of Tajikistan's mineral deposits, particularly gold, silver, and copper, which are located in mountainous and remote areas lacking infrastructure. For their development, the construction of roads and provision of electricity are priority tasks. In this regard, China, in addition to acquiring Tajikistan's deposits, is also involved in the construction of roads and the restoration of power lines, which facilitates its access to its goals. Most of the transit and road projects in Tajikistan are also funded by China.

Recently, representatives of Tajikistan's Ministry of Transport also stated that the country will become a transit hub in Central Asia. Minister of Transport Azim Ibrohim said that in the future, Tajikistan will become one of the transit countries in the region. According to Azim Ibrohim, 11 checkpoint projects worth 10.4 billion somoni, roughly 828.2 million dollars, are currently being implemented in the transport sector.

In 2018, the President of Tajikistan, Emomali Rahmon, also noted during a meeting of the country's Investment Council that one of Tajikistan's key goals in the coming years is to completely overcome transportation isolation and become a transit territory.

Shadow Companies, Anonymous Entities, and "Octopuses"

Many experts believe that Chinese investments are primarily state-driven, while private investments in Tajikistan are concentrated in a narrow circle, or investors in this sector enter the market through the "gates" of anonymous companies. The toll collection company IRS is one such entity, whose owners and registration location have not yet been officially disclosed. Additionally, there are concerns about the payment of taxes and the transparency of its operations. IRS manages the service and toll collection on the Dushanbe-Khujand road, which was mainly built with Chinese investments. Essentially, this company generates almost effortless revenue.

Another company, which changed its name from "Faroz" to a different one, is presented as an active player in the "private sector." In an investigation on July 14, 2022, Radio "Ozodi" wrote: "Whenever the structures of the 'Faroz' company became part of state institutions, the President of Tajikistan, Emomali Rahmon, called it a 'partnership between the state and the private sector.' This was in response to media criticism, which claimed that 'Faroz' was taking over lucrative businesses from state institutions without significant costs, such as fuel sales, medical diagnostics, vehicle inspections, insurance, driving schools, the printing of government forms and license plates, sanatoriums, banking, collection of ferula resin, and more. 'Faroz' covered many sectors and became known among the public as a 'dragon' or 'octopus.' In 2019, it was announced that the company would be dissolved."

The source continued: "Investigations revealed that the dissolution of 'Faroz' was merely to remove its name, as most of the companies continued to operate under new names. One of them is 'Behdoshti,' which now raises doubts about the 'partnership between the state and the private sector.' Employees of state institutions complained about this company, which is responsible for blood analysis. Medical staff at the 'Emergency Hospital' in Dushanbe wrote to Radio 'Ozodi,' saying that the quality of 'Behdoshti's' tests is sometimes unsatisfactory, complicating doctors' work and causing disputes over urgent patient diagnoses."

In recent years, members of parliament have passed laws granting tax and customs privileges to entrepreneurs, whom experts and the public refer to as "favorites of the government" or relatives of officials. In the past, such privileges were granted to the company "Ghayur." In December 2020, the "Sputnik" website reported that the owner of this company is Akbar Gulomov, the son of the former deputy prime minister of Tajikistan, who had committed to launching a plastic bag production plant in Dushanbe within a year. The "Ghayur" company owns three cement plants in Tajikistan, with an annual production capacity of 2.5 million tons, built with financial and technical assistance from Chinese specialists.

Another enterprise is the former "Tojikazot," which was inherited by Tajikistan from Soviet times. In 2001, 75% of the company's shares were acquired by Ukrainian oligarch Dmitry Firtash, and 5% belonged to Khairullo Saidov, the son of Zaid Saidov, a former minister of industry and now an imprisoned businessman. In 2014, authorities declared Firtash's ownership illegal and nationalized the enterprise.

According to a recent report by Radio "Ozodi," the "Azot" fertilizer plant has now been transferred to a company about which no information exists. Its owners are unknown, and it is not disclosed how much the plant was purchased for. President of Tajikistan Emomali Rahmon signed a decree on February 7 of this year transferring the "Azot" plant to the "Osiyo Chemical" company, but this document was not published on official websites. A copy of the agreement obtained by "Ozodi" on February 15 states only that the company was registered and operates in accordance with the laws of Tajikistan. Who founded it, when, and where remains unknown.

There is also no information about this company in the tax committee, and its name does not appear on the list of production companies in Tajikistan. According to available documents, "Osiyo Chemical" will be exempt from paying corporate income tax for five years. Additionally, specialists invited by the company from abroad will be exempt from mandatory state payments and the need to obtain work permits in Tajikistan. Moreover, the Tajik government has agreed that the company will be able to sell its products domestically and abroad without restrictions and at prices it sets, while any profits earned domestically can be converted into foreign currency and transferred abroad. This is despite the fact that the National Bank of Tajikistan prohibits companies from engaging in foreign currency transactions without a license. Furthermore, "Osiyo Chemical" will be able to import goods and materials necessary for operating the plant without paying customs duties.

Reports and investigations indicate that investment and economic activities in Tajikistan are strictly regulated, with no open space for fair competition. Thus, one can enter this sector only with permission from the top, support from members of parliament, and access through the "gates" of a narrow circle of anonymous companies.